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0ffbb12aa53a19e4c4a7225c5f0a54fa	Am I still building a credit score if I use my credit card like a debit card?	[ { "docid": "eea62142409630f507da1c760d51d624", "text": "\"I strongly suggest you look at CreditKarma and see how each aspect of what you are doing impacts your score. Here's my take - There's an anti-credit approach that many have which, to me, is over the top. \"\"Zero cards, zero credit\"\" feels to me like one step shy of \"\"off the grid.\"\" It's so far to the right that it actually is more of an effort than just playing the game a bit. You are depositing to the card frequently to do what you are doing. That takes time and effort. Why not just pay the bill in full each month, and just track purchases so you move the cash to the account in advance, whether that's physical or on paper? In your case, it's the same as charging one item every few months to keep the card active. If that's what you'd like to do, that's fine. I'd just avoid having the card take up too much of your time and thought. (Disclaimer - I've used and written about Credit Karma. I have no business relationship with them, my articles are to help readers, and not paid placement.) mhoran's response is in line with my thinking. His advice to use the card to build your score is what the zero-credit folk criticize as \"\"a great debt score.\"\" Nonsense. If you use debt wisely, you'll never pay interest (except for a mortgage, perhaps) and you may gain rewards with no cost to you.\"", "title": "" }, { "docid": "0158d90036d675c31f5634bff5202605", "text": "Regardless of how it exactly impacts the credit score, the question is does it help improve your credit situation? If the score does go up, but it goes up slowly that was a lot of effort to retard credit score growth. Learning to use a credit card wisely will help you become more financially mature. Start to use the card for a class of purchases: groceries, gas, restaurants. Pick one that won't overwhelm your finances if you lose track of the exact amount you have been charging. You can also use it to pay some utilities or other monthly expenses automatically. As you use the card more often, and you don't overuse it, the credit card company will generally raise your credit limit. This will then help you because that will drop your utilization ratio. Just repeat the process by adding another class of charges to you credit card usage. This expanded use of credit will in the long run help your score. The online systems allow you to see every day what your balance is, thus minimizing surprises.", "title": "" }, { "docid": "d924152e21fea9126d8690a43f98daaa", "text": "\"I always hesitate to provide an answer to \"\"how does this affect my credit score?\"\" questions, because the credit agencies do not publish their formulas and the formulas do change over time. And many others have done more reverse engineering than I to figure out what factors do affect the scores. To some extent, there is no way to know other than to get your credit score and track it over time. (The credit report will tell you what the largest negative factors are.) However, let me make my prediction. You have credit, you aren't using a large percentage of it, and don't have defaults/late payments. So, yes, I think it would help your credit score and would build a history of credit. Since this is so unusual, this is just an educated guess.\"", "title": "" }, { "docid": "231ac48f7fc11c37f7e3955a4c51fe7f", "text": "AIUI credit cards report three main things. The potential problem with your strategy is that by pre loading you never actually get a bill and so your provider may not report your payments. Better to wait until the bill comes and then pay it in full. That ensures that your use of the card is properly reported.", "title": "" } ]	[ { "docid": "1bf43b55a55057cebd95e74979301a9a", "text": "To get a credit history you need to use credit from someone that reports to the major credit agencies. I don't suppose you have to BUY anything. You could just get a cash loan and hold it for a long time, but it seems silly to pay interest only for the purpose of building credit. The student loan should help you build credit. Also, I'm assuming you buy things all the time like gas, groceries, etc. Why not put those on a credit card and pay the balance off every month? That way you aren't buying anything specifically to get credit. Also there are numerous other benefits: Another suggestion: Set up your cards so the full balance is drafted from your bank automatically on the due date. That will ensure that you always pay on time (helping your credit) and also make you think twice about putting things on the card that you can't afford with the cash you have in the bank.", "title": "" }, { "docid": "f9ecbd20ba2f2a878ed7134224091f9b", "text": "\"When using a debit card in a \"\"credit\"\" way, you don't need to enter your PIN, which protects you from skimmers and similar nastiness. Also, assuming it's a Visa or Mastercard debit card, you now have access to all of the fraud protection and other things that you would get with a credit card. The downside for the merchant is that credit card transaction fees are typically higher than debit card transaction fees. I'm less familiar with using a credit card in a \"\"debit\"\" way, so don't have anything to offer on that part of your question.\"", "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": "" }, { "docid": "2786cbf4423fa30dc7a0d1cbed87a1a5", "text": "If you are in the U.S., without credit cards, you probably don't have a credit history. Without a credit history, you won't be able to get a loan/mortgage, and even if you do, you'll get it on very unfavorable terms. Depending on where you live you might even have great difficulty renting an apartment. So, the most important reason to have credit cards is to have a good credit score. People have already listed other advantages of having credit cards, but another thing that wasn't mentioned is fraud protection. Credit cards are better protected against fraud than debit cards. You probably shouldn't use debit cards online unless you must. Also, without a credit card or credit history, some simple and important liberties like renting a car while you are travelling might be denied to you. So, in conclusion, it's bizarre, but in modern America you need credit cards, and you need them bad.", "title": "" }, { "docid": "12846ee71ec9c5769954964fdc8c2f01", "text": "\"Patience has never been my strong suit Unfortunately this is what you need to build up credit. The activities that increase your credit score are paying your bills on time and not using too much of the available credit that you do have. The rest (age of accounts, recent pulls, etc.) are short-term indicators that indicate changes in behavior that will make lenders pause and understand what the reasons behind the events are. Also keep in mind that your credit score shouldn't run your life. It should be a passive indicator of your financial habits - not something that you actively manipulate. Is there anything I can do to raise my score without having to take out a loan with interest? Pay your bills on time, and don't take out more credit than you need. You're already in the \"\"excellent\"\" category, so there's no reason to panic or try to manipulate it. Even if you temporarily dip below, if you need to make a big purchase (house), your loan-to-value and debt/income ratio will be much bigger factors in what interest rate you can get. As far as the BofA card goes, if you don't need it, cancel it. It might cause a temporary dip in your credit, but it will go away quickly, and you're better off not having credit cards that you don't need.\"", "title": "" }, { "docid": "98deac234312b8b39ece2d300ed8d336", "text": "I don't use debit cards, but if I did I would review that portion of the statement. I look at my credit card statements pretty closely, and probably catch one or two mistakes or things I want to question every year.", "title": "" }, { "docid": "5964e038b78de817efa3fe3d15bc7e0b", "text": "You can use the debit card for practically any purchase that you make. You'll have to take the usual precautions and then a few additional ones. Cards make your life really easy and convenient with some basic precautions. All the best for your travel and stay in the USA. My two cents.", "title": "" }, { "docid": "01264d3bf1b37ab9fb671b8d57b01293", "text": "I've read multiple times that the way to rebuild the credit score is to get a credit card and then have some minor charges on it every month and have them paid in full every month. Old negative events age and this disciplined activity rebuild the score to some not to horrible levels. Now it's true that it's hard to get reasonably good credit cards when your credit score is poor. Yet it's not necessary to have a good credit card for this case - such things as large credit limit are not needed. All that's needed is a long grace period so that there's no interest between the moment a charge is done and a moment the bill is paid in full at the end of the month. Yes, the card may have rather high interest and rather low credit limit, but it doesn't really matter. I've read once on MSN Money that people are offered credit even while they're in the middle of bankruptcy, so it's not impossible to get a credit card in the described situation. Goes without saying that a lot of discipline will be needed to have all this implemented.", "title": "" }, { "docid": "4c944fefdbc93e50f6dc709bd42f3708", "text": "What type of credit card should I be looking in to to build credit from scratch? I have a stable job and will be able to pay back debts right away I just don't want to get into something and then regret it in the future.", "title": "" }, { "docid": "d74a74d5aeabef3044cf1f4454d7077d", "text": "Need is a strong word. As far as merchants are concerned, if they accept, e.g., Visa credit, they will accept Visa Debit. The reverse is not necessarily true. Up until lately, Aldi would only accept debit cards (credit cards have higher merchant fees), and when I used to got to Sam's Club, they would accept Visa debit, but not credit (they had/have an exclusive deal with Discover for credit). So, yes, they can tell from the card number whether it's credit or debit. However, I've never heard of a case of the situation being biased against debit.* That said there are some advantages to having a credit card: ETA: I don't know how credit history works in the EU, but in the US having open credit accounts definitely does affect your credit score which directly affects what rate you can get for a mortgage. *ETA_2: As mentioned in the comments and another answer, car rentals will often require credit cards and not debit (Makes sense to me that they would want to make sure they can get their money if there is damage to the car). Many credit cards do include rental car insurance if you use it to pay for your rental, so that's another potential advantage for credit cards.", "title": "" }, { "docid": "c392eba0ad6ab801cc2013507daae51a", "text": "The question should be - do you need a debit card? Other than American Express I have to tell my other credit card issuers to not make my cards dual debit/credit. Using a debit card card can be summed up easily - It creates a risk of fraud, errors, theft, over draft, and more while providing absolutely no benefit. It was simply a marketing scheme for card companies to reduce risk that has lost favor, although they are still used. That is why banks put it on credit cards by default if they can. (I am talking about logical people who can control not overspending because of debit vs. credit - as it is completely illogical that you would spend more based on what kind of card you have.)", "title": "" }, { "docid": "bf5e9fa941ac38c0cf3dae70a40d1c44", "text": "\"The trick to using a credit card responsibly is accounting. With your old system, you were paying for everything out of your savings account. Everytime you had an expense, it was immediately withdrawn from your savings account, and you saw how much money you had left. Now, with a credit card, there isn't any money being withdrawn from your savings account until a month later, when you have a huge credit card bill. The trick is to treat every credit card transaction as if it was a debit card transaction, and subtract the money from your \"\"available funds\"\" on paper immediately. Then you'll know how much money you actually have to spend (not by looking at your bank statement, but by looking at your \"\"available funds\"\" number), and when the credit card bill comes, you'll have money sitting there waiting to go to the credit card company. This requires more work than you had with your old system, and if it sounds like too much work, you might be better off with a debit card or cash. But if you want to continue to use the credit card, you'll find that the right software will make the accounting process easier. I like YNAB, but there are other software products that work as well. Just make sure that your system accounts for each credit card transaction as it is spent, deducting the amount from your budget now, so that there is money set aside for the credit card bill. Software that simply categorizes your spending after the fact is not as useful.\"", "title": "" }, { "docid": "102c30a822fd503925f07060b6aca3c4", "text": "The post that you linked to saying that a pre-paid credit card is really a debit card is kind of right and kind of wrong. From your point of view, to get a $1000 pre-paid credit card, you need to hand over $1000. So nobody is giving any credit to you. You can only spend money that you actually own, like a debit card. For the merchant accepting your card, it is exactly like a credit card. He doesn't know what deals you had to make to get the card. The merchant just knows that up to some amount, he will receive money. So in that sense it is a credit card and will be accepted like a credit card.", "title": "" }, { "docid": "22f5aec3e608838bdd46b9d393d4ee05", "text": "No, it won't affect your score until your statement is posted. Paying your bill before your statement is posted is actually a good way to keep your credit utilization low. If you're worried about high credit utilization negatively affecting your credit score, consider paying your bill several times a month to ensure that when your final monthly statement is posted, your utilization is still low. When my credit limit was very low while I was in college, I did this almost every month, and I've seen other sites recommend this practice as well. From creditkarma.com: The easiest way [to lower credit utilization] is to make credit card payments more than once a month so that your balance never gets too high. and creditcards.com: Consider making payments to creditors more than once each month. Otherwise, if you put a major expense -- like a new appliance -- on a credit card, even if you plan to pay it off, your FICO score may take a hit. The reason is that credit scores are calculated as a snapshot in time, so if that happens to be right after you charged a new $700 washing machine, your utilization ratio will look worryingly high. Remember, though, that it's best to have some balance on your card when your statement is posted (assuming you pay it off in full each month), because as the chart shows, 0% utilization is about as bad as utilization > 31-40%: Also, remember that credit utilization affects your credit score in real time, so if you have high utilization one month but a lower utilization the next month, the hit to your score will disappear once a statement with low utilization is posted.", "title": "" }, { "docid": "aaec795b778da2ed3ae3b5fdaa5b15be", "text": "Depends on your credit score. If you came from foreign country, you might not be having enough Credit Score. In that case, you have to go for Prepaid Credit Card offered by Banks. For prepaid credit card,you have to deposit certain amount of money which will act as your credit line.", "title": "" } ]	fiqa
6f8a67119373bd2e7715858b1be9c249	Implications of receiving small amounts of money on the side	[ { "docid": "85ff947d923a0fb0c528b80bbdf65584", "text": "HMRC may or may not find out about it; the risks and penalties involved if they do find out make it unwise not to just declare it and pay the tax on it. Based on the fact you asked the question, I am assuming that you currently pay all your tax through PAYE and don't do a tax return. You would need to register for Self Assessment and complete a return; this is not at all difficult if your tax situation is straightforward, which it sounds like yours is. Then you would owe the tax on the additional money, at whatever applicable rate (which depends on how much you earn in your main job, the rate tables are here: https://www.gov.uk/income-tax-rates/current-rates-and-allowances ). If it truly is a one off you could simply declare it on your return as other income, but if it is more than that then you would need to look at setting up as Self Employed - there is some good advice on the differences here: http://www.brighton-accountants.com/blog/tax-self-employment-still-employed/ : Broadly, you are likely to be running a business if you have a regular, organised activity with a profit motive, which continues for at least a few months. If the work is one-off, or very occasional (say, a few times per year), or not very organised, or of very low value (say, under £2,000 per year), then it might qualify as casual income. If you think it is beyond the definition of casual income then you would also need to pay National Insurance, as described in the previous link, but otherwise the tax treatment would be the same.", "title": "" } ]	[ { "docid": "22ce9d27bceb925253dd69b181e4470f", "text": "Q: If I call a tail a leg, then how many legs does a dog have? A: 4. You can call it whatever you want, it's still a tail. The scenario is nonsense. There is a quid pro quo, the waitress served the customer and he tipped her. A $7 tip on a $24.47 check. He was generous, but misguided if he thought that this note would let the tip go untaxed. And even though the article you link is fresh, the author has the gift threshold incorrect. This year it's $14,000, and has been so since 2013. A cute story, and unlikely to be an issue for $7, but the IRS would take notice if this idea gained any traction. Two references - If Gifts Are Not Income, Why Tax Gratuities? From the Tax Court Files: Is That Money a Gift or Income?", "title": "" }, { "docid": "3f787372f8004256b7f7385e0f510adb", "text": "Thank you for the quick reply. My main firm pretty much sets us up as individual practices with limited support as far as customer service. The clients are ours to take care of. There is not a formal small account policy I am aware of, though I will confirm this next week. I am considering delegating a current assistant, who is training to be a rep, to take care of these clients under my close supervision. It might be good experience for him and a way I can still profit. I wouldn't want to lose these clients because a) they might mature or bring referrals, and b) there are individuals in need of at least some insurance to protect their families.", "title": "" }, { "docid": "9021ee044ffe953dad127d98ff65fa9e", "text": "\"I don't think it would be counted as income, and if it's a short-term loan it doesn't really matter as the notional interest on the loan would be negligible. But you can avoid any possible complications by just having two accounts in the name of the person trying to get the account benefits, particularly if you're willing to just provide the \"\"seed\"\" money to get the loop started.\"", "title": "" }, { "docid": "e3b31f6ff09ba86956fe3909c37414b4", "text": "\"As the other answer said, the person who owns the lent stock does not benefit directly. They may benefit indirectly in that brokers can use the short lending profits to reduce their fees or in that they have the option to short other stocks at the same terms. Follow-up question: what prevents the broker lending the shares for a very short time (less than a day), pocketing the interest and returning the lenders their shares without much change in share price (because borrowing period was very short). What prevents them from doing that many times a day ? Lack of market. Short selling for short periods of time isn't so common as to allow for \"\"many\"\" times a day. Some day traders may do it occasionally, but I don't know that it would be a reliable business model to supply them. If there are enough people interested in shorting the stock, they will probably want to hold onto it long enough for the anticipated movement to happen. There are transaction costs here. Both fees for trading at all and the extra charges for short sale borrowing and interest. Most stocks do not move down by large enough amounts \"\"many\"\" times a day. Their fluctuations are smaller. If the stock doesn't move enough to cover the transaction fees, then that seller lost money overall. Over time, sellers like that will stop trading, as they will lose all their money. All that said, there are no legal blocks to loaning the stock out many times, just practical ones. If a stock was varying wildly for some bizarre reason, it could happen.\"", "title": "" }, { "docid": "ebc14ad313aef5d1be707450e2f0f264", "text": "I'm not sure this is a safe assumption, necessarily. If the take is sufficient to permanently satiate whatever monetary need motivated the initial crime, risk in the ratio will remain the same but reward will be significantly altered. Having little wealth and gaining a great deal of wealth is different from having a great deal of wealth and getting even more wealth. As the risk/reward ratio would change, the decision-making process would not be the same.", "title": "" }, { "docid": "41738846c29b227d7c9af116f730c97e", "text": "Ok so Arbitrage? I was looking specifically at the people who took this deal to the extreme taking the $5k and using the $10 giftcards to buy prepaid credit cards. Would the better term would be positive-feedback loop, since the only constraint would be time and energy to the people exploit this deal. Is there a financial term that fits this better?", "title": "" }, { "docid": "518804c68cb84104740402d5c0394688", "text": "\"No, but it's serving the same purpose, which is to hide the original origin of a sum of money. Both examples involve moving money from one source to another, when both the source and the sink are in actuality the same entity managed and run by the same people. Both involve doing it in order to hide the money from those who would otherwise have a right to a portion of it. In this case, it is those with a right on the \"\"net\"\". In Starbucks UK, it's the UK government.\"", "title": "" }, { "docid": "9d1a7f1944348ed00e9367a5fcb54ad7", "text": "\"Well, I'd probably need to buy a lot more [Tide](http://nymag.com/news/features/tide-detergent-drugs-2013-1) to hide any purchases I don't want Uncle Sam to know about (not just drugs, either - When's the last time you paid sales tax at a yard sale?). Other than that, I doubt it would matter much. 99.9% of my financial transactions are already on plastic, and I regularly keep the same \"\"emergency $20 bill\"\" in my wallet for months at a time.\"", "title": "" }, { "docid": "4cb42ac0682df55bbe64cdcfaa95892b", "text": "CTRs are made all the time, and yes, the banks do need to consider one-off transactions that aren't $10,000 per se but amount effectively to $10,000 or more. But if you're doing nothing improper, just pay your bill and be done with it. No need to split it up just for this reason.", "title": "" }, { "docid": "bff4b865a1719e435d5065a66da76fe1", "text": "It means someone's getting paid too much. I'd check the sharpe ratio and compare that to similar funds along with their expense ratio. So in some scenarios it's not necessarily a bad thing but being informed is the important thing", "title": "" }, { "docid": "8d9a776d08c206dacd7cec3133072133", "text": "\"With (1), it's rather confusing as to where \"\"interest\"\" refers to what you're paying and where it refers to what you're being paid, and it's confusing what you expect the numbers to work out to be. If you have to pay normal interest on top of sharing the interest you receive, then you're losing money. If the lending bank is receiving less interest than the going market rate, then they're losing money. If the bank you've deposited the money with is paying more than the going market rate, they're losing money. I don't see how you imagine a scenario where someone isn't losing money. For (2) and (3), you're buying stocks on margin, which certainly is something that happens, but you'll have to get an account that is specifically for margin trading. It's a specific type of credit with specific rules, and you if you want to engage in this sort of trading, you should go through established channels rather than trying to convert a regular loan into margin trading. If you get a personal loan that isn't specifically for margin trading, and buy stocks with the money, and the stocks tank, you can be in serious trouble. (If you do it through margin trading, it's still very risky, but not nearly as risky as trying to game the system. In some cases, doing this makes you not only civilly but criminally liable.) The lending bank absolutely can lose if your stocks tank, since then there will be nothing backing up the loan.\"", "title": "" }, { "docid": "fd85b373ebfb5d77342806f310579e72", "text": "Your math is fine, except employers might not permit the withdrawal. You'd have to go back to their rules or contact HR to understand the withdrawals permitted.", "title": "" }, { "docid": "ee473ed573e363dc31cbc27f420ce4a4", "text": "\"I think what those articles are saying is: \"\"If you want to leave some money to charity and some to relatives, don't bequeath a Roth to charity while bequeathing taxable accounts to relatives.\"\" In other words, it's not \"\"bad\"\" to leave a Roth IRA to charity, it's just not as good as giving it to humans, if there are humans you want to give money to. In your situation, the total amount you want to leave to relatives is less than the value of your Roth. So it sounds like the advice as it applies to you is: \"\"Don't leave your relatives $30K from your taxable funds while leaving the whole Roth to charity. Instead, leave $30K of your Roth to your relatives, while leaving all the taxable funds to charity (along with the leftover $20K of the Roth).\"\" In other words, the Roth is a \"\"last resort\"\" for charitable giving --- only give away Roth money to charity if you already gave humans all the money you want to give them. (I'm unsure of the details of how you would actually designate portions of the Roth for different beneficiaries, but some googling suggests it is possible.)\"", "title": "" }, { "docid": "7e3309d191d613404bd65a9a8a47dd1f", "text": "If you are looking at long-term investments then you can look to Dheer's answer and see that it doesn't matter whether the money is large or small, the return will be the same. When it comes to shorter-term investments, it can actually pay to be a smaller investor. Consider a stock that may not be trading in high volume. If I want to take a position for 2,000 shares, I can probably buy it quite quickly without moving the market considerably. If I was managing your hypothetical portfolio opening a position for 1,000,000 shares, it can cause the price to go up significantly because I have to execute the order very carefully in order to not tip my hand to the market that I want a million shares. Algorithmic traders will see the volume increasing on those shares and will raise their asking price. High speed traders and market makers will also cause a lot of purchasing overhead. Then later when it comes time to sell, I will lose a percentage to the price drop as I start flooding the market with available shares.", "title": "" }, { "docid": "ea4c0ee7329add71086fa7685ed6091c", "text": "It will not be a problem; people regularly move larger sums. It will be reported to law authorities as large enough to be potentially of interest, but since you can explain it that's fine.", "title": "" } ]	fiqa
f03058f6674a29661c3d0c6a85415634	Personal loan to a friend procedure	[ { "docid": "18f63457e8334538d77a5766629da7ed", "text": "If this isn't a case where you would be willing to forgive the debt if they can't pay, it's a business transaction, not a friend transaction. Establish exactly what the interest rate will be, what the term of the loan is, whether periodic payments are required, how much is covered by those payments vs. being due at the end of the term as a balloon payment, whether they can make additional payments to reduce the principal early... Get it all in writing and signed by all concerned before any money changes hands. Consider having a lawyer review the language before signing. If the loan is large enough that it might incur gift taxes, then you may want to go the extra distance to make it a real, properly documented, intra-family loan. To do this you must charge (of at least pay taxes on) at least a certain minimal interest rate, and they have to make regular payments (or you can gift them the payments but you still won't up paying tax on the interest income). In this case you definitely want a lawyer to draw up the papers, I think. There are services on the web Antioch specialize in helping to set this up properly, and which offer services such as bookkeeping and monthly billing (aT extra cost) to make it less hassle for the lender. If the loan will be structured as a mortgage on the borrower's house -- making the interest deductible for the borrower in the US -- there are additional forms that need to be filled. The services can help with that too, for appropriate fees. Again, this probably wants experts writing the agreement, to make sure it's properly written for where you and the borrower live. Caveat: all the above is assuming USA. Rules may be very different elsewhere. I've done a formal intractability mortgage -- mostly to avoid gift tax -- and it wasn't too awful a hassle. Your mileage will vary.", "title": "" } ]	[ { "docid": "7972dd39bc25c4136e567baa0e8857d9", "text": "The one thing your friend needs to understand is for every dollar paid out, there is somebody paying that dollar in. The mark of a Ponzi scheme is that it feeds on itself. The stock market has trade volumes where it almost meets the definition of a Ponzi scheme. However, it deals with shares in actual production facilities (rather than only financial institutions) and provides means of production in return for large amounts of the profits. So there is someone legitimately expecting to pay back more than he gets out, in return for the availability of money at a time where he could not finance matters except by credit. With your friend's scheme, there is nobody expected to pay more than he gets out. Nail him down with that: every dollar paid out has to be paid in. Who is the one paying? At this point of time, it sounds like there will be two possible outcomes. You'll be visiting your friend in debtors' prison, or you'll visit him in criminal prison. If you highly value your friendship, you might get him out of the former with your own money. You won't be able with the latter. And if you let him exploit his standing for scamming his community, make no mistake, it will be the latter. I don't envy you.", "title": "" }, { "docid": "e27a09e389aeb2e4de4857f4d59096e7", "text": "Banks will usually look at 2 years worth of tax returns for issuing business credit. If those aren't available (for instance, for recently formed businesses), they will look at the personal returns of the owners. Unfortunately, it sounds like your friend is in the latter category. Bringing in another partner isn't necessarily going to help, either; with only two partners / owners, the bank would probably look at both owners' personal tax returns and credit histories. It may be necessary to offer collateral. I'm sorry I can't offer any better solutions, but alternative funding such as personal loans from family & friends could be necessary. Perhaps making them partners in exchange for capital.", "title": "" }, { "docid": "8125e139939bdcfbcaeb83f843bb2452", "text": "employed under the table and doesn't have a bank account If I could make that size 10,000,000 font I would. Your friend likely also isn't paying taxes. The student loan penalties will be nothing compared to what the IRS does to you. Avoid taking financial advice from that person.", "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": "4414e027b470e0bbfd52df49d5900c61", "text": "I would advise against this, answering only the first part of question #1. Borrowing and lending money among friends and family members can often ruin relationships. While it can sometimes be done successfully, this is most likely not the case. All parties involved have to approach this uniquely in order for it to work. This would include your son's future significant other. Obviously you have done very well financially, congratulations. Your view for your son might be for him to pay you off ASAP: Even after becoming a doctor, continue to live like a student until the loan is paid off. His view might be more conventional; get the car and house and pay off my loans before I am 50. He may start with your view, but two years in he marries a woman that pressures him to be more conventional. My advice would be to give if you can afford to, but if not, do not lend. If you decide to lend then come up with a very clear agreement on the repayment schedule and consequences of non-payment. You may want to see a lawyer. For the rest of it, interest payments received are taxable.", "title": "" }, { "docid": "7e36c25e1dba1eb52f81421c5381ad65", "text": "File a small claims lawsuit in the city that the person resides. The court will charge you a small fee and give you a date. They will also summons the other person to appear. Bring all the documentation that shows the following BONUS - Bring the documentation that shows them saying they will not pay you back I had to sue someone once for a very similar problem. I lent them a 6 month interest free loan. They told me to shove it after 6 months and 1 day. So I sued them. The court should accept facebook messages as proof. More than likely though your friend wont even show up which means you win by default. Here's the bad news, that was the easy part. Just because you win in court doesn't mean the money appears the next day. There are a couple ways you may have to recover your money. Best of luck to you!", "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": "8fd25adfcca35635da856d9e3f8236de", "text": "\"I can't vouch for Australian law, but in the US there is actually a recognized mechanism for \"\"in-family loans\"\" which ensures that it's all fully documented for tax purposes, including filing it as an official second mortgage. (Just did that recently in my own family, which is why I'm aware of it.) We're required to charge at least some interest (there's a minimum set, currently around 0.3%), and the interest is taxable income, and it is wise to get a lawyer to draw up the paperwork (there are a few services which specialize in this, charging a flat fee of about US$700 if the loan is standard enough that they can handle it as fill-in-the-blank), but outside of that it's pretty painless. This can also be used as a way of shifting gift limits from year to year -- if you issue a loan, and then gift the recipient with the payments each year (including the payments), you've effectively spread the immediate transfer of money over multiple years of taxes. Of course it does cost you the legal paperwork and the tax in the interest (which they're still \"\"paying\"\" out of your gift), but it can be a useful tool, and it's one that wasn't well known until recently. Again: This is all US codes, posted only for comparison (and for the benefit of US readers). It may be completely irrelevant. But it may be worth investigating whether Oz has something similar.\"", "title": "" }, { "docid": "c6dbd951582b3e30962e024dba0282d1", "text": "\"The answer to your question is...it depends. Depending on the state you, your friend, and the LLC are located in, it can be very easy to run afoul of state banking laws, or to somehow violate some other statute pertaining to the legal activities an LLC may undertake by doing something like a loan. It is not unusual (or illegal) for officers or employees of a business entity to be loaned money by the company they work for, so something of this nature wouldn't be an issue with regulatory agencies. Having your LLC loan money to a friend who isn't an employee or officer of your LLC just might not be kosher though. The best advice I can give is that you should call the state banking commission or similar agency in your state and ask them whether what you want to do is alright. The LAST thing you want is to end up with auditors or regulators sniffing around your business, even if you haven't done anything wrong, and you certainly don't want to run the risk of accidentally \"\"piercing the corporate veil\"\", as someone else here astutely pointed out. Good luck!\"", "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": "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": "d0ba3a3f52735f9f8f5be47d45351fa7", "text": "\"If you wish to lend them the money, make the check payable to the order of \"\"loan\"\", not directly to your son or daughter.\"", "title": "" }, { "docid": "6aabd62574e0e4c620672a13de2a796d", "text": "Its participating preferred with a 1x liquidation preference. Very unfriendly for the company owner. Most startups these days are seeded with convertible notes because there's less thinking about the valuation of the company; that question is booted to the series A. its also easier to draw up the legal docs; pretty much a standard loan agreement. Finally, it can be far friendlier for the owner depending on if the note is an uncapped note. This is expensive financing and your friend can definitely find cheaper money if he looks for it.", "title": "" }, { "docid": "38b1c484d23f6bd6605e7aa55bb6899f", "text": "Interest payments You can make loans to people and collect interest.", "title": "" }, { "docid": "b9d1cac00c18cae042e4afd946a53db0", "text": "You should only loan money to friends or relatives if you are fully accepting the possibility of never ever getting that money back. And in this situation it can happen that you will be forced to give him a very large loan if something bad ever happens to him. (Paying the monthly rates instead of him and expecting he will someday pay it back to you is technically the same as loaning him money). Something might happen in the future which will result in him not paying his monthly payments. Maybe not now, but in 5 years. Or 10. The economy might change, he might be out of a job, his personal values might change. A house mortgage is long term, and during that time a lot can happen.", "title": "" } ]	fiqa
b2d6df4e8e09a8273974e0d7d5587c53	Under what circumstance will the IRS charge you a late-payment penalty for taxes?	[ { "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": "46c6a641f9ed0bbdd4fd83deed88d97c", "text": "I just got hit with the late payment penalty due to a bug in the H&R Block tax program. The underpayment was only $2 and the penalty was a whopping 1 cent. The letter that informed me of the error also said that they did not consider the $2.01 worth collecting, the amount owed had been zeroed.", "title": "" }, { "docid": "6bfda63d25677223db5af3074fcd810d", "text": "In practice the IRS seems to apply the late payment penalty when they issue a written paper notice. Those notices typically have a pay-by date where no additional penalty applies. The IRS will often waive penalties, but not interest or tax due, if the taxpayer presses the issue.", "title": "" }, { "docid": "77949aaa5c2f792d03459069b783724d", "text": "Assuming US/IRS: If you filed on time and paid what you believed was the correct amount, they might be kind and let it go. But don't assume they will. If you can't file on time, you are supposed to file estimated taxes before the deadline, and to make that payment large enough to cover what you are likely to owe them. If there is excess, you get it back when you file the actual forms. If there is a shortfall, you may be charged fees, essentially interest on the money you still owe them calculated from the submission due date. If you fail to file anything before the due date, then the fees/interest surcharge is calculated on the entire amount still due; effectively the same as if you had filled an estimated return erroneously claiming you owed nothing. Note that since the penalty scales with the amount still due, large errors do cost you more than small ones. And before anyone asks: no, the IRS doesn't pay interest if you submit the forms early and they owe you money. I've sometimes wondered whether they're missing a bet there, and if it would be worth rewarding people to file earlier in order to spread out the work a bit better, but until someone sells them on that idea...", "title": "" }, { "docid": "a179b6735e2b581d1797b56142f6ba59", "text": "Years ago I mailed my personal tax return one day after the due date, and my check was deposited as normal, and I never heard anything about it. As an employer, I once sent in my employee's withheld federal taxes one day after the due date, and I later received a letter stating my penalty for being late worked out to be around $600. The letter stated that since this was my first time being late they would waive the fee. In both cases, they could have charged me a late fee if they wanted to.", "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": "eff9b179c492193e2b8154743ccd5361", "text": "Simply file an amended return to correct the mistake. This happens all the time and is a standard procedure that every legitimate tax pro can handle. You can work it out with the tax pro about whose mistake it was and who should pay for the additional service.", "title": "" }, { "docid": "0ce3c0de5cd8ce04c8a1764c39e3c46d", "text": "No, there is no special leniency given to first time tax payers. In general, this shouldn't be an issue. The IRS collects your taxes out of every one of your paychecks throughout the entire year in what is called a Withholding Tax. The amount that the IRS withholds is calculated on your W-4 Form that you file with your employer whenever you take a new job. The form helps you calculate the right number of allowances to claim (usually this is the number of personal exemptions, but depending upon if you work a second job, are married and your spouse works, or if you itemize, the number of allowances can be increased. WITHHOLDING TAX Withholding tax (also known as “payroll withholding”) is essentially income tax that is withheld from your wages and sent directly to the IRS by your employer. In other words, it’s like a credit against the income taxes that you must pay for the year. By subtracting this money from each paycheck that you receive, the IRS is basically withholding your anticipated tax payment as you earn it. In general, most people overestimate their tax liability. This is bad for them, because they have essentially given the IRS an interest free loan (and weren't able to use the money to earn interest themselves.) I haven't heard of any program targeted at first time tax payers to tell them to file a return, but considering that most tax payers overpay they should or they are giving the government a free grant.", "title": "" }, { "docid": "83b0ba3e5841488f99a591f1984b9dc7", "text": "\"Your question does not say this explicitly, but I assume that you were once a W-2 employee. Each paycheck a certain amount was withheld from your check to pay income, social security, and medicare taxes. Just because you did not receive that amount of money earned does not mean it was immediately sent to the IRS. While I am not all that savvy on payroll procedures, I recall an article that indicated some companies only send in withheld taxes every quarter, much like you are doing now. They get a short term interest free loan. For example taxes withheld by a w-2 employee in the later months of the year may not be provided to the IRS until 15 January of the next year. You are correct in assuming that if you make 100K as a W-2 you will probably pay less in taxes than someone who is 100K self employed with 5K in expenses. However there are many factors. Provided you properly fill out a 1040ES, and pay the correct amount of quarterly payments, you will almost never owe taxes. In fact my experience has been the forms will probably allow you to receive a refund. Tax laws can change and one thing the form did not include last year was the .9% Medicare surcharge for high income earners catching some by surprise. As far as what you pay into is indicative of the games the politicians play. It all just goes into a big old bucket of money, and more is spent by congress than what is in the bucket. The notion of a \"\"social security lockbox\"\" is pure politics/fantasy as well as the notion of medicare and social security taxes. The latter were created to make the actual income tax rate more palatable. I'd recommend getting your taxes done as early as possible come 1 January 2017. While you may not have all the needed info, you could firm up an estimate by 15 Jan and modify the amount for your last estimated payment. Complete the taxes when all stuff comes in and even if you owe an amount you have time to save for anything additional. Keep in mind, between 1 Jan 17 and 15 Apr 17 you will earn and presumably save money to use towards taxes. You can always \"\"rob\"\" from that money to pay any owed tax for 2016 and make it up later. All that is to say you will be golden because you are showing concern and planning. When you hear horror stories of IRS dealings it is most often that people spent the money that should have been sent to the IRS.\"", "title": "" }, { "docid": "73c009c7bf9683f89cbf299e3b45b5ee", "text": "I'm also self employed. Your circumstances may be different, but my accountant told me there was no reason to pay more than 100% of last years' taxes. (Even if this years' earnings are higher.) So I divide last year by 4 and make the quarterlies. As an aside, I accidentally underpaid last year (mis-estimated), and the penalty was much smaller than I expected.", "title": "" }, { "docid": "e7e811dc686db34ea83ccc6787d733ca", "text": "\"The short answer is that the IRS knows this is an issue, so they are prepared to deal with the \"\"discrepancies.\"\" The filer does not need to something special to call it to their attention. Keep good records and consistently report according to your accounting processes. Exactly how the IRS resolves / flags this, I don't know. Maybe someone else can answer, but you can imagine that if they track you for multiple years they should have some idea of how many dollars are rolling over and whether you might have \"\"forgotten\"\" to report something from a few years ago that happened at a year-end break.\"", "title": "" }, { "docid": "2e875c245ee0e24b07668aa19bdc9754", "text": "\"The money gets sent to the IRS through the EFTPS system. Depending on the amounts, the employers are required to deposit it on a monthly/semi-weekly basis, so they don't get to keep the tax money for long. Failure to deposit the payroll taxes on time is one of the most heavily penalized IRS offenses. This area of violations is called \"\"trust fund violations\"\". It is one of the very few areas in which employees may be liable for corporate misdoings (i.e.: an HR or accounting manager responsible for payroll may be personally liable for trust fund violations).\"", "title": "" }, { "docid": "ef0a5efb611d5ac6305005c10dcb6de1", "text": "The only way you will incur underpayment penalties is if you withhold less than 90% of the current year's tax liability or 100% of last years tax liability (whichever is smaller). So as long as your total tax liability last year (not what you paid at filing, but what you paid for the whole year) was more than $1,234, you should not have any penalty. What you pay (or get back) when you file will be your total tax liability less what was withheld. For example, you had $1,234 withheld from your pay for taxes. If after deduction and other factors, your tax liability is $1,345, you will owe $111 when you file. On the other hand, if your tax liability is only $1,000, you'll get a refund of $234 when you file, since you've had more withheld that what you owe. Since your income was only for part of the year, and tax tables assume that you make that much for the whole year, I would suspect that you over-withheld during your internship, which would offset the lack of withholding on the other $6,000 in income.", "title": "" }, { "docid": "0df54c4fd766fcffc01e0aaeb445237d", "text": "The IRS allows filers to attach a statement explaining the reason for late filing. I have had clients do this in the past, and there has never been an issue (not that that guarantees anything, but is still good to know). Generally, the IRS is much more lenient when a taxpayer voluntarily complies with a filing requirement, even if it's late, than if they figure it out themselves and send a notice.", "title": "" }, { "docid": "6936be415fe93cd7e0a9c018dfd788e4", "text": "The difference is that if you end up owing more than $1k in taxes come April, you will be mandated for withholding next year (that's at the federal level, I don't know CA law in particular); and if this isn't the first time you've done it, you may owe additional penalties as well. Your actual tax liability comes out the same either way; you're probably better off just letting Uncle Sam have an interest-free loan for a few months and getting the difference back in April, than risking it; but if you've done the math and know you'll only owe exactly $999.99, you can do what you want. :)", "title": "" }, { "docid": "21eab6a9b9de9eb93d1808da1b921371", "text": "You are only responsible for IRS debt that you owe from returns that you have filed for yourself. The back taxes that your dependent owes are between him and the IRS.", "title": "" }, { "docid": "34fe1827bcc69fdc3fcd8379b228bad4", "text": "As others have said, make sure you can and do file your taxes on a cash basis (not accrual). It sounds like it's very unlikely the company is going to issue you a 1099 for invoices they never paid you. So you just file last year's taxes based on your income, which is the money you actually received. If they do pay you later, in the new year, you'll include that income on next year's tax return, and you would expect a 1099 at that time. Side note: not getting paid is unfortunately common for consultants and contractors. Take the first unpaid invoice and sue them in small claims court. After you win (and collect!), tell them you'll sue them for each unpaid invoice in turn until they pay you in full. (You might need to break up the lawsuits like that to remain under the small claims limit.)", "title": "" }, { "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": "aa534b85bc1b330283961134171101c9", "text": "In the US we have social security taxes, where for a full time employee the company pays half and the employee pays half. When you work as a business, what we call 1099 for the form that the wages are reported on, then the contractor pays the full amount of social security tax. There are times when a contractor can negotiate a higher rate because the company does not have to pay that tax. However, most of the time the company just prefers to negotiate the rate based on your value. If you are a 60K year guy, then that is what they will pay you. From the company's perspective it does not matter what your tax rate is, only the value you can bring to the company. If you can add about 180K to the bottom line, then they will be happy to pay you 60K, and you should be happy to get it. Here in the US a contractor can expect to make about 7.5% more of an equivalent employee because of the social security tax savings to the company. However, not all companies are willing to provide that in compensation. Some companies see the legal and administrative costs of employees as normal, and the same costs with contractors as extra so they don't perceive a cost savings. There are other things that would preclude employers from giving the bump although it is logical to do so. First you will really have to feel out your employer for the attitude on the subject. Then I would make a logical case if they are open to providing extra compensation in return for tax savings. If I am an employee at 60K, you would also have to pay the government 18K. How about you pay me 75K as a contractor instead? That would be a great deal for all in the US.", "title": "" }, { "docid": "a94a1e65b2db8127bd4c8dec7cc095b6", "text": "The reason to do a stock split is to get the price of the stock down to an affordable range. If your stock costs $100,000 per share, you are seriously cutting in to the number of people who can afford to buy it. I can think of two reasons NOT to do a stock split. The biggest is, Why bother? If your stock is trading at a reasonable price, why change anything? It takes time and effort, which equals money, to do a stock split. If this serves no purpose, you're just wasting that effort. The other reason is that you don't want to drive your stock price down too low. Low prices are normally associated with highly speculative start-up companies, and so can give a wrong impression of your company. Also, low prices make it difficult for the price to reflect small changes. If your stock is trading at $10.00, a 1/2 of 1% change is 5 cents. But if it's trading at $1.50, a 1/2 of 1% change is a fraction of a penny. Does it go up by that penny or not? You've turned a smooth scale into a series of hurdles.", "title": "" } ]	fiqa
830e450c49df21b7881552882611ad10	Is VAT applied when a tradesman charges for materials?	[ { "docid": "3af1d7a148fad877b7f7b63019357b09", "text": "The plumber will apply for and receive a refund of the amount of VAT he paid on the purchase amount. That's the cornerstone of how VAT works, as opposed to a sales tax. So for example: (Rounded approximate amounts for simplicity) Now, at each point, the amount between (original cost VAT) and (new VAT) is refunded. So by the end, a total of £3 VAT is paid on the pipe (not £6.2); and at each point the business 'adding value' at that stage pays that much. The material company adds £1 value; the producer adds £4 value; the supplier adds £5 value; the plumber adds £5 value. Each pays some amount of VAT on that amount, typically 20% unless it's zero/reduced rated. So the pipe supplier pays £1 but gets a £0.2 refund, so truly pays £0.8. The plumber pays £3 (from your payment) but gets a £2 refund. So at each level somebody paid a bit, and then that bit is then refunded to the next person up the ladder, with the final person in the chain paying the full amount. The £0.2 is refunded to the producer, the £1 is refunded to the supplier, the £2 is refunded to the plumber.", "title": "" } ]	[ { "docid": "a90eba7df1e05c2d0b73a98ba3ababf1", "text": "Nope pay the employer back the due does not involve any tax. Just keep a record of the transaction so that its available as reference.", "title": "" }, { "docid": "258c76938c7fe7a967057eda50b957c9", "text": "A rather good IRS paper on the topic states that a donation of a business' in-kind inventory would be Under IRC 170(e)(1), however, the fair market value must be reduced by the amount of gain that would not be long-term capital gain if the property had been sold by the donor at the property's fair market value (determined at the time of the contribution). Under this rule, deductions for donated inventory are limited to the property's basis (generally its cost), where the fair market value exceeds the basis. There are references to IRC regulations in a narrative context you may find helpful: This paper goes on for 16 pages describing detailed exceptions and the political reasons for the exceptions (most of which are concerned with encouraging the donation of prepared food from restaurants/caterers to hunger charities by guaranteeing a value for something that would otherwise be trashed valueless); and a worked out example of fur coats that had a cost of goods of $200 and a market value of $1000.", "title": "" }, { "docid": "79f5d1ff8d167d840eeabbcb9e7b97e3", "text": "There's nothing illegal in hiring your friends to manage your property or provide you services, and it is definitely deductible. There's nothing specific to reference here, this is a standard deduction for a landlord just as any. I mentioned 1099 in the comments - if the total is over $600 and your friend is not a corporation, then you should issue 1099. That would provide you the necessary substantiation of the deduction (of course you need to keep some documentation that shows the relation between the money paid and the services provided, like a contract, or invoice or receipt). You can (but don't have to) issue 1099 for lower amounts as well. If you don't - you'll need to keep more documents as substantiation - cached checks, documents about the agreement and the amounts, etc. In addition, your deduction may be disallowed if your friend doesn't declare this as taxable income (issuing 1099 helps here since your friend will be forced to declare it, otherwise it will be recorded as a mismatch by the IRS and trigger an audit). As to reimbursements - that would go into the same bucket. They'll have to deduct their expenses from that income on their own taxes. So if you give them $300 for the work, $300 for the miles, and $300 for the materials they bought - you issue the 1099 for $900, and let them deduct the $600 on their own Schedule C.", "title": "" }, { "docid": "ebe7bab9b048af3bcc0e783606e7074e", "text": "But why can't two companies exchange goods directly without paying VAT? This would make the famous carousel fraud scam impossible and businesses won't have to deal with complicated refunds. Sales tax in the United States works as you describe. Sales tax is charged only to end customers, not to businesses that themselves charge sales tax. But this means that a criminal business can charge tax and just pocket it unless someone else reports it. They can also evade income tax the same way. Not to mention other issues like cross jurisdiction taxes (e.g. internet sales often evade sales tax). The whole point of a Value Added Tax (VAT) is that they charge at each level. This creates a system where each buyer reports the tax paid to the seller so as to be able to deduct it. So the seller has to pay the VAT that they charged. Or the tax authorities know and can revoke their VAT license. If only the end user is charged tax, then fraud is easier than under a VAT. So easy, I doubt they have a special name for it. The fraudulent business just collects tax from end users and disappears. Or simply fails to record those transactions. You could call it missing transaction record fraud, but why bother? It's just straight up tax fraud. The complexity of the carousel fraud arises from the difficulty of evading a VAT.", "title": "" }, { "docid": "a5e5d2517a9b70e783fc80f34f3ce7f7", "text": "What you are doing is barter trade. Most countries [if not all] would tax this on assumed fair value. There are instances where countries may relax this norm in border areas for a small amount. Barter is not just for gold – one can virtually do this for any goods, i.e. sell garments in exchange for oil, sell electronic chips in exchange for consumer goods, etc. Quite a few business would flourish doing this and not exchange currency at all, hence the need for government to tax on the [assumed / calculated / arrived/ derived] fair value. A word of caution: at times this may not be fair at all and may actually cost more than had one done a transaction using currency.", "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": "3d26ef83f96ca1f239f366e28a6761f8", "text": "I don't think so, but: - It depends on the product, some products are simple (Vodka) others have plenty of restrictions (Plutonium). So without you naming what your product is nobody can help you. - Regulation differ for each country. Greece and Italy are different countries. For most products you pay some import duty, the applicable VAT and some customs fees and all is well.", "title": "" }, { "docid": "a254f084d7f18a44be22b255ec156e46", "text": "\"You cannot \"\"claim back\"\" VAT. What happens is that if you sell goods with VAT and charge customers VAT, you would have to send that VAT straight to HMRC, but if your business itself paid VAT, then you already paid VAT, so you have to send less. As an example, if you send an invoice for £10,000 plus £2,000 VAT, and you paid yourself £500 VAT on business related expenses, then you need to send £2,000 - £500 = £1,500 to HMRC. But if you don't send invoices including VAT, then you owe HMRC £0. Any VAT you paid on business related expenses is lost; HMRC won't pay you money. BTW. Only VAT on business related expenses can be deducted. So if you want to be \"\"smart\"\", register for VAT and get the VAT on your weekly shopping bill refunded, forget it.\"", "title": "" }, { "docid": "1a47af56d5b794e7f58cdb39117264bd", "text": "\"TL;DR - my understanding of the rules is that if you are required to register for GST (earning more than $75k per annum), you would be required to pay GST on these items. To clarify firstly: taxable income, and goods and services tax, are two different things. Any income you receive needs to be considered for income tax purposes - whether or not it ends up being taxable income would be too much to go into here, but generally you would take your expenses, and any deductions, away from your income to arrive at what would generally be the taxable amount. An accountant will help you do this. Income tax is paid by anyone who earns income over the tax free threshold. By contrast, goods and services tax is a tax paid by business (of which you are running one). Of course, this is passed on to the consumer, but it's the business that remits the payment to the tax office. However, GST isn't required to be charged and paid in all cases: The key in your situation is first determining whether you need to register for GST (or whether indeed you already have). If you earn less than $75,000 per year - no need to register. If you do earn more than that through your business, or you have registered anyway, then the next question is whether your items are GST-free. The ATO says that \"\"some education courses [and] course materials\"\" are GST-free. Whether this applies to you or not I'm obviously not going to be able to comment on, so I would advise getting an accountant's advice on this (or at the very least, call the ATO or browse their legal database). Thirdly, are your sales connected with Australia? The ATO says that \"\"A sale of something other than goods or property is connected with Australia if ... the thing is done in Australia [or] the seller makes the sale through a business they carry on in Australia\"\". Both of these appear to be true in your case. So in summary: if you are required to register for GST, you would be required to pay GST on these items. I am not a financial advisor or a tax accountant and this is not financial advice.\"", "title": "" }, { "docid": "598447d7fc5f43f2a053c5c29cf3c2a4", "text": "It's called bartering and the IRS has a page titled Four Things to Know About Bartering. The summary is - The bottom line is this is taxable.", "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": "8a36f5394cf6bbe4093906c74e603f2f", "text": "Depends on the state, in Texas you should charge sales tax because the shipment is going to a freight forwarder in Texas. That being said, once you have the bill of lading you can have your tax credited by the vendor. It is one of the documents the state will except in lieu of sales tax for exports. There are five. You can find this info at the Comptrollers website. I would validate that you are being charged sales/use tax and not withholding tax, withholding would be related to your country. Doc requirements for export vary from state to state.", "title": "" }, { "docid": "83ab3e868306499be668600aaafc67c9", "text": "\"The Dutch tax office is pretty decent, although slightly overburdened. Don't expect a lot of help, but they're not generally known for making a lot of problems. Digital copies are fine, for instance. They will send you your first VAT notice. You probably would have known if your company would have been incorporated, so I'll assume you're just trading as a natural person. That means you still have to file VAT returns, but the business income is just filed annually as \"\"other income\"\". For the VAT part, you'll need to invoice your customers. Keep a copy of those invoices for your own bookkeeping, and keep track of the matching customer payments. Together these form the chief evidence of your VAT obligation. You also have a VAT deduction from your purchases (it's a Value-Added Tax, after all). Again, keep receipts. The usual VAT period is 3 months, so you'd pay VAT 4 times a year. But if you would pay less than 1883 euro, you might not need to pay at all and just need to file annually The income part is easy with the receipts you had for VAT purposes anyway. Dutch Tax Office, VAT, in English\"", "title": "" }, { "docid": "9757bb5c63f8eaefdd7cb9c62f6da0b4", "text": "\"The HMRC has a dedicated self-help/learning site that is helpful here: It's important to tell HMRC that you are self-employed as soon as possible. If you don't, you may have to pay a penalty. You don't want to pay more to HMRC than you have to as it is a waste of your money. Your business has started when you start to advertise or you have a customer to buy your goods or services. It is at this point that your business is 'trading'. You cannot register before you start trading. For example, if you advertise your business in the local newspaper on 15 January but do not get your first customer until 29 March; in this case, you have been trading since 15 January. You must tell HMRC within six months of the end of the tax year in which you start self-employment. You must therefore register by 5 October. But it's best to register well before this so that you do not forget to do so. The HMRC also has a YouTube channel with help videos, and \"\"Am I Trading or Not?\"\" might be of particular interest to you. Most of the registration is based around the concept of starting to work with the intent to make a profit. By the letter of law and regulations, you should register within six months of the end of the tax year you started to avoid any potential penalty. However note that the situation is different based upon your intent. If you begin making/putting up videos online as a hobby with the hope that you can make something to help you defray the basic costs involved, and the total amount you make is relatively small (say, less than 500 pounds), you will not be classified as \"\"trading\"\" and likely have no need to register with HMRC. As soon as you begin to get in regular payments, maybe a single payment of a significant size, or multiple payments for a similar service/item, you are vastly more likely to need to register. From my reading you would likely be safe to begin putting up videos without registration, but if you begin spending a large portion of your time over an extended period (multiple months) and/or begin getting payments of any notable size then you should likely register with the appropriate services (HMRC, etc). As is the case in both the USA and UK, simple registration is pretty cheap and the costs of little/no income are usually pretty minor. Also note that the HMRC trading and self-employment regulations are unusual compared to many US laws/institutions, in that you are explicitly permitted to begin doing something and only register later. So if you start doing videos for an entire tax year + 5 months and make nothing significant, you'd seemingly be fine to never register at all.\"", "title": "" }, { "docid": "cf29d354336d2585c9fbaef99b4ae97e", "text": "\"The bill proposed to \"\"Under existing law, employers may take tax deductions for the costs associated with moving jobs out of the country. The proposed legislation would have eliminated that, and used the resulting new revenue to fund a 20 percent tax credit for the costs companies run up \"\"insourcing\"\" labor back into the U.S.\"\" From http://abcnews.go.com/m/blogEntry?id=16816660 as found by beermethestrength. I will explain this in an example below. Lets use allen edmonds. I manufacture shoes and sell them in the US. The facts we will assume is Revenue or sales is $100. Manufacturing cost is $50. Tax rate is 10%. Therefore, Profit before tax is $100 -$50 = $50. Tax is $5. Net profit is $45. However, suppose offshoring to Canada saves money. They say please and thank you at every opportunity and the positive work environment allows them to work faster. Correspondingly to make the same number of shoes our costs has decreased because we pay less for labour. The manufacturing cost decreases to $30. However, we incur costs to move such as severance payments to layoff contracted employees. (I promise to hire you and pay $1 a year for 2 years. I fire you at the end of the first year. To be fair, I pay you $1) However, it can be any legitimate expense under the sun. In this case we suppose this moving cost is $10. Revenue or sales is $100. Manufacturing cost is $30. Moving cost is $10. Tax rate is 10%. Profit before tax is $100 -$40 = $60. Tax is $6. Net profit is $54. Yay more jobs for Canadians. However, the legislation would have changed this. It would have denied that moving expense if you were moving out of the country. Therefore, we cannot consider $10 worth of expenses for tax purposes. Therefore Revenue or sales is $100. Manufacturing cost is $30. Tax rate is 10%. Profit before tax for tax purposes is $100 - $30 = $70. Tax is $7. Net profit for tax purposes is $63. However, my accounting/net/real profit is $53. I must deduct the $10 associated with moving. The difference between the two scenarios is $1. In general our net profit changes by our moving cost * our tax rate. There is no tax break associated with moving. In Canadian tax, any business expense in general can be deducted as long as it is legitimate and not specifically denied. I am uncertain but would assume US tax law is similar enough. Moving expenses in general are legitimate and not specifically denied and therefore can be deducted. Offshoring and onshoring are seen as legitimate business activities as in general companies do things to increase profit. (forget about patriotism for the moment). The bill was to make offshoring more expensive and therefore fewer companies would find offshoring profitable. However, republicans defeated this bill in congress. Most likely the house For completeness let us examine what would happen when we onshore (bring jobs from canada to us :( ). In our example, silly unions demand unrealistically high wages and increase our cost of manufacturing to $50 again. We decide to move back to the US because if it is the same everywhere for the sake of silly national pride we move our jobs back to the US. We incur the same moving cost of $10. Therefore we have Revenue or sales is $100. Manufacturing cost is $50. Moving cost of $10. Tax rate is 10%. Profit before tax for tax purposes is $100 - $60 = $40. Tax is $4. However, we are given a 20% tax credit for moving expense. $10 * .2 = 2. The government only assess us tax of 2. Net profit is $38. Tax credits are a one time deal so profit in the future will be $100 -$50 - $5 = $45. Same as the first example. insourcing = onshoring , outsourcing = offshoring for the purposes of this article. Not quite the same in real life.\"", "title": "" } ]	fiqa
38f68f670f10ecfc324ae2e7568f7748	Do I need to write the date on the back of a received check when depositing it?	[ { "docid": "3b492f20ffd670ec5f37f67561c177c5", "text": "\"You do not need to write anything on the second line. There are a variety of helpful things that you can add, e.g.: For Deposit Only. This tells the bank to deposit the check into your account and ignore other signatures. Your account number. Especially useful when added to \"\"For Deposit Only\"\". A countersignature. This tells the bank to pay the check to someone other than you. Countersigned checks used to be much more common than they are now. Someone who didn't have a bank account might ask someone who did to cash a check for them. See also: Four ways to endorse a check which gives the correct format for endorsing a check in these ways.\"", "title": "" }, { "docid": "2be0465c8f47c298571bd3e30b433808", "text": "\"Changed to answer match the edited version of the question No, you do not need to write the date of your endorsement, but you can choose to do so if you want to. The bank stamp on the back will likely have the date and perhaps even the exact time when the check was deposited. The two lines are there in case you want to write something like \"\"For deposit only to Acct# uvwxyz\"\" above your signature (always a good idea if you are making the deposit by sending the paper check (with or without a deposit slip) by US mail or any other method that doesn't involve you handing the check to a bank teller). If you are wanting to get encash the check, that is, get cash in return for handing the check over to the bank instead of depositing the check in your account, then the rules are quite a bit different.\"", "title": "" }, { "docid": "fd37e41c50ea2a8d652fddf4c8deb8b2", "text": "\"Let me just add that while you don't need to write the date received on the back of the check, you could. Why? Let's say someone was late in paying you and you wanted to document the fact that they were late. I've had late-paying customers send me a check dated on the due date but really they just pre-dated the check and sent it 60 days past-due. So let's say I want to establish and document the pattern in case it becomes a future legal issue. When you deposit or cash a check, an image of the front and back is made and the person or company who issued the check will have those images stored as part of their transaction history. (It used to be that the original, physical, cancelled check was returned to the payer, but that was another era.) So write the date received on the back next to the endorsement, endorse the check, and take a photo of the front and back (along with the postmark on the envelope) to document that they are a late payer. This way, if it ever becomes a \"\"he said she said\"\" issue you can easily show they have a history of paying late. If the payer looks at their check images they'll see your received date note next to the endorsement. Granted, this is a lot of trouble for a unique situation. In 20+ years of running a business I've actually had the foresight to do this a handful of times with habitual offenders, and in (only) one case did it come in handy later on. But boy was I glad to have those photos when I needed them.\"", "title": "" } ]	[ { "docid": "41942b71a95f019b68ead8e85ef4acdc", "text": "Just have the associate sign the back and then deposit it. It's called a third party cheque and is perfectly legal. I wouldn't be surprised if it has a longer hold period and, as always, you don't get the money if the cheque doesn't clear. Now, you may have problems if it's a large amount or you're not very well known at the bank. In that case you can have the associate go to the bank and endorse it in front of the teller with some ID. You don't even technically have to be there. Anybody can deposit money to your account if they have the account number. He could also just deposit it in his account and write a cheque to the business.", "title": "" }, { "docid": "e5bd30df315f45d3433c7b6140119124", "text": "\"I'm no accounting expert, but I've never heard of anyone using a separate account to track outstanding checks. Instead, the software I use (GnuCash) uses a \"\"reconciled\"\" flag on each transaction. This has 3 states: n: new transaction (the bank doesn't know about it yet), c: cleared transaction (the bank deducted the money), and y: reconciled transaction (the transaction has appeared on a bank statement). The account status line includes a Cleared balance (which should be how much is in your bank account right now), a Reconciled balance (which is how much your last bank statement said you had), and a Present balance (which is how much you'll have after your outstanding checks clear). I believe most accounting packages have a similar feature.\"", "title": "" }, { "docid": "4fd0d70975a9e25e6f4df9b653ffceee", "text": "\"I cannot answer the original question, but since there is a good deal of discussion about whether it's credible at all, here's an answer that I got from Bank of America. Note the fine difference between \"\"your account\"\" and \"\"our account\"\", which does not seem to be a typo: The payment method is determined automatically by our system. One of the main factors is the method by which pay to recipients prefer to receive payments. If a payment can be issued electronically, we attempt to do so because it is the most efficient method. Payment methods include: Electronic: Payment is sent electronically prior to the \"\"Deliver By\"\" date. The funds for the payment are deducted from your account on the \"\"Deliver By\"\" date. Corporate Check: This is a check drawn on our account and is mailed to the pay to recipient a few days before the \"\"Deliver By\"\" date. The funds to cover the payment are deducted from your account on the \"\"Deliver By\"\" date. *Laser Draft Check: This is a check drawn on your account and mailed to the pay to recipient a few days before the \"\"Deliver By\"\" date. The funds for the payment are deducted from your account when the pay to recipient cashes the check, just as if you wrote the check yourself. To determine how your payment was sent, click the \"\"Payments\"\" button in your Bill Pay service. Select the \"\"view payment\"\" link next to the payment. Payment information is then displayed. \"\"Transmitted electronically\"\" means the payment was sent electronically. \"\"Payment transaction number\"\" means the payment was sent via a check drawn from our account. \"\"Check number\"\" means the payment was sent as a laser draft check. Each payment request is evaluated individually and may change each time a payment processes. A payment may switch from one payment method to another for a number of reasons. The merchant may have temporarily switched the payment method to paper, while they update processing information. Recent changes or re-issuance of your payee account number could alter the payment method. In my case, the web site reads a little different: Payment check # 12345678 (8 digits) was sent to Company on 10/27/2015 and delivered on 10/30/2015. Funds were withdrawn from your (named) account on 10/30/2015. for one due on 10/30/2015; this must be the \"\"corporate check\"\". And for another, earlier one, due on 10/01/2015, this must be the laser draft check: Check # 1234 (4 digits) from your (named) account was mailed to Company on 09/28/2015. Funds for this payment are withdrawn from your account when the Pay To account cashes the check. Both payments were made based on the same recurring bill pay payment that I set up manually (knowing little more of the company than its address).\"", "title": "" }, { "docid": "b08d9cfb180251cd9d2a024e09a96934", "text": "If it doesn't seem that important, why bother blacking the name out? For the effort, it might cost you less in your time to have the checks reprinted. There's no way to know what all banks would do with a check that has a name crossed out, but most would ignore it. Most checks are processed automatically. Signatures are not verified, post-dated checks can usually still be deposited. Occasionally you'll have a bank or merchant reject a check, but don't expect that to be the norm.", "title": "" }, { "docid": "bfd3eb0b7e5e8a780a7c355f643759a2", "text": "\"Legally, a check just needs to have a certain list of things (be an instruction to one's bank to pay a specific amount of money to bearer or to a specific entity, have a date, have a signature, etc.) There are anecdotes around of a guy depositing a junk mail check and it accidentally qualifying as a real check (which he turned into a live show), or of writing a check on a door, cow, or \"\"the shirt off your back\"\". What kind of checks your bank will process is technically up to them. Generally, if you get your blank checks printed up by any reputable firm, they'll have similar information in similar places, as well as the MICR line (the account and routing number in magnetic ink on the bottom) to allow for bank to process the checks with automated equipment. As long as it's a standard size, has the MICR line, and has the information that a check needs, your bank is likely to be fine with it. So, there are some standards, but details like where exactly the name of the bank is, or what font is used, or the like, are up to whoever is printing the check. For details on what standards your bank requires in order to process your checks, you'd have to check with your bank directly. Though, it wouldn't surprise me if they just directed you to their preferred check printer provider, as they know that they accept their check format fine. Though as I said, any reputable check printer makes sure that they meet the standards to get processed by banks without trouble. Unless you're a business that's going to be writing a lot of checks and pay a lot of fees for the privilege, a bank is not likely to want to make exceptions for you for your own custom-printed octagonal checks written in ancient Vulcan.\"", "title": "" }, { "docid": "3c3423be0fdb44cbd018bfe813fda469", "text": "ACH transfers are reversible and traceable. So what's stopping them is the ease and the speed with which they would be caught. When you give a check - you have to provide some information to the payee so that they could cash it. You can't withhold the bank or the account number - how would they charge you? So it has to be on it, and if it is on it - it can be put on any other (fake) check. That is why checks come also with your signature, and are always available for you to inspect when they're cashed. If you notice something out of the ordinary (check you didn't give? ACH transfer you didn't authorize?) on your statement - it is your responsibility to notify the bank within X period of time (60 days, I think) of the statement, and it will be dealt with. So the best way to protect yourself would be to keep an eye on your account and verify that the transactions that you see are all authorized, and do it frequently. Keeping large amounts of cash on your checking account is never a good idea, regardless. Also, since checks are inherently unsafe - try to only give checks to people you trust, and use bill-pay or credit cards with anyone else.", "title": "" }, { "docid": "a604457a8b2691dc2a260e9b318da026", "text": "\"In general, a lack of endorsement (meaning nothing written by the receiver on the back of the check) is equivalent to it being endorsed \"\"as deposit only\"\" to a bank that the depositor has an account with. (See Uniform Commercial Code §4-205.) That is, the bank that receives a deposit without any endorsement promises to the banks that process the check along the line all the way back to your bank, that they properly deposited the money into the account of the entity that the check was made out to. With checks being processed with more and more automation, it's getting fairly common for there to be little writing needed on the check itself, as the digital copy gets submitted to the banking system for clearing. If you're concerned about there being some sort of fraud, that perhaps the entity that you're sending money to isn't the ones that should be getting it, or that they're not actually getting the money, or something like that, that's really an entirely different concern. I would expect that if you were saying that you paid something, and the payee said that you hadn't, that you would dispute the transaction with your bank. They should be able to follow the electronic trail to where the money went, but I suspect they only do so as part of an investigation (and possibly only in an investigation that involved law enforcement of some type). If you're just curious about what bank account number your deposit went into, then it just looks like you're the one trying to commit some sort of fraud (even if you're just being curious), and they don't have much incentive to try to help you out there.\"", "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": "79cf9bb9c76a12e5bb6ccf3b1186e6be", "text": "\"Firstly, it isn't so generous. It is a win-win, but the bank doesn't have to mail me a free box of checks with my new account, or offer free printing to compete for my business. They already have the infrastructure to send out checks, so the actual cost for my bank to mail a check on my behalf is pretty minimal. It might even save them some cost and reduce exposure. All the better if they don't actually mail a check at all. Per my bank Individuals and most companies you pay using Send Money will be mailed a paper check. Your check is guaranteed to arrive by the delivery date you choose when you create the payment. ... A select number of companies–very large corporations such as telecoms, utilities, and cable companies–are part of our electronic biller network and will be paid electronically. These payments arrive within two business days... So the answer to your question depend on what kind of bill pay you used. If it was an electronic payment, there isn't a realistic possibility the money isn't cashed. If your bank did mail a paper check, the same rules would apply as if you did it yourself. (I suppose it would be up to the bank. When I checked with my bank's support this was their answer.) Therefore per this answer: Do personal checks expire? [US] It is really up to your bank whether or not they allow the check to be cashed at a later date. If you feel the check isn't cashed quickly enough, you would have to stop payment and contact whoever you were trying to pay and perhaps start again. (Or ask them to hustle and cash the check before you stop it.) Finally, I would bet a dime that your bank doesn't \"\"pre-fund\"\" your checks. They are just putting a hold on the equivalent money in your account so you don't overdraw. That is the real favor they do for you. If you stopped the check, your money would be unfrozen and available. EDIT Please read the comment about me losing a dime; seems credible.\"", "title": "" }, { "docid": "9c8011576a486a39fc265ddc0e755997", "text": "I tried to find that out once, and learned 'theoretically never'. The reason is that the guy who gave you the check (name him guy-1) might have deposited a check from guy-2 a day before, and without that money, his check will bounce. Now guy-2 might have deposited a check from guy-3 a day before, and without that money, his check will bounce. Repeat for a while, and then bounce the check from guy-99, and it takes the banks months to unravel it. Yes, improbable. But. A friend working in a bank explained me that, he had seen chains of three and four unravel, which took 20+ days.", "title": "" }, { "docid": "8632e74a64993d3efaae90929599b200", "text": "\"In absence of complete information, I can only speculate that your phrases We both endorsed the cheque, and especially since the name on the cheque doesn't seem to be the name of the person I spoke with. mean that the check was payable to Jane Doe but was endorsed by someone you know as Wade Roe using language such as \"\"Pay to the order of user6344\"\" and then you endorsed it as something like \"\"For deposit only to Acct# 1234567890\"\" and gave it to the bank teller with a deposit slip for Acct# 1234567890. Presumably Wade Roe did not accompany you to the bank and the bank teller did not notice that the check was not endorsed to you by Jane Doe, or she did go with you to the bank but the teller did not check her ID when she endorsed the check. In any case, you, as a customer of the bank, are definitely on the hook in the sense that you in effect guaranteed the validity of Wade Roe's endorsement of the check payable to Jane Doe. You presented the check to the bank as a legitimate check that you were legitimately entitled to deposit in your account. In effect, if fraud was committed, you committed the fraud by depositing a bum check. As all the other answers have said, you need to go down to the bank and talk to a bank officer, preferably the manager, right away. Don't go to a teller (even though in many banks, the tellers have job titles like assistant vice-president.\"", "title": "" }, { "docid": "b621ce2d0edac5bc21245dfd860b2257", "text": "It probably doesn't matter since your credit and your checking are at the same institution, but I don't like to let my credit auto draft my checking. I always do it the other way around (and keep them at different places) I feel like there is more control when my money is gone that way.", "title": "" }, { "docid": "06d8ab67711673601cf3eaaf45b9519a", "text": "\"You can try writing on the back of the check, in the signature area, \"\"For deposit only to account xxxxxxxxx\"\", leaving room for the signature. This may or may not be legally binding, but it states your intnt and is in a form the bank will recognize.\"", "title": "" }, { "docid": "ab4e544caa7e8c7379f2f5832b9df854", "text": "\"Based on past case law, a check made payable to qualified charity and delivered (e.g., placed in the mail on 12/31 would count as delivered as it is out of the hands of the donor) would fall under the \"\"constructive receipt doctrine\"\". However, for non-charitable gifts (e.g., gifts to family members) it is the date the check is cashed (honored by the receiving bank). This is important as the annual gift exclusion is just that \"\"Annual\"\". Therefore, if I gift my child $14,000 by writing a check on 12/31/2014 but they deposit it on 1/3/2015 then I have used my annual gift exclusion for 2015 and not 2014. This means I could not gift them anything further in 2015. BTW the annual gift amount is for ALL gifts cash and non-cash. Most people don't seem to realize this. If I give $14,000 of cash to my child and then also give them Christmas gifts with a value of $1,000 I have exceeded my annual gift exclusion to that child. Usually there are ways around this issue as I can give $14,000 to each and every person I want and if married my spouse can do the same. This allows us to give $14,000 from each of us to each child plus $14,000 from each of us to their spouse if married and $14,000 from each of us to each of their children if they have any.\"", "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": "" } ]	fiqa
bef6e29e97f5a4964d66ffde0ba5c14e	What are the pitfalls of loaning money to friends or family? Is there a right way to do it?	[ { "docid": "2324f4a3c1108e6b79337b075503b0e5", "text": "There are two levels to consider here: That said, before loaning/giving anyone money ask yourself if it is good for them. If they have problems managing their money, or holding down a job, and you give them money, they are just going to come back for more later. In this type of situation, you shouldn't give/loan them money. But on the other hand, if a friend or family member has hit a rough patch and you know they are the kind of person that will be on their feet again soon, and you have nothing to lose, give them the money.", "title": "" }, { "docid": "ab8e356652d6730d50ad291d5fb51e4c", "text": "The big problem with lending money to friends and family is that if things go sour with the deal than you can lose something a lot more valuable than the money associated with the deal. As a result of that I no longer lend money to friends and family. If I have the extra money available and I know someone is really in need I'll give them the money no strings attached before I'll lend any. If they decide to give back the amount given at some point in the future so be it, but there will be no expectations. Thanksgiving dinner just has a different taste to it when someone at the table owes someone else money.", "title": "" }, { "docid": "147d3f1cc3989a3f208c573d1303da36", "text": "I recently lent some money to my sister. While I generally agree with Phillip that lending to family and friends should be avoided, I felt I needed to make an exception. She really needed the cash, and my husband and I agreed that we would be ok without it. Here are some guidelines I used that may be helpful to others: In the end, I think lending to family and friends should be avoided, and certainly should not be done lightly, but by communicating clearly and directly, and keeping careful records, I think you can help someone out and still avoid the lingering awkwardness at future Thanksgivings when one person is convinced that the other owes one more payment, and the other swears it was paid in full.", "title": "" } ]	[ { "docid": "b9d1cac00c18cae042e4afd946a53db0", "text": "You should only loan money to friends or relatives if you are fully accepting the possibility of never ever getting that money back. And in this situation it can happen that you will be forced to give him a very large loan if something bad ever happens to him. (Paying the monthly rates instead of him and expecting he will someday pay it back to you is technically the same as loaning him money). Something might happen in the future which will result in him not paying his monthly payments. Maybe not now, but in 5 years. Or 10. The economy might change, he might be out of a job, his personal values might change. A house mortgage is long term, and during that time a lot can happen.", "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": "c23a1e24ab98e5bdc93c4eaa97a24cd2", "text": "It may or may not be a good idea to borrow money from your family; there are many factors to consider here, not the least of which is what you would do if you got in serious financial trouble and couldn't make your scheduled payments on the loan. Would you arrange with them to sell the property ASAP? Or could they easily manage for a few months without your scheduled payments if it were necessary? A good rule of thumb that some people follow when lending to family is this: don't do it unless you're 100% OK with the possibility that they might not pay you back at all. That said, your question was about credit scores specifically. Having a mortgage and making on-time payments would factor into your score, but not significantly more heavily than having revolving credit (eg a credit card) and making on time payments, or having a car loan or installment loan and making on time payments. I bought my house in 2011, and after years of paying the mortgage on time my credit score hasn't changed at all. MyFico has a breakdown of factors affecting your credit score here: http://www.myfico.com/crediteducation/whatsinyourscore.aspx. The most significant are a history of on-time payments, low revolving credit utilization (carrying a $4900 balance on a card with a $5000 limit is bad, carrying a $10 balance on the same card is good), and overall length of your credit history. As to credit mix, they have this to say: Types of credit in use Credit mix determines 10% of my FICO Score The FICO® Score will consider your mix of credit cards, retail accounts, installment loans, finance company accounts and mortgage loans. It's not necessary to have one of each, and it's not a good idea to open credit accounts you don’t intend to use. The credit mix usually won’t be a key factor in determining your FICO Score—but it will be more important if your credit report does not have a lot of other information on which to base a score. Have credit cards – but manage them responsibly Having credit cards and installment loans with a good payment history will raise your FICO Score. People with no credit cards tend to be viewed as a higher risk than people who have managed credit cards responsibly.", "title": "" }, { "docid": "ea5ed56378c9936a96de6c4b4b832dca", "text": "Never co-sign a loan for someone, especially family Taking out a loan for yourself is bad enough, but co-signing a loan is just plain stupid. Think about it, if the bank is asking for a co-signer its because they are not very confident that the applicant is going to be paying back the loan. So why would you then step up and say I'll pay back the loan if they don't, make me a co-signer please. Here is a list of things that people never think about when they cosign a loan for somebody. Now if you absolutely must co-sign a loan here is how I would do it. I, the co-signer would be the one who makes the payments to ensure that the loan was paid on time and I would be the one collecting the payment from the person who is getting the loan. Its a very simple way of preventing some of the worst situations that can arise and you should be willing to make the payments anyway after all thats what it means to cosign a loan. Your just turning things around and paying the loan upfront instead of paying after the applicant defaults and ruins every ones credit. (Source: user's own blog post Never co-sign a loan for someone, especially family)", "title": "" }, { "docid": "a6e78d648403a607c83fb538ac0fd1d7", "text": "I have recently been the lender to a couple people. It was substantially less money (~$3k), but I was trusting their good faith to pay me back. As a lender, I will never do it again. Reasons, Overall, not worth it.", "title": "" }, { "docid": "e5d08e321efc507002eba796822e1af0", "text": "\"Is there any way through this? Yes, but you're not going to like it. If your friend has guaranteed the loans, then it's your friend's obligation to pay them when the brother-in-law is not cooperating. That's what it means to guarantee a loan. (Obligatory: \"\"Before lending your friends or family money, ask yourself which you need more.\"\")\"", "title": "" }, { "docid": "cd08117069dd39c471f4e395776830a6", "text": "You are using interchangeably borrow/loan and gift. They are very different. For the mortgage company, they would prefer that the money from friends and family be a gift. If it is a loan, then you have an obligation to pay it back. If they see money added to your bank accounts in the months just before getting the loan, they will ask for the source of the money. Anything you claim as a gift will be required to be documented by you and the person making the gift. You don't want to lie about it, and have the other person lie about it. They will make you sign documents, if they catch you in a lie you can lose the loan, or be prosecuted for fraud. If the money from friends and family is a loan, the payments for the loan will impact the amount of money you can borrow. From the view of the IRS the gift tax only comes into play if during one calendar year a person makes a gift to somebody else of 14,000 or more. There are two points related to this. It is person-to-person. So if your dad gives you 14K, and your mom gives you 14K, and your dad gives your wife 14k and your mom gives your wife 14K; everything is fine. So two people can give 2 people 56K in one year. Please use separate checks to make it clear to the IRS. If somebody gives a gift above the exclusion limit for the year, they will have to complete IRS form 709. This essentially removes the excess amount from their life time exclusion, in other words from their estate. Nothing to worry about from the IRS. The bank wants to see the documentation. Also you are not a charity, so they can't claim it as a donation. Why do you have 6,000 in cash sitting around. The mortgage company will want an explanation for all large deposits so you better have a good explanation. From the IRS FAQ on Gift Taxes: What can be excluded from gifts? The general rule is that any gift is a taxable gift. However, there are many exceptions to this rule. Generally, the following gifts are not taxable gifts. Number 3 on the list is the one you care about.", "title": "" }, { "docid": "d0d0e81aa21e392f24788edd720dc46c", "text": "If you take out a personal loan, rather than a mortgage or car loan or hire-purchase agreement or other loan that's for making a specific purchase, then you can do whatever you want with the money. Send it abroad, burn it, spend it on expensive whisky -- it's up to you. The country you want to send the money to might have rules on transferring money into the country, but there will be no impediment at the UK end.", "title": "" }, { "docid": "bc69b5becafdd5a0acf8cdec4b066be4", "text": "a. Depends on whether it is a gift (no tax, but need to file gift tax form against his lifetime exclusion) or a loan (in which case he needs to charge fair market interest, which he can forgive as a gift with no gift tax form, but for which will need to pay tax on the forgiven income. b. This is a definite possibility. Probably depends on the specific lender, but I would imagine this might be questioned, especially if there is an expectation of paying him back. c. Relationships. I would always avoid mixing family and finances in this way. Do you want your family gatherings to be tainted by owing him money? What if you fall on hard times? What if you go on a nice vacation instead of paying him back faster?", "title": "" }, { "docid": "b068ed80d2622176669138ee89886956", "text": "\"Your Spidey senses are good. A good friend would not put you in such a position. It's simple, to skirt some issue (we'll get to that in a second) you are being asked to lie. All for a 15% return on your $$$$. <<< How much is that? You can easily lend him the money, and have a better paper trail. But the bank is not going to like that, and requires this money from friends or family to be a gift. I've heard mortgage guys at the bank say \"\"It's just a formality, we need this paperwork to sell the loan to the investors.\"\" These bankers belong in jail, or at least fired and barred from the industry. They broke the economy in 2008, and should be stopped from doing it again.\"", "title": "" }, { "docid": "21085de52a29bd061a17dba0d67f4927", "text": "\"Basically, you either borrow money, or get other people to invest in your business by buying stock or something analogous. Sometimes you can get people to \"\"park\"\" money with you. For example, many people deposit money in a bank checking account. They don't get any interest or other profit from this, they just do it because the bank is a convenient place to store their money. The bank then loans some percentage of this money out and keeps the interest. I don't doubt that people have come up with more clever ways to use other people's money. Borrowing money for an investment or business venture is risky because if you lose money, you may be unable to pay it back. On the other hand, investors expect a share of the profit, not just a fixed interest rate.\"", "title": "" }, { "docid": "51c97062f6e948df006f5fb2e8511fa4", "text": "\"Some very general advice. Lifestyle borrowing is almost always a bad idea. You should limit your borrowing to where it is an investment decision or where it is necessary and avoid it when it is a lifestyle choice. For example, many people need to borrow to have a car/house/education or go without. Also, if you are unemployed for a long period of time and can't find work, charging up the credit cards seems very reasonable. However, for things like entertainment, travel, and other nice-to-haves can easily become a road to crushing debt. If you don't have the cash for these types of things, my suggestion is to put off the purchase until you do. Note: I am not including credit cards that you pay off in full at the end of the month or credit used as a convenience as \"\"borrowing\"\"\"", "title": "" }, { "docid": "93ebb159e186123a4374d20a007ad6cd", "text": "When borrowing a small sum from a bank, there's usually no collateral. i.e. no property to put a lien on, no gems put in a vault. It's a personal loan. A loan for a plane ticket for you or for them wont make a difference. If they have the borrowing ability, it's their loan. That said, if your family finances are so tight, no one can buy a full round trip ticket, you should not be taking this trip. If your (whole family) savings is not above 3-6 months living expenses, you still shouldn't take this trip.", "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": "87f0b903950a1053f212b9ac7900561d", "text": "There are interpersonal relationships risks which you should consider. These are most likely to eventuate following a financial problem, and depend on your existing relationship. In this answer I'm going to focus on the financial risks. This is not financial advice, but my understanding as someone who has done this. This is best thought of as a loan from my parents to myself. The main financial risks for my parents (the lenders): To avoid these risks, I need to ensure that I am sufficient ahead of loan repayments that I have the full amount of principal available to repay at any time. Redraw Facility While some loans may allow for redraw, you should check the fine print of your loan agreement. A redraw is like borrowing from the bank using existing collateral. There could be some circumstances under which the bank does not allow redraw, even though you are ahead of loan repayments. This might happen if house prices drop enough that you no longer have equity. Offset Account To avoid this problem, the loaned money is best put in an offset account. An offset account reduces the interest on the loan. Importantly, the money in the offset account is yours. Withdrawal from the offset account does not represent a new borrowing but is a withdrawal from savings account. Savings are government guaranteed to some figure.", "title": "" } ]	fiqa
87210cceace00ba455f620911badfc8c	gift is taxable but is “loan” or “debt” taxable?	[ { "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": "" }, { "docid": "2947f7492ade177b57d15dc7816b08c5", "text": "If you are looking to transfer money to another person in the US, you can do do with no tax consequence. The current annual gift limit is $14k per year per person, so for example, my wife and I can gift $56k to another couple with no tax and no forms. For larger amounts, there is a lifetime exclusion that taps into your $5M+ estate tax. It requires submitting a form 709, but just paperwork, no tax would be due. This is the simplest way to gift a large sum and not have any convoluted tracking or structured loan with annual forgiveness. One form and done. (If the sum is well over $5M you should consider a professional to guide you, not a Q&A board)", "title": "" }, { "docid": "b4b404f2995ec98b70c55d6ce4413dc9", "text": "The difference is whether or not you have a contract that stipulates the payment plan, interest, and late payment penalties. If you have one then the IRS treats the transaction as a load/loan servicing. If not the IRS sees the money transfer as a gift.", "title": "" } ]	[ { "docid": "d9f6f01fb966263395bd6d910790da55", "text": "I'm not familiar with US tax law in particular, but the general principle around the world tends to be that interest-free or low-interest loans are taxed as gifts of the difference between a commercial interest charge and the actual interest charged. You could also forgive ($13,000 - waived interest) of the loan each year. Also, remember that there's a lifetime exemption (covering inheritance as well) of $1,000,000 which can be used for any amounts over the $13,000.", "title": "" }, { "docid": "cf058eee9c4834b7292b367fd3c1f15a", "text": "As much as you want. There's no tax on gifts you receive. Gift tax is on the donor, i.e.: the person giving the gift. The $100K limit is for reporting. Gifts of $100K or more per year from foreign sources must be disclosed on form 3520 attached to your tax return. But there's no tax. Read more here.", "title": "" }, { "docid": "748dc61cc970da3eeea8d867b964751b", "text": "When your debt is forgiven, you have to consider the amount written off as an ordinary income item (with the exclusion of the debt originated from the purchase of primary home). If you're trying to write the debt off from your taxes - then it won't work. Even if you can expense the debt forgiveness, you will incur tax liability on your personal taxes side, and in addition you'll be out of cash in your business. So basically you'll end up paying it with after tax money, exactly the thing you're trying to avoid. In addition, you're dealing with related persons here, which means that the loss deduction might not be allowed (depends on the actual details of the transaction), so you might actually end up paying more taxes with this scheme that just paying off the loan directly (if your business pays taxes separately from your person). A loss on the sale or exchange of property between related persons is not deductible. This applies to both direct and indirect transactions, but not to distributions of property from a corporation in a complete liquidation. For the list of related persons, see Related persons next.", "title": "" }, { "docid": "6182d56afcf0b5a8f2439fa618d15295", "text": "\"A loan is not a taxable income. Neither is a gift. Loans are repaid with interest. The interest is taxable income to the lender, and may or may not be deductible to the borrower, depending on how the loan proceeds were used. Gifts are taxable to the donor (the person giving the gift) under the gift tax, they're not a taxable income to the recipient. Some gifts are exempt or excluded from gift tax (there's the annual exemption limit, lifetime exclusion which is correlated to the estate tax, various specific purpose gifts or transfers between spouses are exempt in general). If you trade for something of equal value, is that considered income? Yes. Sale proceeds are taxable income, however your basis in the item sold is deductible from it. If you borrow a small amount of money for a short time, is that considered income? See above. Loan proceeds are not income. does the friend have to pay taxes when they get back their $10? No, repayment of the loan is not taxable income. Interest on it is. Do you have to pay taxes if you are paid back in a different format than originally paid? Form of payment doesn't matter. Barter trade doesn't affect the tax liability. The friend sold you lunches and you paid for them. The friend can deduct the cost of the lunches from the proceeds. What's left - is taxable income. Everything is translated to the functional currency at the fair market value at the time of the trade. you are required to pay taxes on the gross amount Very rarely taxes apply to gross income. Definitely not the US Federal Income taxes for individuals. An example of an exception would be the California LLC taxes. The State of California taxes LLCs under its jurisdiction on gross proceeds, regardless of the actual net income. This is very uncommon. However, the IRC (the US Federal Tax Code) is basically \"\"everything is taxable except what's not\"\", and the cost of generating income is one of the \"\"what's not\"\". That is why you can deduct the basis of the asset from your gross proceeds when you sell stuff and only pay taxes on the net difference.\"", "title": "" }, { "docid": "f86d331b67c716771f8a28fccb5e77c3", "text": "No, money transferred for a loan or a gift is not taxable. If you pay your parents interest, they'll have to pay tax on that. And if they give you money and then die within seven years, the gift may become liable for inheritance tax.", "title": "" }, { "docid": "c2ccc75ec5055a519512219dd2d6262c", "text": "As far as I know (I am not a tax professional or IFA!) there would be no tax implications or other burden on the recipient of the loan under UK law, even if it ended up being treated as a gift rather than a loan. There are no clauses about money being in the account for 90 days in UK housing transactions, however under money laundering rules your brother's solicitor might need sight of loan agreements to verify where the funds came from (I think it would depend on whether you paid the money to your brother direct, in which case there would be no problem, or if you paid it direct to the solicitor for the purchase). What Canadian law might say about capital gains / inheritance tax (if the Canadian IRS did decide the loan counted as a gift) I have no idea.", "title": "" }, { "docid": "881acfadb43654b366bba3cfe8ab2237", "text": "\"The IRS doesn't tax \"\"increased wealth\"\" They tax Revenue -- income. If this money or property came to you as a gift, you would owe no tax on it but the giver probably would owe gift tax. If it came to you as a loan, you would owe no tax on it but the lender would owe tax on any interest you pay (and must charge at least minimal interest, though they could give that to you as a gift and possibly not have it be taxable). But if came as payment for goods or services or investment or anything of that sort, and you aren't demonstrably tax-exempt, it is income and you are responsible for declaring it as such and paying tax on it.\"", "title": "" }, { "docid": "4e558dd105c55cfe2bf640bea41e97a7", "text": "I know the money isn't taxable when I send it to my parents Yes this is right they send it to their nephew as it will count as a gift No this is incorrect Yes. Refer to Income Tax guide on relations exempt under gifts. Gifts received from relatives are not charged to tax. Relative for this purpose means: (a) Spouse of the individual; (b) Brother or sister of the individual; (c) Brother or sister of the spouse of the individual; (d) Brother or sister of either of the parents of the individual; (e) Any lineal ascendant or descendent of the individual; (f) Any lineal ascendant or descendent of the spouse of the individual; (g) Spouse of the persons referred to in (b) to (f). Friend is not a relative as defined in the above list and hence, gift received from friends will be charged to tax (if other criteria of taxing gift are satisfied). Even if you assumption were true, i.e. your dad gives it to his brother and his brother gives it to his son ... But if this is done sequentially and soon one after the other, is it taxable? The intent is important. One can do it immediately or after few years; if the intent is established that this was done to evade taxes, then you will have to pay the tax as well as penalty.", "title": "" }, { "docid": "945f99b0a08fd83e7d63c95edc350f09", "text": "Would I be taxed at my personal income tax rate upon withdrawal of the funds for this loan from my professionally managed, balanced 401k (not Roth funds)? Yes. This is a regular distribution. Why wouldn't you be taxed? What's gifting has to do with anything? If taxable, this would move me to the next higher tax bracket. Depending on your other income - it may, or may not. Whether or not taxable when pulling funds out of the investment account, when I'm repaid, do I owe Federal tax only on the interest income portion of repayment funds or on the lump sum & interest received (all of which which would return to my retirement account in lump)? Only interest. And you will not return it to your retirement account. Not in a lump and not in installments and not in any other way.", "title": "" }, { "docid": "32e4ee4120ffdb25c06dbb6995397621", "text": "As Stan's answer recommends, don't give them the money; make the checks payable to the credit-card company or the bank that issued the student loan so that those debts get repaid for sure, or else you run the risk of that money also going the way of all flesh and the debt remaining untouched. Next, file a gift tax return (Form 709, which is not filed along with Form 1040; all 709s go to one IRS office as described in the instructions), saying that you gave your son and daughter-in-law gifts of $20K each (say) and that you want to have $12K (excess of each gift over and above the annual exclusion of $14K per recipient) count against your combined lifetime estate tax and gift tax exclusion (which is currently over $5M). So, no gift tax needs to be paid. (As JoeTaxpayer's comment points out, if you are married and your spouse is willing to join in this, then as much as $56K can be given without anyone having to file Form 709). Then, change your will to reduce your son's and daughter-in-law's inheritance by $40K. If and when they return the money (as a gift to you), change your will back by removing the reduction. If the repayment is is a lump sum, the gift tax return stratagem can be used by your son and daughter-in-law while if they pay back over two years, no gift tax return need be filed. So., that's it. No interest to be paid by anybody, no gift taxes to be paid by anybody, no income to be reported on any tax return, etc. This will work unless you have serious concerns about reducing your combined lifetime estate tax and gift tax exclusion by $12K, and if you do, you can afford to hire plenty of lawyers to advise you on better strategies.", "title": "" }, { "docid": "134895f4a0699a9084d51e806e90386e", "text": "\"Gift taxes are paid by the giver, not the \"\"givee\"\". You'd have to claim the $500 on your income tax forms, though.\"", "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": "b13137b08509ded0d14669718b79b904", "text": "It is correct, in general. Gift tax is indeed at 35%, but you have the first 14K of your gift exempt from it for each person you give to, yearly (verify the number, it changes every year). You can also use your lifetime exemption ($5.45M in 2016, subject to change each year), but at the amounts you're talking about it still will not be enough. Charitable (501(c)) organizations, paying for someone's tuition or medical expenses (directly to the providers), political donations, transfer between you and your spouse - these are all exempt from gift tax. If you have 10 millions to give, I'm sure you can afford a $200 consultation with a EA/CPA licensed in your state.", "title": "" }, { "docid": "f52e5d1fb5b3ba51acba2f3657db5615", "text": "\"Any inward remittance received by your Parents cannot be treated as \"\"Income\"\" as per the definitaion. This can at best be treated as \"\"Gift\"\". However in India there is No Gift tax for certain relations and there is no ceiling on the amount. In your case gifting of money by son to father or viceversa is allowed without any limits and tax implication. However if you father were to invest this money in his name and make gains, the gains would be taxable. However if the Money is being transfered with specific purpose such as to buy a property, etc make sure you have the Bank give your dad an certificate of Inward remittance. This is also advisable even otherwise, the Inwared Remittance certificate from Bank certifies that the credit entry in the account is because or funds comming into India and if the tax authorities were to question the large amount of credits, it would be proof that it is due to Inward remittance and not due to say a sale of property by your dad Helpful Links: http://www.moneycontrol.com/news/tax/gift-tax-whatsa-gift_664238.html http://www.thehindubusinessline.in/bline/blnri/exp-tax.htm Edit 1: What you father does with the money is treated as EXPENSE, ie spends on day to day expense or pays off your Loans or Pay off his loans have no relevance from a Tax Prespective in India. The only issue comes in say you have transfered the funds to buy a property and there was no purpose of remittance specified by Bank's letter and one want to reptriate this funds back to US, then its an issue. If you transfer the funds directly to your Loan account again there is no tax implication to you in India as you are NRI.\"", "title": "" }, { "docid": "23e1daa0af62d6feac9c5970ca015840", "text": ">Tax benefit of debt The interest on repayments for debt (eg bonds, loans) is tax deductible (as interest expense). The way you figure out the after tax cost of debt is repayment*(1-tax rate). >Marginal tax benefit Just as marginal benefit, this is asking for every ADDITIONAL (ie marginal) dollar of debt, what is my additional tax benefit (tax deduction). Pretty rough explanation, let me know if there is something in particular that doesn't make sense.", "title": "" } ]	fiqa
6086ef7d21c8fd401c623336d281d62e	I got my bank account closed abruptly how do I get money out?	[ { "docid": "9c1ec6fea975a2bcd25777443e1c8908", "text": "This is very possibly a scam. The way the scam works is that the scammers send you a letter and demand you call the telephone number. But the telephone number belongs to the scammers, not the bank. When you call the number, they will 'authenticate' you by asking you a bunch of questions. They will then have enough information to call the bank and pretend to be you, and transfer out all of your money. What you need to do is to find the telephone number for your bank without making use of this letter. For example, look at a previous bank statement, or find the telephone number on the bank's website. Call that number and discuss this letter. If you have already called the number in the letter and if you have the slightest reason to believe it is not valid, stop reading. This is an emergency. Immediately call a legitimate number at the bank. Explain the situation and note that you believe your information has been compromised. Why are you still reading? Do it now.", "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": "d9fb9a566fba1ecb9104bd4270b8e34a", "text": "If you can get to a physical branch, get a cashier's check (or call them and have them send you one by mail). When they draft the cashier's check they remove the money from your account immediately and the check is drawn against the bank itself. You could hold onto that check for a little while even after your account closes and you make other arrangements for banking. If you cannot get a cashier's check, then you should try to expeditiously open a new account and do an ACH from old to new. This might take more days to set up than you have left though.", "title": "" }, { "docid": "57b3624471dc64a3d30fedfa0b56435f", "text": "\"Coming from someone who has worked a in the account servicing department of an actual bank in the US, other answers are right, this is probably a scam, the phone number on the letter is probably ringing to a fraudulent call center (these are very well managed and sound professional), and you must independently locate and dial the true contact number to US Bank. NOW. Tell them what happened. Reporting is critical. Securing your money is critical. Every piece of information you provided \"\"the bank\"\" when you called needs to be changed or worked around. Account numbers, passwords, usernames, card numbers get changed. Tax ID numbers get de-prioritized as an authentication mechanism even if the government won't change them. The true bank probably won't transfer you to the branch. If the front-line call center says they will, ask the person on the phone what the branch can do that they cannot. Information is your friend. They will probably transfer you to a special department that handles these reports. Apparently Union Bank's call center transfers you to the branch then has the branch make this transfer. Maybe their front-line call center team is empowered to handle it like I was. Either way, plug your phone in; if the call takes less than 5 minutes they didn't actually do everything. 5 to 8 minutes per department is more likely, plus hold time. There's a lot of forms they're filling out. What if that office is closed because of time differences? Go online and ask for an ATM limit increase. Start doing cash advances at local banks if your card allows it. Just get that money out of that account before it's in a fraudsters account. Keep receipts, even if the machine declines the transaction. Either way, get cash on hand while you wait for a new debit card and checks for the new account you're going to open. What if this was fraud, you draw your US Bank account down to zero $800 at a time, and you don't close it or change passwords? Is it over? No. Then your account WILL get closed, and you will owe EVERYTHING that the fraudsters rack up (these charges can put your account terrifyingly far in the negative) from this point forward. This is called \"\"participation in a scam\"\" in your depository agreement, because you fell victim to it, didn't report, and the info used was voluntarily given. You will also lose any of your money that they spend. What if US Bank really is closing your account? Then they owe you every penny you had in it. (Minus any fees allowed in the depository agreement). This closure can happen several days after the date on the warning, so being able to withdraw doesn't mean you're safe. Banks usually ship an official check shipped to the last known address they had for you. Why would a bank within the United States close my account when it's not below the minimum balance? Probably because your non-resident alien registration from when you were in school has expired and federal law prohibits them from doing business with you now. These need renewed at least every three years. Renewing federally is not enough; the bank must be aware of the updated expiration date. How do I find out why my account is being closed? You ask the real US Bank. They might find that it's not being closed. Good news! Follow the scam reporting procedure, open a new account (with US Bank if you want, or elsewhere) and close the old one. If it IS being closed by the bank, they'll tell you why, and they'll tell you what your next options are. Ask what can be done. Other commenters are right that bitcoin activity may have flagged it. That activity might actually be against your depository agreement. Or it set off a detection system. Or many other reasons. The bank who services your account is the only place that knows for sure. If I offer them $500 per year will they likely keep the account opened? Otherwise I got to go to singapore open another account Legitimate financial institutions in the United States don't work this way. If there is a legal problem with your tax status in the US, money to the bank won't solve it. Let's call the folks you've talked to \"\"FraudBank\"\" and the real USBank \"\"RealBank,\"\" because until RealBank confirms, we have no reason to believe that the letter is real. FraudBank will ask for money. Don't give it. Don't give them any further information. Gather up as much information from them as possible instead. Where to send it, for example. Then report that to RealBank. RealBank won't have a way to charge $500/year to you only. If they offer a type of account to everyone that costs $500, ask for the \"\"Truth in Savings Act disclosures.\"\" Banks are legally required to provide these upon request. Then read them. Don't put or keep your money anywhere you don't understand.\"", "title": "" }, { "docid": "dd604ea54d8a648a31fca92060615986", "text": "First, if your account has been closed you should not be able to use your debit card in any format. As you mentioned that you are able to use that so your back account is active. So this indicates it is a scam In case account is closed, bank confirms your address and will send you a cheque for the amount in your account. Don't worry. You money will never be lost", "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": "" }, { "docid": "4e4d147b2b4432f5dcf87c40276ab22f", "text": "\"Several options are available. She may ask the US bank to issue a debit card (VISA most probably) to her account, and mail this card to Russia. I think this can be done without much problems, though sending anything by mail may be unreliable. After this she just withdraws the money from local ATM. Some withdrawal fee may apply, which may be rather big if the sum of money is big. In big banks (Alfa-bank, Citibank Russia, etc.) are ATMs that allow you to withdraw dollars, and it is better to use one of them to avoid unfavorable exchange rate. She may ask the US bank to transfer the money to her Russian account. I assume the currency on the US bank account is US Dollars. She needs an US dollar account in any Russian bank (this is no problem at all). She should find out from that bank the transfer parameters (реквизиты) for transfering US dollars to her account. This should include, among other info, a \"\"Bank correspondent\"\", and a SWIFT code (or may be two SWIFT codes). After this, she should contact her US bank and find out how can she request the money to be transferred to her Russian bank, providing these transfer parameters. I can think of two problems that may be here. First, the bank may refuse to transfer money without her herself coming to the bank to confirm her identity. (How do they know that a person writing or calling them is she indeed?) However, I guess there should be some workaround for this. Second, with current US sanctions against Russia, the bank may just refuse the transfer or will have do some additional investigations. However, I have heard that bank transfers from US to private persons to Russia are not blocked. Probably it is good to find this out in advance. In addition, the US bank will most probably charge some standard fee for foreign transfer. After this, she should wait for a couple of days, maybe up to week for the money to appear on Russian account. I have done this once some four years ago, and had no problems, though at that time I was in the US, so I just came to the bank myself. The bank employee to whom I talked obviously was unsure whether the transfer parameters were enough (obviously this was a very unusual situation for her), but she took the information from me, and I guess just passed it on to someone more knowledgable. The fee was something about $40. Another option that I might think of is her US bank issuing and mailing her a check for the whole sum, and she trying to cash it here in Russia. This is possible, but very few banks do cash checks here (Citibank Russia is among those that do). The bank will also charge a fee, and it will be comparable to transfer fee. Plus mailing anything is not quite reliable here. She would also have to consider whether she need to pay Russian taxes on this sum. If the sum is big and passes through a bank, I guess Russian tax police may find this out through and question her. If it is withdrawn from a VISA card, I think it will not be noticed, but even in this case she might be required to file a tax herself.\"", "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": "687883f52451d0e23983d4a65459900d", "text": "If I were you, I would go to the bank right now, pay the $100 and close the account. I would stop the bleeding first then consider the fallout later. Do you own the account jointly with your partner(s) as a partner or does the partnership (a separate formal entity) own the bank account with you a named representative? Those are two very different situations. If you're a joint owner, you're liable for the fees; along with your other partners in accordance with your partnership agreement. You never closed yourself off the account and that's your problem. If the dissolved partnership owns the account, you're not personally liable for the fees. You were never a personal owner of the account, now that the account is negative you don't magically become personally liable. The differences here are very nuanced and the details matter. If this were a large amount of money I'd suggest you go see a lawyer. Since this is about $100 I'd just pay it, make sure the account is closed, and move on.", "title": "" }, { "docid": "11c9b3d0363b550de540aa34f698e3b1", "text": "You haven't mentioned the country. As a general premise, you own them money and the fact that the account was closed has no bearing on the fact that you own them money. My suggestion would be pay them off.", "title": "" }, { "docid": "23d1fd7eb4061a4e562aef4f5efda6af", "text": "Such funds are handed over to the state. In NE, like in many states, there is a government website where you can search by your name, find them, and claim them (with proof of your identity, etc.): https://treasurer.nebraska.gov/up/ For sure, the bank cannot just take the money. It is sitting somewhere, the bank just closed the account, meaning they are technically not managing your money anymore.", "title": "" }, { "docid": "34397e8b79483998ce2f1fc4a02962f7", "text": "Additionally my understanding is that a Faster Payment is as good as cash once received. Yes it is but there is a caveat. Read on unauthorized payments on Faster Payments website. Either the sender is fraudulently claiming this was unauthorised, or their bank doesn't have adequate security standards - why is it me who loses out here? Agreed. You should take this up [dispute the action] with your bank asking why your account was closed as there is no fraud from your side. Make sure you do all the follow-up with writing and provide evidence of the trade being genuine.", "title": "" }, { "docid": "d17c12d9c0392b1881adaa68bbdca8ea", "text": "Banks make mistakes. Reconciling your account with your bank statement is the way to catch the errors.", "title": "" }, { "docid": "179d6735ab4c860b4a12c3a59de3198b", "text": "There are two (main) ways of transferring large sums of money between banks in such a situation. 1) Have your bank mail a cashier's check. They may or may not charge you for this (some banks charge up to $6, the bank I work at doesn't charge at all). You have to wait for the check to go through the mail, but it usually takes just a few days. 2) Wire the money. This could cost $50 or more in combined fees (usually around $30 to send and $20 to receive), but you get same day credit for the funds. The limits to online transfers are in place to protect you, so that if someone gets into your account the amount of damage they can do is limited. If you need those limits lifted temporarily, check with your bank about doing so - they may be willing to adjust them for you for a brief period (a day or two).", "title": "" }, { "docid": "73ce7a1209fe31f5112a211e3c68c64f", "text": "\"It sounds like you are isolated and in a small town. Without the true ability to bank, perhaps you should move. As an alternative you could do some kind of online banking. Most banks offer the ability to deposit via mobile phone and you could obtain cash by using remote ATMs or writing checks for an amount over your purchase at the grocery store. How are you paid? If via direct deposit, that makes mobile banking even easier. Did your read your premise out loud? Using Game Stop as a bank is just silly. Are you banned from banks because of not paying child support or some other legal obligation? If so just \"\"face the music\"\". I know people that are over 40 and owed a relatively small amount of child support and the result of they lost out on order of magnitudes greater income. It was just a short-sighted move that cost them far more than if they just obeyed the court order. It would be smarter to use a check cashing store, like AmScott, to do your banking. They will cash checks for a fee, issue money orders, or even allow you to pay some bills directly through them. Never, ever use them to cash a hot check or for short term financing but using them or Walmart, or the Grocery store is a much better option than Game Stop.\"", "title": "" }, { "docid": "4d264105e40d167955f554e771e82d0d", "text": "\"Change the password on your bank account immediately. This is certainly a scam, and while they have your login info they can cause you even bigger problems. As soon as possible, contact your bank and let them know what happened. If you look at the links in the \"\"Related\"\" list you'll see that this is a fairly common scam. It relies on the fact that some forms of fraudulent deposit take a while for the bank to detect. Sometime in the next month, the bank is going to find out that the deposit of $2500 is bogus, say from a bad check, forged money order, or some other fraudulent source. When that happens, the bank is going to undo the deposit, and demand that you make good any of the deposit that has been spent (including the $50 that has already gone to PayPal). The bank may also suspect you of being in cahoots with the depositor, so you may find yourself talking to the local police, accused of fraud. You've put yourself in a bad spot by giving your password out. Unless your can present other evidence, the bank will have a strong assumption that any activity conducted via the login is performed by you. This is why you should get in touch with your bank right away, to build up some evidence of good will on your part. More remote possibilities are that it is part of a 'long con', where somebody is trying to find out how credulous/greedy you are. This seems unlikely. Unless you are a plum target, few con artists would want to risk as much as $2500. Theoretically it could be some sort of money laundering set up, but amounts involved seem too small for that to be likely.\"", "title": "" }, { "docid": "d0a0cf5385af2ce94620b5ad4c36a38c", "text": "Looks like you have three options: Outside of this you might need to look for a different type of account. Hope that helps.", "title": "" }, { "docid": "ccc5d2a7688d21b0059a0f0a604dc7b1", "text": "So My question is. Is my credit score going to be hit? Yes it will affect your credit. Not as much as missing payments on the debt, which remains even if the credit line is closed, and not as much as missing payments on other bills... If so what can I do about it? Not very much. Nothing worth the time it would take. Like you mentioned, reopening the account or opening another would likely require a credit check and the inquiry will add another negative factor. In this situation, consider the impact on your credit as fact and the best way to correct it is to move forward and pay all your bills on time. This is the number one key to improving credit score. So, right now, the key task is finding a new job. This will enable you to make all payments on time. If you pay on time and do not overspend, your credit score will be fine. Can I contact the creditors to appeal the decision and get them to not affect my score at the very least? I know they won't restore the account without another credit check). Is there anything that can be done directly with the credit score companies? Depending on how they characterize the closing of the account, it may be mostly a neutral event that has a negative impact than a negative event. By negative events, I'm referring to bankruptcy, charge offs, and collections. So the best way to recover is to keep credit utilization below 30% and pay all your bills and debt payments on time. (You seem to be asking how to replace this line of credit to help you through your unemployment.) As for the missing credit line and your current finances, you have to find a way forward. Opening new credit account while you're not employed is going to be very difficult, if not impossible. You might find yourself in a situation where you need to take whatever part time gig you can find in order to make ends meet until your job search is complete. Grocery store, fast food, wait staff, delivery driver, etc. And once you get past this period of unemployment, you'll need to catch up on all bills, then you'll want to build your emergency fund. You don't mention one, but eating, paying rent/mortgage, keeping current on bills, and paying debt payments are the reasons behind the emergency fund, and the reason you need it in a liquid account. Source: I'm a veteran of decades of bad choices when it comes to money, of being unemployed for periods of time, of overusing credit cards, and generally being irresponsible with my income and savings. I've done all those things and am now paying the price. In order to rebuild my credit, and provide for my retirement, I'm having to work very hard to save. My focus being financial health, not credit score, I've brought my bottom line from approximately 25k in the red up to about 5k in the red. The first step was getting my payments under control. I have also been watching my credit score. Two years of on time mortgage payments, gradual growth of score. Paid off student loans, uptick in score. Opened new credit card with 0% intro rate to consolidate a couple of store line of credit accounts. Transferred those balances. Big uptick. Next month when utilization on that card hits 90%, downtick that took back a year's worth of gains. However, financially, I'm not losing 50-100 a month to interest. TLDR; At certain times, you have to ignore the credit score and focus on the important things. This is one of those times for you. Find a job. Get back on your feet. Then look into living debt free, or working to achieve financial independence.", "title": "" }, { "docid": "041245ddb1f9ce5576e6d63afde087e8", "text": "\"The danger to your savings depends on how much sovereign debt your bank is holding. If the government defaults then the bank - if it is holding a lot of sovereign debt - could be short funds and not able to meet its obligations. I believe default is the best option for the Euro long term but it will be painful in the short term. Yes, historically governments have shut down banks to prevent people from withdrawing their money in times of crisis. See Argentina circa 2001 or US during Great Depression. The government prevented people from withdrawing their money and people could do nothing while their money rapidly lost value. (See the emergency banking act where Title I, Section 4 authorizes the US president:\"\"To make it illegal for a bank to do business during a national emergency (per section 2) without the approval of the President.\"\" FDR declared a banking holiday four days before the act was approved by Congress. This documentary on the crisis in Argentina follows a woman as she tries to withdraw her savings from her bank but the government has prevented her from withdrawing her money.) If the printing press is chosen to avoid default then this will allow banks and governments to meet their obligations. This, however, comes at the cost of a seriously debased euro (i.e. higher prices). The euro could then soon become a hot potato as everyone tries to get rid of them before the ECB prints more. The US dollar could meet the same fate. What can you do to avert these risks? Yes, you could exchange into another currency. Unfortunately the printing presses of most of the major central banks today are in overdrive. This may preserve your savings temporarily. I would purchase some gold or silver coins and keep them in your possession. This isolates you from the banking system and gold and silver have value anywhere you go. The coins are also portable in case things really start to get interesting. Attempt to purchase the coins with cash so there is no record of the purchase. This may not be possible.\"", "title": "" }, { "docid": "35a05cfc4c1ac63cbf2f0d766a3e4561", "text": "\"How can someone use the account number to withdraw money without my consent? They can use your account number to game your banks phone support and try to phish their way into your account. Banks have gotten very good at combating this, but theoretically with just the address he lives in, your name, and a bad bank phone rep, he could get into your business. The account number would just be one more piece of information to lead with. I have 1 savings and 3 checking accounts with the same bank. Would they be able to gain access to the other accounts? Dependent on how incompetent the bad bank rep I referenced above is, sure. But the odds are incredibly low, and if anything were to happen, the bank would be falling over itself to fix it and make reparations so that you don't sue for a whole crap ton more. Is there a more secure and still free option that I have overlooked? Opening up yet another checking account solely for accounts receivable and transfer to accounts payable would keep your financial records more transparent. Also, banks are doing \"\"money transfer by email\"\" now, so I don't know how great that is for business transactions, but in that instance you're just giving out an email linked to a money receiving account instead of an actual account number. Paypal is also a pretty good EFT middleman, but their business practices have become shady in the past 5 years.\"", "title": "" } ]	fiqa
45b50eb7f2219f81908feee6303a4b56	Double-entry bookkeeping: When selling an asset, does the money come from, Equity or Income?	[ { "docid": "531b1aba2b2c8be716305089b22240a9", "text": "\"There are basically two approaches, based on how detailed you want to be in your own personal accounting: Obviously the more like a business or like \"\"real\"\" accounting you want to be, the more complex you can make it, but in general I find that the purpose of personal accounting is (1) to track what I own, and (2) to ensure I have documented anything I need to for tax purposes, and as long as you're meeting those goals any reasonable approach is workable.\"", "title": "" }, { "docid": "36933c8b079e518d1fe172462a6c9355", "text": "It's better to use the accounting equation concept: Asset + Expenses = Capital + Liabilities + Income If you purchase an asset: Suppose you purchased a laptop of $ 500, then its journal will be: If you sell the same Laptop for $ 500, then its entry will be:", "title": "" }, { "docid": "c1de1971a83164f2f91c1ca34eb3d445", "text": "\"Selling an asset is not earning income. You are basically moving value from one asset (the laptop) to another (your bank account.) So you reduce the equity that is \"\"value of all my electronics\"\" and you increase the asset that is your bank account. In your case, you never entered the laptop in some category called \"\"value of all my electronics\"\" so you don't have that to make a double-entry against. The temptation is high to call it income as a result. Depending on the reason for all this double-entry book-keeping for personal finances, that may be fine. Or, you can create a category for balancing and use that, and realize the (negative) value of that account doesn't mean much.\"", "title": "" } ]	[ { "docid": "afafec3ae79fa797fcb2e00de3988080", "text": "For reporting purposes, I would treat the purchase and sale of gold like a purchase and sale of a stock. The place to do so is Schedule D. (And if it's the wrong form, but you reported it, there is might not be a penalty, whereas there is a penalty for NOT reporting.) The long term gain would be at capital gains rates. The short term gain would be at ordinary income rates. And if you have two coins bought at two different times, you get to choose which one to report (as long as you report the OTHER one when you sell the second coin).", "title": "" }, { "docid": "2b92b6e2f3a8d740509e76d0c66896bf", "text": "\"The bank will make this even more confusing because they use the terms from their own perspective. From the bank's perspective (printed on your statements) credit: Money into your account (increases the bank's liabilities) debit: Money out of your account (decrease bank liabilities) From your perspective: It depends on the nature of the transfer of money, but here are the most common for a personal account. Income into your account: Credit Expenses out of your account: Debit Payment on a loan made for an asset (house/car): Credit for the loan account, debit for the equity account for the car/house/etc. Yes, it's complicated. Neither credits nor debits are always a + or -. That's why I agree with the advice of the others here that double-entry accounting is overkill for your personal finances. Note: I simplified the above examples for the purpose of clarity. Technically every transaction in double entry accounting includes both a credit and a debit (hence the \"\"double\"\" in the name). In fact, sometimes a transaction involves more than one credit or debit, but always at least one of each. Also, this is for EACH party. So any transaction between you and your bank involves at least FOUR debits and/or credits when all involved are considered.\"", "title": "" }, { "docid": "bcb6523e22504bb769d3d28f4eef746a", "text": "It took me a while to understand the concept, so I'll break it down as best as I can. There are three parts to the accounting equation: Assets = Liabilities + Owner's Equity We'll look at this in two ways 1. As a business owner you invest (say) 10,000 USD into your bank. The entry would be: Debit: Assets: Cash for 10,000 Credit: Owner's Equity: Contributions for 10,000 In this case, you have assets of 10,000 from your deposit, but it is due to owner contributions and not business transactions. Another example (say a sale): Debit: Assets: Cash for 10,000 Credit: Owner's Equity: Sales for 10,000 Debit: Assets: Cash for 10,000 Credit: Liabilities: Deposits for 10,000 Deposits are a banking term to reflect a bank's obligation to return the amount on demand (though the bank has free reign with it, see fractional banking) You will NEVER debit or credit your bank as it is assumed you will be storing your money there, note bank reconciliation. Hope this helps, comment with any more questions.", "title": "" }, { "docid": "0fcd12b68dda2f645cb239640c5a2a3b", "text": "\"From your question, I believe that you are looking for what these mean in accounting terms and not the difference between a debit and a credit card. I'll deal with purchase and sale first as this is easier. They are the same thing seen from different points of view. If I sell something to you then I have made a sale and you have made a purchase. Every sale is a purchase and every purchase is a sale. Debits and Credits are accounting terms and refer to double column accounting (the most common accounting system used). The way a set of accounts works is, accounts are set up under the following broad headings: The first 3 appear on the Balance Sheet, so called because the accounts balance (Assets = Liabilities + Equity). This is always a \"\"point-in-time\"\" snapshot of the accounts (1 June 2015). That last 3 appear on the Profit and Loss sheet, Profit (or loss) = Income - Cost of Goods Sold - Expenses. This is always an interval measure (1 July 2014 to 30 June 2015). Changes in these accounts flow through to the Equity part of the Balance Sheet. When you enter a transaction the Debits always equal the Credits, they are simply applied to different accounts. Debits increase Assets, Cost of Goods Sold and Expenses and decrease Liabilities, Equity and Income. Credits do the reverse For your examples: 1. a customer buy something from me, what is the debit and credit? I will assume they pay $1,000 and the thing cost you $500 Your cash (asset) goes up by $1,000 (Debit), your inventory (asset) goes down by $500 (Credit), your Sales revenue (income) goes up by $500 (credit). This gives you a profit of $500. 2. a customer buy something of worth 1000 but gives me 500 what is debit and credit Your cash (asset) goes up by $500 (Debit), your debtors (asset) goes up by $500, your inventory (asset) goes down by $500 (Credit), your Sales revenue (income) goes up by $500 (credit). This also gives you a profit of $500. 3. if I buy a product from supplier worth 1000 and pay equally what is credit and debit I assume you mean pay cash: Your cash (asset) goes down by $1000 (Credit), your inventory (asset) goes up by $1000 (Debit). There is no profit or loss here - you have swapped one asset (cash) for another (inventory). 4. if I buy a product from supplier worth 1000 and don't pay what is credit and debit Your creditors (liability) goes up by $1000 (Credit), your inventory (asset) goes up by $1000 (Debit). There is no profit or loss here - you have gained an asset (inventory) but incurred a liability (creditors). The reason for confusion is that most people only see Debits and Credits in one place - their bank statement. Your bank statement is a journal of one of the banks liability accounts - its their liability because they owe the money to you (even loan accounts adopt this convention). Credits happen when you give money to the bank, they credit your account (increase a liability) and debit their cash balance (increase an asset). Debits are when they give money to you, they debit your account (decrease a liability) and credit their cash balance (decrease an asset) . If at the end of the period, you have a credit balance then they owe money to you, a debit balance means you owe money to them. If you were keeping a book of accounts then your record of the transactions would be a mirror image of the bank's because you would be looking at it from your point of view.\"", "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": "41372fce8481716fd887860e6d3e94db", "text": "The three places you want to focus on are the income statement, the balance sheet, and cash flow statement. The standard measure for multiple of income is the P/E or price earnings ratio For the balance sheet, the debt to equity or debt to capital (debt+equity) ratio. For cash generation, price to cash flow, or price to free cash flow. (The lower the better, all other things being equal, for all three ratios.)", "title": "" }, { "docid": "a25b57209b7b65d9120b4099816dbf27", "text": "Generally, the answer is as follows: If there is a legal obligation to pay cash flow (including the possibility of court determined restructuring), then it is debt. If the asset owner is not guaranteed any cash flow, but instead owns the residual cash flow from the operations of the business (I.e. the cash flow left-over), then it is equity.", "title": "" }, { "docid": "b987480a00109e250c5865bd585c4a7f", "text": "\"If you are considering this to be an entry for your business this is how you would handle it.... You said you were making a balance sheet for monthly expenses. So on the Balance Sheet, you would be debiting cash. For the Income Statement side you would be crediting Owner's Equity to balance the equation: Assets = Liabilities + Owner's Equity So if you deposited $100 to your account the equation would be affected thus: $ 100 in Assets (Debit to Cash Account) = 0 Liabilities - $100 (Credit to Owner's Equity) It is correctly stated above from the bank's perspective that they would be \"\"Crediting\"\" you account with $100, and any outflow from the bank account would be debiting your account.\"", "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": "9dce0b157b2a2d90afcda05c20b8bd8a", "text": "I mean isn't it implied that cash flows increase by the amount of the benefit of the investment each year? I'm a little shaky on cash flows tbh. My scope may be limited compared to yours I've never taken a financial management class but just from financial accounting knowledge since I recently finished that, it seems like cash flows would be increased if revenues are increased. Unless the revenue increase is for some reason solely in the form of accounts receivable or some asset other than cash.", "title": "" }, { "docid": "c7a0db3a6ebee00e142ce84292f72158", "text": "There are two basic issues here. First, there is the difference between accounting terms and their dictionary definitions. Second, once you dig into it there are dichotomies similar to put vs call options, long sales vs short sales, bond yield vs interest rate. (That is, while they are relatively simple ideas and opposite sides of the same coin, it will probably take some effort to get comfortable with them.) The salient points from the Wikipedia article on debits and credits: In double-entry bookkeeping debit is used for increases in asset and expense transactions and credit is used for increases in a liability, income (gain) or equity transaction. For bank transactions, money deposited in a checking account is treated as a credit transaction (increase) and money paid out is treated as a debit transaction, because checking account balances are bank liabilities. If cash is deposited, the cash becomes a bank asset and is treated as a debit transaction (increase) to a bank asset account. Thus a cash deposit becomes two equal increases: a debit to cash on hand and a credit to a customer's checking account. Your bank account is an asset to you, but a liability to your bank. That makes for a third issue, namely perspective.", "title": "" }, { "docid": "b66aecaca3cfc6d1bf0b48153f487a92", "text": "Yes, at that stage income is income regardless of source. Assuming you're talking about overall profit, not just the individual wins when gambling.", "title": "" }, { "docid": "8b15c9fd643cb2c2f0c419a99905e9ad", "text": "Capital is an Asset. Decreasing value of capital is the decreasing value of an asset. When you buy the forex asset * DR Forex Asset * CR Cash When you sell * DR Cash * CR Forex Asset The difference is now accounted for Here is how: Gains (and losses) are modifications to your financial position (Balance sheet). At the end of the period you take your financial performance (Profit and Loss) and put it into your balance sheet under equity. Meaning that afterwards your balance sheet is better or worse off (Because you made more money = more cash or lost it, whatever). You are wanting to make an income account to reflect the forex revaluation so at the end of the period it is reflected in profit then pushed into your balance sheet. Capital gains directly affect your balance sheet because they increase/decrease your cash and your asset in the journal entry itself (When you buy and sell it). If making money this way is actually how you make you make an income it is possible to make an account for it. If you do this you periodically revalue the asset and write off the changes to the revaluation account. You would do something like DR Asset CR Forex Revaluation account; depending on the method you take. Businesses mostly do this because if the capital gains are their line of business they will be taxed on it like it is income. For simplicity just account for it when you buy and sell the assets (Because you as an individual will only recognise a profit/loss when you enter and exit). Its easier to think about income and expenses are extensions of equity. Income increases your equity, expenses decrease it. This is how they relate to the accounting formula (Assets = Liabilities + Owners Equity)", "title": "" }, { "docid": "0096dd384006c1554bf01aae183b360c", "text": "I debited the principal and interest accruals to an asset account and credited an equity account Why equity? This is clearly income. Generally, except for open balances and additional owner's investment - you wouldn't credit the equity accounts, ever.", "title": "" }, { "docid": "1a48d26db49b7cce01b23f85ca9c3f47", "text": "\"This is a technical term referring to the \"\"double entry\"\"-styled book keeping of trades by brokers. Suppose a client executes a buy order with their broker. The broker's accounting for this \"\"trade\"\" will be recorded as two different \"\"deals\"\" : One \"\"deal\"\" showing the client as buyer and the broker as seller, and a second \"\"deal\"\" showing the broker as buyer and the clearing house as seller. The net result of these two deals is that the broker has no net position while the client has a net buy and the clearing house has a net sell with respect to this broker's account as accounted for internally by the broker. (And the same methods apply for a client sell order.) The client/broker \"\"deal\"\" record - i.e., the client side of the trade - is called the \"\"client side booking\"\", while the broker/clearing house \"\"deal\"\" record is called the \"\"street side booking\"\".\"", "title": "" } ]	fiqa
c63f36bce0258ac6cd52bb4d0264696e	What foreign exchange rate is used for foreign credit card and bank transactions?	[ { "docid": "53b920a8744acc0df88502e7a62a2264", "text": "A lot of questions, but all it boils down to is: . Banks usually perform T+1 net settlements, also called Global Netting, as opposed to real-time gross settlements. That means they promise the counterparty the money at some point in the future (within the next few business days, see delivery versus payment) and collect all transactions of that kind. For this example say, they will have a net outflow of 10M USD. The next day they will purchase 10M USD on the FX market and hand it over to the global netter. Note that this might be more than one transaction, especially because the sums are usually larger. Another Indian bank might have a 10M USD inflow, they too will use the FX market, selling 10M USD for INR, probably picking a different time to the first bank. So the rates will most likely differ (apart from the obvious bid/ask difference). The dollar rate they charge you is an average of their rate achieved when buying the USD, plus some commission for their forex brokerage, plus probably some fee for the service (accessing the global netting system isn't free). The fees should be clearly (and separately) stated on your bank statement, and so should be the FX rate. Back to the second example: Obviously since it's a different bank handing over INRs or USDs (or if it was your own bank, they would have internally netted the incoming USDs with the outgoing USDs) the rate will be different, but it's still a once a day transaction. From the INRs you get they will subtract the average FX achieved rate, the FX commissions and again the service fee for the global netting. The fees alone mean that the USD/INR sell rate is different from the buy rate.", "title": "" }, { "docid": "9bd8b50e0104c813d5f4ea7078fcb107", "text": "On Credit Cards [I am assuming you have a Visa or Master card], the RBI does not decide the rate. The rate is decided by Visa or Master. The standard Sheet rate for the day is used. Additionally SBI would mark it up by few paise [FX mark-up spread]. This is shown as mark-up fee. The rate of USD Vs INR changes frequently. On large value [say 1 million] trades even a paise off makes a huge difference and hence the rate is constantly changing [going up or down]. The rates offered to individuals are constant through out the day. They change from day to day and can go up for down. Recently in the past 6 months if you read the papers, Rupee has been going down and is at historic low. On a give day there are 2 rates; - Bank Buy Rate, ie the rate at which Bank will BUY USD from you. Say 61. So it will buy 100 USD and give you Rupees 6100. - Bank Sell rate, ie the rate at which Bank will SELL USD to you. Say 62. So if you want 100 USD, you need to give Bank 6200. The difference between this is the profit to bank.", "title": "" }, { "docid": "47981e134fcaadbe72fce166491cb0fa", "text": "In addition to the SELL rate on the statement transaction day, currency conversion fees of 0 - 3% is applied, depending on the card issuing bank.", "title": "" } ]	[ { "docid": "b36f4593a562c7419d44757c8d067e94", "text": "I noticed the buy/sell board table. Where did you notice this. Generally for a pair of currencies, there is Unit associated along with direction. The Unit is generally constant. These are only revised when there is large devaluation of a particular currency. Buying Php for MYR 8.52, Selling MYR 8.98. So in this case the Unit of PHP is 100, so Bank is Buying 100 PHP from you [you are selling PHP] and will give you MYR 8.52. If you now want to buy 100 PHP [so the Bank is selling you], you have to pay MYR 8.98. So you loose MYR 0.46 Why are they selling it way beyond the exchange rate? Why is this? As explained above, they are not. Its still within the range. The quote on internet are average price. This means before going back to Philippines, I can buy a lot of peso that I can buy and exchange it for higher price right? Generally an individual cannot make money by buying in one currency and selling in other. There are specialist who try and find arbitrage between multiple pair of currencies and make money out of it. Its a continuous process, if they start making profit, the market will react and put pressure on a pair and the prices would move to remove the arbitrage.", "title": "" }, { "docid": "ee44afaaeb77f2fed647ae241e8bd562", "text": "I suggest opening a Credit Card that doesn't charge Foreign currency conversion fees. Here is the list of cards without such a fee, Bankrate's Foreign transaction fee credit card chart", "title": "" }, { "docid": "8655b32a3c6f801bcb480e02ecae10e1", "text": "\"Check whether you're being charged a \"\"Cash advance\"\" fee with your withdrawals, because it's being withdrawn from your credit card account. If that's happening to you, then having a positive balance on your credit card account will dramatically reduce the fees. Quoting from my answer to a similar question on Travel Stack Exchange: It turns out that even though \"\"Cash advance fee - ATM\"\" has \"\"ATM\"\" in it, it doesn't mean that it's being charged by the ATM you're withdrawing from. It's still being charged by the bank of your home country. And depending on your bank, that fee can be minimized by having a positive balance in your credit card account. This isn't just for cards specially marketed at globehoppers and globeshoppers (mentioned in an answer to a similar question), but even for ordinary credit cards: Help minimise and avoid fees An administrative charge of 2% of the value of the transaction will apply to each cash advance made on your card account, where your account has a negative (debit) balance after the transaction has been posted to it. A minimum charge of $2.50 and a maximum charge of $150 will apply in these circumstances. Where your account has a positive (credit) balance after the transaction has been posted to it, a charge of $2.50 will apply to the transaction. Any such charge will appear on your credit card statement directly below the relevant cash advance. A $2.50 charge if your account is positive, versus $20 if the account is negative? That's a bit of a difference!\"", "title": "" }, { "docid": "f905cfa8cad48d9933b67a3b1b01235e", "text": "The location that you are purchasing from is not really relevant. If you use either a Visa or MasterCard to make a payment in a foreign currency of any kind then your payment will automatically use Visa/MasterCard's FX platform. Whilst fees can vary between issuers, the fee is generally fixed at 2.5%. There are occasionally credit card issuers who have special deals to remove these fees, but they tend to come and go and availability will depend on your country of residence. The only real way to avoid the fee is to get access to a debit or credit card denominated in the currency you wish to use for your purchase. This is often achievable for USD or EUR, but much harder for smaller currencies. You would have to try contacting a bank in that country to see if they would open an account for you or attempting to purchase a pre-paid credit card online.", "title": "" }, { "docid": "3a3ace553b8d5770299f9fc3f60b1b86", "text": "I've done this for many years, and my method has always been to get a bank draft from my Canadian bank and mail it to my UK bank. The bank draft costs $7.50 flat fee and the mail a couple of dollars more. That's obviously quite a lot to pay on $100, so I do this only every six months or so and make the regular payments out of my UK account. It ends up being only a couple of percent in transaction costs, and the exchange rate is the bank rate.", "title": "" }, { "docid": "3440392865922705522359d6a305d0c9", "text": "I concur with the answers above - the difference is about the risk. But in this particular case I find the interest level implausible. 11% interest on deposits in USD seems very speculative and unsustainable. You can't guarantee such return on investment unless you engage in drug trade or some other illegal activity. Or it is a Ponzi scheme. So I would suspect that the bank is having liquidity problems. Which bank is it, by the way? We had a similar case in Bulgaria with one bank offering abnormal interest on deposits in EUR and USD. It went bust - the small depositors were rescued by the local version of FDIC but the large ones were destroyed.", "title": "" }, { "docid": "cd0807d14ae67ad37d5284c750633bce", "text": "Typically, withdrawing cash from an ATM once abroad gives you the best exchange rate, but check if your bank imposes ATM withdrawal fees. This works well for all major currencies, such as GBP, Euro, Yen, AUD. I've also withdrawn Croatian kunas, Brazilian reais and Moroccan dirhams without any trouble. In Southeast Asia, it may be a different story. Thai ATMs, for example, reportedly impose a surcharge of about $5.", "title": "" }, { "docid": "d51b9616110f5402fe4bb70de5b97b68", "text": "\"In my experience working at a currency exchange money service business in the US: Flat fees are the \"\"because we can\"\" fee on average. These can be waived on certain dollar values at some banks or MSBs, and sometimes can even be haggled. If you Google EURUSD, as an example, you also get something like $1.19 at 4pm, 9/18/2017. If you look at the actual conversion that you got, you may find your bank hit you with $1.30 or something close to convert from USD to Euro (in other words, you payed 10% more USD per Euro). And, if you sell your Euro directly back, you might find you only make $1.07. This spread is the real \"\"fee\"\" and covers a number of things including risk or liquidity. You'll see that currencies with more volatility or less liquidity have a much wider spread. Some businesses even go as far as to artificially widen the spread for speculators (see IQD, VND, INR, etc.). Typically if you see a 3% surcharge on international ATM or POS transactions, that's the carrier such as Visa or Mastercard taking their cut for processing. Interestingly enough, you also typically get the carrier-set exchange rate overseas when using your card. In other words, your bank has a cash EURUSD of $1.30 but the conversion you get at the ATM is Visa's rate, hence the Visa fee (but it's typically a nicer spread, or it's sometimes the international spot rate depending on the circumstances, due to the overhead of electronic transactions). You also have to consider the ATM charging you a separate fee for it's own operation. In essence, the fees exist to pad every player involved except you. Some cards do you a solid by advertising $0 foreign exchange fees. Unfortunately these cards only insulate you from the processing/flat fees and you may still fall prey to the fee \"\"hidden\"\" in the spread. In the grander scheme of things, currency exchange is a retail operation. They try to make money on every step that requires them to expend a resource. If you pay 10% on a money transaction, this differs actually very little from the mark-up you pay on your groceries, which varies from 3-5% on dry food, to 20% on alcohol such as wine.\"", "title": "" }, { "docid": "260f08aa3ed67443f642e7942a91ec08", "text": "It will cost the same no matter what currency you use, unless you have access to a deal with a currency exchange that gives you an especially favourable conversion rate for a particular currency. If the current exchange rates are US$1.70 to the £, CA$1.80 to the £ and HK$12.50 to the £, then £1, US$1.70, CA$1.80 and HK$12.50 are just four different ways of writing the same amount of money. So whether you pay in US$, CA$ or HK$ it's the same amount of money that you're paying.", "title": "" }, { "docid": "ab25a613fdb672925f18ec5c484f974a", "text": "Can't I achieve the exact same effect and outcome by exchanging currency now and put that amount of USD in a bank account to gain some interest, then make the payment from one year from now? Sure, assuming that the company has the money now. More commonly they don't have that cash now, but will earn it over the time period (presumably in Euros) and will make the large payment at some point in time. Using a forward protects them from fluctuations in the exchange rate between now and then; otherwise they'd have to stow away USD over the year (which still exposes them to exchange rate fluctuations).", "title": "" }, { "docid": "074fefb0d464c1ed76289e41089e5ff8", "text": "\"What you have is usually called a pre-paid credit card. You pay some money (Indian Rupees) to the credit card company, and then you can use the card to pay for purchases etc in foreign (non-Indian) currencies upto the remaining balance on the card. If a proposed charge exceeds the remaining balance, the transaction will be declined when you try to use the card. There might be multiple ways that the card is set up, e.g. it might be restricted to charge purchases denominated in US dollars alone, or you might be able to use it anywhere in the world (except India). The balance on the card might be denominated in INR, or in US$, say. In the latter case, the exchange rate at which your INR payment was converted into the $US balance is fixed and agreed to at the time of the original payment: you paid INR 70K (say) and the balance was set to US$ 1000 even though the exchange rate on the open market would have given you a few more US dollars. In the former case with the balance denominated in INR, a charge of US$ 100, say, would be converted to INR at a fixed agreed-upon rate, or at the current exchange rate that the Visa or MasterCard network is using, plus (typically) a 3% fee currency exchange fee, and your balance in INR will decrease accordingly. With all that as prologue, if you made a purchase from Walmart USA and later returned it for a credit, it should increase your credit card balance appropriately. You may be whacked with currency conversion fees along the way depending on how your card is set up, but with a US$-denominated card, a credit of US$100 should increase your card balance by US$100. So, that $US 100 can be spent on something else instead. In short, the card is your \"\"bank\"\" account. You cannot spend more than the remaining balance on the card just like you cannot withdraw more money from your bank account than you have in the account, and you can recharge your card by making more INR payments into it so as to increase the available balance. But it is like a current account in that you are unlikely to earn interest on the balance the way you do with a savings account. So what if you are back in India and have no further use of this card? Can you get your balance back as cash or deposit into your regular bank account? Call the Customer Help line, or read the card agreement you signed.\"", "title": "" }, { "docid": "8bcdf4cca2c9f6777c2b69ade14f4138", "text": "Current and past FX rates are available on Visa's website. Note that it may vary by country, so use your local Visa website.", "title": "" }, { "docid": "12c783ab58e622f4b75a45d00cc7d18a", "text": "There is a way I discovered of finding the current exchange rate before committing to buy, go to send payments, put in your own second email, pay 1gbp as the amount and it will give you the exchange rate and fees in your own currency, in my case euro, before you have to click on send payment", "title": "" }, { "docid": "4bb4d41c48db1ec43b5a542e87f30065", "text": "I think the one single answer is that the answer depends on the two countries involved and their banks' practices. To find that answer, you need to ask other expats from your country living in France and ask them for their experience. Note that most expats do not know what fees they are paying. For example, in the Philippines, the lowest fee charged still involves waiting 30 days to get your money. Specifically, I opened a US dollar savings account with the minimum of US $500 required (other rules are involved for opening a bank account), deposited a personal check drawn on my US bank account (no fee charged), and waited 30 calendar days to withdraw USD bills. The Philippines bank did not have a branch in the US, but had financial arrangements with US banks. After getting USD dollars in my hand, I walked to a nearby exchange business store (which usually offered a better daily rate than a bank, but a rate between the banks' buy and sell rates) and exchange the dollars for pesos. Note that years ago, banks did not give USD bills, when dollars were scarce in the Philippines. However, this process does not work in Thailand, due to bank rules against private individuals opening a USD account, with exceptions. And there are still fees involved. March 2017", "title": "" }, { "docid": "f00758a8e973c9613c82d04f248c9dd3", "text": "\"The other option apart from the above which I feel is quite good is \"\"Travel Card\"\" [also called Forex Card] issued in USD. These cards are like prepaid debit cards. They are available from almost quite a few Indian Banks like HDFC / ICICI / UTI. The limit for students is around 100 K USD per year. http://www.hdfcbank.com/personal/cards/prepaid_cards/forexplus_card/pre_forex_elg.htm The card can be reloaded by any amount [i think the minimum is USD 100] by visiting the Branch or certain Forex agents. There loading fee is INR 75. The Fx is typical Card Rate prevailing on the day. In US this card can be used as a credit card for almost everything [I have used this without any hassel]. Avoid using the card for blocking anything [at Hotel for room booking, or initial block at car rentals]. Although its mentioned that there is a withdrawl fees, i was never charged anything for withdrawls. The card comes with an internet based login to monitor account balance and transactions. Any unused funds can be withdrawn in India. The payment will be make in INR.\"", "title": "" } ]	fiqa
a7031dbac7278519e2434d9f310e0f52	What do I do with a P11D Expenses & Benefits form?	[ { "docid": "d3381ce2d3d30afc976df6a0006e9a85", "text": "\"The P11D is a record of the total benefits you've received in a tax year that haven't been taxed in another way, a bit like the P60 is a record of the total pay and tax you've paid in a tax year. Note that travel for business purposes shouldn't be taxable, and if that's what's being reported on the P11D you may need to make a claim for tax relief to HMRC to avoid having to pay the tax. I'm not sure whether it's normal for such expenses to be reported there. HMRC will normally collect that tax by adjusting your tax code after the P11D is issued, so that more tax is taken off your future income. So you don't need to do anything, as it'll be handled automatically. As to how you know it's accurate, if you have any doubts you'd need to contact your former employer and ask them to confirm the details. In general you ought to know what benefits you actually received so should at least be able to figure out if the number is plausible. If your \"\"travel\"\" was a flight to the USA, then probably it was. If it was a bus ticket, less so :-) If you fill in a tax return, you'll also have to report the amount there which will increase the tax you owe/reduce your refund. You won't be charged twice even if your tax code also changes, as the tax return accounts for the total amount of tax you've already paid. For travel benefits, the exact treatment in relation to tax/P11Ds is summarised here.\"", "title": "" } ]	[ { "docid": "d3aa0e53873e068ee63eb8e1179eae2b", "text": "\"I would suggest to get an authoritative response from a CPA. In any case it would be for your own benefit to have at least the first couple of years of tax returns prepared by a professional. However, from my own personal experience, in your situation the income should not be regarded as \"\"US income\"\" but rather income in your home country. Thus it should not appear on the US tax forms because you were not resident when you had it, it was given to you by your employer (which is X(Europe), not X(USA)), and you should have paid local taxes in your home country on it.\"", "title": "" }, { "docid": "c93f3024d8d4bde48399c1dabe42032b", "text": "\"I've done various side work over the years -- computer consulting, writing, and I briefly had a video game company -- so I've gone through most of this. Disclaimer: I have never been audited, which may mean that everything I put on my tax forms looked plausible to the IRS and so is probably at least generally right, but it also means that the IRS has never put their stamp of approval on my tax forms. So that said ... 1: You do not need to form an LLC to be able to claim business expenses. Whether you have any expenses or not, you will have to complete a schedule C. On this form are places for expenses in various categories. Note that the categories are the most common type of expenses, there's an \"\"other\"\" space if you have something different. If you have any property that is used both for the business and also for personal use, you must calculate a business use percentage. For example if you bought a new printer and 60% of the time you use it for the business and 40% of the time you use it for personal stuff, then 60% of the cost is tax deductible. In general the IRS expects you to calculate the percentage based on amount of time used for business versus personal, though you are allowed to use other allocation formulas. Like for a printer I think you'd get away with number of pages printed for each. But if the business use is not 100%, you must keep records to justify the percentage. You can't just say, \"\"Oh, I think business use must have been about 3/4 of the time.\"\" You have to have a log where you write down every time you use it and whether it was business or personal. Also, the IRS is very suspicious of business use of cars and computers, because these are things that are readily used for personal purposes. If you own a copper mine and you buy a mine-boring machine, odds are you aren't going to take that home to dig shafts in your backyard. But a computer can easily be used to play video games or send emails to friends and relatives and lots of things that have nothing to do with a business. So if you're going to claim a computer or a car, be prepared to justify it. You can claim office use of your home if you have one or more rooms or designated parts of a room that are used \"\"regularly and exclusively\"\" for business purposes. That is, if you turn the family room into an office, you can claim home office expenses. But if, like me, you sit on the couch to work but at other times you sit on the couch to watch TV, then the space is not used \"\"exclusively\"\" for business purposes. Also, the IRS is very suspicious of home office deductions. I've never tried to claim it. It's legal, just make sure you have all your ducks in a row if you claim it. Skip 2 for the moment. 3: Yes, you must pay taxes on your business income. If you have not created an LLC or a corporation, then your business income is added to your wage income to calculate your taxes. That is, if you made, say, $50,000 salary working for somebody else and $10,000 on your side business, then your total income is $60,000 and that's what you pay taxes on. The total amount you pay in income taxes will be the same regardless of whether 90% came from salary and 10% from the side business or the other way around. The rates are the same, it's just one total number. If the withholding on your regular paycheck is not enough to cover the total taxes that you will have to pay, then you are required by law to pay estimated taxes quarterly to make up the difference. If you don't, you will be required to pay penalties, so you don't want to skip on this. Basically you are supposed to be withholding from yourself and sending this in to the government. It's POSSIBLE that this won't be an issue. If you're used to getting a big refund, and the refund is more than what the tax on your side business will come to, then you might end up still getting a refund, just a smaller one. But you don't want to guess about this. Get the tax forms and figure out the numbers. I think -- and please don't rely on this, check on it -- that the law says that you don't pay a penalty if the total tax that was withheld from your paycheck plus the amount you paid in estimated payments is more than the tax you owed last year. So like lets say that this year -- just to make up some numbers -- your employer withheld $4,000 from your paychecks. At the end of the year you did your taxes and they came to $3,000, so you got a $1,000 refund. This year your employer again withholds $4,000 and you paid $0 in estimated payments. Your total tax on your salary plus your side business comes to $4,500. You owe $500, but you won't have to pay a penalty, because the $4,000 withheld is more than the $3,000 that you owed last year. But if next year you again don't make estimated payment, so you again have $4,000 withheld plus $0 estimated and then you owe $5,000 in taxes, you will have to pay a penalty, because your withholding was less than what you owed last year. To you had paid $500 in estimated payments, you'd be okay. You'd still owe $500, but you wouldn't owe a penalty, because your total payments were more than the previous year's liability. Clear as mud? Don't forget that you probably will also owe state income tax. If you have a local income tax, you'll owe that too. Scott-McP mentioned self-employment tax. You'll owe that, too. Note that self-employment tax is different from income tax. Self employment tax is just social security tax on self-employed people. You're probably used to seeing the 7-whatever-percent it is these days withheld from your paycheck. That's really only half your social security tax, the other half is not shown on your pay stub because it is not subtracted from your salary. If you're self-employed, you have to pay both halves, or about 15%. You file a form SE with your income taxes to declare it. 4: If you pay your quarterly estimated taxes, well the point of \"\"estimated\"\" taxes is that it's supposed to be close to the amount that you will actually owe next April 15. So if you get it at least close, then you shouldn't owe a lot of money in April. (I usually try to arrange my taxes so that I get a modest refund -- don't loan the government a lot of money, but don't owe anything April 15 either.) Once you take care of any business expenses and taxes, what you do with the rest of the money is up to you, right? Though if you're unsure of how to spend it, let me know and I'll send you the address of my kids' colleges and you can donate it to their tuition fund. I think this would be a very worthy and productive use of your money. :-) Back to #2. I just recently acquired a financial advisor. I can't say what a good process for finding one is. This guy is someone who goes to my church and who hijacked me after Bible study one day to make his sales pitch. But I did talk to him about his fees, and what he told me was this: If I have enough money in an investment account, then he gets a commission from the investment company for bringing the business to them, and that's the total compensation he gets from me. That commission comes out of the management fees they charge, and those management fees are in the same ballpark as the fees I was paying for private investment accounts, so basically he is not costing me anything. He's getting his money from the kickbacks. He said that if I had not had enough accumulated assets, he would have had to charge me an hourly fee. I didn't ask how much that was. Whew, hadn't meant to write such a long answer!\"", "title": "" }, { "docid": "e24013fc2d8a69a7b3cba05a99e5eb8f", "text": "When you enter your expected gross income into the worksheet - just enter $360000 and leave everything else as is. That should give you the right numbers. Same for State (form DE-4).", "title": "" }, { "docid": "57cb61fd296cae857e0413a84e463426", "text": "is it possible to file that single form aside from the rest of my return? Turbotax will generate all the forms necessary to file your return. I recommend you access these forms and file them manually. According to the IRS in order to report capital gains and losses you need to fill out Form 8949 and summarize them on Form 1040 D. Add these two forms to the stack that turbotax generates. Add the total capital gains to line 13 of the Form 1040 which turbotax generated, and adjust the totals on the form accordingly.", "title": "" }, { "docid": "a7e3d7a58663bf7892905e74ddb6346a", "text": "\"I'm mostly guessing based on existing documentation, and have no direct experience, so take this with a pinch of salt. My best understanding is that you need to file Form 843. The instructions for the form say that it can be used to request: A refund or abatement of a penalty or addition to tax due to reasonable cause or other reason (other than erroneous written advice provided by the IRS) allowed under the law. The \"\"reasonable cause\"\" here is a good-faith confusion about what Line 79 of the form was referring to. In Form 843, the IRC Section Code you should enter is 6654 (estimated tax). For more, see the IRC Section 6654 (note, however, that if you already received a CP14 notice from the IRS, you should cross-check that this section code is listed on the notice under the part that covers the estimated tax penalty). If your request is accepted, the IRS should issue you Notice 746, item 17 Penalty Removed: You can get more general information about the tax collection process, and how to challenge it, from the pages linked from Understanding your CP14 Notice\"", "title": "" }, { "docid": "39ac168cb11ea51d8e30d4aa282269e0", "text": "Well you've got to think about the process, but first make sure the thing you want to pay for is actually a qualified dependent care expense. Here is a list of eligible expenses from a national FSA administrator. This process will tie up your money for some amount of time. Your deduction will come out like clockwork. But there is a time-delay of potentially months between your deduction and receipt of a reimbursement. Dependent care plans are money-in money-out. You can only file a reimbursement on funds that have actually been contributed, which is different than a medical FSA. Additionally, you can only file a claim on expenses that have actually been incurred. Dependent care FSA elections can be changed through the year on an as needed basis. This would add an administrivia burden to the person running your payroll, and if there is a payroll vendor in place, likely an actual cost. The administrator in this situation would likely be the company. In the formalities of employee benefits there must always be a named administrator. If your employer currently offers no benefits you should press healthcare first. Paying healthcare premiums pretax would likely save you more money and be less administration than this. Additionally, if your employer is paying for or reimbursing you for your individual health insurance that's currently illegal under the ACA.", "title": "" }, { "docid": "3a00d5959b32ca0bc12b319ae14ed2da", "text": "IRS pub 521 has all the information you need. Expenses reimbursed. If you are reimbursed for your expenses and you use the cash method of accounting, you can deduct your expenses either in the year you paid them or in the year you received the reimbursement. If you use the cash method of accounting, you can choose to deduct the expenses in the year you are reimbursed even though you paid the expenses in a different year. See Choosing when to deduct, next. If you deduct your expenses and you receive the reimbursement in a later year, you must include the reimbursement in your income on Form 1040, line 21 This is not unusual. Anybody who moves near the end of the year can have this problem. The 39 week time test also can be an issue that span over 2 tax years. I would take the deduction for the expenses as soon a I could, and then count the income in the later year if they pay me back. IF they do so before April 15th, then I would put them on the same tax form to make things easier.", "title": "" }, { "docid": "f20fdd823286eba26d5f938c45710cd2", "text": "Talk to a tax professional. The IRS really doesn't like the deduction, and it's a concept (like independent contractors) that is often not done properly. You need to, at a minimum, have records, including timestamped photographs, proving that: Remember, documentation is key, and must be filed and accessible for a number of years. Poor record keeping will cost you dearly, and the cost of keeping those records is something that you need to weigh against the benefit.", "title": "" }, { "docid": "3bdd2e14dc990aa712c3092fbe817087", "text": "I received a $2,000 bonus... Gross Income is income from whatever source derived, including (but not limited to) “compensation for services, including fees, commissions, fringe benefits, and similar items.” Adjusted Gross Income is defined as gross income minus adjustments to income. My question is, must I still report this money on my tax return and if so, how? Yes, and it would be on line 21 of your 1040 with supporting documentation. Are these legal fees deductible as an expense, and where would I list them? Yes, you would aggregate your deductible expenses and place these on your Schedule A. Instructions here. Good Luck. Edit: As Ben Miller pointed out in the comments, the deduction would be placed in either line 23 or 28 depending on the nature of the attorney (investment related or not).", "title": "" }, { "docid": "91ffa5ed8478fc188d5928f275b34075", "text": "What happened is that they do not track (and report) your original cost basis for 1099-B purposes. That is because it is an RSU. Instead, they just reported gross proceeds ($5200) and $0 for everything else. On your Schedule D you adjust the basis to the correct one, and as a comment you add that it was reported on W2 of the previous year. You then report the correct $1200 gain. You keep the documentation you have to back this up in case of questions (which shouldn't happen, since it will match what was indeed reported on your W2).", "title": "" }, { "docid": "e316d41336ca3bda6eb126bcc4115790", "text": "\"Can I use the foreign earned income exclusion in my situation? Only partially, since the days you spent in the US should be excluded. You'll have to prorate your exclusion limit, and only apply it to the income earned while not in the US. If not, how should I go about this to avoid being doubly taxed for 2014? The amounts you cannot exclude are taxable in the US, and you can use a portion of your Norwegian tax to offset the US tax liability. Use form 1116 for that. Form 1116 with form 2555 on the same return will require some arithmetic exercises, but there are worksheets for that in the instructions. In addition, US-Norwegian treaty may come into play, so check that out. It may help you reduce the tax liability in the US or claim credit on the US taxes in Norway. It seems that Norway has a bilateral tax treaty with the US, that, if I'm reading it correctly, seems to indicate that \"\"visiting researchers to universities\"\" (which really seems like I would qualify as) should not be taxed by either country for the duration of their stay. The relevant portion of the treaty is Article 16. Article 16(2)(b) allows you $5000 exemption for up to a year stay in the US for your salary from the Norwegian school. You will still be taxed in Norway. To claim the treaty benefit you need to attach form 8833 to your tax return, and deduct the appropriate amount on line 21 of your form 1040. However, since you're a US citizen, that article doesn't apply to you (See the \"\"savings clause\"\" in the Article 22). I didn't even give a thought to state taxes; those should only apply to income sourced from the state I lived in, right (AKA $0)? I don't know what State you were in, so hard to say, but yes - the State you were in is the one to tax you. Note that the tax treaty between Norway and the US is between Norway and the Federal government, and doesn't apply to States. So the income you earned while in the US will be taxable by the State you were at, and you'll need to file a \"\"non-resident\"\" return there (if that State has income taxes - not all do).\"", "title": "" }, { "docid": "dd10d90ffdb55b8ff054948c6a6d2926", "text": "\"You will be filing the exact same form you've been filing until now (I hope...) which is called form 1040. Attached to it, you'll add a \"\"Schedule C\"\" form and \"\"Schedule SE\"\" form. Keep in mind the potential effect of the tax and totalization treaties the US has with the UK which may affect your filings. I suggest you talk to a licensed EA/CPA who works with expats in the UK and is familiar with all the issues. There are several prominent offices you can find by Googling.\"", "title": "" }, { "docid": "ac8916af592d24f229674bf1f89c93c2", "text": "If this is something you plan to continue doing it would make sense to create it as it's own business entity and then to get non-profit status eg: 501c3. Otherwise I'm pretty sure you have to think of it as YOU receiving the money as a sole proprietor - and file a couple more tax forms at the end of the year. I think it's a Schedule C. So essentially if you bring in $10,000, then you spend that $10,000 as legit business expenses for your venture your schedule C would show no profit and wouldn't pay taxes on it. BUT, you do have to file that form. Operating this way could have legal implications should something happen and you get sued. Having the proper business entity setup could help in that situation.", "title": "" }, { "docid": "2e01fae496d2dff9ca15ea734ad1f05d", "text": "There is a tax advantage only for medical expenses exceeding 10% of your adjusted gross income (7.5% if over age 65). This limit means only a very few people can take advantage of the deduction. The expenses would be entered on Schedule A (itemized deductions) of form 1040. You don't have to send in the supporting documentation, but you have to keep it in your records to present if audited. Yes, a copay qualifies as an expense, but needs supporting documentation.", "title": "" }, { "docid": "3eb73a2ca9245aa95108c276f11d1f16", "text": "In a nutshell, throwing your taxable income in the trash does not remove it from your taxable income; you still have to report in your tax filing, and pay taxes as needed. Especially as you could at any time request your employer to write you a replacement check. I would expect them to start charging a fee for reprinting if you really annoy them by doing it dozens of times. If you want to avoid taxes on it, donate it to a deductible 501(c)3 organization; then it becomes neutral to your taxes.", "title": "" } ]	fiqa
3e14868377bb102cf3eec3067ccc208d	Do market shares exhaust?	[ { "docid": "ef30a432d7454e3ff4e13d625cde1ce5", "text": "\"As @ApplePie pointed out in their answer, at any given time there is a finite amount of stock available in a company. One subtlety you may be missing is that there is always a price associated with an offer to buy shares. That is, you don't put in an order simply to buy 1 share of ABC, you put in an order to buy 1 share of ABC for $10. If no one is willing to sell a share of ABC for $10, then your order will go unfilled. This happens millions of times a day as traders try to figure the cheapest price they can get for a stock. Practically speaking, there is always a price at which people are willing to sell their shares. You can put in a market order for 1 share of ABC, which says essentially \"\"I want one share of ABC, and I will pay whatever the market deems to be the price\"\". Your broker will find you 1 share, but you may be very unhappy about the price you have to pay! While it's very rare for a market to have nobody willing to sell at any price, it occasionally happens that no one is willing to buy at any price. This causes a market crash, as in the 2007-2008 financial crisis, when suddenly everyone became very suspicious of how much debt the major banks actually held, and for a few days, very few traders were willing to buy bank stocks at any price.\"", "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": "4b61f1e9a03676ffb539b67ca4c76ef4", "text": "RonJohn is right, all shares are owned by someone. Depending on the company, they can be closely held so that nobody wants to sell at a given time. This can cause the price people are offering to rise until someone sells. That trade will cause an adjustment in the ticker price of that stock. Supply and demand at work. Berkshire Hathaway is an example of this. The number of shares is low, the demand for them is high, the price per share is high.", "title": "" }, { "docid": "ff2aa48a33ad116566c1f6a710a41290", "text": "Yes, all the shares of a publicly traded company can be purchased. This effectively takes the company private so that it's no longer traded on a stock market. Here are some examples: EDIT: to answer your edited question... the corporation can issue more stock. However that would dilute the value of existing shares. Thus, existing shareholders must vote to allow more shares to be issued. So... in your situation yes, you'd need to wait for someone else to sell.", "title": "" }, { "docid": "11c607b0ff6dc8f0ff3d816435c528ad", "text": "Stock trades are always between real buyers and real sellers. In thinly-traded small stocks, for example, you may not always be able to find a buyer when you want to sell. For most public companies, there is enough volume that individual investors can just about always fill their market orders.", "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": "a788ba9e6ce569641b5d442a54deb512", "text": "Everyone has a price. If nobody is selling shares, then increase the price you will buy them for. And then wait. Somebody will have some hospital bills to pay for eventually. I buy illiquid investments all the time, and thats typically what happens. Great companies do not have liquidity problems.", "title": "" } ]	[ { "docid": "f502cc83389aeb904354d24d6772f1f4", "text": "\"Isn't this effectively saying that the market responds principally to itself, and not to either economic fundamentals, or the profitability of the underlying companies. If so, the market as a \"\"price discovery mechanism\"\" is broken, and investors would be wise to do their own research.\"", "title": "" }, { "docid": "a3c1598e7c8cc2ad85bf254e80449f30", "text": "\"There are stocks that have held 100% of the exact same trend (bull or bear) on a date or date range for years. While history of course doesn't guarantee that the trend will hold for the current year, that fact itself is distinct from the question of whether history is an indicator worth building a thesis off of. The problem is if and when someone thinks \"\"indicator\"\" is equivalent to \"\"definitive answer\"\". Answer 2: A dozen big algo traders have disproven this notion. Answer 3: Price is not only price action itself. It's calendar, evens, binaries, cyclical psychology, etc.\"", "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": "" }, { "docid": "cd80bd4bbb567bb4dd7ffaf39b6d6e0b", "text": "Usually when a stock is up-trending or down-trending the price does not go up or down in a straight line. In an uptrend the price may go up over a couple of days then it could go down the next day or two, but the general direction would be up over the medium term. The opposite for a downtrend. So if the stock has been generally going up over the last few weeks, it may take a breather for a week or two before prices continue up again. This breather is called a retracement in the uptrend. The Fibonacci levels are possible amounts by which the price might retract before it continues on its way up again. By the way 50% is not actually a Fibonacci Retracement level but it is a common retracement level which is usually used in combination with the Fibonacci Retracement levels.", "title": "" }, { "docid": "9194f0c8b7fe2e3e5ef76b79f041941f", "text": "Stock price is based on supply and demand. Unless the stock you are looking to buy usually has very low volume trading 100 shares isn't likely to have any effect on price. There are many companies that have millions or tens of millions of shares trade daily. For stocks like that 100 shares is barely a trivial percentage of the daily volume. For thinly traded stocks you can look at the bid and ask size but even that isn't likely to get you an exact answer. Unless you are trading large volumes your trade will have no effect on the price of shares.", "title": "" }, { "docid": "0c7d88593f9a6f3ff7634377f2856e23", "text": "On most exchanges, if you place a limit order to sell at 94.64, you will be executed before the market can trade at a higher price. However most stocks in the US trade across several exchanges and your broker won't place your limit order on all exchanges (otherwise you could be executed several times). The likeliest reason for wht happened to you is that your order was not on the market where those transactions were executed. Reviewing the ticks, there were only 8 transactions above your limit, all at 1:28:24, for a total 1,864 shares and all on the NYSE ARCA exchange. If your order was on a different exchange (NYSE for example) you would not have been executed. If your broker uses a smart routing system they would not have had time to route your order to ARCA in time for execution because the market traded lower straight after. Volume at each price on that day:", "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": "d136f7a305f0ebe8718fdc3b590115ec", "text": "As Chris pointed out in his comment, smaller stock exchanges may use open outcry. There are several exchanges that use open outcry/floor trading in the US, however, although they aren't necessarily stock exchanges. Having visited the three Chicago exchanges I mentioned, I can personally vouch for their continued use of a trading floor, although its use is declining in all three.", "title": "" }, { "docid": "0d0fb6a1a06313f56e37e7e8b8c1b1f3", "text": "http://mobile.nytimes.com/blogs/economix/2014/04/02/the-many-classes-of-google-stock/ Are you counting both class A and other share classes?", "title": "" }, { "docid": "d1bac2cad9517ca397e51368dd834c77", "text": "it's kind of like a circular loop: i think he would suggest identifying strategies/portfolio managers who have demonstrated outperformance in a persistent manner. Thing is, that's also really hard to do. I think empirically, MPT suffers when the market does. By diversifying, you'll only be down less. He's suggesting shooting for absolute returns -- no matter what the market does, he wants to see positive gains. (a lot) easier said than done", "title": "" }, { "docid": "f988fc7610be7ccd2e8685e75ebb6fe5", "text": "Assuming S&P value as % of GDP doesn't change, to get S&P return you add (Nominal GDP % growth + Dividend Yield) -> S&P return. Historically the S&P has grown faster as corporations of won market share and therefore grown to a larger portion of GDP. While this can continue (or possibly reverse), and can happen globally as well, you are correct in pointing out that it cannot continue ad infinitum.", "title": "" }, { "docid": "1589a66f5ac4ed2660e146ba82cd8dbc", "text": "\"In theory, say we had two soft drink companies, and no other existed. On Jan 1, they report they each had 50% market share for the past year. Over the next year, one company's gain is the other's loss. But over the year, for whatever reason, the market has grown 10% (all the stories of bad water helped this), and while the market share ends at 49/51, the 49 guy has improved his margins, and that stock rises by more than the other. In general, companies in the same industry will be positively correlated, and strongly so. I offer my \"\"spreadsheets are your friend\"\" advice. I took data over the last 10 years for Coke and Pepsi. Easy to pull from various sites, I tend to use Yahoo. In Excel the function CORREL with let you compare two columns of numbers for correlation. I got a .85 result, pretty high. To show how a different industry would have a lower correlation, I picked Intel. Strangely, enough, Intel and Pepsi had a .94 correlation. A coincidence, I suppose, but my point is that you can easily get data and perform your own analysis to better understand what's going on.\"", "title": "" }, { "docid": "dabc7412a6bb3aa6b04232e77185d57a", "text": "\"The June 2014 issue of Barclays Wealth's Compass magazine had a very nice succinct article on this topic: \"\"Value investing – does a rules-based approach work?\"\". It examines the performance of value and growth styles of investment in the MSCI World and S&P500 arenas for a few decades back, and reveals a surprisingly complicated picture, depending on sector, region and time-period. Their summary is basically: A closer look however shows that the overall success of value strategies derives mainly from the 1970s and 1980s. ... in the US, value has underperformed growth for over 25 years since peaking in July 1988. Globally, value experienced a 30% setback in the late 1990s so that there are now periods with a length of nearly 13 years over which growth has outperformed. So the answer to \"\"does it beat the market?\"\" is \"\"it depends...\"\". Update in response to comment below: the question of risk adjusted returns is interesting. To quote another couple of fragments from the piece: Since December 1974, [MSCI world] value has outperformed growth by 2.6% annually, with lower risk. This outperformance on a risk-adjusted basis is the so-called value premium that Eugene Fama and Kenneth French first identified in 1992... and That outperformance has, however, come with more risk. Historical volatility of the pure style indices has been 21-22% compared to 16% for the market. ... From a maximum drawdown perspective, the 69% drop of pure value during the financial crisis exceeded the 51% drop of the overall market.\"", "title": "" }, { "docid": "ff877f1b75ec383bd26eeb7c552b25cd", "text": "Yes, this can and does certainly happen. When two companies each own stock in each other, it's called a cross holding. I learned about cross holdings in reference to Japanese companies (see Wikipedia - Keiretsu) but the phenomenon is certainly not exclusive to that jurisdiction. Here are a few additional references:", "title": "" }, { "docid": "57133597d661974ecdbde235ef6f4c4a", "text": "Markets are rational in the long term. Actors act rationally given the knowledge they have. They don't have perfect knowledge - meaning they're prone to make mistakes. However, in the LONG run, every would be a equilibrium. Facebook stock is clearly over valued and the market is adjusting to the real price. Nothing spectacular going on there.", "title": "" } ]	fiqa
a3a36ab2711d3a7d97e618bb809d4d96	How do 'payday money' stores fund their 'buy now, pay later' loans?	[ { "docid": "a5904cc24faa878de040793a1e14075b", "text": "Payday loan companies basically are banks (although they are incredibly terrible ones). Banks make money in two ways: (1) They charge fees for services they provide (bank account fees, etc.); and (2) The interest rate differential: They borrow money from individuals and corporations (your savings account is essentially money you are loaning to the bank) for a small % paid to individuals, and then lend that money back to other people for a higher %. ie: You might earn 0.5% on your savings account, but then the bank takes that money and lends it to your neighbor for 2.5% as part of their mortgage. Payday loan companies make money in one way: They charge an enormous markup on money lent out to other people. The rates in some cases are so high (annualized interest rates of >1000% are not uncommon in countries without full regulation of this industry), that it barely matters where they get money from. They might get money from investors [who bought shares in the company, giving the company initial cash in the hope that they give dividends down the road], they might get money from other 'real' banks [who lend money just like they would lend money to any other business, with a regular interest rate], or they might have many from many other sources. They might even issue their debt publically, so that individuals could buy bonds from the company and receive a small amount of interest every year. The point is that the rates of return on the money leant by payday loan companies are so high, that the cost of where the money comes from is not terribly relevant.", "title": "" } ]	[ { "docid": "6b722f7ab18aa74ea0ca2f4cbd589dfb", "text": "Of course its possible. Under what terms and with what fees depends on your bank/country regulations, but generally speaking - loaning is the major source of income for banks, especially short-term account overdrafts (which is essentially a loan, usually at a high rate). In the US you can (now, since the new regulations kicked in) instruct the bank not to pay checks/decline debit card purchases if you don't have sufficient funds on the account. Otherwise you can instruct them to pay (at their discretion) to avoid bouncing checks, and accept NSF fees (usually pretty high). Some banks provide overdraft lines of credit (then you won't have NSF fees, and will just pay interest when tapping into that line), others provide option to automatically withdraw the missing amount from a linked account (checking or credit card).", "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": "b10a6a9f11ddd5e980624a5df4c0c0f8", "text": "Car dealers as well as boat dealers, RV dealers, maybe farm vehicle dealers and other asset types make deals with banks and finance companies to they can make loans to buyers. They may be paying the interest to the finance companies so they can offer a 0% loan to the retail customer for all or part of the loan term. Neither the finance company nor the dealer wants to make such loans to people who are likely to default. Such customers will not be offered this kind of financing. But remember too that these loans are secured by the asset - the car - which is also insured. But the dealer or the finance company holds that asset as collateral that they can seize to repay the loan. So the finance company gets paid off and the dealer keeps the profit he made selling the car. So these loans are designed to ensure the dealer nor the finance company looses much. These are called asset finance loans because there is always an asset (the car) to use as collateral.", "title": "" }, { "docid": "588d7deabaf5f7eb299ccaad1bf4760c", "text": "\"When is the best time to pay? At the end of each year? If you save $1,000 each month at 1% so as to pay $12,000 at EOY on a 4.75% loan, you've lost \"\"4.75% - 1% = 3.75%\"\" over that year. (And that's presuming you put the money in a \"\"high yield\"\" online savings account.) Thus, the best time to pay is as soon as you have the money. EDIT: This all assumes that you have an emergency fund (more than the bare minimum $1K), zero other debt with a higher rate than 4.75% and that you are getting the full company match from 401(k).\"", "title": "" }, { "docid": "47b0e5018962cd5b091dffb879e6d7f5", "text": "There is a strange puzzle today where savings account interest rates are not rising in-line with the Federal Funds rate. Either customers are apathetic to their alternative uses of cash, or banks have some-how formed a cartel to keep their cost of funding low. I'm leaning towards the former since bank customers today likely value readily accessible cash more than the interest rate they could earn by investing in money market mutual funds.", "title": "" }, { "docid": "f71e16876c49a2516f62da64a0d1f7c0", "text": "\"It's worth pointing out that most \"\"cash\"\" deals are actually debt financed, at least in part. A quick review of the 8K tells us they plan on debt financing the entire transaction with some senior notes and not use any of the 15B on their BS. This is fairly typical these days because debt is cheaper then the foregone interest on cash.\"", "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": "37f1468d33edbdf2cc73c45e8868ae69", "text": "\"Actually in Finland on some bank + debit/credit card + online retailer combinations you type in your card details as you normally do, but after clicking \"\"Buy\"\" you get directed to your own bank's website which asks you to authenticate yourself with online banking credentials. It also displays the amount of money and to which account it is being paid to. After authentication you get directed back to the retailer's website. Cannot say why banks in US haven't implemented this.\"", "title": "" }, { "docid": "13579414bd19097f500ef210e2dfd057", "text": "\"(Disclosure - PeerStreet was at FinCon, a financial blogger conference I attended last month. I had the chance to briefly meet a couple people from this company. Also, I recognize a number of the names of their financial backers. This doesn't guarantee anything, of course, except the people behind the scenes are no slackers.) The same way Prosper and Lending Club have created a market for personal loans, this is a company that offers real estate loans. The \"\"too good to be true\"\" aspect is what I'll try to address. I've disclosed in other answers that I have my Real Estate license. Earlier this year, I sold a house that was financed with a \"\"Hard Money\"\" loan. Not a bank, but a group of investors. They charged the buyer 10%. Let me state - I represented the seller, and when I found out the terms of the loan, it would have been a breach of my own moral and legal responsibility to her to do anything to kill the deal. I felt sick for days after that sale. There are many people with little credit history who are hard workers and have saved their 20% down. For PeerStreet, 25%. The same way there's a business, local to my area, that offered a 10% loan, PeerStreet is doing something similar but in a 'crowd sourced' way. It seems to me that since they show the duration as only 6-24 months, the buyer typically manages to refinance during that time. I'm guessing that these may be people who are selling their house, but have bad timing, i.e. they need to first close on the sale to qualify to buy the new home. Or simply need the time to get their regular loan approved. (As a final side note - I recalled the 10% story in a social setting, and more than one person responded they'd have been happy to invest their money at 6%. I could have saved the buyer 4% and gotten someone else nearly 6% more than they get on their cash.)\"", "title": "" }, { "docid": "7a78128b1da5143d99ed854a17355031", "text": "They also tranche their loans just like the bonds in the housing crisis, which freaked me the fuck out when I heard it. Asked one of the main Sofi guys presenting at an event (think he works with the 4 founders about his answer and he basically just said the quality of the loans going in will keep them save. It seemed like a semi complete answer, one that I would never know unless I got an inside look at how rigid their loan process is and if it holds up when they are having a low month of inflows.", "title": "" }, { "docid": "4571505cd5e76a598b1090e109add091", "text": "\"A lot of credit card companies these days uses what they call \"\"daily interest\"\" where they charge the interest rate for the number of days till you pay off what you spent. This allows them to make more money than the \"\"period billing\"\". The idea of credit, theoretically, is that there isn't really a day when you can borrow without paying interest - in theory\"", "title": "" }, { "docid": "749eaaf9fc54104235fb924c6e220d06", "text": "The short term loan that accept any credit score is really merchant cash advance. They call it loan because clients do have options to pay as direct deposit but most of the times they would make clients switch to their credit card terminals so they can get percentage of daily sales as payment as well as percentage from their partner credit card company. And that kind of payment (percentage of daily credit card sales) is merchant cash advance.", "title": "" }, { "docid": "e6a21aae1590e3bc1adc26bba980101b", "text": "\"Now store the money in -- okay here, think about a realistic worst case scenario. Not zombie attack or meteor mega-strike, but the kinds in which you are not entirely helpless: job loss stacked on top of the worst recession since the Great Depression, along with credit drying up so you can't just borrow your way through the hard times. Store the money in an account and investment which is relatively liquid, meaning you could extract cash value from it fairly easily in a worst case scneario. Safe -- essentially impossible to lose significant value in a worst case scenario. (or, you only count the part of its value that's sure to be there in a worst case.) If you're much too cool for an emergency fund, then sorry to waste your valuable time! For the rest of us, it's a planning tool. Even dot-coms do this: it's called a \"\"burn-rate\"\" and they know exactly how many more weeks their VC can fund operations. Of course in practicality, it may not go to X months of routine expenses. Most of it may get burned up in month 2 on a new transmission. You can't really predict this stuff, the \"\"X month\"\" paradigm is just an arm-wave. For the financially uneducated, it's also a training tool. In the US, school does not provide financial education. Most people get financial habits from their parents, and like most family lessons, they are deeply emotionally wired, even if they are unconscious of that fact. For instance, some people don't ask for the salaries they deserve, and spend lavishly until the checkbook is zero - they literally push money away. Suffice it to say, it's a challenge to get some people to even realize that savings is a thing, when they have never in their whole lives been able to hold onto more than $20 for more than a week. The concept of an emergency fund is a sellable way to break through that \"\"I can't save\"\" mental-block. So I can see where you might think the emergency fund is greasy kidstuff. Fair. But it's not just that, it's also a very practical planning tool.\"", "title": "" }, { "docid": "70e04ae623489ace987557576c29b943", "text": "Banks can't simply make loans in the void. This is how the cash flow works, generally: 1. Depositers add cash into the bank. The Bank now has cash. 10% of that cash is held on reserve per law. This cash is held on the balance sheet as an asset (cash) and a liability (demand deposits). 2. Someone requests a loan. The loan is funded from the non-reserved cash of these deposits. This results in a lessening of an asset (cash), and the creation of a new asset (loan). 3. Traditionally, as the debtor pays back the loan, the interest is distributed in some sort of split between the bank and the depositors. This means cash in from the loan and interest, and a liability (deposits) also go up. 4. Alternatively, while the above still happens, the bank can securitize the loan and sell that to investors. Investors then get access to the loan and its income, and the bank collects a fee. However, this means more cash on hand for the bank to originate additional loans without going near the reserve requirement. If a bank extends too many loans and its reserve is threatened, it must borrow either from the fed or from other banks. These loans must be paid back.", "title": "" }, { "docid": "25acfc12627b8bc956a648b3eb673eb5", "text": "So this method makes sense and is reasonable and possible. The money multiplier effect ends up capped by the fact that the bank can only lend a percent of its 'cash'. My issue understanding this is I've been told that banks actually don't hold 10% of the cash and lend the other 90% but instead hold the full 100% in cash and lend 900%. Is this accurate? The issue I see with it is that it becomes exponential growth that is uncapped. If the bank lends 900%, it has created this money from nothing, which by itself isn't different that the bank loaning 90% and keeping 10%. The issue comes because the next bank who gets that money deposited will treat that amount as cash as well, so they loan 900% of the 900%. And so on and so forth. How does the system prevent this from happening?", "title": "" } ]	fiqa
0dbc6bfa8df28f346e7303c970d6d851	Can an unmarried couple buy a home together with only one person on the mortgage?	[ { "docid": "239eefd27af2f242572ffc8aa02b5f83", "text": "It is highly unlikely that this would be approved by a mortgage underwriter. When the bank gives a loan with a security interest in a property (a lien), they are protected - if the borrower does not repay the loan, the property can be foreclosed on and sold, and the lender is made whole for the amount of the loan that was not repaid. When two parties are listed on the deed, then each owns an UNDIVIDED 50% share in the property. If only one party has pledged the property as surety against the loan, then in effect only 50% of the property is forecloseable. This means that the bank is unable to recoup its loss. For a (fictional, highly simplified) concrete example, suppose that the house is worth $100,000 and Adam and Zoe are listed on the deed, but Adam is the borrower for a $100,000 mortgage. Adam owes $100,000 and has an asset worth $50,000 (which he has pledged as security for the loan), while Zoe owes nothing and has an asset worth $50,000 (which is entirely unencumbered). If Adam does not pay the mortgage, the bank would only be able to foreclose on his $50,000 half of the property, leaving them exposed to great risk. There are other legal and financial reasons, but overall I think you'll find it very difficult to locate a lender who is willing to take that kind of risk. It's very complicated and there is absolutely no up-side. Also - speaking from experience (from which I was protected because of the bank's underwriting rules) and echoing the advice offered by others on this site: don't bother trying. Commingling assets without a contract (either implicit by marriage or explicit by, well a contract) is going to get you in trouble.", "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": "d5e93075e5b363f36d9be5f797b3e6b3", "text": "In this case can the title of the home still be held by both? Yes, it is possible to have additional people on title that are not on the mortgage. Would the lender (bank) have any reservations about this since a party not on the mortgage has ownership of the property? Possibly, but there is a very simple way to avoid this. Clayton could simply purchase the home himself, and add Emma to the title after closing by recording a quitclaim deed. The lender can't stop that, and from their point of view it's actually better, since they have two people to go after in the case of default. (But despite it being better they often make it difficult to purchase Tip, when you have an attorney draft the quitclaim document, have them draft the reverse document too. (Emma relinquishing the property back to Clayton.) There is usually no extra charge for this and then you have it if you need it. For example, you may need to file the reverse forms if you want to refinance. As a side note, I agree with Grade 'Eh' Bacon's and Pete B.'s in recommending that Clayton and Emma do not do this. Once they are married the property will either be automatically jointly owned, or a spouse can be added to the title easily, and until they are married there are no pros but many cons to doing this. Reasons not to do it: As a side note, in a comment it was proposed: ...suppose Clayton loves Emma so much that he wants her name to be on the house... I understand the desire to do this from an emotional point of view, but realize this does not make sense from a financial point of view.", "title": "" }, { "docid": "024f190b764183dc722c34c4360e0f90", "text": "The mortgage and title of the house would be under both your names equally. When I applied for a mortgage with my girlfriend, I was the primary applicant because of my credit score and she was the secondary because of her income (she makes more). When all was said and done, it was explained to us that the mortgage was ours equally and so was the house, and that I didn't hold more ownership than her over either. We were approved quickly and hassle free. This is our first house too. This is in Florida.", "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": "7ce55e9bf0dbb378da0165acec00aef8", "text": "It's not typically possible for someone to jointly own the house, who is not also jointly liable for the mortgage. This doesn't matter however, because it is possible for two people to get a mortgage together, where only one person's income is assessed by the lender. If that person could get a mortgage of that amount on their own, then the couple should also be able to get the same mortgage. Source: My wife and I got a mortgage like this. She is self-employed, rather than meet the very high requirements for proving her self-employment income, we simply said that we only wanted my income to be taken into consideration.", "title": "" }, { "docid": "d1f4b4fa488a4712895fd0f96f48d5f0", "text": "It depends on the bank - In some cases(mine included :) ) the bank allowed for this but Emma had to sign on a document waiving the rights for the house in case the bank needs to liquidate assets in to recover their mortgage in case of delays or non-payment of dues in time. This had to be signed after taking independent legal advice from a legal adviser.", "title": "" }, { "docid": "0c2838624733017e3b4fd0b74a966f5d", "text": "There is no issue whatsoever, getting a mortgage this way as an unmarried couple. This is very similar to what I did while my wife and I were engaged. We we're on the title as joint tenants. I would expect them to have her as a signee to the mortgage. She won't be able to claim 50% ownership and make things hard on the lender. The title will be contingent on the mortgage being paid. What will be harder is if you guys decide to split. It's not at all uncommon for unmarried couples to buy a house together. Find a broker and get their advice.", "title": "" } ]	[ { "docid": "b239ecbe22ac4293f7f0df722ed82b8e", "text": "You cannot deduct. Even if you could, unless you also hold the mortgage, it's unlikely that you would have sufficient deductions to exceed the standard deduction for a married couple.", "title": "" }, { "docid": "9bcc0c9036c690555368b96512ef7ed8", "text": "\"A Tweep friend asked me a similar question. In her case it was in the larger context of a marriage and house purchase. In reply I wrote a detail article Student Loans and Your First Mortgage. The loan payment easily fit between the generally accepted qualifying debt ratios, 28% for house/36 for all debt. If the loan payment has no effect on the mortgage one qualifies for, that's one thing, but taking say $20K to pay it off will impact the house you can buy. For a 20% down purchase, this multiplies up to $100k less house. Or worse, a lower down payment percent then requiring PMI. Clearly, I had a specific situation to address, which ultimately becomes part of the list for \"\"pay off student loan? Pro / Con\"\" Absent the scenario I offered, I'd line up debt, highest to lowest rate (tax adjusted of course) and hack away at it all. It's part of the big picture like any other debt, save for the cases where it can be cancelled. Personal finance is exactly that, personal. Advisors (the good ones) make their money by looking carefully at the big picture and not offering a cookie-cutter approach.\"", "title": "" }, { "docid": "21f52f29dbe899c34e4170287fea73f2", "text": "It is possible. You'll have to call the bank and ask what documentation is required, I'm pretty sure they'll want notarized authorization by all partners, at least.", "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": "68922f8b7da11e444b92f686b6ced412", "text": "Unlike others who have answered the question - I have done this. Here is my experience - your mileage and friendship may vary: I bought a condo years ago with a longtime childhood friend. We did it for all the reasons you mentioned - sick of renting and not building equity, were both young, single professionals who had the money. The market crashed we have both since married and moved on to own other properties with our spouses. Now we rent out the condo as selling in the current market is not doable.. It's not an ideal situation but that is because of the real estate market - not who I bought with. You need to discuss very openly all of the following scenarios, as well as others I can't think of right now I am sure: If you aren't both 100% in sync with these questions then do not do it. I never understand why some people would buy with a girlfriend/boyfriend but not a good personal friend. You're more likely to have a falling out with your significant other then a long time close friend. My advice, have honest, open conversations, about all possible scenarios. If you feel necessary put somethings down into some sort of legal agreement - with us it was not, and still isn't necessary.", "title": "" }, { "docid": "e807732a034e0d32a4c0fe25c7b8cd02", "text": "If someone owns a house that is not paid off...can someone buy it by taking another mortgage? Yes, but I'm not sure why you think the buyer would need to take another mortgage to buy it. If someone sells their home for X dollars, then the buyer needs X dollars to buy the house. How they get that money (use cash, take out a mortgage) is up to them. During the closing process, a portion of the funds generated from the sale are diverted to pay off the seller's loan and any leftover funds after closing are pocketed by the seller. What kind of offer would be most sensible? I assume that in this case the current owner of the house would want to make a profit. The amount that the house is sold for is determined by the market value of their home, not by the size of the mortgage they have left to pay off. You make the same offer whether they own their home or have a mortgage.", "title": "" }, { "docid": "419c9242f195bf26a718bf4e307dc73d", "text": "You are thinking about this very well. With option one, you need to think about the 5 D's in the contract. What happens when one partner becomes disinterested, divorced (break up), does drugs (something illegal), dies or does not agree with decisions. One complication if you buy jointly, and decide to break up/move, on will the other partner be able to refinance? If not the leaving person will probably not be able to finance a new home as the banks are rarely willing to assume multiple mortgage risks for one person. (High income/large down payment not with standing.) I prefer the one person rents option to option one. The trouble with that is that it sounds like you are in better position to be the owner, and she has a higher emotional need to own. If she is really interested in building equity I would recommend a 15 year or shorter mortgage. Building equity in a 30 year is not realistic.", "title": "" }, { "docid": "c5c182f9a317adac4162135e9842a282", "text": "i would recommend that you establish a landlord/tenant relationship instead of joint ownership (ie 100% ownership stake for one of you vs 0% for the other). it is much cleaner and simpler. basically, one of you can propose a monthly rent amount and the other one can chose to be either renter or landlord. alternatively, you can both write down a secret rental price offer assuming you are the landlord, then pick the landlord who wrote down the smaller rental price. if neither of you can afford the down payment, then you can consider the renter's contribution an unsecured loan (at an agreed interest rate and payment schedule). if you must have both names on the financing, then i would recommend you sell the property (or refinance under a single name) as quickly as possible when the relationship ends (if not before), pay the renter back any remaining balance on the loan and leave the landlord with the resulting equity (or debt). in any case, if you expect the unsecured loan to outlive your relationship, then you are either buying a house you can't afford, or partnering on it with someone you shouldn't.", "title": "" }, { "docid": "533849b422ef3b33e57bd133c162eba5", "text": "\"With regard to worries about ownership: I'll point you towards this - The Cohabitants Rights Bill currently in First Reading at the House of Lords. Without a date for even the second reading yet. In short the Bill is attempting to redress is the lack of rights when a non-married relationship ends when compared to married relationships; that is that one of the \"\"cohabitants\"\" can end up with basically nothing that they don't have their name on. So currently you're in the clear and (Part 2) Section 6.2.a says the Bill cannot be used retroactively against you if your relationship is over before it becomes law (I expect with Brexit etc, this Bill isn't a high priority - it's been a year since the first reading). Section 6.2.a: This Part does not apply to former cohabitants where the former cohabitants have ceased living together as a couple before the commencement date; However, if you're still together if/when this Bill becomes Law then basically all of (Part 1) Section 2 may be relevant as it notes the conditions you will fall into this bill: Section 2.1.a: live together as a couple and Section 2.2.d: have lived together as a couple for a continuous period of three years or more. and the \"\"have lived together\"\" at that point counts from the start of your cohabitation, not the start of the Bill being law: Section 2.4.a: For the purposes of subsection (2)(d), in determining the length of the continuous period during which two people have lived together as a couple - any period of the relationship that fell before the commencement date (of the Bill) is to be taken into account If you have kids at some point, you'd also fall under 2.2.a through 2.2.c too. After that, the financial parity decided upon by the court depends on a whole bunch of conditions as outlined in the Bill, but Section 8.1.b is pretty clear: Section 8.1.b: (b)the court is satisfied either— (i)that the respondent has retained a benefit; or (ii)40that the applicant has an economic disadvantage, as a result of qualifying contributions the applicant has made I'm not qualified to say whether your partner helping to pay off your mortgage in lieu of paying rent herself would count as just paying rent or giving you an economic benefit. Sections 12, 13, and 14 discuss opt-outs, also worth a read. The a major disclaimer here in that Bills at this early stage have the potential to be modified, scrapped and/or replaced making this info incorrect. As an additional read, here's an FT article from Feb 2016 discussing this lack of rights of a cohabitant which should alleviate any current concerns.\"", "title": "" }, { "docid": "bd89b818d5702284369797b5fbfb8462", "text": "A simple and low-interest loan is probably the least likely to cause acrimony, aside from a direct gift. You seem to be describing an equity stake in their house, where some portion of the appreciation in value accrues to you (relative to your initial investment). An equity stake in their house probably doesn't make much sense. You sound as though you're not going to do any of the work aside from the contribution of money. Equity might make sense as a way to reward you for efforts, such as home design or renovation, that increase the value of the home. You probably don't want to be in a position where you are together improving the property and your payback only comes when she sells for more money. What if you have different ideas of how to do it? She has to live there and may want improvements for her needs rather than for buyers. What if she asks you to pay for a portion of the improvement costs or resents you not offering? What if she doesn't want to sell for some reason, so your money is locked up with her family choices? Renovations can often be stressful, so these decisions may be made at difficult times. Either a gift or a low-interest family loan may be simpler for your needs. You can just set the loan terms you want, say payoff over 10 years or a deferred payment schedule. If she gets in trouble, you could perhaps delay or forgive payments. I don't know the UK tax consequences of a loan of this nature, if any. As a general proposition, it's best to set clear and simple expectations at the beginning, and avoid agreements that require multiple decisions to be made consensually in the future, possibly during a time of stress.", "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": "5ca0c78419f78426e0ab28fd31691ec3", "text": "Congrats! Make sure you nail down NOW what happens to the house should you eventually separate. I know lots of unmarried couples who have stayed together for decades and look likely to do so for life; I've also seen some marriages break up that I wouldn't have expected to. Better to have this discussion NOW. Beyond that: Main immediate implications are that you have new costs (taxes, utilities, maintenance) and new tax issues (mortgage interest and property tax deductability) and you're going to have to figure out how to allocate those between you (if there is a between; not sure whether unmarried couples can file jointly these days).", "title": "" }, { "docid": "928f578d51d5e2b352fe5022b90e524e", "text": "If they own the old house outright, they can mortgage it to you. In many jurisdictions this relieves you of the obligation to chase for payment, and of any worry that you won't get paid, because a transfer of ownership to the new owner cannot be registered until any charge against a property (ie. a mortgage) has been discharged. The cost of to your friends of setting up the mortgage will be less than the opulent interest they are offering you, and you will both have peace of mind. Even if the sale of the old house falls through, you will still be its mortgagee and still assured of repayment on any future sale (or even inheritance). Complications arise if the first property is mortgaged. Although second mortgages are possible (and rank behind first mortgages in priority of repayment) the first mortgagee generally has a veto on the creation of second mortgages.", "title": "" }, { "docid": "ba18ba31775842e53398358765bef09d", "text": "Construction loans have an entirely set of rules and factors than mortgages and that's hard to reconcile into one instrument. Also, I'm guessing the bank would be a bit shy about giving a commitment to a home loan before they have any information about how the construction process is going. There would have to be a ton of contingencies put into mortgage and they probably can't account for everything.", "title": "" }, { "docid": "8f92ce53db50ec532e8395af9da6f0bb", "text": "I think you are running into multiple problems here: All these together look like a high risk to a bank, especially right now with companies being reluctant to hire full-time employees. Looking at it from their perspective, the last thing they need right now is another potential foreclosure on their books. BTW, if it is a consolation, I had to prove 2 years of continuous employment (used to be a freelancer) before the local credit union would consider giving me a mortgage. We missed out on a couple of good deals because of that, too.", "title": "" } ]	fiqa
ea0143701d6106f318e08c15c42fa960	Why would a person not want to purchase a Personal Liability (Umbrella) insurance policy?	[ { "docid": "619411647736891896ac3c26e0bed10c", "text": "\"This article has a section titled \"\"Do you need an umbrella policy to cover your personal liability risks?\"\" that says: If you have young children, for example, you might need a policy because they have lots of friends. These little tikes might get into some mischief and hurt themselves at your home. If so, you’re at risk of being sued. Do you have people over often? Do you drive like a maniac or a Parisian? Do you have firearms on your premises? Do you have gardeners and housekeepers on the grounds? All these are reasons why you might want to own an umbrella policy. Although many people in the US are homeowners, parents, drivers, etc., not everyone falls into these categories. For some people, as low as the premiums for such a policy might be, the expected cost outweighs the expected benefit. The cost of a lawsuit may be extremely high, but someone may feel that the chance of a lawsuit being filed against them is low enough to be safely ignored and not worth insuring against. I'm probably not a great example, but I'll use my own situation anyway. Even though a liability policy probably wouldn't cost me too much, I'm almost certain that I wouldn't derive any benefit from it. I live alone without children (or firearms, pet tigers, gardeners, etc.) in a 520 sq. ft. apartment, so the probability that something bad would happen to someone on the small bit of property that I rent and that they would file a sizable lawsuit against me is small enough that I choose to ignore it.\"", "title": "" }, { "docid": "1837651d08056accb28bde3581e2eb92", "text": "\"The two questions inherent in any decision to purchase an insurance plan is, \"\"how likely am I to need it?\"\", and \"\"what's the worst case scenario if I don't have it?\"\". The actuary that works for the insurance company is asking these same questions from the other end (with the second question thus being \"\"what would we be expected to have to pay out for a claim\"\"), using a lot of data about you and people like you to arrive at an answer. It really boils down to little more than a bet between you and the insurance company, and like any casino, the insurer has a house edge. The question is whether you think you'll beat that edge; if you're more likely than the insurer thinks you are to have to file a claim, then additional insurance is a good bet. So, the reasons you might decide against getting umbrella insurance include: Your everyday liability is low - Most people don't live in an environment where the \"\"normal\"\" insurance they carry won't pay for their occasional mistakes or acts of God. The scariest one for most is a car accident, but when you think of all the mistakes that have to be made by both sides in order for you to burn through the average policy's liability limits and still be ruined for life, you start feeling better. For instance, in Texas, minimum insurance coverage levels are 50/100/50; assuming neither party is hurt but the car is a total loss, your insurer will pay the fair market value of the car up to $50,000. That's a really nice car, to have a curbside value of 50 grand; remember that most cars take an initial hit of up to 25% of their sticker value and a first year depreciation of up to 50%. That 50 grand would cover an $80k Porsche 911 or top-end Lexus ES, and the owner of that car, in the U.S. at least, cannot sue to recover replacement value; his damages are only the fair market value of the car (plus medical, lost wages, etc, which are covered under your two personal injury liability buckets). If that's a problem, it's the other guy's job to buy his own supplemental insurance, such as gap insurance which covers the remaining payoff balance of a loan or lease above total loss value. Beyond that level, up into the supercars like the Bentleys, Ferraris, A-Ms, Rollses, Bugattis etc, the drivers of these cars know full well that they will never get the blue book value of the car from you or your insurer, and take steps to protect their investment. The guys who sell these cars also know this, and so they don't sell these cars outright; they require buyers to sign \"\"ownership contracts\"\", and one of the stipulations of such a contract is that the buyer must maintain a gold-plated insurance policy on the car. That's usually not the only stipulation; The total yearly cost to own a Bugatti Veyron, according to some estimates, is around $300,000, of which insurance is only 10%; the other 90% is obligatory routine maintenance including a $50,000 tire replacement every 10,000 miles, obligatory yearly detailing at $10k, fuel costs (that's a 16.4-liter engine under that hood; the car requires high-octane and only gets 3 mpg city, 8 highway), and secure parking and storage (the moguls in Lower Manhattan who own one of these could expect to pay almost as much just for the parking space as for the car, with a monthly service contract payment to boot). You don't have a lot to lose - You can't get blood from a turnip. Bankruptcy laws typically prevent creditors from taking things you need to live or do your job, including your home, your car, wardrobe, etc. For someone just starting out, that may be all you have. It could still be bad for you, but comparing that to, say, a small business owner with a net worth in the millions who's found liable for a slip and fall in his store, there's a lot more to be lost in the latter case, and in a hurry. For the same reason, litigious people and their legal representation look for deep pockets who can pay big sums quickly instead of $100 a month for the rest of their life, and so very few lawyers will target you as an individual unless you're the only one to blame (rare) or their client insists on making it personal. Most of your liability is already covered, one way or the other - When something happens to someone else in your home, your homeowner's policy includes a personal liability rider. The first two \"\"buckets\"\" of state-mandated auto liability insurance are for personal injury liability; the third is for property (car/house/signpost/mailbox). Health insurance covers your own emergency care, no matter who sent you to the ER, and life and AD&D insurance covers your own death or permanent disability no matter who caused it (depending on who's offering it; sometimes the AD&D rider is for your employer's benefit and only applies on the job). 99 times out of 100, people just want to be made whole when it's another Average Joe on the other side who caused them harm, and that's what \"\"normal\"\" insurance is designed to cover. It's fashionable to go after big business for big money when they do wrong (and big business knows this and spends a lot of money insuring against it), but when it's another little guy on the short end of the stick, rabidly pursuing them for everything they're worth is frowned on by society, and the lawyer virtually always walks away with the lion's share, so this strategy is self-defeating for those who choose it; no money and no friends. Now, if you are the deep pockets that people look for when they get out of the hospital, then a PLP or other supplemental liability insurance is definitely in order. You now think (as you should) that you're more likely to be sued for more than your normal insurance will cover, and even if the insurance company thinks the same as you and will only offer a rather expensive policy, it becomes a rather easy decision of \"\"lose a little every month\"\" or \"\"lose it all at once\"\".\"", "title": "" }, { "docid": "e48a26da3c0a0c63bdae93575ef5466c", "text": "You only need umbrella policy for large amounts of liability protection (I think they usually start with $1M). So if you don't have and don't expect to have assets at such a high value - why would you need the insurance? Your homeowners/renters/car/travel insurance should be enough, and you still need to have those for umbrella since its on top of the existing coverage, not instead. Many people just don't have enough assets to justify such a high coverage.", "title": "" } ]	[ { "docid": "43bfcb307ebfd5d196bfaafbe1c6da53", "text": "If someone recommends a particular investment rather than a class of investments, assume they are getting a commission and walk away. If someone recommends whole life insurance as an investment vehicle, walk away. Find someone whose fiduciary responsibility is explicitly to you as their client. That legally obligated them to consider your best interests first. It doesn't guarantee they are good, but it's done protection against their being actively evil.", "title": "" }, { "docid": "e986d00b1b65c89f70aea126b6dfa7a3", "text": "\"You are kind of thinking of this correctly, but you will and should pay for insurance at some point. What I mean by that is that, although the insurance company is making a profit, that removing the risk for certain incidents from your life, you are still receiving a lot of value. Things that inflict large losses in your life tend to be good insurance buys. Health, liability, long term care, long term disability and property insurance typically fall into this category. In your case, assuming you are young and healthy, it would be a poor choice to drop the major medical health insurance. There is a small chance you will get very sick in the next 10 years or so and require the use of this insurance. A much smaller chance than what is represented by the premium. But if you do get very sick, and don't have insurance, it will probably wipe you out financially. The devastation could last the rest of your life. You are paying to mitigate that possibility. And as you said, it's pretty low cost. While you seem to be really good at numbers it is hard to quantify the risk avoidance. But it must be considered in your analysis. Also along those lines is car insurance. While you may not be willing to pay for \"\"full coverage\"\" it's a great idea to max out your personal liability if you have sufficient assets.\"", "title": "" }, { "docid": "f8c7c147d3aff7133b59201bcddfcdd5", "text": "\"Sales tactics for permanent insurance policies can get pretty sleazy. Sending home a flier from school is a way for an insurance salesperson to get his/her message out to 800 families without any effort at all, and very little advertising cost (just a ream of paper and some toner). The biggest catchphrases used are the \"\"just pennies per day\"\" and \"\"in case they get (some devastating medical condition) and become uninsurable.\"\" Sure, both are technically true, but are definitely used to trigger the grown ups' insecurities. Having said that (and having been in the financial business for a time, which included selling insurance policies), there is a place for insurance of children. A small amount can be used to offset the loss of income for the parents who may have to take extended time away from work to deal with the event of the loss of their child, and to deal with the costs of funeral and burial. Let's face it, the percentage of families who have a sufficiently large emergency fund is extremely small compared to the overall population. Personally, I have added a child rider to my own (term) insurance policies that covers any/all of my children. It does add some cost to my premiums, but it's a small cost on top of something that is already justifiably in place for myself. One other thing to be aware of: if you're in a group policy (any life insurance where you're automatically accepted without any underwriting process, like through a benefit at work, or some other club or association), the healthy members are subsidizing the unhealthy ones. If you're on the healthy side, you might consider foregoing that policy in favor of getting your own policy through an insurance company of your choice. If you're healthy, it will always be cheaper than the group coverage.\"", "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": "7288244b1e70bb0b665ab9461c33d128", "text": "While I can't say how it is in the Philippines, my wife the insurance broker leads me to believe that individual insurance is more expensive than group coverages in the US almost always. So much so that people will go to great extents to form any sort of business just to insure themselves. If however it is cheaper, can't you simply opt out of your employer's plan? If you can opt out, will your employer give you any of the money they aren't paying for your insurance? If you can't opt out, or if you paycheck doesn't grow, I can't see why you would want additional coverage especially at such a young age. Should you lose your job in the near future and you worry about, go get the insurance then. EDIT One big advantage is if you get personal insurance, you might need to get an exam to qualify, and it is likely the younger you are the better you will qualify. But again, you already have insurance that covers you so I would advise keeping the group policy is probably better.", "title": "" }, { "docid": "1370c5e19e8cb80afba418a4da199a96", "text": "Not to pick your words apart, but I'm used to the word laddering as used with CDs or bonds, where one buys a new say, 7 year duration each year with old money coming due and, in effect, is always earning the longer term rate, while still having new funds available each year. So. The article you link suggests that there's money to be saved by not taking a long term policy on all the insurance you buy. They split $250K 30 year / $1M 20 year. The money saved by going short on the bigger policy is (they say) $11K. It's an interesting idea. Will you use the $11K saved to buy a new $1M 10 year policy in 20 years, or will you not need the insurance? There are situations where insurance needs drop, e.g. 20 years into my marriage, college fully funded as are retirement accounts. I am semi-retired and if I passed, there's enough money. There are also situations where the need runs longer. The concept in the article works for the former type of circumstance.", "title": "" }, { "docid": "9656dbde9bcf9ceff0f8dccdca838802", "text": "Depending on your perspective of it, I can see reasons for and against this idea. Only with the benefit of hindsight can one say how wise or unwise it is to do so. Earlier in my career, I invested and lost it all. Understand if you do buy when would you be able to sell, do you have to have an account with the underwriter, what fees may there be in having such an account, and would there be restrictions on when you could sell.", "title": "" }, { "docid": "91661f1933fc8339c681374e1d9834ac", "text": "Since insurance is priced for profit, the price will be more than the price of a new phone multiplied against the chance of loss and payout. Otherwise insurance would not be offered since there was no money to be made by the insurance company. The idea of insurance is that you are pooling your risk with everyone else. You all definitely pay a little (insurance premium) instead of any of you maybe paying a lot (when a phone is destroyed). The question is not whether it is a good investment (almost surely no), but whether the loss at a random time would be too crippling to be absorbed by you when it happened. If you can afford a new phone without financial difficulty if it were destroyed then you should generally not buy insurance. One other factor could be that although you are in the same risk pool as everyone else (everyone pays the same rate), but your situation has a higher risk than most, insurance can be a better deal, though the better investment over time would be to correct the risky situation instead of buying insurance. This could be that you have a habit of losing things, live in an area where phones are stolen often, have pets that destroy your belongings, etc. Statistically, you will come out ahead not buying insurance, but you are accepting an unknown outcome.", "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": "237ac6e2a6adcc9579322678030523b6", "text": "Another fun fact: only ~10% of property southern California is covered by earthquake insurance. Why? Same reason as here. 1) It is a difficult to measure the risk. Think: Texas has experienced 3 100-year floods in 18 months. This amount of rain could have caused a wide range of different outcomes (anywhere from tens of millions to tens of billions in damage) depending on location, soil saturation, structural integrity of dams, wind direction, drainage/sewage systems, etc. Insurers who have covered these types of disasters before have paid out more in claims then they took in premiums. 2) It is expensive. Yes, you can reinsure but most of the reinsures won't take this type of risk in their property portfolio in such a soft market that has persisted for roughly a decade. Consumers don't want to pay for the coverage because it is expensive even with government backstops. The smart money would be in investing in resiliency programs (infrastructure) that would mitigate damage to sensitive areas which would in turn drive down premiums. But that requires governments, citizens, and businesses to engage in long run thinking and execution. Some areas have discussed these types of plans (New Orleans comes to mind) but most of our coastlines need to have plans like this in place given sea level rises, high concentrations of valuable assets on shorelines, and warmer oceans having the potential to generate more intense storms. tl;dr this is not a new problem. It is nobody's fault but everybody's responsibility. Fuck nature, man", "title": "" }, { "docid": "c66ba9f4f3ff61ebd2e8c6b23ade1366", "text": "One of the more subtle disadvantages to large credit card purposes purchases (besides what the other answer mentions), is that it makes you less prepared for emergencies. If you carry a large balance on your credit card with the idea that your income can easily handle the payments to beat the no-interest period, you never know when you'll have an unexpected emergency and you'll end up having to pay less, miss the deadline and end up paying huge interest. Even if you are fastidious about saving and budgeting, what if your family comes under a large financial burden (just as one possible example)?", "title": "" }, { "docid": "9f2487f643a187dfc1e4bd144bd1b541", "text": "If the child can take over the life insurance when they wish to get a mortgage or have their own children, there may be a case for buying insurance for the child in the event that your child's health is not good enough for them to get cover at that time. However I don’t think this type of insurance is worth having.", "title": "" }, { "docid": "de4fcb8ec22d7cad3076d944c5a39ab5", "text": "Another reason to buy insurance, though not applicable in this case, is that the insurance company is a big buyer of services and will be able to buy any services covered under the policy much more cheaply than you will. So they can charge you less than your expected payouts if you were uninsured and still make a profit. This particularly applies to things like medical and veterinary insurance.", "title": "" }, { "docid": "fb9010f18a4e49aa74aab3af0e2b48b8", "text": "\"The general answer to any \"\"is it worth it\"\" insurance question is \"\"no,\"\" because the insurance company is making a profit on the insurance.* To decide if you want the insurance, you need to figure out how much you can afford to pay if something happens, how much they cover, and how badly you want to transfer your risk to them. If you won't have trouble coming up with the $4000 deductible should you need to, then don't get this extra insurance. * I did not mean to imply that insurance is always a bad idea or that insurance companies are cheating their customers. Please let me explain further. When you buy any product from a business, that business is making a profit. And there is nothing wrong with that at all. They are providing a service and should be compensated for their efforts. Insurance companies also provide a service, but unlike other types of businesses, their product is monetary. You pay them money now, and they might pay you money later. If they pay you more money then you spent, you came out ahead, and if you spend more money then they give you, it was a loss for you. In order for the insurance company to make a profit, they need to bring in more money than they pay out. In fact, they need to bring in a lot more money then they pay out, because in addition to their profit, they have all the overhead of running a business. As a result, on average, you will come out behind when you purchase insurance. This means that when you are on the fence about whether or not to purchase any insurance product, the default choice should be \"\"no.\"\" On average, you are financially better off without insurance. Now, that doesn't mean you should never buy insurance. As mentioned by commenter @xiaomy, insurance companies spread risk across all of their customers. If I am in a situation where I have a risk of financial ruin in a certain circumstance, I can eliminate that risk by purchasing insurance. For example, I have term life insurance, because if I were to pass away, it would be financially catastrophic for my family. (I'm hoping that the insurance company makes 100% profit on that deal!) I also continue to buy expensive health insurance because an unexpected medical event would be financially devastating. However, I always decline the extended warranty when I buy a $300 appliance, because I don't have any trouble coming up with another $300 in the unlikely event that it breaks, and I would rather keep the money than contribute to the profits of an insurance company unnecessarily. In my original answer above, I pointed out how you would determine whether or not to purchase this particular insurance product. This product pays out a bunch of relatively small amounts for certain events, up to a limit of $4000. Would this $4000 be hard for you to come up with if you needed to? If so, get the insurance. But if you are like me and have an emergency fund in place to handle things like this, then you are financially better off declining this policy.\"", "title": "" }, { "docid": "82379ac03993b758aa664cb67d6905ad", "text": "\"The size terminology for lumber is based on the rough cut dimensions from the mill, not the actual size of the board at Home Depot. There's post finishing done to 2x4's, etc from the big box stores. It's been that way for 50 years. If a couple of hipsters got their feelings hurt because they didn't know what they were doing, tell them to watch a youtube video about lumber before screwing up a home improvement project. They wouldn't have the slightest idea what to do with an actual rough cut 1x6 anyway. They'd get home with it, and if by some miracle they managed to plane it, they'd realize they're left with a 3/4\"\"x5 3/4\"\" board, just like you get from Home Depot. Grow up, pansies.\"", "title": "" } ]	fiqa
2891a43e5c3082e455bf74a424f63f43	How do I calculate ownership percentage for shared home ownership?	[ { "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": "98b07a3bada1706a14716f012eaff827", "text": "\"Accounting for this properly is not a trivial matter, and you would be wise to pay a little extra to talk with a lawyer and/or CPA to ensure the precise wording. How best to structure such an arrangement will depend upon your particular jurisdiction, as this is not a federal matter - you need someone licensed to advise in your particular state at least. The law of real estate co-ownership (as defined on a deed) is not sufficient for the task you are asking of it - you need something more sophisticated. Family Partnership (we'll call it FP) is created (LLC, LLP, whatever). We'll say April + A-Husband gets 50%, and Sister gets 50% equity (how you should handle ownership with your husband is outside the scope of this answer, but you should probably talk it over with a lawyer and this will depend on your state!). A loan is taken out to buy the property, in this case with all partners personally guaranteeing the loan equally, but the loan is really being taken out by FP. The mortgage should probably show 100% ownership by FP, not by any of you individually - you will only be guaranteeing the loan, and your ownership is purely through the partnership. You and your husband put $20,000 into the partnership. The FP now lists a $20,000 liability to you, and a $20,000 asset in cash. FP buys the $320,000 house (increase assets) with a $300,000 mortgage (liability) and $20,000 cash (decrease assets). Equity in the partnership is $0 right now. The ownership at present is clear. You own 50% of $0, and your sister owns 50% of $0. Where'd your money go?! Simple - it's a liability of the partnership, so you and your husband are together owed $20,000 by the partnership before any equity exists. Everything balances nicely at this point. Note that you should account for paying closing costs the same as you considered the down payment - that money should be paid back to you before any is doled out as investment profit! Now, how do you handle mortgage payments? This actually isn't as hard as it sounds, thanks to the nature of a partnership and proper business accounting. With a good foundation the rest of the building proceeds quite cleanly. On month 1 your sister pays $1400 into the partnership, while you pay $645 into the partnership. FP will record an increase in assets (cash) of $1800, an increase in liability to your sister of $1400, and an increase in liability to you of $645. FP will then record a decrease in cash assets of $1800 to pay the mortgage, with a matching increase in cost account for the mortgage. No net change in equity, but your individual contributions are still preserved. Let's say that now after only 1 month you decide to sell the property - someone makes an offer you just can't refuse of $350,000 dollars (we'll pretend all the closing costs disappeared in buying and selling, but it should be clear how to account for those as I mention earlier). Now what happens? FP gets an increase in cash assets of $350,000, decreases the house asset ($320,000 - original purchase price), and pays off the mortgage - for simplicity let's pretend it's still $300,000 somehow. Now there's $50,000 in cash left in the partnership - who's money is it? By accounting for the house this way, the answer is easily determined. First all investments are paid back - so you get back $20,000 for the down payment, $645 for your mortgage payments so far, and your sister gets back $1400 for her mortgage payment. There is now $27,995 left, and by being equal partners you get to split it - 13,977 to you and your husband and the same amount to your sister (I'm keeping the extra dollar for my advice to talk to a lawyer/CPA). What About Getting To Live There? The fact is that your sister is getting a little something extra out of the deal - she get's the live there! How do you account for that? Well, you might just be calling it a gift. The problem is you aren't in any way, shape, or form putting that in writing, assigning it a value, nothing. Also, what do you do if you want to sell/cash out or at least get rid of the mortgage, as it will be showing up as a debt on your credit report and will effect your ability to secure financing of your own in the future if you decide to buy a house for your husband and yourself? Now this is the kind of stuff where families get in trouble. You are mixing personal lives and business arrangements, and some things are not written down (like the right to occupy the property) and this can really get messy. Would evicting your sister to sell the house before you all go bankrupt on a bad deal make future family gatherings tense? I'm betting it might. There should be a carefully worded lease probably from the partnership to your sister. That would help protect you from extra court costs in trying to determine who has the rights to occupy the property, especially if it's also written up as part of the partnership agreement...but now you are building the potential for eviction proceedings against your sister right into an investment deal? Ugh, what a potential nightmare! And done right, there should probably be some dollar value assigned to the right to live there and use the property. Unless you just want to really gift that to your sister, but this can be a kind of invisible and poorly quantified gift - and those don't usually work very well psychologically. And it also means she's going to be getting an awfully larger benefit from this \"\"investment\"\" than you and your husband - do you think that might cause animosity over dozens and dozens of writing out the check to pay for the property while not realizing any direct benefit while you pay to keep up your own living circumstances too? In short, you need a legal structure that can properly account for the fact that you are starting out in-equal contributors to your scheme, and ongoing contributions will be different over time too. What if she falls on hard times and you make a few of the mortgage payments? What if she wants to redo the bathroom and insists on paying for the whole thing herself or with her own loan, etc? With a properly documented partnership - or equivalent such business entity - these questions are easily resolved. They can be equitably handled by a court in event of family squabble, divorce, death, bankruptcy, emergency liquidation, early sale, refinance - you name it. No percentage of simple co-ownership recorded on a deed can do any of this for you. No math can provide you the proper protection that a properly organized business entity can. I would thus strongly advise you, your husband, and your sister to spend the comparatively tiny amount of extra money to get advice from a real estate/investment lawyer/CPA to get you set up right. Keep all receipts and you can pay a book keeper or the accountant to do end of the year taxes, and answer questions that will come up like how to properly account for things like depreciation on taxes. Your intuition that you should make sure things are formally written up in times when everyone is on good terms is extremely wise, so please follow it up with in-person paid consultation from an expert. And no matter what, this deal as presently structured has a really large built-in potential for heartache as you have three partners AND one of the partners is also renting the property partially from themselves while putting no money down? This has a great potential to be a train wreck, so please do look into what would happen if these went wrong into some more detail and write up in advance - in a legally binding way - what all parties rights and responsibilities are.\"", "title": "" }, { "docid": "59c1caa0b4f4ba5a04b1ff5e3b69cd6d", "text": "It may clarify your thinking if you look at this as two transactions: I am an Australian so I cannot comment on US tax laws but this is how the Australian Tax Office would view the transaction. By thinking this way you can allocate the risks correctly, Partnership Tenancy Two things should be clear - you will need a good accountant and a good lawyer - each.", "title": "" }, { "docid": "683d1446a4606ae1e9fdf8dc074abe9b", "text": "\"The bottom line is that you can decide whatever you want to do. It is good of you to get everything in writing. What happens if she decides to move to a different city? What happens if she also wants to be bought out? It should also include contingencies for your husband and yourself. God forbid anything negative happens, but what happens if you two get divorced? Does your husband want to be an agreement with your sister if you pass away? There does not seem to be any math to do in this case. While she is paying the lion's share of the payment, she is also receiving the benefit of having a place to live. It is unlikely that she can rent an equivalent place for anything close to 1400/month. I would estimate it would be at least 1800/month to rent an equivalent property. So she put no money down, and she is paying below market \"\"rent\"\" to live somewhere. Many people would be happy to have $400/month off and handle their own repairs (let alone you still kicking in half). Now all that said, if you want to give her some equity based upon generosity or the desire to give her some dignity, then you are free to do so. Perhaps 10%?\"", "title": "" }, { "docid": "5b290e20dbb771f105b217af25c83024", "text": "You and your husband are fronting all the money upfront. I'm guessing this will cost you around 67,000 once closing costs and fees are included. So obviously you would be hundred percent owners at the beginning. You'll then pay 31% of the mortgage and have your sister pay the remaining 69%. This puts your total investment at the end at 67k + 74.4k + 31% of interest accrued, and your sisters total investment at 165.6k+69% of interest accrued. If you hold the full length of the mortgage, your sister will have invested much more than you( assuming 30 year fixed rate, and 3.75%, she'd pay 116.6k in interest as opposed to your 49.6k) She will have spent 282.2k and y'all will have spent 191k. However if you sell early, your percentage could be much higher. These calculations don't take into account the opportunity cost of fronting all the cash. It could be earning you more in the stock market or in a different investment property. Liability also could be an issue in the case of her not being able to pay. The bank can still come after you for the whole amount. Lastly and most importantly, this also doesn't include the fact that she will be living there and y'all will not. What kind of rent would she be paying to live in a similar home? If it is more than 1400, you will basically be subsidizing her living, as well as tying up funds, and increasing your risk exposure. If it is more than 1400, she shouldn't be any percent owner.", "title": "" }, { "docid": "a0e3321a511af495a460c7995a5d59a1", "text": "Once your sister and you make your first payments, you've paid $20,645, and your sister has paid $1400. But your sister also owes rent. Zeroth order estimate for rent is that it's equal to mortgage payment, so that's $2045 (I assume that $2045 is actually your total payment, not just your escrow payment. Unless I'm misunderstanding what the term means, $2045 is an absurdly high amount for a monthly escrow payment.) So your sister now has made a net capital contribution of ... negative $645. So you're giving your sister a gift of $7740 each year, and are the sole equity owner of the house. There's a $14000/year gift tax exclusion, and I think that both you and your husband can claim it separately, so every year you could declare your sister to have $20260 added to her capital contribution, or more if you're willing to pay gift tax. But as it stands, if there are any losses from the property, they will be borne exclusively by you; therefore, any profits should be enjoyed exclusively by you. Any other arrangement is you giving a gift to your sister. If the price of the house were to shoot up to $1,000,000 after a year, and you were to split the profits with your sister 50:50, and not pay a gift tax, you WOULD be violating tax law.", "title": "" } ]	[ { "docid": "c5c182f9a317adac4162135e9842a282", "text": "i would recommend that you establish a landlord/tenant relationship instead of joint ownership (ie 100% ownership stake for one of you vs 0% for the other). it is much cleaner and simpler. basically, one of you can propose a monthly rent amount and the other one can chose to be either renter or landlord. alternatively, you can both write down a secret rental price offer assuming you are the landlord, then pick the landlord who wrote down the smaller rental price. if neither of you can afford the down payment, then you can consider the renter's contribution an unsecured loan (at an agreed interest rate and payment schedule). if you must have both names on the financing, then i would recommend you sell the property (or refinance under a single name) as quickly as possible when the relationship ends (if not before), pay the renter back any remaining balance on the loan and leave the landlord with the resulting equity (or debt). in any case, if you expect the unsecured loan to outlive your relationship, then you are either buying a house you can't afford, or partnering on it with someone you shouldn't.", "title": "" }, { "docid": "587070af410b39e29a6ef113da901b37", "text": "You should have drafted a contract of purchase that stipulated out equity stake in the home based of his down payment and yours, along with future monthly payments. But morally, if the house sells, yielding 100,000 profit (after fees/taxes/etc), you should get ( To Calculate Your Cut: (20,000 + Your Total Mortgage Payments Applied to Principle) / (1,900 + His Total Mortgage Payments Applied to Principle Only) * Profit on Sale of House After All Fees = Your Cut His would be: (1,900 + His Total Mortgage Payments Applied to Principle Only) / (20,000 + Your Total Mortgage Payments Applied to Principle) * Profit on Sale of House After All Fees = His Cut You'd then take mortgage payment totals for each; and calculate the payments made towards interest; and claim the correct amount each of you paid on payments for the mortgage interest deduction when you file your taxes. Although, depending on how the loan is written, the banks may issue 1099s which dont reflect actual payments made... Talk to an accountant.", "title": "" }, { "docid": "533849b422ef3b33e57bd133c162eba5", "text": "\"With regard to worries about ownership: I'll point you towards this - The Cohabitants Rights Bill currently in First Reading at the House of Lords. Without a date for even the second reading yet. In short the Bill is attempting to redress is the lack of rights when a non-married relationship ends when compared to married relationships; that is that one of the \"\"cohabitants\"\" can end up with basically nothing that they don't have their name on. So currently you're in the clear and (Part 2) Section 6.2.a says the Bill cannot be used retroactively against you if your relationship is over before it becomes law (I expect with Brexit etc, this Bill isn't a high priority - it's been a year since the first reading). Section 6.2.a: This Part does not apply to former cohabitants where the former cohabitants have ceased living together as a couple before the commencement date; However, if you're still together if/when this Bill becomes Law then basically all of (Part 1) Section 2 may be relevant as it notes the conditions you will fall into this bill: Section 2.1.a: live together as a couple and Section 2.2.d: have lived together as a couple for a continuous period of three years or more. and the \"\"have lived together\"\" at that point counts from the start of your cohabitation, not the start of the Bill being law: Section 2.4.a: For the purposes of subsection (2)(d), in determining the length of the continuous period during which two people have lived together as a couple - any period of the relationship that fell before the commencement date (of the Bill) is to be taken into account If you have kids at some point, you'd also fall under 2.2.a through 2.2.c too. After that, the financial parity decided upon by the court depends on a whole bunch of conditions as outlined in the Bill, but Section 8.1.b is pretty clear: Section 8.1.b: (b)the court is satisfied either— (i)that the respondent has retained a benefit; or (ii)40that the applicant has an economic disadvantage, as a result of qualifying contributions the applicant has made I'm not qualified to say whether your partner helping to pay off your mortgage in lieu of paying rent herself would count as just paying rent or giving you an economic benefit. Sections 12, 13, and 14 discuss opt-outs, also worth a read. The a major disclaimer here in that Bills at this early stage have the potential to be modified, scrapped and/or replaced making this info incorrect. As an additional read, here's an FT article from Feb 2016 discussing this lack of rights of a cohabitant which should alleviate any current concerns.\"", "title": "" }, { "docid": "19f18ebdd0d55ba406566aa94f714891", "text": "You can either borrow money... credit card, line of credit, re-finance your home, home equity line of credit, loan, mortgage, etc. Or you have other invest in your company as equity. They will contribute $X to get Y% of your company and get Z% of the profits. Note amount of profits does not necessarily have to equate to percentage owned. This makes sense if they are a passive investor, where they just come up with the money and you do all the work. Also voting rights in a company does not have to equate to percentage owned either. You can also have a combination of equity and debt. If you have investors, you would need to figure out whether the investor will personally guarantee the debt of your company - recourse vs non-recourse. If they have more risk, they will want more of a return. One last way to do it is crowdfunding, similar to what people do on Kickstarter. Supporters/customers come up with the money, then you deliver the product. Consulting practices do something similar with the concept of retainers. Best of luck.", "title": "" }, { "docid": "a409e9ac055ad2bcb8612e19efcef9a2", "text": "It sounds like you are in great shape, congratulations! Things I would think about in your position: Consider putting 20% down instead of 30% and find a great house that has a key missing modernization, like a kitchen. Then replace the kitchen, which if done right can instantly add that 10% (or more) right back in equity... or stick to your plan... You have earned the luxury of taking your time and doing what's right for you. Think real carefully about location. Here are some ideas based on my experience.", "title": "" }, { "docid": "3a0af25e03040e9e403abe4284ce6bb4", "text": "\"To expand on what @fishinear and some others are saying: The only way to look at it is that the parents have invested, because the parents get a % of the property in the end, rather than the original loan amount plus interest. It is investment; it is not a loan of any kind. One way to understand this is to imagine that after 20 years, the property triples in value (or halves in value). The parents participate as if they had invested in 75% ownership of the property and the OP as if 25% ownership of the property. Note that with a loan, there is a (potentially changing) outstanding loan balance, that could be paid to end the loan (to pay off the loan), and there is an agreed upon an interest rate that is computed on the outstanding balance — none of those apply to this situation; further with a loan there is no % of the property: though the property may be used to secure the loan, that isn't ownership. Basically, since the situation bears none of the qualities of a loan, and yet does bear the qualities of investment, the parents have bought a % ownership of the property. The parents have invested in 75% of the real estate, and the OP is renting that 75% from them for: The total rent the OP is paying the parents for their 75% of the property is then (at least) $1012.50/mo, A rental rate of $1012.50/mo for 75% of the property equates to a rental price of $1350/mo for the whole property. This arrangement is only fair to both parties when the fair-market rental value of the whole property is $1350/mo; it is unfair to the OP when the fair-market rental value of property is less, and unfair to the parents when the fair-market rental value of property is more. Of course, the fair-market rental value of the property is variable over time, so the overall fairness would need to understand rental values over time. I feel like this isn't actually a loan if I can never build more equity in the condo. Am I missing something? No, it isn't a loan. You and your parents are co-investing in real estate. Further, you are renting their portion of the investment from them. For comparison, with a loan you have 100% ownership in the property from the start, so you, the owner, would see all the upside/downside as the property valuation changes over time whether the loan is paid off or not. The borrower owes the loan balance (and interest) not some % of the property. A loan may be secured by the property (using a lien) but that is quite different from ownership. Typically, a loan has a payment schedule setup to reduce the loan balance (steadily) over time so that you eventually pay it off. With a loan you gain equity % — the amount you own outright, free & clear — in two ways, (1) by gradually paying off the loan over time so the unencumbered portion of the property grows, and (2) if the valuation of the property increases over time that gain in equity % is yours (not the lenders). However note that the legal ownership is all 100% yours from the start. Are my parents ripping me off with this deal that doesn't allow me to build my equity in my home? You can evaluate whether you are being ripped off by comparing the $1350/mo rate to the potential rental rate for the property over time (which will be a range or curve, and there are real estate websites (like zillow.com or redfin.com, others) to help estimate what fair-market rent might be). Are there similar deals like this...? A straight-forward loan would have the borrower with 100% legal ownership from the start, just that the property secures the loan. Whereas with co-investment there is a division of ownership % that is fixed from the start. It is unusual to have both investment and loan at the same time where they are setup for gradual change between them. (Investment and loan can certainly be done together but would usually be done as completely separate contracts, one loan, one investment with no adjustment between the two over time.) To do both investment and loan would be unusual but certainly be possible, I would imagine; however that is not the case here as being described. I am not familiar with contracts that do both so as to take over the equity/ownership/investment over time while also reducing loan balance. Perhaps some forms of rent-to-own work that way, something to look into — still, usually rent-to-own means that until the renter owns it 100%, the landlord owns 100%, rather than a gradual % transfer over time (gradual transfer would imply co-ownership for a long time, something that most landlords would be reluctant to do). Transfer of any particular % of real estate ownership typically requires filing documents with the county and may incur fees. I am not aware of counties that allow gradual % transfer with one single filing. Still, the courts may honor a contract that does such gradual transfer outside of county filings. If so, what should I do? Explain the situation to your parents, and, in particular, however far out of balance the rental rate may be. Decide for yourself if you want to rent vs. buy, and where (that property or some other). If your parents are fair people, they should be open to negotiation. If not, you might need a lawyer. I suspect that a lawyer would be able to find several issues with which to challenge the contract. The other terms are important as well, namely gross vs. net proceeds (as others point out) because selling a property costs a % to real estate agents and possibly some taxes as well. And as the others have pointed out, if the property ultimately looses value, that could be factored in as well. It is immaterial to judging the fairness of this particular situation whether getting a bank loan would be preferable to renting 75% from the parents. Further, loan interest rates don't factor into the fairness of this rental situation (but of course interest rates do factor into identifying the better of various methods of investment and methods of securing a place to live, e.g. rent vs. buy). Contributed by @Scott: If your parents view this as an investment arrangement as described, then you need to clarify with them if the payments being made to them are considered a \"\"buy out\"\" of their share. This would allow you to gain the equity you seek from the arrangement. @Scott: Terms would have to be (or have been) declared to that effect; this would involve specifying some schedule and/or rates. It would have to be negotiated; this it is not something that could go assumed or unstated. -- Erik\"", "title": "" }, { "docid": "4de70d581061d6bf240c21767d96b9f8", "text": "You say that one property is 65% of the value of the two properties and the other is 35%. But how much of that do the two of you actually own? If you have co-signed mortgages on both properties, then your equity is going to be lower. If you sold both properties, then your take away would be just half of that equity. And while the 35% property may be less valuable, if you bought it first, it may actually have more equity. It's the equity that matters here, not the value of the property. With a mortgage, the bank is more of an owner than you are until you've paid down most of the loan. You may find that the bank won't agree to a single-owner refinance. A co-signed mortgage is a lot easier for them to collect, as they can hold either of you responsible for the entire loan. If you sell the 65% property, then you can pay off any mortgage on that property and use the equity payout from that to buy out your relative on the 35% property. If you currently have no mortgage, you'd even have cash back. This is your fewest strings option. Let's say that you have no mortgage now. So this mortgage would be the only mortgage on the property. It's not so much, as 15:65 is 3:13 or 18.75% of the value of the property. That's more of a home equity loan than a mortgage. You should be able to get a good rate. It might reduce your short term profit, but it should be survivable if you have other income. If you don't have other income, then seriously consider selling the 65% property and diversifying the payout into something else. E.g. stocks and bonds. Perhaps your relative would be willing to float you the loan. That would save you bank fees and closing costs. Write up a contract and agree to take assignment of the title at payoff. You'll need to pay a lawyer to write up the contract (paying a modest amount now to cover the various future possibilities), but that should still be cheaper. There's a certain amount of trust required on both sides, but this gives you some separation. And of course it takes your relative out of the day-to-day management entirely. Perhaps the steady flow of cash would provide what they need. If your relative is willing to remain that involved, that can work. Note that they may not want to do this, so don't get too attached to the idea. Be prepared for a no. This would be a great option for you, as you pretty much get everything you have now. They get back the time meeting with you to make decisions, but they also give up control over those decisions. Some people would not like that tradeoff. The one time I was involved with a professional managing a property for me, the fee was around 7% of the rent. If that fits your area, you might reasonably charge 5%. That gives a discount for family and not being a professional. There's a relatively easy way to find out what fits your area. Look around and see what companies offer multiple listings. Call until you find a couple that will do management for you. Get quotes for managing your properties. Now you'll know the amounts. The big failing though is that this may not describe the issue that your relative has. If the real problem is that the two of you have different approaches to property management, then making you the only decision maker may be the wrong direction. This is certainly financially feasible, but it still may not be the right solution for your relationship. If you get a no on this, I'd recommend moving on to other solutions immediately. This may simply be too favorable to you.", "title": "" }, { "docid": "a9ebe78161a536d7558dd48aea39b3d0", "text": "\"If you and your parents both put up money to buy a house or anything else, what share each of you owns would be a subject for negotiation and agreement between you. To the best of my knowledge, there is no law that says \"\"if person X pays the down payment and person Y pays the monthly payments, than X owns 40% and Y owns 60%\"\" or any other specific numbers. Parents often give their children money to help with a down payment on a house or a car with the understanding that this is a gift and the child still owns 100% of the item. Other times they are unwilling or unable to just give the money and want some stake in exchange. In the case of a house or a car, there's a title that identifies the owner, and legally the owner is the person or people named on the title. I'd suggest that if you want to have split ownership, like if your parents are saying that they'll help with the down payment but they want to get that money back when you sell or some such, that you come up with a written agreement saying who owns what percentage and you both sign it. If there was a dispute -- if you never had an agreement about what share each owned and now you're selling the house and you're arguing over how much of the money each of you should get, or your parents want you to sell the house so they can get their money back but you don't want to sell, or whatever -- ultimately a court would decide. Presumably the judge would consider how much you had each paid in, but he might also consider who's been paying property taxes, how much work each has done to maintain the place, etc. It's better to have a written and signed agreement, something that everyone involved is satisfied with and where you all know exactly what you're agreeing to, rather than having a nasty surprise when a judge says no, you're not getting what you were assuming you were getting.\"", "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": "0d2d02163258915703d7cc13ec404b8d", "text": "In effect, you are paying for 70% of the house but he gets half the gain. On the flip side, you're living there, so that probably makes up this difference. It will be toughest if the house jumps in value, to the point you might be forced to sell. You might want to think about that a bit.", "title": "" }, { "docid": "00d99bd22e5e93a23cfeb738acd9c16b", "text": "\"This is fine, just have a plan before you go into it. Look up a co-ownership agreement contract off LegalZoom, they are like $15, or get a lawyer if you want. Decide if you want to be \"\"Joint tenants\"\" or \"\"Tenants in common\"\". You probably want to be joint tenants so that if one of you dies the property goes to the other person. Go through the agreement, make any changes you want, and then both sign it. These documents outline what happens if someone dies, or if you break up, or if you are allowed to sell your ownership, and anything else. Keep a record of who has paid what % of equity towards the house. Also look into tax laws, if the mortgage or house is only truly in 1 person's name they may get a tax break that the other person will not get. The co-ownership agreement is essentially the same agreement that happens when you're married, the only difference is that it happens automatically and implicitly when you're married. It's interesting that some people are saying this is a horrible idea when it's practically the same as the agreement you'd have if you were married. Whether you're single or married, if you own a house with another person and you break up, it's going to be a bit complicated. Get a contract in place beforehand so that things go as smoothly as possible. If you are both rational adults you shouldn't have any problems.\"", "title": "" }, { "docid": "c2c46a382eef8995be98cb6552d1f628", "text": "\"I just wanted to give you a different perspective, as I own a house (purchased with a mortgage), with my girlfriend. I think it can be done safely and fairly, but you do need to involve legal help to do it right. There really is nothing to be terrified about, the extra cost to set this up was almost irrelevant in the bigger picture of legal costs around purchasing and the documents describing the ownership scheme are quite straightforward. Maybe it's a UK thing, but it seems rather commonplace here. We've chosen to hold this as \"\"tenants in common\"\" and use a trust deed for this when we purchased. We had a solicitor write the trust deed and it clearly states what percentage of the house is owned by either party and exactly what the steps would be taken, should we decide to end the trust (e.g. in case of a split-up). This includes things like the right to buy out the other person before selling on the market etc. We also had to make wills separately to indicate what should happen with our percentage of the property in case one of us died as with this type of ownership it doesn't automatically go to the other person. Finally we're both on the mortgage, which I guess is the main difference versus your situation. But again, you could get legal advice as to how this should best be handled.\"", "title": "" }, { "docid": "ffb80c3cb2326ad48361b84743963ec9", "text": "Also, does anyone know of any books on doing this sort of thing, i.e. renting out half of your home to a tenant and living in the ret? Head down to your local library. Mine has a state guide for renters and another one for landlords. There will likely be a lot of Nolo Press books around there too. You can also research the property tax on a lot; many counties run an arcGIS server that will tell you who owns a given property, what the assessed value is and the total tax bill, etc.", "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": "85ca7a856958a0f69886a6a70a9632a4", "text": "I think you wrong about this. There are two problems I see with your example. * When you created something which costs $150 you have increased the amount of money in the world from $200 to $450 because money is the storage of value. * After the first transaction you have said that you have $250, which presumably means the money in the bank. However, at a later point when you go to the bank demanding $500 you only consider physical notes to be money. The bank at this point could give you a check book and if you wanted to spend it would simple credit the other person $500 and remove that amount from your account. In addition, the bank could always repossess the items you have sold to the other person and give them to you in lieu of physical money.", "title": "" } ]	fiqa
83605f56969871312a073aca35a1801b	I earn $75K, have $30K in savings, no debt, rent from my parents who are losing their home. Should I buy a home now or save?	[ { "docid": "15f8ac47cd161d2a2b55ed104b4c581f", "text": "The biggest red flag is the fact that your parents may lose their house. There are multiple parts of the decision. The red flag comes in because you are stretching your finances to the max to afford the house you are interested in. Buying down the interest rate makes some sense depending on how long you plan on staying, but not a a way to afford house X. Of course a bigger down payment will also influence the size of the house. You are also buying something in case your parents need a place to live. What happens if that never occurs? You now have something bigger than you need. You are mixing investments and housing. There is no guarantee that you will even break-even on the house as a investment. It can take several years to make back the closing costs involved in buying and selling a house, based solely on stable price and your monthly payments. If the price drops you might never make the money back. You might be better off renting what you need now or waiting until the current house is lost and then renting what you need then.", "title": "" }, { "docid": "1e06a2786f1164414a9e785519945f77", "text": "This solution obviously wouldn't work for everyone, and is contingent on the circumstances of your parents' finances with regards to their house, but... Have you considered buying your parents' house? This way your parents' desire for you to get a house as an investment would be satisfied, they wouldn't have to worry about losing their home, and you might even be able to work out a financing/rent deal that is beneficial to everyone involved. There are definitely fewer costs going this route anyway, for instance, your parents won't have any marketing costs associated with selling the house and could pass this savings along to you. Also, having lived in the house for a large part of your life you will also know what you are getting in to.", "title": "" }, { "docid": "8825a32eb3c62944620577a4707afdb9", "text": "\"For the vast majority, \"\"buying\"\" a house via a mortgage is not an investment. I use quotes around buying because from a technical perspective you don't own anything until you've paid it off; this is often an important point that people forget. It's highly unlikely you'll make more on it than the amount you put into it (interest, repairs, etc). Even with relatively low interest rates. The people who successfully invest in homes are those that use actual cash (not borrowed) to buy a home at well below market value. They then clean it up and make enough repairs to make it marketable and sell it shortly there after. Sometimes these people get hosed if the housing market tumbles to the point that the home is now worth less than the amount they put into it. This is especially problematic if they used bank loans to get the process going. They were actually the hardest hit when the housing bubble popped several years ago. Well, them and the people who bought on interest only loans or had balloon payments. Whereas the people who use a mortgage are essentially treating it like a bank account with a negative interest rate. For example, $180k loan on a 30 yr fixed at 4% will mean a total payout of around $310k, excluding normal repairs like roofs, carpet, etc. Due to how mortgage's work, most of the interest is collected during the first half of the loan period. So selling it within 2 to 5 years is usually problematic unless the local housing market has really skyrocketed. Housing markets move up and down all the time due to a hundred different things completely out of your control. It might be a regional depression, weather events, failed large businesses, failed city/local governments, etc. It could go up because businesses moved in, a new highway is built, state/local taxes decline, etc. My point is, homes are not long term investments. They can be short term ones, but only in limited circumstances and there is a high degree of risk involved. So don't let that be a driving point of your decision. Instead you need to focus on other factors. Such as: what is really going on with the house you are currently in? Why would they lose it? Can you help out, and, should you help out? If things are precarious, it might make more sense to sell that home now and everyone move into separate locations, possibly different rentals or apartments. If they are foreclosed on then they will be in a world of financial hurt for a long time. If we ignore your parents situation, then one piece of advice I would give you is this: Rent the cheapest apartment you can find that is still a \"\"safe\"\" place to live in. Put every dollar you can into some type of savings/investment that will actually grow. Stay there for 5+ years, then go pay cash for a nice home. Making $75k a year while single means that you don't need much to live on. In other words, live extremely cheap now so you can enjoy a fantastic living experience later that is free from financial fear. You should be able to put $30k+ per year aside going this route. edit: A bit of support data for those that somehow think buying a home on a mortgage is somehow a good investment: Robert Shiller, who won a Nobel prize in economics and who predicted the bursting of the housing bubble, has shown that a house is not a good investment. Why? First, home prices (adjusted for inflation) have been virtually unchanged for the past 100 years. (link 1, link 2) Second, after you add in the costs of maintenance alone then those costs plus what you've paid for the home will exceed what you get out of it. Adding in the cost of a mortgage could easily double or even triple the price you paid which makes things even worse. Maintenance costs include things like a new roof, carpet/flooring, water heater, appliances, etc. Yes, a home might cost you $100k and you might sell it for $200k after 15 years. However during that time you'll likely replace the roof ($10k to $20k), replace appliances ($2k to $5k), water heater ($1k), carpet/flooring ($5k to $20k), paint ($3k to $6k), and mortgage related costs (~$60k - assuming 30 yr fixed @4%). So your \"\"costs\"\" are between $180k and $200k just on those items. There are many more that could easily escalate the costs further. Like a fence ($5k+), air conditioner ($5k+), windows, etc. The above is assuming the home actually appreciates in value faster than inflation: which they historically haven't over the long term. So you have to consider all of the costs ultimately paid to purchase and maintain the home vs the costs of renting during the same time period. Point is: do your research and be realistic about it. Buying a home is a huge financial risk.\"", "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": "db30f9ff88078772375651cf85355306", "text": "House as investment is not a good idea. Besides the obvious calculations don't forget the property tax, home maintenance costs and time, insurance costs, etc. There are a lot of hidden drains on the investment value of the house; most especially the time that you have to invest in maintaining it. On the other hand, if you plan on staying in the area, having children, pets or like do home improvements, landscaping, gardening, auto repair, wood/metal shopping then a house might be useful to you. Also consider the housing market where you are. This gets a bit more difficult to calculate but if you have a high-demand rental market then the house might make sense as an investment if you can rent it out for more than your monthly cost (including all of those factors above). But being a landlord is not for everyone. Again more of your time invested into the house, you have to be prepared to go months without renting it, you may have to deal with crazy people that will totally trash your house and threaten you if you complain, and you may need to part with some of the rent to a management company if you need their skills or time. It sounds like you are just not that interested right now. That's fine. Don't rush. Invest your money some other way (i.e.: the stock market). More than likely when you are ready for a house, or to bail your family out of trouble (if that's what you choose to do), you'll have even more assets to do either with.", "title": "" }, { "docid": "a88ece2a5328c8f50bc1fe27e8bf1e99", "text": "Plus, there's the feeling my parents want me to have a house in case we can't save the one we (my mom and brothers) all live in. First, you should not be forced to buy a home because your parents are telling you to. You should have your own life. Period. That said, while you are doing well from a salary perspective, your savings are somewhat borderline for a purchase if you ask me. Meaning your savings would essentially be the full downpayment & then your whole paycheck basically becomes payments on the mortgage. Not a good situation to be in. My advice would be that if you can invest in something smaller—like a small apartment for yourself—that is what you should purchase. That would allow you to invest in something but not be completely financially drained by the prospect. And then in a few years, you can sell that apartment & move onto something else. Perhaps a house at that stage? But right now, a full home purchase would be a fairly massive risk.", "title": "" }, { "docid": "d3befbb389bfa24fb7a4ab586ee947b5", "text": "\"Real Estate has historically been the most sound investment of all times. Not only does property consistant increase in value (which is what you want every investment to do), it does so at the highest rate with the lowest risk. Most return on investment (like a stock in the market) the potential rate of gain is proportionat to the potential loss. The more secure an investment, the lower the potential gain. But, with Real Estate, property typically doubles in value every 10 years. Our overall R.E. economy is on an upward turn, recovering from a time where values tanked. to jump in now, is probably better than waiting for any amount of time, be it 1 month, or 1 year. You concern about being \"\"tied in\"\" to this investment is a valid concern, however, since the market is in an upward turn, you should be more and more able to turn around and sell it later on. The best thing that you could potentially do would be to invest in a rental property where your cost of investment (your mortgage note) is paid by the renters. However, being a landlord is always a risky business (hence, the higher rate of return, which considering your investment is ultimately zero, the return rate is huge :-) The trick would be to take the reters payments to you and keep it in an account that you use to pay for any repairs, upgrades, or marketing in between when the unit is vacant. But, with your parents losing their house, this may not be possible - unless you take their home and then keep the living arrangments the same as they are now. One possibility to help you get your foot in the door of being a property owner (not necessarily \"\"investor\"\") and help your parents keep their house (if that is what they would like to do) is re-finance with them... if you can't afford the entire mortgage, but they are capable of filling the gap between what you can afford and what their property costs, then you become partnered with them, and when/if their circumstances change, they can always buy you out.\"", "title": "" }, { "docid": "f11d7ecd4c9cdce45d294a32031f9d3c", "text": "To be honest, if it's a home all of you share you should try and save the home for your parents. your 26, you will have plenty of time to make 30k again. Having a home headquarters will bring some security to the family. Not only that your parents are old now, it could be hard for them to get another home. They have sacrificed for you, so maybe you should sacrifice for them? Thank god i have no family.", "title": "" }, { "docid": "dfe28ac207fb5729bfd3a25165f99c42", "text": "You earn $75,000 yearly and saved $30,000 while living at home, for two years, rent-free. I am assuming you have been making good money for at least 2 years. How is it possible you only put away $30,000 on $150,000 of income? Were you giving something to your parents each week as rent, so they don't lose their home? Second, if you're not sure if you will be relocated in a year or two it makes no sense to buy. House prices won't spike like they have in the past any time soon. In one year, you can save another $30,000 without suffering since you live rent free. Many couples don't even make $75,000 and they got a mortgage, 2 kids and car payments.", "title": "" } ]	[ { "docid": "8235e95dbdf4a3ee49fa95b34de43948", "text": "The main point to consider is that your payments toward your own home replace your rent. Any house or apartment you buy will have changes in value; the value is generally going slowly up, but there is a lot of noise, and you may be in a low phase at any time, and for a long time. So seeing it as an investment is not any better than buying share or funds, and it has a much worse liquidity (= you cannot as easily make it to cash when you want to), and not in parts either. However, if you buy for example a one-room apartment for 80000 with a 2% mortgage, and pay 2% interest = 1600 plus 1% principal = 800, for a total of 2400 per year = 200 per month, you are paying less than your current rent, plus you own it after 30 years. Even if it would be worth nothing after 30 years, you made a lot of money by paying half only every month, and it probably is not worthless. You need to be careful not to compare apples with oranges - if you buy a house for 200000 instead, your payments would be higher than your rent was, but you would be living in your house, not in a room. For most people, that is worth a lot. You need to put your own value to that; if you don't care to have a lot more space and freedom, the extra value is zero; if you like it, put a price to it. With current interest rates, it is probably a good idea for most people to buy a house that they can easily afford instead of paying rent. The usual rules should be considered - don't overstretch yourself, leave some security, etc. Generally, it is rather difficult to buy an affordable house instead of renting today and not saving a lot of money in the process, so I would say go for it.", "title": "" }, { "docid": "064495cf3332a8aabc1d6f1343e99bd0", "text": "Paying down your mortgage now will decrease the total cost of your home loan and the time period for which your loan lasts. Even if you trade up in that time period, you will be that much closer to being free of house payments. Owning your home outright gives you a significant amount of freedom to consider less lucrative and more personally fulfilling career options- especially if your work environment becomes unpleasant. It can also help you weather the storm of a job loss more easily (though you should also build an emergency fund). Homes are depreciating, illiquid assets with significant transaction fees. It is wise to get a starter home that meets your current needs and move up to a home that better meets your needs as you mature. However, getting on the status treadmill and buying large showy homes that generally exceed the utility that you get out of them is expensive, a poor investment, and often impairs the ability to generate long term wealth.", "title": "" }, { "docid": "20e166df2c93571c305e04030bb03ede", "text": "Do you want a house? Sounds like you do. Did you think about what it will take to own a run a house? I am betting you have. Buying a home shouldn't be about an investment in anything other than you happiness and you sure seem conscientious and ready. Your worries are good ones, but don't forget about unemployment insurance, that as responsible people you can get another job. Do you have a life insurance policy? If you really really can't afford your payments, you can try to sell the house because you should have plenty of equity per your plans. Furthermore, chances are you will earn more in your paychecks over your lifetime. Think about what features you want, shop the market hard, take time and buy a house on reason rather than love. Don't you dare love the house until you buy it.", "title": "" }, { "docid": "55bcedf9148ed62eafa72d0c3547db05", "text": "\"The mix how how you present this feels contradictory. You would pull a 'major' portion from the emergency fund (EF), but at the same time, you'll replace it in a month. The first bit scares me, this is not the purpose of that fund, and the issue is the aspect of money that's psychological. Money is a habit, if you justify this use of the EF now, it gets progressively easier for this purchase or that, and the fund loses its intended purpose. If the second half is accurate, that your income would replace that money in a month, i'd say the fund wasn't fully funded to its proper level, 6-9 months of all expenses to get you though issues as bad as a job loss. The great thing I see in your question is what's missing. You're not looking to buy a car with a loan. That puts you in a good situation, and should push those answering to cut you some slack on the one month \"\"bridge loan\"\" from your own savings. Edit - OP add 2 key points, His EF is 3 years expenses (wow, kudos to him!), but he's living like a student (i.e. with parents, which keeps his costs low). If this latter observation seems judgmental, I'll re-edit. The finances of everyone would be far better off if we adopted multigenerational living. The young could save as Fahad is doing, and when parents retire, they can know they are cared for. In the US, I'd say \"\"when you move out, your expenses will go up drastically,\"\" but in this case, that may not happen, or not soon. This is my observation the world is a big place and our answers need to fit the OP's situation, not assume our own standards apply to all. Buy the better car. You saved. You earned it.\"", "title": "" }, { "docid": "b2357d8110fb4543d81549c6e887d7e6", "text": "The problem is, you are trying to qualify for a loan that has a 25% down payment using money you don't have, which defeats the purpose of having a down payment. The best thing to do is have your parents buy the house for you. You then rent the house from them where your rent is equal to the mortgage + x. Your parents then put x into savings account for you and then once you have 25% in that account, they gift it to you and you purchase the house from them using that 25% as the downpayment for the mortgage.", "title": "" }, { "docid": "dcae4ec650f640cfaaaced33ca0d5542", "text": "I'm going to take a different path than the other answers: Given how low interest rates are (depending on your credit), buying a house may be a great strategy. However, I would not put more than 20% down. Putting more than 20% down unnecessarily ties up cash that could be used more productively elsewhere. You need to figure out your cash flow situation both for the near term, and for the long term. For the short term, you probably won't need to help your kids with tuition. They will likely be able to get a combination of grants, scholarships, and loans that will cover the cost. However, the loans are generally not low interest, and that is a huge amount of debt for someone so young. If you want to help pay your kids tuition, you should at least guestimate/budget that amount now. For the long term, without any retirement savings, you may be hurting in a couple decades. Since you also don't have a home, your living situation may be a problem. Buying a home today may be the prudent move, because that will hopefully be an appreciating asset, and, with a 30 year mortgage, you'll own it outright by 75, which takes a big strain off of retirement costs. $1400 a month in bills (apart from rent/mortgage) with no kids in the house (is this correct?) sounds high. I would also recommend looking at your basic expenses and seeing what you can do without if you are cash strapped.", "title": "" }, { "docid": "b709e69dbf9007ae850e17bc6b2055aa", "text": "You are very young, you make a huge amount of money, and you have (from what information you provide) very little debt. If you simply want to buy a house for whatever reason, sure, but be honest with yourself about why you want to buy it. I see a lot of people who think they're doing it for smart financial reasons, but then when I ask them about their pension savings and credit card debts and so on, there is no evidence that they are actually the kind of person who makes decisions for smart financial reasons. If you want a house because that seems like the thing that people do, maybe you could think more about what you actually want. If your concern is putting your money to work for you (you seem to dislike that you pay rent each month and after that month you don't have anything to show for your money, except of course that you didn't spent the last month living on the streets), you can do a lot better than getting a mortgage. For example, living frugally you should be able to dump 50k a year into investments; if you did that for a few years, you could reasonably expect the return to cover your rent and bills in a surprisingly small number of years (a lot less than a 25 year mortgage). Your question seems to be starting from the position that you should buy a house. You're asking if you should buy it now, or wait. You are rich enough now (and if your earnings keep going up, will be even more rich in a few years) that you should perhaps question your need to buy a house. With your kind of money, at this stage of your life, you can do a lot better.", "title": "" }, { "docid": "f322b9b5a08727925d15bfeaf3f74e1d", "text": "I think the consensus is that you can't afford a home now and need to build more of a down payment (20% is benchmark, you may also need to pay mortgage insurance if you are below that) and all considered, it takes up too much of your monthly budget. You didn't do anything wrong but as mentioned by Ben, you are missing some monthly and yearly costs with home ownership. I suggest visiting a bank or somewhere like coldwell banker to discuss accurate costs and regulations in your area. I know the feeling of considering paying more now for the very attractive thought of owning a home... in 30 years. After interest, you need to consider that you are paying almost double the initial principle so don't rush for something you can do a year or two down the line as a major commitment. One major point that isn't emphasized in the current answers. You have a large family: Two children, a dog, and a cat. I don't know the kid's ages but given you are in your early twenties and your estimated monthly costs, they are probably very young before the point they really put any stress financially but you need to budget them in exponentially. Some quick figures from experience. Closing costs including inspections, mortgage origination fee, lawyer fees, checking the history of the home for liens, etc, which will set you back minimum 5% depending on the type of purchase (short sales, foreclosures are more expensive because they take longer) Insurance (home and flood) will depend on your zoning but you can expect anywhere between $100-300 a month. For many zones it is mandatory. Also depending on if it's a coop ($800+), condo($500+) or a townhouse-type you will need to pay different levels of monthly maintenance for the groundskeeping as a cooperative fee. at an estimate of a 250K home, all your savings will not be able to cover your closing costs and all 250k will need to be part of your base mortgage. so your base monthly mortgage payment at around 4% will be $1,200 a month. it's too tight. If it was a friend, I would highly suggest against buying in this case to preserve financial flexibility and sanity at such a young age.", "title": "" }, { "docid": "f598ab2f6fbf16a9948e513ffbee3307", "text": "Lets consider what would happen if you invested $1500/mo plus $10k down in a property, or did the same in a low-cost index fund over the 30 year term that most mortgages take. The returns of either scenarios cannot be guaranteed, but there are long term analyses that shows the stock market can be expected to return about 7%, compounded yearly. This doesn't mean each year will return 7%, some years will be negative, and some will be much higher, but that over a long span, the average will reach 7%. Using a Time-Value-of-Money calculator, that down payment, monthly additions of $1,500, and a 7% annual return would be worth about $1.8M in 30 years. If 1.8M were invested, you could safely withdraw $6000/mo for the rest of your life. Do consider 30years of inflation makes this less than today's dollar. There are long term analyses that show real estate more-or-less keeps track with inflation at 2-4% annual returns. This doesn't consider real estate taxes, maintenance, insurance and the very individual and localized issues with your market and your particular house. Is land limited where you are, increasing your price? Will new development drive down your price? In 30 years, you'll own the house outright. You'll still need to pay property tax and insurance on it, and you'll be getting rental income. Over those 30 years, you can expect to replace a roof, 2-3 hot water heaters, concrete work, several trees, decades of snow shoveling, mowing grass and weeding, your HVAC system, windows and doors, and probably a kitchen and bathroom overhauls. You will have paid about 1.5x the initial price of the mortgage in interest along the way. So you'll have whatever the rental price for your house, monthly (probably almost impossible to predict for a single-family home) plus the market price of your house. (again, very difficult to predict, but could safely say it keeps pace with inflation) minus your expenses. There are scenarios where you could beat the stock market. There are ways to reduce the lifestyle burden of being a landlord. Along the way, should you want to purchase a house for yourself to live in, you'll have to prove the rental income is steady, to qualify for a loan. Having equity in a mortgage gives you something to borrow against, in a HELOC. Of course, you could easily end up owing more than your house is worth in that situation. Personally, I'd stick to investing that money in low-fee index funds.", "title": "" }, { "docid": "700e9a72ad0e8e2ce135cbb86d64d1c0", "text": "\"Congratulations, you are in great shape financially at a very young age. Great income, nice equity in a home, and mostly debt free. It seems like you are looking at taking out a loan of 400K, and to do so you will have to put your own home at risk as you do not have the 80K cash for a down payment. Correct? It also looks like after 2.1K per year without regard to taxes, maintenance, bad tenants, or vacancies. As such this will likely be a negative cash flow situation. I would say you should plan on a 912/month cost. Are you okay with that? While your income can probably cover this, no problem, is that your objective to have this property have a negative return for the next 10-15 years or so? For me, this is a no. Way too much risk for a negative cash flow. It is hard to talk to the upside as you did not give any profit predictions and I am unsure of the market. Why would you risk jeopardizing your great financial situation with a \"\"hail mary\"\" attempt to make money? Slow down, you will get there. Save for a few years so there is no need to tap your home's equity to make a down payment. It would really bother me to owe 600K on a 121K salary (75K+20K+26K).\"", "title": "" }, { "docid": "933d4d77ab71aaf0bdb5e1d198ab6f1b", "text": "When I bought my own place, mortgage lenders worked on 3 x salary basis. Admittedly that was joint salary - eg you and spouse could sum your salaries. Relaxing this ratio is one of the reasons we are in the mess we are now. You are shrewd (my view) to realise that buying is better than renting. But you also should consider the short term likely movement in house prices. I think this could be down. If prices continue to fall, buying gets easier the longer you wait. When house prices do hit rock bottom, and you are sure they have, then you can afford to take a gamble. Lets face it, if prices are moving up, even if you lose your job and cannot pay, you can sell and you have potentially gained the increase in the period when it went up. Also remember that getting the mortgage is the easy bit. Paying in the longer term is the really hard part of the deal.", "title": "" }, { "docid": "aef86ebe299a964f826a4562492623f3", "text": "\"The suggestions towards retirement and emergency savings outlined by the other posters are absolute must-dos. The donations towards charitable causes are also extremely valuable considerations. If you are concerned about your savings, consider making some goals. If you plan on staying in an area long term (at least five years), consider beginning to save for a down payment to own a home. A rent-versus-buy calculator can help you figure out how long you'd need to stay in an area to make owning a home cost effective, but five years is usually a minimum to cover closing costs and such compared to rending. Other goals that might be worthwhile are a fully funded new car fund for when you need new wheels, the ability to take a longer or nicer vacation, a future wedding if you'd like to get married some day, and so on. Think of your savings not as a slush fund of money sitting around doing nothing, but as the seed of something worthwhile. Yes, you will only be young once. However being young does not mean you have to be Carrie from Sex in the City buying extremely expensive designer shoes or live like a rapper on Cribs. Dave Ramsey is attributed as saying something like, \"\"Live like no one else so that you can live like no one else.\"\" Many people in their 30s and 40s are struggling under mortgages, perhaps long-left-over student loan debt, credit card debt, auto loans, and not enough retirement savings because they had \"\"fun\"\" while they were young. Do you have any remaining debt? Pay it off early instead of saving so much. Perhaps you'll find that you prefer to hit that age with a fully paid off home and car, savings for your future goals (kids' college tuitions, early retirement, etc.). Maybe you want to be able to afford some land or a place in a very high cost of living city. In other words - now is the time to set your dreams and allocate your spare cash towards them. Life's only going to get more expensive if you choose to have a family, so save what you can as early as possible.\"", "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": "5069019873055d17bce6fac7e64c7c24", "text": "You could use the money to buy a couple of other (smaller) properties. Part of the rent of these properties would be used to cover the mortgage and the rest is income.", "title": "" }, { "docid": "3cf92c95663f3b8b22cae34423e103f1", "text": "Assuming you plan to buy a whole number of shares and have a maximum dollar value you intend to invest, it may be better to wait for the split if the figures don't quite work out nicely. For example, if you are going to invest $1,000 and the stock pre-split is $400 and the split is 2 for 1, then you'd buy 2 shares before the split unless you have an extra $200 to add. Meanwhile, after the split you could buy 5 shares at $200 so that you invest all that you intend. Aside from that case, it doesn't really make a difference since the split is similar to getting 2 nickels for a dime which in each case is still a total value of 10 cents.", "title": "" } ]	fiqa
86ace8820aa912f5915ac2c4e51544f5	What happens if I intentionally throw out a paycheck?	[ { "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": "3eb73a2ca9245aa95108c276f11d1f16", "text": "In a nutshell, throwing your taxable income in the trash does not remove it from your taxable income; you still have to report in your tax filing, and pay taxes as needed. Especially as you could at any time request your employer to write you a replacement check. I would expect them to start charging a fee for reprinting if you really annoy them by doing it dozens of times. If you want to avoid taxes on it, donate it to a deductible 501(c)3 organization; then it becomes neutral to your taxes.", "title": "" } ]	[ { "docid": "5d59a80cbc6303934bc2c968a57e0e8c", "text": "IANAL but I'd think common sense would say that if you take advantage of one of the special cases that allow you to withdraw from a retirement plan without penalty, and then for whatever reason you don't use the money for a legal purpose, you would have to either return the money or pay the tax penalty. And I'll go out on a limb here without any documentation and guess that if you lie to the IRS and say that you withdrew the money for an exempt purpose and instead use it to go on vacation and you get caught, that you will not only have to pay the tax penalty but will also be liable for criminal charges of tax fraud. If the law and/or IRS regulations say that the only legal exceptions are A, B, and C, that pretty clearly means that if you do D, you are breaking the law. And in the eyes of the government, failing to pay the taxes you owe is way worse than robbery, murder, or rape.", "title": "" }, { "docid": "65e3655d914fd144483dfa301d079f7c", "text": "I'd think the first question here is: Did they overpay you? And if so, what were the circumstances? At one extreme: If you lied on your timesheet and said you worked 50 hours when really you only worked 40, and they paid you for 50 hours, and now they've figured out that you didn't really work those overtime hours, then yes, they overpaid you and you owe them the money. Or if you reported your time accurately but they made an honest mistake, like you worked 30 hours but for whatever reason they paid you for 40, then they really did overpay you and you owe them the money. Or if a check was just mis-printed because their computer system screwed up or something, sorry, you don't get to keep the money. Yes, we all have fantasies about the bank accidentally adding a million dollars to our balance and somehow we get to keep the money, but sorry, it doesn't work that way in real life. If there's been a mistake, once they figure out the mistake, you have to give the money back. If it's something more complicated, it might be debatable. If you're not sure what the details are, find out the details and investigate. Do you have any evidence that what they are saying is not true? How much money is involved? If we're talking $20, it's not worth going to court over. You'd have to pay a lawyer way more than the $20. A court MIGHT order the company to pay your court costs if you won, but they might not. And if you lost, you could have to pay their court costs, which could be way more than any possible gain. There are times when it's better to just eat the loss and get on with your life. Of course, the same could be said from the other side: If the amount of money is small and the case is debatable and you refuse to hand over the cash, they may just give up figuring it's not worth the trouble. I don't know that I'd want to gamble on that, though. If there is serious money involved, at least several thousand dollars, then it could make sense to talk to a lawyer if you think you have a case.", "title": "" }, { "docid": "621d0c1188e1600851fb94c0d18f0a73", "text": "You'd probably have to sue them to get the money. In most cases those statements have disclaimers all over them telling you about the vesting period and technically that extra money was probably never really in your account. Normally the statements also break out the actual contributions from the employer match part and have a footnote about the vesting policy. Unless the employer was completely incompetent in their management of this account, I am betting they will have documentation of the policy that you supposedly were given. You probably have very slim chances of prevailing on this unless they were very lax in their documentation. I'd say re-check the statements and your employee manually carefully for any mention of vesting. If you don't find it, ask the employer (nicely) where you were notified of this. If they still can't produce any documentation, then sue them.", "title": "" }, { "docid": "e7dd34a5589a65d6d560800040ad42f7", "text": "\"I disagree with @Sam's answers: yes you will get that money back when your tax return is processed. This is not true. You will receive funds that are in excess of your liability (contrary to popular belief, the government does not take more than what you are liable for). \"\"is it possible to return the check and modify how it's calculated if I talk to payroll?\"\" No. When you sign your documents at the beginning of the year, that will dictate the amount of liability they take from each of your paychecks. \"\"Will this difference be given back in my next tax return\"\" Because your company is withdrawing 25% on your paycheck you may/or may not need to pay more depending on the rest of your salary. The IRS has set the system up as brackets. You pay your taxes based on the amount earned (voluntarily or involuntarily). So if you have income of $9,275 you would pay $923 in taxes at a marginal rate of 10% (and average rate of 10%). If you made $10,000, you would pay $923+$109=$1,032 with your marginal rate as 15% (while your average rate is 10.31%). All in all, this is dependent on your salary, filing, and other deductions to raise or lower your tax liability. Note: The $109 came from this: [(10,000-9,275)*.15]\"", "title": "" }, { "docid": "e31d83c2b6c6c161fe23c93acc427b3d", "text": "\"Create an account called, say, \"\"Paycheck\"\". When you get paid, create an entry with your gross income as a deposit. For each deduction in your paycheck, create a minus (or expense) entry. After doing that, what will be left in the Paycheck account will be your net income. Simply transfer this amount to the real account your paycheck goes into (your checking account, probably). Almost all the time, the value of your Paycheck account will be 0. It will be nonzero only for a moment every two weeks (or however often you get paid). I don't know if this is the standard way of doing it (in the professional accounting world). It's a way I developed on my own and it works well, I think. I think it's better than just adding a deposit entry in your checking account for your net income as it lets you keep track of all your deductions. (I use Quicken for the Mac. Before they added a Paycheck feature, I used this method. Then they removed the Paycheck feature from the latest version of Quicken for the Mac and I now use this method again.)\"", "title": "" }, { "docid": "173677a1d78c4e8a90b0be22dec7361e", "text": "\"I had experience working for a company that manufactures stuff and giving products to the employees. The condition was to stay employed for a year after the gift for the company to cover its cost (I think they imputed the tax), otherwise they'd add the cost to the last paycheck (which they did when I left). But they were straight-forward about it and I signed a paper acknowledging it. However, in your case you didn't get a product (that you could return when leaving if you didn't want to pay), but rather a service. The \"\"winning\"\" trip was definitely supposed to be reported as income to you last year. Is it okay for them to treat me differently than the others for tax purposes? Of course not. But it may be that some strings were attached to the winning of the incentive trip (for example, you're required to stay employed for X time for the company to cover the expense). See my example above. Maybe it was buried somewhere in small letters. Can they do this a year after the trip was won and redeemed? As I said - in this case this sounds shady. Since it is a service which you cannot return - you should have been taxed on it when receiving it. Would the IRS want to know about this fuzzy business trip practice? How would I report it? Here's how you can let them know. Besides now understanding the new level of slime from my former employer is there anything else I should be worried about? Could they do something like this every year just to be annoying? No, once they issued the last paycheck - you're done with them. They cannot issue you more paychecks after you're no longer an employee. In most US States, you are supposed to receive the last paycheck on your last day of work, or in very close proximity (matter of weeks at most).\"", "title": "" }, { "docid": "7bf5504d00cea413a67082d069b3dcfe", "text": "\"> The worst that could happen to the employee is they could lose their job. Yes, that's my point. An employee is not going to risk saying \"\"no\"\" to a violation of labor laws when their livelihood depends on keeping the pay check coming.\"", "title": "" }, { "docid": "5f1f8ff31dd3660e2605889bd69b79fc", "text": "They can go to an ATM and deposit it in to their account. The ATM does not care to read the name, and the bank does not care to verify anything if the check goes through (meaning the bank it is drawn on pays). So if nobody complains, that's it, he has your money. You would need to go to the check-writer's bank and ask for help, or look at the check-writer's cancelled check copy if you get to it. That bank can find out where it was deposited to, and then you have to go after the guy and get your money back - if it is still recoverable! - if it is a poor sod and he already blew your 5 grand, you can sue his pants off, but there are no 5 grand in them anywhere. So bad luck for you. Technically, the bank is not supposed to accept the check if the name doesn't match. At the counter, that might get a question, but as said above, there are deposit ATMs, and he could also just endorse the check to himself and sign the endorsement with some illegible scrawling, and claim that this is your signature - how would Joe the teller know? Either way, he gets the check in his account, and then he can take it out and blow it. It is legally clearly theft or fraud, and probably a federal crime, but if the guy is bankrupt, that doesn't help you much. Depending on that bank's fine-print, they might or might not cover your loss, but I wouldn't hold my breath. Better don't lose a check.", "title": "" }, { "docid": "031ad6af1f53f6a986927e16c5ed867d", "text": "If you leave your job (or lose it) the loan is due on separation. You'll pay tax and a10% penalty.", "title": "" }, { "docid": "7a1e6c5dee1dc728561808bbff5abb42", "text": "\"The answer probably varies with local law, and you haven't said where you're located. In most or all US states, it appears that after some statutory length of time, the bank would transfer the money to the state government, where it would be held indefinitely as \"\"unclaimed property\"\" in the name of the recipient (technically, the payee, the person to whom the check is made payable). This process is called escheatment. Most states publish a list of all unclaimed property, so at some later date the payee could find their name on this list, and realize they were entitled to the funds. There would then be a process by which the payee could claim the funds from the state. Usually the state keeps any interest earned on the money. As far as I know, there typically wouldn't be any way for you, the person who originated the payment, to collect the money after escheatment. (Before escheatment, if you have the uncashed check in your possession, you can usually return it to the bank and have it refunded to you.) I had trouble finding an authoritative source explaining this, but a number of informal sources (found by Googling \"\"cashier check escheatment\"\") seem to agree that this is generally how it works. Here is the web site for a law firm, saying that in California an uncashed cashier's check escheats to the state after 3 years. Until escheatment occurs, the recipient can cash the check at any time. I don't think that cashier's checks become \"\"stale\"\" like personal checks do, and there isn't any situation in which the funds would automatically revert to you.\"", "title": "" }, { "docid": "d16bd31eccc19c4eaf928074113c0f68", "text": "I still have my bank account active in usa. Can my company legally deposit my salary in my bank account? Of course they can. Where they deposit is of no consequence (in the US, may be in India). It is who they deposit it for that matters. You need to file form W8 with the company, and they may end up withholding portion of that pay for IRS. You'll need to talk to a tax adviser in India about how to report the income back at home, and you may need to talk to a tax adviser in the US about what to do if the company does indeed remit withholding from your earnings.", "title": "" }, { "docid": "af1106a29d58d5538e4e2baea1dc30ea", "text": "The insurance company issued the check. I'd contact the insurance company to have the current check voided and a new one issued to the pharmacy.", "title": "" }, { "docid": "9781524bf267c26ed2f913336063da22", "text": "It is possible that they only do the hold on the first deposit from a given source. It is probably worth asking if they intend to do the hold on every paycheck or just the first one.", "title": "" }, { "docid": "9ec1dfd6d86c3a924cdeb48e64cc98ac", "text": "In the UK the official rule is that a cheque is valid for 3 years from the date it was wrote. However after 3 months some banks can choose to turn them down. I had a cheque once that was a year old which is when I looked it up to see whether it was stil valid, and I found the laws regarding it then. I was actually quite surprised it was 3 years! Btw if it does bounce your quite entitled to ask your employer for a replacement cheque. They owe it you and it's just sat in their account assigned to you anyway.", "title": "" }, { "docid": "0f14f80b7b309f04558d5bd967798206", "text": "Take a certain percentage of your income (say, 10%, but more is better if you can) and put it aside with every paycheck. Some employers will even allow you to direct deposit your paycheck into two different accounts and you can specify a certain amount or percentage for the second account. Your savings will go directly into a separate account as if you never had it in the first place. Consider your savings untouchable as spending money. Watch it grow. There's no other secret, you just have to do it!", "title": "" } ]	fiqa
56799d69c0f513996fa7b3bc05aafffa	The Purpose of Change Machines	[ { "docid": "f952fd4655c7f72282cc9720de09acf2", "text": "\"I think you're talking about two types of machines, at least in the United States. The term change machine usually refers to a machine that accepts large denominations of currency and returns an equal amount of currency in smaller bills or coins. Typically these machines are used to provide coins in exchange for paper currency, in which case they are also often known as bill changers. Exactly what bills or coins these machines return depends on the machine. Read the instructions on the machine to get the details (they're usually right on the machine). For example my apartment building has a machine that converts small bills like ones and fives to quarters, since the laundry machines only took quarters. The other type of machine are coin-cashing machines, like the Coinstar machines you might see at a grocery store. Many banks used to have these machines as well although in my area they're few and far between now. These machines perform the opposite function of the traditional change machine and convert smaller denominations (mostly coins) into bill form. For example if you dump all your accumulated pennies into the machine, it will probably give you bills and larger coins like quarters, dimes, nickels in exchange, after subtracting a small fee. I've heard that now, some of these machines may give you a gift card of some kind instead of bills, although they'll still subtract a fee from your original amount, usually. Once again just read the instructions and they should tell you. When my bank had one of these machines, they didn't charge a fee as long as you were a customer at the bank. I'm sure that varies from place to place and bank to bank though. Wikipedia's article has this to say (see the article for references): In some sections of the U.S., regional banks have begun offering free coin-counting services in the amount of a gift card. Refunds are often given in cash rather than in the form of a gift card. In some cases, it is not even necessary for the customer to have an account at the bank; the free service is offered as a way to attract new business from individuals who are not current account holders. TD Bank's \"\"Penny Arcade\"\" coin counters were free and available to both customers and non-customers in many branches, but as of November 2010, the bank charges a 6% fee for non-customers to use the machine.\"", "title": "" } ]	[ { "docid": "302019998d8505c3d4064045d88f4dcc", "text": "TD Bank (Northeast US) has free change counting machines at its branches. You don't have to have an account to use them.", "title": "" }, { "docid": "6f0cb1b299c8902d05de659c56af9285", "text": "\"In finance, form is function, and while a reason for a trade could be anything, but since the result of a trade is a change in value, it could be presumed that one seeks to receive a change in value. Stock company There may have been more esoteric examples, but currently, possession of a company (total ownership of its' assets actually) is delineated by percentage or a glorified \"\"banknote\"\" frequently called a \"\"share\"\". Percentage companies are usually sole proprietorship and partnerships, but partnerships can now trade in \"\"units\"\". Share companies are usually corporations. With shares, a company can be divided into almost totally indistinguishable units. This allows for more flexible ownership, so individuals can trade them without having to change the company contract. Considering the ease of trade, it could be assumed that common stock contract provisions were formulated to provide for such an ease. Motivation to trade This could be anything, but it seems those with the largest ownership of common stock have lots of wealth, so it could be assumed that people at least want to own stocks to own wealth. Shorting might be a little harder to reason, but I personally assume that the motivation to trade is still to increase wealth. Social benefit of the stock market Assuming that ownership in a company is socially valuable and that the total value of ownership is proportional to the social value provided, the social benefit of a stock market is that it provided the means to scale ownership through convenience, speed, and reliability.\"", "title": "" }, { "docid": "dd2bbe86583f23eefbef5892c3ec131c", "text": "\"the economy is, therefore, a gigantic broken window fallacy if you want to go down that path. if you had technology that made food procurement, shelter, healthcare, and transportation obsolete, everyone in the world could do another productive activity. the parable discusses the negation of the \"\"benefit\"\" that the calamity causes to economic actors (i.e. saying a broken window creates a job for the glass dude ignores the fact that the shop owner is now out one window) by a loss of use of that same capital for the shop owner - risk of loss associated with vehicle usage isn't analagous. It would be more in line with the shop owner consuming a resource which has a replacement cost.\"", "title": "" }, { "docid": "163d56b61d3d45be9bdca5119ca44eeb", "text": "\"If you read the first sentence of the article, you'll notice that the orders were placed, then canceled. The only reason this is done is to front run real incoming orders and get in. \"\"Translation: the ultimate goal of many of these programs is to gum up the system so it slows down the quote feed to others and allows the computer traders (with their co-located servers at the exchanges) to gain a money-making arbitrage opportunity.\"\" If you are an investor without access to floor space within 3 meters of the exchange computer to place a computer of your own, you are being defrauded of the true market price by this machine.\"", "title": "" }, { "docid": "0e2f22aaed4bd3c49f6d9a3db6eb3a86", "text": "Because the people who own the machines aren't going to just give their product away for free to the now unemployed. Similarly for those creating food, water, etc. Yes, in the long term all will be at equilibrium as prices come down so that supply can meet demand, but in the short term, there will be a hell of a lot of unemployed unable to afford to live. Why do people always assume technology or some change in the underpinnings of society will make unemployment a non-issue?", "title": "" }, { "docid": "eb71d94eba635d0f791312e0a0cdec73", "text": "\"Major societal changes generally emerge out of a lot of riots and protests. Social Security literally came out of the great depression where you had Hoovervilles popping up everywhere. All this turmoil lead to an existential crises where issues actually needed to be addressed. The point I was trying to make is that I doubt a basic income will come about naturally. Corporations and those with a lot of money are going to try and push it off for as long as possible. However, if something accelerates automation you would have more people on the streets. Some say a $15 minimum wage would accelerate it, some say it wouldn't. On the one hand you would have people getting paid a living wage presumably. On the other hand you would have more automation which would mean a quicker transition to the next economic system instead of a long drawn out transition. Ideally we can shorten the length of time people are living on scraps. The idea being, one short surge of social unrest is better than many years of frustration, which would culminate in the same surge of unrest at the end. Plus the whole point of a basic income isn't to \"\"eliminate inequality.\"\" It is an effort to \"\"reduce inequality.\"\" Most people in the basic income community are against extreme inequality. They do not say that inequality should be inherently avoided. They say that there is such a thing as \"\"TOO MUCH\"\" inequality which can cause various problems, and that we have come to that point on Earth.\"", "title": "" }, { "docid": "3fd57b102685d8342fe1d9909a041746", "text": "Here is a list of threads in other subreddits about the same content: * [Why Dockless Bikes May Spell the End of Public Bike-Share](https://www.reddit.com/r/Economics/comments/789r5u/why_dockless_bikes_may_spell_the_end_of_public/) on /r/Economics with 7 karma (created at 2017-10-24 02:28:09 by /u/rwescott) * [Why Dockless Bikes May Spell the End of the Old Bike-Share Model](https://www.reddit.com/r/EcoInternet/comments/779kkg/why_dockless_bikes_may_spell_the_end_of_the_old/) on /r/EcoInternet with 1 karma (created at 2017-10-19 04:51:07 by /u/EcoInternetNewsfeed) ---- ^^I ^^am ^^a ^^bot ^^[FAQ](https://www.reddit.com/r/DuplicatesBot/wiki/index)-[Code](https://github.com/PokestarFan/DuplicateBot)-[Bugs](https://www.reddit.com/r/DuplicatesBot/comments/6ypgmx/bugs_and_problems/)-[Suggestions](https://www.reddit.com/r/DuplicatesBot/comments/6ypg85/suggestion_for_duplicatesbot/)-[Block](https://www.reddit.com/r/DuplicatesBot/wiki/index#wiki_block_bot_from_tagging_on_your_posts) ^^Now ^^you ^^can ^^remove ^^the ^^comment ^^by ^^replying ^^delete!", "title": "" }, { "docid": "8c35074b5fef92beb58a17ec96fd2450", "text": "What benefit vs. what cost? Benefit - none that I can think of. Cost - massive. Every system that handles money would need to re-value overnight, every store would need to re-price. In many ways it would be simpler and maybe even cheaper to introduce a new currency.", "title": "" }, { "docid": "5adacefbe232ae2fdb5061c62d1ea13b", "text": "This is an interesting discussion. I've never been a part of a large corporation, but aren't these functions good for morale. If they gripe about saving money, and then cut all the employees functions becoming the most uncaring and dispassionate company in all of companydom, wouldn't that also kill productivity?", "title": "" }, { "docid": "11c9637e728c93de525fa23c404114f9", "text": "I admit, in the long term there are a good number of kinks to work out, but in the end I want to see some system where people in general can seize the means to their own well being without stepping on one another. The management corruptions you talked about is another reason why I prefer Worker-Co-ops to be the optimum form of issuing business, because its not just a few people in charge, it's a whole social group acting in unison. When you discuss the mom-and-pop store having no suppliers, it would be good to promote some way of each money supply to have a share of each industry within it. There are always some people in every trade looking for their next job. They just have to find a supply where there trade is in demand. The process is self feeding. Next off, or course the mechanism of the system would work in a way that firm's can't just pay themselves with their own debt, they have to issue it to their creditors first, and even then it's practically impossible to accept your own debt as payment. You would have to take some from a competitor at best. What I've been trying to do is find some system where no one institution or no one alliance holds the keys to the definition of value. If you have five to eight dictators fighting at once as opposed to one financial dictator who can oversee all, like the fed scenario you just described, It's more possible for people who are freer relatively to survive freely between the borders of these spheres of influence, as they can play each dictator off the other. at least from your dialogue I can see you're one of those who gets what I'm trying to aim for. Here's another idea I've explored with it, that's similar but may make the environment slightly different, so let me know what you think what I call the Revolving Tax Window, where the government accepts different bondnotes, both in quantity and specific assortments of notes, in intervals of every business quarter, so that the demand for specific notes changes four times a year. From January until the end of March they could accept Taxes in notes from Firms A,F,H, and T, and for April into June it could be just B and S, and so on. The options for note issuing could be set on a list of firms registered with the SEC or whoever. The combination for the quarter could be picked at random by a randomizing algorithm, so no firm could make a plan to be a market dictator, and a sense of dynamism is maintained in the economy. Obviously, the more firms are properly registered on this list, the more combinations of monetary combinations you have, and the more power is distributed from too much control by anybody. What you can do is choose whether or not you want there to be less or more notes in the next quarter, because just like fiscal policy and conventional monetary policy, the extremes have trade offs, but different ones; to few currencies, the economy may be stimulated, but you get market dictators via monetary oligopoly, even if temporary. Too many, you avoid market dictators who will be more focused on getting a real return by investing in competing ventures based on what will actually return investment, but the economy may not be as stimulated. What do you think of this structural alternative? (One of the focal sources I've been building my economic policy on has been Debt: The First 5,000 Years by David Graeber, if anyone's familiar.)", "title": "" }, { "docid": "4088f80a4f45ddc6237123e7d90d8c6b", "text": "While this is true, it depends on the lens with which you view technology. There are plenty of examples: 1. The transition from horse to car 2. The transition from whale oil for lighting to the incandescent light bulb. 3. The transition from paper and pen to computer 4. The transition from manual telephone connections to the automatic switch box. Time and time again, automation has resulted in a higher quality of life for the world. Here are some examples of how a robot would be beneficial to the consumer: 1. More accurate orders 2. Faster service 3. More consistent service 4. More sanitary 5. Cheaper", "title": "" }, { "docid": "0ea51b7565180e6d9c36225bb99eabaa", "text": "\"Sorry, i always use my phone when using reddit and i'm also not a native speaker. Basically what i tried to say is; The reason the whole world using this economic system is because when people divide their work force and everyone specializes on one thing they are much better at it, gain more experience, become more efficient and basically it is just more productive. Thats why everyone has a job. But jobs has few downsides, most prominent one being making all these repetitive tasks, one can lose their purpose. This is the situation for the poor community. People who do not earn a lot of money and doesn't have a good statue can be depressed by going to same place everyday, doing the same thing for 40-50 years, for....???The reason is, everyone is doing repetitive tasks, even if it is something you love (personally i would hate my hobbies if i had to do them everyday not for enjoyment but for money) but some are being rewarded much more. My goal of telling all these is, this is not a perfect economic system but it is the most efficient one today. People need motivation if they are going to do the same thing all the time. The motivation could be different than money and statue but it is much easier to convince the masses these are important so the machine could work. Only a fool with no regard to history would tell this is the best economic system and it will never change since world is always changing, 5 years ago top10 companies were banks and investment companies now they are tech/internet. My belief is that for now the system is structured and will stay the same until; •War ,which changes the economy. War economy needs other stuff compared to what we are producing normally. Motivation also changes in these times, it's not money anymore but for \"\"your countries sake\"\" and \"\"pride\"\". •Different political system which is unusual to most since it is the economic change in classes which makes the political system to change.\"", "title": "" }, { "docid": "eb992dbb7fe30f719525fc1037a1f44e", "text": "Nothing really tangible is lost when bits of paper or shiny rocks disappear. Economies are built on raw materials, equipment, production facilities, and people doing work. Compared to that, any medium of exchange can easily be replaced.", "title": "" }, { "docid": "0bec16344b49de4af6aa1e4d03c07e2e", "text": "Simply, most of the above given 'answers' are mere 'justifications' for a practice that has become anachronistic. It did make sense once in the past, but not any more. Computers and networks can run non-stop 24/7; even though the same human beings cannot be expected to work 24/7, we have invented the beautiful concept of multiple shifts; banks may be closed during nights and weekends, but banking is never closed in the internet era; ...The answer must lie in the vested interests of a few stakeholder groups - or - it could just be our difficult to change habits.", "title": "" }, { "docid": "03d5c37a6d0b902405aae69cffb660a3", "text": "I will be general. It's more fun. If everyone in auto manufacturing labor was replaced by a cheap robot tomorrow, then cars would be cheaper. Those of us who buy cars at 50% less could spend that on video games and facelifts. All the auto laborers could make more money doing less labor in the video game and plastic surgery business, robot manufacturing, and robot programming. Others could tailor the robots for other industries, making money there. If there is less menial labor to be done, then more meaningful and productive work can be done in its place. In other words, when the cheap, undesirable jobs are made more productive, the product price goes down and that money is spent somewhere else. On the other hand, if we want to go with much lower productivity, we could all spend an average of 12 hours a day 7 days a week (or the equivalent) obtaining food and shelter. After all, with less productivity, everything takes more labor and more time, and we would have to do without many of the luxuries we take for granted. But everybody could be working really hard.", "title": "" } ]	fiqa
050f2e2c78ab55e3e87d91abbcea5d17	Do I even need credit cards?	[ { "docid": "50cebe54304399dc8830a8878285b778", "text": "Credit cards are great. You get free money for 30+ days and a bunch of additional benefits like insurance, extended warranties and reward programs. When vendors don't behave, you dispute the charge with the credit card and they deal with it on your behalf. Just get a fee-free American Express card and pay the balance off each month. There's nothing wrong with using cash either, but I would avoid debit cards like the plague.", "title": "" }, { "docid": "7a6e0c52a7b8939afaf7259203e176a8", "text": "Try to buy an airline ticket, rent a hotel room, or rent a car without a credit card. Doable? Perhaps. Easy? Nope. With a debit card, you run the risk of a hotel reserving more than your stay's cost for room service, parking, etc and potentially having a domino effect if other payments bounce. We just spent 3 nights in NYC, room was just over $1000. Do I really want to carry that much cash?", "title": "" }, { "docid": "1a6eca859a7f7153d84029bc32cdfaff", "text": "There are numerous reasons that go beyond the immediate requirement for access to credit. Many people just plain don't like carrying cash. Before electronic debit cards became mainstream about the only way to pay for online services was with a credit card. This has now changed just about everywhere except a large number of airlines which still only sell online tickets via a credit card payment. And then there are all those countries where governments (and some banks) have decided to charge merchants more when customers use debit cards. If you don't like carrying cash then you may find that the only card you can use is a credit card. These concerns are gradually disappearing and at some stage someone is likely to offer a combined debit-credit card. At which point you'll probably get credit whether you like it or not.", "title": "" }, { "docid": "37f9ccbc98e620f8cafda25f86a159ee", "text": "You don't need a credit card anymore than you need a TV or a car. There might be many circumstances where a credit card is a convenience, there might be things you give up because you don't have a credit card. There are even some upsides to a well managed card account. But no, you don't need it.", "title": "" }, { "docid": "74a87d751a1ab73ea40a716c13379be4", "text": "People have credit cards for various reasons depending upon their personal situation and uses You don't need to have a Credit Card if you don't have a reason to. But most people do.", "title": "" }, { "docid": "ac6c8b4a19615ff7b2de20577028940c", "text": "A credit card can be a long running line of credit that will help to boost your FICO score. However if you have student loans, a mortgage, or car payments those will work just as well. If you ever get to the point where you don't have any recent lines of credit, this may eventually end up hurting your score, but until then you really don't need any extras.", "title": "" }, { "docid": "e4502fb18066fc053cd52c0aca1090f1", "text": "You don't need credit cards but there are few benefits, if you pay them off right away I assume you do have a debit card, since sometimes (like unattended gas stations or shopping on the web) cash is not accepted.", "title": "" }, { "docid": "f61e2fa0b51e154e19ee6efdffc99751", "text": "\"No you do not need a credit card. They are convenient to have sometimes. But you do not \"\"need\"\" one. I know people who only have one for use when they travel for work and get reimbursed later. But most companies have other ways to pay for your travel if you tell them you do not have a credit card.\"", "title": "" }, { "docid": "429300aac743c8e517657e31c1bcb4e7", "text": "I can't answer the question if you should or shouldn't get a credit card; after all, you seem to manage fine without one (which is good). I started using credit cards when I lived in the UK as the consumer protection you get from a credit card there tends to be better than from a debit card. I'd also treat it as a debit or charge card, ie pay it off in full every month. That way, because you're not carrying a balance the high interest rate doesn't matter and you avoid the trap of digging yourself deeper into the hole each month. Cashback or other perks offered by a credit card can be worth it, but (a) make sure that they're worth more than the yearly fee and (b) that they're perks you're actually using. For that reason, cashback tends to work best. I'd get a VISA or Mastercard, they seem to be the ones that pretty much everybody accepts. Amex can have better perks but tends to be more expensive and isn't accepted everywhere, especially not outside the US. But in the end, do you really need one if you're managing fine without one?", "title": "" }, { "docid": "2786cbf4423fa30dc7a0d1cbed87a1a5", "text": "If you are in the U.S., without credit cards, you probably don't have a credit history. Without a credit history, you won't be able to get a loan/mortgage, and even if you do, you'll get it on very unfavorable terms. Depending on where you live you might even have great difficulty renting an apartment. So, the most important reason to have credit cards is to have a good credit score. People have already listed other advantages of having credit cards, but another thing that wasn't mentioned is fraud protection. Credit cards are better protected against fraud than debit cards. You probably shouldn't use debit cards online unless you must. Also, without a credit card or credit history, some simple and important liberties like renting a car while you are travelling might be denied to you. So, in conclusion, it's bizarre, but in modern America you need credit cards, and you need them bad.", "title": "" }, { "docid": "a47cc29f2e01747714734a1f3a1113ca", "text": "Eventually you are going to need some sort of real credit history. It is possible that you will be able to evade this if you never buy a house, or if you pay cash for any house/condo/car/boat/etc that you buy. Even employers check credit history these days. I wouldn't be surprised if some medical professionals such as surgeons check it also. Obviously if you have a mortgage and car loan this doesn't apply, but I'd be curious how you acquired those unless you have substantial income and/or assets. Combine this with the fact that certain things like renting a car essentially require a credit card (because they need to put a hold on more money than they are actually going to take out of your card, so they can take that money if you don't bring the car back), and I think you should have a credit card unless you and your wife are individuals with zero impulse control, which sounds highly improbable. If your concern is the financial liability of the credit line, just keep the credit line low.", "title": "" }, { "docid": "2f23b324328a3959962de22867d43218", "text": "\"Like many things, there are pros and cons to using credit cards. The other folks on here have discussed the pros and length, so I'll just quickly summarize: Convenience of not having to carry cash. Delay paying your bills for a month with no penalty. Build your credit rating for a time when you need a big loan, like buying a house or starting a business. Provide easy access to credit for emergencies or special situations. Many credit cards provide \"\"rewards\"\" of various sorts that can effectively reduce the cost of what you buy. Protection against fraud. Extended warranty, often up to one year Damage warranty, covering breakage that might be explicitly excluded from normal warranty. But there are also disadvantages: One of the advantages of credit cards -- easy access to credit -- can also be a disadvantage. If you pay with cash, then when you run out of cash, you are forced to stop buying. But when you pay with credit, you can fall into the trap of buying things that you can't afford. You tell yourself that you'll pay for it when you get that next paycheck, but by the time the paycheck arrives, you have bought more things that you can't afford. Then you have to start paying interest on your credit card purchases, so now you have less money left over to pay off the bills. Many, many people have gotten into a death spiral where they keep piling up credit card debt until they are barely able to pay the interest every month, never mind pay off the original bill. And yes, it's easy to say, \"\"Credit cards are great as long as you use them responsibly.\"\" That may well be true. But some people have great difficulty being responsible about it. If you find that having a credit card in your pocket leads you to just not worry about how much you buy or what it costs, because, hey, you'll just put it on the credit card, then you will likely end up in serious trouble. If, on the other hand, you are just as careful about what you buy whether you are paying cash or using credit, and you never put more on the credit card than you can pay off in full when the bill arrives, then you should be fine.\"", "title": "" }, { "docid": "e730aab19de38394b4ebdb278b211e4a", "text": "Credits are expensive, so it's a great advantage to pay in cash. Obviously, it's even more an advantage to pay in cash for a house or a car, of course if you can afford it. But, as annoying as it could be, there are some services, where you're out of option to pay in cash, or even to pay by bank transfer. One of the most prominent examples, Google Play (OK, as I've learned, there are prepaid cards. But Groundspeak, for example, has none.). With the further expansion of Internet and E-Economy there will be more cases like that, where paying in cash is no more an option. Booking of hotels or hostels is already mentioned. There are some that provide no other booking option that giving your credit card number. However, even if the do, for example bank transfer of, say, 20% as reservation fee, please note that international money transfer can be very expensive, and credit card is usually given only for security in case you don't come, and if you do come and pay in cash, no money is taken = no expensive fee for international money transfer and/or disadvantaging currency exchange rate.", "title": "" }, { "docid": "0705011a94c6f42e4594a8b2d3c5aafb", "text": "\"The key part of your question is the \"\"so far\"\". So you didn't need a credit card today, or yesterday, or last month - great! But what about tomorrow? The time may come when you really need to spend a little more than you have, and a credit card will let you do that, at a very modest cost if you pay it off promptly (no cost, if paid within 30 days). I learned this when I was traveling and stranded due to bad weather. I had almost nothing in my bank account at the time, and while I actually did have a small student-type credit card, I came really close to having to sleep at the train station when I didn't have enough for another night in a hotel. As an example, if you have close friends or family living across the country, and something tragic were to happen, would you be able to pay for a flight to attend the funeral? What if you'd recently had an accident and a big medical bill (it doesn't take much, a broken arm can cost $10,000)? Perhaps you have a solid nest egg, but breaking a CD ahead of schedule or taking short-term capital gains on a mutual fund will usually cost more than one or two months of interest payments.\"", "title": "" } ]	[ { "docid": "ba5e72b09d215ff8acab3310262b3c2c", "text": "I just want to stress one point, which has been mentioned, but only in passing. The disadvantage of a credit card is that it makes it very easy to take on a credit. paying it off over time, which I know is the point of the card. Then you fell into the trap of the issuer of the card. They benefit if you pay off stuff over time; that's why taking up a credit seems to be so easy with a credit (sic) card. All the technical aspects aside, you are still in debt, and you never ever want to be so if you can avoid it. And, for any voluntary, non-essential, payment, you can avoid it. Buy furniture that you can pay off in full right now. If that means only buying a few pieces or used/junk stuff, then so be it. Save up money until you can buy more/better pieces.", "title": "" }, { "docid": "ffa94275aa93cb5a176269ec1ea4ee25", "text": "Credit cards are a basic building block of a stable financial plan. By using a credit card for every purchase above, say, the price of a coffee you gain a number of material benefits. You get the free use of the bank's money for about a month. You reduce the amount of cash you require to almost nothing. You get a handy budget tracking tool as many credit cards help you assign categories to expenses. You can typically download your transactions and import them into a budget app for handy record keeping. Many cards offer benefits such as extended warranties on items purchased, travel insurance, reward points and other benefits. There is only one caveat: Pay the entire balance, in full, every month, on or before the due date. Don't even THINK about paying anything less and don't EVER be late.", "title": "" }, { "docid": "ef4425720fc7d104b359eb30f87b432a", "text": "In Canada, there are many stores that take debit (Interac) but don't take Visa or MasterCard. For example, a corner store. In the US the reverse is often true: every tiny place seems to take Visa or MasterCard, but not debit. A Visa debit card looks like a Visa card to the merchant. It therefore has the benefit of being usable at places that only take Visa. (Substitute MasterCard as necessary.) This benefit is very small in Canada, less so elsewhere. Meanwhile the money is actually coming out of your bank account just like a debit card, which therefore has the benefit that you're not borrowing money, can't accidentally overspend, and run no risk of incurring interest charges. It is also a way to get what appears to be a credit card when you can't qualify for credit. If you do the majority of your spending in Canada, you don't need a Visa or MasterCard debit card. Your regular debit card (Interac) will work fine for you. If you have a credit card anyway (from another bank or whatever) then again, you don't need a debit card that can pretend to be a credit card.", "title": "" }, { "docid": "399b94cafae1981298f8c7b2e307857e", "text": "I am like you with not acknowledging balances in my accounts, so I pay my credit card early and often. Much more than once a month. With my banks bill pay, I can send money to the credit card for free and at any time. I pay it every two weeks (when I get paid), and I will put other extra payments on there if I bought a large item. It helps me keep my balances based in reality in Quicken. For example, I saved the cash for my trip, put the trip on my credit card, then paid it all off the day after I got home. I used the card because I didn't want to carry the cash, I wanted the rewards cash back, I wanted the automatic protection on the car rental, and I couldn't pay for a hotel with cash. There are many good reasons to use credit cards, but only if you can avoid carrying a balance.", "title": "" }, { "docid": "e52366d8966e913b60bd0a8484a839bf", "text": "Not sure if serious or not, but i'll bite. First of all the service you are purchasing is the access to credit card, which runs on a network supplied by financial institutions. Secondly credit card is an optional fee, taxes are mandatory (unless you are a crook).", "title": "" }, { "docid": "d14711729b97add28c20e2e8b1141186", "text": "\"I'm the contrarian on this forum. Since you asked a \"\"should I ...\"\" question, I'm free to answer \"\"No, you shouldn't increase your limit. Instead, you should close it out\"\". A credit card is a money pump - it pumps money from your account to the bank's profit margins. When I look at my furniture and the bank's furniture, I know exactly who needs my money more (hint: it's not the bank). Credit cards change people's spending patterns. In my first day of training as a Sears salesman, the use of the card was drummed into our heads. People purchase on average 25% more when they use a card than when they pay cash. That's good if you're a retailer or the lender (at that time Sears was both), but no good if you're a consumer. Build up a $1,000 emergency fund (for emergencies only, not \"\"I need a quick latte because I stayed up too late last night\"\"), then savings for 6 to 12 months living expenses. Close and cut up the credit card. Save up and pay cash for everything except possibly your house mortgage. If you have that much cash in the bank, the bankers will be as willing to talk to you as if you had an 800+ score. I have lived both with and without debt. Life without debt is well worth the short term sacrifice early on.\"", "title": "" }, { "docid": "38e4f903129eea009106df399fa19e67", "text": "\"Pretty much every american \"\"borrows\"\". Credit cards are essential in building credit history and story. Debit cards got popular in the past few years, but most still borrow at least a little bit on credit and pay it off right away.\"", "title": "" }, { "docid": "0d1b5fd24a8e63382d7e89adc5f8419e", "text": "How you can pay your rent is really up to your landlord. They are, however, unlikely to take a credit card, for at least two reasons. Firstly they are unlikely to have the means to take electronic payment Second, and more importantly, merchants get charged a percentage of the transaction. These fees can be quite high to them for premium cards like travel and gold cards; three, four or even five percent of the value of the transaction. This is sometimes why you see cash discounted pricing.", "title": "" }, { "docid": "57df0258a0afb33df7402a40ec2fc121", "text": "In general, minors cannot enter into legally binding contracts -- which is what credit accounts are -- so an individually held card is probably not an option for you right now. You will not be approved for a credit card because you are minor. The only option credit card wise for you is for your parents to add you on as an authorized user onto their accounts. The upside is that you and your parents can work out a monthly payment for the amount you spend on your equipment, the downside is that if your parents don't pay their credit card bill, your credit score/report can be negatively affected. (This also depends on the bank, however, all the banks I bank with report monthly payment activities on authorized users' credit reports as well. There might be a bank that doesn't.) In terms of credit cards, there is nothing you can do. What you could do as the comments have suggested is either save up money for the equipment you want, or buy something cheaper.", "title": "" }, { "docid": "9b409376a73e9e3452cdb3b6f3e7c365", "text": "Using your credit card: Applying for a store credit card: In general it is far better to not buy bigger items like a computer until you can pay cash, or pay for it on credit card (to get reward points) and then pay off the card the next month so you don't pay interest.", "title": "" }, { "docid": "902d883dc904b70b034cc564964afb21", "text": "\"Credit Cards typically charge interest on money you borrow from them. They work in one of two ways. Most cards will not charge you any interest if you pay the balance in full each month. You typically have around 25 days (the \"\"grace period\"\") to pay that off. If that's the case, then you will use your credit card without any cost to yourself. However, if you do not pay it in full by that point, then you will owe 19.9% interest on the balance, typically from the day you charged the payment (so, retroactively). You'll also immediately begin owing interest on anything else you charge - typically, even if you do then pay the next month the entire balance on time. It's typically a \"\"daily\"\" rate, which means that the annual rate (APR) is divided into its daily rate (think the APR divided by 365 - though it's a bit different than that, since it's the rate which would be 19.9% annualized when you realize interest is paid on interest). Say in your case it's 0.05% daily - that means, each day, 0.05% is added to your balance due. If you charged $1000 on day one and never made a payment (but never had to - ignore penalties here), you'd owe $1199 at the end of the year, paying $199 interest (19.9*1000). Note that your interest is calculated on the daily balance, not on your actual credit limit - if you only charge $100, you'd owe $19.90 interest, not $199. Also note that this simplifies what they're actually doing. They often use things like \"\"average daily balance\"\" calculations and such to work out actual interest charged; they tend to be similar to what I'm describing, but usually favor the bank a bit (or, are simpler to calculate). Finally: some credit cards do not have a grace period. In the US, most do, but not all; in other countries it may be less common. Some simply charge you interest from day one. As far as \"\"Standard Purchases\"\", that means buying services or goods. Using your credit card for cash advances (i.e., receiving cash from an ATM), using those checks they mail you, or for cash-like purchases (for example, at a casino), are often under a different scheme; they may have the same rate, or a different rate. They likely incur interest from the moment cash is produced (no grace period), and they may involve additional fees. Never use cash advances unless you absolutely cannot avoid it.\"", "title": "" }, { "docid": "9a0ca13945e1a243ff19881143e14582", "text": "\"I gather from your mention of \"\"stamp duty\"\" that you're in Britain? I'm only familiar with US cards, but for them I can't see that there is any reason (other than a lack of self-discipline) not to use a credit card wherever possible, especially these days. 1) There are plenty of cards with no annual fee. 2) You get anywhere from 1-5% discount/cash back on purchases. 3) Many will give you sign-up bonuses, and a year or more of zero interest. (So you put that money in your investment account, and odds are you make a profit on it.) 4) Even after the introductory 0% interest period, you get on average about a month of 0% interest between purchase and due date, during which period the money can be earning interest for you. I've made a good many thousands of dollars over the years doing this. Again, the only drawback I can see is that you may not have the self-discipline to pay off the accounts before they start charging interest.\"", "title": "" }, { "docid": "0e48693bde300c48d90869879df069e1", "text": "\"I don't think it really matters, my understanding is that as a sole trader there is no distinction between your personal and business tax affairs. The distinction between your personal and business account is mainly for your own personal benefit to make it easier to differentiate between \"\"wages\"\" and retained earnings. If you want to maintain this distinction with regard to tax then you need to somehow differentiate between tax paid on your \"\"wage\"\" and tax paid on retained earnings. You could then either make two payments, or pay from either and transfer the difference from the other. Either way, it's just a matter of perspective rather than something with a physical difference.\"", "title": "" }, { "docid": "52814076ebf3e11bea5315414acf2240", "text": "There does not appear to be a way to export the customers and invoices nor a way to import them into another data file if you could export them. However, as said in the comments to your question, your question seems predicated upon the notion that it is 'best practice' to create a new data file each year. This is not considered necessary It should be noted that GnuCash reports should be able to provide accurate year-end data for accounting purposes without zeroing transactions, so book-closing may not be necessary. Leaving books unclosed does mean that account balances in the Chart of Accounts will not show Year-To-Date amounts. - Closing Books GnuCash Wiki The above linked wiki page has several methods to 'close the books' if that is what you want to do - but it is not necessary. There is even a description on how to create a new file for the new year which only talks about setting up the new accounts and transactions - nothing about customers, invoices etc. Note that you can 'close the books' without creating a new data file. In summary: you cannot do it; but you don't need to create a new file for the new year so you don't need to do it.", "title": "" } ]	fiqa
bb9eef4e093a797d808a2cc61d03abdc	Should I accept shares as payment?	[ { "docid": "d4b7a84d38a6e0206518d8453f5ea09a", "text": "For one, the startup doesn't exist yet, so until March I will get nothing on hand, though I have enough reserves to bridge that time. I would not take this deal unless the start-up exists in some form. If it's just not yet profitable, then there's a risk/reward to consider. If it doesn't exist at all, then it cannot make a legal obligation to you and it's not worth taking the deal yet. If everything else is an acceptable risk to you, then you should be asking the other party to create the company and formalize the agreement with you. As regards reserves, if you're really getting paid in shares instead of cash, then you may need them later. Shares in a start-up likely are not easy to sell (if you're allowed to sell them at all), so it may be a while before a paycheck given what you've described. For a second, who pays the tax? This is my first non-university job so I don't exactly know, but usually the employer has to/does pay my taxes and some other stuff from my brutto-income (that's what I understood). If brutto=netto, where is the tax? This I cannot answer for Germany. In the U.S. it would depend in part on how the company is organized. It's likely that some or all of the tax will be deferred until you monetize your shares, but you should get some professional advice on that before you move forward. As an example, it's likely that you'd get taxed (in part or in whole) on what we'd call capital gains (maybe Abgeltungsteuer in German?) that would only be assessed when you sell the shares. For third, shares are a risk. If I or any other in the startup screw really, my pay might be a lot less than expected. Of course, if it works out I'm rich(er). This is the inherent risk of a start-up, so there's no getting around the fact that there's a chance that the business may fail and your shares become worthless. Up to you if you think the risk is acceptable. Where you can mitigate risk is in ensuring that there's a well-written and enforceable set of documents that define what rights go with the shares, who controls the company, how profits will be distributed, etc. Don't do this by spoken agreement only. Get it all written down, and then get it checked by a lawyer representing your interests.", "title": "" }, { "docid": "f8955613a998abdfff08b56b8522982c", "text": "I like the answer given by mikeazo. If paid in cash would you immediately buy the stock of the company? We all want to be the next Steve Jobs (or Woz), but the truth is that a Jobs comes along only once in a lifetime and chances are that you are not him. We have seen this kind of question here before. Search the site for the answers given previously.", "title": "" } ]	[ { "docid": "1749b87a6b63cb5a2c23d27a3d647519", "text": "\"I'm in the US, so there may be idiosyncrasies with UK taxes that I'm not familiar with, but here's how I've always treated stock I get as compensation. Suppose the vested shares are worth X. If I had X in cash, would I buy my company's stock as an investment? Usually the answer is no, not because I think the stock will tank, but because there's better things I can do with that cash (pay off debt, unfortunately). Therefore I sell the shares and use the cash for something else. You have stock options. So suppose the stock value is X but you can buy it for Y. You can either: Therefore, the math is the same. If you had X in cash, would you buy your company's stock as an investment? If so, then option 2 is best, because you can get X in stock for a lower cost. (Option 3 might be better if the gain on the stock will be taxed higher, but they're pretty much equivalent if there's no chance that the stock will drop below Y) If not, then option 4 is best since you will likely get more than X-Y from selling the options that by exercising them and selling the stock (since options have time value). If option 4 is not a possibility, then option 1 is best - you pocket X-Y as \"\"income\"\" and invest it however you see fit.\"", "title": "" }, { "docid": "18fc34821f0b3821b40a71fe3df362fe", "text": "Make sure to check the language describing the 'discount'. The company may be matching your contribution by 5% instead of a discount. You will likely be taxed on the match as compensation and your benefit would net to less than 5%. The next risk is that you've increased your exposure if your company does poorly. In the worst case scenario you could lose your wages to a layoff and your portfolio to a falling share price. Investing in other companies will diversify this risk. As for benefits, you get the 5% (less taxes) for free which isn't a bad thing in my book. Just don't put everything you own into the stock. It should be part of your overall investing strategy.", "title": "" }, { "docid": "eb105d4d0ff779c35ed28a9789e1b869", "text": "There are 2 basic ways to have someone buy partial ownership of your company: OR If they buy shares that you already own, then their shares will have the same rights as yours (same voting rights, same dividend rights, etc.). If they buy shares newly created from the company, they could be either identical shares to what you already own, or they could be a new class of shares [you may need to adjust the articles of incorporation if you did not plan ahead with multiple share classes]. You really need to talk to a lawyer & tax accountant about this. There are a lot of questions you need to consider here. For example: do you want to use the money in the business, or would you rather have it personally? Are you concerned about losing some control of how the business is run? What are the short term and long-term tax consequences of each method? What does your new partner want in terms of their share class? The answers to these questions will be highly valuable, and likely worth much more than the fees you will need to pay. At the very least, you will likely need a lawyer and accountant anyway to ensure the filings & taxes are done correctly, so better to involve them now, rather than later. There are many other situations to consider here, and an online forum is not the best place to get advice that might put you in a sticky legal situation later on.", "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": "4dcf19ba186d15a463ef6a75516fb0a3", "text": "The S&P is cap-weighted. So it's not as simple as buying 1 share of each of 500 stocks. (If it were, getting started might be doable, although adding to your position would take time and another large unit of money.) Can you do it? Sure? Do you have enough money to actually do it? I don't know. I'm happy to pay my .02-.03% to not worry about such things.", "title": "" }, { "docid": "361690718a70866828f1ed57f6cc28ba", "text": "A Company start with say $100. Lets say the max it can borrow from bank is $100 @ $10 a year as Interest. After a years say, On the $200 the company made a profit of $110. So it now has total $310 Option 1: Company pays back the Bank $100 + $10. It further gave away the $100 back to shareholders as dividends. The Balance with company $100. It can again start the second year, borrow from Bank $100 @ 10 interest and restart. Option 2: Company pays back the Bank $100 + $10. It now has $200. It can now borrow $200 from Bank @ $20. After a year it makes a profit of $250. [Economics of scale result $30 more] Quite a few companies in growth phase use Option 2 as they can grow faster, achieve economies of scale, keep competition at bay, etc Now if I had a share of this company say 1 @ $1, by end of first year its value would be $2, at the end of year 2 it would be $3.3. Now there is someone else who wants to buy this share at end of year 1. I would say this share gives me 100% returns every year, so I will not sell at $2. Give me $3 at the end of first year. The buyer would think well, if I buy this at $3, first year I would notionally get $.3 and from then on $1 every year. Not bad. This is still better than other stocks and better than Bank CD etc ... So as long as the company is doing well and expected to do well in future its price keeps on increasing as there is someone who want to buy. Why would someone want to sell and not hold one: 1. Needs cash for buying house or other purposes, close to retirement etc 2. Is balancing the portfolio to make is less risk based 3. Quite a few similar reasons Why would someone feel its right to buy: 1. Has cash and is young is open to small risk 2. Believes the value will still go up further 3. Quite a few similar reasons", "title": "" }, { "docid": "ac18a23cf30f659b257d22786cc092b5", "text": "\"As I understand it, a company raises money by sharing parts of it (\"\"ownership\"\") to people who buy stocks from it. It's not \"\"ownership\"\" in quotes, it's ownership in a non-ironic way. You own part of the company. If the company has 100 million shares outstanding you own 1/100,000,000th of it per share, it's small but you're an owner. In most cases you also get to vote on company issues as a shareholder. (though non-voting shares are becoming a thing). After the initial share offer, you're not buying your shares from the company, you're buying your shares from an owner of the company. The company doesn't control the price of the shares or the shares themselves. I get that some stocks pay dividends, and that as these change the price of the stock may change accordingly. The company pays a dividend, not the stock. The company is distributing earnings to it's owners your proportion of the earnings are equal to your proportion of ownership. If you own a single share in the company referenced above you would get $1 in the case of a $100,000,000 dividend (1/100,000,000th of the dividend for your 1/100,000,000th ownership stake). I don't get why the price otherwise goes up or down (why demand changes) with earnings, and speculation on earnings. Companies are generally valued based on what they will be worth in the future. What do the prospects look like for this industry? A company that only makes typewriters probably became less valuable as computers became more prolific. Was a new law just passed that would hurt our ability to operate? Did a new competitor enter the industry to force us to change prices in order to stay competitive? If we have to charge less for our product, it stands to reason our earnings in the future will be similarly reduced. So what if the company's making more money now than it did when I bought the share? Presumably the company would then be more valuable. None of that is filtered my way as a \"\"part owner\"\". Yes it is, as a dividend; or in the case of a company not paying a dividend you're rewarded by an appreciating value. Why should the value of the shares change? A multitude of reasons generally revolving around the company's ability to profit in the future.\"", "title": "" }, { "docid": "837cbd14f721b7d3fbbde09e11bd72e8", "text": "\"Profit sharing adds complexity. I'd pitch it as a percentage of revenue to him. \"\"Profit\"\" is a term than can be abused. Sales are sales. Somewhat related, if you're giving him 30% of all profit on all deals, you're basically selling 30% of your business for $80K. No surprise he's interested. Think more about how you'll finance working capital. You need money to buy the pool supplies, pay for labor, etc. Ideally, you should float as little of this money as you can. An incentive structure that rewards the salespeople should also be taken into consideration. Build that in somewhere. You want his reps to want to pitch your pools. They need some kind of incentive. These are just thoughts off the top of my head. I don't completely understand the details, but maybe it'll help.\"", "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": "2095856000a43ba310d2ac61948c6cb0", "text": "Stuff I wish I had known, based on having done the following: Obtained employment at a startup that grants Incentive Stock Options (ISOs); Early-exercised a portion of my options when fair market value was very close to my strike price to minimize AMT; made a section 83b) election and paid my AMT up front for that tax year. All this (the exercise and the AMT) was done out of pocket. I've never see EquityZen or Equidate mention anything about loans for your exercise. My understanding is they help you sell your shares once you actually own them. Stayed at said startup long enough to have my exercised portion of these ISOs vest and count as long term capital gains; Tried to sell them on both EquityZen and Equidate with no success, due to not meeting their transaction minimums. Initial contact with EquityZen was very friendly and helpful, and I even got a notice about a potential sale, but then they hired an intern to answer emails and I remember his responses being particularly dismissive, as if I was wasting their time by trying to sell such a small amount of stock. So that didn't go anywhere. Equidate was a little more friendly and was open to the option of pooling shares with other employees to make a sale in order to meet their minimum, but that never happened either. My advice, if you're thinking about exercising and you're worried about liquidity on the secondary markets, would be to find out what the minimums would be for your specific company on these platforms before you plunk any cash down. Eventually brought my request for liquidity back to the company who helped connect me with an interested external buyer, and we completed the transaction that way. As for employer approval - there's really no reason or basis that your company wouldn't allow it (if you paid to exercise then the shares are yours to sell, though the company may have a right of first refusal). It's not really in the company's best interest to have their shares be illiquid on the secondary markets, since that sends a bad signal to potential investors and future employees.", "title": "" }, { "docid": "7357993aa3e3e8e6d746463fbc6fefa2", "text": "Shares often come associated with a set of rights, such as ability to vote in the outcome of the company. Some shares do not have this right, however. With your ability to vote in the outcome of the company, you could help dictate that the company paid dividends at a point in time. Or many other varieties of outcomes. Also, if there were any liquidity events due to demand of the shares, this is typically at a much higher price than the shares are now when the company is private/closely held.", "title": "" }, { "docid": "f07ac4680194626215deef6479418a33", "text": "\"The answer is partly and sometimes, but you cannot know when or how. Most clearly, you do not take somebody else's money if you buy shares in a start-up company. You are putting your money at risk in exchange for a share in the rewards. Later, if the company thrives, you can sell your shares for whatever somebody else will pay for your current share in the thriving company's earnings. Or, you lose your money, when the company fails. (Much of it has then ended up in the company's employees' pockets, much of the rest with the government as taxes that the company paid). If the stockmarket did not exist, people would be far less willing to put their money into a new company, because selling shares would be far harder. This in turn would mean that fewer new things were tried out, and less progress would be made. Communists insist that central state planning would make better decisions than random people linked by a market. I suggest that the historical record proves otherwise. Historically, limited liability companies came first, then dividing them up into larger numbers of \"\"bearer\"\" shares, and finally creating markets where such shares were traded. On the other hand if you trade in the short or medium term, you are betting that your opinion that XYZ shares are undervalued against other investors who think otherwise. But there again, you may be buying from a person who has some other reason for selling. Maybe he just needs some cash for a new car or his child's marriage, and will buy back into XYZ once he has earned some more money. You can't tell who you are buying from, and the seller can only tell if his decision to sell was good with the benefit of a good few years of hindsight. I bought shares hand over fist immediately after the Brexit vote. I was putting my money where my vote went, and I've now made a decent profit. I don't feel that I harmed the people who sold out in expectation of the UK economy cratering. They got the peace of mind of cash (which they might then reinvest in Euro stocks or gold or whatever). Time will tell whether my selling out of these purchases more recently was a good decision (short term, not my best, but a profit is a profit ...) I never trade using borrowed money and I'm not sure whether city institutions should be allowed to do so (or more reasonably, to what extent this should be allowed). In a certain size and shortness of holding time, they cease to contribute to an orderly market and become a destabilizing force. This showed up in the financial crisis when certain banks were \"\"too big to fail\"\" and had to be bailed out at the taxpayer's expense. \"\"Heads we win, tails you lose\"\", rather than trading with us small guys as equals! Likewise it's hard to see any justification for high-frequency trading, where stocks are held for mere milliseconds, and the speed of light between the trader's and the market's computers is significant.\"", "title": "" }, { "docid": "09efe4f8b886aa27c8c94b8d5aeda27e", "text": "Typically, as an individual, you can't just decide you want to lend out some securities. There is a lot of legalities that must take place in order to engage in such a transaction. It's a regulated industry and the contractual obligations that exist between borrower and seller are taken care of ahead of time by the broker with their client, prior to any actual transaction taking place. http://en.wikipedia.org/wiki/Securities_lending I say typically, becuase I'm guessing that if you are a large enough client and own a substantial block of shares (I really mean a lot) you may be in the unique position of being able to lend out. I'm not sure what the logistics of this would look like, but I think the brokerage house would approach you and negotiate a borrowing rate. In that situation, you may negotiate lending to the the brokerage house and not necessarily directly to the borrower.", "title": "" }, { "docid": "40e9d293bd41571c2c549d53e800c95e", "text": "If it changes, should get new bids. That will prevent making stupid irrelevant changes. Leaving a contract open ended so contractors can come back for more money over and over and over just isn't smart and is an open call for corruption.", "title": "" }, { "docid": "37d96adb2a4325aba75b2c5be6005d57", "text": "There are been many tests about invest all the money immediately and average it out during a period of time. The results favor to invest the lump sum immediately, so your money starts to work and produce income with dividends. Cash don't produce any income.", "title": "" } ]	fiqa
dbbf60697dd4a57ca042e106be705038	Where can I find the current price to rent ratio of the locality of my interest?	[ { "docid": "2d918de5487dc487d2778b3f08eaca73", "text": "\"Chris, this is an arbitrage question with a twist: you cannot treat the location you want to live objectively. For example, why not SoCal instead of Texas? Yes, SoCal's expensive but what if you account for the weather? This question is very interesting for me personally: something I am going to focus on myself, soon, as well. To the question at hand: it's very hard to get a close estimate of the price from a single source, say, a website. The cost of a house is always negotiable and there's no sticker price, and there begins your problems. However, there are some publicly available information which websites aggregate, see: http://www.city-data.com/ Also, some heuristics might help: Rent is at-least as expensive as the monthly mortgage, (property) taxes, HOA fees, etc. Smart people have told me this, and this also makes sense to me as the landlord is in this business to make some money after all. However, there are also other hidden costs of home ownership that I am not aware of in details (and which I craftily sidestepped in my \"\"etc\"\" above) that could put a rental to be \"\"cheaper\"\". One example that comes to mind is you as a tenant get to complain if the washer-dryer misbehaves and demand the landlord get you a new one (see how you wouldn't make a sound were you to own it however) Such a website to gauge rentals: http://www.rentometer.com/ Houses cost more where the median income is more. Again, you cannot be objective about this because smart people like to live around smart people (and pay for the privilege). Turn again to http://www.city-data.com/ to get this information Better weather is more expensive than not so good weather. In the article you linked, notice the ratio of homes in California. Yes, I know of people who sold off their family ranches in Vancouver and Seattle to buy homes in Orange Country. In short, there is a lot of information you would have to gather from multiple sources, and even then never be sure that you did your best! This also includes arbitrage, as you would like to \"\"come out ahead\"\" and while you are doing your research (and paying your rent), you want to invest your \"\"savings\"\" in instruments where you earn more than what you would have saved in a mortgage, etc. I would very much like to be refuted on every point and my answer be edited and \"\"made better\"\" as I need the same answers as you do :-D Feel free to comment, edit your question etc and I will act on feedback and help both of us (and future readers) out!\"", "title": "" } ]	[ { "docid": "f9b2b463faf9513e4ff7d222ccc92672", "text": "You can use www.etfdb.com and search on geography.", "title": "" }, { "docid": "faafc603fc4fdc218a969f17936f5d17", "text": "Our two rentals have yielded 8.5% over the past two years (averaged). That is net, after taxes, maintenance, management, vacancy, insurance, interest. I am only interested in cash flow - expenses / original investment. If you aren't achieving at least 4.5-5% net on your original investment you probably could invest elsewhere and earn a better return on a similar risk profile.", "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": "eae5196212863adcafc2e7e4646f6cf8", "text": "first, let me reiterate what everyone else is saying about rental rates having nothing to do with your expenses. you should charge market rates. slightly higher if you want better tenants and slightly lower if you want to avoid prolonged vacancy. you can determine market rates by finding similar properties in your area and seeing what they are asking for rent. you will need to adjust for location, square footage, number of bathrooms, etc. now that that is out of the way, here is a quick checklist of expenses that you will need to calculate and/or estimate for your specific property in order to decide if you should rent or sell: if you add up all of the above expenses and it's more than the market rates for rent, you should sell. if the above expenses are below the market rates, then you need to consider if the profit margin is enough to justify the hassle and the risk.", "title": "" }, { "docid": "0044afa440570181fb34cb566eaab389", "text": "I found the zephyr database, which does the job. Nonetheless if someone knows other (open) sources, be welcome to answer.", "title": "" }, { "docid": "ff1b45edc4eca37b570b308f78dab670", "text": "\"The house that sells for $200,000 might rent for a range of monthly numbers. 3% would be $6000/yr or $500/mo. This is absurdly low, and favors renting, not buying. 9% is $1500/mo in which case buying the house to live in or rent out (as a landlord) is the better choice. At this level \"\"paying rent\"\" should be avoided. I'm simply explaining the author's view, not advocating it. A quote from the article - annual rent / purchase price = 3% means do not buy, prices are too high annual rent / purchase price = 6% means borderline annual rent / purchase price = 9% means ok to buy, prices are reasonable Edit to respond to Chuck's comment - Mortgage rates for qualified applicants are pretty tight from low to high, the 30 year is about 4.4% and the 15, 3.45%. Of course, a number of factors might mean paying more, but this is the average rate. And it changes over time. But the rent and purchase price in a given area will be different. Very different based on location. See what you'd pay for 2000 sq feet in Manhattan vs a nice town in the Mid-West. One can imagine a 'heat' map, when an area might show an $800 rent on a house selling for $40,000 as a \"\"4.16\"\" (The home price divided by annual rent) and another area as a \"\"20\"\", where the $200K house might rent for $1667/mo. It's not homogeneous through the US. As I said, I'm not taking a position, just discussing how the author formulated his approach. The author makes some assertions that can be debatable, e.g. that low rates are a bad time to buy because they already pushed the price too high. In my opinion, the US has had the crash, but the rates are still low. Buying is a personal decision, and the own/rent ratios are only one tool to be added to a list of factors in making the decision. Of course the article, as written, does the math based on the rates at time of publication (4%/30years). And the ratio of income to mortgage one can afford is tied to the current rate. The $60K couple, at 4%, can afford just over a $260K mortgage, but at 6%, $208K, and 8%, $170K. The struggle isn't with the payment, but the downpayment. The analysis isn't too different for a purchase to invest. If the rent exceeds 1% of the home price, an investor should be able to turn a profit after expenses.\"", "title": "" }, { "docid": "294a49c90910b8cd894159827d7b7d5d", "text": "Well, I am an investor/ Lessor under DHA properties. Oflate, DHA lost it identity as a Govt agency and try to imitate a worst (not the best) real eastate agent. Every year rental valuation is a drama or waste of time and money to lessor. They pull down the rent by 10 to 22% and ask for a secondary valuation for no reasons. They don't even agree with market evidence and start bullying or black mailing tactics to force you to aceept a below market rent or the threat of third review , a very expensive review shared 50% by lessor and rest the poor tax payers! The thir review also badly influenced by DHA by submitting biased valuations and thereby destroying the independence of valuation. The API appointed valuer neither follow the DHA gudie nor the API guide and also ignore the market reality and take the average rent for the area. You also losse 14 to 18% as management fees paid to DHA. Selling also a problem and its high time the CWG and the Minster in charge of the DHA must institute an independent investigation to expose the potential nexus between the valuers and the DHA and how the lessor (a self funded retiree, pensioners and others). I already lodged a complaint with Ombudsman and waiting for a reply. There are 14 Lessors all in a Private street (Only DHA leased property in that street) near 213 Ray rd Epping 2121 that are leased to DHA for more than 10 years. Please note most of those Lessors almost lost $10000 per year because DHA under cut the rent to them when they paid me the market rent for many years. DHA by mistake send the rent paid to all. We have called for the details of rent paid to all the 14 lessors in that private street from 2008 todate under the Freedom of Information Act and waiting.", "title": "" }, { "docid": "161d32c11caf8d199a69bc1f6f0a40e0", "text": "There could be a number of reasons for a rent increase. The only information I can offer is how I calculate what rent I will charge. The minimum I would ever charge per unit (Mortgage payment + Water) / Number of units This number is the minimum because it's what I need to keep afloat. Keep in mind these are ballpark numbers The target rent ((Mortgage payment + Water) / Number of units)1.60 I mark up the price 60% for a few reasons. First, the building needs a repair budget. That money has to come from somewhere. Second, I want to put away for my next acquisition and third I want to make a profit. These get me close to my rental price but ultimately it depends on your location and the comparables in the area. If my target rent is 600 a month but the neighbors are getting 700-800 for the same exact unit I might ask more. It also depends on the types of units. Some of my buildings, all of the units are identical. Other buildings half of the units are bigger than the other half so clearly I wouldn't charge a equal amount for them. Ultimately you have to remember we're not in the game to lose money. I know what my renters are going to pay before I even put an offer in on a building because that's how I stay in business. It might go up over the years but it will always outpace my expenses for that property.", "title": "" }, { "docid": "61231aff72e9c22612339590683fd1d6", "text": "Google 'information ratio'. It is better suited to what you want than the Sharpe or Sortino ratios because it only evaluates the excess* return you get from your investment, ie. return from your investment minus the return from a benchmark investment. The benchmark here could be an index like the S&P500.", "title": "" }, { "docid": "133154f62f8331a8df866bfc4aab2f0b", "text": "\"The trade-off seems to be quite simple: \"\"How much are you going to get if you sell it\"\" against \"\"How much are you going to get if you rent it out\"\". Several people already hinted that the rental revenue may be optimistic, I don't have anything to add to this, but keep in mind that if someone pays 45k for your apartment, the net gains for you will likely be lower as well. Another consideration would be that the value of your apartment can change, if you expect it to rise steadily you may want to think twice before selling. Now, assuming you have calculated your numbers properly, and a near 0% opportunity cost: 45,000 right now 3,200 per year The given numbers imply a return on investment of 14 years, or 7.1%. Personal conclusion: I would be surprised if you can actually get a 3.2k expected net profit for an apartment that rents out at 6k per year, but if you are confident the reward seems to be quite nice.\"", "title": "" }, { "docid": "1d8b09907e8aefd522de4e0842820320", "text": "That interesting. It seems like an apt building could use that for its residents. I think I saw the amount quoted at $470/month, but since there isn't a market it's probably speculative to say anything about what it would cost a consumer or group of consumers.", "title": "" }, { "docid": "27ea2555942f63ee9fc3405229350cb3", "text": "\"If it is true that for the same price, you could get a better place (or that for a lower price you could get an equivalent place), you should do some soul-searching to decide what monetary value you would place on the hassle of moving to such an alternative. You should then negotiate aggressively for a rent that is no more than the rent of the alternative place plus your hassle costs, and if the landlord does not meet your price, you should refuse to renew your lease, and instead move out to an alternative. (Of course, you might also want to double-check your research to ensure you really can get such a good alternative, and that your new landlords won't try a similar bait-and-switch and force you to move again in a year.) Barring local ordinances such as rent control laws, I don't think it's worth it to worry about whether the increase is \"\"normal\"\". If you can get a better deal somewhere else, then what your landlords are asking is too much. If you have a good relationship with them on a personal level you may be able to tell them this in a nice way and thus get them to make a more reasonable offer. Otherwise, the landlords will learn that their expectations are unreasonable when all their tenants move out to cheaper places.\"", "title": "" }, { "docid": "ba2dda2440aab1b0940b723689abe424", "text": "I don't like it using percentages makes no sense. Find out what market value is for rent and pay 1/2 of that to your partner, adjust annually. You partner should be protected from inflation if he is going to invest in real estate.", "title": "" }, { "docid": "ea1d8767ba8369927d29e6af4f099ce1", "text": "\"This is the best tl;dr I could make, [original](http://www.housingfinance.com/news/us-losing-low-rent-units_o) reduced by 88%. (I'm a bot) *** > The lower end of the rental housing market continues to lose ground, according to the new The State of the Nation&#039;s Housing report by the Joint Center for Housing Studies of Harvard University. > In examining the threats to the affordable housing supply, the report finds that housing created under the low-income housing tax credit is a concern. > Looking ahead, being intentional and being committed about developing affordable housing will be critical to addressing the rental housing crisis, said Terri Ludwig, president and CEO of Enterprise Community Partners, during a webcast held to discuss the report&#039;s findings. * [Extended Summary*](http://np.reddit.com/r/autotldr/comments/6hw6os/us_losing_lowrent_units_despite_a_slight/) \| [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~146856 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: housing^#1 rent^#2 units^#3 more^#4 households^#5\"", "title": "" }, { "docid": "b91d9fa21e5371a5211d87591ab49f95", "text": "\"Average rent rates will typically rise and fall, and are market-dependent just like real estate. In the short term, a collapse in housing like the one we saw in 2008 can induce a spike in rental costs as people walk away or get foreclosed on, and move back into apartments. That then tends to self-adjust, as the people who had been in the apartments find a deal on a foreclosed house and move out. However, one thing I've seen to be near-constant in the apartment business is that a landlord will offer you a deal to get in, then increase the rent on you from year to year until you get fed up and move. This is a big reason I didn't have the same address for two years in a row until I bought my house. The landlord is basically betting that you won't want to deal with the hassle of moving, and so will pay the higher rent rate, even if, when you do the math, it makes more sense to move even to maintain the same rent rate. Eventually though, you do get fed up, look around, find the next good deal, and move, \"\"resetting\"\" your rent rate. I have never, not once in my life, seen or heard of any landlord offering a drop in rent as a \"\"loyalty\"\" move to keep you from going somewhere else. It's considered part of the game; retailers will price match, but most service providers (landlords, but also utility providers) expect a large amount of \"\"churn\"\" in their customer base as people shop around. It averages out.\"", "title": "" } ]	fiqa
4df9bec5757a0c6289d33675299d4649	Is it a gift or not?	[ { "docid": "3ad06d0a2649f4a8c86f4a6155520bba", "text": "There are a few things that this question prompts -", "title": "" }, { "docid": "3954998d54c5ceb0df39d934a45d24c1", "text": "Part of 'consideration', I imagine, would be the obligation of either party to follow through on an agreement, not only fair market value. Look at the thought experiment from the opposite perspective. If you did not pay him $150 (maybe just $50 or even $0), would you be breaking a contractual obligation to him? If he left after 2 hours because he forgot about a family event and did not finish your move, would he be breaking a contractual obligation to you even if you gave him $150? It seems it can be considered a gift (Update: in all cases) There was no agreement of what either party viewed as full consideration in a mutual exchange. To put it another way: From your examples, there is no evidence that the performance of either party hinged on receiving mutual consideration from the other. More Updates from comments: Patterns Matter Similarly to how the IRS may determine W2 employee vs independent contractor, patterns do matter. If your friend has a pattern of helping people move in exchange for tens of thousands of dollars in gifts every year, the IRS would view that in a different light. A waitress/waiter has a pattern of accepting 'gifts' of tips in exchange for good service as a part of their established job duties. If you gifted your friend with $150/week when they watched your kids every Monday-Wednesday, that would be different. You are establishing a pattern, and I would suggest you may be establishing mutual consideration. In that case, consult a professional if you are worried. Amounts Matter This is why the gift tax exemption was created. The IRS does not care about the amounts in question here. It is too much of a burden to track and account for transactions that are this questionable and this small. You gift your friend with a $20k car? Now you need to pay attention. Consult your CPA. You gift your friend $1k for helping build your new deck? The IRS does not care. Intent Matters Even in the first case, it is not necessarily true that your friend considers $150 to be mutual consideration for his services. Would he open a business where he offers that rate to the general public? I doubt it. He intends to gift you services out of his own free will, not because there will be an equitable exchange of value. The intent of both parties is to give a gift. There is no evidence that would suggest otherwise to the IRS, it seems, even if they cared in the first place.", "title": "" }, { "docid": "e317b5e2b2e5a1f5942b077e393b2c65", "text": "\"The IRS definition of gift you quoted has \"\"full consideration ... received in return\"\". If your friend's help is not contingent upon your monetary offer (as is the case in all your scenarios I believe?), then it shouldn't be viewed as consideration in return of your money, right?\"", "title": "" } ]	[ { "docid": "e7416d510ca61428b034926cf72ad7b2", "text": "\"Appears to be a hypothetical question and not really worth answering but... Must it be explained.. no, not until audited. It's saying that for everything reported on a tax return, people have to include an explanation for everything, which you do not, unless you want to make some type of 'disclosure' which is a different matter. Must it be reported.. Yes, based on info presented. All income is taxable unless \"\"specifically exempted\"\" per the US Tax code or court cases. Gift vs Found Income... it's not 'found' income as someone gave (gifted) the money to him. Generally, gifts received are not taxable and don't have to be reported.\"", "title": "" }, { "docid": "bc69b5becafdd5a0acf8cdec4b066be4", "text": "a. Depends on whether it is a gift (no tax, but need to file gift tax form against his lifetime exclusion) or a loan (in which case he needs to charge fair market interest, which he can forgive as a gift with no gift tax form, but for which will need to pay tax on the forgiven income. b. This is a definite possibility. Probably depends on the specific lender, but I would imagine this might be questioned, especially if there is an expectation of paying him back. c. Relationships. I would always avoid mixing family and finances in this way. Do you want your family gatherings to be tainted by owing him money? What if you fall on hard times? What if you go on a nice vacation instead of paying him back faster?", "title": "" }, { "docid": "fb7402a0c252a922705eff1a0d2f4e71", "text": "\"I worked in the service industry for over 10 years and this came up every now and again. Mostly in hypothetical situations. I'm not a tax expert, but my general understanding is that it is viewed as income by the IRS if you performed a service of any kind in exchange for the money. In other words, if you waited on the table, and they left you a gift for doing so, it is taxable. You'll probably also find that if you pool tips with other employees or have to tip out the bartenders, cooks or dishwashers, they'll generally agree with the IRS that you clearly received a tip and want their fair share. While the concept of \"\"gifting\"\" money to others in a situation like this is intriguing, especially in the service industry, it really doesn't meet the definition of a gift in the eyes of the IRS. For it to truly be a gift, the person would have had to intend to gift you the money even if they hadn't come into your restaurant at all that night. That clearly is not the case here.\"", "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": "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": "bc225e44fd80343c0a866212368b4b58", "text": "The money was sent from my US bank to my father in India Your father can receive unlimited amount of money as GIFT from you. There is no tax implication on this transaction. Related question After 3 years, my father received a note from the income tax dept. asking him to pay income taxes. Possibly because the income does not match and there maybe high value transactions. This should be replied preferably with the help of CA. Now, the CA is asking him to pay tax in the money I transferred. Is that correct? This is incorrect. Please change the CA and get someone competent. If not, what should I or he do in this case? Get guidance from another CA. Your father can establish that this was convenience and show evidence of transfer from you [need bank statements from your bank and Indian bank]. Property registration payments receipts, etc. Or he can also show this as Gift. If required get a gift deed created.", "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": "" }, { "docid": "17299afec6fb8f94e38f7bee72aadc43", "text": "\"Yes, it is, under some circumstances (basically, a piece of paper saying \"\"John Doe borrowed Josh Shoe 100 USD\"\" is not enough). Usually, the paper should include: This is the case for Czech Republic, I believe it's similar for other countries as well. Remember that without the repair date, you have very complicated position forcing the person to give you the money back. As well, there's a withdrawal of rights, i.e. after X years after the \"\"repair date\"\", you cannot force the person to give you the money. You have to send the case to the court in some period after the \"\"repair date\"\", if you don't have the money yet.\"", "title": "" }, { "docid": "8578a04e5c03da87b37aa92eaae6b8ea", "text": "No. You will already have paid taxes on the gift you give to your wife, so there will be no tax savings.", "title": "" }, { "docid": "b941bee9339eba902aae32a50f75393e", "text": "Omg, the answer is easy. Tell the TRUTH, and nothing is fraud. Down payment gifts are SOP's, and every lender works with that. EACH lender has their own rules. Fannie May and Freddie Mac could care less, and FHA and VA backed loans allow for full gifting unless the buyer's credit is below the standard 620, then 3.5% must come from the buyer. Standard bank loans want to know the source of the down payment for ONE REASON ONLY: to know if the buyer is taking ON A NEW DEBT! The only thing you will need do is sign a legal document stating the entire down payment is a gift. That way the bank knows their lendee isn't owing a new substantial debt, and that there aren't two lenders on the house, because should she default, the bank will have to pay you back first off the resale. Get it? They just want to know how many hands are in the fire.", "title": "" }, { "docid": "4e558dd105c55cfe2bf640bea41e97a7", "text": "I know the money isn't taxable when I send it to my parents Yes this is right they send it to their nephew as it will count as a gift No this is incorrect Yes. Refer to Income Tax guide on relations exempt under gifts. Gifts received from relatives are not charged to tax. Relative for this purpose means: (a) Spouse of the individual; (b) Brother or sister of the individual; (c) Brother or sister of the spouse of the individual; (d) Brother or sister of either of the parents of the individual; (e) Any lineal ascendant or descendent of the individual; (f) Any lineal ascendant or descendent of the spouse of the individual; (g) Spouse of the persons referred to in (b) to (f). Friend is not a relative as defined in the above list and hence, gift received from friends will be charged to tax (if other criteria of taxing gift are satisfied). Even if you assumption were true, i.e. your dad gives it to his brother and his brother gives it to his son ... But if this is done sequentially and soon one after the other, is it taxable? The intent is important. One can do it immediately or after few years; if the intent is established that this was done to evade taxes, then you will have to pay the tax as well as penalty.", "title": "" }, { "docid": "ac8ac0733c5f41a16cb86551c86d6d89", "text": "There might be some US tax implications depending on the amount of gift. See more here: http://en.wikipedia.org/wiki/Gift_tax_in_the_United_States", "title": "" }, { "docid": "dbb37eee9e3fb8c574d99323f3cd9dc9", "text": "\"You're right about your suspicions. I'm not a professional (I suggest you talk to a real one, a one with CPA, EA or Attorney credentials and license in your State), but I would be very cautious in this case. The IRS will look at all the facts and circumstances to make a claim, but my guess would be that the initial claim would be for this to be taxable income for your husband. He'd have to prove it to be otherwise. It does seem to be related to his performance, and I doubt that had they not known him through his employment, they'd give him such a gift. I may be wrong. So may be an IRS Revenue Officer. But I'd bet he'd think the same. Did they give \"\"gifts\"\" like that to anyone else? If they did - was it to other employees or they gave similar gifts to all their friends and family? Did those who gave your husband a gift file a gift tax return? Had they paid the gift tax? Were they principles in the partnership or they were limited partners (i.e.: not the ones with authority to make any decision)? Was your husband instrumental in making their extraordinary profit, or his job was not related to the profits these people made? These questions are inquiring about the facts and circumstances of the transaction. Based on what he can find out, and other potential information, your husband will have to decide whether he can reasonably claim that it was a gift. Beware: unreasonable claims lead to equally unreasonable penalties and charges. IRS and your State will definitely want to know more about this transaction, its not an amount to slide under the radar. This is not a matter where you can rely on a free opinions written by amateurs who don't know the whole story. You (or, rather, your husband) are highly encouraged to hire a paid professional - a CPA, EA (enrolled agent) or tax attorney with enough experience in fighting gift vs income characterization issues against the IRS (and the State, don't forget your State). An experienced professional may be able to identify something in the facts and the circumstances of the situation that would lead to reducing the tax bill or shifting it to the partners, but it is not something you do on your own.\"", "title": "" }, { "docid": "dde6d3d89969be28d244d2d179f90a25", "text": "First, the recipient is not responsible for any gift tax, the giver pays the tax. The gift is not taxable income to the recipient and so the recipient does not pay any income tax on the gift either. More than that, and they tap into their lifetime exclusion, currently (2015) $5.43M. All that's needed is a simple form. More convoluted, would be to lend you the full amount and then forgive $14,000 per year. Unnescesary paperwork, in my opinion.", "title": "" }, { "docid": "7ad5b8a7665f87f4c1a7685590461e7f", "text": "This is tax fraud, plain and simple. I recently wrote an article The Step Transaction Doctrine, in which I explain that a series of events may each be legal, but aggregate to one transaction and the individual steps are ignored. In this case, it goes beyond that, by accepting $5/mo you are already outside the tax code. As littleadv noted, you can't work for a legitimate business for free and not expect to have some kind of issue. The $14K/yr gift isn't a bona fide gift, but ties to that work.", "title": "" } ]	fiqa
25b72dab0cf0ace35ffe38e1c2031880	Wife sent to collections for ticket she paid ten years ago	[ { "docid": "9b6e498c8dba48fc427faf5f1009f65f", "text": "\"The first thing you should do is write a letter to the collection company telling them that you dispute all charges and demand, per section 809 of the Fair Debt Collection Practices Act, that they immediately validate and confirm any and all debts they allege you owe. You should further request that that they only communicate with you by mail. Section 809 requires them to examine the legal documents showing you allegedly owe a debt and they are required to send this to you. This all creates a useful paper trail. When you send the letter, be sure to send it as certified mail with a return receipt. From your description, it doesn't sound like this will do anything, but it's important you do it within 30 days of them contacting you. This is because the law allows them to assume the debt is valid if you don't do it within 30 days of their initial contact. I recommend you speak with an attorney. Most states have a statute of limitation on debt of about 4 or 5 years. I don't know if that applies to courts though. Whatever you do, be very careful of the language you use when speaking with them. Always refer to it as \"\"the alleged debt,\"\" or \"\"the debt you allege I owe.\"\" You don't want them misconstruing your words later on. As far as proving you paid it, I would look through every scrap of paper I'd ever touched looking for it. If that proves fruitless, try going to the courthouse and looking through their records. If they're saying you didn't pay, that's a long shot, but still worth a try. You could also try bank records from that time, like if you have a Visa statement showing $276.17 paid to the Nevada Court or something like that. If all else fails, the law allows you to send the collector a letter saying that you refuse to pay the debt. The collection company then legally must stop contacting you unless it's to tell you they are suing you or to tell you they won't contact you again. I strongly advise against this though. Your best bet is going to be speaking with a qualified attorney. Edit: You should also pull your credit reports to make sure this isn't being reported there. Federal law gives you the right to have a free copy of each of your credit reports once every year. If it is being reported, send a certified letter with return receipt to each bureau which is reporting it telling them you dispute the information. They then are required to confirm the information. If they can't confirm it, they must remove it. If they do confirm it, you are legally entitled to put a statement disputing the information next to it on your credit report. I am not an attorney. This is not legal advise. You should consult an attorney who is licensed to practice law in your particular jurisdiction.\"", "title": "" }, { "docid": "664e7acb6d0cc33e2fa85898f0517868", "text": "I had this happen to me with parking ticket when I was still in school. The tickets were issued by the school police and later dismissed (because I had purchased a year-long parking pass). 3 years later I got a letter alleging that I had unpaid parking ticket. So they lost the record of dismissal. But they did not lose the record of having issued the ticket. I am fairly certain this happens because legal entities either lose electronic records and restore data from backups without realizing that some corrupted data remains lost or because they transition to a new system and certain real-world events don't get transferred properly to the new system. Of course, the people with whom you end up interacting at that point have no idea of any potential technical problems (because they may occur only in some technical one-off cases). In my case, I was able to show that I had received a judgement of dismissal. I actually kept the paperwork. The question is what do you do if you lost the records and the state had lost all electronic records of your payments. Let's assume the collections agency has a record (produced by the state) that you owed the ticket amount, but the state claims that no record exists of you having paid the tickets. What do you do, then? Carefully compile the list of all possible banks which you could have possibly used. Then request duplicate statements from all the banks which you have on that list. Assuming you were a regular consumer and not running a business, this should not amount to more than 100 pages or so. If you do manage to find the transactions in those bank records, you are in luck. States, unlike the federal government, are not immune from law suits. So you can consult a lawyer. By fraudulently claiming that you defaulted on payments, the state caused you material harm (by lowering your credit rating and increasing your cost of borrowing). Once you have all the paperwork in hand, you still will have difficult time finding anyone in the state to listen to you. And even if you do, you will not be compensated for the time and expenses you expanded to obtain these records. If you indeed paid the tickets, then you are being asked to prove your innocence and you are assumed guilty until you do. Again, a good lawyer should be able to do something with that to get you a proper compensation for this.", "title": "" } ]	[ { "docid": "8c860ddc8f02abafffb7d625bb5c4d3e", "text": "You could talk to them, but (assuming you're in the U.S.), it's highly doubtful any bank would honor a check from 26 years ago. Most checks in the U.S. are only valid for 180 days, mainly to help companies and banks keep accounting simple. I would suggest talking to your late husband's former employer. Explain the situation and ask if they'd be willing to research it and perhaps honor his memory and contribution to their company by issuing a new check. They might do it as a gesture of good will. Are they legally bound to do this? To my knowledge, the answer is no. The check was issued and never cashed, which is not all that unusual for companies in business for a long time. A good example of this would be rebate checks, which (you'd be surprised) quite frequently end up in a drawer and forgotten about. There has to be some closure for the issuing company in its accounting, else they'd have money in their bank accounts that doesn't properly show in their ledgers. This is an interesting question, though. I hope others will reply, and perhaps they have a more informed take than me. I'm going to upvote it simply because I'd like to see this discussion continue. Good luck!", "title": "" }, { "docid": "2fc58fa4e0d30d7f72608146c8999a38", "text": "Generally this gets corrected when you file returns for both States -- one owes you some refund, and younowe some money to the other. Multistate tax returns are their own special kettle of worms, so you might want to consider hiring a pro to straighten this out -- their software has some tools personal packages don't.", "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": "57ecc3cc87544cb382c000d2dd1e6e58", "text": "One piece of documentation that might help here is a confirmation of your benefit selections through your employer for each year since the expenses in question were incurred, assuming you have a job with eligibility for benefits. If you can prove which accounts you maintained through your/your spouse's (if applicable) employer(s), then it is relatively simple to go back through the records for those specific accounts and see if a specific expense was ever reimbursed. Obviously, you can't prove through documentation that you didn't have accounts that don't exist. This seems like it would be more important for the accounts elected by a significant other, since I believe reimbursements from an account in your name would typically be reported to the IRS on your behalf anyway. Also, keep in mind that the IRS won't care about each line item individually. Their focus will be on whether, for any given snapshot in time, your total reimbursed amount exceeded your total eligible expenses.", "title": "" }, { "docid": "29a347402ca5887b88750d5d390c444d", "text": "You might want to head on over to https://law.stackexchange.com/ and ask the same question. However from a personal finance perspective this kind of drama is somewhat common when someone is deceased and financial expectations are not met by the heirs. It sounds like the daughter was expecting a lot more in inheritance than was actually received. There was probably an overestimation of dad's net worth and an underestimation of the cost of his care toward the end of his life. Its best not to participate in this drama, and I feel that you are correct that the daughter does not have a right to see the bank account statements prior to dad's passage. The question is also if she has a right to see it now. Here in the US a joint account can be setup so the ownership transfers to other account holder(s) up death of an owner. So in this case your mother would own the account. If the account is setup as such, then the estate has no right to that money. You may want to check with the bank for some free advice. What is the classification of the account now that dad has passed? When a person grants someone else the power of attorney they have the ability to act as if they were that person. Most of the time POAs are limited in scope so If I give a person the POA to register a car in my name, they cannot apply for a credit card in my name (legally). In this case, however, the POA was probably general so pretty much your mom could do whatever she pleased. So if your mom took good care of the dad and bought herself some nice jewelry that is perfectly allowable with a general POA. I strongly doubt this daughter has any rights to the past records and may not even have the rights to the joint bank account currently.", "title": "" }, { "docid": "0f0865c5aa030971e55a0866fcbedf71", "text": "You should start by making a written complaint to the insurance company itself. You have two angles of attack: What was discussed when she was sold the policy. Make sure you set out exactly what you believe you were told and highlight that they didn't ask about commuting (assuming that's the case). Ask them to preserve any recordings they have of the call and to send you a copy. The nature of the journey where the accident happened. From the description - unless it was part of a journey to and from work - there's no good reason for them to classify it as commuting. Make sure you make good written notes now of anything that happened verbally - phone calls etc, and keep doing this as the process goes along. If that written complaint doesn't work, your next step is to go to the Financial Ombudsman, who are a neutral adjudication service. If the Ombudsman doesn't support your case, you could go to court directly, but it'll be expensive and a lot of effort, and by this stage it'd be unlikely you would win. The Ombudsman's rejection wouldn't count against you directly, but it'd be a strong indication that your case is weak. See https://www.moneyadviceservice.org.uk/en/articles/making-a-complaint-about-an-insurance-company for a more detailed walk-through.", "title": "" }, { "docid": "8f1831a82af5d517f86b946c720d2d22", "text": "One issue is whether it is a scam or the collector has a right to collect. Another issue is the statute of limitations period on the debt. If it has expired, the creditor cannot get a court judgement against the borrower (if the borrower contests it). However, if the borrower makes a payment, or promises to pay, the time resets to zero, starting a new period subject to valid court action. In the U.S. the length of this period varies by state. (This period is different from the amount of time a debt can be listed on a credit report.)", "title": "" }, { "docid": "9c45066b63198035b22930c8c25a63c2", "text": "Sit down with professional with knowledge about eldercare issues. Know how your options regarding the property ownership can impact the services they qualify for. Even making a change in ownership can impact their eligibility for certain programs. Some of which can reach back to events in the recent past. Also if you own it but she will get some of the profits when you sell, she could still be considered an owner, which can impact eligibility for programs. This is in addition to the issues with the lender, the IRS, and your estate.", "title": "" }, { "docid": "c6b09a1c18842ba3d64088cabe20f311", "text": "Personal story here: I ended up at the Santa Monica hospital without insurance and left with a bill of $30k-$35k. They really helped me, so I felt like I had a duty to pay them. However, close inspection revealed ridiculous markups on some items which I would have disputed, but I noticed that I had been billed for a few thousands of services not rendered. I got very mad at them for this, they apologized, told me they'd fix it. I never heard back from them and they never put it in collection either. I'm assuming they (rightfully) got scared that I'd go to court and this would be bad publicity. Sometimes I feel guilty I didn't pay them anything, sometimes I feel like they tried to screw me.", "title": "" }, { "docid": "df414047a4aeb337a3f7f42e8a3c734d", "text": "I think the statute of limitations is 2 years so I suspect that she may not qualify, also BOA was not the last bank to hold her mortgage. I doubt she'll receive anything. She's just glad the whole mess is behind her.", "title": "" }, { "docid": "add38ca7424072cd6aa0226650874a23", "text": "\"I had about $16k in student loans. I defaulted on the loans, and they got > passed to a collection type agency (OSCEOLA). These guys are as legitimate as a collection agency can be. One thing that I feel is very sketchy is when they were verifying my identity they said \"\"Does your Social Security Number end in ####. Is your Birthday Month/Day/Year.\"\" That is not sketchy. It would be sketchy for a caller to ask you to give that information; that's a common scheme for identity theft. OSCEOLA are following the rules on this one. My mom suggested I should consider applying for bankruptcy Won't help. Student loans can't be discharged in bankruptcy. You have the bankruptcy \"\"reform\"\" act passed during the Bush 43 regime for that. The loan itself is from school. What school? Contact them and ask for help. They may have washed their hands of your case when they turned over your file to OSCEOLA. Then again, they may not. It's worth finding out. Also, name and shame the school. Future applicants should be warned that they will do this. What can I do to aid in my negotiations with this company? Don't negotiate on the phone. You've discovered that they won't honor such negotiations. Ask for written communications sent by postal mail. Keep copies of everything, including both sides of the canceled checks you use to make payments (during the six months and in the future). Keep making the payments you agreed to in the conversation six months ago. Do not, EVER, ignore a letter from them. Do not, EVER, skip going to court if they send you a summons to appear. They count on people doing this. They can get a default judgement if you don't show up. Then you're well and truly screwed. What do you want? You want the $4K fee removed. If you want something else, figure out what it is. Here's what to do: Write them a polite letter explaining what you said here. Recount the conversation you had with their telephone agent where they said they would remove the $4K fee if you made payments. Recount the later conversation. If possible give the dates of both conversations and the names of the both agents. Explain the situation completely. Don't assume the recipient of your letter knows anything about your case. Include evidence that you made payments as agreed during the six months. If you were late or something, don't withhold that. Ask them to remove the extra $4K from your account, and ask for whatever else you want. Send the letter to them with a return receipt requested, or even registered mail. That will prevent them from claiming they didn't get it. And it will show them you're serious. Write a cover letter admitting your default, saying you relied on their negotiation to set things straight, and saying you're dismayed they aren't sticking to their word. The cover letter should ask for help sorting this out. Send copies of the letter with the cover letter to: Be sure to mark your letter to OSCEOLA \"\"cc\"\" all these folks, so they know you are asking for help. It can't hurt to call your congressional representative's office and ask to whom you should send the letter, and then address it by name. This is called Constituent Service, and they take pride in it. If you send this letter with copies you're letting them know you intend to fight. The collection agency may decide it's not worth the fight to get the $4K and decide to let it go. Again, if they call to pressure you, say you'd rather communicate in writing, and that they are not to call you by telephone. Then hang up. Should I hire a lawyer? Yes, but only if you get a court summons or if you don't get anywhere with this. You can give the lawyer all this paperwork I've suggested here, and it will help her come up to speed on your case. This is the kind of stuff the lawyer would do for you at well over $100 per hour. Is bankruptcy really an option Certainly not, unfortunately. Never forget that student lenders and their collection agencies are dangerous and clever predators. You are their lawful prey. They look at you, lick their chops, and think, \"\"food.\"\" Watch John Oliver's takedown of that industry. https://www.youtube.com/watch?v=hxUAntt1z2c Good luck and stay safe.\"", "title": "" }, { "docid": "a40013b8d9d2d1ecb3b3697c7e5366a2", "text": "The original note should have had a a clear start and expiration date included with in it (the term). If it did then the term has likely expired by now (since you said it had been years) and you should issue an amendment to the note that clarifies the new term and also clarifies the interest rate terms. If the original note did not have an expiration date then that would be unusual and your mom should work with her friend to execute a new note with clear start and expiration dates and that also clarifies the payment and interest terms. From my experience it is best to include a specific payment schedule within the note as well as very specific and clear terms around how interest will be handled in the event of a missed payment, late payment, or inability to pay the note off in full at expiration. There are many good examples available online to help you craft the appropriate verbiage for your specific needs: http://tinyurl.com/note-examples", "title": "" }, { "docid": "12d897b31bb6c93c879a2de36343bbe5", "text": "If you and your wife are owners, your tickets might be a business expense against the rental income. 'Might' as in the IRS will be happy to audit you, seeing the kids went as well and prorating the expense as say 25% was really business, the rest, family vacation. If this $4000 write off is the make or break for this deal, don't do it.", "title": "" }, { "docid": "166eccbbadd622bc91c8da320ac53105", "text": "\"In California at least a little known secret is you don't have to pay traffic fines older than three years. I had my DL suspended for three years from 3thousand in bad tickets. I went to pay after I saved enough, and the nice lady said \"\"the law says you don't have to pay the fines over three years old and we can't legally hold your license and we legally can't report it to credit agencies or the DMV\"\" She got her gold star that day!! She said no one will tell you, but being nice sometimes gets you a long way. I'm sure most people take out their frustrations on her. So I paid about 1300$ and walked out a happy licenced man. Thanks to that lady!!\"", "title": "" }, { "docid": "9a5895bc8c4b6bd307eaeb467bf56f4e", "text": "You're not missing anything. Consumer protection in the US is very basic and limited, if at all. So if someone claims you owe them something, it would be really hard for you to prove otherwise unless you actually drag them to court. Especially if there actually was a relationship, and there probably is some paperwork to substantiate the claim. I suggest talking to a consumer issues attorney.", "title": "" } ]	fiqa
663e6b59f23872450d20c612db181f0e	Any reason to be cautious of giving personal info to corporate fraud departments?	[ { "docid": "76082c0b98ca9ccbc1df18da185d027f", "text": "I can't address the psychology of trust involved in your question, but here are some common sense guidelines for dealing with your issue. Make sure you know who you are talking to. Call the company you need to speak to via a publicly available phone number. An email or something you got in a letter might be from a different source. If you use a website, you should be sure you are on the correct website. Keep careful records. Make good notes of each phone call and keep all emails and letters forever. Note the time, name and/or ID of the person you spoke to and numbers called in addition to keeping notes on what actions should be done. Keep your faxing transmission receipts and shipping tracking numbers too. If you are nervous, ask them why they want the info. The fraud department should be able to explain it to you. For example, they probably want your social because that is how your credit report is identified. If they are going to fix a credit report, they will need a social. It is doubtful they would have a good explanation why they need your mother's maiden name. Ask for secure transmission, or confirm they have it. Postal mail isn't so secure, but I'll go out on a limb and say most fax machines today are not really fax machines, but software that deals in PDFs. At some point you will have to realize you will have to transmit something. No method is perfect, but you can limit your exposure. Help them do their jobs. If you are (understandably) nervous, consider their motivations: corporate profit. BUT that could very well mean not running afoul of the law and (with any luck) treating customers the best way they know to earn business. If you stymy the fraud department, how can they help you? If the ID theft was serious enough, document your issue for future law enforcement so you getting pulled over for speeding doesn't result in you going to jail for whatever crime the other person did. Perhaps the fraud department you are dealing with can assist there. Finally, while you work with fraud departments to clear up your name and account, work on the other end to limit future damage. Freeze your credit. See if you bank or credit card have monitoring. Use CreditKarma.com or a similar if you cannot find a free service. (Please don't ever pay for credit monitoring.)", "title": "" } ]	[ { "docid": "92c0079346d0ded3ed163d22572d3b90", "text": "You are describing a corporation. You can set up a corporation to perform business, but if you were using the money for any personal reasons the courts could Pierce the corporate veil and hold you personally liable. Also, setting up a corporation for purely personal reasons is fraud.", "title": "" }, { "docid": "1338c98be810a7589d60fb24c4903d79", "text": "When an someone as esteemed and smart as Donald Knuth tells you the chequing system is busted it's time to close your cheque account, or I guess live with the associated risk. Answer to question, yes your account information can be used to commit fraud on you via your bank.", "title": "" }, { "docid": "9a1c8d73a18e912dd13bdb6d7e880bba", "text": "I think that the person that stole the wallet is up for the credit cards and stuff with money but less likely he/she will be smart enough too use your identity, and even if they do you'll find out somehow now or later!", "title": "" }, { "docid": "db3869d3bbe9694441d0f24d4c98a15b", "text": "\"As long as there is nothing more to this story you aren't sharing, you can expect those bills you paid to come back (you will have to pay them again later). You can be pretty certain that the name he gave you was fake, and that the bank account you paid your bills with was not his. I would not try to do anything at all with the information he gave you because first it is not his, and second your name is already tied to this bank account via your utility bills. In other words that would be illegal and you are already on the list of suspects. I would say that if you don't call the police they probably won't call you. The police often times do not even waste their time when somebody's light bill was paid with fraudulent financial information or whatever. I have actually seen similar situations play out a number of times and the police have never gotten involved. Disclaimer: I probably don't live where you live, and I'm not an attorney. But I do know what I am talking about so here's my advice (I know you didn't ask for advice but you probably might benefit from it). Let that money go, sometimes people get you. Take it as a lesson and move on. If you do end up having to have contact with the police and you don't already know, they will lie to you and try to trick you into acting in a way that is not in your self interest. But then you kind of look guilty if you won't even talk to them, and in this case you did not do anything illegal. So if I was you I would probably just think of where I might be incriminating myself by telling the truth, if there were any parts of my story that would raise any flags, and think of how I would smooth those out ahead of time. Also for your personal information you do not need to have a sophisticated understanding of computers to do anything you described, if you are familiar with operating a web browser you can do all types of stuff with Paypal. Most people that give off the vibe \"\"criminal\"\" are not going to be able to make any money conning people and would probably have given it up before they got to you. The information you have is not like the most valuable stuff ever but somebody that knew what they were doing could use it to take money out of your account, and if they had that and then could get a few other pieces they could really mess up your life. So that's part of why they say to be careful, any one piece is maybe not so valuable but if you are loose with everything you will probably have a shitty few weeks at some points in the future. \"\"no aa\"\" lol\"", "title": "" }, { "docid": "6dedcdbbf03e9a2de3000237c184bcc1", "text": "It's very, very unlikely that you received a phone call at work with an incorrect birth date from an actual lending company that thinks it loaned you any money. It's much more likely that you received a phone call at work from a collections agency that would have bought some loan from the aforementioned agency for pennies on the dollar. They would have been hunting around trying to find someone with your name who was born thirteen years earlier. It's even more likely that this is some sort of phishing scam. If you're worried, you can check your credit rating, but it is likely that you can safely ignore the situation. If they call back, ask for thorough details about the credit card. If they're a real collections agency and for some reason they won't leave you alone, IIRC the most surefire course of action is to hire a lawyer to send them a cease-and-desist letter.", "title": "" }, { "docid": "860266c5f091ca5d690561f10b47edb1", "text": "\"Here are a handful of measures I take myself: I check my credit reports once in a while and look for anything out of the ordinary. If somebody calls me on the telephone claiming to be from my bank or credit card company, utility, etc. I ask for their number, check it, and call them back. I don't give personal information to people merely claiming to be from a place I do business with. I never fill out ballots for free contests. Most of the time these are scams. When I get a call telling me \"\"you won a free cruise\"\" for a ballot I supposedly filled out at the mall, I say they're lying through their teeth. For excitement, I'll sometimes buy a lotto ticket instead. I'm careful when I surf the web. I don't give my personal information to web sites I can't trust. If they look the least bit shady, I'm out. Also, I use different passwords at different web sites. I avoid using a password from a public terminal, but when I must, I change my password soon after. I'm careful when I download software. I don't install anything I didn't get from a trusted source. I pay for software when necessary, so finding a trusted source is not hard. But, I've heard of people who – to save a buck – would download a pirated application from a shady warez site only to be \"\"gifted\"\" a trojan horse key logging or other spyware along with it. When I no longer need a bill, receipt, statement, etc. or any document containing personal information, I shred it, and I use a shredder that does a micro-cut, not just a strip- or cross-cut. The micro-cut remains go in the green bin with wet and yucky organic waste. When I no longer need a hard drive, I use a secure wiping tool like Darik's Boot & Nuke before reusing. If the drive isn't worth reusing, I'll wipe first then take apart with my Torx screwdriver. Once I have the drive platter, I scratch the heck out of it. Remains go to the community recycling depot. That's all I can think of right now; I probably missed a few :-) So, what do others do? I'm curious, too.\"", "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": "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": "c96289c6f10cf5dd3412d213afde0f90", "text": "Usually the most significant risk scenarios here are: Third parties can abuse your routing/account numbers to initiate debits, but this is a type of fraud that is easily traced. It can happen, but it is more likely that it would be a scenario where you were specifically targeted vs. the victim of some random fraud. Defending against someone who is specifically going after you is very difficult, especially if you don't know about it. Your SSN isnt used for the bank transfer, you are providing it so that the entity making the payments can report on payments to you for tax purposes. If you are truly worried about this type of scenario, I suggest setting up a dedicated savings account for the purpose of receiving these payments and then sweeping (either manually or automatically) the funds into another account. Most stock brokers will allow you to automate this, and most banks will let you do this manually.", "title": "" }, { "docid": "30c431a4738f2c89c49acec373d3c91a", "text": "\"Every legitimate claim I've filed regarding fraudulent charges on my card includes signing a legal document. If your \"\"friend\"\" completes such a document and you can verify that it is untrue, he's in deeper trouble than you. Unfortunately, if he's successful in filing a claim that is later proven to be fraudulent, it puts your account in a poor status until it's fully cleared. Even then, corporate inertia may result in longer duration inaccurate information. Once you've cleared the fraudulent claim, you'll want to contact your credit agency to ensure they are provided with correct and proper documentation.\"", "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": "7105af373db635e924f9f01e352fc7d4", "text": "You don't have to provide your personal home address per se. You can provide a legal address where Companies house can send across paper correspondence to. Companies house legally requires an address because directors are liable to their shareholders(even if you are the only shareholder) and to stop them from disappearing just like that with shareholder's money. Moreover your birth date will also be visible on websites which provide comapnies information. You can ask these websites to stop sharing your personal information. Every company must have a registered office within the UK which is the official legal address of the company. It must be a physical address (i.e. not a PO Box without a physical location) as Companies House will use this address to send correspondence to. To incorporate a private limited company you need at least one director, who has to be over 16 years of age. You may also have a secretary, but this is optional. The information you will need to supply for each officer includes: You may also have officers that are companies or firms, and for these you will need to supply the company or firm name, its registered office address, details of the legal form of the company, where it is registered and if applicable its registration number.", "title": "" }, { "docid": "306bb354eb7a9ffb5fae3393a9007d2d", "text": "\"Others have already commented on the impact of anything which dissuades merchants from raising possible breaches, so I won't dwell on that. Maybe we need stronger legislation, maybe we don't, but it doesn't change today's answer. Often it works the other way around to what you might expect - rather than the merchant noticing and notifying Visa/MC/others, Visa/MC/others spot patterns of suspicious activity (example 1). I don't have any data on the relative numbers of who is being notified/notifying between merchants and payment processors, but at the point when your card is identified as compromised there's no reason to suppose that an individual merchant in the traditional sense has been compromised, let alone identified. In fact because there's a fast moving investigation it could even be a false alarm that led to your card getting cancelled. Conversely it could be a hugely complex multinational investigation which would be jeopardised. It's simply not safe to assume that simply \"\"brand X\"\" has been compromised, therefore everything \"\"brand X\"\" knows about you is also compromised: Furthermore there's no reason to assume the merchant has even admitted to, or discovered the root cause. MC/Visa/Banks, at the point at which they're cancelling cards simply can't say (at least not in a way that might expensively backfire involving lots of lawyers) because the standard of proof needed to go on record blaming someone is simply not yet met. So: yes it's common that you aren't told anything for all of the above reasons. And of course if you really want to find out more you may have some success with your local data protection legislation and formally make a subject access request (or local equivalent) to see what that brings back. Be sure to do it in writing, to the official address of both mastercard and your bank.\"", "title": "" }, { "docid": "91d1802b16c0cb4b7467d2137e0e4800", "text": "Probably because large chains can absorb the loss from fraud better than small stores do. Thus, small stores want to ensure that the person holding the card is the same as the name on the card.", "title": "" }, { "docid": "b3db2fd1aa8c7f9b4020e369c5924214", "text": "So could someone working at your bank directly. Of at your HR department at work. Most of the wait staff at the restaurant I ate at technically had access to my credit card and could steal money. While you are at work, someone could break into your house and steal your stuff too. The point is, Mint and everything else is a matter of the evaluating the risk. Since you already understand the vulnerability (they have your accounts) and you know the risk (they could steal your money) what are the chances it happens? 1.) Mint will make lots more money if it doesn't happen, so it benefits Intuit to pay their employees well and put in safeguards to prevent theft. Mint.com is on your side even if a specific employee isn't. 2.) You have statements and such, so you can independently evaluate mint. I do not just trust mint with my stuff, I check info in Quicken and at the bank sites themselves. I don't do them all equally, but I will catch problems. 3.) Laws mean that if theft happens, you will have the opportunity to be made whole. If you are worried about theft, don't trust other people or generally get a bad feeling, don't do it. If you check your accounts online with the same computer you log into Facebook with, them I would suggest it doesn't bother you. You might have legal or business reasons to be more adverse to risk then me. However, just because somebody could steal your money, I personally don't consider it an acceptable risk compared to the reward. I will also be one of the first people to be robbed, I am not unrealistic.", "title": "" } ]	fiqa
87bcf532188c3605ff1ac62bc427b828	How Do I Fix Excess Contribution Withdrawl	[ { "docid": "92c2fe0fdd0104d5307b60266a6202c8", "text": "\"You didn't have a situation of \"\"excess contribution\"\". If you have proof that someone in Fidelity actually told you what you said, you might try to recover some of your losses through a lawsuit. However, their first (and main) defense would be that they're not in the business of providing tax advice, and it is your problem that you asked random person a tax question, and then acted on an incorrect answer. By the way, that only goes to say that anything you might read here you should, as well, take with a grain of salt. The only one who can give you a tax advice is a licensed tax professional. I explained it in details in my blog post, but in short - it is either an EA (Enrolled Agent, with the IRS credentials), or a CPA (Certified Public Accountant) or Attorney licensed in your State. Back to your question - \"\"Excess Contribution\"\" to a IRA is when you contribute in excess to the limits imposed. For Traditional IRA in 2012 the limit was $5000. You contributed $4000 - this means that you were not in excess. There's nothing they can \"\"correct\"\", the 1099-R you got seems to be correct and in order. What you did have was a case of non-deductible contribution. Non-deductible contribution to your IRA should have been reported to the IRS on form 8606. Non-deductible contribution creates basis in your IRA. Withdrawals from your IRA are prorated to the relation of your basis to your total value, and the taxable amount is determined based on that rate. It is, also, calculated using form 8606. So in short - you should have filed a form 8606 with your 2012 tax return declaring non-deductible IRA and creating $4000 basis, and then form 8606 with your 2013 tax return calculating which portion of the $4000 you withdrew is non-taxable. If your total IRA (in all accounts) was that $4000 - then nothing would be taxable. Talk to a tax adviser, you might need to amend your 2012 return (or send the 2012 form separately, if possible), and then do some math on your 2013 return. If 60 days haven't passed, you might want to consider depositing the $4000 in a Roth IRA and perform what is called \"\"Conversion\"\".\"", "title": "" }, { "docid": "5e20fcec6c8c6bffd7c63b45263466c2", "text": "\"I think there are several issues here. First, there's the contribution. As littleadv said, there is no excess contribution. Excess contribution is only if you exceed the contribution limit. The contribution limit for Traditional IRAs does not depend on how high your income goes or whether you have a 401(k). It's the deduction limit that may depend on those things. Not deducting it is perfectly legitimate, and is completely different than an \"\"excess contribution\"\", which has a penalty. Second, the withdrawal. You are allowed to withdraw contributions made during a year, plus any earnings from those contributions, before the tax filing deadline for the taxes of that year (which is April 15 of the following year, or even up to October 15 of the following year), and it will be treated as if the contribution never happened. No penalties. The earnings will be taxed as regular income (as if you put it in a bank account). That sounds like what you did. So the withdrawal was not an \"\"early withdrawal\"\", and the 1099-R should reflect that (what distribution code did they put?). Third, even if (and it does not sound like the case, but if) it doesn't qualify as a return of contributions before the tax due date as described above (maybe you withdrew it after October 15 of the following year), as littleadv mentioned, your contribution was a non-deductible contribution, and when withdrawing it, only the earnings portion (which after such a short time should only be a very small part of the distribution) would be subject to tax and penalty.\"", "title": "" } ]	[ { "docid": "44a3e24f5e05ecd5ec3c1cb76d7ba92e", "text": "An answer to this question Can I get a rebate after using my HSA? discusses how to redeposit money accidentally withdrawn. The link to https://www.americafirst.com/about/help/faq/health-savings.cfm in the answer also includes this FAQ: What if I contribute into my HSA more than my yearly limit allows? If nothing is done about this excess contribution then there will be an excise tax of 6 percent assessed by the IRS. You are able to avoid this penalty as long as you distribute the excess before the tax filing deadline including any extensions. Any of our many America First branches can help you fill out the appropriate paperwork to get this taken care of so you avoid this tax. contact the institution where the funds are deposited and ask for help reversing the deposit.", "title": "" }, { "docid": "ae3d1e7f2ee5a22c82850e4704b0d8d6", "text": "\"Besides what others have mentioned, another thing to watch out for is the tax withholding on withdrawal. If it's a Traditional IRA, they will probably withhold a certain percentage on non-qualified withdrawals. I am not sure if you can ask them not to withhold. I don't remember the percentage, and it varies by state, but let's assume it is 20%. That means that you only receive 80% of the withdrawal amount when you take it out. However, when you deposit the money to complete the \"\"rollover\"\", you need to give them 100% of the withdrawal. That means (assuming the 20% withholding) you need to fork out cash equal to 125% of what you received in cash, within 60 days! That's like several hundred percent APR and hard to meet unless you are certain of receiving a large payment within the time period. And if you forget about this, and you just deposit the same amount that you received (80% of the withdrawal), the remainder (20% of the withdrawal) will count as an early withdrawal, with all the taxes and penalty. So what happens to the 20% withheld that you never received but had to pay anyway? Well, the government has it. It will count as tax paid on your tax return, so it will increase your refund/decrease the amount you owe, but that means you are out that money until tax time! (Unless you decrease the withholding on your salary in the rest of the year to compensate.) If it's a Roth IRA withdrawal on the contribution, there is generally no withholding, so you don't have to worry about the above. (But there is no penalty on withdrawal of Roth IRA contribution anyway.)\"", "title": "" }, { "docid": "36a804f76053758e3c670904a4eed573", "text": "\"typically, your employer will automatically stop making contributions once you hit the 18k$ limit. it is worth noting that employer contributions (e.g. \"\"matching\"\") do not count towards the 18k$ employee pre-tax contribution limit. however, if you have 2 employers during the year their combined payroll deductions might exceed the limit if you do not inform your later employer of the contributions you made at your former employer (or they ignore the info). in which case, you must request a refund of \"\"excess contributions\"\" from one of the plans (your choice). you must report the refund as taxable income on your taxes. if you do not make this request by the time you file your taxes, the tax man will reject your filing and \"\"adjust\"\" your return with more taxes and penalties. sometimes requesting a refund of excess contributions might cause your employer to remove \"\"matching\"\" funds, but i am not clear on the rules behind that. there are some 401k plans that allow \"\"supplemental after-tax contributions\"\" up to the combined employee/employer limit (53k$ in 2015 and 2016). it is a rare feature, and if your company offers it, you probably already know. however, generally it is governed by a separate contribution election that only take effect once you hit the employee pre-tax contribution limit (18k$ in 2015 and 2016). you could ask your hr department to be sure. 401k plans can be changed if there is enough employee demand for a rule change. especially in a small company, simply asking for them to allow dollar based contributions instead of percent based contributions can cause them to change the plan to allow it. similarly, you could request they allow \"\"supplemental after-tax contributions\"\", but that might be a harder change to get.\"", "title": "" }, { "docid": "8eb7d6d80f8ec378980ab8a4fa22e149", "text": "\"You are not the only one with this problem. When Intuit changed their pricing and services structure in 2015 a lot of people got angry, facing larger fees and having to go through an annoying upgrade just to get the same functionality (such as Schedule D, capital gains). You have several options: (1) Forget Turbo Tax and just use paper forms. That is what I do. Paper is reliable. (2) Use forms mode in Turbo Tax. Of course, that may be even more complicated than simply filing out paper forms. (3) Use a different service. If your income is below $64,000 the IRS has a free electronic filing service. Other online vendors have full taxes services for less than Turbo Tax. (4) Add the amount to ordinary income. Technically, as long as you report the income, you cannot be penalized, so if you add the capital gain to your ordinary income, then you have paid taxes on the income. Even if they send you a letter, you can send an answer that you added it to ordinary income and that will satisfy them. Of course you pay a higher rate on your $26 if you do that. (5) If you are in the 15% or below income bracket you are exempt from capital gains, and you can omit it. Don't believe the nervous Nellies who say the IRS will burn your house down if you don't report $26 in capital gains. Penalties are assessed on the percentage of TAXES you did not pay (0.5% penalty per month). Since 0.5% of $0 is $0 your penalty is $0. The IRS knows this. The IRS does not send out assessment letters for $0. (6) Even if you are above the 15% bracket, there is likelihood it is still a no-tax situation (see 5 above). (7) Worst case scenario: you are making a million dollars per year and you omit your $26 capital gains from your return. The IRS will send you an assessment letter for about $10. You can then send them a separate check or money order to pay it. In all honesty I have omitted documented tax items, like taxable interest, that the IRS knows about many times and never gotten an assessment letter. Once I made a serious math error on my return and they sent me an assessment letter, which I just paid, end of story. And that was for a lot more than $26. The technical verbiage for something like this in IRS lingo is CP-2000, underreported income. As you can see from this official IRS web page, basically what they do is guess how much they think you owe and send you a bill. Then you pay it. If you do so in time, you don't even get a 0.5% interest penalty on your $6.75 owed or whatever it is. (8) Go hog wild. As long as you are risking an assessment on your $26, why not go hog wild and just let the IRS compute all your taxes for you? Make a copy of your income statements, then mail them to the IRS with a letter that says, \"\"Hi, I am Mr. Odinson, my SSN is XXX-XX-XXXX. My address is XYZ. I am unable to compute my taxes due to a confused state of mind. I am hereby requesting a tax assessment for the 2016 tax year.\"\" Make sure you sign and date the letter. In all probability they will compute the full assessment and send you a bill (or refund).\"", "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": "52456dcf90b012d6a5124b3306c93288", "text": "I wrote an article about this a while ago with detailed instructions, so I'll link to it here. Here's a snippet about how to use the Roth IRA loophole and report it properly: You don’t have any Traditional/Rollover IRA at all. You deposit up to the yearly maximum (currently $5500) into a traditional IRA. In your case, you re-characterized, which means you essentially deposited. The fact that it lost money may help you later if you have extra amounts in Traditional IRA. You convert your traditional IRA to become Roth IRA ($5500 change designation from Traditional IRA to Roth IRA). You fill IRS form 8606 and attach it to your yearly tax return, no tax due. You have a fully funded Roth IRA account. If you have amounts in the Traditional IRA in excess to what you contributed last year - it becomes a bit more complicated and you need to prorate. See my article for a detailed example. On the form 8606 you fill the numbers as they are. You deposited to IRA 5500, you converted 5100, your $400 loss is lost (unless you have more money in IRA from elsewhere). If you completely distribute your IRA, you can deduct the $400 on your Schedule A, if you itemize.", "title": "" }, { "docid": "926bbb14f14cc331260a220cf824cfef", "text": "Apply as many deductions as you are legally entitled to. Those are taxes you may never ever pay. Then turn around and put any more monies above the maximum retirement contributions into a taxable account. But this time invest in tax efficient investments. For example, VTI or SPY will incur very minimal taxes and when you withdraw, it will be at lower tax rate (based on current tax laws). Just as you diversify your investments, you also want to diversify your taxes.", "title": "" }, { "docid": "a4c0d2d16b3592e2800408a3cb76c312", "text": "\"Yes, you can withdraw the excess contribution (or actually any amount you contributed for 2015, not necessarily an excess), plus earnings from that withdrawn contribution, by April 15, and not incur a penalty for the excess contribution. It would count as if you did not contribute that amount at all. The earnings would be taxed as regular income, and the earnings may incur a penalty. Yes, you can \"\"recharacterize\"\" (all or part of) your Roth IRA contribution as a Traditional IRA contribution (or vice versa) by April 15. Recharacterization means you pretend the contribution was originally made as a Traditional IRA contribution, and did not involve Roth IRA at all. (\"\"Conversion\"\" is something very different and can only go from Traditional to Roth, not the other way around.) You are likely not eligible to deduct that Traditional IRA contribution, so you will have to report it as a non-deductible Traditional IRA contribution on a 2015 Form 8606 Part 1. Note that after you've recharacterized it as a Traditional IRA contribution, you can also then \"\"convert\"\" that Traditional IRA money to a Roth IRA if you want, achieving the same state as what you have now. Contributing to a Traditional IRA and then converting to a Roth IRA is called a \"\"backdoor Roth IRA contribution\"\"; if you don't have any existing pre-tax money in Traditional IRA or other IRAs, then this achieves the same as a regular Roth IRA contribution except with no income limits. When you convert, the earnings you have made since contributing will be taxed as income. If you had done the backdoor originally to begin with (convert right after contributing), you would have had no earnings in between and no tax to pay, but since if you do the conversion now you have waited so long, you are disadvantaged by having to pay tax on the earnings in between. If you convert, you will have to fill out Form 8606 Part 2 for the year you convert (2016).\"", "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": "0810b4d6bcf568804606b0a2e51e9c07", "text": "\"Because it is a Roth IRA (not traditional), you never pay penalties for withdrawing any amount up to your total contributions amount. This is because you are funding it with after tax money. But it sounds like your Roth had $11K in it and you zeroed it out? If you were less than 59.5 years old at the time you made the withdrawal, then if you did not return anything to the account, then you would pay tax on the 6K as income this year at your normal tax rate, plus an additional 10% penalty on that 6K ($600). The 5K in contributions is not taxable. Now, since it's been more than 60 days since you withdrew the money, you cannot put the 6K in earnings back in without paying the penalty, however, you can still contribute $5500 per year (or $6500 if you're over 50). So, you can put back $5500 and then you would only have to pay tax + 10% on the $500 difference. Update: I would recommend talking to an accountant. The fact that you intended to buy a house might provide a mechanism for getting the money back in if you wish. If this was your first house or you have not owned a home in the last 2 years, then you would be considered a \"\"first-time homebuyer\"\" and there is a special exception allowing you to remove 10K without penalty. If you end up not purchasing the home, you have 120 days to contribute those funds back in (treated as a rollover- thank you littleadv for the link to this). As for the final 1K overage, I believe you can count that towards your $5500/yr contribution when you put the entire amount back. Lastly, after digging into this, you have hit so many edge cases with your scenario (6K in earnings being between 5500 for under 50 and 6500 for over 50, it's been 70 days which is between the 60 day normal cutoff and the 120 day extended cutoff for home purchase falling through, and 11K total being just over the 10K cutoff for the same), that I'm starting to wonder if this is some sort of contrived case for an accounting exam!?\"", "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": "c409489ebe6d78cdb47a180ef534c2ee", "text": "It is my understanding that there are no penalties for withdrawals and you can withdraw as much as you want as often as you want, including more than once in the same calendar year. Of course, the money must be in cash in the TFSA, which may require you to sell something. That sale may have fees associated with it and possibly penalties for early withdrawal, etc. There is still huge confusion over this, because there are penalties for over-contributions in the calendar year. You contribution limit is still $5,500/year, regardless of how much you may have withdrawn in that same calendar year. So if you withdraw $10K in 2013, you can still only contribute $5,500 in 2013. In 2014, you can contribute $5,500, PLUS you can also contribute an additional $10K for the 2013 withdrawal of $10K. Think of it like 2 separate limits, one for current year, and one a running total of all past withdrawals.", "title": "" }, { "docid": "061c88bc7c25999f41e8622fc2c2bd64", "text": "The rebate amount is a non-qualified distribution: IRS Pub 969 describes how the HSA works: Reporting Distributions on Your Return How you report your distributions depends on whether or not you use the distribution for qualified medical expenses (defined earlier). If you use a distribution from your HSA for qualified medical expenses, you do not pay tax on the distribution but you have to report the distribution on Form 8889. However, the distribution of an excess contribution taken out after the due date, including extensions, of your return is subject to tax even if used for qualified medical expenses. Follow the instructions for the form and file it with your Form 1040 or Form 1040NR. If you do not use a distribution from your HSA for qualified medical expenses, you must pay tax on the distribution. Report the amount on Form 8889 and file it with your Form 1040 or Form 1040NR. If you have a taxable HSA distribution, include it in the total on Form 1040 or Form 1040NR, line 21, and enter “HSA” and the amount on the dotted line next to line 21. You may have to pay an additional 20% tax on your taxable distribution. I looked at several plans regarding how to handle mistaken distributions: example A What if I accidentally use my HSA Visa debit card for a non-qualified expense? To fix this problem, just bring that same amount into any local branch and tell us it was a Mistaken Distribution. We can then put the funds back into your HSA and correct the problem. example B You’re allowed to correct mistaken HSA withdrawals when there is clear and convincing evidence that amounts were distributed from an HSA because of a mistake of fact due to reasonable cause. You can correct the mistake by repaying the withdrawal no later than April 15 following the first year that you knew or should have known that the withdrawal was a mistake. When a correction is made, the mistaken withdrawal does not have to be included in gross income or be subject to the 6 percent additional tax, and the repayment does not count as an excess contribution. If an error is made by SelectAccount in its role as the administrator, SelectAccount will be responsible for taking appropriate corrective action. Check with your plan trustee on their procedure to fix the mistaken withdrawal.", "title": "" }, { "docid": "a5395c1a16754bfaee969990f4e83e29", "text": "Excise tax on the excess contribution is 6% a year on the amount of the contribution. In addition, gains will be taxable to you. By adding 20K over the limit, you added $1200 to your tax bill. Withdraw it ASAP. Whatever investment you have in your IRA - you can probably buy it (or a comparable) outside of the IRA.", "title": "" }, { "docid": "60e5e50342d8e0101f8d1103e5d885d2", "text": "\"Perhaps you can track your VAT amounts in a Liability account. Using a tax liability account is a common thing in accounting. To do this, when you receive money, split the transaction such that your actual revenue (which you will keep after VAT remittance) goes into an Asset account, and the amount you will eventually have to pay back to the state goes into a Liability account. Later, when you pay the VAT back to the state, your transaction will effectively \"\"pay back\"\" the liability, with one end of your double-entry decreasing the funds in your checking account, and the other end decreasing the funds in your tax liability account. Having said that, I've found that there are many shortcomings in the Cash Flow report, and I'm not sure that using a tax liability account (which I think is the Right Thing to do) will necessarily solve this problem for you...\"", "title": "" } ]	fiqa
f127fa773df66a89ccbb263e84e22b48	How can I build up my credit history when I have nearly none	[ { "docid": "b83e9ce022aee6abbedc891366578447", "text": "You're going to have a huge problem getting approved for anything as long as you have an unpaid bill on your report. Pay it and make sure its reported as paid in full - ASAP. Once that settled, your credit will start to improve slowly. Can't do anything about that, it will take time. You can make the situation improve a bit faster by lending money to yourself and having it reported regularly on your report. How? Easy. Get a secured credit card. What does it mean? You put X amount of money in a CD and the bank will issue you a credit card secured by that CD. Your credit line will be based on the amount in that CD, and you'll probably pay some fees to the bank for the service (~$20-50/year, shop around). You might get lucky and find a secured card without fees, if you look hard enough. Secured cards are reported as revolving credit (just as any other credit card) and are easy to get because the bank doesn't take the risk - you do. If you default on your payments - your CD goes to cover the debt, and the card gets cancelled. But make absolutely sure that you do not default. Charge between 10% and 30% of the credit limit each month, not more. Pay the balance shown on your credit card statement in full every month and by the due date shown on your monthly statement. It will take a while, but you would typically start noticing the improvement within ~6-12 months. Stop applying for stuff. Not store cards, not car loans, you're not going to get anything, and will just keep dragging your scores down. Each time you have a pull on your report, the score goes down. A lot of pulls, frequent pulls - the score goes down a lot. Lenders can see when one is desperate, and no-one wants to lend money to desperate people. Optimally lenders want to lend money to people who doesn't need loans, but in order to keep the business running they'll settle for slightly less - people who don't usually need loans, and pay the loans they do have on time. You fail on both, as you're desperate for a loan and you have unpaid bills on your report.", "title": "" }, { "docid": "b6d324ab6806767d063c89d020086ca4", "text": "What's the fastest way I can raise my credit score from nothing? I worked at a bank for almost 6 years and used their secured credit card. To give you an example of what that did as far as credit was concerned: on Transunion my score increased 200+ points, while on Experian and Equifax, it increased by less than 150. Most customers who used the card also saw an increase, provided that they paid on time and didn't max out the card. Some strategies I used and I recommended to my customers:", "title": "" } ]	[ { "docid": "22950e777b1e19bc74ba9f13cd706984", "text": "\"There are services that deal specifically with these situations, boostcredit101.com is one I've personally had a good experience with though there are plenty out there. What they do is add you as an authorized user to a credit card with a high limit, low balance, and perfect payment history. This \"\"boosts\"\" for about 30 days while you remain listed as a user on that account, which allows you to qualify for your own card or other kind of loan in that time and helps you start rebuilding your credit. I've even heard of people doing this to qualify for a home loan, though the home loan industry is typically aware of this \"\"trick\"\".\"", "title": "" }, { "docid": "607d3d93fe01a67524bee2141178e60a", "text": "The short answer is, with limited credit, your best bet might be an FHA loan for first time buyers. They only require 3.5% down (if I recall the number right), and you can qualify for their loan programs with a credit score as low as 580. The problem is that even if you were to add new credit lines (such as signing up for new credit cards, etc.), they still take time to have a positive effect on your credit. First, your score takes a bit of a hit with each new hard inquiry by a prospective creditor, then your score will dip slightly when a new credit account is first added. While your credit score will improve somewhat within a few months of adding new credit and you begin to show payment history on those accounts, your average age of accounts needs to be two years or older for the best effect, assuming you're making all of the payments on time. A good happy medium is to have between 7 and 10 credit lines on your credit history, and to make sure it's a mix of account types, such as store cards, installment loans, and credit cards, to show that you can handle various types of credit. Be careful not to add TOO much credit, because it affects your debt-to-income ratio, and that will have a negative effect on your ability to obtain mortgage financing. I really suggest that you look at some of the sites which offer free credit scores, because some of them provide great advice and tips on how to achieve what you're trying to do. They also offer credit score simulators, which can help you understand how your score might change if, for instance, you add new credit cards, pay off existing cards, or take on installment loans. It's well worth checking out. I hope this helps. Good luck!", "title": "" }, { "docid": "322a5c40e4c81d952476c0acfbd4c64e", "text": "\"One of the factors of a credit score is the \"\"length of time revolving accounts have been established\"\". Having a credit card with any line of credit will help in this regard. The account will age regardless of your use or utilization. If you are having issues with credit limits and no credit history, you may have trouble getting financing for the purchase. You should be sure you're approved for financing, and not just that the financing option is \"\"available\"\" (potentially with the caveat of \"\"for well qualified borrowers\"\"). Generally, if you've gotten approved for financing, that will come in the form of another credit card account (many contracting and plumbing companies will do this in hopes you will use the card for future purchases) or a bank loan account (more common for auto and home loans). With the credit card account, you might be able to perform a balance transfer, but there are usually fees associated with that. For bank loan accounts, you probably can't pay that off with a credit card. You'll need to transfer money to the account via ACH or send in a check. In short: I wouldn't bet on paying with your current credit card to get any benefit. IANAL. Utilizing promotional offers, whether interest-free for __ months, no balance transfer fees, or whatever, and passing your debt around is not illegal, not fraudulent, and in many cases advised (this is a link), though that is more for people to distribute utilization across multiple cards, and to minimize interest accrued. Many people, myself included, use a credit card for purchasing EVERYTHING, then pay it off in full every month (or sometimes immediately) to reap the benefit of cash back rewards and other cardholder benefits. I've also made a major payment (tuition, actually) on a Discover card, and opened up a new Visa card with 18-months of no interest and no balance transfer fees to let the bill sit for 12 months while I finished school and got a job.\"", "title": "" }, { "docid": "2539bf77b34ceeb3c9a919dc1a7a2889", "text": "\"Under the assumption you're not looking for a particular credit union/bank (since that'll make this question off topic), you can apply for a secure credit card. That's where you essentially put up a sum of money as collateral. That would be the safe way for someone with \"\"little or no credit history\"\" and wants to build credit. Any big bank (Wells Fargo, Chase, etc.) should be able to do that for you. You can also do that online provided you have the means to transfer money into the account.\"", "title": "" }, { "docid": "426732136eca3b2ab7cf31da061c990a", "text": "I'm the contrarian in the crowd. I think credit scores and debt are the closest thing to evil incarnate. You're in good company. The absence of a credit score simply means the agencies have insufficient data in their behavioral model to determine how profitable your business would be to the bank. The higher your score, the more likely the bank is to make a profit from your loan. IMHO, you're better off building up cash and investment reserves than a credit history. With sufficient reserves, you will be able to shop around for a bank that will give you a good rate, if you ever do need a loan. You'll be surprised at how quickly you get in a position where you don't need a loan if you save and invest wisely. I used to have a (high) credit score, and I was miserable about it because there were always bills due. I gave up debt 14 years ago, paid the last debt 7 years ago, and have never. been happier. Raising kids without debt (or credit score) is much more fun than with debt.", "title": "" }, { "docid": "60f197fcd24ac4a0004f929ef51fa4a2", "text": "This strategy will have long lasting effects since negative items can persist for many years, making financing a home difficult, the primary source of household credit. It is also very risky. You can play hard, but then the creditor may choose you to be the one that they make an example out of by suing you for a judgement that allows them to empty your accounts and garnish your wages. If you have no record of late payments, or they are old and/or few, your credit score will quickly shoot up if you pay down to 10% of the balance, keep the cards, and maintain that balance rate. This strategy will have them begging you to take on more credit with offers of lower interest rates. The less credit you take on, the more they'll throw at you, and when it comes time to purchase a home, more home can be bought because your interest rates will be lower.", "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": "3cc6c9116769ff348070c66a1ed49129", "text": "\"A credit card is a way to borrow money. That's all. Sometimes the loans are very small - $5 - and sometimes they are larger. You can have a credit card with a company (bank or whatever) that you have no other relationship with. They're not a property of a bank account, they are their own thing. The card you describe sounds exactly like a debit card here, and you can treat your Canadian debit card like your French credit card - you pay for things directly from your bank account, assuming the money is in there. In Canada, many small stores take debit but not credit, so do be sure to get a debit card and not only a credit card. Now as to your specific concerns. You aren't going to \"\"forget to make a wire.\"\" You're going to get a bill - perhaps a paper one, perhaps an email - and it will say \"\"here is everything you charged on your credit card this month\"\" along with a date, which will be perhaps 21 days from the statement date, not the date you used the card. Pay the entire balance (not just the minimum payment) by that date and you'll pay no interest. The bill date will be a specific date each month (eg the 23rd) so you can set yourself a reminder to check and pay your bill once a month. Building a credit history has value if you want to borrow a larger amount of money to buy a car or a house, or to start a business. Unlike the US, it doesn't really have an impact on things like getting a job. If you use your card for groceries, you use it enough, no worries. In 5 years it is nice to look back and see \"\"never paid late; mostly paid the entire amount each month; never went over limit; never went into collections\"\" and so on. In my experience you can tell they like you because they keep raising your limit without you asking them to. If you want to buy a $2500 item and your credit limit is $1500 you could prepay $1000 onto the credit card and then use it. Or you could tell the vendor you'd rather use your debit card. Or you could pay $1500 on the credit card and then rest with your debit card. Lots of options. In my experience once you get up to that kind of money they'd rather not use a credit card because of the merchant fees they pay.\"", "title": "" }, { "docid": "a076691090c6252f90551775a973c8fa", "text": "Generally, if you have a loan, you have a credit score. But since you have never had a loan before, then it is likely that you do not have a credit score. You should not be worried if you aren't planning on applying for credit and/or loans. If you are wanting to purchase a house, car, or even just having a credit card, you should work on obtaining a secure loan so then you can establish history. Most of the time you have to pay to view your credit score. By law, you can obtain a free copy of your credit report, which it sounds like you have at annualcreditreport.com, which only shows your payment history, but in order to view your credit score, you generally have to pay for it.", "title": "" }, { "docid": "87d965cd8c97f1faa8784ca29206e209", "text": "Because even if you won the lottery, without at least some credit history you will have trouble renting cars and hotel rooms. I learned about the importance, and limitations of credit history when, in the 90's, I switched from using credit cards to doing everything with a debit card and checks purely for convenience. Eventually, my unused credit cards were not renewed. At that point in my life I had saved a lot and had high liquidity. I even bought new autos every 5 years with cash. Then, last decade, I found it increasingly hard to rent cars and sometimes even a hotel rooms with a debit card even though I would say they could precharge whatever they thought necessary to cover any expenses I might run. I started investigating why and found out that hotels and car rentals saw having a credit card as a proxy for low risk that you would damage the car or hotel room and not pay. So then I researched credit cards, credit reports, and how they worked. They have nothing about any savings, investments, or bank accounts you have. I had no idea this was the case. And, since I hadn't had cards or bought anything on credit in over 10 years there were no records in my credit files. Old, closed accounts had fallen off after 10 years. So, I opened a couple of secured credit cards with the highest security deposit allowed. They unsecured after a year or so. Then, I added several rewards cards. I use them instead of a debit card and always pay in full and they provide some cash back so I save money compared to just using a debit card. After 4 years my credit score has gone to 800+ even though I have never carried any debt and use the cards as if they were debit cards. I was very foolish to have stopped using credit cards 20 years ago but just had no idea of the importance of an established credit history. And note that establishing a great credit history does not require that you borrow money or take out loans for anything. just get credit cards and pay them in full each month.", "title": "" }, { "docid": "269fa9298e086fbc62da9e7a66c195c5", "text": "What the other's said is right. You build credit by paying over time. Keeping your balance under the halfway mark of your limit and paying it down over the course of a fair amount of periods yields the best results. So if you have a limit of $1500 then charge a $600 credit and pay $100+ interest over 6 months. Best yet are loans with fix installments. This behavior tells the credit agencies you are responsible and you pay your debts. In their eyes you are a low risk high ROI, statistically speaking.", "title": "" }, { "docid": "a2bca858601b7bc24a317dbaf20d6a38", "text": "\"You have a lack of credit history. Lending is still tight since the recession and companies aren't as willing to take a gamble on people with no history. The secured credit card is the most direct route to building credit right now. I don't think you're going to be applicable for a department store card (pointless anyways and encourages wasteful spending) nor the gas card. Gas cards are credit cards, funded through a bank just like any ordinary credit card, only you are limited to gas purchases at a particular retailer. Although gas cards, department store cards and other limited usage types of credit cards have less requirements, in this post-financial crisis economy, credit is still stringent and a \"\"no history\"\" file is too risky for banks to take on. Having multiple hard inquiries won't help either. You do have a full-time job that pays well so the $500 deposit shouldn't be a problem for the secured credit card. After 6 months you'll get it back anyways. Just remember to pay off in full every month. After 6 months you'll be upgraded to a regular credit card and you will have established credit history.\"", "title": "" }, { "docid": "01264d3bf1b37ab9fb671b8d57b01293", "text": "I've read multiple times that the way to rebuild the credit score is to get a credit card and then have some minor charges on it every month and have them paid in full every month. Old negative events age and this disciplined activity rebuild the score to some not to horrible levels. Now it's true that it's hard to get reasonably good credit cards when your credit score is poor. Yet it's not necessary to have a good credit card for this case - such things as large credit limit are not needed. All that's needed is a long grace period so that there's no interest between the moment a charge is done and a moment the bill is paid in full at the end of the month. Yes, the card may have rather high interest and rather low credit limit, but it doesn't really matter. I've read once on MSN Money that people are offered credit even while they're in the middle of bankruptcy, so it's not impossible to get a credit card in the described situation. Goes without saying that a lot of discipline will be needed to have all this implemented.", "title": "" }, { "docid": "0d0741eee12de03a7beb55b8a9fe3b40", "text": "Set up a meeting with the bank that handles your business checking account. Go there in person and bring your business statements: profit and loss, balance sheet, and a spreadsheet showing your historical cash flow. The goal is to get your banker to understand your business and your needs and also for you to be on a first-name basis with your banker for an ongoing business relationship. Tell them you want to establish credit and you want a credit card account with $x as the limit. Your banker might be able to help push your application through even with your credit history. Even if you can't get the limit you want, you'll be on your way and can meet again with your banker in 6 or 12 months. Once your credit is re-established you'll be able to shop around and apply for other rewards cards. One day you might want a line of credit or a business loan. Establishing a relationship with your banker ahead of time will make that process easier if and when the time comes. Continue to meet with him or her at least annually, and bring updated financial statements each time. If nothing else, this process will help you analyze your business, so the process itself is useful even if nothing comes of it immediately.", "title": "" }, { "docid": "6de2264a0a9d82015be6c5d897c27ebd", "text": "I have a car loan paid in full and even paid off early, and 2 personal loans paid in full from my credit union that don't seem to reflect in a positive way and all 3 were in good standing. But you also My credit card utilization is 95%. I have a total of 4 store credit cards, a car loan, 2 personal loans. So assuming no overlap, you've paid off three of your ten loans (30%). And you still have 95% utilization. What would you do if you were laid off for six months? Regardless of payment history, you would most likely stop making payments on your loans. This is why your credit score is bad. You are in fact a credit risk. Not due to payment history. If your payment history was bad, you'd likely rank worse. But simple fiscal reality is that you are an adverse event away from serious fiscal problems. For that matter, the very point that you are considering bankruptcy says that they are right to give you a poor score. Bankruptcy has adverse effects on you, but for your creditors it means that many of them will never get paid or get paid less than what they loaned. The hard advice that we can give is to reduce your expenses. Stop going to restaurants. Prepare breakfast and supper from scratch and bag your lunch. Don't put new expenses on your credit cards unless you can pay them this month. Cut up your store cards and don't shop for anything but necessities. Whatever durables (furniture, appliances, clothes, shoes, etc.) you have now should be enough for the next year or so. Cut your expenses. Have premium channels on your cable or the extra fast internet? Drop back to the minimum instead. Turn the heat down and the A/C temperature up (so it cools less). Turn off the lights if you aren't using them. If you move, move to a cheaper apartment. Nothing to do? Get a second job. That will not only keep you from being bored, it will help with your financial issues. Bankruptcy will not itself fix the problems you describe. You are living beyond your means. Bankruptcy might make you stop living beyond your means. But it won't fix the problem that you make less money than you want to spend. Only you can do that. Better to stop the spending now rather than waiting until bankruptcy makes your credit even worse and forces you to cut spending. If you have extra money at the end of the month, pick the worst loan and pay as much of it as you can. By worst, I mean the one with the worst terms going forward. Highest interest rate, etc. If two loans have the same rate, pay the smaller one first. Once you pay off that loan, it will increase the amount of money you have left to pay off your other loans. This is called the debt snowball (snowball effect). After you finish paying off your debt, save up six months worth of expenses or income. These will be your emergency savings. Once you have your emergency fund, write out a budget and stick to it. You can buy anything you want, so long as it fits in your budget. Avoid borrowing unless absolutely necessary. Instead, save your money for bigger purchases. With savings, you not only avoid paying interest, you may actually get paid interest. Even if it's a low rate, paid to you is better than paying someone else. One of the largest effects of bankruptcy is that it forces you to act like this. They offer you even less credit at worse terms. You won't be able to shop on credit anymore. No new car loan. No mortgage. No nice clothes on credit. So why declare bankruptcy? Take charge of your spending now rather than waiting until you can't do anything else.", "title": "" } ]	fiqa
603ee4148f3fbbe0f237b4964feae53c	Rental Application Fees	[ { "docid": "7377d2268dcb7cd6f476d5923bce0e6a", "text": "Slightly abbreviated version of the guidance from NOLO.com California state law limits credit check or application screening fees landlords can charge prospective tenants and specifies what landlords must do when accepting these types of fees. (Cal. Civ. Code § 1950.6.) Here are key provisions: I am not a lawyer, but it would seem you have two options if you catch a landlord violating these rules. An idea to avoid the whole problem in the first place: Get a copy of your credit report yourself and take a copy with you to meet the landlord. If they want an application fee, ask why they need it making it clear you know the above law. If they say for a credit report offer to give them a copy in lieu of the fee.", "title": "" } ]	[ { "docid": "716556dc8e2ec8e89a0b9229f91bd0c6", "text": "You're asking all the right questions, and if I worked for my landlord's company I might have an answer! I imagine they're capitalizing on people's laziness. I live in the Bay Area where some people probably don't mind paying $35 to not have to walk 100 feet to the office and drop off a check.", "title": "" }, { "docid": "06724d4ce9c252533e99ccea2c29973c", "text": "If I is the initial deposit, P the periodic deposit, r the rent per period, n the number of periods, and F the final value, than we can combine two formulas into one to get the following answer: F = I(1+r)n + P[(1+r)n-1]/r In this case, you get V = 1000(1.05)20 + 100[(1.05)20-1]/0.05 = 5959.89 USD. Note that the actual final value may be lower because of rounding errors.", "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": "554772f1fd22785cb52c3fab4b5a1063", "text": "In Massachusetts, we have a similar law. Each tenant fills out a W9 and the account is in their name. You need to find a bank willing to do this at no cost, else fees can be problematic. With today's rates, any fee at all will exceed interest earned.", "title": "" }, { "docid": "9d9403bb9d1a39b292f8692b5bc67126", "text": "\"Have you been rejected from a rental for a specific reason (leading to this question)? Landlords are in the business of exchanging space for regular payments with no drama. Anything they ask in an application should be something to minimize the risk of drama. The \"\"happy path\"\" optimistic goal is that you pay your rent by the due date every month. If your income is not sufficient for this, demonstrating you have assets and would be able to pay for the full term of the lease is part of the decision to enter into the lease with you. In the non-happy-path, say you fall off the face of the earth before ending the lease. The landlord could be owed several months of rent, and could pursue a legal judgment on your assets. With a court order, they can make the bank pay out what is owed; having bank information reduces the landlord's cost and research efforts in the event the story has degenerated to this point (in the jargon of landlording, this means the tenant is \"\"collectable\"\"). While of course you could have zeroed out your accounts or moved money to a bank you didn't tell the landlord in the meantime, if you are not the bad actor in this story, you probably wouldn't have. If you get any kind of \"\"spidey-sense\"\" about a landlord or property at all there is probably a better rental situation in your city. You also want to minimize drama. If the landlord is operating like a business, they're not in this to perform identity theft. If the landlord is sloppy, or has sloppy office workers, that would be different. In the event sharing your asset information truly bothers you, and the money is for rental expense anyway, you could offer to negotiate a 1 year prepaid rental (of course knock another 5%-10% off for time value of money and lower risk to landlord) if you're sure you wouldn't want to leave early.\"", "title": "" }, { "docid": "d1d533045082cea963c107c1c6b250c9", "text": "The fees for the services are displayed on the PayPal website at https://www.paypal.com/cgi-bin/webscr?cmd=_display-fees-outside Is there anything else you were looking for.", "title": "" }, { "docid": "6a811ba05b575681ba2d20adffe6a2fc", "text": "This is something you are going to have to work out with the leasing company because your goal is to get them to make an exception to their normal rules. I'm a little surprised they wouldn't take 6 months pre-payment, plus documentation of your savings. One option might be to cash in the bonds (since you said they are mature), deposit them in a savings account, and show them your account balance. That documentation of enough to pay for the year, plus an offer to pay 6 months in advance would be pretty compelling. Ask the property manage if that's sufficient. And if the lease is for one year and you're willing to pay the entire year in advance, I can't see how they would possibly object. If your employment prospects are good (show them your resume and explain why you are moving and what jobs you are seeking) a smart property manager would realize you'll be an excellent, low-risk tenant and will make an effort to convince the parent company that you should live there.", "title": "" }, { "docid": "2ff18fce91f9e00ae614b18af671a83a", "text": "More possible considerations: Comparability with other properties. Maybe properties that rent for $972 have more amenities than this one (parking, laundry, yard, etc) or are in better repair. Or maybe the $972 property is a block closer to campus and thus commands 30% higher rent (that can happen). Condition of property. You know nothing about this until you see it. It could be in such bad shape that you can't legally rent it until you spend a lot of money fixing it. Or it may just be run down or outdated: still inhabitable but not as attractive to renters, leading to lower rent and/or longer vacancy periods. Do you accept that, or spend a lot of money to renovate? Collecting the rent. Tenants don't necessarily always pay their rent on time, or at all. If a tenant quits paying, you incur significant expenses to evict them and then find a new tenant, and all the while, you collect no rent. There could be a tenant in place paying a much lower rent. Rent control or a long lease may prevent you from raising it. If you are able to raise it, and the tenant doesn't want to pay, see above. Maintenance and more maintenance. College students could be hard on the property; one good kegger could easily cause more damage than their security deposits will cover. Being near a university doesn't guarantee you an easy time renting it. It suggests the demand is high, but maybe the supply is even higher. Renting to college students has additional issues. They are less likely to have incomes large enough to satisfy you that they can pay the rent. Are you willing to deal with cosigners? If a student quits paying, are you willing to try to collect from their cosigning parents in another state? And you'll probably have many tenants (roommates) living in the house. They will come and go separately and unexpectedly, complicating your leasing arrangements. And you may well get drawn in to disputes between them.", "title": "" }, { "docid": "d33cfed182d3f8615b0308ee695e4067", "text": "As a landlord for 14 years with 10 properties, I can give a few pointers: be able and skilled enough to perform the majority of maintenance because this is your biggest expense otherwise. it will shock you how much maintenance rental units require. don't invest in real estate where the locality/state favors the tenant (e.g., New York City) in disputes. A great state is Florida where you can have someone evicted very quickly. require a minimum credit score of 620 for all tenants over 21. This seems to be the magic number that keeps most of the nightmare tenants out makes sure they have a job nearby that pays at least three times their annual rent every renewal, adjust your tenant's rent to be approximately 5% less than going rates in your area. Use Zillow as a guide. Keeping just below market rates keeps tenants from moving to cheaper options. do not rent to anyone under 30 and single. Trust me trust me trust me. you can't legally do this officially, but do it while offering another acceptable reason for rejection; there's always something you could say that's legitimate (bad credit, or chose another tenant, etc.) charge a 5% late fee starting 10 days after the rent is due. 20 days late, file for eviction to let the tenant know you mean business. Don't sink yourself too much in debt, put enough money down so that you start profitable. I made the mistake of burying myself and I haven't barely been able to breathe for the entire 14 years. It's just now finally coming into profitability. Don't get adjustable rate or balloon loans under any circumstances. Fixed 30 only. You can pay it down in 20 years and get the same benefits as if you got a fixed 20, but you will want the option of paying less some months so get the 30 and treat it like a 20. don't even try to find your own tenants. Use a realtor and take the 10% cost hit. They actually save you money because they can show your place to a lot more prospective tenants and it will be rented much sooner. Empty place = empty wallet. Also, block out the part of the realtor's agreement-to-lease where it states they keep getting the 10% every year thereafter. Most realtors will go along with this just to get the first year, but if they don't, find another realtor. buy all in the same community if you can, then you can use the same vendor list, the same lease agreement, the same realtor, the same documentation, spreadsheets, etc. Much much easier to have everything a clone. They say don't put all your eggs in one basket, but the reality is, running a bunch of properties is a lot of work, and the more similar they are, the more you can duplicate your work for free. That's worth a lot more day-to-day than the remote chance your entire community goes up in flames", "title": "" }, { "docid": "4a725f949aaf815c31c2920f1683fe7d", "text": "Application & processing an application for obtaining a Registration under the Act to Regional PF commissioner. We would be receiving and keeping a track of all the Nomination & Declaration Forms (Form#2) of all new enrollments for onward submission to PF Office. Our Team would be responsible for Submission of Nomination Forms (Form#2). We would be allotting the Individual P.F. A/c. Nos. and maintain their A/c.'s in the devised P.F. Register to be maintained. Monthly Payment Challans to be computed alongwith the desired MIS Reports would be our responsibility and the same would be handed over to your HR Team to make the payment on or before 15th of every month. Preparation and compilation of Monthly and Annual Returns would be our responsibility. All the Payments and Returns would be filed within the stipulated time and the adherence would be monitored by us. We would be submit application for transfer of fund , withdrawal applications and application for non- refundable claims for House repair / purchase of flat/ for post matriculate education , etc. We would be liasoning on behalf of the establishment with the authorities for ensuring smooth functioning, follow ups and retrieving the Annual Accounts Slips. We would also be attending the periodical Inspections on behalf of the establishment. The Responsibility of the Assessment would be limited for the period which would be coverable under our service tenure. We will keep the Company posted on all Amendments & Development of the Act / various circulars issued by SRO time to time for awareness of employees as well as employer.", "title": "" }, { "docid": "b04cf8e1ff7f2441173d8a4de3017461", "text": "\"Be very careful with this. When we tried this with furniture, they charged an \"\"administrative\"\" fee to setup the account. I believe it was about $75. So if you defer interest for one year on a $1000 purchase and pay a $75 administrative fee, it's 7.5% interest. Also, they don't always send you a bill when it's due, they just let you go over the date when you could have paid it without paying interest, and then you owe interest from the date of purchase. These plans are slimy. Be careful.\"", "title": "" }, { "docid": "20ae132d01516ae7c708aed732a616e1", "text": "Surely the yield should be Yield = (Rent - Costs) / Downpayment ? As you want the yield relative to your capital not to the property value. As for the opportunity cost part you could look at the risk free rate of return you could obtain, either through government bonds or bank accounts with some sort of government guarantee (not sure what practical terms are for this in Finland). The management fee is almost 30% of your rent, what does this cover? Is it possible to manage the property yourself, as this would give you a much larger cushion between rent and expenses.", "title": "" }, { "docid": "b5adc69cca3d027f18083e62afca7523", "text": "From the apartment owners perspective what was the purpose of $300? They promised they wouldn't rent it to somebody before you had a chance to see it. But lets say you did see it, and decided you didn't like the view. Would they have to give the money back? if so, why would they promise not to rent it if somebody showed up first? I would have made it clear, as the owner, what the money was for. It was a $300 fee to delay rental. You would have essentially bought x number of days of delay. You could view it as a mini-short-term rental. Of course there should have been paperwork involved. There should have been been a receipt that at least mentioned the amount of money involved. You may need to pay the amount owed, and may need to determine if you want to sue in small claims court. Of course your agent may have some liability based on your contract with them and any paperwork they signed when the money was sent to the owner. The fact that the bank sided with you doesn't mean the courts will.", "title": "" }, { "docid": "8c5aa064b387820dc05c7f309a1ffe17", "text": "Schedule E is the form you'll use. It lists nearly all deductions you can take for a rental. TurboTax Deluxe will handle it and it includes State Filing.", "title": "" }, { "docid": "a40bb98efec6409b70151dd126776cff", "text": "I'm assuming this is the US. Is this illegal? Are we likely to be caught? What could happen if caught? If you sign an occupancy affidavit at closing that says you intend to move in within 60-days, with no intention of doing so, then you'll be committing fraud, specifically mortgage/occupancy fraud, a federal crime with potential for imprisonment and hefty fines. In general, moving in late is not something that's likely to be noticed, if the lender is getting their money then they probably don't care. Renting it out prior to moving in seems much riskier, especially if you live in a city/state that requires rental licensing, or are depending on rental income to carry the mortgage. No idea how frequently people are caught/punished for this type of fraud, but it hardly seems worth finding out.", "title": "" } ]	fiqa
1bbc45cc7d01942bf539efb114976577	My bank often blocks my card during purchases - what is the most reliable bank card? (UK)	[ { "docid": "325915f956881bcf35484789a75e57fc", "text": "\"This question is likely to be closed as a product recommendation request. But if you are willing to change the question a bit, perhaps to \"\"How do I avoid having my debit card declined when I know I have good funds\"\" it becomes a reasonable general question. And my answer follows. I can tell you the same thing happens to those of us with credit cards. It can happen when your buying pattern changes. Suddenly buying a lot of merchandise, especially away from home. Nothing like having your card declined while with relatives you visit or while on vacation. I'd talk to the bank and ask for advice how to avoid this. I've called my card issuer to tell them I'll in X city for these dates, to expect charges from there. That seems to work well.\"", "title": "" }, { "docid": "b0c63f8ceefa08c9cd94e5324d84bd46", "text": "\"Having worked in the financial industry, I can say 9:10 times a card is blocked, it is not actually the financial industry, but a credit/credit card monitoring service like \"\"Falcon\"\" for VISA. If you have not added travel notes or similar, they will decline large, our of country purchases as a way to protect you, from what is most likely fraud. Imagine if you were living in Sweden and making regular steady purchases, then all of a sudden, without warning your card was used in Spain. This would look suspicious on paper, even it was obvious to you. This is less to do with your financial institution, and more to do with increased fraud prevention. Call your bank. They will help you.\"", "title": "" }, { "docid": "c6810de46ac8d987ed495b03c9fc5dce", "text": "I have had my card blocked at home only rarely. One occasion comes to mind - I had bought something fairly large online late at night. No sooner had I clicked Purchase than my phone rang - the bank was asking had I actually just spent [$amount] at [$online store]? I said yes and that was that. A little later I made another purchase late at night on a different card. It went through, but when I tried to use the card the next day for something small in a store, it was declined. Embarrassed, I used a different card then called the bank. They said they had put the card on hold because of the online purchase for a large amount, even though they had let the purchase go through. They hadn't called me because it was late at night, and they hadn't given themselves any reasonable mechanisms to compensate for that (like calling me the next morning, emailing me, or the like) they'd just blocked the card. We had what you might call a frank and open exchange of views on the matter. Not all banks use the same strategies or software. I suggest: Far and away the simplest thing is just to have more than one card so that these declines are a momentary hiccup you might forget by the time you and your Rolex are out of the store.", "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": "306bb354eb7a9ffb5fae3393a9007d2d", "text": "\"Others have already commented on the impact of anything which dissuades merchants from raising possible breaches, so I won't dwell on that. Maybe we need stronger legislation, maybe we don't, but it doesn't change today's answer. Often it works the other way around to what you might expect - rather than the merchant noticing and notifying Visa/MC/others, Visa/MC/others spot patterns of suspicious activity (example 1). I don't have any data on the relative numbers of who is being notified/notifying between merchants and payment processors, but at the point when your card is identified as compromised there's no reason to suppose that an individual merchant in the traditional sense has been compromised, let alone identified. In fact because there's a fast moving investigation it could even be a false alarm that led to your card getting cancelled. Conversely it could be a hugely complex multinational investigation which would be jeopardised. It's simply not safe to assume that simply \"\"brand X\"\" has been compromised, therefore everything \"\"brand X\"\" knows about you is also compromised: Furthermore there's no reason to assume the merchant has even admitted to, or discovered the root cause. MC/Visa/Banks, at the point at which they're cancelling cards simply can't say (at least not in a way that might expensively backfire involving lots of lawyers) because the standard of proof needed to go on record blaming someone is simply not yet met. So: yes it's common that you aren't told anything for all of the above reasons. And of course if you really want to find out more you may have some success with your local data protection legislation and formally make a subject access request (or local equivalent) to see what that brings back. Be sure to do it in writing, to the official address of both mastercard and your bank.\"", "title": "" }, { "docid": "fdde16f02a47c59d0ba7b213478cdd88", "text": "Oh yes, it is absolutely the problem of the consumers. After all how is the bank to know how it should be doing business unless the customer explains it to them? Please read the other comments about how the customer has verified receipt of some critical document and then they claim that they don't have it. Sure they are very nice on the phone, but that doesn't help when I have to take time out of my work day to call them repeatedly.", "title": "" }, { "docid": "93651496bbc8ad51ee18fb100f61dfbc", "text": "I used to use Quicken, but support for that has been suspended in the UK. I had started using Mvelopes, but support for that was suspended as well! What I use now is an IPhone app called IXpenseit to track my spending.", "title": "" }, { "docid": "1492c7d7a160f55fad97eb6c89942dcc", "text": "I use another solution: debit card with an account kept empty most of the time and another account in the same bank without any card. I keep the money on the second card-less account, and when I want to buy something, I instantly transfer the appropriate amount to the account with the card and pay. That way money is on the account tied to a debit card only for a minute before payment, and normally it is empty - so even if someone would try to fraudulently use my card number - I don't care - the transaction will be rejected. I think its the perfect solution - no fraud possible, and I don't have to worry about possibly having to bother calling my bank and requesting a chargeback, which is stressful and a waste of time and harmful to peace of mind (what if they refuse the chargeback)? I prefer to spend a minute before each transaction to transfer the money between the two accounts, and that time is not a waste, because I use it to reconsider the purchase - which prevents impulse-buying.", "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": "c0b0f2a8a8ad5213aec82f7c592e9d45", "text": "Debit cards with the Visa or Mastercard symbol on them work technically everywhere where credit cards work. There are some limitations where the respective business does not accept them, for example car rentals want a credit card for potential extra charges; but most of the time, for day-to-day shopping and dining, debit cards work fine. However, you should read up the potential risks. A credit card gives you some security by buffering incorrect/fraudulent charges from your account, and credit card companies also help you reverse incorrect charges, before you ever have to pay for it. If you use a debit card, it is your money on the line immediately - any incorrect charge, even accidential, takes your money from your account, and it is gone while you work on reversing the charge. Any theft, and your account can be cleaned out, and you will be without money while you go after the thief. Many people consider the debit card risk too high, and don't use them for this reason. However, many people do use them - it is up to you.", "title": "" }, { "docid": "60a2572977757c55d3e10e77ab881e79", "text": "You could get a prepaid Visa card. You don't need a bank account and at least here in Australia you just buy them over the counter at the post office. I believe the U.K. has a similar card: Travel Money Card Plus from the Post Office. The card requires a UK passport or driving license. Other European countries may have similar prepaid cards but may also require resident status and electronic identity / credit inquiry.", "title": "" }, { "docid": "752daecc1ea9eac372dfd2a26e756c88", "text": "I would try to avoid mixing business expenditure with personal expenditure so a second credit card might be a good idea. That said, I did get a business credit card for my company in the UK as I didn't want to be personally liable for the money that was spent on the business card (even though I owned 100% of the business) in case things went horribly wrong. As I didn't fancy signing a personal guarantee, this meant that the limit was quite low but it was good enough in most cases.", "title": "" }, { "docid": "70cbde4e59f8d13443d6583130e5122e", "text": "\"Speaking from personal experience: I have had a credit card canceled for exactly this reason. It's happened to me three times, with two different providers (NatWest and Nationwide). After the third instance I stopped bothering to even carry a credit card. It's worth noting that all three were \"\"free\"\" cards in the sense that I paid no flat fee or subscription to get the cards. The only way the issuer could make a profit on them was through interest. I was also not a frequent user, carrying the card for convenience more than anything else, although I did make purchases on all three. So it's certainly a possibility. But I live in the UK and I'm guessing most of your other respondents do not. It may be a practice that's more common here than in the US. That might even explain the origin of the rumour.\"", "title": "" }, { "docid": "f259be50d138b904b12baade94cba456", "text": "When debit cards were first made available one of the advertised strengths was that if you never wrote a check,and always used a debit card, you could never be overdrawn. They money would be instantly withdrawn from the account and the balance would always reflect perfectly the amount of money in the account. Of course some saw the loss of float as a weakness, but for others this instantaneous aspect was what they needed. If only that were true. I have seen debit card transactions take a couple of days to appear. I have seen a $1 hold for gas not be removed and the real amount withdrawn for 2 or 3 days. Horror stories about having a $3 coffee end up costing $30 because of overdraft fees can only occur if the transactions aren't instant. The contactless feature doesn't make the time delay any shorter. The delay for an individual transaction, assuming there are no unusual network problems, still depend on the vendor policies, the card network policies, and the bank policies. But from the viewpoint of the cashier the transaction has been completes and the customer can leave with their coffee. From the viewpoint of the bank account it may still be waiting,", "title": "" }, { "docid": "8f4811e9f57f13e77060fd89a6104181", "text": "This link might help determining if American Express is willing to offer a card in the UK. I did it the other way around when moving from the UK to the US and getting a US card was pretty painless; I also didn't have to close the UK card, although I'm probably going to do that fairly soon. You will need a UK bank account so your employer can pay you; If it is a big enough employer their HR department might have deals with a local bank; a smaller employer might simply be able to refer you to their bank to help you open an account there. My first bank account in the UK after moving over there from Germany was with HSBC (then Midland Bank) - HSBC seems to be pretty open towards customers moving to the UK. Plus, they're pretty much everywhere. If you're planning to come back to the US and especially if you have any US-based ongoing expenses, I'd keep at least one bank account in the US open (but keep an eye on it).", "title": "" }, { "docid": "3676ef92f760af7d37a1107c411add97", "text": "\"I think this stuff was more valid when grace periods were longer. For example, back in the 90's, I had an MBNA card with a 35 day grace period. Many business travellers used Diner's Club charge cards because they featured a 60 day grace period. There are valid uses for this: As JoeTaxpayer stated, if you are benefiting from \"\"tricks\"\" like this, you probably have other problems that you probably ought to deal with.\"", "title": "" }, { "docid": "7ec98223bf7d147a121185b9f03fae31", "text": "\"There's something wrong with your story. The IBAN contiains two check digits, and the method used to compute them guarantees that any single digit error will be caught. So it's impossible that \"\"HSBC screwed up the last digit of my IBAN\"\" because if that were the case, the resulting IBAN would not be valid and be rejected by the computer when it was entered at your bank.\"", "title": "" }, { "docid": "c5f3a1695022c098d71e4d8b6cc024a0", "text": "Why not get her a credit card of her own, while she is still in the US? My experience with Canadian banks is that they were delighted to issue credit cards to I-turned-18-yesterday with no income. We did not cosign these applications. You can then give her a budget and pay up to that amount of her credit card bill each month (you should be able to do this online.) Should she overspend, she may have to scrimp for a while until your payments bring the balance back to zero. Don't delay on this though: I doubt any UK bank will issue her a card with no credit history and having only just moved to the country. And get a chip and pin if you can, they work everywhere in Europe.", "title": "" } ]	fiqa
fcfeebb0faba76688ae01f2b16b6b4c7	What does “balance sheet banks” mean in this context?	[ { "docid": "d9363e182020d78bdc5050c5969a94da", "text": "\"The balance sheet for a bank is the list of assets and liabilities that the bank directly is responsible for. This would be things like loans the bank issues and accounts with the bank. Banks can make both \"\"balance sheet\"\" loans, meaning a loan that says on the balance sheet - one the bank gains the profits from but holds the risks for also. They can also make \"\"off balance sheet\"\" loans, meaning they securitize the loan (sell it off, such as the mortgage backed securities). Most major banks, i.e. Chase, Citibank, etc., could be called \"\"balance sheet\"\" banks because at least some portion of their lending comes from their balance sheet. Not 100% by any means, they participate in the security swaps extensively just like everyone does, but they do at least some normal, boring lending just as you would explain a bank to a five year old. Bank takes in deposits from account holders, loans that money out to people who want to buy homes or start businesses. However, some (particularly smaller) firms don't work this way - they don't take responsibility for the money or the loans. They instead \"\"manage assets\"\" or some similar term. I think of it like the difference between Wal-Mart and a consignment store. Wal-Mart buys things from its distributors, and sells them, taking the risk (of the item not selling) and the reward (of the profit from selling) to itself. On the other hand, a consignment store takes on neither: it takes a flat fee to host your items in its store, but takes no risk (you own the items) nor the majority of the profit. In this case, Mischler Financial Group is not a bank per se - they don't have accounts; they manage funds, instead. Note the following statement on their Services page for example: Mischler Financial Group holds no risk positions and no unwanted inventory of securities, which preserves the integrity of our capital and assures our clients that we will be able to obtain bids and offers for them regardless of adverse market conditions. They're not taking your money and then making their own investments; they're advising you how to invest your money, or they're helping do it for you, but it's your money going out and your risk (and reward).\"", "title": "" } ]	[ { "docid": "58860fe0de482e4d2eb3464f2934d2b9", "text": "\"Clearing means processing unsettled transactions. Specifically - all the money transfers between the banks, in this case. Clearing Bank for RMB business means that all RMB transactions will be cleared through that specific bank. If bank A in Hong Kong gets a check drawn on Bank B in Hong Kong, and the check is in RMB - A will go to the BoC with the check and will get the money, and BoC will take the money from B. That obviously requires both A and B have accounts with BoC. \"\"Sole\"\" clearing house means there's only one. I.e.: in our example, A and B cannot settle the check through C where they both happen to have accounts, or directly with each other. They MUST utilize the services of BoC.\"", "title": "" }, { "docid": "67ecaeb0dc5c48e630846ae225a8727d", "text": "When banks create a loan, it is said they write the debit account out of thin air (liability), balanced by the loan (asset). When the person who gets the loans spends the money, the bank has to pay it. If the bank only has 10% reserves of the money it loans, how does the bank pay out it's loans? Does it borrow the money from the Fed and then pay it back?", "title": "" }, { "docid": "15e7356c016443e5288e2ef1b1cbb8ed", "text": "The same banks that own those loan debts are also heavily invested in the corporations who provide workforce data for educational and job placement to the schools the debtors attend... And the same Corporations who offer jobs to graduates- they can be sure they'll be getting pliable debt slaves right out the gate. They'll be good little taxpayers, funding the wars for profit contracts and corporate subsidies which are all good for the banks. People think they are getting education, but they are actually (by-and-large) getting shackles.", "title": "" }, { "docid": "f5ba4d0f16ca882bbed7a6ab56fdf362", "text": "\">Besides, if banks are so evil, why would I ever do any business with them? Are you not familiar with the phrase \"\"a necessary evil\"\"? You must understand that the major difference between borrowing from an individual and borrowing from a financial institution is that the latter factors the risk of default into its business model. The bank expects a certain percentage of its borrowers to default and manages its risk accordingly, which is why there are such things as credit scores and variable APRs in the first place. Your bank doesn't \"\"trust\"\" you any further than it could throw you.\"", "title": "" }, { "docid": "5132b40266f047e3d4b8b00719e93e6c", "text": "I wouldn't say 90% but it is a lot. Oracle Financials is also quite big. Excel is used for reporting. To give you an idea of how one big organisation does it, the balance sheet is SAP. Transactions are done with Oracle, the two are reconciled and reported via Excel.", "title": "" }, { "docid": "7ce55bb468243f17ed0bb47ed03907a2", "text": "You must mean the current debt ceiling debacle. The meaning of it is: US government is constantly borrowing money (by issuing treasury bonds) and constantly repaying some of the bonds that come to maturity, and also has other obligations it has to meet by law all the time - such as Social Security checks, bonds interest, federal employees' salaries and pensions, etc. By law, total amount of money that can be borrowed at the same time is capped. That means, there can be situation where the government needs to borrow money to pay, say, interest on existing bonds, but can not, since the limit is reached. Such situation is called a default, since the government promised to pay the interest, but is unable to do so. That does not mean the government has no money at all and will completely collapse or couldn't raise money on the market if it were permitted by law to do so (currently, the market is completely willing to buy the debt issued by US government, and with interest that is not very high, though of course that may change). It also does not mean the economy ceases to function, dollars cease to have value or banks instantly go bankrupt. But if the government breaks its promises to investors, it has various consequences such as raising the costs of borrowing in the future. Breaking promises to other people - like Social Security recipients - would also look bad and probably hurt many of them. Going back to your bank account, most probably nothing would happen to the money you store there. Even if the bank had invested 100% of the money in US treasury bonds (which doesn't really happen) they still can be sold on the open market, even if with some discount in the event of credit rating downgrade, so most probably your account would not be affected. As stated in another answer, even if the fallout of all these calamities causes a bank to fail, there's FDIC and if your money is under insured maximums you'll be getting your money back. But if your bank is one of the big ones, nothing of the sort would happen anyway - as we have seen in the past years, government would do practically anything to not allow any big bank failures.", "title": "" }, { "docid": "4b4ac6d21b3e809e741841ba81cd1cf1", "text": "This article is 100% incorrect. The governments main concern is to PREVENT depositors and tax payers from losing funds in the case of bank default. How? By having debt holders being forced to converted into equity to create a capital buffer to keep a bank solvent which will help protect depositors and prevent tax payers from having to bail the banks out. Please ask me more questions on this as I have done a lot of work on this topic as of late.", "title": "" }, { "docid": "5202d4de136b1e8c4e29e3b6a1b04d89", "text": "Can someone who understands this part of the business explain what exactly happened and how they benefited? I have read a few articles, and I don't really understand. I work in a bank, and seeing how some other aspects of the financial crisis were portrayed in the news, I have a feeling the whole story isn't being told. How could this have possibly gone on undetected?", "title": "" }, { "docid": "88270328b70d71e169a6f12bd3f0c450", "text": "\"When trying to understand accounting, it's always helpful to reference the balance sheet identity, thus , and debits and credits must balance. In this case, one would So that \"\"Cash\"\" is subtracted (credited) from assets, and \"\"Loans to family members\"\" is added (debited) to assets. The income identity is treated differently as So, unless if the \"\"Cash\"\" and \"\"Loans to family members\"\" did not start imbalanced, there was no revenue or expense. A revenue will be any interest paid. The expenses will be any costs related to loaning the money such as drafting a contract or any amount defaulted. Assets are not liabilities A liability on the balance sheet is a liability owed by the entity measured, such as a person or a company. The family members in this case are the borrowers, so they are the ones who must increase their liability accounts like so: The lender to family members would not increase liabilities in this case because the lender is not borrowing from the borrower. Debits, credits, and the balance sheet Debits & credits must be equal, or an identity is violated. Debits add to assets and subtract from liabilities (and equity) while credits subtract from assets and add to liabilities (and equity). If a lender were to try to simultaneously subtract cash from assets and add loans to liabilities to book a loan, the operation would look like this This would cause an immediate imbalance because there are no offsetting debits, but more importantly, crediting Loans to family members as a liability would actually mean that the lender owes Loans to family members.\"", "title": "" }, { "docid": "b6bd677c1e3ea129e086763705a7bdad", "text": "\"The \"\"c.\"\" is probably circa, or \"\"about.\"\" Regulatory settlements is in blue because it's negative; the amount is in parentheses, which indicates a loss. WB and CB might be wholesale banking and commercial banking? BAU probably means \"\"business as usual\"\" or things that don't directly apply to the project. Incremental investment is the additional cash a company puts towards its long-term capital assets. FX is probably foreign 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": "f84479e8a52861dfe9eeead50cc3aa64", "text": "Yes, I think you're correct. I think it was more like. Paul Singer: Pay up on time and in full or I will ruin your credit history so bad you'll never be able to get a loan again. Argentina: Burn the house, we will call the BRIC bank to re-build.", "title": "" }, { "docid": "f4aa10b157076a2d41f8f8ec9de3d2c1", "text": "\"The \"\"just accounting\"\" is how money market works these days. Lets look at this simplified example: The bank creates an asset - loan in the amount of X, secured by a house worth 1.25X (assuming 20% downpayment). The bank also creates a liability in the amount of X to its depositors, because the money lent was the money first deposited into the bank by someone else (or borrowed by the bank from the Federal Reserve(), which is, again, a liability). That liability is not secured. Now the person defaults on the loan in the amount of X, but at that time the prices dropped, and the house is now worth 0.8X. The bank forecloses, sells the house, recovers 80% of the loan, and removes the asset of the loan, creating an asset of cash in the value of 0.8X. But the liability in the amount of X didn't go anywhere. Bank still has to repay the X amount of money back to its depositors/Feds. The difference? 20% of X in our scenario - that's the bank's loss. (*) Federal Reserve is the US equivalent of a central bank.\"", "title": "" }, { "docid": "dbf6c0d7a43b6351ab3b9a3854accdca", "text": "Fractional reserve banking is all fine and dandy, however allowing banks to use savings accounts and checking accounts for high-risk investments is the real insanity. Fiat currency is what you're getting at being 'broken' as it is inherently a political tool.", "title": "" }, { "docid": "d0a0d9d141ef7e145d5b00a7be8a9c9d", "text": ">banking practises thrive through deception. and >A bank is in other words, just moving money from A to B and then making profit out of thin air due to the capitalistic systems nature and >they are private govt agencies I realize these are just snippets, but from other debate threads it seems there is a lot of misinformation about what banks are. I have only taken a few finance classes so I was coming here to see what /r/finance thinks a bank is. Sorry if I let me own bias show in my post, I wasnt trying to let it. But I still havent seen anyone mention the benefits of credit. It seems most peoples perception of a bank is very simplistic.", "title": "" } ]	fiqa
2536db2335dec565ffd4d1a34f092f2a	~$75k in savings - Pay off house before new home?	[ { "docid": "cdb5958b106e6058ffae51d768bc9c46", "text": "Congratulations on saving up $75,000. That requires discipline and tenacity. There are a lot of factors that would go into making your decision. First and foremost is the security of the income stream you have now. Being leveraged during times of hardship is not a pleasant experience. Unexpected job losses can and do happen. Only you can determine how secure your and your spouse's situation is. Second, I would consider the job market in the location that you live. If you live in a small town it will be hard to find income levels like you have now. Rental properties are additional ties to an area. Are you happy in the area in which you live? If you were laid off are there opportunities in the same area. Being a long distance landlord is again not a pleasant experience. I can throw being forced to sell to relocate at a reduced price into this same bucket. Third, you need to have 3 to 6 months of expenses saved for emergencies. This is in addition to having no consumer debt (credit cards, car loans, student loans). $75,000 feels like a lot. Life can throw you curve balls. You need to be prepared for them because of the fundamental nature of Murphy's Law. If you were to be a landlord you should err closer to the six month end of the scale. I own two rentals and can speak to people being late a given month, heating and air problems, plumbing issues, washers and dryers breaking, weather related issues, and even a tenant leaving behind for truckloads of trash. Over 20 years I guess I have seen it all. A rental agency will only act as a minor buffer. Fourth, your family situation is important. I personally save 10% of my income for my child's education. If you haven't started doing so or have different feelings on what you might contribute think about it before any financial move. Fifth, any mortgage payment you are making should be 25% or less than your take home pay for a 15 year fixed rate mortgage. Anything less than 20% down and you start burning up money on PMI insurance. 'House Poor' is a term for people that make high incomes but have too much being spent for housing. It is the cause of a lot of financial stress. Sixth, you need to save for retirement. The absolute minimum I recommend is 15% of your income. Even if the match is 6% you should invest the full 15% making it 21%. Social Security is a scary thing and depending on it is not wise. I think your income still qualifies you for contributions to a Roth IRA. If you aren't personally contributing 15% do so before making a move. There is an old joke that homeless people who have a 0 net worth often are richer than people driving fancy cars and living in fancy houses. Ultimately no one can tell you the right answer. Every situation is unique. You have a complex tapestry to your financial life that no else one knows.", "title": "" }, { "docid": "a124946eb7dc8c8a9cb3c3cc6b64bf69", "text": "\"As others have said, congratulations on saving up 75K in cash while seemingly not neglecting other areas of personal finance. Considering that only 15% of Americans have more than 10K saved this is quite a feat. source If you sell your old house, and buy the new one you will still be in really good financial shape. No need to comment further. Renting your current home and buying a new home introduces a great amount of risk into your life. The risk in this case is mitigated by cash. As others have pointed out, you will need to save a lot more to remove an acceptable amount of risk. Here is what I see: So without paying off your existing house I would see a minimum savings account balance of about double of what you have now. Once you purchase the new house, the amount would be reduced by the down payment, so you will only have about 50K sitting around. The rental emergency fund may be a little light depending on how friendly your state is to landlords. Water heaters break, renters don't pay, and properties can sit vacant. Also anytime you move into a new business there will be mistakes made that are solved by writing checks. Do you have experience running rentals? You might be better off to sell your existing home, and move into a more expensive home than what you are suggesting. You can continue to win at money without introducing a new factor into your life. Alternatively, if you are \"\"bitten by the real estate bug\"\" you could mitigate a lot risk by buying a property that is of similar value to your current home or even less expensive. You can then choose which home to live in that makes the most financial sense. For example some choose to live in the more dilapidated home so they can do repairs as time permits. To me upgrading the home you live in, and renting an expensivish home for a rental is too much to do in such a short time frame. It is assuming far too much risk far to quickly for a person with your discipline. You will get there.\"", "title": "" }, { "docid": "ef88fda581b8247321f9fd356dccdaf7", "text": "With an annual income of $120,000 you can be approved for a $2800 monthly payment on your mortgage. The trickier problem is that you will save quite a bit on that mortgage payment if you can avoid PMI, which means that you should be targeting a 20% down-payment on your next purchase. With a $500,000 budget for a new home, that means you should put $100,000 down. You only have $75,000 saved, so you can either wait until you save another $25,000, or you can refinance your current property for $95k+ $25k = $120k which would give you about a $575 monthly payment (at 30 years at 4%) on your current property. Your new property should be a little over $1,900 per month if you finance $400,000 of it. Those figures do not include property tax or home owners insurance escrow payments. Are you prepared to have about $2,500 in mortgage payments should your renters stop paying or you can't find renters? Those numbers also do not include an emergency fund. You may want to wait even longer before making this move so that you can save enough to still have an emergency fund (worth 6 months of your new higher expenses including the higher mortgage payment on the new house.) I don't know enough about the rest of your expenses, but I think it's likely that if you're willing to borrow a little more refinancing your current place that you can probably make the numbers work to purchase a new home now. If I were you, I would not count on rental money when running the numbers to be sure it will work. I would probably also wait until I had saved $100,000 outright for the down-payment on the new place instead of refinancing the current place, but that's just a reflection of my more conservative approach to finances. You may have a larger appetite for risk, and that's fine, then rental income will probably help you pay down any money you borrow in the refinancing to make this all worth it.", "title": "" } ]	[ { "docid": "3e5be56b599f442654446f850300611c", "text": "Paying extra principal is not a complicated decision. You have a rate, say 5%. And you have an after tax rate, say, 3.75% (if you are in the 25% bracket and it's all deductible) Are you happy to get a 3.75% after tax return? If you have a retirement plan, and are not getting the full company match, that would be the first priority. If you have other debt, say a 10% credit card, that's the next priority. Is the sale soon? If so, I'd imagine you'd prefer to stay liquid, to have the next down payment ready without needing to rent in between.", "title": "" }, { "docid": "f322b9b5a08727925d15bfeaf3f74e1d", "text": "I think the consensus is that you can't afford a home now and need to build more of a down payment (20% is benchmark, you may also need to pay mortgage insurance if you are below that) and all considered, it takes up too much of your monthly budget. You didn't do anything wrong but as mentioned by Ben, you are missing some monthly and yearly costs with home ownership. I suggest visiting a bank or somewhere like coldwell banker to discuss accurate costs and regulations in your area. I know the feeling of considering paying more now for the very attractive thought of owning a home... in 30 years. After interest, you need to consider that you are paying almost double the initial principle so don't rush for something you can do a year or two down the line as a major commitment. One major point that isn't emphasized in the current answers. You have a large family: Two children, a dog, and a cat. I don't know the kid's ages but given you are in your early twenties and your estimated monthly costs, they are probably very young before the point they really put any stress financially but you need to budget them in exponentially. Some quick figures from experience. Closing costs including inspections, mortgage origination fee, lawyer fees, checking the history of the home for liens, etc, which will set you back minimum 5% depending on the type of purchase (short sales, foreclosures are more expensive because they take longer) Insurance (home and flood) will depend on your zoning but you can expect anywhere between $100-300 a month. For many zones it is mandatory. Also depending on if it's a coop ($800+), condo($500+) or a townhouse-type you will need to pay different levels of monthly maintenance for the groundskeeping as a cooperative fee. at an estimate of a 250K home, all your savings will not be able to cover your closing costs and all 250k will need to be part of your base mortgage. so your base monthly mortgage payment at around 4% will be $1,200 a month. it's too tight. If it was a friend, I would highly suggest against buying in this case to preserve financial flexibility and sanity at such a young age.", "title": "" }, { "docid": "20066787147b6ee9c8164b361abcc108", "text": "The monthly payment difference isn't that great On a $300K loan, the 30 year monthly payment (at 4%) is $1432, the 15 year (at 3.5%) is $2145, that $712 per month, or 50% higher payment. $712 is the total utility or food bill for a couple. If that $1432 represents 25% of income (a reasonable number) then $2145 is over 35%. I'd rather use that money for something else and not obligate myself at the start of the mortgage. Given how little we save as a country, the $712 is best put into a matched 401(k) in the US or other retirement account if elsewhere.", "title": "" }, { "docid": "6feb68f1f4bf210fa3330896509742de", "text": "So you wouldn't really be using the IRA money for building the house, but for padding your savings? I would just leave the money in the IRA. Don't take it out just in the off-chance you need it, especially when you already have money in savings. If you want to replenish your savings do it by putting some of your income in there.", "title": "" }, { "docid": "c89bda2bf674c8cdbb86ae67c568f3e8", "text": "I'd suggest you put only 20% down if you qualify for the 80% amount of the mortgage. Live in the house a year and see what expenses really are. Then if your non-Ret accounts are still being funded to your liking, start prepaying the mortgage if you wish. It's great to start with a house that's only 50% mortgaged, but if any life change happens to you, it may be tough to borrow it back. Far easier to just take your time and not make a decision you may regret. You don't give much detail about your retirement savings, but I'd suggest that I'd rather have a large mortgage and fund my retirement accounts to the maximum than to have a paid house and start the retirement account at age 35. Some choose that option.", "title": "" }, { "docid": "fe2aca48fc1afdc119c92468c2111de1", "text": "\"The golden rule is \"\"Pay yourself first.\"\" This means that you should have some form of savings plan set up, preferably a monthly automatic withdrawal that comes out the day after your pay is deposited. 10% is a reasonable number to start with. You are in a wonderful situation because you are thinking about this 10-15 years before most of us do. Use this to your advantage. You are also in a good situation if you can defer the purchase of the house (assuming prices don't rise drastically in the next few years -- which they might.) If your home situation is acceptable, then sit down with the parents and present a plan. Something along the lines of: I'd like to move out and start my life. However, it would be advantageous to stay here for a few years to build up a down payment and reserve. I'm happy to help out with expenses, but do need a couple years of rent-free support to get started. Then go into monk mode for one year. It's doable, and you can save a lot of cash. Then you're on the road to freedom.\"", "title": "" }, { "docid": "abeead7391f1ad7e527550a2bca32fd5", "text": "\"For some people, it should be a top priority. For others, there are higher priorities. What it should be for you depends on a number of things, including your overall financial situation (both your current finances and how stable you expect them to be over time), your level of financial \"\"education\"\", the costs of your mortgage, the alternative investments available to you, your investing goals, and your tolerance for risk. Your #1 priority should be to ensure that your basic needs (including making the required monthly payment on your mortgage) are met, both now and in the near future, which includes paying off high-interest (i.e. credit card) debt and building up an emergency fund in a savings or money-market account or some other low-risk and liquid account. If you haven't done those things, do not pass Go, do not collect $200, and do not consider making advance payments on your mortgage. Mason Wheeler's statements that the bank can't take your house if you've paid it off are correct, but it's going to be a long time till you get there and they can take it if you're partway to paying it off early and then something bad happens to you and you start missing payments. (If you're not underwater, you should be able to get some of your money back by selling - possibly at a loss - before it gets to the point of foreclosure, but you'll still have to move, which can be costly and unappealing.) So make sure you've got what you need to handle your basic needs even if you hit a rough patch, and make sure you're not financing the paying off of your house by taking a loan from Visa at 27% annually. Once you've gotten through all of those more-important things, you finally get to decide what else to invest your extra money in. Different investments will provide different rewards, both financial and emotional (and Mason Wheeler has clearly demonstrated that he gets a strong emotional payoff from not having a mortgage, which may or may not be how you feel about it). On the financial side of any potential investment, you'll want to consider things like the expected rate of return, the risk it carries (both on its own and whether it balances out or unbalances the overall risk profile of all your investments in total), its expected costs (including its - and your - tax rate and any preferred tax treatment), and any other potential factors (such as an employer match on 401(k) contributions, which are basically free money to you). Then you weigh the pros and cons (financial and emotional) of each option against your imperfect forecast of what the future holds, take your best guess, and then keep adjusting as you go through life and things change. But I want to come back to one of the factors I mentioned in the first paragraph. Which options you should even be considering is in part influenced by the degree to which you understand your finances and the wide variety of options available to you as well as all the subtleties of how different things can make them more or less advantageous than one another. The fact that you're posting this question here indicates that you're still early in the process of learning those things, and although it's great that you're educating yourself on them (and keep doing it!), it means that you're probably not ready to worry about some of the things other posters have talked about, such as Cost of Capital and ROI. So keep reading blog posts and articles online (there's no shortage of them), and keep developing your understanding of the options available to you and their pros and cons, and wait to tackle the full suite of investment options till you fully understand them. However, there's still the question of what to do between now and then. Paying the mortgage down isn't an unreasonable thing for you to do for now, since it's a guaranteed rate of return that also provides some degree of emotional payoff. But I'd say the higher priority should be getting money into a tax-advantaged retirement account (a 401(k)/403(b)/IRA), because the tax-advantaged growth of those accounts makes their long-term return far greater than whatever you're paying on your mortgage, and they provide more benefit (tax-advantaged growth) the earlier you invest in them, so doing that now instead of paying off the house quicker is probably going to be better for you financially, even if it doesn't provide the emotional payoff. If your employer will match your contributions into that account, then it's a no-brainer, but it's probably still a better idea than the mortgage unless the emotional payoff is very very important to you or unless you're nearing retirement age (so the tax-free growth period is small). If you're not sure what to invest in, just choose something that's broad-market and low-cost (total-market index funds are a great choice), and you can diversify into other things as you gain more savvy as an investor; what matters more is that you start investing in something now, not exactly what it is. Disclaimer: I'm not a personal advisor, and this does not constitute investing advice. Understand your choices and make your own decisions.\"", "title": "" }, { "docid": "1c06ffefde4806da3073c4d252a5c6fb", "text": "If you had originally borrowed $100k at 4.75% for 15 years, the last 5 years would include a total of $3,300-$3,500 in interest payment. That is the total universe of savings available to you if you were able to get a 0.0% mortgage. Unless the mortgage is huge, I think that in most scenarios the upfront closing costs, taxes and other fees would immediately exceed any savings. If you have the money, pay it down. Otherwise, keep on truckin' -- you have 60 short months to go.", "title": "" }, { "docid": "7887fa5f84365f71662c00ab61fbdfed", "text": "\"I'm assuming when you say \"\"…put it towards our mortgage payment?\"\", you mean make additional payments on top of your scheduled payment. Strictly speaking, if the interest on your mortgage is higher than the return you can expect by saving, then yes, your excess savings should be put toward your mortgage. This assumes that there are no pre-payment penalties, that you really won't miss that money in the short term (i.e. you say you have enough savings for emergencies, so that's good), and that both choices would use after-tax dollars (i.e. mortgage payment vs RRSP contribution in Canada is a huge discussion).\"", "title": "" }, { "docid": "dca1a33a7f94d8ef59daa6de936c28c3", "text": "\"If it was me, I would sell the house and use the proceeds to work on/pay off the second. You don't speak to your income, but it must be pretty darn healthy to convince someone to lend you ~$809K on two homes. Given this situation, I am not sure what income I would have to have to feel comfortable. I am thinking around 500K/year would start to make me feel okay, but I would probably want it higher than that. think I can rent out the 1st house for $1500, and after property management fees, take home about $435 per month. That is not including any additional taxes on that income, or deductions based on repair work, etc. So this is why. Given that your income is probably pretty high, would something less than $435 really move your net worth needle? No. It is worth the reduction in risk to give up that amount of \"\"passive\"\" income. Keeping the home opens you up to all kinds of risk. Your $435 per month could easily evaporate into something negative given taxes, likely rise in insurance rates and repairs. You have a great shovel to build wealth there is no reason to assume this kind of exposure. You will become wealthy if you invest and work to reduce your debt.\"", "title": "" }, { "docid": "81f9e0cdef3a0e82ca2d085a310182fb", "text": "The below assessment is for primary residences as opposed to income properties. The truth is that with the exception of a housing bubble, the value of a house might outpace inflation by one or two percent. According to the US Census, the price of a new home per square foot only went up 4.42% between 1963 and 2008, where as inflation was 4.4%. Since home sizes increased, the price of a new home overall outpaced inflation by 1% at 5.4% (source). According to Case-Shiller, inflation adjusted prices increased a measly .4% from 1890-2004 (see graph here). On the other hand your down payment money and the interest towards owning that home might be in a mutual fund earning you north of eight percent. If you don't put down enough of a down payment to avoid PMI, you'll be literally throwing away money to get yourself in a home that could also be making money. Upgrades to your home that increase its value - unless you have crazy do-it-yourself skills and get good deals on the materials - usually don't return 100% on an investment. The best tend to be around 80%. On top of the fact that your money is going towards an asset that isn't giving you much of a return, a house has costs that a rental simply doesn't have (or rather, it does have them, but they are wrapped into your rent) - closing costs as a buyer, realtor fees and closing costs as a seller, maintenance costs, and constantly escalating property taxes are examples of things that renters deal with only in an indirect sense. NYT columnist David Leonhart says all this more eloquently than I ever could in: There's an interactive calculator at the NYT that helps you apply Leonhart's criteria to your own area. None of this is to say that home ownership is a bad decision for all people at all times. I'm looking to buy myself, but I'm not buying as an investment. For example, I would never think that it was OK to stop funding my retirement because my house will eventually fund it for me. Instead I'm buying because home ownership brings other values than money that a rental apartment would never give me and a rental home would cost more than the same home purchase (given 10 years).", "title": "" }, { "docid": "e52cab25c8a4b58dd01b6ff3d0d8a071", "text": "\"Can is fine, and other answered that. I'd suggest that you consider the \"\"should.\"\" Does your employer offer a matched retirement account, typically a 401(k)? Are you depositing up to the match? Do you have any higher interest short term debt, credit cards, car loan, student loan, etc? Do you have 6 months worth of living expenses in liquid funds? One point I like to beat a dead horse over is this - for most normal mortgages, the extra you pay goes to principal, but regardless of how much extra you pay, the next payment is still due next month. So it's possible that you are feeling pretty good that for 5 years you pay so much that you have just 10 left on the 30 year loan, but if you lose your job, you still risk losing the house to foreclosure. It's not like you can ask the bank for that money back. If you are as disciplined as you sound, put the extra money aside, and only when you have well over the recommended 6 months, then make those prepayments if you choose. To pull my comment to @MikeKale into my answer - I avoided this aspect of the discussion. But here I'll suggest that a 4% mortgage costs 3% after tax (in 25% bracket), and I'd bet cap gain rates will stay 15% for non-1%ers. So, with the break-even return of 3.5% (to return 3 after tax) and DVY yielding 3.33%, the questions becomes - do you think the DVY top yielders will be flat over the next 15 years? Any return over .17%/yr is profit. That said, the truly risk averse should heed the advise in original answer, then pre-pay. Update - when asked,in April 2012, the DVY I suggested as an example of an investment that beats the mortgage cost, traded at $56. It's now $83 and still yields 3.84%. To put numbers to this, a lump sum $100K would be worth $148K (this doesn't include dividends), and giving off $5700/yr in dividends for an after-tax $4800/yr. We happened to have a good 4 years, overall. The time horizon (15 years) makes the strategy low risk if one sticks to it.\"", "title": "" }, { "docid": "a31a9db361a97b55d29f3aaf7dc22cfc", "text": "Other answers are already very good, but I'd like to add one step before taking the advice of the other answers... If you still can, switch to a 15 year mortgage, and figure out what percentage of your take-home pay the new payment is. This is the position taken by Dave Ramsey, and I believe this will give you a better base from which to launch your other goals for two reasons: Since you are then paying it off faster at a base payment, you may then want to take MrChrister's advice but put all extra income toward investments, feeling secure that your house will be paid off much sooner anyway (and at a lower interest rate). Dave's advice isn't for everyone, because he takes a very long-term view. However, in the long-term, it is great advice. See here for more. JoeTaxpayer is right, you will not see anything near guaranteed yearly rates in mutual funds, so make sure they are part of a long-term investing plan. You are not investing your time in learning the short-term stock game, so stay away from it. As long as you are continuing to learn in your own career, you should see very good short-term gains there anyway.", "title": "" }, { "docid": "a1cbaf548cfac2d95afa711c88f816b6", "text": "I think we would be good with paying around $1200 monthly mortgage fees (with all other property fees included like tax etc.) You probably can't get a $250k house for $1,200 a month including taxes and insurance. Even at a 4% rate and 20% down, your mortgage payment alone will be $954, and with taxes and insurance on top of that you're going to be over $1,200. You might get a lower rate but even a drop to 3% only lowers the payment $90/month. Getting a cheaper house (which also reduces taxes and insurance) is the best option financially. What to do with the $15k that I have? If you didn't have a mortgage I'd say to keep 3-6 months of living expenses in an emergency fund, so I wouldn't deplete that just to get a mortgage. You're either going to be Since 1) the mortgage payment would be tight and 2) you aren't able to save for a down payment, my recommendation is for you to rent until you can make a 20% down payment and have monthly payment that is 25% of your take-home pay or less. Which means either your income goes up (which you indicate is a possibility) or you look for less house. Ideally that would be on a 15-year note, since you build equity (and reduce interest) much more quickly than a 3-year note, but you can get the same effect by making extra principal payments. Also, very few people stay in their house for 30 years - 5 years is generally considered the cutoff point between renting and buying. Since you're looking at a 10-year horizon it makes sense to buy a house once you can afford it.", "title": "" }, { "docid": "15c158701768c423b56c2ce8adef5483", "text": "I also am paying roughly twice as much in rent as a mortgage payment would be on the type of house I have been looking at, so I'd really like to purchase a house if possible. Sounds like I need to rain on your parade a bit: there's a lot more to owning a house than the mortgage. Property tax, insurance, PMI, and maintenance are things that throw this off. You'll also be paying more interest than normal given your recent credit history. It's still possible that buying is better than renting, but one really should run the detailed math on this. For example, looking at houses around where I live, insurance, property tax and special assessments over the course of a year roughly equal the mortgage payments annually. You probably won't be able to get a loan just yet. If you've just started your new job it will take a while to build a documentable income history sufficient for lenders. But take heart! As you take the next year to save up a down payment / build up an emergency fund you'll discover that credit score improves with time. However, it's crucial that you don't do anything to mess with the score. Pay all your bills on time. Don't take out a car loan. Don't close your old revolving accounts. But most of all, don't worry. Rent hurts (I rent too) but in many parts of the US owning hurts more, as your property values fall. A house down the street from my dear old mother has been on the market for several months at a price 33 percent lower than her most recent appraisals. I'm comfortable waiting until markets stabilize / start rising before jumping on real estate.", "title": "" } ]	fiqa
7d85d9c64fc7defa0ec5856405015e68	For a car, what scams can be plotted with 0% financing vs rebate?	[ { "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": "85a22b9f88c17e4df080b8498dba4cbc", "text": "\"Here's a number-crunching example of how the \"\"Zero interest rate\"\" offer is misleading. Suppose the offer is that a car \"\"costs $24,000.00 with zero percent financing over 24 months\"\" or as an alternative, \"\"$3,000.00 off for cash\"\". Ignore the hype: the quoted prices and the quoted interest rates. Look at what really happens to two people who take advantage of the two offers, One person hands over $21,000.00 cash, and leaves with the new car. The second promises to make 24 payments of $1000.00, one a month, starting in one month's time, and also leaves with the same make and model new car. The two people have received exactly the same benefit, so the two payment schemes must have the same value. A mortgage program will tell you that paying off a $21,000.00 loan by making 24 monthly payments of $1000.00 requires an interest rate of 1.10% a month, or an effective annual rate of 14.03%.\"", "title": "" } ]	[ { "docid": "1380194c0b6436ed04951838f3289501", "text": "If you have enough money to buy a car in full, that probably means you have good credit. If you have good credit, car dealerships will often offer 0% loans for either a small period of time, like 12 months, or the entire loan. Taking a 0% loan is obviously more optimal than paying the entire lump sum up front. You can take the money and invest in other things that earn you more than 0%. However, most dealerships offer a rebate OR a 0% loan. Some commenters below claim that the rebate is usually larger than the saved interest, so definitely do the math if you have that option.", "title": "" }, { "docid": "c584db6ae2f9e3b6d480b9df41e05090", "text": "\"I cannot stress this enough, so I'll just repeat it: Don't plan your finances around your credit score. Don't even think about your credit score at all. Plan a budget an stick to it. Make sure you include short and long term savings in your budget. Pay your bills on time. Use credit responsibly. Do all of these things, and your credit rating will take care of itself. Don't try to plan your finances around raising it. On the subject of 0% financing specifically, my rule of thumb is to only ever use it when I have enough money saved up to buy the thing outright, and even then only if my budget will still balance with the added cost of repaying the loan. Other people have other rules, including not taking such loans at all, and you should develop a rule that works for you (but you should have a rule). One rule shouldn't have is \"\"do whatever will optimize your credit score\"\" because you shouldn't plan your finances around your credit score. All things considered, I think the most important thing in your situation is to make sure that you don't let the teaser rate tempt you into making purchases you wouldn't otherwise make. You're not really getting free money; you're just shifting around the time frame for payment, and only within a limited window at that. Also, be sure to read the fine print in the credit agreement; they can be filled with gotchas and pitfalls. In particular, if you don't clear the balance by the end of the introductory rate period, you can sometimes incur interest charges retroactively to the date of purchase. Make sure you know your terms and conditions cold. It sounds like you're just getting started, so best of luck, and remember that Rome wasn't built in a day. Patience can be the most effective tool in your personal finance arsenal. p.s. Don't plan your finances around your credit score.\"", "title": "" }, { "docid": "1495c43f88e687ac41a3febea399f557", "text": "I haven't heard of these before! (And I'm on the board of a Credit Union.) The 0.99% on loans is great. It's especially great on a used car: the steep part of the depreciation curve was paid by the first owner. The network probably have a business relationship with the credit union. Credit unions do indirect lending -- approval of loans that happens at the point of sale, which then the credit union gets as assets. Depending on the cost of that program, it probably won't hurt. Your credit union wants to keep your business, because they know that you have a lot of options for where you bank and where you get loans.", "title": "" }, { "docid": "2afc463c2de196296f20f632d9d0fe12", "text": "If you're getting 0% on the financing, it's not costing you anything to borrow that money. So its basically free money. If you are comfortable with the monthly payments, consider going with no downpayment at all. Keep that money aside for a rainy day, or invest it somewhere so that you get some return on it. If you need to lower the payments later you can always use that money to pay down part of the loan later (check with the dealer that it is an open loan). If you're not comfortable with the payments at 0 down, put enough down to bring the monthly payment to a level where you are comfortable.", "title": "" }, { "docid": "12ce6bf1901e7a59419a3c340b6d6bfc", "text": "I could be mistaken on this, but after the GM bailout and others, weren't laws put in place to essentially force companies to maintain a certain level of liquidity? Also, that 0% is probably closer to .25~.50 through way of credit swaps, no? Or if we assume it's earning .1%, that's still $6,666,667/month ($80,000,000,000 x .001/12).", "title": "" }, { "docid": "c03c89b9c8a7b1f7dc27747751e1c316", "text": "\"This is completely disgusting, utterly unethical, deeply objectionable, and yes, it is almost certainly illegal. The Federal Trade Commission has indeed filed suit, halted ads, etc in a number of cases - but these likely only represent a tiny percentage of all cases. This doesn't make what the car dealer's do ok, but don't expect the SWAT team to bust some heads any time soon - which is kind of sad, but let's deal with the details. Let's see what the Federal Trade Commission has to say in their article, Are Car Ads Taking You for a Ride? Deceptive Car Ads Here are some claims that may be deceptive — and why: Vehicles are available at a specific low price or for a specific discount What may be missing: The low price is after a downpayment, often thousands of dollars, plus other fees, like taxes, licensing and document fees, on approved credit. Other pitches: The discount is only for a pricey, fully-loaded model; or the reduced price or discount offered might depend on qualifications like the buyer being a recent college graduate or having an account at a particular bank. “Only $99/Month” What may be missing: The advertised payments are temporary “teaser” payments. Payments for the rest of the loan term are much higher. A variation on this pitch: You will owe a balloon payment — usually thousands of dollars — at the end of the term. So both of these are what the FTC explicitly says are deceptive practices. Has the FTC taken action in cases similar to this? Yes, they have: “If auto dealers make advertising claims in headlines, they can’t take them away in fine print,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “These actions show there is a financial cost for violating FTC orders.” In the case referenced above, the owners of a 20+ dealership chain was hit with about $250,000 in fines. If you think that's a tiny portion of the unethical gains they made from those ads in the time they were running, I'd say you were absolutely correct and that's little more than a \"\"cost of doing business\"\" for unscrupulous companies. But that's the state of the US nation at this time, and so we are left with \"\"caveat emptor\"\" as a guiding principle. What can you do about it? Competitors are technically allowed to file suit for deceptive business practices, so if you know any honest dealers in the area you can tip them off about it (try saying that out loud with a serious face). But even better, you can contact the FTC and file a formal complaint online. I wouldn't expect the world to change for your complaint, but even if it just generates a letter it may be enough to let a company know someone is watching - and if they are a big business, they might actually get into a little bit of trouble.\"", "title": "" }, { "docid": "2030d051b9a4283cf0200420312b9693", "text": "The bank depends on the laws of large numbers. They don't need to make money on every customer -- just on average. There are several ways that zero interest makes sense to them: You asked about banks, and I don't think you see this last scheme in use very much by a bank. Here's why. First, customers absolutely hate it - and when you drop the interest bomb, they will warn their friends away, blow you up on social media, call the TV news consumer protectors, and never, ever, ever do business with you again. Which defeats your efforts in customer acquisition. Second, it only works on that narrow range of people who default just a little bit, i.e. who have an auto-pay malfunction. If someone really defaults, not only will they not pay the punishment interest, they won't pay the principal either! This only makes sense for secured loans like furniture or cars, where you can repo that stuff - with unsecured loans, you don't really have any power to force them to pay, short of burning their credit. You can sue them, but you can't get blood from a stone.", "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": "0579f10d1ce90a4cde198f805773cf5a", "text": "First of all, congratulations on paying off $40k in debt in one year. Mathematically, you'd be better off making the standard car loan payments and putting your extra money toward the student loan. However, there are a few other things that you might want to consider. Over the last year, you've knocked out a whole bunch of different debts. Feels pretty good, doesn't it? At your current rate, you could knock out your new car loan in 6 months. Then you'd only have one debt left. If it sounds to you like it would be nice to only have one debt left, then it might be worth the mathematical disadvantage you would get by paying off the car early instead of putting the money toward the last student loan. The car loan is 0%, but if you are late on a single payment, they will take that opportunity to raise your interest rate to something probably higher than the interest rate of your student loan. For this reason, you may decide it is not worth the hassle, and you'd rather just eliminate the car loan as quickly as possible. Either choice is fine, in my opinion, as long as you have a purpose behind the choice and you are committed to eliminating both debts as quickly as possible. As an aside, it is important to remember that even a 0% loan is not really free money, and needs to be paid back. You know this, of course, but sometimes you see a 0% loan advertized and it feels like free money. It's not. You have probably already paid for the loan by forfeiting a rebate. So although, at this point having already taken this loan and paying for it, you will come out ahead by dragging out your car loan for the full term, in the future do not think that you can make money by buying something at 0% interest.", "title": "" }, { "docid": "29c366b66bc9ac78b881ee6be8d430e3", "text": "That interest rate (13%) is steep, and the balloon payment will have him paying more interest longer. Investing the difference is a risky proposition because past performance of an investment is no guarantee of future performance. Is taking that risk worth netting 2%? Not for me, but you must answer that last question for yourself. To your edit: How disruptive would losing the car and/or getting negative marks on your credit be? If you can quantify that in dollars then you have your answer.", "title": "" }, { "docid": "90784bb2202e09012dc892aadfee1d73", "text": "\"As reported by ZeroHedge in January 2016: \"\"While the media claims that this record has been reached because of drastic improvements to the US economy, they are once again failing to account for the central factor: credit expansion.\"\" \"\"In order to generate more vehicle purchases, these companies have incentivized consumers with hot, hard-to-resist offers, similar to the infamous “liar loans” and “no-money down” loans of the 2008 recession.\"\" http://www.zerohedge.com/news/2016-01-11/auto-loan-bubble-ready-pop. Pro tip: Get your news over 1 year in advance by reading ZeroHedge and not shitty Bloomberg or other lamestream media.\"", "title": "" }, { "docid": "454af89ce64a4b4e0a6d5a9c8c1f8ea5", "text": "\"I'd put more money down and avoid financing. I personally don't think car debt is good debt and if you can't afford the car, you are better off with a cheaper car. Also, you should read up on the 0% offer before deciding to commit. Here's one article that is slightly dated, but discusses some pros and cons of 0% financing. My main point though is that 0% financing is not \"\"free\"\" and you need to consider the cost of that financing before making the purchase. Aside from the normal loan costs of having a monthly payment, possibly buying too much car by looking at monthly cost, etc., a 0% financing offer usually forces you to give the dealer/financing company any rebates that are due to you, in essence making the car cost more.\"", "title": "" }, { "docid": "d1f1aa4fd1d65fa135ec33d4155d334c", "text": "\"You are correct to be wary. Car dealerships make money selling cars, and use many tactics and advertisements to entice you to come into their showroom. \"\"We are in desperate need of [insert your make, model, year and color]! We have several people who want that exact car you have! Come in and sell it to us and buy a new car at a great price! We'll give you so much money on your trade in!\"\" In reality, they play a shell game and have you focus on your monthly payment. By extending the loan to 4 or 5 years (or longer), they can make your monthly payment lower, sure, but the total amount paid is much higher. You're right: it's not in your best interest. Buy a car and drive it into the ground. Being free of car payments is a luxury!\"", "title": "" }, { "docid": "bf8e57c340cfe4475615371f4ab62bad", "text": "\"as a used dealer in subprime sales, finance has to be higher than cash because every finance deal has a lender that takes a percentage \"\"discount\"\" on every deal financed. if you notice a dealer is hesitant to give a price before knowing if cash or finance, because every bit of a cash deal's profit will be taken by a finance company in order to finance the deal and then there's no deal. you might be approved but if you're not willing to pay more for a finance deal, the deal isn't happening if I have $5000 in a car, you want to buy it for $6000 and the finance lender wants to take $1200 as a \"\"buy-fee\"\" leaving me $4800 in the end.\"", "title": "" }, { "docid": "eeac29631c2021c0a70d03a09c16d73b", "text": "Most 0% interest loans have quite high interest rates that are deferred. If you are late on a payment you are hit with all the deferred interest. They're banking on a percentage of customers missing a payment. Also, this is popular in furniture/car sales because it's a way to get people to buy who otherwise wouldn't, they made money on the item sale, so the loan doesn't have to earn them money (even though some will). Traditional banks/lenders do make money from interest and rely on that, they would have to rely on fees if interest were not permitted.", "title": "" } ]	fiqa
69e4d82fc9fb957162ec5c6b4a6ce305	Dividend vs Growth Stocks for young investors	[ { "docid": "8a034f1611cd316cbe7ee2c792c80699", "text": "\"The key is to look at total return, that is dividend yields plus capital growth. Some stocks have yields of 5%-7%, and no growth. In that case, you get the dividends, and not a whole lot more. These are called dividend stocks. Other stocks pay no dividends. But if they can grow at 15%-20% a year or more, you're fine.These are called growth stocks. The safest way is to get a \"\"balanced\"\" combination of dividends and growth, say a yield of 3% growing at 8%-10% a year, for a total return of 11%-13%. meaning that you get the best of both worlds.These are called dividend growth stocks.\"", "title": "" }, { "docid": "180e6d94451418039726e6417a0faa49", "text": "First, what Daniel Carson said. Second, if you're getting started, just make sure you are well diversified. Lots of growth stocks turn into dividend stocks over time-- Microsoft and Apple are the classic examples in this era. Someday, Google will pay a dividend too. If you're investing for the long haul, diversify and watch your taxes, and you'll make out better than nearly everyone else.", "title": "" }, { "docid": "283abe2bf7ba643264d43d27a0f39044", "text": "A lot of people use dividend stocks as a regular income, which is why dividend stocks are often associated with retirement. If your goal is growth and you're reinvesting capital gains and dividends then investing growth stocks or dividend stocks should have the same effect. The only difference would be if you are manually reinvesting dividends, which could incur extra trading fees.", "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": "7634073cc528cda9424fbd7a8253d95e", "text": "You should never invest in a stock just for the dividend. Dividends are not guaranteed. I have seen some companies that are paying close to 10% dividends but are losing money and have to borrow funds just to maintain the dividends. How long can these companies continue paying dividends at this rate or at all. Would you keep investing in a stock paying 10% dividends per year where the share price is falling 20% per year? I know I wouldn't. Some high dividend paying stocks also tend to grow a lot slower than lower or non dividend paying stocks. You should look at the total return - both dividend yield and capital return combined to make a better decision. You should also never stay in a stock which is falling drastically just because it pays a dividend. I would never stay in a stock that falls 20%, 30%, 50% or more just because I am getting a 5% dividend. Regarding taxation, some countries may have special taxation rules when it comes to dividends just like they may have special taxation rules for longer term capital gains compared to shorter term capital gains. Again no one should use taxation as the main purpose to make an investment decision. You should factor taxation into your decision but it should never be the determining factor of your decisions. No one has ever become poor in making a gain and paying some tax, but many people have lost a great portion of their capital by not selling a stock when it has lost 50% or more of its value.", "title": "" }, { "docid": "12ba592d2f049943973920988ce2b57c", "text": "The general difference between high dividend paying stocks and growth stocks is as follows: 1) A high dividend paying stock/company is a company that has reached its maximum growth potential in a market and its real growth (that is after adjustment of inflation) is same (more or less) as the growth of the economy. These companies typically generate a lot of cash (Cash Cow) and has nowhere to really invest the entire thing, so they pay high dividends. Typically Fast Moving Consumer Goods (FMCG) ,Power/Utility companies, Textile (in some countries) come into this category. If you invest in these stocks, expect less growth but more dividend; these companies generally come under 'defensive sector' of the market i.e. whose prices do not fall drastically during down turn in a market. 2) Growth stocks on the other hand are the stocks that are operating in a market that is witnessing rapid growth, for example, technology, aerospace etc. These companies have high growth potential but not much accumulated income as the profit is re-invested to support the growth of the company, so no dividend (you will be typically never get any/much dividend from these companies). These companies usually (for some years) grow (or at least has potential to grow) more than the economy and provide real return. Usually these companies are very sensitive to results (good or bad) and their prices are quite volatile. As for your investment strategy, I cannot comment on that as investment is a very subjective matter. Hope this helps", "title": "" }, { "docid": "d65e2d5329fa3d2f3b1c4b2a853847b7", "text": "\"Yahoo Finance is definitely a good one, and its ultimately the source of the data that a lot of other places use (like the iOS Stocks app), because of their famous API. Another good dividend website is Dividata.com. It's a fairly simple website, free to use, which provides tons of dividend-specific info, including the highest-yield stocks, the upcoming ex-div dates, and the highest-rated stocks based on their 3-metric rating system. It's a great place to find new stocks to investigate, although you obviously don't want to stop there. It also shows dividend payment histories and \"\"years paying,\"\" so you can quickly get an idea of which stocks are long-established and which may just be flashes in the pan. For example: Lastly, I've got a couple of iOS apps that really help me with dividend investing: Compounder is a single-stock compound interest calculator, which automatically looks up a stock's info and calculates a simulated return for a given number of years, and Dividender allows you to input your entire portfolio and then calculates its growth over time as a whole. The former is great for researching potential stocks, running scenarios, and deciding how much to invest, while the latter is great for tracking your portfolio and making plans regarding your investments overall.\"", "title": "" }, { "docid": "e0a96be69a097f0ddb3916ff126d5baa", "text": "The reason that you are advised to take more risk while you are young is because the risk is often correlated to a short investment horizon. Young people have 40-50 years to let their savings grow if they get started early enough. If you need the money in 5-15 years (near the end of your earning years), there is much more risk of a dip that will not correct itself before you need the money than if you don't need the money for 25-40 years (someone whose career is on the rise). The main focus for the young should be growth. Hedging your investments with gold might be a good strategy for someone who is worried about the volatility of other investments, but I would imagine that gold will only reduce your returns compared to small-cap stocks, for example. If you are looking for more risk, you can leverage some of your money and buy call options to increase the gains with upward market moves.", "title": "" }, { "docid": "e05a30c4c2dd0cf27738493f5d1a2b47", "text": "This investment strategy may have tax advantages. In some countries, income received from dividends is taxed as income, whereas profits on share trades are capital gains. If you have already exceeded your tax-free income limit for the year, but not your capital gains tax allowance, it may be preferable to make a dealing profit rather than an investment income. These arrangements are called a bed-and-breakfast.", "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": "31ddc4ebffed415c057593a0a676c33a", "text": "Nobody tracks a single company's net assets on a daily basis, and stock prices are almost never derived directly from their assets (otherwise there would be no concept of 'growth stocks'). Stocks trade on the presumed current value of future positive cash flow, not on the value of their assets alone. Funds are totally different. They own nothing but stocks and are valued on the basis on the value of those stocks. (Commodity funds and closed funds muddy the picture somewhat, but basically a fund's only business is owning very liquid assets, not using their assets to produce wealth the way companies do.) A fund has no meaning other than the direct value of its assets. Even companies which own and exploit large assets, like resource companies, are far more complicated than funds: e.g. gold mining or oil extracting companies derive most of their value from their physical holdings, but those holdings value depends on the moving price and assumed future price of the commodity and also on the operations (efficiency of extraction etc.) Still different from a fund which only owns very liquid assets.", "title": "" }, { "docid": "695d9044391183d088ac37025b39cdb2", "text": "If it's money you can lose, and you're young, why not? Another would be motifinvesting where you can invest in ideas as opposed to picking companies. However, blindly following other investors is not a good idea. Big investors strategies might not be similar to yours, they might be looking for something different than you. If you're going to do that, find someone with similar goals. Having investments, and a strategy, that you believe in and understand is paramount to investing. It's that belief, strategy, and understanding that will give you direction. Otherwise you're just going to follow the herd and as they say, sheep get slaughtered.", "title": "" }, { "docid": "7dcda72e44ad0126ba5ec11ec96b37e3", "text": "Check out the questions about why stock prices are what they are. In a nutshell, a stock's value is based on the future prospects of the company. Generally speaking, if a growth company is paying a dividend, that payment is going to negatively affect the growth of the business. The smart move is to re-invest that capital and make more money. As a shareholder, you are compensated by a rising stock price. When a stock isn't growing quickly, a dividend is a better way for a stockholder to realize value. If a gas and electric company makes a billion dollars, investing that money back into the company is not going to yield a large return. And since those types of companies don't really grow too much, the stocks typically trade in a range and don't see the type of appreciation that a growth stock will. So it makes sense to pay out the dividend to the shareholders.", "title": "" }, { "docid": "df51baa716fa4162186729d8475b8167", "text": "\"The Dividend Discount Model is based on the concept that the present value of a stock is the sum of all future dividends, discounted back to the present. Since you said: dividends are expected to grow at a constant rate in perpetuity ... the Gordon Growth Model is a simple variant of the DDM, tailored for a firm in \"\"steady state\"\" mode, with dividends growing at a rate that can be sustained forever. Consider McCormick (MKC), who's last dividend was 31 cents, or $1.24 annualized. The dividend has been growing just a little over 7% annually. Let's use a discount, or hurdle rate of 10%. MKC closed today at $50.32, for what it's worth. The model is extremely sensitive to inputs. As g approaches r, the stock price rises to infinity. If g > r, stock goes negative. Be conservative with 'g' -- it must be sustainable forever. The next step up in complexity is the two-stage DDM, where the company is expected to grow at a higher, unsustainable rate in the early years (stage 1), and then settling down to the terminal rate for stage 2. Stage 1 is the present value of dividends during the high growth period. Stage 2 is the Gordon Model, starting at the end of stage 1, and discounting back to the present. Consider Abbott Labs (ABT). The current annual dividend is $1.92, the current dividend growth rate is 12%, and let's say that continues for ten years (n), after which point the growth rate is 5% in perpetuity. Again, the discount rate is 10%. Stage 1 is calculated as follows: Stage 2 is GGM, using not today's dividend, but the 11th year's dividend, since stage 1 covered the first ten years. 'gn' is the terminal growth, 5% in our case. then... The value of the stock today is 21.22 + 51.50 = 72.72 ABT closed today at $56.72, for what it's worth.\"", "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": "edda35fcb15185c95e9989ac80f206f2", "text": "25% isnt high growth for tech. Amazon does not fund itself from earnings and any improvement in its inventory turns will accelerate its growth capacity. On the other hand, I would love to hear your choice of valuation method for high-growth companies.", "title": "" }, { "docid": "9ddaeefedd377e0765564f49d50c76b3", "text": "\"It has little to do with money or finance. It's basic neuroscience. When we get money, our brains release dopamine (read Your Money and Your Brain), and receiving dividends is \"\"getting money.\"\" It feels good, so we're more likely to do it again. What you often see are rationalizations because the above explanation sounds ... irrational, so many people want to make their behavior look more rational. Ceteris paribus a solid growth stock is as good as a solid company that pays dividends. In value-investing terms, dividend paying stocks may appear to give you an advantage in that you can keep the dividends in cash and buy when the price of the security is low (\"\"underpriced\"\"). However, as you realize, you could just sell the growth stock at certain prices and the effect would be the same, assuming you're using a free brokerage like Robin Hood. You can easily sell just a portion of the shares periodically to get a \"\"stream of cash\"\" like dividends. That presents no problem whatsoever, so this cannot be the explanation to why some people think it is \"\"smart\"\" to be a dividend investor. Yes, if you're using a brokerage like Robin Hood (there may be others, but I think this is the only one right now), then you are right on.\"", "title": "" }, { "docid": "54284d2a3c8a95d3298247d368e50224", "text": "\"The Investment Entertainment Pricing Theory (INEPT) has this bit to note: The returns of small growth stocks are ridiculously low—just 2.18 percent per year since 1927 (versus 17.47 percent for small value, 10.06 percent for large growth, and 13.99 percent for large value). Where the S & P 500 would be a blend of large-cap growth and value so does that meet your \"\"beat the market over the long term\"\" as 1927-1999 would be long for most people.\"", "title": "" }, { "docid": "3149270826356975b301bd95c0ebabf6", "text": "\"This question is predicated on the assumption that investors prefer dividends, as this depends on who you're speaking to. Some investors prefer growth stocks (some which don't pay dividends), so in this case, we're covering the percent of investors who like dividend paying stocks. It depends on who you ask and it also depends on how self-aware they are because some people may give reasons that make little financial sense. The two major benefits that I hear are fundamentally psychological: Dividends are like mini-paychecks. Since people get a dopamine jolt from receiving a paycheck, I would predict the same holds true for receiving dividends. More than likely, the brain feels a reward when getting dividends; even if the dividend stock performs lower than a growth stock for a decade, the experience of receiving dividends may feel more rewarding (plus, depending on the institution, they may get a report or see the tax information for the year, and that also feels good). Some value investors don't reinvest dividends, as they believe the price of the stock matters (stocks are either cheap or expensive and automatic reinvestment to these investors implies that the price of a stock doesn't matter), so dividends allow them to rebuild their cash after a buy. They can either buy more shares, if the stock is cheap, or keep the cash if the stock is expensive. Think about Warren Buffett here: he purchased $3 billion worth of shares of Wells Fargo at approximately $8-12 a share in 2009 (from my memory, as people were shocked that be bought into a bank when no one liked banks). Consider how much money he makes from dividends off that purchase alone and if he were to currently believe Wells Fargo was overpriced, he could keep the cash and buy something else he believes is cheaper. In these cases, dividends automatically build cash cushions post buying and many value investors believe that one should always have cash on hand. This second point is a little tricky because it can involve risk assessment: some investors believe that high dividend paying stocks, like MO, won't experience the huge declines of indexes like the SPY. MO routed the SPY in 2009 (29% vs. 19%) and these investors believe that's because it's yield was too desired (it feels safer to them - the index side would argue \"\"but what happens in the long run?\"\"). The problem I have with this argument (which is frequent) is that it doesn't hold true for every high yield stock, though some high yield stocks do show strong resistance levels during bear markets.\"", "title": "" } ]	fiqa
b7c2e60b8ffe30c5e3ae6dd7dda50ec9	What is a Discount Called in the Context of a Negative Interest Rate?	[ { "docid": "88eb05212e390eb6b77372ec51fdc3ee", "text": "\"Even though the article doesn't actually use the word \"\"discount\"\", I think the corresponding word you are looking for is \"\"premium\"\". The words are used quite frequently even outside of the context of negative rates. In general, bonds are issued with coupons close to the prevailing level of interest rates, i.e. their price is close to par (100 dollar price). Suppose yields go up the next day, then the price moves inversely to yields, and that bond will now trade at a \"\"discount to par\"\" (less than 100 dollar price). And vice versa, if yields went down, prices go up, and the bond is now at a \"\"premium to par\"\" (greater than 100 dollar price)\"", "title": "" }, { "docid": "a4f2af7a90c5a816a855e15c4044574a", "text": "\"Negative Yields on Bonds is opposite of Getting profit on your investment. This is some kind of new practice from world wide financial institute. the interest rate is -0.05% for ten years. So a $100,000 bond under those terms would be \"\"discounted\"\" to $100,501, give or take. No, actually what you are going to get out from this investment is after 10 years when this investment is mature for liquidation, you will get return not even your principle $100,000 , but ( (Principle $100,000) minus (Negative Yields @ -0.05) Times ( 10 Years ) ) assume the rates are on simple annual rate. Now anyone may wander why should someone going to buy this kind of investment where I am actually giving away not only possible profit also losing some of principle amount! This might looks real odd, but there is other valid reason for issuing / investing on such kind of bond. From investor prospective: Every asset has its own 'expense' for keeping ownership of it. This is also true for money/currency depending on its size. And other investment possibility and risk factor. The same way people maintain checking account with virtually no visible income vs. Savings account where bank issue some positive rate of interest with various time factor like annually/half-yearly/monthly. People with lower level of income but steady on flow choose savings where business personals go for checking one. Think of Millions of Ideal money with no secure investment opportunity have to option in real. Option one to keeping this large amount of money in hand, arranging all kind of security which involve extra expense, risk and headache where Option two is invest on bond issued by Government of country. Owner of that amount will go for second one even with negative yields on bonds where he is paying in return of security and risk free grantee of getting it back on time. On Issuing Government prospective: Here government actually want people not to keep money idle investing bonds, but find any possible sector to invest which might profitable for both Investor + Grater Community ultimately country. This is a basic understanding on issue/buy/selling of Negative interest bearing bond on market. Hope I could explain it here. Not to mention, English is not my 1st language at all. So ignore my typo, grammatical error and welcome to fix it. Cheers!\"", "title": "" } ]	[ { "docid": "74a6a11df8141bf6906945103103b30f", "text": "Right, I understand minority interest but it is typically reported as a positive under liabilities instead of a negative. For example, when you are calculating the enterprise value of a company, you add back in the minority interest. Enterprise Value= Market Share +Pref Equity + Min Interest+ Total Debt - Cash and ST Equivalents. EV is used to quantify the total price of a company's worth. If you have negative Min Interest on your books, that will make your EV less than it should be, creating an incorrect valuation. This just doesn't make any sense to me. Does it mean that the subsidiary that they had a stake in had a negative earning?", "title": "" }, { "docid": "43cc3e1388828369619c2a9314438375", "text": "Savings accounts have limitations in case a bank goes belly up and you have a higher amount in the account (more than the insured amount). Mostly big corporations or pension funds cannot rely on a bank to secure their cash but a government bond is secured (with some fine print) and hence they are willing to take negative interest rates.", "title": "" }, { "docid": "8b43f330c145b3509335301b690bd3eb", "text": "There is no interest outstanding, per se. There is only principal outstanding. Initially, principal outstanding is simply your initial loan amount. The first two sections discuss the math needed - just some arithmetic. The interest that you owe is typically calculated on a monthly basis. The interested owed formula is simply (pI)/12, where p is the principal outstanding, I is your annual interest, and you're dividing by 12 to turn annual to monthly. With a monthly payment, take out interest owed. What you have left gets applied into lowering your principal outstanding. If your actual monthly payment is less than the interest owed, then you have negative amortization where your principal outstanding goes up instead of down. Regardless of how the monthly payment comes about (eg prepay, underpay, no payment), you just apply these two calculations above and you're set. The sections below will discuss these cases in differing payments in detail. For a standard 30 year fixed rate loan, the monthly payment is calculated to pay-off the entire loan in 30 years. If you pay exactly this amount every month, your loan will be paid off, including the principal, in 30 years. The breakdown of the initial payment will be almost all interest, as you have noticed. Of course, there is a little bit of principal in that payment or your principal outstanding would not decrease and you would never pay off the loan. If you pay any amount less than the monthly payment, you extend the duration of your loan to longer than 30 years. How much less than the monthly payment will determine how much longer you extend your loan. If it's a little less, you may extend your loan to 40 years. It's possible to extend the loan to any duration you like by paying less. Mathematically, this makes sense, but legally, the loan department will say you're in breach of your contract. Let's pay a little less and see what happens. If you pay exactly the interest owed = (pI)/12, you would have an infinite duration loan where your principal outstanding would always be the same as your initial principal or the initial amount of your loan. If you pay less than the interest owed, you will actually owe more every month. In other words, your principal outstanding will increase every month!!! This is called negative amortization. Of course, this includes the case where you make zero payment. You will owe more money every month. Of course, for most loans, you cannot pay less than the required monthly payments. If you do, you are in default of the loan terms. If you pay more than the required monthly payment, you shorten the duration of your loan. Your principal outstanding will be less by the amount that you overpaid the required monthly payment by. For example, if your required monthly payment is $200 and you paid $300, $100 will go into reducing your principal outstanding (in addition to the bit in the $200 used to pay down your principal outstanding). Of course, if you hit the lottery and overpay by the entire principal outstanding amount, then you will have paid off the entire loan in one shot! When you get to non-standard contracts, a loan can be structured to have any kind of required monthly payments. They don't have to be fixed. For example, there are Balloon Loans where you have small monthly payments in the beginning and large monthly payments in the last year. Is the math any different? Not really - you still apply the one important formula, interest owed = (pI)/12, on a monthly basis. Then you break down the amount you paid for the month into the interest owed you just calculated and principal. You apply that principal amount to lowering your principal outstanding for the next month. Supposing that what you have posted is accurate, the most likely scenario is that you have a structured 5 year car loan where your monthly payments are smaller than the required fixed monthly payment for a 5 year loan, so even after 2 years, you owe as much or more than you did in the beginning! That means you have some large balloon payments towards the end of your loan. All of this is just part of the contract and has nothing to do with your prepay. Maybe I'm incorrect in my thinking, but I have a question about prepaying a loan. When you take out a mortgage on a home or a car loan, it is my understanding that for the first years of payment you are paying mostly interest. Correct. So, let's take a mortgage loan that allows prepayment without penalty. If I have a 30 year mortgage and I have paid it for 15 years, by the 16th year almost all the interest on the 30 year loan has been paid to the bank and I'm only paying primarily principle for the remainder of the loan. Incorrect. It seems counter-intuitive, but even in year 16, about 53% of your monthly payment still goes to interest!!! It is hard to see this unless you try to do the calculations yourself in a spreadsheet. If suddenly I come into a large sum of money and decide I want to pay off the mortgage in the 16th year, but the bank has already received all the interest computed for 30 years, shouldn't the bank recompute the interest for 16 years and then recalculate what's actually owed in effect on a 16 year loan not a 30 year loan? It is my understanding that the bank doesn't do this. What they do is just tell you the balance owed under the 30 year agreement and that's your payoff amount. Your last sentence is correct. The payoff amount is simply the principal outstanding plus any interest from (pI)/12 that you owe. In your example of trying to payoff the rest of your 30 year loan in year 16, you will owe around 68% of your original loan amount. That seems unfair. Shouldn't the loan be recalculated as a 16 year loan, which it actually has become? In fact, you do have the equivalent of a 15 year loan (30-15=15) at about 68% of your initial loan amount. If you refinanced, that's exactly what you would see. In other words, for a 30y loan at 5% for $10,000, you have monthly payments of $53.68, which is exactly the same as a 15y loan at 5% for $6,788.39 (your principal outstanding after 15 years of payments), which would also have monthly payments of $53.68. A few years ago I had a 5 year car loan. I wanted to prepay it after 2 years and I asked this question to the lender. I expected a reduction in the interest attached to the car loan since it didn't go the full 5 years. They basically told me I was crazy and the balance owed was the full amount of the 5 year car loan. I didn't prepay it because of this. That is the wrong reason for not prepaying. I suspect you have misunderstood the terms of the loan - look at the Variable Monthly Payments section above for a discussion. The best thing to do with all loans is to read the terms carefully and do the calculations yourself in a spreadsheet. If you are able to get the cashflows spelled out in the contract, then you have understood the loan.", "title": "" }, { "docid": "649824325a61e5fc7fc43c7b20e5cbcc", "text": "I see another way of looking at this that hasn't been addressed yet. By offering the discount, the company is attempting to change your behavior into doing something irrational, that benefits them at your expense. The company hopes for one (or more) of the following psychological effects to happen to you: The proper thing to do, if you have enough capital to prevent margin calls, it to short-sell the stock at the same instant the price is set, thus locking in the profit. Eventually you can take possession of the shares and deliver them to offset the short -- hopefully before you get a margin call from the stock dropping.", "title": "" }, { "docid": "735cdacb94f03923d7db3c732b06db0f", "text": "\"These rates are so low because the cost of money is so low. Specifically, two rates are near zero. The Federal Reserve discount rate, which is \"\"the interest rate charged to commercial banks and other depository institutions on loans they receive from their regional Federal Reserve Bank's lending facility--the discount window.\"\" The effective federal funds rate, which is the rate banks pay when they trade balances with each other through the Federal Reserve. Banks want to profit on the loans they make, like mortgage loans. To do so, they try to maximize the difference between the rates they charge on mortgages and other loans (revenue), and the rates they pay savings account holders, the Federal Reserve or other banks to obtain funds (expenses). This means that the rates they offer to pay are as close to these rates as possible. As the charts shows, both rates have been cut significantly since the start of the recession, either through open market operations (the federal funds rate) or directly (the discount rate). The discount rate is set directly by the regional Federal Reserve banks every 14 days. In most cases, the federal funds rate is lower than the discount rate, in order to encourage banks to lend money to each other instead of borrowing it from the Fed. In the past, however, there have been rare instances where the federal funds rate has exceeded the discount rate, and it's been cheaper for banks to borrow money directly from the Fed than from each other.\"", "title": "" }, { "docid": "631c6e3f6efdc57d684f2b42448b65a5", "text": "Yes those are really yields. A large portion of the world has negative yielding bonds in fact. This process has been in motion for the past 10 years for very specific reasons. So congratulations on discovering the bond market.", "title": "" }, { "docid": "f04c95fbe25c806a926f738494f09406", "text": "\"It makes sense if the NPV is positive. But what rate should you use at determining the NPV? A textbook might say \"\"market rate\"\".... and by definition the market rate to use in bond calculations like yours will mean that your NPV will be zero. How can this be? Well it's a bit of a circular definition. You take less capital to earn a higher return. The value of your capital spread over the period of the bond's maturity is the net difference... but the money in your pocket from selling the bond and not purchasing also has value. Banks and traders do this exact swap every day, many many times. The rate at which you can execute this swap is what defines the market rate. Therefore, by definition, the NPV will be zero. Now, this doesn't mean it's a bad idea for you. You can, on your own accord, decide the value you place on the capital versus the yield and make the decision. Do you expect rates to rise or fall? Do you expect higher or lower inflation? In reality you can form whatever opinion you like for your own circumstance, but the market is the net aggregation of formative opinion. You only get to decide whether or not you agree with the market.\"", "title": "" }, { "docid": "5c28da24fe7e4e2c72386e4b0b0fb8ff", "text": "I know this can be confusing because you tend to think of money being worth the face value. So let's eliminate that for the sake of an example that will be easier to understand. Let's say your friend loaned you rock worth $10 today. He expects you to pay him back an identical rock whenever you can. Now let's also assume that historically the price of rocks tends to go down every year. At some point you will need to buy a rock to pay your friend back. Because they keep getting cheaper, it costs less to buy the payback rock the longer you wait. Replace a dollar with a rock in the example and you have your answer. This is known as the time value of money. In reality, this is priced into the loan (via the interest rate) because the lender very much understands the math going on here. Also, it is more complicated because the longer you delay payment the more interest you pay (pebbles if you will) so it doesn't usually work to your advantage unless they underpriced the loan's interest rate.", "title": "" }, { "docid": "2732e9c4c38806c0e89bb2edd6272924", "text": "Supply and demand for a particular bond may be such that the market price exceeds the par value for the bond at maturity. This is when you get a negative yield. Especially when volatility is high, people will actually pay money to park it in treasuries for an amount of time. But when compared to a > 25% vol in the equities market over that same period, taking a 5% or less hit doesn't sound nearly as bad!", "title": "" }, { "docid": "1cb65507cf8bac0aa0716c6ab3eb142a", "text": "\"I would say people are generally talking about the prime lending rate. I have heard the prime lending rate defined as \"\"The rate that banks charge each other when they borrow money overnight.\"\" But it often defined as the rate at which banks lend their most creditworthy customers. That definition comes with the caveat that it is not always held to strictly. Either definition has the same idea: it's the lowest rate at which anyone could currently borrow money. The rate for many types of lending is based upon the prime rate. A variable rate loan might have an interest rate of (Prime + x). The prime rate is in turn based upon the Federal Funds Rate, which is the rate that the Fed sets manually. When the news breaks that \"\"the Fed is raising interest rates by a quarter of a point\"\" (or similar) it is the Federal Funds Rate that they control. Lending institutions then \"\"fall in line\"\" and adjust the rates at which they lend money. So to summarize: When people refer to \"\"high\"\" or \"\"low\"\" or \"\"rising\"\" interest rates they are conceptually referring to the prime lending rate. When people talk about the Fed raising/lowering interest rates (In the U.S.) they are referring specifically to the Federal Funds Rate (which ultimately sets other lending rates).\"", "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": "" }, { "docid": "1e6372bb007a7316716de34aa3fe6a50", "text": "Your mortgage represents a negative cash flow of $X for N months. The typical mortgage prepayment doesn't reduce your next payment, but does reduce the length of the mortgage. If you look at the amortization table of a 30 year loan, you might see a payment of $1000 but only $50 going to principal. So if on day one you send an extra $51 or so to the bank, you find that in 30 years you just saved that $1000 payment. In effect, it was a long term bond or CD, yielding the post tax rate of the mortgage. Say your loan were 7%. At 7%, money doubles every 10 years or so. 30 years is 3 doubles or 8X. If I were to offer you $1000 and ask for $7500 in 30 years, you might accept it, with an agreement to buy me out if you refinanced. For me, that would be an investment. Just like buying a bond. In fact, there is a real return, as you see the cash flow at the end. The payments 'not made' are your payback. Those who insist it's not an investment are correct in the strict sense of the word's definition, but pedantic for the fact in practice, the prepayment is a choice to be considered alongside other investment choices. When I have a mortgage, I am the mortgagor, the bank, the mortgagee. Same as a company issuing a bond, the Bank holds my bond and I'm making payments to them. They hold my bond as an investment. There is no question of that. In fact, they package these and sell them as CMOs, groups of mortgages. A pre-payment is me buying back the last coupon on my mortgage. I fail to see the distinction between me 'buying back' $10K in future coupons on my own loan or me investing $10K in someone else's loans. The real question for me is whether this makes sense when rates are so low. At 4%, I'd say it's a matter of prioritizing any high rate debt and any other investments that might yield more. But even so, it's an investment yielding 4%. Over the years, I've developed the priorities of where to put new money - The priorities are debatable. I have my opinion, and my reasons to back them up. In general, it's a balance between risk and return. In my opinion, there's something wrong with ignoring a dollar for dollar match on the 401(k) in most circumstances. Others seem to prefer being 100% debt free before saving at all. There's a balance that might be different for each individual. As I started, the mortgage is a fixed return, with no chance to just get it back if needed. If your cash savings is pretty high, and the choice is a .001% CD or prepay a 4% mortgage, I'd use some funds to pay it down. But not to the point you have no liquid reserves.", "title": "" }, { "docid": "dac42c465bf5780fb4ab730b4f3be366", "text": "There is another reason why an investor might buy negative yielding bonds: if the investor expects that bond yields will go even further negative, then they are also expecting the price of the bond to go up. They can resell the bond later at a profit. As an example, they may expect an increase in central bank bond purchases to drive yields lower and prices higher.", "title": "" }, { "docid": "c956cd96a41c6cc45b9a750211d740ac", "text": "Part 2 = 12% -5000/0.12 (1 - 1/(1.12^2 ) = -8450.26 Then subtract year 0s 5000 payment if you havent = -13450.26 and then compare to option 2 -2000/0.12 (1 - 1/(1.12^10) = -11300.46 and subtract 20000 -31300.46 As you can see both values are substantially smaller compared to a 4% discount rate.", "title": "" }, { "docid": "298bc6aaa358239ee51268053527c422", "text": "I haven't read the terms here but the question may not have a good answer. That won't stop me from trying. Call the real rate (interest rate - inflation) and you'll have what is called negative real rates. It's rare for the overnight real rate to be negative. If you check the same sources for historical data you'll find it's usually higher. This is because borrowing money is usually done to gain an economic benefit, ie. make a profit. That is no longer a consideration when borrowing money short term and is IMO a serious problem. This will cause poor investment decisions like you see in housing. Notice I said overnight rate. That is the only rate set by the BoC and the longer rates are set by the market. The central bank has some influence because a longer term is just a series of shorter terms but if you looked up the rate on long Canadian real return bonds, you'd see them with a real rate around 1%. What happens when the central bank raise or lowers rates will depend on the circumstances. The rate in India is so high because they are using it to defend the rupee. If people earn more interest they have a preference to buy that currency rather than others. However these people aren't stupid, they realize it's the real rate that matters. That's why Japan can get away with very low rates and still have demand for the currency - they have, or had, deflation. When that changed, the preference for their currency changed. So if Canada hast forex driven inflation then the BoC will have to raise rates to defend the dollar for the purpose of lowering inflation from imports. Whether it works or not is another story. Note that the Canadian dollar is very dependant on the total dollar value of net oil exports. If Canada has inflation due too an accelerating economy this implies that there are profitable opportunities so businesses and individuals will be more likely to pay a positive real rate of interest. In that scenario the demand for credit money will drive the real rate of return.", "title": "" } ]	fiqa
9ee662f5117c791bfe9da94c571a46ad	Buy car vs lease vs long term rent for 10 years period	[ { "docid": "5d46edb721a1d2259a5ece1ede3310f4", "text": "If you plan to keep this asset for ten years then you can take the deprecation of its cost over that time period. For simplicity lets treat that as 120 monthly payments. So at a purchase price of $60,000 you are committing around $500 per month not including vehicle maintenance. I typically allocate around 20 percent of the purchase price of my vehicles for future maintenance costs. Since you have the cash to purchase this outright you have an option not afforded to most people. This adds for additional consideration. Here is an example. You purchase a $60,000 car and put $10,000 down. You finance $50,000 at 2.84% over 60 months. Your total finance cost is $53,693 if you do not miss any payments. The question here is can you make more than $3,693 on the $50,000 that you would retain in this situation over a five year period? I know that I most certainly can and is an excellent example of why I finance my vehicles. Obviously this all goes out the window if you do not have the credit for top rates. I have also negotiated a vehicle maintenance plan with the dealership at the time of my vehicle purchases. Most dealerships offer this service, the key here is negotiating. On my last truck I was able to get an all inclusive maintenance policy for 72 months for 8% of the purchase price. Your mileage will vary with manufacturer and dealership. As described in the comments above it is never beneficial for an individual to lease. You end up paying more for the newer models. I consider that to be a lifestyle choice as it is most certainly not a sound financial decision.", "title": "" }, { "docid": "6dc205d75952b5f81215d237971e9943", "text": "\"This question has been asked and answered before. Financially, owning a car will be more economical than leasing one in most cases. The reason for this is that leasing arrangements are designed to make a profit for the leasing company over and above the value of the car. A leasing company that does not profit off their customers will not be in business for long. This is a zero-sum game and the leasing customer is the loser. The lion's share of the customer losses are in maintenance and in the event of an accident or other damage. In both cases, leasing arrangements are designed to make a large profit for the owner. The average customer assumes they will never get into an accident and they underestimate the losses they will take on the maintenance. For example, if both oxygen sensors need to be replaced and it would have cost you $800 to replace them yourself, but the leasing company charges you $1200, then BOOM! you just lost $400. If the car is totaled, the customer will lose many thousands of dollars. Leasing contracts are designed to make money for the owner, not the customer. Another way leasing agents make money is on \"\"required maintenance\"\". Most leasing contracts require the leasor to perform \"\"required\"\" maintenance, oil changes, tire rotations, etc. Also, with newer cars manufacturers recalls are common. Those are required as well. Nearly nobody does this maintenance correctly. This gives the agent the excuse to charge the customer thousands of dollars when the vehicle is returned. Bills of $4000 to $6000 on a 3 year lease for failure to perform required maintenance are common. Its items like this that allow the leasing agent to get a profit on what looks like a \"\"good deal\"\" when the customer walked in the door 3 years previously. The advantage of leasing is that it costs less up front and it is more convenient to switch to a different car because you don't have to sell the car.\"", "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": "" }, { "docid": "48afeed212c2d44d7878e3a0f08b085b", "text": "\"I'd probably say \"\"buy\"\" for most situations. Unless you have a long-term lease, you're going to be saddled with elastic/rising rents if the market tightens up, while with a purchase you usually have fixed expenses (with the exception of property taxes/condo fees) and you are gaining equity. As I've gotten older, the prospect of moving is more and more daunting. The prospect of being essentially kicked out of my home when the landlord decides to sell the property or raise the rent is a turn-off to me.\"", "title": "" }, { "docid": "1866315752d623c85565b72dbfb392fd", "text": "You should never buy anything that consumes all of your savings. First you should have 6 months living expenses in a liquid account. Second you should be investing for retirement, index funds or ETFs. The longer you have money invested the better off you'll be. Pragmatically speaking you're better off getting the cheapest car that is reliable. Cars cost money, depreciation and money, every day you own them. However I get the urge to splurge. Get a loan, pay 2x the standard payment amount.", "title": "" }, { "docid": "2877ea212c9e3863024c98fb6b9f6fa0", "text": "In a perfect world scenario you would get a car 2-5 years old that has very little mileage. One of the long standing archaic rules of the car world is that age trumps mileage. This was a good rule when any idiot could roll back an odometer. Chances are now that if you rolled your odometer back the car was serviced somewhere, had inspection or whatever and it is on a report. If seller was found to do this they could face jail time and obviously now their car is almost worthless. Why do I mention this? Because you can take a look at 2011 cars. Those with 20K miles go for just a little more than those with 100K miles. As an owner you will start incurring heavy maintenance costs around 100K on most newer cars. By buying cars with lower mileage, keeping them for a year or two, and reselling them before they get up in miles, you can stay in that magic area where you can drive a pretty good car for $200-300 a month. Note that this takes work on both the buying and selling side and you often need cash to get these cars (dealers are good about siphoning really good used cars to employees/friends). This is a great strategy for keeping costs down and car value up but obviously a lot of people try to do this and it takes work and you have to be willing to settle sometimes on a car that is fine, but not exactly what you want. As for leasing this really gets into three main components: If you are going to do EVERYTHING at a dealership and you want something new or newish you might as well lease. At least then you can shop around for apples to apples. The problem with buying a new/used car from the dealers in perpetuity isn't the buying process. It is the fact that they will screw you on the trade-in. A car that books for 20K may trade-in for 17K. Even if the dealer says they are giving you 20K, then they make you pay list price for the car. I have many many times negotiated a price of a car and then wife brought in our car separately and I can count on ZERO fingers how many times that the dealership honored both sides of the negotiations. Not only did they not honor them but most refused to talk with us after they found out. With a lease you don't have to worry about losing this money in the negotiations. You might pay a little extra (or not since you can shop around) but after the lease you wash your hands of the car. The one caveat to this is the high-end market. When you are talking your Acura, Mercedes, Lexus... It is probably better to buy and trade in every couple years. You lose too much equity by leasing, where it won't cover the trade-in gap and cost of your money being elsewhere. I have a friend that does this and gets a slightly better car every 2-3 years with same monthly payment. Another factor to consider is the price of a car. If your car will be worth over $15K at time of sale you are going to have a hard time selling it by owner. When amounts get this high people often need financing. Yes they can get personal financing but most people are too lazy to do this. So the number of used car buyers on let's say craigslist are way way fewer as you start getting over $10-12K and I have found $15K to be kind of that magic amount. The pro-buy-used side is easy. Aim for those cars around $12-18K that are out there (and many still under warranty). These owners will have issues finding cash buyers. They will drop prices somewhere between book price and dealer trade-in. In lucky cases where they need cash maybe below dealer trade-in. And remember these sellers aren't dealing with 100s let alone 10 buyers. You drive the car for 3-4 years. Maybe it is $7-10K. But now you will get much much closer to book price because there will be far more buyers in this range.", "title": "" }, { "docid": "46f295dd712175146f902bb3afbad09b", "text": "\"You are still paying a heavy price for the 'instant gratification' of driving (renting) a brand-new car that you will not own at the end of the terms. It is not a good idea in your case, since this luxury expense sounds like a large amount of money for you. Edited to better answer question The most cost effective solution: Purchase a $2000 car now. Place the $300/mo payment aside for 3 years. Then, go buy a similar car that is 3 years old. You will have almost $10k in cash and probably will need minimal, if any, financing. Same as this answer from Pete: https://money.stackexchange.com/a/63079/40014 Does this plan seem like a reasonable way to proceed, or a big mistake? \"\"Reasonable\"\" is what you must decide. As the first paragraph states, you are paying a large expense to operate the vehicle. Whether you lease or buy, you are still paying this expense, especially from the depreciation on a new vehicle. It does not seem reasonable to pay for this luxury if the cost is significant to you. That said, it will probably not be a 'big mistake' that will destroy your finances, just not the best way to set yourself up for long-term success.\"", "title": "" }, { "docid": "10c46e0d92feb504ce36be9b95654e06", "text": "The answer is very simple. Part of the luxury is having the cutting edge technology with the very latest features. The price premium is not just from increased build quality; it's simply a perception. Additionally, 10 years takes its toll on a car. The smooth suspension gets rougher over time, and all the little features start to break down. Part of the price of that car factors in the expense of expected repairs. That's true of every car, but the repairs are more expensive when there are lots of gadgets to break down, especially on imports.", "title": "" }, { "docid": "79b11649d690b24c7378ff5f0ec8ef65", "text": "There are some who argue that you should lease an electric car. These factors are in addition to all the normal pros and cons of leasing vs. buying. The technology is still new and is advancing rapidly. In 2-3 years, the newer model may have significantly improved features, range, and efficiency, as well as lower prices. If you are the type of person to upgrade regularly to the latest and greatest, leasing can make it a smoother transition. It is hard to predict the depreciation of the vehicles. This is both because of the above factors, but also because these kinds of cars are newer and so the statistical models used to predict their future values are less refined. The models for predicting gas car prices have been honed for decades. EV Manufacturers have in the past made some mistakes in their residual value estimations. When you lease a car, you get essentially an option to buy the car at the future predicted residual value. If, at the end of the lease, the market value of the car is higher than the residual value, you can purchase the car at the predetermined price, making yourself some extra money. If the value is lower than the residual, you can return the car or renegotiate. I know a relatively large number of electric vehicle owners. Most or all of the ones who got the vehicle new leased it. The rest bought used vehicles coming off lease, which can also be a good deal.", "title": "" }, { "docid": "0b00f0e24f0eb0bf60fbdf10077762a4", "text": "From strictly a gross revenue point of view, the parking spot is going to yield a higher rate (5.4%) versus a 3% savings account, assuming you have it rented all year. Your break-even point (not considering other expenses) is 7-8 months of rent per year. So, what are things to consider? Here's a few to start with. The parking spot is a nice investment in that you get a decent return, and the potential for appreciation. The savings account/CD will give you a fixed return with no risk. To support your decision, make sure you understand all of the costs and understand all of the downside risk. If you're 50 and this is alot of money to you, be conservative. If you're 25 and have a good job, you can afford to chase the yield.", "title": "" }, { "docid": "e663e64de0fd06bc15a34aaa2cfcacb5", "text": "If the car is in otherwise good shape, it's always less expensive to keep it longer. Think of it this way: you have to buy new tires no matter what. It's just a question of whether or not those new tires are attached to a new car or your current car.", "title": "" }, { "docid": "4fd215464e90bb864b3b516173aaf6ff", "text": "\"The general answer is: \"\"it depends on how long you want to live there\"\". Here is a good calculator to figure it out: http://www.nytimes.com/interactive/business/buy-rent-calculator.html Basically, if you plan to move in a few years, then renting makes more sense. It is a lot easier to move from an apartment when your lease is up versus selling a house, which can be subject to fluctuations in the real-estate market. As an example, during the real estate bubble, a lot of \"\"young professional\"\" types bought condos and town homes instead of renting. Now these people are married with kids, need to move somewhere bigger, but they can't get rid of their old place because they can't sell it for what they still owe. If these people had rented for a few years, they would be in a better position financially. (Many people fell for the mantra \"\"If you are renting, you are throwing your money away\"\", without looking at the long-term implications.) However, your question is a little unique, because you mentioned renting for the rest of your life, and putting the savings into an investment, which is a cool idea. (Thinking outside the box, I like it.) I'm going to assume you mean \"\"rent the same place for many years\"\" versus \"\"moving around the country every few years\"\". If you are staying in one place for a long time, I am going to say that buying a house is probably a better option. Here's why: So what about investing? Let's look at some numbers: So, based on the above, I say that buying a house is the way to go (as long as you plan to live in the same place for several years). However, if you could find a better investment than the Dow, or if mortgage interest rates change drastically, things could tip in another direction. Addendum: CrimsonX brought up a good point about the costs of owning a house (upkeep and property taxes), which I didn't mention above. However, I don't think they change my answer. If you rent, you are still paying those costs. They are just hidden from you. Your landlord pays the contractor or the tax man, and then you pay the landlord as part of your rent.\"", "title": "" }, { "docid": "a5b7a01c6f647e9a59ef22f7f031ff54", "text": "If you are looking to build wealth, leasing is a bad idea. But so is buying a new car. All cars lose value once you buy them. New cars lose anywhere between 30-60% of their value in the first 4 years of ownership. Buying a good quality, used car is the way to go if you are looking to build wealth. And keeping the car for a while is also desirable. Re-leasing every three years is no way to build wealth. The American Car Payment is probably the biggest factor holding many people back from building wealth. Don't fall into the trap - buy a used car and drive it for as long as you can until the maintenance gets too pricey. Then upgrade to a better used car, etc. If you cannot buy a car outright with cash, you cannot afford it. Period.", "title": "" }, { "docid": "78b7e7d1ebadbacbc9ae26e90af8340f", "text": "The first thing that strikes me is: Is this a time-limited offer? Because if you can expect the offer to still be valid in a few weeks, why not just wait that month (which will earn you the money) and buy the car then? The second thing you need to consider is obviously the risk that in the interim, there will be an actual emergency which would require the money that you no longer have. The third thing to consider is whether you need the car now. Do you require a car to get around and your current one is breaking down, perhaps even to the point that repairing it would cost you more than buying a new car and it is currently not safe to drive? If so, compare the cost of repairing to the cost of buying; if the difference is small, and the new car would be more likely to be reliable than the old car after spending the money, then it can make sense to buy a new car and perhaps sell the old one in its current condition to someone who likes to tinker. (Even if you only recover a few hundreds of dollars, that's still money that perhaps you wouldn't otherwise have.) The fourth thing I would consider, especially given the time frame involved, is: Can you get a loan to buy the new car? Even if the interest rate is high, one month's worth of interest expense won't set you back very far, and it will keep the money in your emergency fund for if there is an actual emergency in the weeks ahead. Doing so might be a better choice than to take the money out of the emergency fund, if you have the opportunity; save the emergency fund for when that opportunity does not exist. And of course, without knowing how much you earn, take care to not end up with a car that is no more reliable than what you have now. Without knowing how much you earn and what the car you have in mind would cost, it's hard to say anything for certain, but if the car you have in mind costs less than a month's worth of net pay for you, consider whether it's likely to be reliable. Maybe you are making an absolutely stellar pay and the car will be perfectly fine; but there's that risk. Running the car by a mechanic to have it briefly checked out before buying it may be a wise move, just to make sure that you don't end up with a large car repair expense in a few months when the transmission gives up, for example.", "title": "" }, { "docid": "c67a88c4227e0bf04bf2a770ce04fe61", "text": "When getting a car always start with your bank or credit union. They are very likely to offer better loan rate than the dealer. Because you start there you have a data point so you can tell if the dealer is giving you a good rate. Having the loan approved before going to the dealer allows you to negotiate the best deal for the purchase price for the car. When you are negotiating price, length of loan, down payment, and trade in it can get very confusing to determine if the deal is a good one. Sometimes you can also get a bigger rebate or discount because to the dealer you are paying cash. The general advice is that a lease for the average consumer is a bad deal. You are paying for the most expensive months, and at the end of the lease you don't have a car. With a loan you keep the car after you are done paying for it. Another reason to avoid the lease. It allows you to purchase a car that is two or three years old. These are the ones that just came off lease. I am not a car dealer, and I have never needed a work visa, but I think their concern is that there is a greater risk of you not being in the country for the entire period of the lease.", "title": "" }, { "docid": "464cbae1aff1457fc0fc804fb43863e4", "text": "I have coworker who reported that he leased a Nissan Leaf from 2013-2016 and was offered $4000 off the contracted purchase price at the end of the lease due to a glut of other lessees turning in for a lease on the newest model with greater range. It's not clear that this experience will be repeated by others three years from now, but there is enough uncertainty in the future electric car market that it's quite possible to have faster depreciation on a new vehicle than you might otherwise expect based on experience with conventional internal combustion powered vehicles. Leasing will remove that uncertainty. Purchasing a lease-return can also offer great value. I looked at the price for a lease return + a new battery with the extended range, and it was still significantly cheaper than buying a completely new vehicle.", "title": "" }, { "docid": "6d864190cdecc0a7b03e663b49b5604b", "text": "It's my understand that leasing is never the better overall deal, with the possible exception of a person who would otherwise buy a brand new car every 2 or 3 years, and does not drive a lot of miles. Note: in the case of a company car, Canadian taxes let you deduct the entire lease payment (which clearly has some principal in it) if you lease, while if you buy you can only deduct the interest, and must depreciate the car according to their schedule. This can make leasing more attractive to those buying a car through a corporation. I don't know if this applies in the US. The numbers you ran through in class presumably involved calculating the interest paid over the term of the loan. Can you not just redo the calculation using actual interest and lease numbers from a randomly chosen current car ad? I suspect if you do, you will discover leasing is still not the right choice.", "title": "" } ]	fiqa
76fb14f07713d78d1481e31063e3b6d6	How do I protect myself from a scam if I want to help a relative?	[ { "docid": "c11c09b85c443880b8d617752cb05e2a", "text": "\"For some reason can't transfer it directly to his account overseas (something to do with security codes, authorized payees and expired cards). Don't become someone's financial intermediary. Find out exactly why he can't transfer the money himself, and then if you want to help him, solve that problem for him. Helping him fix his issue with his expired card, or whatever the real problem is, would be a good thing to do. Allowing him to involve you in the transaction, would be a bad thing to do. Possible problems which might be caused by becoming directly involved in the transaction: -The relative is being scammed themselves, and doesn't realize it / doesn't realize the risks, and either wants you to take the risk, or simply thinks there is no risk but needs administrative help. -The person contacting you is not the relative - perhaps they are faking that person's identity, and are using your trust to defraud you. -The person is committing some form of fraud, money laundering, or worse, and is directly trying to defraud you in order to keep their hands clean. -The transaction may be perfectly legal, but is considered taxable in one or more countries. By getting involved, you might face tax filing obligations, or even tax payment obligations. -The transaction may be perfectly legal and legitimate, but might accidentally get picked up as potential fraud by a financial monitoring system, causing the funds to be held, and your account to be flagged for further investigation, creating headaches for you until it becomes resolved. There are possibly other ways that this can go awry, but these are the biggest possibilities I can think of. The only possible 'good' outcome here is that everything goes smoothly, and it works exactly as well as if your relative's \"\"administrative problems\"\" were solved first, and the money went through his own account. Handwaving about why your account is needed and his is faulty is a big red flag. If it is truly just an administrative issue on his end, help him fix that issue instead.\"", "title": "" }, { "docid": "55bb65d0b678ef4788f3d6625191a078", "text": "\"What can I do to help him out, but at the same time protect myself from any potential scams? Find out why he can't do this himself. Whether your relative is being sincere or not, if he owns both accounts then he should be able to transfer money between them by himself. If you can find a way to solve that issue without involving your bank account, so much the better. Don't settle for \"\"something about authorized payees and expired cards.\"\" Get details, write them down. If possible, get documents. Then go to a bank or financial adviser you can trust and run those details by them to see what they have to say. Even if there's no scam, if what he's trying to do is illegal (even if he doesn't realize it himself) then you want to know before you get involved. You say you're willing to deal with \"\"other issues\"\" separately, but keep in mind that, even if there's no external scam here, those \"\"other issues\"\" could include hefty fees, censures on your own account, or jail time. Ask yourself: Does it make sense that this relative has an account overseas? I don't have any overseas accounts, because I don't do business in other countries. Is your relative a dual-citizen? Does he travel a lot? What country is the overseas account in? How long has he had this account? What bank is it with? Where the money is going is just as important as how it gets there (ie: through your account.) Arguably more so. Keep in mind that many scammers tell their marks not to share what's going on with anyone else. (Because doing so increases the odds of someone telling them to snap out of it.) It's entirely possible he's being scammed himself and just not telling you the whole story because the 419er is telling him to keep it quiet. (Check out that link for more details on common scams that your relative may be unwittingly part of, btw.) Get as many details as possible about what he's doing and why. If he's communicating with anyone else regarding this transfer, find out who. If there are emails, ask his permission to read them and watch for anything suspicious (ie: people who can't spell their own name consistently, constant pressure to act quickly, etc.)\"", "title": "" }, { "docid": "04e74a4f44ed1e8e97ae3bfd5f3b6892", "text": "\"Let's summarize your relative's problem: How is this possible? If both of those statements are true, then he should be able to explain exactly why those statements are true, and then you can explain it to us, and then we can all nod our heads and admit, \"\"Wow, that makes sense. Proceed if you want to.\"\" But until that happens I suggest you take the advice I offered in the first paragraph of this answer.\"", "title": "" }, { "docid": "f3d56d46ed450decb613728608ee35ab", "text": "Since you mentioned that it is your close relative, he has never done enything dodgy and is wise with his money, then I would take it that you have some implicit trust in him. Now your options in this case are limited to either saying an outright no, which may impact familial ties adversely or to do as he has requested. One way could be to ask him for a mail requesting a short term loan and then transfer the money to his account. Then after a few days/weeks he repays the money back to your account. Now, this may or may not be 100% black & white depending on the legalities of your country but in most countries/cultures giving and taking of personal loans between friends/families is quite common.", "title": "" }, { "docid": "7b93e0783a91335c0418e313471690db", "text": "\"Mostly ditto to @grade'eh'bacon, but let me add a couple of comments: Before I did anything, I'd find out more about what's going on. Anytime someone tells me that there's a problem with \"\"security codes or something\"\", I get cautious. Think about what the possibilities are here. Your relative is being scammed. In that case, helping him to transfer his money to the scammer is not the kind of help you really want to give. Despite your firm belief in your relative's integrity, he may have been seduced by the dark side. If he's doing something illegal, I'd be very careful about getting involved. My friends and relatives don't ask me to commit crimes for them, especially not in a way that leaves me holding the bag if things go wrong. Assuming that what is going on here is all legal and ethical, still there is the possibility that you could be making yourself liable for taxes, fees, whatever. At the very least I'd want to know what those are up front. As @Grade'eh'bacon, if he really has a problem with a lost password or expired account, by all means help him fix that problem. But become someone else's financial intermediary has many possible pitfalls.\"", "title": "" } ]	[ { "docid": "bc0682855ab73115a7ab506f3c255162", "text": "\"Government registering of financial institutions usually is to make the government safe (eg FINTRAC is watching for money laundering and financing terrorism) rather than to make it's customers safe. Most governments have many levels of registrations and regulatory bodies. The most stringent requirements are usually obligatory only for banks, and they indeed often include precautions for insuring customer's deposits. Even this insurances have limits, eg in most EU countries the state guarantees deposits up to 100kEUR. If you deposit more and the bank flops - you lose everything over the limit. Companies like forex or currency exchanges usually make their best effort to avoid as many regulations as possible, just because it's costly. If a given company does have guarantee funds and/or customer insurance, it should be advertised and explained on their website. However the whole issue of trust is misguiding. You don't have to \"\"trust\"\" in your grocery store to shop there. There is no government guarantee that the vegetables sold will be tasty. If you buy and the product fells short of your expectations, you call it a loss and start shopping elsewhere. Financial services are no different than any other product. I recommend to your aunt to start small and see how it works. If a service turns out well, she can increase the amount sent through exchange and decrease amount sent through bank. But still, it's always prudent to send eg $1000 every week instead of $4000 once a month. It's more time consuming and cumbersome than having your bank do it - but it's the safety and convenience you're paying premium for.\"", "title": "" }, { "docid": "860266c5f091ca5d690561f10b47edb1", "text": "\"Here are a handful of measures I take myself: I check my credit reports once in a while and look for anything out of the ordinary. If somebody calls me on the telephone claiming to be from my bank or credit card company, utility, etc. I ask for their number, check it, and call them back. I don't give personal information to people merely claiming to be from a place I do business with. I never fill out ballots for free contests. Most of the time these are scams. When I get a call telling me \"\"you won a free cruise\"\" for a ballot I supposedly filled out at the mall, I say they're lying through their teeth. For excitement, I'll sometimes buy a lotto ticket instead. I'm careful when I surf the web. I don't give my personal information to web sites I can't trust. If they look the least bit shady, I'm out. Also, I use different passwords at different web sites. I avoid using a password from a public terminal, but when I must, I change my password soon after. I'm careful when I download software. I don't install anything I didn't get from a trusted source. I pay for software when necessary, so finding a trusted source is not hard. But, I've heard of people who – to save a buck – would download a pirated application from a shady warez site only to be \"\"gifted\"\" a trojan horse key logging or other spyware along with it. When I no longer need a bill, receipt, statement, etc. or any document containing personal information, I shred it, and I use a shredder that does a micro-cut, not just a strip- or cross-cut. The micro-cut remains go in the green bin with wet and yucky organic waste. When I no longer need a hard drive, I use a secure wiping tool like Darik's Boot & Nuke before reusing. If the drive isn't worth reusing, I'll wipe first then take apart with my Torx screwdriver. Once I have the drive platter, I scratch the heck out of it. Remains go to the community recycling depot. That's all I can think of right now; I probably missed a few :-) So, what do others do? I'm curious, too.\"", "title": "" }, { "docid": "ec55ffc0afb013f63119e61c57879329", "text": "\"Personally, I avoid making business deals with friends and relatives. There's just too much of a possibility that things can go wrong. Let's assume that you're honest people and you have no intention of cheating your mother-in-law. Still, all sorts of things could happen that could make it difficult for you to repay the loan. You could lose your job. You could get some big medical expense. Etc. Then what happens? Then your financial problems become family problems. There's a strong temptation when people borrow from relatives to make paying the loan the lowest priority in their budget. \"\"I know I promised to pay \\$X per month, but things are really tight right now and Mom should understand.\"\" Maybe she does understand and can manage without it. But maybe not. And then it becomes a family fight. \"\"You promised you'd pay it back.\"\" \"\"And we will, we're having a hard time right now. Can't you just give us a break?\"\" Etc. Or she might have some extra expense, and say, \"\"Hey, can't you pay a little more this month? I really need some extra cash.\"\" \"\"I'm sorry, we're struggling just to make the regular payments, we can't.\"\" \"\"Well I was willing to loan you all this money. The least you could do is pay me back when I need it.\"\" Etc. You can end up ruining family relationships over money. Your wife can find herself in the position of having to choose whether to side with her mother or her husband. Etc. I'm sure plenty of people do things like this and it works out just great. But there are big risks. And by the way, apparently this was your idea, not your mother-in-laws. I wonder what her reaction is. Is she eager to help out her daughter and son-in-law and had nothing in particular to do with the money anyway? Or is she feeling very imposed on? It's one thing to ask relatives to let you borrow their car for the weekend. Asking someone to loan you $50,000 is a very big request. If one of my kids asked me to loan them $50,000 from my retirement fund, I'd consider that a very presumptuous request. (Unless they needed the money for life-saving surgery for my grandchild or some such.)\"", "title": "" }, { "docid": "839709aa6287a3c0bdadf5e399de228d", "text": "I would recommend against loans from family members. But if you decide to go down that path take care of the basics: This is a business decision so treat it like one. I would add that the situation you describe sounds extremely generous to your family member. I'd look at standard loan agreements (ie. in the marketplace) and model your situation more on them - if you do this, even with you paying a premium, you'd never come up with something as generous as what you have described.", "title": "" }, { "docid": "7488478ce920b35c3d40540eac3f9dfc", "text": "Most modern bank accounts can be set up to automatically pay bills for anyone, even someone who has no control over the account. This account would be in a trustee's name for the untrustworthy party. An automatic transfer could be set up from the source account to the irresponsible party's bank account to pay their allowance. It would be wise to remove all overdraft capability from the recipients account, but the whole system might help them learn some responsibility. There are more formal legal structures for forming a long term care-taking trust (with spendthrift provisions to protect the trust from legal action). The trust would need to be maintained by a trustee, resulting in maintenance fees on the principle. It might also help to know if there are legally recognized factors that impair the beneficiaries ability to take care of themselves (substance abuse, depression, age, mental impairment, etc.), but depending on state law, trusts can be designed very flexibly to cover the lifetime of an heir and even their heirs.", "title": "" }, { "docid": "288d276228f14c790a00ed38f2cbcab0", "text": "Go to the police. This is fraud and is illegal. Sure, this will hurt your friend but better now then when he starts abusing of his position to fraud even more people... Original comment by Bakuriu sorry for not giving credit", "title": "" }, { "docid": "29804bab79f47aa6d3252357b0decc82", "text": "\"I would write them a check or give them cash money. There are payment receipt forms available online, you can print one of have them fill it out and sign it. Just google \"\"private party receipt\"\". Money transfer (via bank account or Paypal) is also an option, but in my opinion it's more convenient to meet up and handle it in person. If you want, you can have them meet you at a notary public's office (your local bank branch should have one) and have the receipt notarized. I don't think it's a scam, but make sure you are paying the right person.\"", "title": "" }, { "docid": "85c8b5fc25546611c4d7aa05d80c5060", "text": "\"It's pretty easy for foreign scammers to get a US phone number or email. A domestic bank account is a little harder. Very likely the direct contact is a US citizen or a legal immigrant. The Nigerian may be completely made-up to throw you off the scent. And that person can be found, dunned, or deported, and there's even a small chance of reversing the bank transfers. It's also hard for foreign scammers to sound American on the phone, again suggesting a domestic scam or one with domestic agents. If you or your son is willing to do a serious amount of skill-building and legwork, you can uncover evidence by filing a lawsuit. Once you have done so, you can use the legal processes of discovery to force banks etc. to give you information they would never give willingly. There are countless details. Lawyers get paid to get the details right. Suing actual people can backfire, they can countersue. But since you do not know their real name, you would probably be filing a \"\"John Doe\"\" lawsuit. \"\"John Doe\"\" is a placeholder: the idea being that you will later, through discovery, uncover the defendants' real names. For a novice exploring the legal system for the first time, there's a big advantage - John Doe never countersues or quashes, he never gets in your way or wastes your time... heck, he never even shows up in court! And when you collect evidence via discovery, you can take that to law enforcement or immigration. It goes without sayi-- well, there's no need to go into that. Just realize you did goof, and make sure you learn the lessons.\"", "title": "" }, { "docid": "55ffd718f6d814e05d9b1f6be1336852", "text": "\"With regard to your edit (although I didn't downvote): one way to reduce the security risk is to separate the payment from the ability to drain your account. A considerable part of the security risk is inherent in giving people a number which is directly linked to a bank account where you keep all your money. If you don't want that risk, don't do that. Instead of (or in addition to) trying to reduce the chance of fraud, you can reduce the impact of fraud, even if it occurs, by not paying for things using the details of an account where you have all your money. Trying to protect against fraud while keeping all your money in the account is sort of like carrying around thousands of dollars in cash in your wallet and then worrying about how to defend against robbery. Yes, you can carry a weapon or hire a bodyguard, but it's probably simpler to just not carry that much money in the first place. You already mentioned one solution with your option #1, which is to just keep a small amount of money in a separate account and use that for online payments. Assuming you can easily transfer money in and out of this account via online banking, this effectively is what you say you want in your edit: you log in to your bank online, but rather than \"\"informing it\"\" you're about to make a payment, you just transfer money in. You'll probably have to keep a small amount of money in the account to keep it open, but if this is an important issue for you, that shouldn't be that big a deal. Another solution is a credit card. With a credit card, you simply make the payment online. In the US, if the merchant (or someone else stealing the info) makes fraudulent charges, the credit card company assumes the liability and the consumer suffers only the inconvenience of having to get a new card issued. I don't know what the UK laws are regarding credit vs. debit fraud, but some sites I found seem to suggest that credit cards have fraud protection in the UK as well. This is probably worth looking into if you are concerned about fraud.\"", "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": "ff3724cefbcaa8e967a9ddbb6bdea607", "text": "I think there are two options: You invest for very close friends, who trust you completely. In this case, I don't see why you need legal formalities. Just take their money, invest, and return the profits (or losses) to them. They'll know that you invest it as well as you can (rather than spend it on your dream vacation), simply because they trust you. And in case they never get to see most of their money back - they'll know that you've tried your best, and won't be upset with you. You invest for people who trust you, but not 100%. In this case, don't take their money. If you lose (and in Forex, you most likely will) then you'll lose not only money, but also your friends. Even if the legal documents would prove that you were honset, and that they knew what they're getting into, they'll still be mad at you.", "title": "" }, { "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": "730426820d883cc22c2fb9d03728ceba", "text": "\"This is the biggest blunder I see in money handling. \"\"Oh I'm a good person and everyone knows my intentions are good. And they're really happy with me right now, so it'll stay that way forever, right? So I can just do anything and they'll trust me.\"\" And then in hindsight 10 years later, the person realizes \"\"wow, I was really stubborn and selfish to just assume that. No wonder it blew up.\"\" Anyway, to that end, your requirement that all the money be in one account and \"\"this will simplify taxes\"\" is horsepuckey. No one will believe a legitimate financial advisor needs that, but it's exactly what a swindler would do. And that's the problem. If anything goes wrong, their trust in you will be forgotten, some will say you intended to scam all along, and the structure will be the first thing to convict you. Money makes everyone mistrusting. Ironically, the concept is called a \"\"trust\"\", and there's a wide body of law and practice for Person X responsibly handling the money of Person Y. The classic example is Person Y is a corporation (say, a charity) and Person X is on the Board of Directors. It's the same basic thing. The doctrine is:\"", "title": "" }, { "docid": "56fb73a2e8ec4fb502a48d6384f1265e", "text": "Yes, it is a scam. Think about it: Why would a stranger offer to give you money? Why would she need you to pay her own employees? She wouldn't. It is a scam. You have more to lose than just the $25 that is in the account. Just as has happened to your dad before, you will be receiving money that is not real, but paying real money out somewhere else. One more thing: If your dad has fallen for these scams so many times that he can't get a bank account anymore, why are you still taking financial advice from him?", "title": "" }, { "docid": "c3381caa7edc086a41211ca618056174", "text": "The price of the loan may be justified if you're considered a high-risk applicant for some reason (e.g. you're putting very little money in initial payment), and if it includes all the associated expenses. What is more relevant to your situation is that you're probably better off renting. Think about it: your $300'000 house will require some repairs in those 30 years (let's estimate those at $100'000). That means in 30 years you'll build $200'000 of equity spending $720'000 on it. Of course this assumes that the value of the house will remain constant. You're effectively be throwing away $520'000, or more than $1'400 a month. If you can rent a place for $1'400 a month or less, you'll build more equity by renting that place for 30 years and saving the excess money in a bank account. If you consider the interest that money in your bank account will earn you (e.g. 3% annually), you'll build more than $200'000 equity in 30 years even if you spend as much as $1'650 on your rent and save only $350 a month.", "title": "" } ]	fiqa
e057134887d4a40893c0a5f05b31a7b0	What should I do with $4,000 cash and High Interest Debt?	[ { "docid": "e044e38a50bd0167f31b7cc9d61a5946", "text": "Every $1,000 you use to pay off a 26% interest rate card saves you $260 / year. Every $1,000 you use to pay off a 23% interest rate card saves you $230 / year. Every $1,000 you put in a savings account earning ~0.5% interest earns you $5 / year. Having cash on hand is good in case of emergencies, but typically if your debt is on high interest credit cards, you should consider paying off as much of it as possible. In your case you may want to keep only some small amount (maybe $500, maybe $1000, maybe $100) in cash for emergencies. Paying off your high interest debt should be a top priority for you. You may want to look on this site for help with budgeting, also. Typically, being in debt to credit card companies is a sign of living beyond your means. It costs you a lot of money in the long run.", "title": "" }, { "docid": "300da8ce16aa66516972068b1cb3de3f", "text": "\"If it were me, I would pay off the 23%er. That is as long as you don't borrow anymore. Please consider \"\"your hair on fire\"\" and get that 26%er paid off as soon as possible. From my calculations your big CC is sitting at 26% has a balance of 20K. Holy cow girl, what in the world? The goal here is to have that paid off in less than one year. Get another job, work more than you have in your life. Others may disagree as it is more efficient to pay down the 26%er. However, if you pay it all of within the year the difference only comes to $260. If you gain momentum, which is important in changing your financial life, that $260 will be meaningless. With focus, intensity, and momentum you can get this mess cleaned up sooner than you think. However, if you are going to continue to rack up credit card debt at these rates, it does not matter what you do.\"", "title": "" }, { "docid": "6d47872c305ac82a7baf1b8d3fd8b0b2", "text": "The difference in interest is not a huge factor in your decision. It's about $2 per month. Personally I would go ahead and knock one out since it's one less to worry about. Then I would cancel the account and cut that card up so you are not tempted to use it again. To address the comments... Cutting up the card is NOT the ultimate solution. The solution is to stop borrowing money... Get on a strict budget, live on less than what you bring home, and throw everything you can at this high-interest debt. The destroying of the card is partly symbolic - it's a gesture to indicate that you're not going to use credit cards at all, or at least until they can be used responsibly, not paying a DIME of interest. It's analogous to a recovering alcoholic pouring out bottles of booze. Sure you can easily get more, but it's a commitment to changing your attitude and behavior. Yes leaving the card open will reduce utilization and improve (or not hurt) credit score - but if the goal is to stop borrowing money and pay off the other card, then once that is achieved, your credit score will be significantly improved, and the cancelling of the first card will not matter. The card (really both cards) should never, ever be used again.", "title": "" }, { "docid": "5951e28e84473a206dafb1940db6ec7f", "text": "With all due respect to The David, the $1000 is best put against 20%+ debt, no sitting in checking as part of some emergency fund. I'd agree with the decision to pay off the lower rate card. Why? Because we can do the math, and can see the cost in doing so. Low enough that other factors come in, namely, a freed up card. That card can function as the emergency one in the short term. Long term, once these high rate cards are paid off, you'll build your proper emergency fund, but the cost is too high right now. The $4000 is a nice start, but the most important thing is to get your budget under control. Only you can decide how much you can cut back, and go after this debt as if it were life or death.", "title": "" }, { "docid": "336c242807b2a76919c7656d1e3db6e5", "text": "I see some merit in the other answers, which are all based on the snowball method. However, I would like to present an alternative approach which would be the optimal way in case you have perfect self-control. (Given your amount of debt, most likely you currently do not have perfect self-control, but we will come to that.) The first step is to think about what the minimum amount of emergency funds are that you need and to compare this number with your credit card limit. If your limits are such that your credit cards can still cover potential emergency expenses, use all of the 4000$ to repay the debt on the loan with the higher interest rate. Some answer wrote that Others may disagree as it is more efficient to pay down the 26%er. However, if you pay it all of within the year the difference only comes to $260. This is bad advice because you will probably not pay back the loan within one year. Where would you miraculously obtain 20 000$ for that? Thus, paying back the higher interest loan will save you more money than just 260$. Next, follow @Chris 's advice and refinance your debt under a lower rate. This is much more impactful than choosing the right loan to repay. Make sure to consult with different banks to get the best rate. Reducing your interest rate has utmost priority! From your accumulated debt we can probably infer that you do not have perfect self-control and will be able to minimize your spending/maximize your debt repayments. Thus, you need to incentivize yourself to follow such behavior. A powerful way to do this is to have a family member or very close friend monitor your purchase and saving behavior. If you cannot control yourself, someone else must. It should rather be a a person you trust than the banks you owe money.", "title": "" }, { "docid": "077cd4233e6c723599047e4fc5f27fb7", "text": "If your credit is good, you should immediately attempt to refinance your high rate credit cards by transferring the balance to credit cards with lower interest rates.You might want to check at your local credit union, credit unions can offer great rates. Use the $4000 to pay off whatever is left on the high rate cards. If your credit is bad, I suggest you call your credit card company and try to negotiate with them. If they consider you a risk they might settle your account for fraction of what you own if you can send payment immediately. Don't tell them you have money, just tell them your are trying to get your finances under control and see what they can offer you. This will damage your credit score but will get you out of depth much sooner and save you money in the long term. Also keep in mind that if they do settle, they'll close your account. That way, you leverage the $4000 and use it as a tool to get concessions from the bank.", "title": "" }, { "docid": "55bc23a70f3c2f798ddca615e31a746c", "text": "When paying off multiple debts there is a protocol that many support. Payoff your debts according to the snowball method. The snowball method proposes that you make minimum payments on all debts except the smallest one. Payoff the smallest debt as quickly as possible. As smaller debts are paid off, that makes one less minimum payment you need to make, leaving you with more money to put against the next smallest debt. So in your case, pay off the smaller debt completely, then follow up on the larger one by making regular payments at least equal to the sum of your two current minimum payments. You'll see immediate progress in tackling your debt and have one less minimum to worry about, which can serve as a little safety of it's own if you have a bad month. As to saving the thousand dollars, that is pragmatic and prudent. It's not financially useful (you won't make any money in a savings account), but having cash on hand for emergencies and various other reasons is an important security for modern living. As suggested in another answer, you can forgo saving this thousand and put it against debt now, because you will have a freed up credit card. Credit can certainly give you that same security. This is an alternative option, but not all emergencies will take a credit card. You typically can't make rent with your credit card, for example. Good luck paying your debts and I hope you can soon enjoy the freedom of a debt free life.", "title": "" }, { "docid": "9cc9772cf40feea310452158aa1f3243", "text": "Patti - I realize, of course, that you pose an either/or question. It seems the question closes the door on other potential solutions.", "title": "" }, { "docid": "13d513d4f2ab3d69d388bc0fb074a379", "text": "I'm going to suggest a slightly different approach. Most answers seem to suggest paying off the lower rate card to clear it. Some answers / comments also talk about emergency funds. One risk of paying off a card is that the card issuer may choose to reduce your credit limit if they see you as high risk, to prevent you re-spending the money. If you don't trust yourself with the card then this could be a good thing (and remember you're always free to ask for a limit decrease). But if you want access to emergency funds, then I would suggest paying half onto each card. That way if one card cuts you off, you have a chance of still having access to the other in an emergency.", "title": "" }, { "docid": "c9e79c3970a82e9d968dd3eaf9229e54", "text": "\"This is the kind of scenario addressed by Reddit's /r/personalfinance Prime Directive, or \"\"I have $X, what should I do with it?\"\" It follows a fairly linear flowchart for personal spending beginning with a budget and essential costs. The gist of the flowchart is to cover your most immediate costs and risks first, while also maximizing your benefits. It sounds like you would fall somewhere around steps 1 and 3. (Step 2 won't apply since this is not pretax income.) If you don't already have at least $1000 reserved in an emergency fund, that's a great place to start. After that, you'll want to use the rest to pay down your debt. Your credit card debt is very high interest and should be treated as a financial emergency. Besides the balance of your gift, you may want to throw whatever other funds you have saved beyond one month's expenses at this problem. As far as which card, since you have multiple debts you're faced with the classic choice of which payoff method to use: snowball (lowest balance first) or avalanche (highest interest rate first). Avalanche is more financially optimal but less immediately gratifying. Personally, since your 26% APR debt is so large and so high interest, I would recommend focusing every available penny on that card until it is paid off, and then never use it again. Again, per the flowchart, that means using everything left over after steps 0-2 are fulfilled.\"", "title": "" }, { "docid": "d905851f6af654a18f454d523e3f11ce", "text": "If we're including psychological considerations, then the question becomes much more complicated: will having a higher available credit increase the temptation to spend? Will eliminating 100% of a small debt provide more positive reinforcement than paying off 15% of a larger debt? Etc. If we're looking at the pure financial impact, the question is simpler. The only advantage I see to prioritizing the lower interest card is the float: when you buy something on a credit card, interest is often calculated for that purchase starting at the beginning of the next billing cycle, rather than immediately from the purchase date. I'm not clear on what policies credit card companies have on giving float for credit cards with a carried balance, so you should look into what your card's policy is. Other than than, paying off the higher interest rate card is better than paying off the lower interest rate. On top of that, you should look into whether you qualify for any of the following options (presented from best to worst):", "title": "" }, { "docid": "9c6339ce8800b7d88f46b532fd8775c1", "text": "I like the answers others gave, if it's some substantial debt you definitely could go the bankruptcy route but it damages your future, also it's morally unethical to borrow all that money and not intend to pay. Second, if you can pay off the entire balance and clear out the 23% interest than I'd do that first. One less bill to concern yourself with. Now let's say you've been making $100 payments monthly on each card (my assumption for this examples sale) now instead of paying $100 to the remaining cards balance each month and saving the other $100, pay $200 against the remaining credit cards balance. By not taking home any money this way you are tackling the liability that is costing you money every month. Unless you have a great investment opportunity on that remaining $1000 or haven't created much of an emergency fund yet, I'd consider putting more of that money towards the debt. Gaining 0.01% on savings interest still means you're eating 25.99% in debt monthly. If you're able to I'd venture out to open a zero interest card and do a balance transfer over to that new card, there will be a minimal transfer fee but you may get some cash back out of it and also that zero interest for a year would help hold off more interest accruing while you're tackling the balance.", "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": "1dd669d41dae2b13de2963af30ee98d2", "text": "\"First, I would recommend getting rid of this ridiculous debt, or remember this day and this answer, \"\"you will be living this way for many years to come and maybe worse, no/not enough retirement\"\". Hold off on any retirement savings right now so that the money can be used to crush this debt. Without knowing all of your specifics (health insurance deductions, etc.) and without any retirement contribution, given $190,000 you should probably be taking home around $12,000 per month total. Assuming a $2,000 mortgage payment (30 year term), that is $10,000 left per month. If you were serious about paying this off, you could easily live off of $3,000 per month (probably less) and have $7,000 left to throw at the student loan debt. This assumes that you haven't financed automobiles, especially expensive ones or have other significant debt payments. That's around 3 years until the entire $300,000 is paid! I have personally used and endorse the snowball method (pay off smallest to largest regardless of interest rate), though I did adjust it slightly to pay off some debts first that had a very high monthly payment so that I would then have this large payment to throw at the next debt. After the debt is gone, you now have the extra $7,000 per month (probably more if you get raises, bonuses etc.) to enjoy and start saving for retirement and kid's college. You may have 20-25 years to save for retirement; at $4,000 per month that's $1 million in just savings, not including the growth (with moderate growth this could easily double or more). You'll also have about 14 years to save for college for this one kid; at $1,500 per month that's $250,000 (not including investment growth). This is probably overkill for one kid, so adjust accordingly. Then there's at least $1,500 per month left to pay off the mortgage in less than half the time of the original term! So in this scenario, conservatively you might have: Obviously I don't know your financials or circumstances, so build a good budget and play with the numbers. If you sacrifice for a short time you'll be way better off, trust me from experience. As a side note: Assuming the loan debt is 50/50 you and your husband, you made a good investment and he made a poor one. Unless he is a public defender or charity attorney, why is he making $60,000 when you are both attorneys and both have huge student loan debt? If it were me, I would consider a job change. At least until the debt was cleaned up. If he can make $100,000 to $130,000 or more, then your debt may be gone in under 2 years! Then he can go back to the charity gig.\"", "title": "" }, { "docid": "ad32b8cf0dd0f9cc0e07c5649bfad92a", "text": "In addition to the advice already given (particularly getting rid of high-interest debt), I would add the following:", "title": "" }, { "docid": "907ebd1d1b30cca0aff5ac675d24d1cd", "text": "To directly answer your question, the best choice is to pay cash and place the rest on your student loan. This is saving you from paying more interest. To offer some advise, consider purchasing a cheaper car to place more money towards your student loan debt. This will be the best financial decision in the long-term. I suspect the reason you are considering financing this vehicle is that the cash payment feels like a lot. Trust your instinct here. This vehicle sounds like large splurge considering your current debt, and your gut is telling you as much. Be patient. Use your liquid funds to get a more affordable vehicle and attack the debt. That is setting yourself up for financial success.", "title": "" }, { "docid": "605842993bf7c451b0f12c45806e8a78", "text": "First, I would point you to this question: Oversimplify it for me: the correct order of investing With the $50k that you have inherited, you have enough money to pay off all your debt ($40k), purchase a functional used car ($5k), and get a great start on an emergency fund with the rest. There are many who would tell you to wait as long as possible to pay off your student loans and invest the money instead. However, I would pay off the loans right away if I were you. Even if it is low interest right now, it is still a debt that needs to be paid back. Pay it off, and you won't have this debt hanging over your head anymore. Your grandmother has given you an incredible gift. This money can make you completely debt free and put you on a path for success. However, if you aren't careful, you could end up back in debt quickly. Learn how to make a budget, and commit to never spending money that you don't have again.", "title": "" }, { "docid": "4fdc0c096584047dd029d2407e86289d", "text": "With a lot excess cash you eventually have two goals: Since interest on cash bank deposits does not exceed inflation and you have currency risk, you may want to get into other asset classes. Options that might be, but not limited to are:", "title": "" }, { "docid": "ccbded8e947dc60198be6d55fec7d18c", "text": "Let's look at some of your options: In a savings account, your $40,000 might be earning maybe 0.5%, if you are lucky. In a year, you'll have earned $200. On the plus side, you'll have your $40,000 easily accessible to you to pay for moving, closing costs on your new house, etc. If you apply it to your mortgage, you are effectively saving the interest on the amount for the life of the loan. Let's say that the interest rate on your mortgage is 4%. If you were staying in the house long-term, this interest would be compounded, but since you are only going to be there for 1 year, this move will save you $1600 in interest this year, which means that when you sell the house and pay off this mortgage, you'll have $1600 extra in your pocket. You said that you don't like to dabble in stocks. I wouldn't recommend investing in individual stocks anyway. A stock mutual fund, however, is a great option for investing, but only as a long-term investment. You should be able to beat your 4% mortgage, but only over the long term. If you want to have the $40,000 available to you in a year, don't invest in a mutual fund now. I would lean toward option #2, applying the money to the mortgage. However, there are some other considerations: Do you have any other debts, maybe a car loan, student loan, or a credit card balance? If so, I would forget everything else and put everything toward one or more of these loans first. Do you have an emergency fund in place, or is this $40,000 all of the cash that you have available to you? One rule of thumb is that you have 3 to 6 months of expenses set aside in a safe, easily accessible account ready to go if something comes up. Are you saving for retirement? If you don't already have retirement savings in place and are adding to it regularly, some of this cash would be a great start to a Roth IRA or something like that, invested in a stock mutual fund. If you are already debt free except for this mortgage, you might want to do some of each: Keep $10,000 in a savings account for an emergency fund (if you don't already have an emergency fund), put $5,000 in a Roth IRA (if you aren't already contributing a satisfactory amount to a retirement account), and apply the rest toward your mortgage.", "title": "" }, { "docid": "2106c31d84b4c18a5fd0a1c91430e2b5", "text": "Paying off the high-interest debt is a good first start. Paying interest, or compound interest on debt is like paying somebody to make you poor. As for your 401k, you want to contribute enough to get the full match from your employer. You might also consider checking out the fees associated with your 401k with an online fee analyzer. If it turns out you're getting reamed with fees, you can reduce them by fiddling with your investments. Checking your investment options is always a good idea since jobs frequently change them. Opening an IRA is a good call. If you're eligible for both Roth and Traditional IRAs, consider the following: Most financial institutions (brokers or banks) can help you open an IRA in a matter of minutes. If you shop around, you will find very cheap or even no fee options. Many brokers might try to get your business by giving away something for ‘free.' Just make sure you read the fine print so you understand the conditions of their promotional offer. Whichever IRA you choose, you want to make sure that it's managed properly. Some people might say, ‘go for it, do it yourself’ but I strongly disagree with that approach. Stock picking is a waste of time and market timing rarely works. I'd look into flat fee financial advisors. You have lots of options. Just make sure they hear you out, and can design/execute an investment plan specific to your needs At a minimum, they should: Hope this is helpful.", "title": "" }, { "docid": "e25fcd5b89b415a0f9310d96fdd581a2", "text": "\"Your plan as proposed will not work, because it goes against how banks make money. Banks make money in two ways: (1) Fees [including account fees, investment advice fees, mortgage application fees, etc.]; and (2) Interest Rate Spread. They borrow money for x%, and they lend it out for x+y%. In a simple form, someone gives the bank a deposit, and earns 1%. The bank turns around to the next person in line and loans the money to them for 4%. You are asking them to turn the interest rate spread into a cost instead of their main source of profit: You are asking the bank to borrow money from another person paying them 1.2% interest, and then loan the money to you, paying you 0.6% interest and keeping 0.6% for themselves. The bank would lose money doing this. Technically yes, you can borrow from a bank and invest it in something earning above the 4% interest they will charge you. You can then pay the bank's interest off of your earnings, and make some profit for yourself. BUT this carries an inherent risk: If your investment loses money, you still owe the bank, effectively increasing the negative impact of your investment. This tactic is called \"\"Leveraging\"\"; you can look it up on this site or on google. It is not something you should do if you do not fully understand the risks you are taking on. Given that you are asking this question, I would suggest tactfully that you are not yet well informed enough to make this sort of investment. You run serious risk of losing everything if you over-leverage (assuming the banks will even lend you money in the first place).\"", "title": "" }, { "docid": "562199728b298b68e02ab2224814095c", "text": "\"Your only real alternative is something like T-Bills via your broker or TreasuryDirect or short-term bond funds like the Vanguard Short-Term Investment-Grade Fund. The problem with this strategy is that these options are different animals than a money market. You're either going to subject yourself to principal risk or lose the flexibility of withdrawing the money. A better strategy IMO is to look at your overall portfolio and what you actually want. If you have $100k in a money market, and you are not going to need $100k in cash for the forseeable future -- you are \"\"paying\"\" (via the low yield) for flexibility that you don't need. If get your money into an appropriately diversified portfolio, you'll end up with a more optimal return. If the money involved is relatively small, doing nothing is a real option as well. $5,000 at 0.5% yields $25, and a 5% return yields only $250. If you need that money soon to pay tuition, use for living expenses, etc, it's not worth the trouble.\"", "title": "" }, { "docid": "a7523c0c096626ffb0b416e5d7207a48", "text": "Debt creates risk. The more debt you take on, the higher your risk. What happens if you lose your job, miss a payment, or forget to write the final payment check for the exact amount needed, and are left with a balance of $1 (meaning the back-dated interest would be applied)? There is too much risk for little reward? If you paid monthly at 0% and put your money in your savings account like you mentioned, how much interest would you really accrue? Probably not much, since savings account rates suck right now. If you can pay cash for it now, do it. So pay cash now and own it outright. Why prolong it? Is there something looming in the future that you think will require your money? If so, I would put off the purchase. No one can predict the future. Why not pay cash for it now, and pay yourself what would have been the monthly payment? In three years, you have your money back. And there is no risk at all. Also, when making large purchases with cash, you can sometimes get better discounts if you ask.", "title": "" }, { "docid": "1ee79f89d2eccdf0d137f986fd276ece", "text": "It doesn't make a whole lot of sense to save up and wait to make a payment on any of these loans. Any dollar you pay today works better than saving it and waiting months to pay it, no matter which loan it will be applied to. Since your lender won't let you choose which loan your payment is being applied to, don't worry about it. Just make as big a payment as you can each month, and try to get the whole thing out of your life as soon as possible. The result of this will be that the smaller balance loans will be paid off first, and the bigger balance loans later. It is unfortunate that the higher interest rate loans will be paid later, but it sounds like you don't have a choice, so it is not worth worrying about. Instead of thinking of it as 5 loans of different amounts, think of it as one loan with a balance of $74,000, and make payments as quickly and as often as possible. For example, let's say that you have $1000 a month extra to throw at the loans. You would be better off paying $1000 each month than waiting until you have $4000 in the bank and paying it all at once toward one loan. How the lender divides up your payment is less significant than when the lender gets the payment.", "title": "" }, { "docid": "7f4660e81b6cac0d44cedec2044272b9", "text": "My recommendation would be to pay off your student loan debt as soon as possible. You mention that the difference between your student loan and the historical, long-term return on the stock market is one-half percent. The problem is, the 7% return that you are counting on from the stock market is not guaranteed. You might get 7% over the next few years, but you also might do much worse. The 6.4% interest that you will save by aggressively paying off your debt is guaranteed. You are concerned about the opportunity cost of paying your debt early. However, this cost is only temporary. By drawing out your debt payments, you have a long-term opportunity cost. By this, I mean that 4 years from now, you could still have 6 years of debt payments hanging over your head, or you could be debt free with all of your income available to save, spend, or invest as you see fit. In my opinion, prolonging debt just to try to come out 0.5% ahead is not worth the hassle or risk.", "title": "" }, { "docid": "6236c533a709b202a826720071e1f5a7", "text": "\"Although there is no single best answer to your situation, several other people have already suggest it in some form: always pay off your highest after-tax (!) interest loan first! That being said, you probably also have heard about the differentiation for good debt vs. bad debt. Good debt is considered a mortgage for buying your primary home or, as is the case here, debt for education. As far as I am concerned, those are pretty much the only two types of debt I'd ever tolerate. (There may be exceptions for health/medical reasons.) Everything else is consumer debt and my personal rule is, don't buy it if you don't have the money for it! Meaning, don't take on consumer debt. One other thing you may consider before accelerating paying off your student debt, the interest paid on it may be tax deductible. So you should look at what the true interest is on your student loan after taxes. If it is in the (very) low single digits, meaning between 1-3%, you may consider using the extra money towards an automatic investment plan into an ETF index fund. But that would be a question you should discuss with your tax accountant or financial adviser. It is also critical in that case that you don't view the money invested as \"\"found\"\" money later on, unless you have paid off all your debt. (This part is the most difficult for most people so be very cautious and conscious if you decide to go this route!) At any rate, congratulations on making so much progress paying off your debt! Keep it going.\"", "title": "" }, { "docid": "7ac77f862da86e38701a192398ab3ea4", "text": "I have credit card debt of about $5000 That's the answer right there. You told us the 401(b) has no match. The next highest priority would be credit card debt that's costing you interest. You didn't mention the rate on the card, I'm assuming it's 8% or more. As far as your balance sheet (the 'bottom line') is concerned, pay off a 10% debt is the same as earning 10% on your money. If anyone promises you a higher return with a different investment, I'd run the other way. We hope the market, i.e. the US stock market, as measured by a broad index, say the S&P 500, will return 8-10%/yr over the long term, but this isn't guaranteed. Paying off that credit card will save you the interest every year, and free up the payments to invest elsewhere. In response to Marlene's comment - Crazy? No. Human nature and emotion is what it is. I honestly don't know how to address some of it. Years ago, I was in a similar situation with a reader who had a $5000 'emergency' account, yet had $5000 in credit card debt. I had a tough time getting my head around why it wasn't obvious this made no sense. In your case, I might suggest you pay the card down to below $1000 and have the credit line reduced. Paying high interest on $5K makes no sense at any point in one's life. At least a 20-something can dig his way out and learn a lesson. A pre-retiree shouldn't be throwing this money away.", "title": "" } ]	fiqa
3032f0c1e019306a1cce6d9b7e359c4e	How to check the paypal's current exchange rate?	[ { "docid": "e0011c2d147a78e3b4afab4acd9ea44c", "text": "PayPal does charge a premium, both for sending and receiving. Here's how you find their rates:", "title": "" }, { "docid": "5e9d9f9cdbfb2ddae39e31b503360c5e", "text": "The Paypal 'classic' site option has now been removed and you will not know what you will be charged UNTIL YOU COMMIT TO BUY. Paypal told me today ( brexit day 24th ) that their site is NOT connected to the Ebay site so when Ebay tells me '$77.00 approximately £52.43' for an item I would in fact pay £59.62. You will Not be aware of this UNTIL you commit to by. Paypal informs me there are no plans to restore the 'classic' option Paypal site.", "title": "" }, { "docid": "a22174c44403030698e39181361ab771", "text": "fx-rate.net offers a AUDUSD exchange rate comparison, which includes paypal: Currencyfair $1.14 Transferwise $ 2.29 Worldremit $ 3.50 Xendpay $ 3.71 Tranzfers $ 5.52 Ukforex $ 7.35 Skrill $ 15.13 Paypal $ 25.77 Kantox $ 27.76 http://fx-rate.net/currency-transfer/?c_input=AUD&cp_input=USD", "title": "" }, { "docid": "8def29393e303b6be727289894f80600", "text": "\"FYI, just found this (https://www.paypal.com/webapps/mpp/ua/useragreement-full#8) \"\"8.9 Currency Conversion Currency Conversion 2.5% added to the exchange rate The Currency Conversion spread applies whenever a currency conversion is required to complete your transaction. The exchange rate is determined by a financial institution and is adjusted regularly based on market conditions. Adjustments may be applied immediately and without notice to you. When your payment is funded by a debit or credit card and requires a currency conversion, you consent to and authorize PayPal to convert the currency in place of your debit or credit card issuer. You have the right to have your card issuer perform the currency conversion and can choose this option during checkout on your transaction review page before you complete the transaction.\"\" 2.5%!! Can this be true?\"", "title": "" }, { "docid": "a3dda95b6fe5e60b7c1a455d81fc346f", "text": "\"I cannot speak for Paypal specifically and I doubt anyone who doesn't actually work on their internal automated payment systems could. However, I can speak from experiencing in working on automated forex transaction systems and tell you what many institutions do and it is often NOT based on live rates. There is no law stating an institution must honor a specific market exchange rate. Institutions can determine their own rates how and when they want to. However, there is some useful information on their website: https://www.paypal.com/an/cgi-bin/webscr?cmd=p/sell/mc/mc_convert-outside \"\"The most readily available information on currency exchange rates is based on interbank exchange rates. Interbank exchange rates are established in the course of currency trading among a global network of over 1,000 banks, and are not available through consumer or retail channels.\"\" This leads me to believe they pull exchange rates from either Oanda or XE periodically and then use these rates throughout the day to conduct business. Paypal does not disclose who they use to determine rates. And it's highly doubtful they do this for every transaction (using live rates). Even if they did, there would be no way for you to check and be certain of a particular exchange rate as paypal states: \"\" Consumers may use these rates as a reference, but should not expect to use interbank rates in transactions that involve currency conversion. To obtain actual retail rates, contact your local financial institution or currency exchange, or check the rate displayed in your PayPal transaction.\"\" This is partly because rates can change by the second just like stock prices or anything else which is susceptible to the open market's variables of supply, demand news events etc. So, even if you check the rates on Oanda (which you can do here: http://www.oanda.com/currency/converter/) you are not going to get a 100% accurate representation of what you would get by doing an exchange immediately afterwards from Paypal or any other financial institution. However, if you want to estimate, using Oanda's currency converter will likely get you close in most scenarios. That is assuming Paypal doesn't charge a premium for the exchange, which they may. That is also assuming they use live rates, it's also possible they only update their rates based on market rates periodically and not for every transaction. You may want to test this by checking the exchange rate on your transaction and comparing that to the Oanda rates at the same time.\"", "title": "" }, { "docid": "12c783ab58e622f4b75a45d00cc7d18a", "text": "There is a way I discovered of finding the current exchange rate before committing to buy, go to send payments, put in your own second email, pay 1gbp as the amount and it will give you the exchange rate and fees in your own currency, in my case euro, before you have to click on send payment", "title": "" }, { "docid": "29cf5583c86e0216a19eb093e877ba35", "text": "Whenever you pay or withdraw some fund from your account, paypal takes approx 3% of the current currency value along with the fees. i.e. If you are paying/withdraw 100 unit of US Dollars to British pounds and if the current convertion rate is 1$=0.82GBP, then consider reducing 3% of the actual currency rate. So, the approximate magnitude will be 0.82*97% (100-3=97) = 0.7954. So, 1$=0.7954GBP. This formula will not give you 100% accurate value but will help of course. Captain", "title": "" } ]	[ { "docid": "cbfaa8e5b417b674e4a7ec3116770215", "text": "PayPal charges a 2.5% currency conversion fee to exchange funds from one currency to another. That means, the receiver would receive $ 9.75. Read More", "title": "" }, { "docid": "ccef86861b5918e8ad02925f6b4ea9c4", "text": "Is there not some central service that tracks current currency rates that banks can use to get currency data? Sure. But this doesn't matter. All the central service can tell you is how much the rate was historically. But the banks/PayPal don't care about the historical value. They want to know the price that they'll pay when they get around to switching, not the last price before the switch. Beyond that, there is a transaction cost to switching. They have to pay the clearinghouse for managing the transaction. The banks can choose to act as a clearinghouse, but that increases their risk. If the bank has a large balance of US dollars but dollars are falling, then they end up eating that cost. They'll only take that risk if they think that they'll make more money that way. And in the end, they may have to go on the currency market anyway. If a European bank runs out of US dollars, they have to buy them on the open market. Or a US bank might run out of Euros. Or Yen. Etc. Another problem is that many of the currency transactions are small, but the overhead is fixed. If the bank has to pay $5 for every currency transaction, they won't even break even charging 3% on a $100 transaction. So they delay the actual transaction so that they can make more than one at a time. But then they have the risk that the currency value might change in the meantime. If they credit you with $97 in your account ($100 minus the 3% fee) but the price actually drops from $100 to $99, they're out the $1. They could do it the other way as well. You ask for a $100 transaction. They perform a $1000 transaction, of which they give you $97. Now they have $898 ($1000 minus the $5 they paid for the transaction plus the $3 they charged you for the transaction). If there's a 1% drop, they're out $10.98 ($8.98 in currency loss plus a net $2 in fees). This is why banks have money market accounts. So they have someone to manage these problems working twenty-four hours a day. But then they have to pay interest on those accounts, further eating into their profits. Along with paying a staff to monitor the currency markets and things that may affect them.", "title": "" }, { "docid": "4365e9c6ffd3fc7b9acb7f2a38cece51", "text": "I used MoneyCorp - they typically charge you approximately 2% on top of the official exchange rate. You would probably need to declare that in your home country - I do not know Pakistan rules so can't help there.", "title": "" }, { "docid": "f668293a44aa11b7f4bf48fcf050ab1d", "text": "If I remember correctly my own experience : no you can't. Paypal will block the money even if it's only for online payement.", "title": "" }, { "docid": "625b4ac57726954c615a0f324b509988", "text": "There are several red flags here. can they get my bank account info in any way from me transferring money to them? Probably yes. Almost all bank transactions are auditable, and intentionally cause a money track. This track can be followed from both sides. If they can use your bank account as if they were you, that is a bit deeper than what you are asking, but yes they (and the polish cops) can find you through that transfer. I did look up the company and didn't find any scam or complaints concerning them. Not finding scams or complains is good, but what did you find? Did you find good reviews, the company website, its register, etc, etc? How far back does the website goes (try the wayback machine) Making a cardboard front company is very easy, and if they are into identity theft the company is under some guy in guam that never heard of poland or paypal. As @Andrew said above, it is probably a scam. I'd add that this scam leverages on the how easier is to get a PayPal refund compared to a regular bank transfer. It is almost impossible to get the money back on an international transaction. Usually reverting a bank transfer requires the agreement in writing of the receiver and of both banks. As for paypal, just a dispute from the other user: You are responsible for all Reversals, Chargebacks, fees, fines, penalties and other liability incurred by PayPal, a PayPal User, or a third party caused by your use of the Services and/or arising from your breach of this Agreement. You agree to reimburse PayPal, a User, or a third party for any and all such liability. (source) Also, you might be violating the TOS: Allow your use of the Service to present to PayPal a risk of non-compliance with PayPal’s anti-money laundering, counter terrorist financing and similar regulatory obligations (including, without limitation, where we cannot verify your identity or you fail to complete the steps to lift your sending, receiving or withdrawal limit in accordance with sections 3.3, 4.1 and 6.3 or where you expose PayPal to the risk of any regulatory fines by European, US or other authorities for processing your transactions); (emphasis mine, source) So even if the PayPal transfer is not disputed, how can you be sure you are not laundering money? Are you being paid well enough to assume that risk?", "title": "" }, { "docid": "0878af8aa13a09e310192c9020de479d", "text": "For those who are interested, I am answering my own question: We used Postbank and transferred 6000 Euro, we chose to Transfer in US$, and selected Shared Fees. There were three fees in total: All in all, I paid ~37$; this is about half of what I expected; and I got a perfect exchange rate. Postbank might have its downsides, but it seems they are still a good deal.", "title": "" }, { "docid": "fd2f1fc30829819c8c5653ecd6f4f808", "text": "As an Indian resident you can open an Resident Foreign Currency Account, i.e. an USD account. This facility is provided by all major banks. I am not sure if PayPal would transfer money to these accounts or would convert. The alternative is to give this account number along with other Bank details to the company in US and ask them to send money via remittance services.", "title": "" }, { "docid": "eb9b830ba43c5a42c6f41b9e1714634b", "text": "PayPal will be contacting you shortly, I'm sure. You'll see the reversal on their site in a few days as well as a fee from their end I bet.", "title": "" }, { "docid": "c4b740c53cd6ff4f2ff8b29ed3c99642", "text": "I want to shop in the currency that will be cheapest in CAD at any given time. How do you plan to do this? If you are using a debit or credit card on a CAD account, then you will pay that bank's exchange rate to pay for goods and services that are billed in foreign currency. If you plan on buying goods and services from merchants that offer to bill you in CAD for items that are priced in foreign currency (E.g. buying from Amazon.co.uk GBP priced goods, but having Amazon bill your card with equivalent CAD) then you will be paying that merchant's exchange rate. It is very unlikely that either of these scenarios would result in you paying mid-market rates (what you see on xe.com), which is the average between the current ask and bid prices for any currency pair. Instead, the business handling your transaction will set their own exchange rate, which will usually be less favorable than the mid-market rate and may have additional fees/commission bolted on as a separate charge. For example, if I buy 100 USD worth of goods from a US vendor, but use a CAD credit card to pay, the mid-market rate on xe.com right now indicates an equivalent value of 126.97 CAD. However the credit card company is more likely to charge closer to 130.00 CAD and add a foreign transaction fee of maybe $2-3, or a percentage of the transaction value. Alternatively, if using something like Amazon, they may offer to bill the CAD credit card in CAD for those 100 USD goods. No separate foreign transaction fee in this case, but they are still likely to exchange at the less favorable 130.00 rate instead of the mid-market rates. The only way you can choose to pay in the cheapest equivalent currency is if you already have holdings of all the different currencies. Then just pay using whichever currency gets you the most bang for your buck. Unless you are receiving payments/wages in multiple currencies though, you're still going to have to refill these accounts periodically, thus incurring some foreign transaction fees and being subject to the banker's exchange rates. Where can I lookup accurate current exchange rates for consumers? It depends on who will be handling your transaction. Amazon will tell you at the checkout what exchange rate they will apply if you are having them convert a bill into your local currency for you. For credit/debit card transactions processed in a different currency than the attached account, you need to look at your specific agreement or contact the bank to see which rate they use for daily transactions (and where you can obtain these rates), whether they convert on the day of the transaction vs. the day it posts to your account, and how much they add on ($ and/or %) in fees and commission.", "title": "" }, { "docid": "bc6e266b59ecc292bde5266b4226db53", "text": "\"The solution I've come up with is to keep income in CAD, and Accounts Receivable in USD. Every time I post an invoice it prompts for the exchange rate. I don't know if this is \"\"correct\"\" but it seems to be preserving all of the information about the transactions and it makes sense to me. I'm a programmer, not an accountant though so I'd still appreciate an answer from someone more familiar with this topic.\"", "title": "" }, { "docid": "2baba78dfdae88f69f0fe2537b25cb3a", "text": "According to Paypal, they support transactions in Ethiopia: https://www.paypal.com/webapps/mpp/country-worldwide https://developer.paypal.com/docs/classic/api/country_codes/ However those appear to be limited to transferring money out of the country. (link) There is an article here (link) which talks about how to transfer money from paypal back to your bank in Ethiopia. It sounds like you have to set up a US bank account, withdraw the funds to that then somehow transfer the money from their to your bank. NOTE: I have no relationship to any of the sites above, nor do I know if the information is accurate or the trustworthiness of those businesses.", "title": "" }, { "docid": "260f08aa3ed67443f642e7942a91ec08", "text": "It will cost the same no matter what currency you use, unless you have access to a deal with a currency exchange that gives you an especially favourable conversion rate for a particular currency. If the current exchange rates are US$1.70 to the £, CA$1.80 to the £ and HK$12.50 to the £, then £1, US$1.70, CA$1.80 and HK$12.50 are just four different ways of writing the same amount of money. So whether you pay in US$, CA$ or HK$ it's the same amount of money that you're paying.", "title": "" }, { "docid": "58f356edc765539400f4a3ea5ef4d3b4", "text": "Yes. I have a US based website that accepts payments via PayPal and can confirm we have many customers from India. Here is a list of countries PayPal supports. Note typically there are some additional fees associated with currency conversion.", "title": "" }, { "docid": "47b1fe6ea3938c0a89565d110d6fdfd8", "text": "You probably can get away with only updating the exchange rates once a day and specify that any prices quoted in units other than your home currency are estimates only. If you're planning to accept more than one currency as payment, I'd (a) see about whatever regulations there are for doing so, and (b) build in a nice spread for yourself if you're allowed to, since it is a service you're providing to your customers. If you Google currency converter the first result is just that: a currency converter.", "title": "" }, { "docid": "eaf49cfcd2a5ddfdcc47d4ebf7667b29", "text": "I'm not confident that the requirements for 2017 are up yet, but assuming they don't change much from those of 2016, then probably not if you have no other earnings this year. If you make $500 a month, then you will make $6,000 this year. This is below the filing requirements for most taxpayers, unless you are married but filing separately. At the end of 2017 you should tally up your earnings (including earnings from other sources) find which category you find yourself in on the table, and make a final determination of whether you'll need to file.", "title": "" } ]	fiqa
bdf80d9330b8299955a8d7d27e816778	Want to buy a car but have not enough money	[ { "docid": "1b7c1624d7d04d8c11b7637127205547", "text": "\"When your dream car is not just 200 times your disposable income but in fact 200 times your whole monthly salary, then there is no way for you to afford it right now. Any attempt to finance through a loan would put you into a debt trap you won't ever dig yourself out. And if there are any car dealerships in your country which claim otherwise, run away fast. Jon Oliver from Last Week tonight made a video about business practices of car dealerships in the United States which sell cars on loans to people who can't afford them a while ago. As usual: When a deal seems too good to be true, it generally isn't true at all. After a few months, the victims customers usually end up with no car but lots of outstanding debt they pay off for years. So how do you tell if you can afford a car or not? A new car usually lives for about 10-20 years. So when you want to calculate the monthly cost of owning a new car, divide the price by 120. But that's just the price for buying the vehicle, not for actually driving it. Cars cost additional money each month for gas, repairs, insurance, taxes etc. (these costs depend a lot on your usage pattern and location, so I can not provide you with any numbers for that). If you have less disposable income per month (as in \"\"money you currently have left at the end of each month\"\") than monthly cost of purchase plus expected monthly running costs, you can not afford the car. Possible alternatives:\"", "title": "" } ]	[ { "docid": "ac4094c5932096f13faf9926cfb1373a", "text": "\"I think the answer to how much you \"\"should\"\" spend depends on a few more questions: Once you answer these questions I think you'll have a better idea of what you should spend. If you have no financial goals then what kind of car you buy doesn't really matter. But if your goals are to build and accumulate wealth both in the short and long term then you should know that, by the numbers, a car is terrible financial investment. A new car loses thousands of dollars in value the moment you drive it off the lot. Buy the cheapest, reliable commuter you can ($5k or less) and use the extra money to pay off your debts. Then once your debts are paid off start investing that money. If you continue this frugal mindset with your other purchases (what house to buy, what food to eat, what indulgences to indulge in, etc...) and invest a bit, I think you'll find it pretty easy to create a giant amount of wealth.\"", "title": "" }, { "docid": "67e35bdb72a7bf29c81b0b88865805c6", "text": "\"Neat points but with regards to your first point there is no car financing to \"\"pay off\"\" unless you take on debt. And few Americans have or can easily accumulate the cash in hand to buy a $15K-30K vehicle. Sure, you can definitely live without debt, but buying a home, a car or making other sizable purchases is not possible under such circumstances unless you make a greater than average salary and are remarkably frugal, including an affordable, tenable living situation.\"", "title": "" }, { "docid": "f6d49c1b2838bd282dd66634ac8411af", "text": "Each of us makes our own way in life, making choices based upon or own needs and desires. Some of us choose to live simple lives, others choose more complex lives where we earn and spend more. There are several points which one should examine and consider. Consider that the market for new cars is not the entire population, but only the fraction of the population that can afford to spend $20,000+ for a new car (at $400+/month payments). You quickly realize that most people making below median income cannot afford to purchase a new car. They buy used cars, from the pool of cars left after depreciation has reduced the price of the car by half (or more). One rule of thumb might be to spend < 10% of your income on transportation. Which might allow for a $400-500/month car payment for half of families. And when you keep a car for 10 years, that can mean two cars, one payment-free. Consider that a new Honda Accord or Toyota Camry is $20-30,000 which is 2/3 to 3/4 the price of a new luxury car. When I purchased my (used) Civic several years ago, the price was nearly 1/2 the price of a new luxury car. I recently purchased a (used) luxury car (7 year old, 70,000 miles) less than 1/3 the new price. The leather interior looks new, more amenities, better performance than my Civic, the car runs well, and with proper maintenance, I expect to drive it for 2-3 years and pass it along to one of my children.", "title": "" }, { "docid": "310791d9ac43bf6dfa29b6a6bbfa79aa", "text": "Ignoring that liability car insurance is usually a state mandated requirement and that all banks require full coverage, there are quite a few reasons to buy it. No matter how much money you have, you can't really guarantee that you can recover financially from an accident. Yes, you can buy a new car. But what happens if you are sued because the other driver died or is now in a long term coma? The legal costs alone would financially bury most people. It's even worse if you are rich. Let's say someone rear ended you. If you had no insurance (again ignoring the legality here), you can bet their attorney would take a look at your considerable financial assets and do whatever it took to get as much of that as possible. The legal fees alone of defending yourself at trial would likely far outstrip everything else. And that's just one little situation.", "title": "" }, { "docid": "e2c99ff02914e5fdf4bcd544d9e7b608", "text": "\"It's all about what you value personally. I'm mid-30s and drive a $40K \"\"luxury\"\" sports car. I also happen to wear a $6K wristwatch every day. I purchased both of these items because I thought they were beautiful when I saw them. On the flip side, because I spent 6 years living below the poverty line, I instinctively spend almost nothing on a daily basis. My food budget is less than $50 a week, and I never go out to eat. I wear my clothes and shoes and coats until they have holes, and I drove my previous car (a Toyota) into the ground. My cell phone is 5 years old. The walls of my apartment are bare. I don't have cable TV, I don't subscribe to newspapers or magazines, and I don't own a pet. In all of these cases I don't feel like I'm \"\"sacrificing\"\" anything; food and clothes and cell phones and pets just don't matter to me. If you truly feel that you're missing something in your life by not having a luxury car -- that owning one would be more satisfying than owning the corresponding tens of thousands of dollars -- then go for it. Just be sure to consider all the other things that money could buy before you do. Lastly, buy in cash. Don't make monthly payments unless you enjoy giving money away to the bank!\"", "title": "" }, { "docid": "9b62649799769028e783df7241b86e9b", "text": "\"Given the state of the economy, and the potential of a rough near future for us recent grads (i.e. on/off work), I would recommend holding off on large purchases while your life is in flux. This includes both a NEW car and purchasing a house. My short answer is: you need a reliable vehicle, so purchase a used car, from a major dealer (yes this will add a fairly high premium, but easier financing), that is 4-5 years old, or more. Barring the major dealer purchase, be sure to get a mechanic to check out a vehicle, many will offer this service for a reasonable payment. As people point out, cars these days will run for another 100k miles. You will NOT have to pay anywhere near $27,000 for this vehicle. You may need to leverage your 10k for a loan if you choose to finance, but it should not be a problem, especially as you seem to imply an established credit history. In addition to this, start saving your money for the house you would like to eventually get. We have no idea where you live, but, picking rough numbers, assuming a 2 year buy period, 20% down, and a $250,000 home, the down payment alone will require you to save ~$2,000/month starting now. Barring either of these options, max out your money to tax sheltered accounts (your Roth IRA, work 401k, or a regular IRA) asap. Obviously, do not deplete your emergency fund, if anything, increase it. 10k can be burned through in a heartbeat. Long Answer: I purchased a brand new car, right out of school, at a reasonable interest rate. Like you, I can afford this vehicle, however, if someone were to come to me today (3.5 years later) and offer me the opportunity to take it back and purchase a 4-5 year used vehicle, at a 4-5 year used car price, albeit at a much higher interest rate (since I financed), it would be about a 0.02 second decision. I like my car, but, I'd like the differential cash savings between it and a reliable used car more. $27,000 is also fairly expensive for a new vehicle, there are many, very nice vehicles, for 21-23k. I still would not consider these priced appropriate to spend your money on them, but they exist. However, you do very much need a reliable vehicle, and I think you should get one. On the home front, your $400 all inclusive rent is insanely cheap. Many people spend more than that on property tax and PMI each year, so anyone who throws the \"\"You're throwing money away!\"\" line at you is blowing smoke to justify their own home purchase. Take the money you would have spent on a mortgage, and squirrel it away. Do your own due diligence and research the home market in your area and decide for yourself if you think home prices have bottomed and will stay there, have further to go, or are going to begin to rise. That is a decision only you can make for yourself. I'd add a section about getting expenses under control, but you said you could save 50% of your takehome pay. This is an order of magnitude above the average. Good job. Try doing 50% for 4 months, then calculate your actual amount. Then try to beat it.\"", "title": "" }, { "docid": "0dbacdfc45f0f936cc1fe6137cec4fab", "text": "The only way this suggestion works is if you can realize a higher rate of return on the investment than the payoff of the loan. There's no guarantee of that, so it can be a risky strategy from the standpoint that you'll end up paying more for the car when all is said and done.", "title": "" }, { "docid": "3f6fd8de83b35661dd1ec3881b92ad1f", "text": "Yes, but should you be even trying to get a mortgage if you can't aford at least a 5% deposit? Prove you do want the house by doing without a new car for a few years...", "title": "" }, { "docid": "1380194c0b6436ed04951838f3289501", "text": "If you have enough money to buy a car in full, that probably means you have good credit. If you have good credit, car dealerships will often offer 0% loans for either a small period of time, like 12 months, or the entire loan. Taking a 0% loan is obviously more optimal than paying the entire lump sum up front. You can take the money and invest in other things that earn you more than 0%. However, most dealerships offer a rebate OR a 0% loan. Some commenters below claim that the rebate is usually larger than the saved interest, so definitely do the math if you have that option.", "title": "" }, { "docid": "0216a3f4087ad61f309381cdde5f28f6", "text": "What percentage of your savings is the full car payment? If it's a significant chunk, then I'd finance some of the cost of the car in order to maintain liquidity.", "title": "" }, { "docid": "85ef54507d2fada1a6364d888462df4f", "text": "I wouldn't give it a second thought. I'd get rid of the extra car and do everything I could in the following months to repay the emergency fund. Even without the interest payments, I'd consider getting rid of an unused car due to the very nature of a car being a depreciating asset that has insurance expenses and annual registration fees on top of that depreciation. The one exception to the above would be a classic car that was purchased for an investment that is always garaged and doesn't need to be registered for road use. I take it for granted that most people who can afford such investments don't need my advice about when to sell.", "title": "" }, { "docid": "11692d59ac54be45ba7425bb06463446", "text": "The only reason to lend the money in this scenario is cashflow. But considering you buy a $15000 car, your lifestyle is not super luxurious, so $15000 spare cash is enough.", "title": "" }, { "docid": "6cd61dc0b24ddb05e5df77719c29cbd3", "text": "Regardless of your circumstances, the amount of money you should put into a car is about $6000-8000 or the amount of cash you actually have, whichever is less. You can get a very reliable gently-used car in that price range, and a car that's plenty good to drive for basically whatever your budget is, down to about $1500-2000 or so. Spending more is never a financially sound decision; it's purely a luxury expenditure. Buying a car with a loan is always a financially bad decision.", "title": "" }, { "docid": "0023829af08e1f223028c03a4ed6db45", "text": "You are really showing some wisdom here, and congratulations on finishing college. Its a lot about likelihoods. If you buy a new car, there is something like a 99.5% chance you will get a car that will not need repairs. If you buy a car for $1200 there is probably a 20% chance that the car will only need minimal repairs. So the answer is there is no real guarantee that spending any amount of money you will end up with a car with no repairs. You also can't assume that with buying a car it will immediately need repairs. Its possible, that you could spend 1200 on a car and it will need an oil change. In three months it might need brakes and in 6 months tires. If that is the case, you could save up the money for repairs. Have you looked for a car? It will take some work, but you might be able to find something in good condition for your budget. If you shop for a loan, go with a good credit union or local bank. Mostly you are looking for a low rate. However, I would advise against it. You worked so hard on getting out of school without debt, why start now? Be weird and buy a car for cash. Heck someone may be able to loan you a car for a short time while you save some money.", "title": "" }, { "docid": "2bb4e06785887fbf93def08101666f95", "text": "\"For the future: NEVER buy a car based on the payment. When dealers start negotiating, they always try to have you focus on the monthly payment. This allows them to change the numbers for your trade, the price they are selling the car for, etc so that they maximize the amount of money they can get. To combat this you need to educate yourself on how much total money you are willing to spend for the vehicle, then, if you need financing, figure out what that actually works out to on a monthly basis. NEVER take out a 6 year loan. Especially on a used car. If you can't afford a used car with at most a 3 year note (paying cash is much better) then you can't really afford that car. The longer the note term, the more money you are throwing away in interest. You could have simply bought a much cheaper car, drove it for a couple years, then paid CASH for a new(er) one with the money you saved. Now, as to the amount you are \"\"upside down\"\" and that you are looking at new cars. $1400 isn't really that bad. (note: Yes you were taken to the cleaners.) Someone mentioned that banks will sometimes loan up to 20% above MSRP. This is true depending on your credit, but it's a very bad idea because you are purposely putting yourself in the exact same position (worse actually). However, you shouldn't need to worry about that. It is trivial to negotiate such that you pay less than sticker for a new car while trading yours in, even with that deficit. Markup on vehicles is pretty insane. When I sold, it was usually around 20% for foreign and up to 30% for domestic: that leaves a lot of wiggle room. When buying a used car, most dealers ask for at least $3k more than what they bought them for... Sometimes much more than that depending on blue book (loan) value or what they managed to talk the previous owner out of. Either way, a purchase can swallow that $1400 without making it worse. Buy accordingly.\"", "title": "" } ]	fiqa
350189e02b49d0d6b38abe63d58257bc	What percent of my salary should I save?	[ { "docid": "977c686aff58909db85369becaa8c3bc", "text": "\"I am pretty sure you could find a number of financial planners whom you could pay to give you a very accurate number, but the rule of thumb I like best is Save a dime of every dollar. 10% (Savings means save for retirement, not vacations.) Here is a nice article from radio personality Clark Howard with some adjustments based on your age: Saving for retirement later in life? If you're getting started saving for retirement later in life, the dime out of every dollar rule won't cut it for you. So for you, The Baltimore Sun has crunched the following numbers: Jayraj has a particularly good and just as simple bit of math. https://money.stackexchange.com/a/30751/91 Your retirement and financial planning should not end with a flat percentage. In fact, the chances that any simple math formula is adequate are very low. My percentages (or Jayraj's simple math) are only starting places. If you are at the point where you are asking \"\"where do I start\"\", starting with this super easy no-brainer approach is great because the key is starting and doing it.\"", "title": "" }, { "docid": "c2c923b73acb20d13c877daff38b68aa", "text": "\"I disagree with the selected answer. There's no one rule of thumb and certainly not simple ones like \"\"20 cents of every dollar if you're 35\"\". You've made a good start by making a budget of your expected expenses. If you read the Mr. Money Mustache blogpost titled The Shockingly Simple Math Behind Early Retirement, you will understand that it is usually a mistake to think of your expenses as a fixed percentage of your income. In most cases, it makes more sense to keep your expenses as low as possible, regardless of your actual income. In the financial independence community, it is a common principle that one typically needs 25-30 times one's annual spending to have enough money to sustain oneself forever off the investment returns that those savings generate (this is based on the assumption of a 7% average annual return, 4% after inflation). So the real answer to your question is this: UPDATE Keats brought to my attention that this formula doesn't work that well when the savings rates are low (20% range). This is because it assumes that money you save earns no returns for the entire period that you are saving. This is obviously not true; investment returns should also count toward your 25-times annual spending goal. For that reason, it's probably better to refer to the blog post that I linked to in the answer above for precise calculations. That's where I got the \"\"37 years at 20% savings rate\"\" figure from. Depending on how large and small x and y are, you could have enough saved up to retire in 7 years (at a 75% savings rate), 17 years (at a 50% savings rate), or 37 years! (at the suggested 20% savings rate for 35-year olds). As you go through life, your expenses may increase (eg. starting a family, starting a new business, unexpected health event etc) or decrease (kid wins full scholarship to college). So could your income. However, in general, you should negotiate the highest salary possible (if you are salaried), use the 25x rule, and consider your life and career goals to decide how much you want to save. And stop thinking of expenses as a percentage of income.\"", "title": "" }, { "docid": "8a0f3d6a2130f45b02a8d98d61f593f8", "text": "A single percentage figure makes little sense here as you are asking for a bunch of different things:", "title": "" }, { "docid": "4f4622ab3f6c1ad091de3f50fc108f36", "text": "\"What percent of my salary should I save? is tightly coupled with its companion, What size “nest egg” should my husband and I have, and by what age? Interestingly, Mr.Christer's answer, 10%, is the number that plugs into the equation that I reference. Jay's 25X rule is part of this. We start with the assumption that one's required income at retirement will be 80% of their pre-retirement income. That's high by some observations, low by others. A quick look at the expenses that go away in retirement - The above can total 35-40% It would be great if it ended there, but there are costs that go up. The above extra spending is tough to nail down, after all, you knew what you spent, and what's going away, but the new items? Crapshoot. (For non-native speakers - this refers to a game with dice, meaning a random event) Again, referencing Mr Christer's answer \"\"financial planners whom you could pay to give you a very accurate number,\"\" I'm going to disagree with that soundbyte. Consider, when retirement is 30 years away, you don't know much If I can offer an analogy. I once had the pleasure of hearing Jim Lovell (The astronaut played by Tom Hanks in Apollo 13) give a speech. He said that for the first 99% of the trip to the moon, they simply aimed ahead of their target, never directly at the moon. In this manner, I suggest that with so many variables, accuracy is impossible, it's a moving target. Start young, take the 10% MrC offered, and keep saving. Every few years, stop and see if you are on target, if not, bump the number a bit. Better to turn 50 and find that after a good decade you've reached your number and can drop your savings to a minimum, perhaps just to capture a 401(k) match, than to turn 50 and realize you've undersaved and need to bump to an unsustainable level. Imagine planning ahead in 1999. You've seen 2 great decades of returns, and even realizing that 18%/yr couldn't continue, you plan for a below average 7%, this would double your 1999 balance in 10 years. Instead you saw zero return. For a decade. In sum, when each variable has an accuracy of +/-50% you are not going to combine them all and get a number with even 10% accuracy (as if MrC were wrong, but the pro would tell you 11% is right for you?). This is as absurd as packaging up a bunch of C rated debt, and thinking that enough of this paper would yield a final product that was AAA.\"", "title": "" }, { "docid": "270b471564ffb96df5cd684b477d5a90", "text": "Its been years since I lived there, but I found Seattle to be pretty expensive. Housing costs seem out of line with expected salaries. Coming from Puerto Rico you might be shocked how expensive it is to live there, and also how infrequently you see the sun. Your question is highly subjective. One person would need 100K to cover those things you are talking about, while others would need less then 30K. Also where you live in the Seattle area makes a difference. Will you be in Redmond or Bothell? Housing costs vary considerably. One nice thing about that part of the country is can be very inexpensive to vacation. A fishing license, a packed lunch, and a bit of gas is all that is necessary to really enjoy that part of the country. Back in the day I used to ski Steven's Pass during the week, and the lift tickets were a 1/3 of the weekend rate. Having hiking/camping gear and or a bicycle is also a good way to enjoy life. Bottom line I would make a budget, and go from there. If you intend on retiring in PR, then you would need a lot less then if you choose to remain in Seattle so even that is subjective. Perfect Example, Marysville, which is way out of town so a commute would be a problem. However, unlike many parts south of Seattle, it is safe and nice. ~200K for a 1200 sq ft home. Holy cow. Here in Orlando, figure about 130K for the same home with less of a commute. And you will see the sun more than 5 days per year.", "title": "" } ]	[ { "docid": "c141ed7cdf8cab6bfcb015570724f327", "text": "With a 1/4 million you should be looking at staying fully invested and doing income draw down you can safely take 3 or 4 % Basing your retirement income 100% on cash investments is very risky I can remember when inflation hit 15% in the UK and it has been at similar levels in the usa around 14% in 79.", "title": "" }, { "docid": "0db9ed0f698cd183a8be904e69a5bd30", "text": "\"I think your very long list of possible assumptions makes a tacit point of your own: to state \"\"15%\"\" as a general value is bogus. I think, in most cases, the \"\"15%\"\" is merely a popular meme. To give any fixed number or percentage of income saved is insufficient without expanding things in the way you show. Therefore, a formula, in which at least a handful of variables can be plugged into it, seems like the right approach. (And this is what is being discussed here with the Monte Carlo method).\"", "title": "" }, { "docid": "e4a9aa1cc6447e913c6f9cfbce259014", "text": "\"The most important thing is not to tell yourself \"\"I'll save more later in my career when I have more disposable income,\"\" because of two factors. 1) You will get raises over your career, but unless you make it big, it will never really feel like you have extra money. You may double or triple your salary over a career, but it usually happens in small increments which your lifestyle tends to adjust upwards to meet even though it doesn't feel like it. 2) Later in your career you may have more money to save, but now the commodity you have is time. Your total savings at retirement are going to be influenced in a massive way by both of these factors. A good strategy is save SOMETHING early in your career even if it feels like an insignificant amount. Then save larger amounts later in your career when you are earning more, but have less time for your investments to grow and less tolerance for high risk/high growth investments.\"", "title": "" }, { "docid": "f0acf326fbdfa250e70c646ec968b6f6", "text": "I think rather than take a percentage out, I focus on getting a total amount I consider appropriate for my emergency fund. Then as for retirement, I do at least what my employer matches, up to the contribution limit. For example my personal retirement plan in the US has an annual max contribution of $5000. Once I have my 6 to 12 month emergency fund (in a pretty liquid form) and a fully funded retirement, I want to concentrate on building wealth via investments or increasing the quality of my life by spending. Summary answer is: no percentage for emergency, just get to a total amount you feel comfortable. Then whatever percentage will allow you to make the most of employer matching and make your retirement fully funded.", "title": "" }, { "docid": "ac36ee0d725e5358b52e85148a82764a", "text": "Answering this question is a great way to gauge how you're doing towards saving for retirement now. But of course what matters more than this snapshot in time is how much you contribute down the line. It may be wise to try to estimate how much you will want saved by the time you retire. Then try to calculate how much you would need to save in order to hit that mark.", "title": "" }, { "docid": "ce7bc2c2cd732782fe38fbe089359593", "text": "The exact percentages depend on many things, not just location. For example, everyone needs food. If you have a low income, the percentage of your income spent on food would be much higher than for someone that has a high income. Any budgeting guidelines that you find are just a starting point. You need to look at your own income and expenses and come up with your own spending plan. Start by listing all of the necessities that you have to spend on. For example, your basic necessities might be: Fund those categories, and any other fixed expenses that you have. Whatever you have left is available for other things, such as: and anything else that you can think of to spend money on. If you can save money on some of the necessities above, it will free up money on the discretionary categories below. Because your income and priorities are different than everyone else, your budget will be different than everyone else, too. If you are new to budgeting, you might find that the right budgeting software can make the task much easier. YNAB, EveryDollar, or Mvelopes are three popular choices.", "title": "" }, { "docid": "d8af6818d444883888868b92ad4c7dc6", "text": "I just want to point out a couple of things, and I do not have enough reputation to comment. Saving 50% is totally possible. I know people saving 65%. For more see here EDIT: Let me repeat that 4% it the maximum you can assume if you want to be sure to have at least that return in the long term. It's not the average, it's the minimum, the value you can expect and plan with. Just to reinforce the claim, I can cite Irrational Exuberance of Robert Schiller, who explicitly says, on page 135 of the 2015 edition, that from January 1966 to January 1992 the real annual return was just 4.1%. Sure, this does not matter so much if you are investing all the way through, but it's still a 26 year period.", "title": "" }, { "docid": "0f14f80b7b309f04558d5bd967798206", "text": "Take a certain percentage of your income (say, 10%, but more is better if you can) and put it aside with every paycheck. Some employers will even allow you to direct deposit your paycheck into two different accounts and you can specify a certain amount or percentage for the second account. Your savings will go directly into a separate account as if you never had it in the first place. Consider your savings untouchable as spending money. Watch it grow. There's no other secret, you just have to do it!", "title": "" }, { "docid": "5a37214ce39c0d60775a5bf216304cb9", "text": "A good general rule is to save 15% of your income for retirement. As for where you put it: Put as much as it takes to maximize your employer match into your 401(k), but no more. The employer match is free money, and you can't beat free money If you still haven't put in 15%, put the rest into a Roth IRA. By historical standards, taxes are pretty low today. They are almost certainly going to be higher in retirement, especially since you likely won't have the deductions in retirement that you may have now (kids, mortgage, etc). If you've maxed our the allowed contribution for your Roth and still haven't saved 15%, put the rest in a traditional IRA.", "title": "" }, { "docid": "41bf5cbee4234ed07d164d694903290a", "text": "\"My basic rule I tell everyone who will listen is to always live like you're a college student - if you could make it on $20k a year, when you get your first \"\"real\"\" job at $40k (eg), put all the rest into savings to start (401(k), IRA, etc). Gradually increase your lifestyle expenses after you hit major savings goals (3+ month emergency fund, house down payment, etc). Any time you get a raise, start by socking it all into your employer's 401(k) or similar. And repeat the above advice.\"", "title": "" }, { "docid": "3787ce52da94e544036b6fada6b1e3a2", "text": "\"I argued for a 15% rule of thumb here: Saving for retirement: How much is enough? Though if you'll let me, I'd refine the argument to: use a rule of thumb to set your minimum savings, then use Monte Carlo to stress-test and look at any special circumstances, and make a case to save more. You're right that the rule of thumb bakes in tons of assumptions (great list btw). A typical 15%-works scenario could include: If any of those big assumptions don't apply to you (or you don't want to rely on them) you'd have to re-evaluate. It sounds like you're assuming 4-5% investment returns? As you say that's probably the big difference, 4-5% is lower than most would assume. 6-7% (real return) is maybe a middle-of-the-road assumption and 8% is maybe an unrealistic one. Many of the assumptions you list (such as married/kids, cost of living, spouse's income, paying for college) can maybe be bundled up into one assumption (percentage of income you will spend). Set a percentage budget and as you go along, stay within your means by sacrificing as required. Also smooth out income across layoffs and things by having an emergency fund. By staying on-budget as you go you can remove some of the unpredictability. The reason I think the rule of thumb is still good, despite the assumptions, is that I don't think a \"\"more accurate\"\" number based on a lot of unpredictable guesses is really better; and it may even be harmful if you use it to justify saving less, or even if you use it to save far too much. See also http://en.wikipedia.org/wiki/Precision_bias Many (most?) important assumptions are not predictable: investment returns, health care inflation, personal health, lifestyle creep (changing spending needs/desires), irrational investment behavior. I agree with you that for many scenarios and people, 15% will not be enough, though it's a whole lot more than most save already. In particular, low investment returns over your time horizon will make 15% insufficient, and some argue that low investment returns over the coming 30 years are likely. Without a doubt, 20% or more is safer than 15%. Do consider that \"\"saving enough\"\" is not a binary thing. If you save only 15% and it turns out that doesn't completely replace your income, it's not like you're out on the street; you might have to retire a few years later, or downsize your house, or something, but perhaps that isn't a catastrophe. There's a very personal question about how much to sacrifice now for less risk of sacrifice in the future. Maybe I'd better qualify \"\"not a binary thing\"\": some savings rates (certainly, anything less than 10%), make major sacrifices pretty likely... so in that sense there is a binary distinction between \"\"plausible plan\"\" and \"\"denial.\"\" Also, precise assumptions and calculations get a lot more useful as you approach retirement age. You can pretty much answer the question \"\"is it reasonable to retire right now?\"\" or \"\"could I retire in 5 years?\"\" (though with a retirement that could last 30 years, plenty of unknowns will remain even then). I think at age 20 or 30 though, just saving 15% (20% if you're conservative), and not spending too much time on a speculative analysis would be a sound decision. That's why I like the rule of thumb. Analysis paralysis (saving nothing or near-nothing) is the real danger early in one's career. Any plausible percentage is fine as long as you save. As your life unfolds and you see what happens, you can refine and correct, adjusting your savings rate, moving your retirement age around, spending a little less or more. The important thing earlier in life is to just get in the right ballpark.\"", "title": "" }, { "docid": "f95f6b5332818507075b52f5b406e60d", "text": "\"I'd encourage you to use rules of thumb and back-of-the-envelope. Here are some ideas that could be useful: The problem with any kind of detailed calculations is the number of unknowns: There are some really complex calculators out there, for example see ESPlanner (http://www.esplanner.com/) (caution: horrible user interface, but seemed to work), that will include all kinds of factors and run monte carlo and the whole thing. But in my opinion, it's just as good or better to say save at least 15% of income until you have 25x what you spend, or some other such rule of thumb. Here's my little blog post on savings and investing fwiw: http://blog.ometer.com/2010/11/10/take-risks-in-life-for-savings-choose-a-balanced-fund/ Another note, there's sort of an \"\"ideology of how to live\"\" embedded in any retirement recommendation, and you might want to take the time to reflect on that and consciously choose. A book on this topic is Your Money or Your Life by Robin & Dominguez, http://www.amazon.com/Your-Money-Life-Transforming-Relationship/dp/0143115766 which is a sort of radical \"\"you should save everything possible to achieve financial independence as early as possible\"\" argument. I didn't go for their plan, but I think it's thought-provoking. A newer book that may be more appealing is called The Number and it's about your question exactly. It's more designed to get you thinking, while Your Money or Your Life has a particular answer in mind. Both have some math and some rules of thumb, though they aren't focused on that. A kind of general takeaway from these books might be: first think about your expenses. What are you trying to accomplish in life, how would you like to spend your time? And then ask how much money you absolutely need to accomplish that, and focus on accomplishing your goals, spending your time (as much as you can) on what you'd like to spend it on. I'm contrasting this with a generic recommendation to save enough to spend 80% of your income in retirement, which embeds this idea that you should spend as much as possible every year, before and after you retire. Lots of people do like that idea, but it's not a law of the universe or something, it's just one popular approach.\"", "title": "" }, { "docid": "2af54e9f869b44c4f65083b7c30d1f2d", "text": "Though I do think it is important to have a diversified portfolio for your retirement, I also think it's more important to make sure you are at no point touching this money until you retire. Taking money out of your retirement early is a sure fire way to get in a bad habit of spending this money when you need a little help. Here's a tip: If you consider this money gone, you will find another way to figure out your situation. With that said, I also would rather not put a percentage on this. Start by building your emergency fund. You'll want to treat this like a bill and make a monthly payment to your savings account each month or paycheck. When you have a good nine times your monthly income in here, stop contributing to this fund. Instead start putting the same amount into your IRA instead. At this point you should no longer have to add to your emergency fund unless there is a true emergency and you are replacing that money. Keep in mind that the amount of money in your emergency fund changes significantly in each situation. Sit down with your bills and think about how much money you would need in the event you lost your job. How long would you be out of work? How many bills do you have each month that would need to be covered?", "title": "" }, { "docid": "d12a01b8f903137662fada452e2939e5", "text": "\"Congratulations. The first savings goal should be an emergency fund. Think of this not as an investment, but as insurance against life's woes. They happen and having this kind of money earmarked allows one to invest without needing to withdraw at an inopportune time. This should go into a \"\"high interest\"\" savings account or money market account. Figure three to six months of expenses. The next goal should be retirement savings. In the US this is typically done through 401K or if your company does not offer one, either a ROTH IRA or Traditional IRA. The goal should be about 15% of your income. You should favor a 401k match over just about anything else, and then a ROTH over that. The key to transforming from a broke college student into a person with a real job, and disposable income, is a budget. Otherwise you might just end up as a broke person with a real job (not fun). Part of your budget should include savings, spending, and giving. All three areas are the key to building wealth. Once you have all of those taking care of the real fun begins. That is you have an emergency fund, you are putting 15% to retirement, you are spending some on yourself, and giving to a charity of your choice. Then you can dream some with any money left over (after expenses of course). Do you want to retire early? Invest more for retirement. Looking to buy a home or own a bunch of rental property? Start educating yourself and invest for that. Are you passionate about a certain charity? Give more and save some money to take time off in order to volunteer for that charity. All that and more can be yours. Budgeting is a key concept, and the younger you start the easier it gets. While the financiers will disagree with me, you cannot really invest if you are borrowing money. Keep debt to zero or just on a primary residence. I can tell you from personal experience that I did not started building wealth until I made a firm commitment to being out of debt. Buy cars for cash and never pay credit card interest. Pay off student loans as soon as possible. For some reason the idea of giving to charity invokes rancor. A cursory study of millionaires will indicate some surprising facts: most of them are self made, most of them behave differently than pop culture, and among other things most of them are generous givers. Building wealth is about behavior. Giving to charity is part of that behavior. Its my own theory that giving does almost no good for the recipient, but a great amount of good for the giver. This may seem difficult to believe, but I ask that you try it.\"", "title": "" }, { "docid": "90337c3fa4b8e6ade18c781f79fabe5f", "text": "On average, you should be saving at least 10-15% of your income in order to be financially secure when you retire. Different people will tell you different things, but really this can be split between short term savings (cash), long term savings (401ks, IRAs, stocks & bonds), and paying down debt. That $5k is a good start on an emergency fund, but you probably want a little more. As justkt said, 6 months' worth is what you want to aim for. Put this in a Money Market account, where you'll earn a little more interest but won't be penalized from withdrawing it when its needed (you may have to live off it, after all). Beyond that, I would split things up; if possible, have payroll deductions going to a broker (sharebuilder is a good one to start with if you can't spare much change), as well as an IRA at a bank. Set up a separate checking account just for rent and utilities, put a month's worth of cash in there, and have another payroll deduction that covers your living expenses + maybe 5% put in there automatically. Then, set up automatic bill payments, so you don't even have to think about it. Check it once a month to make sure there aren't any surprises. Pay off your credit cards every month. These are, by far, the most expensive forms of credit that most people have. You shouldn't be financing large purchases with them (you'll get better rates by taking a personal loan from a bank). Set specific goals for savings, and set up automatic payroll deductions to work towards them. Especially for buying a house; most responsible lenders will ask for 20% down. In today's market, that means you need to write a check for $40k or $50k. While it's tempting to finance up to 100% of the property value, it's also risky considering how volatile markets can be. You don't want to end up owing more on the property than it's worth two years down the road. If you find yourself at the end of the month with an extra $50 or so, consider your savings goals or your current debt instead of blowing it on a toy. Especially if you have long term debt (high balance credit cards, vehicle or property loans), applying that money directly to principal can save you months (or years) paying it back, and hundreds or thousands of dollars of interest (all depending on the details of the loan, of course). Above all, have fun with it :) Think of your personal net worth as you do your Gamer score on the XBox, and look for ways to maximize it with a minimum of effort or investment on your part! Investing in yourself and your future can be incredibly rewarding emotionally :)", "title": "" } ]	fiqa
eed8f66165aabbacb8a8890718a5f751	What happens to my savings if my country defaults or restructures its debt?	[ { "docid": "530ba3f0e8050cdfe11a9e3dfe48a39f", "text": "In theory, anything can happen, and the world could end tomorrow. However, with a reasonably sane financial plan you should be able to ride this out. If the government cannot or won't immediately pay its debt in full, the most immediate consequence is that people are going to be unwilling to lend any more money in future, except at very high rates to reflect the high risk of future default. Presumably the government has got into this state by running a deficit (spending more than they collect in tax) and that is going to have to come to an abrupt end. That means: higher taxes, public service retrenchments and restrictions of service, perhaps cuts to social benefits, etc. Countries that get into this state typically also have banks that have lent too much money to risky customers. So you should also expect to see some banks get into trouble, which may mean customers who have money on deposit will have trouble getting it back. In many cases governments will guarantee deposits, but perhaps only up to a particular ceiling like $100k. It would be very possible to lose everything if you have speculative investments geared by substantial loans. If you have zero or moderate debt, your net wealth may decrease substantially (50%?) but there should be little prospect of it going to zero. It is possible governments will simply confiscate your property, but I think in a first-world EU country this is fairly unlikely to happen to bank accounts, houses, shares, etc. Typically, a default has led to a fall in the value of the country's currency. In the eurozone that is more complex because the same currency is used by countries that are doing fairly well, and because there is also turbulence in other major currency regions (JPY, USD and GBP). In some ways this makes the adjustment harder, because debts can't be inflated down. All of this obviously causes a lot of economic turbulence so you can expect house prices to fall, share prices to gyrate, unemployment to rise. If you can afford it and come stomach the risk, it may turn out to be a good time to buy assets for the long term. If you're reasonably young the largest impact on you won't be losing your current savings, but rather the impact on your future job prospects from this adjustment period. You never know, but I don't think the Weimar Republic wheelbarrows-of-banknotes situation is likely to recur; people are at least a bit smarter now and there is an inflation-targeting independent central bank. I think gold can have some room in a portfolio, but now is not the time to make a sudden drastic move into it. Most middle class people cannot afford to have enough gold to support them for the rest of their life, though they may have enough for a rainy day or to act as a balancing component. So what I would do to cope with this is: be well diversified, be sufficiently conservatively positioned that I would sleep at night, and beyond that just ride it out and try not to worry too much.", "title": "" }, { "docid": "0afc4be53a7d5723c723f6f6974db822", "text": "\"The biggest risk you have when a country defaults on its currency is a major devaluation of the currency. Since the EURO is a fiat currency, like almost all developed nations, its \"\"promise\"\" comes from the expectation that its union and system will endure. The EURO is a basket of countries and as such could probably handle bailing out countries or possibly letting some default on their sovereign debt without killing the EURO itself. A similar reality happens in the United States with some level of regularity with state and municipal debt being considered riskier than Federal debt (it isn't uncommon for cities to default). The biggest reason the EURO will probably lose a LOT of value initially is if any nation defaults there isn't a track record as to how the EU member body will respond. Will some countries attempt to break out of the EU? If the member countries fracture then the EURO collapses rendering any and all EURO notes useless. It is that political stability that underlies the value of the EURO. If you are seriously concerned about the risk of a falling EURO and its long term stability then you'd do best buying a hedge currency or devising a basket of hedge currencies to diversify risk. Many will recommend you buy Gold or other precious metals, but I think the idea is silly at best. It is not only hard to buy precious metals at a \"\"fair\"\" value it is even harder to sell them at a fair value. Whatever currency you hold needs to be able to be used in transactions with ease. Doesn't do you any good having $20K in gold coins and no one willing to buy them (as the seller at the store will usually want currency and not gold coins). If you want to go the easy route you can follow the same line of reasoning Central Banks do. Buy USD and hold it. It is probably the world's safest currency to hold over a long period of time. Current US policy is inflationary so that won't help you gain value, but that depends on how the EU responds to a sovereign debt crisis; if one matures.\"", "title": "" }, { "docid": "041245ddb1f9ce5576e6d63afde087e8", "text": "\"The danger to your savings depends on how much sovereign debt your bank is holding. If the government defaults then the bank - if it is holding a lot of sovereign debt - could be short funds and not able to meet its obligations. I believe default is the best option for the Euro long term but it will be painful in the short term. Yes, historically governments have shut down banks to prevent people from withdrawing their money in times of crisis. See Argentina circa 2001 or US during Great Depression. The government prevented people from withdrawing their money and people could do nothing while their money rapidly lost value. (See the emergency banking act where Title I, Section 4 authorizes the US president:\"\"To make it illegal for a bank to do business during a national emergency (per section 2) without the approval of the President.\"\" FDR declared a banking holiday four days before the act was approved by Congress. This documentary on the crisis in Argentina follows a woman as she tries to withdraw her savings from her bank but the government has prevented her from withdrawing her money.) If the printing press is chosen to avoid default then this will allow banks and governments to meet their obligations. This, however, comes at the cost of a seriously debased euro (i.e. higher prices). The euro could then soon become a hot potato as everyone tries to get rid of them before the ECB prints more. The US dollar could meet the same fate. What can you do to avert these risks? Yes, you could exchange into another currency. Unfortunately the printing presses of most of the major central banks today are in overdrive. This may preserve your savings temporarily. I would purchase some gold or silver coins and keep them in your possession. This isolates you from the banking system and gold and silver have value anywhere you go. The coins are also portable in case things really start to get interesting. Attempt to purchase the coins with cash so there is no record of the purchase. This may not be possible.\"", "title": "" }, { "docid": "f223389ac294be1c02dff830429e81dd", "text": "First question: Any, probably all, of the above. Second question: The risk is that the currency will become worth less, or even worthless. Most will resort to the printing press (inflation) which will tank the currency's purchasing power. A different currency will have the same problem, but possibly less so than yours. Real estate is a good deal. So are eggs, if you were to ask a Weimar Germany farmer. People will always need food and shelter.", "title": "" }, { "docid": "8738f4e98abfc2075b8eaac884495047", "text": "\"This question is different because you are asking for actual advice vs. a more academic, \"\"what if\"\" scenario. The answer that I'll give will be different, and similar to another recent question on a similar vein. Basically, if you're living in a European country that's effectively in default and in need of a bailout, the range of things that can happen is difficult to predict... the fate of countries like Ireland and Greece, whatever the scenario, will be economic and social upheaval. But, this isn't the end of the world either... it's happened before and will happen again. As an individual, you need to start investing defensively in a manner appropriate for your level of wealth. Things to think about: I'd suggest reading \"\"A Free Nation Deep in Debt: The Financial Roots of Democracy\"\"\"", "title": "" }, { "docid": "0a493da20b1cbd404298095c658da479", "text": "My 0,02€ - I probably live in the same country as you. Stop worrying. The Euro zone has a 100.000€ guaranty deposit. So if any bank should fail, that's the amount you'll receive back. This applies to all bank accounts and deposits. Not to any investments. You should not have more than 100.000€ in any bank. So, lucky you, if you have more than that money, divide between a number of banks. As for the Euro, there might be an inflation, but at this moment the USA and China are in a currency battle that 'benefits' the Euro. Meaning you should not invest in dollars or yuan at this time. Look for undervalued currency to invest in as they should rise against the Euro.", "title": "" }, { "docid": "eefe526e99c585f680907b8039439560", "text": "Best thing to do is convert your money into something that will retain value. Currency is a symbol of wealth, and can be significantly devalued with inflation. Something such as Gold or Silver might not allow you to see huge benefit, but its perhaps the safest bet (gold in particular, as silver is more volatile), as mentioned above, yes you do pay a little above spot price and receive a little below spot when and if you sell, but current projections for both gold and silver suggest that you won't lose money at least. Safe bet. Suggesting it is a bad idea at this time is just silly, and goes against the majority of advisers out there.", "title": "" }, { "docid": "610647bae4d6310e27ebdbbc43b28acb", "text": "I am going to add in an opinion here from the Wall Street Journal that I read this morning in What's at Stake in the Greek Vote, in light of current events and elections in Greece. The article claims that if the election results make it sound like a break from the Euro is imminent then ... we will see a full-fledged bank run. Greek banks would collapse ... The market exchange-rate would likely be two or three drachmas to the euro, which would double or triple the Greek price of imported goods within a few days. Prices of assets, including real-estate assets, would crumble. Those who moved their deposits abroad would be able to buy these assets cheaply, leading to a significant, regressive redistribution of Greek wealth. In short, you'd lose two-thirds of your savings unless you were storing them somewhere safe from the conversion. The article also predicts difficulty importing goods (other nations will demand to be paid in euro, not drachma) leading to disruption of trade and various supply shortages. I will note that the predictions here seem to be in opposition to some other advice here which suggests that real estate will be an effective hedge.", "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": "cfff1fa9526bfd598d38b9f15ba3b586", "text": "Andrew Lilico has a likely scenario for when Greece defaults on its sovereign debt: What happens when Greece defaults. Here are a few things: Every bank in Greece will instantly go insolvent. The Greek government will nationalise every bank in Greece. The Greek government will forbid withdrawals from Greek banks. To prevent Greek depositors from rioting on the streets, Argentina-2002-style (when the Argentinian president had to flee by helicopter from the roof of the presidential palace to evade a mob of such depositors), the Greek government will declare a curfew, perhaps even general martial law. Greece will redenominate all its debts into “New Drachmas” or whatever it calls the new currency (this is a classic ploy of countries defaulting) The New Drachma will devalue by some 30-70 per cent (probably around 50 per cent, though perhaps more), effectively defaulting 0n 50 per cent or more of all Greek euro-denominated debts. As Megan McArdle says, there's more at the link, all depressing. I think you're focusing too much on Greece leaving the euro and not enough on why Greece would leave the euro. Greece would leave the euro precisely so that it could pay back its debt in a new currency worth less than valuable euros. The new currency will devalue, since that's the point of leaving. Along the way the government forces its citizens to take the new currency. The money they have in Greek banks will be converted to the new currency: The citizens don't have a choice to keep their euros.", "title": "" }, { "docid": "d5e20b5bf238f0c1b1c3ce61dd1bc609", "text": "IMHO: The best scenario where Greece does not leave the euro: In this scenario there is probably no risk, because either the ECB will print more money, or other countries will help Greece in some way. The average scenario where Greece leaves the euro: All Bank accounts will be frozen and slowly turned into NEW DRACHMA, and your poor money after the conversion will be worth 50K euro at best (but probably much less). There is also the worst scenario: The bank defaults too, and you will lose everything. Italy has a fund to protect deposits up to 100K euro (I don't know if you have something similar in Greece). However, a similar fund in Greece would be guaranteed by Greek banks and the Greek government, so you might not get much back regardless.", "title": "" }, { "docid": "dea8171566d9141f05c3d4f716818442", "text": "Oh, you mean converting your money to that of a country whose public debt is [103% of GDP, instead of the 108% of your own?](http://en.wikipedia.org/wiki/List_of_countries_by_public_debt) That seems hardly an advancement, even more so considering that the public debt of the Eurozone as a whole is 82.5% of GDP. Greece is just 2% of the European economy, its default would not mean the collapse of the Euro.", "title": "" }, { "docid": "3183eaf434c9e5a766a8bacab88329e0", "text": "In principle, a default will have no effect on your bank account. But if the US's credit rating is downgraded, the knock-on effects might cause some more bank failures, and if the debt ceiling is still in place then the FDIC insurance might not be able to pay out immediately.", "title": "" }, { "docid": "85cc61ce4cae47e915371baf9aea5ef4", "text": "\"But do you know about a US state risking to go default now or in the past? Ultimately, a US state could go into default. However, I doubt that such a scenario would be allowed to transpire. This seems to happen to California with some regularity. That is, risking default. What would happen is not quite well known: \"\"There is no provision for a state to go bankrupt,\"\" Kyser said. \"\"I don't think anyone really knows what will happen or even if the state will go into receivership if it does default. I can tell you this, officials are looking at all the (current) laws.\"\" (source) I believe that the answer to your question is that it could happen, but likely would not be allowed to occur. The nature of the EU and US are quite different. The individual states forming the US are not separate nations. For better or for worse, the US is a stronger federation than the EU. (Something that is lamented at times when the Feds mess with the purview of the locals.)\"", "title": "" }, { "docid": "7f3147f6adedde8e9a6bfd15489cca35", "text": "And then there is the issue of people who actually don't intend to reduce the size of their loan. They only want to pay the interest, so their debt with the bank remains constant. If you are upside down, it means you will not have the financial means to remove the debt. If, for some reason, you are no longer able to pay the bank, you might lose the house. After that you will have no house, but you still have a debt with the bank.", "title": "" }, { "docid": "2fc3014e53ce66c2041906e87955ae2e", "text": "The ruble was, is and will be very unstable because of unstable political situation in Russia and the economy strongly dependent of the export of raw resources. What you can do? I assume, you want to minimize risk. The best way to achieve that is to make your savings in some stable currency. Euro and Swiss Franc are currently very stable currencies, so storing your surpluses in them is a very good option if you want to keep your money safe. To prevent political risk, you should keep your money in countries with stable political regime, which are unlikely to 'nationalize' the savings of the citizens in predictable future. As for your existing savings in rubles, it's a hard deal. I assume, as the web developer, you have a plenty of money, which have lost a lot of value. If you convert them to euro or francs, you will preserver the current value (after the loss). You'll safe them agaist ruble falling down, but in case the ruble will return to previous value, you'll loose. Keeping savings in instable currencies is, however, speculation, like investing in gold etc. So if you can mentally accept the loss and want to sleep good, convert them. You have also option to invest in properties, for example buy an extra appartment. It's a good way to deal with financial surplus in Europe in US, however you should be aware, in Russland it's connected with the political risk. The real estates can be confiscated in any moment by the state and you can't run away with it (the savings can also be confiscated, but there's a fair chance you'll manage to rescue them if you act quickly).", "title": "" }, { "docid": "ea86fd7b4d8b9b47a0d883a41209fb7c", "text": "Yes, if all my savings were in Euro, I would absolutely be converting everything to US dollars, and possibly some gold. You probably don't want to sit around with lots of Euros while watching the shit hit fan. Talk to your bank, possibly they can open a US dollar bank account in your own country for you. Definitely any bank that has an international presence, like HSBC, should be able to do this for you. And if not US dollars, British Pounds would also be another option.", "title": "" }, { "docid": "353a7974e5e0ce0e013320123f9fc2d7", "text": "I mean the current account has four parts - goods trade, services trade, “primary” income (this used to just be investment income) and “secondary” incomes (this used to be just remittance and cash flows, Mexico has a lot of these). By definition, if you have a trade deficit but current account surplus it comes from primary/secondary income. I’m not sure if it’s crisis mode - a true BoP shock is much more likely to come from having a lot of foreigners owning portfolio assets based on your country (ie Germans owning Spanish bonds sell the bonds, so Spain now has less money for imports).", "title": "" }, { "docid": "689f1348e18c44df10a95af25b6de4c4", "text": "Lol TL:DR. your first point is completely wrong so I stopped at the wall of text. Get over it buddy, you lost the argument. No country simultaniously purchased and sold its own debt, like we have this past several years in the US. So, shut the fuck up already. loser.", "title": "" }, { "docid": "d94ad5be7d204f89427965766afdaa0d", "text": "Its highly unlikely to 'collapse', perhaps there will be managed defaults, yes, but there is no way they will let it collapse as a global depression would follow. If the euro collapses it will also bring down most of the global economy including the likes of China and the US (not to mention the Germans) and they are not going to let that happen. http://www.ft.com/cms/s/0/6cf8ce18-2042-11e1-9878-00144feabdc0.html#axzz1y0lc0hy1 P.s. I am surprised we have not seen more suggestions of buying guns, land and building a commune.", "title": "" }, { "docid": "d67d3a9f9940d33d75c8fbfa7f854d74", "text": "The general idea is that if the statement wasn't true there would be an arbitrage opportunity. You'll probably want to do the math yourself to believe me. But theoretically you could borrow money in country A at their real interest rate, exchange it, then invest the money in the other country at Country B's interest rate. Generating a profit without any risk. There are a lot of assumptions that go along with the statement (like borrowing and lending have the same costs, but I'm sure that is assumed wherever you read that statement.)", "title": "" }, { "docid": "c179753dbea5c49f43dee22bc621eb21", "text": "Government default doesn't mean that all US money is immediately worthless. First, the bondholders will get stiffed. Following that, interest rates will shoot up (because the US is a bad credit risk at this point) and the government will monetize its ongoing expenses -- i.e., fire up the printing presses. If you're concerned about not having access to your money, start pulling out a little extra when you get cash at an ATM. Build it up over time until you have enough currency to weather through whatever emergency you envision with your bank account.", "title": "" }, { "docid": "09dd4f368fc21a4a56f73613cfb5cc4e", "text": "Two possible reasons: You can tell which scenario it is based on the credit history they provide you. If you look at the history and they show you your scores for each month, even though you didn't initiate it, then they are auto checking it each month. If the historical dates are only on the dates you clicked on the button, they are only checking when you manually click on it. As for the why they provide it, a few years back it was a desirable feature. Now they all do it just to keep pace with everyone else. Note that most banks only provide a single scoring model from one bureau (but different banks use different bureaus).", "title": "" }, { "docid": "7b0c964ba22d93e8451148742228fe18", "text": "Resident Alien is liable for the same taxes as a citizen. Citizenship has nothing to do with taxes.", "title": "" } ]	fiqa
b0e8222be1f5fd5473816d2c14c25204	Ensuring payment from client	[ { "docid": "234c54943d0d639b3171953cad2c383d", "text": "Use some form of escrow agent: Some freelancer sites provide payment escrow services (e.g. E-Lance). In this system the client puts money in escrow for the project in advance and then when they accept the project it forwards the payment to the provider. Progress Payments Arrange a progress payment approach with the client where they pay at certain milestones rather than a single payment at the end of the project. Ideally you would have them pre-pay for each milestone before you start work on it. However, you could ask for payment after each milestone, which might be easier to sell to your client. It does leave some risk, but minimizes that risk somewhat.", "title": "" }, { "docid": "d7c498825c09e23317c7c93211e5533e", "text": "\"You should absolutely have a contract between you and your client stipulating the quid-pro-quos of the arrangement. They get the product, you get the money. First off, this contract should specify what you must do, and what they must do, for the contract to be \"\"satisfied\"\". This isn't necessarily just product for money; your client may be under deadlines to approve the product in various stages of work in process. Depending on the product, the client may be required to provide starting materials (like existing logos/slogans for advertising/marketing graphics), information on or access to computer systems (for software or infrastructure consulting, or accounting auditing), etc. Second, if you provide a tangible product like graphics or software, the contract should clearly state that \"\"intellectual property transfers on satisfaction of contract\"\"; they don't own what you have made until they have accepted it and paid you accordingly. If they try to stiff you by taking what you made them and using it before you've been paid, you can take them to the cleaner's for copyright violations. Third, you should structure a payment schedule; don't do too much for free. You can get the money in thirds, for instance; a third up front, a third at some defined halfway point and a third on final delivery and acceptance. Lastly, you should stipulate that the client is responsible for all expenses incurred by you as a result of their failure to pay as stipulated, up to and including attorney's fees. Definitely have a lawyer draft these agreements; contract law is a many-layered area of law with hundreds of years of case law and slightly different nuances in every state. A competent lawyer will know things that can and can't be stipulated in a contract, and if you try to do it alone you'll wish you hadn't when the contract's tossed out by a judge because of some technicality. If they refuse to pay, get the lawyer on the phone and file suit. A well-written contract drafted by a competent lawyer, which you have lived up to on your end, will give your client no loopholes to slip through. As far as recovering damages, it shouldn't matter whether he's in the U.S. or not; if he does business in the U.S. then he very probably has money in banks that have to listen to U.S. courts (or at least court orders).\"", "title": "" } ]	[ { "docid": "f3c332fbce2b61f308b02c595062977e", "text": "Ok so this is the best information I could get! It is a guarantee from a financial institution that payment will be made for items or services once certain requirements are met. Let me know if this helps! I'll try to get more info in the meantime.", "title": "" }, { "docid": "02dc5cfe87845930e123d0aeac9c47da", "text": "Source: Business owner for 13 years. Unfortunately you may be hard-pressed to get that money back. You can try sending him to collections, but at that point it often starts to cost you more than what he owes you, in my experience. In the worst instance I lost $2100 on a single invoice that I never received a dime for. Nearly 20 hours of my time wasted for nothing! A bit of unsolicited advice: I've found that when working on a service-basis, obtaining billing and payment info up front and taking a deposit makes sense. I take 1 hour's worth of deposit and bill the rest after. Not only does it verify the payment method works, but it also gives you a way to confirm the customer's ability to pay in the future. If the customer balks at this, just walk away. It's not worth the risk. As a business, your goal is to make money in exchange for goods or services. If your customers don't understand that and aren't willing to front a bit of money to secure your services, you'll likely going to lose time and money.", "title": "" }, { "docid": "56f82db3f78d5f5a19e418772f91d4da", "text": "Many banks offer online payment. He can add a payee and just type your name and address in. The bank will mail the check out if they cannot deliver payment electronically. Edit: Recently I came across this (Citibank Global Transfer), you and your friend should see if your bank offers a similar service. Citibank requires both of you to have an account with them.", "title": "" }, { "docid": "98e0c7c1611cb33a283a45e94ba2c289", "text": "\"The thing to look at is PayPal's \"\"PayPal.me\"\" service, which is a pretty neat little item. When you sign up for a PayPal.me account (totally free), you create a unique username. So for example, my PayPal.me account name is DanCAnderson. I can give someone the following web link to send me $500: http://paypal.me/DanCAnderson/500 If you click the link above, you'll see what the user sees (my company name is Salt River Networks, Inc.). I gave a live link so you can see the working example of it (no need for anyone to send money! chuckle). I can change the amount by simply changing the value at the end of the URL. When they go to that link, they see a landing page with your name on it and the amount to send to you, then they go through the normal process of paying via PayPal. It's a pretty neat service, and I've used to it bill a few clients for work I've done by emailing that link to them rather than going through the whole PayPal procedure.\"", "title": "" }, { "docid": "ac8abccf51bd6ddeaff31ce498e4be7b", "text": "\"You are right in insisting upon a proper B2B contract in any business relationship. You wish to reduce your risk and be compensated fairly. In addition to the cost and complexity of international wire transfers, the US companies may also be considering the fact that as an international contractor in a relatively hard-to-reach jurisdiction, payments to you place the company at higher risk than payments to a domestic contractor. By insisting upon PayPal or similar transmitters, they are reducing their internal complexity and reducing their financial exposure to unfulfilled/disputed contract terms. Therefore, wire payments are \"\"hard\"\" in an internal business sense, as well as in a remittance transfer reporting sense. The internal business procedure will likely be the hardest to overcome--changing risk management is harder than filling out forms.\"", "title": "" }, { "docid": "fc17bf0c8d9eecdcd412998741cfc8f4", "text": "Short answer: No. Some of those 'automatic' payments you've agreed to (presumably by signing a PAD form) are initiated in batch by the company whom you're buying from (phone company, cable company etc). So no, the bank has no indication from one day to the next what is coming through. And the request goes from say, your cable company to THEIR merchant bank to YOUR bank. Typically you have a monthly bill date which is fixed, and they should have terms established when it is due. If a payment comes back NSF they can retry once - but only for the same amount and I believe it is 14 days from the initial payment attempt. It makes it predictable, and you'd figure banks would clue in and start to predict for you when things may come out - but strictly speaking your bank doesn't know when or how much.", "title": "" }, { "docid": "89bf83f18f6fc3252483ecf01139e83b", "text": "You could of course request payment in EUR or USD, maybe keep a PayPal account and just leave the funds in PayPal unless you need to withdraw the money in local currency? Either currency would be fine because the problem you are trying to overcome is the instability in the ruble. EUR and USD both accomplish that. If you can get local clients to pay in EUR or USD (again, PayPal seems like an easy way to accomplish that) you avoid the ruble, but at the risk that your services become more expensive to local clients because they have to convert a weaker currency to a stronger one. You should also solicit some international clients! You are obviously perfectly fluent in English and that's a significant advantage. And they'll be happy to pay in dollars and euros.", "title": "" }, { "docid": "552d9668245c71a85bc404876a03f57e", "text": "Given the combination of the admitted delays and then the failure of the money to arrive with only their word they have sent it, I would be worried that the solicitor is having financial problems and has not really sent your money because they don't have it. This shouldn't be possible unless they were already acting unethically by not properly segregating client money, but that possibility does always exist. I would consult the Solicitor's Regulation Authority for advice as quickly as possible. They may not be the right people to initially deal with the problem, but they should be able to advise on the appropriate next steps and it might help them match up your problem with any other reports they have received.", "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": "fc6cd8481d4716ff1f1c8e3b63a62584", "text": "If you are regularly taking payments of $10,000 I'm very surprised you aren't already set up to accept credit card payments. If you are going to be doing this much in the future it would be a good thing to investigate. Some other options might be:", "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": "a928a5c3aa932c66a58061c6b90a22e5", "text": "On a summary level, there are three conceptual ways of clearing money electronically. Immediate clearing, where banks (often, but not necessarily) with support of the supervisory entities, send immediate drawing rights against their own cash reserves, and dedicate this right to the account of the receiving customer. This is rather expensive, as it limits the banks ability to use their cash reserves for their own banking operations (crediting etc). This is often the only way to wire significant (in comparison to the bank size) amounts of money. Internal clearing, where the money actually never leaves the bank - it's just moved between accounts of two different customers of the same bank. It's usually free, as the bank is still free to use your money to do it's banking, and it's usually immediate since nothing actually needs to happen besides a change in the banks entries. Batch clearing, where banks submit outstanding requests against each other, and calculate the net settlement. Basically, when you from bank A wire money to me in bank B, there is a high chance that a similar amount of money is wired between two other users it the opposite direction. After a bit of accounting the net imbalance is computed (and often drawn via immediate clearing) but the bulk of the money actually never leaves any of the banks, it just is reassigned between each banks customers as per agreed books. There are also additional ways where companies decide to open accounts in each of the banks and provide some sort of immediate clearing backed by the operators cash reserves rather than the banks.. and so on.. How does it happen in Indonesia? I have no idea, but I think a good overview of how it happens around the world is a publication by a partner entity of ours; http://pymntsreportstore.com/products/global-wire-transfer-choices If you are really curious, I'd research under what legal form does Paypal Indonesia operate (it should be somewhere in the archives) and figure out what other wiring options are available.", "title": "" }, { "docid": "d7ef398e41b7d6d15756c78d9ae1a431", "text": "Generally there's no ultimate protection against charge backs. Some methods are easier to charge back and some harder, and there's always the resort of going to courts. The hardest to contest is, of course, a cash payment or wire transfer. You need to remember that imposing unnecessary/unreasonable difficulties on your customers will drive business away. I can buy diamonds in the nearest mall with my credit card - why would I buy from you if you want cash, BTC, or any other shady way to pay? I'm pretty sure that whatever that is you're selling, anyone can buy elsewhere as well.", "title": "" }, { "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": "97a20b758d5b697cdf2e9de993eaf4b9", "text": "\"There are Cyber Security and Reporting Standards which Financial Service Provider (Banks and Financial services where customers deposit and/or transact fiat currency) You can find a comprehensive list on Wikipedia under Cyber security standards Depending on the geographic location there might be local Govt requirements such as reporting issues, data security etc. Concerning point 1. We have to differ between a fraudulent customer and an attacker on the banks infrastructure. Fraudulent customers / customers that have been compromised by third parties are identified with but not limited to credit scores and merchant databases or data from firms specialized in \"\"Fraud Prevention\"\". Attackers (Criminals that intend to steal, manipulate or spy on data) are identified/prevented/recorded by but not limited to IDS solutions and attacker databases. For firms that get compensation by insurances the most important thing is the compilant with law and have records of everything, they rather focus on recording data to backtrack attackers than preventing attacks. Concerning point 2. For you as customer the local law and deposit insurance are the most important things. Banks are insured and usually compensate customers on money theft. The authentication and PIN / TAN methods are most crucial but standard - these authentication methods consist of one password and one offline part such as a TAN from a paperletter or a RSA generator or card reader. WRAPUP: Financial institutions have to comply with local law and meet international standards. Banks use highly advanced Intrusion detection and fraud prevention which logically must be based on databases. For the average joe customer there is seldom high risk to lose deposits even if the attackers gains full access to the bank account but this depends a lot on the country you reside in. Concerning targeted attacks:\"", "title": "" } ]	fiqa
b5ec1be05c76883a2db05f7657dff604	Explanations on credit cards in Canada	[ { "docid": "3cc6c9116769ff348070c66a1ed49129", "text": "\"A credit card is a way to borrow money. That's all. Sometimes the loans are very small - $5 - and sometimes they are larger. You can have a credit card with a company (bank or whatever) that you have no other relationship with. They're not a property of a bank account, they are their own thing. The card you describe sounds exactly like a debit card here, and you can treat your Canadian debit card like your French credit card - you pay for things directly from your bank account, assuming the money is in there. In Canada, many small stores take debit but not credit, so do be sure to get a debit card and not only a credit card. Now as to your specific concerns. You aren't going to \"\"forget to make a wire.\"\" You're going to get a bill - perhaps a paper one, perhaps an email - and it will say \"\"here is everything you charged on your credit card this month\"\" along with a date, which will be perhaps 21 days from the statement date, not the date you used the card. Pay the entire balance (not just the minimum payment) by that date and you'll pay no interest. The bill date will be a specific date each month (eg the 23rd) so you can set yourself a reminder to check and pay your bill once a month. Building a credit history has value if you want to borrow a larger amount of money to buy a car or a house, or to start a business. Unlike the US, it doesn't really have an impact on things like getting a job. If you use your card for groceries, you use it enough, no worries. In 5 years it is nice to look back and see \"\"never paid late; mostly paid the entire amount each month; never went over limit; never went into collections\"\" and so on. In my experience you can tell they like you because they keep raising your limit without you asking them to. If you want to buy a $2500 item and your credit limit is $1500 you could prepay $1000 onto the credit card and then use it. Or you could tell the vendor you'd rather use your debit card. Or you could pay $1500 on the credit card and then rest with your debit card. Lots of options. In my experience once you get up to that kind of money they'd rather not use a credit card because of the merchant fees they pay.\"", "title": "" }, { "docid": "b4da24f321fb782c3eadaf9e189c1c90", "text": "Is my understanding okay ? If so, it seems to me that this system is rather error prone. By that I mean I could easily forget to make a wire some day and be charged interests while I actually have more than enough money on the check account to pay the debt. Which is where the credit card company can add fees so you pay more and they make more money. Don't forget that in the credit case, you are borrowing money rather than using your own. Another thing that bothers me is that the credit card apparently has a rather low credit limit. If I wanted to buy something that costs $2500 but only have a credit limit of $1500, can I make a preemptive wire from my check account to the VISA account to avoid facing the limit ? If so, what is the point for the customer of having two accounts (and two cards for that matter...) ? If you were the credit card company, do you believe people should be given large limits first? There are prepaid credit cards where you could put a dollar amount on and it would reject if the balance gets low enough. Iridium Prepaid MasterCard would be an example here that I received one last year as I was involved in the floods in my area and needed access to government assistance which was given this way. Part of the point of building up a credit history is that this is part of how one can get the credit limits increased on cards so that one can have a higher limit after demonstrating that they will pay it back and otherwise the system could be abused. There may be a risk that if you prepay onto a credit card and then want to take back the money that there may be fees involved in the transaction. Generally, with credit cards the company makes money on the fees involved for transactions which may come from merchants or yourself as a cash advance on a credit card will be charged interest right away while if you buy merchandise in a store there may not be the interest charged right away.", "title": "" }, { "docid": "8beada6940fcd19d31b2e64fb168897f", "text": "If so, it seems to me that this system is rather error prone. By that I mean I could easily forget to make a wire some day and be charged interests while I actually have more than enough money on the check account to pay the debt. I have my back account (i.e. chequing account) and VISA account at/from the same bank (which, in my case, is the Royal Bank of Canada). I asked my bank to set up an automatic transfer, so that they automatically pay off my whole VISA balance every month, on time, by taking the money from my bank account. In that way I am never late paying the VISA so I never pay interest charges. IOW I use the VISA like a debit card; the difference is that it's accepted at some places where a debit card isn't (e.g. online, and for car rentals), and that the money is deducted from my bank account at the end of the month instead of immediately.", "title": "" }, { "docid": "7c04f6dc0d7acbc634d4a02bf5166519", "text": "\"I think it's worth pointing out explicitly that the biggest difference between a credit card (US/Canada) and a debit card (like your French carte de crédit) is that with a credit card, it's entirely possible to not pay the bill or to pay only the \"\"minimum payment\"\" when asked. This results in you owing significantly more money due to interest, which can snowball into higher and higher levels of debt, and end up getting rapidly out of control. This is the reason why you should ALWAYS pay off the ENTIRE balance every month, as attested to in the other answers; it's not uncommon to find people in the US with thousands of dollars of debt they can't pay off from misuse of credit cards.\"", "title": "" } ]	[ { "docid": "efc61f4ca2cbf4747a962aacb18f1111", "text": "There are two separate cases here that people are not separating. Any card will allow you to pay an amount not exceeding the actually posted charges. Some cards will allow you to pay more than this, some will not. My parents have deliberately overpaid as a means of having a higher credit limit, I've been denied (different card) when trying to do the same thing and the website wouldn't even allow me to pay temporary charges that hadn't yet become real. (A human operator would allow paying those, though.)", "title": "" }, { "docid": "07387f98d8f5d6003a51cc409fc5a910", "text": "You have to check your contract to be sure what is it you're paying for. Typically, you get some of the following features which can be unavailable to you in banks which don't charge a monthly fee: Arguably, these expenses could be paid by the interest rates your money earn to the bank. Notice how banks which don't charge a fee usually require you to have a minimum amount of cash in your account or a minimum monthly cash flow. When you pay for your bank's services in cash, there's no such restrictions. I'm not sure if typical banks in the UK would take away your credit card if you lose your job and don't qualify for that kind of card any more, but I do know banks who would. The choice is yours, and while it's indeed sad that you don't have this kind of choice in Canada, it's also not like you're paying solely for the privilege of letting them invest your money behind your back.", "title": "" }, { "docid": "14db4aaccba207332c28e3d8235ba523", "text": "From a Canadian point of view, I think we are generally very similar to how you describe Austria. The only thing I use cash for, is to pay for my coffee at a local micro-roaster who only accepts cash. Cheques, I only use to pay friends. Everything else is debit or credit card. Very few businesses around here will even accept cheques anymore.", "title": "" }, { "docid": "5fee4c2ada624f9f9dfd3cf43e073b65", "text": "There are different ways of credit card purchase authorizations. if some choose less secure method it's their problem. Merchants are charged back if a stolen card is used.", "title": "" }, { "docid": "689b2850dd96b39d5d22d06a510114d6", "text": "This is quite possibly a tactic to attract new clients.. ICICI is one of the banks with a small presence in Canada. There are also banks like Tangerine and PC Financial that are aggressively trying to get new clients to switch over from the big 5 banks. At the time of writing, for a limited time, PC Financial is paying 2.5% interest on savings accounts versus 1.4% for a 1 year GIC.", "title": "" }, { "docid": "d1219fb850544eb95e1b9182489c5e9a", "text": "One possibility is to ask RBC to lend you some money (or more specifically, to lend you some more money): an overdraft, a personal loan, or whatever. To discuss this you should to talk to your personal banker (not a teller), probably by appointment: to explain why you want it, and how and when you expect repay it. You might (I don't know) say that you want the loan (or some of the loan) to pay off the Visa, and/or for the travel. If you've only just arrived in Canada, however, then I don't see why they should want to lend it to you (i.e. why they should think you're a good credit risk). Is there anyone else (e.g. an immigration sponsor or parent or employer) who might co-sign (a.k.a. guarantee) the loan? I have never had this issue before with any other credit cards but I got an RBC Visa in Canada In some countries (not Canada) a Visa behaves more like a debit card, i.e. you can only spend money you have in the account.", "title": "" }, { "docid": "c3b135c214fc5ac414175d3cc25f3cde", "text": "Corporations are removed from the options markets. They can neither permit nor forbid others from trading them, local laws notwithstanding. No national options market is as prolific as the US's. In fact, most countries don't even have options trading. Some won't even allow options but rather option-like derivatives. Finance in Canada is much more tightly regulated than the US. This primer on Canadian option eligibility shows how much. While US eligibility is also stringent, the quotas are far less restrictive, so a highly liquid small company can also be included where it would be excluded in Canada for failing the top 25% rule.", "title": "" }, { "docid": "3676ef92f760af7d37a1107c411add97", "text": "\"I think this stuff was more valid when grace periods were longer. For example, back in the 90's, I had an MBNA card with a 35 day grace period. Many business travellers used Diner's Club charge cards because they featured a 60 day grace period. There are valid uses for this: As JoeTaxpayer stated, if you are benefiting from \"\"tricks\"\" like this, you probably have other problems that you probably ought to deal with.\"", "title": "" }, { "docid": "c84f0f572bfc3e7a3e4c9442340d5088", "text": "Given that the laws on consumer liability for unauthorized transactions mean no cost in most cases, the CVV is there to protect the merchant. Typically a merchant will receive a lower cost from their bank to process the transaction with the CVV code versus without. As far as the Netflix case goes, (or any other recurring billing for that matter) they wouldn't care as much about it because Visa/MC/Amex regulations prohibit storage of the CVV. So if they collect it then it's only used for the first transaction and renewals just use the rest of the card info (name, expiration date, address). Does the presence of CVV indicate the merchant has better security? Maybe, maybe not. It probably means they care about their costs and want to pay the bank as little as possible to process the transaction.", "title": "" }, { "docid": "ccb53ec70fd1c7e3b4addbd3a77698da", "text": "\"There are two reasons you would get a higher yield for savings accounts: either because it is not guaranteed by a national deposit insurance fund (CDIC I presume in Canada), or you have to hold it for a longer term. Money Market Accounts are insured in the U.S. and are also very liquid since you can debit from it any time. Because of this, they offer much lower rates of interest than comparable products. If you look at the savings products such as the 1.50% momentum savings account offered by ScotiaBank, you actually have to hold a $5000 balance and not make any debit from it for 90 days in order to get the extra 0.75% that would get you to 1.50%. Essentially this is roughly equivalent to offering you a 1.50% GIC with a 0.75% withdrawal penalty fee, but simply presented in more \"\"positive\"\" terms. As for the Implicity Financial Financial 1.75% offering, it looks like it is not insured by the CDIC.\"", "title": "" }, { "docid": "8f5767d1419297a9b538d367bd4a0332", "text": "I have a visa with Scotiabank and I purposefully keep a negative balance at times. The guy at the bank said it was a great idea. I have never received a cheque, nor do I want one. The reason is that it allows me to make quick purchases without having to worry about paying back and due dates. Only with large purchases do I allow myself to do that. I still check in with my account every once in a while just to make sure everything is all right. It allows for good money management and piece of mind. I have been doing it for a couple of years and have not been penalized at all. (Wouldn't really make sense to do so though.)", "title": "" }, { "docid": "ba960eb7f7436e5f3824be9fad756a02", "text": "If you're willing to use OFX or QIF files, most Canadian banks can spit output more data than 90 days. The files are typically used to import into Quicken-like local programs, but can be easily parsed for your webapp, I imagine.", "title": "" }, { "docid": "b454bdd66734e04e3cd3b92bb4779f8f", "text": "I'm an Australian who just got back from a trip to Malaysia for two weeks over the New Year, so this feels a bit like dejavu! I set up a 28 Degrees credit card (my first ever!) because of their low exchange rate and lack of fees on credit card transactions. People say it's the best card for travel and I was ready for it. However, since Malaysia is largely a cash economy (especially in the non-city areas), I found myself mostly just withdrawing money from my credit card and thus getting hit with a cash advance fee ($4) and instant application of the high interest rate (22%) on the money. Since I was there already and had no other alternatives, I made five withdrawals over the two weeks and ended up paying about $21 in fees. Not great! But last time I travelled I had a Commonwealth Bank Travel Money Card (not a great idea), and if I'd used that instead on this trip and given up fees for a higher exchange rate, I would have been charged an extra $60! Presumably my Commonwealth debit card would have been the same. This isn't even including mandatory ATM fees. If I've learned anything from this experience and these envelope calculations I'm doing now, it's these:", "title": "" }, { "docid": "443bc8c96f4ef3937951264c4c74c89a", "text": "Lived in same situation for 8 years. I walked into a BMO - told them what I needed to do and they set me right up - no U.S. accounts necessary. My account allowed me to pay bills in USD or CDN. Doesn't get any simpler than that.", "title": "" }, { "docid": "298bc6aaa358239ee51268053527c422", "text": "I haven't read the terms here but the question may not have a good answer. That won't stop me from trying. Call the real rate (interest rate - inflation) and you'll have what is called negative real rates. It's rare for the overnight real rate to be negative. If you check the same sources for historical data you'll find it's usually higher. This is because borrowing money is usually done to gain an economic benefit, ie. make a profit. That is no longer a consideration when borrowing money short term and is IMO a serious problem. This will cause poor investment decisions like you see in housing. Notice I said overnight rate. That is the only rate set by the BoC and the longer rates are set by the market. The central bank has some influence because a longer term is just a series of shorter terms but if you looked up the rate on long Canadian real return bonds, you'd see them with a real rate around 1%. What happens when the central bank raise or lowers rates will depend on the circumstances. The rate in India is so high because they are using it to defend the rupee. If people earn more interest they have a preference to buy that currency rather than others. However these people aren't stupid, they realize it's the real rate that matters. That's why Japan can get away with very low rates and still have demand for the currency - they have, or had, deflation. When that changed, the preference for their currency changed. So if Canada hast forex driven inflation then the BoC will have to raise rates to defend the dollar for the purpose of lowering inflation from imports. Whether it works or not is another story. Note that the Canadian dollar is very dependant on the total dollar value of net oil exports. If Canada has inflation due too an accelerating economy this implies that there are profitable opportunities so businesses and individuals will be more likely to pay a positive real rate of interest. In that scenario the demand for credit money will drive the real rate of return.", "title": "" } ]	fiqa
fb2cf8b6b1d2231b10c2a9265692f48a	Yahoo Finance not showing detailed information for foreign stocks	[ { "docid": "125865bceb315212e78e50f6a3ccd6f5", "text": "The cause of incomplete/inaccurate financial data's appearing on free sites is that it is both complicated and expensive to obtain and parse these data. Even within a single country, different pieces of financial data are handled by different authorities. In the US, for example, there is one generally recognized authority for stock prices and volumes (CQS), but a completely different authority for corporate earnings data (SEC). For futures and options data the only authority is each individual exchange. Each of these sources might have a vastly different interface to their data; some may have websites, others may have FTPs, others may have TCP datastreams to which you must subscribe, etc. Now throw in the rest of the world and all their exchanges and regulatory agencies, and you can see how it's a difficult job to gather all this information, parse it on a daily (or more frequent) basis, and check it all for errors. There are some companies (e.g. Bloomberg) whose entire business model is to do the above. They spend tens of millions of dollars per year to support the infrastructure and manpower required to keep such a complex system working, and they charge their consumers a pretty penny in return. Do Google/Yahoo pay for Bloomberg data access just to display information that we then consume for free? Maybe. Maybe they pay for some less expensive reduced data set. Or a data set that is less rigorously checked for errors. Even if they pay for the best data available, there's no guarantee that a company's last earnings report didn't have a glitch in it, or that Bloomberg's latest download from the Canadian Agency for Corporate Dividends and Moose Census-Taking didn't get cut off in the middle, or that the folks at Yahoo built a robust system that can handle a particular file's not arriving on time. Bloomberg has dozens or even hundreds of employees focused on just this one task; Yahoo probably has 5. Moral: If you really need the best available data you must go to the source(s), or you must pay a provider to whom you can then complain when something is wrong. With free data you get what you pay for.", "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": "b1c3ef346e865a00ed0f22d1e57bf6c2", "text": "You might have better luck using Quandl as a source. They have free databases, you just need to register to access them. They also have good api's, easier to use than the yahoo api's Their WIKI database of stock prices is curated and things like this are fixed (www.quandl.com/WIKI ), but I'm not sure that covers the London stock exchange. They do, however, have other databases that cover the London stock exchange.", "title": "" }, { "docid": "3451c2779bca4a3422a1edf0de832b52", "text": "At this time, Google Finance doesn't support historical return or dividend data, only share prices. The attributes for mutual funds such as return52 are only available as real-time data, not historical. Yahoo also does not appear to offer market return data including dividends. For example, the S&P 500 index does not account for dividends--the S&P ^SPXTR index does, but is unavailable through Yahoo Finance.", "title": "" }, { "docid": "57c412fe4c06eb13496ba96739bf6d9f", "text": "No, there is no such list, as the other answers mention it is practically impossible to compile one. However you can see the institutional investors of a public company. MSN Money has this information available in a fair amount of details. For example see the Institutional Investors of GOOG", "title": "" }, { "docid": "16fc45daadb1b77449a00539b723e29d", "text": "There are several Excel spreadsheets for downloading stock quotes (from Yahoo Finance), and historical exchange rates at http://investexcel.net/financial-web-services-kb", "title": "" }, { "docid": "c139204ef8db6cebd5386f5e6f653212", "text": "You'd have to buy that information. Quoting from this page, Commercial Historical Data Higher resolution and more complete datasets are generally not available for free. Below is a list of vendors which have passed our quality screening (in total, we screened over a dozen vendors). To qualify, the vendor must aggregate data from all US national/regional exchanges as only complete datasets are suitable for research use. The last point is especially important as there are many vendors who just get data from a couple sources and is missing important information such as dark pool trades. They offer some alternatives for free data: Daily Resolution Data 1) Yahoo! Finance– Daily resolution data, with split/dividend adjustments can be downloaded from here. The download procedure can be automated using this tool. Note, Yahoo quite frequently has errors in its database and does not contain data for delisted symbols. 2) QuantQuote Free Data– QuantQuote offers free daily resolution data for the S&P500 at this web page under the Free Data tab. The data accounts for symbol changes, splits, and dividends, and is largely free of the errors found in the Yahoo data. Note, only 500 symbols are available unlike Yahoo which provides all listed symbols. And they list recommendations about who to buy the data from.", "title": "" }, { "docid": "a386bedbf0f63f354370e49ebbe1d777", "text": "I still can't understand why there is a price discrepancancy. There isn't. It's the same stock and price differences between such major exchanges will always be minimal. I think you simply haven't paid attention to the date range. It seems Google finance only has data for FRA:BMW reaching back to 2011, so if you try to look at the development of your investment since 2009, you're not getting comparable data.", "title": "" }, { "docid": "8ed8bf7342dacdca59824555d53f7ff7", "text": "The reason it's not automatic is that Questrade doesn't want to force you to convert in margin accounts at the time of buying the stock. What if you bought a US stock today and the exchange rate happened to be very unfavorable (due to whatever), wouldn't you rather wait a few days to exchange the funds rather than lose on conversion right away? In my opinion, Questrade is doing you a favor by letting you convert at your own convenience.", "title": "" }, { "docid": "0b2b5a994cca7939cf4143da8b2514a0", "text": "\"I had both closing price and adjusted price of Apple showing the same amount after \"\"download data\"\" csv file was opened in excel. https://finance.yahoo.com/quote/AAPL/history?period1=1463599361&period2=1495135361&interval=div%7Csplit&filter=split&frequency=1d Its frustrating. My last option was to get the dividends history of the stock and add back to the adjusted price to compute the total return for a select stock for the period.\"", "title": "" }, { "docid": "432563b151d2e6afcfa8c7f9f577f54b", "text": "I use and recommend barchart.com. Again you have to register but it's free. Although it's a US system it has a full listing of UK stocks and ETFs under International > London. The big advantage of barchart.com is that you can do advanced technical screening with Stochastics and RS, new highs and lows, moving averages etc. You're not stuck with just fundamentals, which in my opinion belong to a previous era. Even if you don't share that opinion you'd still find barchart.com useful for UK stocks.", "title": "" }, { "docid": "1cd38e3e416ac01e0190e2ec259f87ce", "text": "Fisher Capital Management World News Latest Update has all the updated news on Korea’s technology and business sectors. We aim to consistently update this site – several times a day – to provide you with the latest news from across the globe. This site features all the current trends in technology, breakthroughs in science, condition of the market, background information and in-depth analysis on significant world events. For any inquiries, email us at info@fishercapitalmanagement-worldnews.com", "title": "" }, { "docid": "2379e2f1e6f178d08404ad68f7796fef", "text": "http://www.moneysupermarket.com/shares/CompareSharesForm.asp lists many. I found the Interactive Investor website to be excruciatingly bad. I switched to TD Waterhouse and found the website good but the telephone service a bit abrupt. I often use the data presented on SelfTrade but don't have an account there.", "title": "" }, { "docid": "3befa06aff1f9bdd4c44321420a6f7d0", "text": "Options - yes we can :) Options tickers on Yahoo! Finance will be displayed as per new options symbology announced by OCC. The basic parts of new option symbol are: Root symbol + Expiration Year(yy)+ Expiration Month(mm)+ Expiration Day(dd) + Call/Put Indicator (C or P) + Strike price Ex.: AAPL January 19 2013, Put 615 would be AAPL130119P00615000 http://finance.yahoo.com/q?s=AAPL130119P00615000&ql=1 Futures - yes as well (: Ex.: 6A.M12.E would be 6AM12.CME using Yahoo Finance symbology. (simple as that, try it out) Get your major futures symbols from here: http://quotes.ino.com/exchanges/exchange.html?e=CME", "title": "" }, { "docid": "39e680ba097f0ffc975fb39a29e5dcd0", "text": "Check the answers to this Stackoverflow question https://stackoverflow.com/questions/754593/source-of-historical-stock-data a number of potential sources are listed", "title": "" }, { "docid": "a4fe4886ea6863bd792a7277924d2b8b", "text": "Purchase accounting requires that you mark assets, including PP&E to fair value. So let's say you bought a machine 5 years ago for $1,000 - you might have depreciated it to $250 on your balance sheet but it might actually be worth $900.", "title": "" } ]	fiqa
9865ae895ef4040d147c654ea9ff9a0a	How to respond to a customer's demand for payment extension?	[ { "docid": "068fdfe3d42820b093505efed1501d8e", "text": "In the event that payment is not made by the due date on the invoice then the transaction is essentially null and void and you can sell the work to another client. For your particular situation I would strongly suggest that you implement a sales contract and agreement of original transfer of work of art for any and all future sales of your original works of art. In this contract you need to either enforce payment in full at time of signing or a deposit at signing with payment in full within (X) amount of days and upon delivery of item. In your sales contract you will want to stipulate a late fee in the event that the client does not pay the balance by the date specified, and a clause that stipulates how long after the due date that you will hold the artwork before the client forfeiting deposit and losing rights to the work. You will also want to specify an amount of time that you provide as a grace period in the event client changes their mind about the purchase, and you can make it zero grace period, making all sales final and upon signing of the agreement the client agrees to the terms and is locked into the sale. In which point if they back out they forfeit all deposits paid. I own a custom web design business and we implement a similar agreement for all works that we create for a client, requiring a 50% deposit in advance of work being started, an additional 25% at time of client accepting the design/layout and the final 25% at delivery of finished product. In the event that a client fails to meet the requirements of the contract for the second or final installment payments the client forfeits all money paid and actually owes us 70% of total quoted project price for wasting our time. We have only had to enforce these stipulations on one client in 5 years! The benefit to you for requiring a deposit if payment is not made in full is that it ensures that the client is serious about purchasing the work because they have put money in the game rather than just their word of wanting to purchase. Think of it like putting earnest money down when you make an offer to buy a house. Hope this helps!", "title": "" } ]	[ { "docid": "532ea8a3447f66a4dbb838a28f89c272", "text": "\"I put bills with a fixed monthly amount to my credit card, and remember to pay it every month. However, I do not let any bill with a variable amount \"\"pull\"\" access to my funds. I have to \"\"push\"\" the payment. The reason is simple: We've all heard the tale of the Electric meter that rolled past zero, and the customer got charged for $65000.00, or other similar situations. When there is pull access to my money, then I have to work to get my money back. When there is push access, I can (in the electric situation above) pay an estimated monthly amount, (say $100) to demonstrate good faith and make them come after me. When they do, I can ask them to demonstrate the accuracy of the bill. If I have to go after them, I have to demonstrate the inaccuracy.\"", "title": "" }, { "docid": "e7924979d20f06b4944df764769fc72a", "text": "If something in any transaction in life—financial or otherwise—doesn’t make you feel comfortable and the choice is between saving money with one thing versus another, don’t sell your personal needs short. Pay more elsewhere that treats you the way you expect to be treated. In the long run the $$$ you “save” in a cheaper transaction might cost you more in the headaches and annoyance you have to swallow in dealing with this “bargain” in the future. Your question is this: “Do his sales tactics indicate other underlying problems? How can I deal effectively with those tactics?” And you state this as well: “To make a long story short, the dealer's aggressive sales tactics have made me somewhat uncomfortable.” And finally ask: “How can I deal effectively with those tactics?” Okay, first and foremost if you feel discomfort in anything in life—not just a financial situation—just walk away. You might have to say “No…” when doing this but it’s not always the case you will have to counter aggression with aggression. And specifically in the case of a purchase like this, you need to also ask yourself: “Is this discount being offered me worth the headache I am getting?” At the end of the day money is meaningless and has it’s main worth as an economic motivator/stimulator: Someone has a need and someone else has something that can solve that need. What would it take for the side of need to connect to the side of solution to that need? This is the basic concept surrounding all economics. So that said, I have personally avoided buying things for less money and paid slightly more elsewhere for a service experience that made me feel comfortable. At the end of the day, if you feel happy in the transaction it helps in the long run more than—let’s say—the $20 to $40 you “save” by buying from someone else. Also—on the side of customer service—this person’s sales techniques sound like something out of a very old fashioned sales playbook. Nowadays it’s all about relationships and service: The immediate sale is not as important for competent and reputable businesses because they know a better customer service experience will bring people back. So it doesn’t matter how long this guy has been in business: It could be that he’s been in business a long time just because he has been in business a long time. That said—and in the case of musical instruments—maybe this guy is really good at care and upkeep of instruments but has crappy sales techniques. Keep that in mind as well and just push back on their sales methods. For things like musical instruments, people might be jerks on the sales side but in the maintenance and repair side they are great. Will you need to go to them if/when your instrument needs repair? Or you don’t care? At the end of the day, go with your gut. And if your gut says, “No…” then just go somewhere else and spend your money on an item you like from a place that treats you the way you need.", "title": "" }, { "docid": "f3fd5c9c209bfbf5883680b43d728caf", "text": "You will be best to cancel the original instruction first, as you will have to wait for any pending payments to be received, as the banks will not entertain multiple refunds. After this can be confirmed the account will simply show a credit which you ask for. Many lenders/banks process these type of transactions after a period of time ie 30 days and there will be no way to speed this up, so the sooner you act the better. When you contact the bank have bank details for the payment(they might transfer externally fingers crossed), or you may receive a cheque in the post. Try to avoid complicating the matter with changes of address and ringing before you have cancelled the instruction etc if possible.", "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": "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": "e24b171d757ef9cc138878484923fbde", "text": "\"You promised to pay the loan if he didn't. That was a commitment, and I recommend \"\"owning\"\" your choice and following it through to its conclusion, even if you never do that again. TLDR: You made a mistake: own it, keep your word, and embrace the lesson. Why? Because you keep your promises. (Nevermind that this is a rare time where your answer will be directly recorded, in your credit report.) This isn't moralism. I see this as a \"\"defining moment\"\" in a long game: 10 years down the road I'd like you to be wise, confident and unafraid in financial matters, with a healthy (if distant) relationship with our somewhat corrupt financial system. I know austerity stinks, but having a strong financial life will bring you a lot more money in the long run. Many are leaping to the conclusions that this is an \"\"EX-friend\"\" who did this deliberately. Don't assume this. For instance, it's quite possible your friend sold the (car?) at a dealer, who failed to pay off this note, or did and the lender botched the paperwork. And when the collector called, he told them that, thinking the collector would fix it, which they don't do. The point is, you don't know: your friend may be an innocent party here. Creditors generally don't report late payments to the credit bureaus until they're 30 days late. But as a co-signer, you're in a bad spot: you're liable for the payments, but they don't send you a bill. So when you hear about it, it's already nearly 30 days late. You don't get any extra grace period as a co-signer. So you need to make a payment right away to keep that from going 30 late, or if it's already 30 late, to keep it from going any later. If it is later determined that it was not necessary for you to make those payments, the lender should give them back to you. A less reputable lender may resist, and you may have to threaten small claims court, which is a great expense to them. Cheaper to pay you. They say France is the nation of love. They say America is the nation of commerce. So it's not surprising that here, people are quick to burn a lasting friendship over a temporary financial issue. Just saying, that isn't necessarily the right answer. I don't know about you, but my friends all have warts. Nobody's perfect. Financial issues are just another kind of wart. And financial life in America is hard, because we let commerce run amok. And because our obsession with it makes it a \"\"loaded\"\" issue and thus hard to talk about. Perhaps your friend is in trouble but the actual villain is a predatory lender. Point is, the friendship may be more important than this temporary adversity. The right answer may be to come together and figure out how to make it work. Yes, it's also possible he's a human leech who hops from person to person, charming them into cosigning for him. But to assume that right out of the gate is a bit silly. The first question I'd ask is \"\"where's the car?\"\" (If it's a car). Many lenders, especially those who loan to poor credit risks, put trackers in the car. They can tell you where it is, or at least, where it was last seen when the tracker stopped working. If that is a car dealer's lot, for instance, that would be very informative. Simply reaching out to the lender may get things moving, if there's just a paperwork issue behind this. Many people deal with life troubles by fleeing: they dread picking up the phone, they fearfully throw summons in the trash. This is a terrifying and miserable way to deal with such a situation. They learn nothing, and it's pure suffering. I prefer and recommend the opposite: turn into it, deal with it head-on, get ahead of it. Ask questions, google things, read, become an expert on the thing. Be the one calling the lender, not the other way round. This way it becomes a technical learning experience that's interesting and fun for you, and the lender is dreading your calls instead of the other way 'round. I've been sued. It sucked. But I took it on boldly, and and actually led the fight and strategy (albeit with counsel). And turned it around so he wound up paying my legal bills. HA! With that precious experience, I know exactly what to do... I don't fear being sued, or if absolutely necessary, suing. You might as well get the best financial education. You're paying the tuition!\"", "title": "" }, { "docid": "964ef441a36a8f3558d245c82db5bc45", "text": "It may have been the standard practice for a long time, and indeed it still is the common practice for my credit union to apply all excess payment directly to the principal. At the risk of sounding a little cynical, I will suggest that there is a profit motive in the move to not applying excess payments to principal unless directly instructed to do so. Interest accrued isn't reduced until the principal is reduced, so it benefits the creditor to both have the money in advance and to not apply it to the principal. You should probably move forward with the expectation that all of your creditors are adversarial even if only in a passive-aggressive manner.", "title": "" }, { "docid": "b6088456fab65cad84e6a54bbf6e1bf7", "text": "I don't see this article being about the merit of the customers claim but rather the condition of sale: > You agree not to file any complaint, chargeback, claim, dispute, or make any public forum post, review, Better Business Bureau complaint, social media post, or any public statement regarding the order, our website, or any issue regarding your order, for any reason, within this 90 day period, or to threaten to do so within the 90 day period, or it is a breach of the terms of sale, creating liability for damages in the amount of $250, plus any additional fees, damages - both consequential and incidental, calculated on an ongoing basis. I'm happy to rally my pitchfork against any company that includes these conditions.", "title": "" }, { "docid": "7e36c25e1dba1eb52f81421c5381ad65", "text": "File a small claims lawsuit in the city that the person resides. The court will charge you a small fee and give you a date. They will also summons the other person to appear. Bring all the documentation that shows the following BONUS - Bring the documentation that shows them saying they will not pay you back I had to sue someone once for a very similar problem. I lent them a 6 month interest free loan. They told me to shove it after 6 months and 1 day. So I sued them. The court should accept facebook messages as proof. More than likely though your friend wont even show up which means you win by default. Here's the bad news, that was the easy part. Just because you win in court doesn't mean the money appears the next day. There are a couple ways you may have to recover your money. Best of luck to you!", "title": "" }, { "docid": "ffd92d990a6b96092871ac822eef4a57", "text": "\"This is not a normal occurrence, and you have every right to be annoyed, but the technical way it usually happens goes like this: What can happen is when the merchant incorrectly completes the transaction without referencing the pre-authorization transaction. The bank effectively doesn't \"\"know\"\" this is the same transaction, so they process it the same way they process any other purchase, and it has no effect on the pre-authorization and related held/pending transaction. As far as the bank knows, you purchased a second set of blinds in the store for $200 and are still waiting on the first order to come in, they have no idea the store screwed up. The reason this is possible is the purpose of the pre-auth in the first place is that it is a contractual agreement between the bank (credit card) and the merchant that the funds are available, will be available except under rare special circumstances, and thus they can go ahead and process the order. This lets the merchant be secure in the knowledge that they can collect their payment, but you aren't paying interest or monthly payments on something you haven't even gotten yet! This system works reasonably well for everyone - right up until someone screws up and fails to properly release a hold, makes a second transaction instead of properly referencing the first one, or the bank screws up their system and fails to correctly match referenced pre-authorization codes to purchases. The problem is that this should not be a normal occurrence, and the people you are speaking with to try to sort out the issue often do not have the authority or knowledge necessary to properly fix the issue, or its such a hassle for them that they hope you just go away and time fixes the issue on its own. The only sure-fire solution to this is: make sure you have so much extra credit line that this doesn't effect you and you can safely let it time out on its own, or stop doing business with this combination of merchant/payment that creates the problem. Back when my credit limits were being pushed, I would never pay at gas pumps because their hold polices were so weird and unpredictable, and I would only pre-pay inside or with cash to avoid the holds.\"", "title": "" }, { "docid": "b4c8a00c2ccd550325c09cc501ffa17f", "text": "You can either write it off or pursue it. If you write it off I wouldn't do business with the client again, until they bring their balance owed to you back to zero. If you pursue it, try to reach out to the client and find out why they are not paying what they owe you and try to work out a deal with them if they seem negotiable. If they aren't negotiable then you could take the issue to court, but you'll only be proving a point by then.", "title": "" }, { "docid": "29d14308ca1707942c0fe3a844c420fe", "text": "I did just what you suggest. The card company honored the charge, they told me the temporary number was solely for the purpose of assigning a number to one vendor/business. So even though I set a low limit, the number was still active and the card company paid the request. Small price to pay, but it didn't go as I wished. For this purpose, I've used Visa/Mastercard gift cards. They are often on sale for face value and no additional fees.", "title": "" }, { "docid": "43faf3384b9ca7f557b35ff222e3f0d7", "text": "You need to know your costs. Some are fixed. Review them. There are some expenses that are variable. Review the amount and if it is reasonable. Review your large orders. Are they increasing? Ask him how he thinks people will steal from the company. Did he see a large order and the customer will default?", "title": "" }, { "docid": "01cacef29c64c11de2e1789f6891d83c", "text": "It's a pretty good tip. People are often telling you the answer but not explicitly. Example: You call about bad service and demand a refund. The employee tells you: I'm sorry, sir, I can't give you back your money. But maybe he actually said: I'm sorry, sir, I can't give you back your money. Maybe someone else can? I'm sorry, sir, I can't give you back your money. So not give but trade? I'm sorry, sir, I can't give you back your money. So what can you give?", "title": "" }, { "docid": "aeeec46755857b7736b4766bddabbf33", "text": "First off... If you provide good service than you shouldn't worry... Since you are providing a service and your customers send payment to your PayPal, if there is no dispute made within 90 days, the customer cannot dispute further. However if it is disputed within 90 days than you may run into some trouble. But it may be in your favor if PayPal finds no signs of fraud and since it's a service payment, PayPal cannot really track it compared to if your customers paid you for a product which can be disputed up to 180 Days?? I may be wrong on that one. However if it does get disputed and PayPal favors your clients than you have to pay it back one way or another. You may want to ask your customers or put yourself a description of the service and terms in the invoice. It may help resolve future disputes. I know this because I have called PayPal customer service and ask which I suggest you do too.", "title": "" } ]	fiqa
9fe00b43a03b528cd6afd5f8f5a8961a	Retirement formula for annual compound interest with changing principal	[ { "docid": "37528e2711eafb0e0573772a2bf49083", "text": "The equation is the same one used for mortgage amortization. You first want to calculate the PV (present value) for a stream of $50K payments over 20 years at a10% rate. Then that value is the FV (future value) that you want to save for, and you are looking to solve the payment stream needed to create that future value. Good luck achieving the 10% return, and in knowing your mortality down to the exact year. Unless this is a homework assignment, which need not reflect real life. Edit - as indicated above, the first step is to get that value in 20 years: The image is the user-friendly entry screen for the PV calculation. It walks you though the need to enter rate as per period, therefore I enter .1/12 as the rate. The payment you desire is $50K/yr, and since it's a payment, it's a negative number. The equation in excel that results is: =PV(0.1/12,240,-50000/12,0) and the sum calculated is $431,769 Next you wish to know the payments to make to arrive at this number: In this case, you start at zero PV with a known FV calculated above, and known rate. This solves for the payment needed to get this number, $568.59 The excel equation is: =PMT(0.1/12,240,0,431769) Most people have access to excel or a public domain spreadsheet application (e.g. Openoffice). If you are often needing to perform such calculations, a business finance calculator is recommended. TI used to make a model BA-35 finance calculator, no longer in production, still on eBay, used. One more update- these equations whether in excel or a calculator are geared toward per period interest, i.e. when you state 10%, they assume a monthly 10/12%. With that said, you required a 20 year deposit period and 20 year withdrawal period. We know you wish to take out $4166.67 per month. The equation to calculate deposit required becomes - 4166.67/(1.00833333)^240= 568.59 HA! Exact same answer, far less work. To be clear, this works only because you required 240 deposits to produce 240 withdrawals in the future.", "title": "" }, { "docid": "26821c66dd72cf208a64336d6b63caa5", "text": "I've found the systems that seem to work. Firstly, you need to find how much money is required to pay for the withdrawals after retirement, while still accruing interest. I couldn't seem to do this with an equation, but this bit of javascript worked: yearsToLast: Number of years of yearly withdrawals yearlyWithdrawal: Amount to withdraw each year interest: Decimal form of yearly compounding interest Now that we have how much is required at the beginning of the retirement, to figure out how much to add yearly to hit this mark, you'd use: amount: Previously found required amount to reach interest: Decimal form of yearly compounding interest yearsSaving: Number of years saving till amount needs to be hit I hope this helps some other poor soul, because I could find squat on how to do this. Max", "title": "" } ]	[ { "docid": "00155b67fc1e919484a70eadd7488566", "text": "It would help if we had numbers to walk you through the analysis. Current balance, rate, remaining term, and the new mortgage details. To echo and elaborate on part of Ben's response, the most important thing is to not confuse cash flow with savings. If you have 15 years to go, and refinance to 30 years, at the rate rate, your payment drops by 1/3. Yet your rate is identical in this example. The correct method is to take the new rate, plug it into a mortgage calculator or spreadsheet using the remaining months on the current mortgage, and see the change in payment. This savings is what you should divide into closing costs to calculate the breakeven. It's up to you whether to adjust your payments to keep the term the same after you close. With respect to keshlam, rules of thumb often fail. There are mortgages that build the closing costs into the rate. Not the amount loaned, the rate. This means that as rates dropped, moving from 5.25% to 5% made sense even though with closing costs there were 4.5% mortgages out there. Because rates were still falling, and I finally moved to a 3.5% loan. At the time I was serial refinancing, the bank said I could return to them after a year if rates were still lower. In my opinion, we are at a bottom, and the biggest question you need to answer is whether you'll remain in the house past your own breakeven time. Last - with personal finance focusing on personal, the analysis shouldn't ignore the rest of your balance sheet. Say you are paying $1500/mo with 15 years to go. Your budget is tight enough that you've chosen not to deposit to your 401(k). (assuming you are in the US or country with pretax retirement account options) In this case, holding rates constant, a shift to 30 years frees up about $500/mo. In a matched 401(k), your $6000/yr is doubled to $12K/year. Of course, if the money would just go in the market unmatched, members here would correctly admonish me for suggesting a dangerous game, in effect borrowing via mortgage to invest in the market. The matched funds, however are tough to argue against.", "title": "" }, { "docid": "98b754f24b889e94e2c6761e6418131a", "text": "What is the formula for calculating the total cost of a loan with extra payments towards the principal? The formula you require is the standard one for calculating the time to repay. With larger repayments the time to completely repay the loan is reduced. Where The total cost of the loan is then n * d. Explanation & Calculation The formula for a loan is derived from the sum of the cash flows discounted to present value being equal to the principal. For further info see the section here titled: Calculating the Present Value of an Ordinary Annuity The summation can be reduced to a closed form by induction: Rearranging for d and n With the OP's figures The original monthly repayment is $1,006.96 Adding $200 each month ... With the higher repayment the loan is repaid in 257.36 months instead of 360. (Of course a bank would simply take a reduced payment in month 258, but the amounts work out the same.) The saving is $51,882.37 Addendum If the repayments increase was made part-way through the term of the loan the summation and formula would be Where Then For example, if for the first ten years the payments are $1,006.96 and for the remaining time the repayments are $1,206.96 The loan is completely repaid in 302.528 months. The saving is Plotting over a range of m months:", "title": "" }, { "docid": "98d274e0165cfccc061e8c55403a3152", "text": "Yes your basic math is correct. If your tax bracket never changes, then either type of retirement account will end up in the same place. Assuming that there are no income restrictions that will limit your ability to contribute to the type of account you want. Now your job is to guess what your tax bracket will be each and every year for the next 3 or 4 decades. Events that will influence your bracket: getting married; having children; buying a house; selling a house; paying for college; the cost of medical care; moving to a state with a different state tax structure. Of course that assumes that you don't get a big bonus one year or that congress changes the tax brackets. That is why many people have both types of retirement accounts: Roth and non-Roth.", "title": "" }, { "docid": "b73b0ea57bf9938c6d3d2aaaf99b4c1b", "text": "\"Well, the first one is based on the \"\"Pert\"\" formula for continuously-compounded present value, while the second one is the periodically-compounded variant. Typically, the continuously-compounded models represent the ideal; as the compounding period of time-valued money shrinks towards zero, and the discount rate (or interest rate if positive) stays constant over the time period examined, the periodic equation's results approach that of the continuously-compounded equation. Those two assumptions (a constant rate and continuous balance adjustment from interest) that allow simplification to the continuous form are usually incorrect in real-world finance; virtually all financial institutions accrue interest monthly, for a variety of reasons including simpler bookkeeping and less money paid or owed in interest. They also, unless prohibited by contract, accrue this interest based on a rate that can change daily or even more granularly based on what financial markets are doing. Most often, the calculation is periodic based on the \"\"average daily balance\"\" and an agreed rate that, if variable, is based on the \"\"average daily rate\"\" over the previous observed period. So, you should use the first form for fast calculation of a rough value based on estimated variables. You should use the second form when you have accurate periodic information on the variables involved. Stated alternately, use the first form to predict the future, use the second form in retrospect to the past.\"", "title": "" }, { "docid": "77f2fb35a2beff9e1f1c485393fb6fd7", "text": "\"Hey guys I have a quick question about a financial accounting problem although I think it's not really an \"\"accounting\"\" problem but just a bond problem. Here it goes GSB Corporation issued semiannual coupon bonds with a face value of $110,000 several years ago. The annual coupon rate is 8%, with two coupons due each year, six months apart. The historical market interest rate was 10% compounded semiannually when GSB Corporation issued the bonds, equal to an effective interest rate of 10.25% [= (1.05 × 1.05) – 1]. GSB Corporation accounts for these bonds using amortized cost measurement based on the historical market interest rate. The current market interest rate at the beginning of the current year on these bonds was 6% compounded semiannually, for an effective interest rate of 6.09% [= (1.03 × 1.03) – 1]. The market interest rate remained at this level throughout the current year. The bonds had a book value of $100,000 at the beginning of the current year. When the firm made the payment at the end of the first six months of the current year, the accountant debited a liability for the exact amount of cash paid. Compute the amount of interest expense on these bonds for the last six months of the life of the bonds, assuming all bonds remain outstanding until the retirement date. My question is why would they give me the effective interest rate for both the historical and current rate? The problem states that the firm accounts for the bond using historical interest which is 10% semiannual and the coupon payments are 4400 twice per year. I was just wondering if I should just do the (Beginning Balance (which is 100000 in this case) x 1.05)-4400=Ending Balance so on and so forth until I get to the 110000 maturity value. I got an answer of 5474.97 and was wondering if that's the correct approach or not.\"", "title": "" }, { "docid": "78ea266bd36fb5b163f07f784e26b5d4", "text": "I would like to know how they calculated such monthly payment The formula is: Your values would come out to be: r = (1+3.06/(100365))^31-1=0.002602 (converting your annual percentage to a monthly rate equivalent of daily compounded interest) PV = 12865.57 n = 48 Inserting your values into the formula: P = [r(PV)]/[1-(1+r)^(-n)] P = [0.002602(12865.57)]/[1-(1.002602)^(-48)] P = 285.47", "title": "" }, { "docid": "98f243b08477754a4db0a21dd740ad38", "text": "The really simple answer is that compound interest is compound not linear. Money invested for longer earns more interest, and the sooner you start investing, the longer it has to earn interest. These ideas come out of pension investment where 65 is the usual retirement age and what you invest in the 1st ten years of your pension (or any other compound interest fund) accounts for over 50% of what you will get out. 25 to 65 is forty years and $100 invested at 7% for 40 years is $1400. $100 invested every year for 40 years the pot would be worth just under $20,000. At 30 years, it would be worth under $10,000, and at 20 years it would be worth only $4099. If you double your investment amount every 10 years you would have invested $15700, and the pot would be worth $45,457. Do exactly the same but starting at 35 instead of 25 and your pot would only be worth $14,200.", "title": "" }, { "docid": "544f3cee0128618541de2661be51233f", "text": "First, assuming you are making payments for a savings deposit. The present value of the deposit is the sum of the all the payments discounted to present value. In this case they would be discounted by the rate of inflation: £100 deposited next year is worth less than £100 today because it will be eroded by inflation. With a higher rate of inflation the payments are discounted more heavily, so the present value decreases. A deposit, or annuity due (see Calculating the Present Value of an Annuity Due), can be expressed mathematically like so:- ∴ by induction So for example, the following annuity has a present value of £1,136.76 The total amount that will be paid for the annuity is 12 x £100 = £1,200. With a higher rate of inflation, say 2% per month, and with the same 12 x £100 payments, the present value of the annuity decreases. In Excel (£1,078.68) A similar case is that for a loan, or ordinary annuity (see Calculating the Present Value of an Ordinary Annuity), except the discounting factor is the loan interest rate rather than inflation and repayments are made at the end of each period rather than at the start. The present value of a loan is the value of the all the future repayments discounted to present value. With a higher interest rate the payments are discounted more heavily, so the present value decreases. A loan can be expressed mathematically like so:- ∴ by induction So for example, the following values fulfill a loan worth £1,125.51 The total amount that will be paid for the loan is 12 x £100 = £1,200. With a higher rate of interest, say 2% per month, and the same 12 x £100 repayments, the present value of the loan that can be obtained decreases. In Excel (£1,057.53)", "title": "" }, { "docid": "41e358f0c4f17a2e8510b504eef1f6d2", "text": "Retirement calculation, in general, should be based on the amount of money needed per year/month and the expected life expectancy. Life expectancy, if calculated to 90 years (let's say) indicates that post retirement age (60 yrs.) your accumulated/invested money should generate adequate income to cover your expenses till 90 years. The problem in general is not how long you shall live but what would be your expected spending from retirement to end of life expectancy. The idea is at the minimum your investments should generate income that is inflation adjusted. One way to do this is to consider your monthly expense now i.e. the expense that is absolute minimum for carrying on (food, electricity, water, medicines, household consumables, car petrol, insurance, servicing, entertainment, newspaper etc.) this does not contain the amortizable liabilities (home loan, child's education, other debts). It is better to take this amount per family rather than per person and yearly rather than monthly (as we tend to miss a lot of yearly expenses). This amount that you need today will increase at a Compounded Annual Growth Rate (CAGR) of the average inflation. For example, if today you spend 100 per year in 7 years you will need to spend appx. 200 at 10% inflation. Now, your investments will not increase post your retirement, so your current investment needs to do two things (1) give you your yearly requirement (2) grow by a fixed amount so that next year it can give you CAGR adjusted returns. In general, this kind of investment grows by high net amounts initially and slowly the growth decrease. The above can be calculated by Net Present value (NPV) formulae (http://en.wikipedia.org/wiki/Net_present_value). The key is to remember that the money that is invested when you retire should be able to give you inflation adjusted returns to cover your yearly expenses. How much money you need depends on your life style/expectation and how much return is received depends on the instruments that you invest on. As for your question above on the difference between the age of you and your spouse, it better to go with the consolidated family requirement and get an idea of how much investment is necessary and provision the same as soon as possible from your as well as your spouse's income. Hope this helps.- thanks", "title": "" }, { "docid": "415e726f50391132ed4c01460adb72a3", "text": "\"The formula you are looking for is pretty complicated. It's given here: http://itl.nist.gov/div898/handbook/eda/section3/eda3661.htm You might prefer to let somebody else do the grunt work for you. This page will calculate the probability for you: http://stattrek.com/online-calculator/normal.aspx. In your case, you'd enter mean=.114, standard deviation=.132, and \"\"standard score\"\"= ... oh, you didn't say what you're paying on your debt. Let's say it's 6%, i.e. .06. Note that this page will give you the probability that the actual number will be less than or equal to the \"\"standard score\"\". Enter all that and click the magic button and the probability that the investment will produce less than 6% is ... .34124, or 34%. The handy rule of thumb is that the probability is about 68% that the actual number will be within 1 standard deviation of the mean, 95% that it will be within 2 standard deviations, and 99.7% that it will be within 3. Which isn't exactly what you want because you don't want \"\"within\"\" but \"\"less than\"\". But you could get that by just adding half the difference from 100% for each of the above, i.e. instead of 68-95-99.7 it would be 84-98-99.9. Oh, I missed that in a follow-up comment you say you are paying 4% on a mortgage which you are adjusting to 3% because of tax implications. Probability based on mean and SD you gave of getting less than 3% is 26%. I didn't read the article you cite. I assume the standard deviation given is for the rate of return for one year. If you stretch that over many years, the SD goes down, as many factors tend to even out. So while the probability that money in a given, say, mutual fund will grow by less than 3% in one year is fairly high -- the 25 - 35% we're talking here sounds plausible to me -- the probability that it will grow by an average of less than 3% over a period of 10 or 15 or 20 years is much less. Further Thought There is, of course, no provably-true formula for what makes a reasonable risk. Suppose I offered you an investment that had a 99% chance of showing a $5,000 profit and a 1% chance of a $495,000 loss. Would you take it? I wouldn't. Even though the chance of a loss is small, if it happened, I'd lose everything I have. Is it worth that risk for the modest potential profit? I'd say no. Of course to someone who has a billion dollars, this might be a very reasonable risk. If it fails, oh well, that could really cut in to what he can spend on lunch tomorrow.\"", "title": "" }, { "docid": "4bd07322012f097a21bf63a11cc85067", "text": "Since the compounding period and payment period differs (Compounded Daily vs Paid Monthly), you need to find the effective interest rate for one payment period (month). This means that each month you pay 0.33387092772% of the outstanding principal as interest. Then use this formula to find the number of months: Where PV = 21750, Pmt = 220, i = 0.0033387092772 That gives 120 Months. Depending on the day count convention, (30/360 or 30.416/365 or Actual/Actual), the answer may differ slightly. Using Financial Calculator gives extremely similar answer. The total cash paid in the entire course of the loan is 120 x $220 = $26,400", "title": "" }, { "docid": "e14660d08b4b2fa45f1d81f43002d2c7", "text": "\"Wow, this turns out to be a much more difficult problem than I thought from first looking at it. Let's recast some of the variables to simplify the equations a bit. Let rb be the growth rate of money in your bank for one period. By \"\"growth rate\"\" I mean the amount you will have after one period. So if the interest rate is 3% per year paid monthly, then the interest for one month is 3/12 of 1% = .25%, so after one month you have 1.0025 times as much money as you started with. Similarly, let si be the growth rate of the investment. Then after you make a deposit the amount you have in the bank is pb = s. After another deposit you've collected interest on the first, so you have pb = s rb + s. That is, the first deposit with one period's growth plus the second deposit. One more deposit and you have pb = ((s * rb) + s) * rb + s = s + s * rb + s * rb^2. Etc. So after n deposits you have pb = s + s * rb + s * rb^2 + s * rb^3 + ... + s * rb^(n-1). This simplifies to pb = s * (rb^n - 1)/(rb - 1). Similarly for the amount you would get by depositing to the investment, let's call that pi, except you must also subtract the amount of the broker fee, b. So you want to make deposits when pb>pi, or s(ri^n-1)/(ri-1) - b > s(rb^n-1)/(rb-1) Then just solve for n and you're done! Except ... maybe someone who's better at algebra than me could solve that for n, but I don't see how to do it. Further complicating this is that banks normally pay interest monthly, while stocks go up or down every day. If a calculation said to withdraw after 3.9 months, it might really be better to wait for 4.0 months to collect one additional month's interest. But let's see if we can approximate. If the growth rates and the number of periods are relatively small, the compounding of growth should also be relatively small. So an approximate solution would be when the difference between the interest rates, times the amount of each deposit, summed over the number of deposits, is greater than the fee. That is, say the investment pays 10% per month more than your bank account (wildly optimistic but just for example), the broker fee is $10, and the amount of each deposit is $200. Then if you delay making the investment by one month you're losing 10% of $200 = $20. This is more than the broker fee, so you should invest immediately. Okay, suppose more realistically that the investment pays 1% more per month than the bank account. Then the first month you're losing 1% of $200 = $2. The second month you have $400 in the bank, so you're losing $4, total loss for two months = $6. The third month you have $600 in the bank so you lose an additional $6, total loss = $12. Etc. So you should transfer the money to the investment about the third month. Compounding would mean that losses on transferring to the investment are a little higher than this, so you'd want to bias to transferring a little earlier. Or, you could set up a spreadsheet to do the compounding calculations month by month, and then just look down the column for when the investment total minus the bank total is greater than the broker fee. Sorry I'm not giving you a definitive answer, but maybe this helps.\"", "title": "" }, { "docid": "f0fcaada709d1c45c7d277159146313d", "text": "With 10% return over three years, depositing $900 each month, in three years $34,039.30. Re. downvote. I guess this is too brief and without explanation, but I was rushing. If you want further explanation of how this is calculated check the link already posted by JoeTaxpayer, and have a look at the formula for continuously compounded return. Also, try out the numbers in the simplified example below yourself. E.g. Addendum mhoran_psprep has pointed out that I didn't read the OP's post closely enough. With rolling investments the total return will be: Where n is the month number i.e. 36, 37, etc.", "title": "" }, { "docid": "34ff158b6ef5069454476b94d3c6f49b", "text": "Okay, I think I managed to find the precise answer to this problem! It involves solving a non-linear exponential equation, but I also found a good approximate solution using the truncated Taylor series. See below for a spreadsheet you can use. Let's start by defining the growth factors per period, for money in the bank and money invested: Now, let S be the amount ready to be invested after n+1 periods; so the first of that money has earned interest for n periods. That is, The key step to solve the problem was to fix the total number of periods considered. So let's introduce a new variable: t = the total number of time periods elapsed So if money is ready to invest every n+1 periods, there will be t/(n+1) separate investments, and the future value of the investments will be: This formula is exact in the case of integer t and n, and a good approximation when t and n are not integers. Substituting S, we get the version of the formula which explicitly depends on n: Fortunately, only a couple of terms in FV depend on n, so we can find the derivative after some effort: Equating the derivative to zero, we can remove the denominator, and assuming t is greater than zero, we can divide by the constant ( 1-G t ): To simplify the equation, we can define some extra constants: Then, we can define a function f(n) and write the equation as: Note that α, β, γ, G, and R are all constant. From here there are two options: Use Newton's method or another numerical method for finding the positive root of f(n). This can be done in a number of software packages like MATLAB, Octave, etc, or by using a graphics calculator. Solve approximately using a truncated Taylor series polynomial. I will use this method here. The Taylor series of f(n), centred around n=0, is: Truncating the series to the first three terms, we get a quadratic polynomial (with constant coefficients): Using R, G, α, β and γ defined above, let c0, c1 and c2 be the coefficients of the truncated Taylor series for f(n): Then, n should be rounded to the nearest whole number. To be certain, check the values above and below n using the formula for FV. Using the example from the question: For example, I might put aside $100 every week to invest into a stock with an expected growth of 9% p.a., but brokerage fees are $10/trade. For how many weeks should I accumulate the $100 before investing, if I can put it in my high-interest bank account at 4% p.a. until then? Using Newton's method to find roots of f(n) above, we get n = 14.004. Using the closed-form approximate solution, we get n = 14.082. Checking this against the FV with t = 1680 (evenly divisible by each n + 1 tested): Therefore, you should wait for n = 14 periods, keeping that money in the bank, investing it together with the money in the next period (so you will make an investment every 14 + 1 = 15 weeks.) Here's one way to implement the above solution with a spreadsheet. StackExchange doesn't allow tables in their syntax at this time, so I'll show a screenshot of the formulae and columns you can copy and paste: Formulae: Copy and paste column A: Copy and paste column B: Results: Remember, n is the number of periods to accumulate money in the bank. So you will want to invest every n+1 weeks; in this case, every 15 weeks.", "title": "" }, { "docid": "18cd8234a214ff8a7f311bcf36715bc1", "text": "If you need to shop coins, you could do your personal improvement, however, this may be tricky because of even easy documentation errors fee extra. For many little employer proprietors, the high-quality picks the use of a business enterprise company, which is a fee-powerful preference to make sure your documentation is accurate and filed right away with conditions. If you're concerned in Delaware LLC with as little quotes as viable, begin with the aid of considering conditions wherein you'll include. You do no longer require work within the state you select, however it may be more reasonable for pick out your home circumstance.", "title": "" } ]	fiqa
a087468cdab42d44a74f7d262a0fbdee	What is a typical investment portfolio made up of?	[ { "docid": "f5fb93b7a5cd0209d2b227983b37eb21", "text": "Most people carry a diversity of stock, bond, and commodities in their portfolio. The ratio and types of these investments should be based on your goals and risk tolerance. I personally choose to manage mine through mutual funds which combine the three, but ETFs are also becoming popular. As for where you keep your portfolio, it depends on what you're investing for. If you're investing for retirement you are definitely best to keep as much of your investment as possible in 401k or IRAs (preferably Roth IRAs). Many advisers suggest contributing as much to your 401k as your company matches, then the rest to IRA, and if you over contribute for the IRA back to the 401k. You may choose to skip the 401k if you are not comfortable with the choices your company offers in it (such as only investing in company stock). If you are investing for a point closer than retirement and you still want the risk (and reward potential) of stock I would suggest investing in low tax mutual funds, or eating the tax and investing in regular mutual funds. If you are going to take money out before retirement the penalties of a 401k or IRA make it not worth doing. Technically a savings account isn't investing, but rather a place to store money.", "title": "" }, { "docid": "2106c31d84b4c18a5fd0a1c91430e2b5", "text": "Paying off the high-interest debt is a good first start. Paying interest, or compound interest on debt is like paying somebody to make you poor. As for your 401k, you want to contribute enough to get the full match from your employer. You might also consider checking out the fees associated with your 401k with an online fee analyzer. If it turns out you're getting reamed with fees, you can reduce them by fiddling with your investments. Checking your investment options is always a good idea since jobs frequently change them. Opening an IRA is a good call. If you're eligible for both Roth and Traditional IRAs, consider the following: Most financial institutions (brokers or banks) can help you open an IRA in a matter of minutes. If you shop around, you will find very cheap or even no fee options. Many brokers might try to get your business by giving away something for ‘free.' Just make sure you read the fine print so you understand the conditions of their promotional offer. Whichever IRA you choose, you want to make sure that it's managed properly. Some people might say, ‘go for it, do it yourself’ but I strongly disagree with that approach. Stock picking is a waste of time and market timing rarely works. I'd look into flat fee financial advisors. You have lots of options. Just make sure they hear you out, and can design/execute an investment plan specific to your needs At a minimum, they should: Hope this is helpful.", "title": "" }, { "docid": "3fec87ba98c65968d2530af5cf61d076", "text": "\"An investment portfolio is typically divided into three components: All three of those can be accessed through mutual funds or ETFs. A 401(k) will probably have a small set of mutual funds for you to pick from. Mutual funds may charge you silly expenses if you pick a bad one. Look at the prospectus for the expense ratio. If it's over 1% you're definitely paying too much. If it's over 0.5% you're probably paying too much. If it's less than 0.1% you have a really good deal. US stocks are generally the core holding until you move into retirement (or get close to spending the money on something else if it's not invested for retirement). International stocks are riskier than US stocks, but provide opportunity for diversification and better returns than the US stocks. Bonds, or fixed-income investments, are generally very safe, but have limited opportunities for returns. They tend to do better when stocks are doing poorly. When you've got a while to invest, you should be looking at riskier investments; when you don't, you should be looking for safer investments. A quick (and rough) rule of thumb is that \"\"your age should match the portion of your portfolio in bonds\"\". So if you're 50 years old and approaching retirement in 15 years or so, you should have about 50% in bonds. Roughly. People whose employment and future income is particularly tied to one sector of the market would also do well to avoid investing there, because they already are at risk if it performs badly. For instance, if you work in the technology sector, loading up on tech stocks is extra risky: if there's a big bust, you're not just out of a job, your portfolio is dead as well. More exotic options are available to diversify a portfolio: While many portfolios could benefit from these sorts of holdings, they come with their own advantages and disadvantages and should be researched carefully before taking a significant stake in them.\"", "title": "" }, { "docid": "8ea3fa55dc99d74165a2688fa631cbe1", "text": "Don't over think about your choices. The most important thing to start now and keep adjusting and tuning your portfolio as you move along in your life. Each individual's situation is unique. Start with something simple and straight forward, like 100 - your age, in Total Stock market Index fund and the remaining total bond market index fund. For your 401k, at least contribute so much as to get the maximum employer match. Its always good if you can contribute the yearly maximum in your 401k or IRA. Once you have built up a substantial amount of assets (~ $50k+) then its time to think more about asset allocation and start buying into more specific investments as needed. Remember to keep your investment expenses low by using index funds. Also remember to factor in tax implications on your investment decisions. eg. buying an REIT fund in a tax advantaged account like 40k is more tax efficient than buying it in a normal brokerage account.", "title": "" } ]	[ { "docid": "e4cbddfaee0024ce7a0ec84c4ca73a32", "text": "You are diversified within a particular type of security. Notably the stock market. A truly diversified portfolio not only has multiple types of holdings within a single type of security (what your broad market fund does) but between different types. You have partially succeeded in doing this with the international fund - that way your risk is spread between domestic and international stocks. But there are other holdings. Cash, bonds, commodities, real estate, etc. There are broad index funds/ETFs for those as well, which may reduce your risk when the stock market as a whole tanks - which it does on occasion.", "title": "" }, { "docid": "78324133f5ee24f7ae0dc6de65f65c25", "text": "I strongly suggest you go to www.investor.gov as it has excellent information regarding these types of questions. A mutual fund is a company that pools money from many investors and invests the money in securities such as stocks, bonds, and short-term debt. The combined holdings of the mutual fund are known as its portfolio. Investors buy shares in mutual funds. Each share represents an investor’s part ownership in the fund and the income it generates. When you buy shares of a mutual fund you're buying it at NAV, or net asset value. The NAV is the value of the fund’s assets minus its liabilities. SEC rules require funds to calculate the NAV at least once daily. Different funds may own thousands of different stocks. In order to calculate the NAV, the fund company must value every security it owns. Since each security's valuation is changing throughout the day it's difficult to determine the valuation of the mutual fund except for when the market is closed. Once the market has closed (4pm eastern) and securities are no longer trading, the company must get accurate valuations for every security and perform the valuation calculations and distribute the results to the pricing vendors. This has to be done by 6pm eastern. This is a difficult and, more importantly, a time consuming process to get it done right once per day. Having worked for several fund companies I can tell you there are many days where companies are getting this done at the very last minute. When you place a buy or sell order for a mutual fund it doesn't matter what time you placed it as long as you entered it before 4pm ET. Cutoff times may be earlier depending on who you're placing the order with. If companies had to price their funds more frequently, they would undoubtedly raise their fees.", "title": "" }, { "docid": "cde469018b3cfb591796938d77a8ff2d", "text": "I don't see balance sheet in what you're looking at, and I'd definitely suggest learning how to read a balance sheet and looking at it, if you're going to buy stock in a company, unless you know that the recommendations you're buying on are already doing that and you're willing to take that risk. Also, reading past balance sheets and statements can give you an idea about how accurate the company is with their predictions, or if they have a history of financial integrity. Now, if you're going the model portfolio route, which has become popular, the assumption that many of these stock buyers are making is that someone else is doing that for them. I am not saying that this assumption is valid, just one that I've seen; you will definitely find a lot of skeptics, and rightly so, about model portfolios. Likewise, people who trade based on what [Person X] does (like Warren Buffett or David Einhorn) are assuming that they're doing the research. The downside to this is if you follow someone like this. Yeah, oops. I should also point out that technical analysis, especially high probability TA, generally only looks at history. Most would define it as high risk and there are many underlying assumptions with reading the price movements by high probability TA types.", "title": "" }, { "docid": "4c6894948ead5872e579b7d433107eba", "text": "At its simplest level it's an application of basic statistics/probability: Suppose you have n independent and identically distributed assets with the return on asset i denoted R_i which has mean m and variance s^2 (same for all assets). You can easily weaken these assumptions but I make them to simplify the exposition [Square brackets show a numerical example with n=20, m=8%, s=2%] if you invest in one of these assets you expect to get a return of m [8%] with standard deviation s [2%] (so you expect with probability 95% (approx) to get a return between m-2s and m+2s. [between 4% and 12%] Now suppose you split your money equally among the n-assets. Your return is now R = (1/n)\\Sum{i=1}^n R_i your expected return is E(R) = (1/n)\\Sum{i=1}^n E(R_i) = (1/n)\\Sum{i=1}^n m = m [8%] the variance of your return is Var(R) = Var( (1/n)\\Sum{i=1}^n R_i ) = (1/n^2)\\Sum{i=1}^n Var(R_i) = n * s^2 / n^2) = s^2/n So, the standard deviation is SD(R) = Sqrt(V(R)) = s/Sqrt(n) [2%/Sqrt(20) = 0.44%] Now, with 95% probability we get a return between E(R)-2SD(R) and E(R)+2SD(R) [between 7.12% and 8.88%]. This interval is smaller than when we invested in the single asset, so in effect with this portfolio we are achieving the same return m [8%] but with lower variance (risk) [0.44% instead of 2%]. This is the result of diversification. You can assume the assets are not independent (and most book expositions of this topic do indeed do that). In that case the calculation is modified because the variance of the portfolio now depends on the correlation between returns, as does the reduction in variance caused by the diversification. If assets are negatively correlated the result of the diversification will be more reduction in risk and vice versa. You can also assume the assets are not identically distributed and the above analysis does not change too much. You might look for some references on CAPM (Capital Asset Pricing Model) or portfolio theory but broadly these are based on what I have described above - finding the portfolio with minimum variance for a given return by investing proportionally in treasury bonds and risky assets.", "title": "" }, { "docid": "edc663e7d0c90c031d359caf3f23ca44", "text": "\"The standard measure of risk is the variance of the asset. The return on investment of the asset is understood as a random variable with a particular distribution. One can make inferences about the underlying distribution using historical data. As you say, this is what the quants do. There are other, more sophisticated measures of risk that allow for such things as skewed distributions and Markov switching. If you are interested in learning more, I suggest starting with the foundations of Modern Portfolio Theory: \"\"Portfolio Selection\"\" by Harry Markowitz and \"\"Capital Asset Prices\"\" by William Sharpe.\"", "title": "" }, { "docid": "883e13003661c691b6adae423ffef8b1", "text": "\"A diversified portfolio (such as a 60% stocks / 40% bonds balanced fund) is much more predictable and reliable than an all-stocks portfolio, and the returns are perfectly adequate. The extra returns on 100% stocks vs. 60% are 1.2% per year (historically) according to https://personal.vanguard.com/us/insights/saving-investing/model-portfolio-allocations To get those average higher stock returns, you need to be thinking 20-30 years (even 10 years is too short-term). Over the 20-30 years, you must never panic and go to cash, or you will destroy the higher returns. You must never get discouraged and stop saving, or you will destroy the higher returns. You have to avoid the panic and discouragement despite the likelihood that some 10-year period in your 20-30 years the stock market will go nowhere. You also must never have an emergency or other reason to withdraw money early. If you look at \"\"dry periods\"\" in stocks, like 2000 to 2011, a 60/40 portfolio made significant money and stocks went nowhere. A diversified portfolio means that price volatility makes you money (due to rebalancing) while a 100% stocks portfolio means that price volatility is just a lot of stress with no benefit. It's somewhat possible, probably, to predict dry periods in stocks; if I remember the statistics, about 50% of the variability in the market price 10 years out can be explained by normalized market valuation (normalized = adjusted for business cycle and abnormal profit margins). Some funds such as http://hussmanfunds.com/ are completely based on this, though a lot of money managers consider it. With a balanced portfolio and rebalancing, though, you don't have to worry about it very much. In my view, the proper goal is not to beat the market, nor match the market, nor is it to earn the absolute highest possible returns. Instead, the goal is to have the highest chance of financing your non-financial goals (such as retirement, or buying a house). To maximize your chances of supporting your life goals with your financial decisions, predictability is more important than maximized returns. Your results are primarily determined by your savings rate - which realistic investment returns will never compensate for if it's too low. You can certainly make a 40-year projection in which 1.2% difference in returns makes a big difference. But you have to remember that a projection in which value steadily and predictably compounds is not the same as real life, where you could have emergency or emotional factors, where the market will move erratically and might have a big plunge at just the wrong time (end of the 40 years), and so on. If your plan \"\"relies\"\" on the extra 1.2% returns then it's not a reasonable plan anyhow, in my opinion, since you can't count on them. So why suffer the stress and extra risk created by an all-stocks portfolio?\"", "title": "" }, { "docid": "36006f966011491e35cf6577dfab4990", "text": "\"DJIA is a price weighted index (as in the amount of each component company is weighted by its price) and the constituents change occasionally (51 times so far). With these two effects you would not get anything like the same return by equally weighting your holdings and would have to rebalance every so often. Note that your premise was most obviously flawed thinking the number of near bankruptcies there have been in that time. More details of the differing make-ups of the index are available on Wikipedia. When you ask about the \"\"average investment\"\" you would have to be a lot more specific; is it limited just to US shares, to shares, to shares and fixed income securities, should I include all commodities, etc. see also What's the justification for the DJIA being share-price weighted?\"", "title": "" }, { "docid": "958bc50fb642ea1196eccc7d99737758", "text": "Given that hedge funds and trading firms employ scores of highly intelligent analysts, programmers, and managers to game the market, what shot does the average person have at successful investing in the stock market? Good question and the existing answers provide valuable insight. I will add one major ingredient to successful investing: emotion. The analysts and experts that Goldman Sachs, Morgan Stanley or the best hedge funds employ may have some of the most advanced analytical skills in the world, but knowing and doing still greatly differ. Consider how many of these same companies and funds thought real estate was a great buy before the housing bubble. Why? FOMO (fear of missing out; what some people call greed). One of my friends purchased Macy's and Las Vegas Sands in 2009 at around $5 for M and $2 for LVS. He never graduated high school, so we might (foolishly) refer to him as below average because he's not as educated as those individuals at Goldman Sachs, Morgan Stanley, etc. Today M sits around $40 a share and LVS at around $70. Those returns in five years. The difference? Emotion. He holds little attachment to money (lives on very little) and thus had the freedom to take a chance, which to him didn't feel like a chance. In a nutshell, his emotions were in the right place and he studied a little bit about investing (read two article) and took action. Most of the people who I know, which easily had quintuple his wealth and made significantly more than he did, didn't take a chance (even on an index fund) because of their fear of loss. I mean everyone knows to buy low, right? But how many actually do? So knowing what to do is great; just be sure you have the courage to act on what you know.", "title": "" }, { "docid": "20f359098fd69ea33661b6f8f5533514", "text": "Google Portfolio does the job: https://www.google.com/finance/portfolio You can add transaction data, view fundamentals and much more.", "title": "" }, { "docid": "d1015ffe029820bd6079017d96a071be", "text": "Like an S&P 500 ETF? So you're getting in some cash inflow each day, cash outflows each day. And you have to buy and sell 500 different stocks, at the same time, in order for your total fund assets to match the S&P 500 index proportions, as much as possible. At any given time, the prices you get from the purchase/sale of stock is probably going to be somewhat different than the theoretical amounts you are supposed to get to match, so it's quite a tangle. This is my understanding of things. Some funds are simpler - a Dow 30 fund only has 30 stocks to balance out. Maybe that's easier, or maybe it's harder because one wonky trade makes a bigger difference? I'm not sure this is how it really operates. The closest I've gotten is a team that has submitted products for indexing, and attempted to develop funds from those indexes. Turns out finding the $25-50 million of initial investments isn't as easy as anyone would think.", "title": "" }, { "docid": "100c16089b98c6da4bdec9e3d52ba91b", "text": "\"The raw question is as follows: \"\"You will be recommending a purposed portfolio to an investment committee (my class). The committee runs a foundation that has an asset base of $4,000,000. The foundations' dual mandates are to (a) preserve capital and (b) to fund $200,000 worth of scholarships. The foundation has a third objective, which is to grow its asset base over time.\"\" The rest of the assignment lays out the format and headings for the sections of the presentation. Thanks, by the way - it's an 8 week accelerated course and I've been out sick for two weeks. I've been trying to teach myself this stuff, including the excel calculations for the past few weeks.\"", "title": "" }, { "docid": "f22e794d25699e76013708b1fc5884b6", "text": "Not according to the SEC: A mutual fund is an SEC-registered open-end investment company that pools money from many investors and invests the money in stocks, bonds, short-term money-market instruments, other securities or assets, or some combination of these investments. The combined securities and assets the mutual fund owns are known as its portfolio, which is managed by an SEC-registered investment adviser. Each mutual fund share represents an investor’s proportionate ownership of the mutual fund’s portfolio and the income the portfolio generates. And further down: Mutual funds are open-end funds.", "title": "" }, { "docid": "b814e2e4f943f77864610939f302e619", "text": "\"I find it interesting that you didn't include something like [Total Bond Market](http://stockcharts.com/freecharts/perf.html?VBMFX), or [Intermediate-Term Treasuries](http://stockcharts.com/freecharts/perf.html?VBIIX), in your graphic. If someone were to have just invested in the DJI or SP500, then they would have ignored the tenants of the Modern Portfolio Theory and not diversified adequately. I wouldn't have been able to stomach a portfolio of 100% stocks, commodities, or metals. My vote goes for: 1.) picking an asset allocation that reflects your tolerance for risk (a good starting point is \"\"age in bonds,\"\" i.e. if you're 30, then hold 30% in bonds); 2.) save as if you're not expecting annualized returns of %10 (for example) and save more; 3.) don't try to pick the next winner, instead broadly invest in the market and hold it. Maybe gold and silver are bubbles soon to burst -- I for one don't know. I don't give the \"\"notion in the investment community\"\" much weight -- as it always is, someday someone will be right, I just don't know who that someone is.\"", "title": "" }, { "docid": "198ed04523c8fccd9e40079232c52c8f", "text": "There is no typical return for an IRA. Understand that an IRA is not an investment type, it is just an account that gets special tax treatment by the Federal Government. The money in the IRA could be invested in almost anything including Gold, Stocks, Bonds, Cash, CDs, etc. So the question as phrased isn't exactly meaningful. It is kind of like asking what is the typical price of things if I use $10 bills. As for a 10.6% annualized return on your portfolio. That's not a bad return. At that rate you will double your investment (with compounding) every 7.2 years. Again, however, some context is needed. You can really only evaluate investment returns with your risk profile in mind. If you are invested in super safe investments like CDs, that is an absolutely incredible return. You compare it to several indexes, which is a good way to do it if you are investing in the types of investments tracked by those indexes.", "title": "" }, { "docid": "ef25a6623be4b8f0fea3b10714130202", "text": "Have a look at: Diversify Portfolio. The site provides various tools all focused on correlation, diversification and portfolio construction. You can scan through every stock and ETF listed on the NASDAQ and NYSE to find any kind of correlation you're looking for. You can also create a portfolio and then analyze all the correlations within it, or search for specific stocks that can be added to the portfolio based on correlation and various other factors.", "title": "" } ]	fiqa
63fe146ae80edcb3c7c9b72f643ea78e	Should I Use an Investment Professional?	[ { "docid": "e480dd601db84fd15ba11dc4b9f24b1e", "text": "People ... are nearly twice as likely to ... feel confident Great, confidence is amazing. That and $5 will buy you a cup of coffee. 44% [who hired a pro] have $100K or more [vs.] 9% of DIYers There's no way to examine these numbers without a link to the source, but it stands to reason that if you have a plan that you're sticking to you'll save more money than if you are just investing haphazardly. It's too bad that we can't see what the returns are for those using a pro vs. DIYers. That would be much more valuable than an arbitrary dollar level. Unfortunately $100K isn't really that much money if you live in the US, so it's an irrelevant talking point. The real question is whether investment knowledge is readily available to the masses or if having a person who specializes in finance is required to make good decisions about investment. I think the fact that the conventional wisdom prefers index funds to actively managed funds demonstrates that investment professionals are less useful than they might have been even a decade or two ago. If money should be spent on professional advice, it's probably better spent on CPAs or other tax professionals who can help optimize your investments for tax efficiency, though even that is now available as more common knowledge.", "title": "" }, { "docid": "87257c9e7676b1f5e305e8799e0c1dba", "text": "\"Let me start with something you might dismiss as trite - Correlation does not mean Causation. A money manager charging say, 1%, isn't likely to take on clients below a minimum level. On the other hand, there's a long debate regarding how, on average, managed funds don't beat the averages. I think that you should look at it this way. People that have money tend to be focused on other things. A brain surgeon making $500K/yr may not have the time, nor the inclination to want to manage her own money. I was always a numbers person. I marveled at the difference between raising 1.1 to the 40th power, getting 45.3 (i.e. Getting 45.3 times your investment after 40 years at 10%) vs 31.4 at 9%. That 1% difference feels like nothing, but after a lifetime, 1/3 of your money has been skimmed off the top. the data show that one can do better by simply putting their money into a mix of S&P index and cash, and beat the average money manager over time, regardless of convoluted 12 asset class allocations. Similarly - There are people who use a 'tax guy.' In quotes because I mean this as an individual whom they go to, year after year, not a storefront. My inlaws used to go to one, and I was curious what they got for their money. Each year he sent them a form. 3 pages they needed to fill in. Every cell made its way into the guy's tax program. The last year, I went with them to pick up the tax return. I asked him if he noticed that they might benefit from small Roth conversions each year, or by making some of their IRA RMD directly to charity. He kindly told me \"\"That's not what we do here\"\" and whisked us away. I planned both questions in advance. The Roth conversion was a strategy that one could agree made sense or dismiss as convoluted for some clients. But. The RMD issue was very different. They didn't have enough Schedule A deductions to itemize. Therefore the $3000 they donated each year wasn't impacting their return. By donating directly from their IRAs, this money would avoid tax. It would have saved them more than the cost of the tax guy, who charged a hefty fee, in my opinion. It seemed to me, this particular strategy should be obvious to one whose business is preparing returns.\"", "title": "" }, { "docid": "91fb261fb43c7a6e952181591f1f09fb", "text": "\"Ask yourself the same question for furniture making. Would you feel more comfortable sitting in a chair that you made yourself versus one that you bought from a furniture store? How about one that you bought from IKEA and assembled? For an experienced, competent furniture maker, you might be able to make an equivalent chair for less money and be highly confident. For a \"\"DIY\"\" builder, you might be less confident but be willing to take more of a risk with the possibility of making a good chair for less money (and gain experience on what not to do next time). The same applies to investing - if you are highly confident in your own abilities, DIY investing may work better for you. For the \"\"general population\"\", however, relying on experts to do the hard work (and paying a little more for their services) is probably a better option and gives you more confidence. As for the second quote, I'm note sure there's a causality there. If anything, I think it's the other way around - people who have more money saved for retirement are more likely to use investment advisors.\"", "title": "" }, { "docid": "6887793c18bd7e32a144e27a4c402c77", "text": "I am sure there would be many views on the above topic, my take is that DIY takes the following: Now, for many, one or more of the other factors are missing. In this case, it is probably best to go for a financial adviser. There are others who have some of the above in place and are interested but probably cannot spend enough time. For them a middle ground of Mutual Funds probably is a good choice. Here they get to choose the fund they invest in and the fund manager manages the fund. For the people who have the above more or less in place and also are willing to take risk and learn, they probably can do a DIY for a while and find out the actual result. Just my views and opinion.", "title": "" }, { "docid": "4f3d40924805aae62ffe3085c2320a24", "text": "\"Even if we accept these claims as being true, neither the fact that their clients are more confident, nor the fact that people who use an investment professional have a higher net worth tells you anything about the value of the service that such professionals provide. Judging a service provider is a complex matter where you take into account multiple variables but the main ones are the cost and quality of the service, the cost and quality of doing it yourself and the value you assign to your time and effort. I think it's highly likely that professional gardeners will on average maintain larger gardens than those who do their own garden work. And any professional will have more experience at his profession than an average member of the public. But to determine if hiring a professional is objectively \"\"better\"\" requires defining what that word means. Finance is a bit weird in that respect since we actually do have objective ways of measuring results by looking at performance over time. But since the quotes you give here don't address that at all, we can simply conclude that they do not make the case for anything related to financial performance.\"", "title": "" }, { "docid": "a3e79a97b30ad341e174195a9a08cc48", "text": "Agree with the above poster regarding causation vs. correlation. Unless you can separate out the variables questions like this are somewhat impossible to answer. Additionally, one of the fundamental issues is the Agency Problem. Depending on the fee structure the advisor might be more interested in their own self benefit then yours.", "title": "" }, { "docid": "fed007efb508a5594f917b352526261e", "text": "Yes. The investment world is extremely fast-paced and competitive. There are loads of professional traders with supercomputers working day in and day out to make smarter, faster trade decisions than you. If you try to compete with them, there’s a better than fair chance you’ll lose precious time and money, which kind of defeats the purpose. A good wealth manager: In short, they can save you time and money and help you take the most advantage of your current savings. Or, you can think about it in terms of cost. Most wealth managers charge an annual fee (as a % of the amount invested) for their services. This fee can range anywhere from close to zero, to 0.75% depending upon how sophisticated the strategy is that the money will be invested in, and what kind of additional services they have to offer. Investing in the S&P500 on the behalf of the investor shouldn’t need a fee, but investing in a smart beta or an alpha strategy, that generates returns independent of the market’s movement and certainly commands a fee. But how does one figure if that fee is justified? It is really simple. What is the risk-adjusted performance of the strategy? What is the Sharpe ratio? Large successful funds like Renaissance Technologies and Citadel can charge 3% in addition to 30% of profits because even after that their returns are much better than the market. I have this rule of thumb for money-management fees that I am willing to pay:", "title": "" } ]	[ { "docid": "0da5a63664d01ab153188b5ba37b058e", "text": "\"If by \"\"can we trust the analyst recommendations\"\" you mean \"\"are they right 100% of the time\"\" the answer is absolutely no. Analysts are human and make mistakes, some more than others. There are many stories of \"\"superstar managers\"\" that make killings for several straight years, then have a few bad years and lose it all back. However, don't take \"\"you can't trust them\"\" to mean that they are nefarious in some way. While there may be some that recommend stocks for selfish purposes, I suspect that the vast majority are just going off what information they have, and can't predict market behavior or future performance with perfect accuracy. Look at many analysts' recommendations. Do your own analysis. If you're still not comfortable buying individual stocks, then don't buy them. Buy index funds if you are satisfied with market returns, or other mutual funds if you want to invest in specific sectors. Or at the very least make sure you are sufficiently diversified so that you don't lose your entire investment by one bad decision. One rule of thumb is to not have more than 10% of your entire portfolio in any one company.\"", "title": "" }, { "docid": "491a99aedc99af76a8cbdc0058b69d22", "text": "Investing is good. Insurance when you have something to insure is good. But using a single account for investing and insurance is not so good. You need to determine how much you need to invest for retirement. You also need to determine if you need life insurance. As a single person you might determine that you don't have a great need for life insurance. If you get married, or have kids, your needs may grow. So you will want to revisit your decisions every so often. You may need to save for retirement, or setup a college fund. You may need to protect your spouse or children in case you die. It doesn't seem to make sense to invest and insure in a plan with complicated rules, fees and schedules. What happens if in 3 years you need to blow it up and start over? What surrender charges will they hit you with?", "title": "" }, { "docid": "cd64e0364d2155994fb14edafa14b040", "text": "You should ensure that your broker is a member of the Securities Investor Protection Corporation (SIPC). SIPC protects the cash and securities in your brokerage account much like the Federal Deposit Insurance Corporation (FDIC) protects bank deposits. Securities are protected with a limit of $500,000 USD. Cash is protected with a limit of $250,000 USD. It should be noted that SIPC does not protect investors against loss of value or bad advice. As far as having multiple brokerage accounts for security, I personally don’t think it’s necessary to have multiple accounts for that reason. Depending on account or transaction fees, it might not hurt to have multiple accounts. It can actually be beneficial to have multiple accounts so long as each account serves a purpose in your overall financial plan. For example, I have three brokerage accounts, each of which serves a specific purpose. One provides low cost stock and bond transactions, another provides superior market data, and the third provides low cost mutual fund transactions. If you’re worried about asset security, there are a few things you can do to protect yourself. I would recommend you begin by consulting a qualified financial advisor about your risk profile. You stated that a considerable portion of your total assets are in securities. Depending on your risk profile and the amount of your net worth held in securities, you might be better served by moving your money into lower risk asset classes. I’m not an attorney or a financial advisor. This is not legal advice or financial advice. You can and should consult your own attorney and financial advisor.", "title": "" }, { "docid": "f43694d6b791a3c2cd5acf2302cdeffa", "text": "Investopedia does have tutorials about investments in different asset classes. Have you read them ? If you had heard of CFA, you can read their material if you can get hold of it or register for CFA. Their material is quite extensive and primarily designed for newbies. This is one helluva book and advice coming from persons who have showed and proved their tricks. And the good part is loads of advice in one single volume. And what they would suggest is probably opposite of what you would be doing in a hedge fund. And you can always trust google to fish out resources at the click of a button.", "title": "" }, { "docid": "3ae55bf06b5b29598b4932492d995608", "text": "\"You should only invest in individual stocks if you truly understand the company's business model and follow its financial reports closely. Even then, individual stocks should represent only the tiniest, most \"\"adventurous\"\" part of your portfolio, as they are a huge risk. A basic investing principle is diversification. If you invest in a variety of financial instruments, then: (a) when some components of your portfolio are doing poorly, others will be doing well. Even in the case of significant economic downturns, when it seems like everything is doing poorly, there will be some investment sectors that are doing relatively better (such as bonds, physical real estate, precious metals). (b) over time, some components of your portfolio will gain more money than others, so every 6 or 12 months you can \"\"rebalance\"\" such that all components once again have the same % of money invested in them as when you began. You can do this either by selling off some of your well-performing assets to purchase more of your poorly-performing assets or (if you don't want to incur a taxable event) by introducing additional money from outside your portfolio. This essentially forces you to \"\"buy (relatively) low, sell (relatively) high\"\". Now, if you accept the above argument for diversification, then you should recognize that owning a handful (or even several handfuls) of individual stocks will not help you achieve diversification. Even if you buy one stock in the energy sector, one in consumer discretionary, one in financials, etc., then you're still massively exposed to the day-to-day fates of those individual companies. And if you invest solely in the US stock market, then when the US has a decline, your whole portfolio will decline. And if you don't buy any bonds, then again when the world has a downturn, your portfolio will decline. And so on ... That's why index mutual funds are so helpful. Someone else has already gone to the trouble of grouping together all the stocks or bonds of a certain \"\"type\"\" (small-cap/large-cap, domestic/foreign, value/growth) so all you have to do is pick the types you want until you feel you have the diversity you need. No more worrying about whether you've picked the \"\"right\"\" company to represent a particular sector. The fewer knobs there are to turn in your portfolio, the less chance there is for mistakes!\"", "title": "" }, { "docid": "60935e537431524f993dfcf5f2c5a13a", "text": "Go with a Vanguard ETF. I had a lengthy discussion with a successful broker who runs a firm in Chicago. He boiled all of finance down to Vanguard ETF and start saving with a roth IRA. 20 years of psychology research shows that there's a .01 correlation (that's 1/100 of 1%) of stock/mutual fund performance to prediction. That's effectively zero. You can read more about it in the book Thinking Fast and Slow. Investors have ignored this research for years. The truth is you'd be just as successful if you picked your mutual funds out of a hat. But I'll recommend you go with a broker's advice.", "title": "" }, { "docid": "94ca39ebe5195ff60e6057e66b8c62a6", "text": "Since you seem to be interested in investing in individual stocks, this answer will address that. As for the general question of investing, the answer that @johnfx gave is just about as good as it gets. Investing in individual stocks is extremely risky and takes a LOT of work to do right. On top of the fairly obvious need to research a stock before you buy, there is the matter of keeping up with the stocks to know when you need to sell as well as myriad other facets of investing. Paid professionals spend all day, every day, doing this and they have a hard time beating an index fund. Unless you take the time to educate yourself and are willing to continually put in a good bit of effort, I would advise you to stay away from individual stocks and rely on mutual funds.", "title": "" }, { "docid": "4cd9c2b35628903a560ac635280aedbe", "text": "It depends on whether you want a career as a fund manager/ analyst or if you want to be an investor/ trader. A fund manager will have many constraints that a private investor doesn’t have, as they are managing other people’s money. If they do invest their own money as well they usually would invest it differently from how they invest the fund's money. Many would just get someone else to invest their money for them, just as a surgeon would get another surgeon to operate on a family member. My suggestion to you is to find a job you like doing and build up your savings. Whilst you are building up your savings read some books. You said you don’t know much about the financial markets, then learn about them. Get yourself a working knowledge about both fundamental and technical analysis. Work out which method of analysis (if not both) suits you best and you would like to know more about. As you read you will get a better idea if you prefer to be a long term investor or a short term trader or somewhere in-between or a combination of various methods. Now you will start to get an idea of what type of books and areas of analysis you would like to concentrate on. Once you have a better idea of what you would like to do and have gained some knowledge, then you can develop your investment/trading plan and start paper trading. Once you are happy with you plan and your paper trading you can start trading with a small account balance (not more than $10,000 and preferably under $5,000). No matter how well you did with paper trading you will always do worse with real money at first due to your emotions being in it now. So always start off small. If you want to become good at something it takes time and a lot of hard work. You can’t go from knowing nothing to making a million dollars per year without putting in the hard yards first.", "title": "" }, { "docid": "6e7f88b56677a917045c41db97d6ced0", "text": "\"I'd suggest you start by looking at the mutual fund and/or ETF options available via your bank, and see if they have any low-cost funds that invest in high-risk sectors. You can increase your risk (and potential returns) by allocating your assets to riskier sectors rather than by picking individual stocks, and you'll be less likely to make an avoidable mistake. It is possible to do as you suggest and pick individual stocks, but by doing so you may be taking on more risk than you suspect, even unnecessary risk. For instance, if you decide to buy stock in Company A, you know you're taking a risk by investing in just one company. However, without a lot of work and financial expertise, you may not be able to assess how much risk you're taking by investing in Company A specifically, as opposed to Company B. Even if you know that investing in individual stocks is risky, it can be very hard to know how risky those particular individual stocks are, compared to other alternatives. This is doubly true if the investment involves actions more exotic than simply buying and holding an asset like a stock. For instance, you could definitely get plenty of risk by investing in commercial real estate development or complicated options contracts; but a certain amount of work and expertise is required to even understand how to do that, and there is a greater likelihood that you will slip up and make a costly mistake that negates any extra gain, even if the investment itself might have been sound for someone with experience in that area. In other words, you want your risk to really be the risk of the investment, not the \"\"personal\"\" risk that you'll make a mistake in a complicated scheme and lose money because you didn't know what you were doing. (If you do have some expertise in more exotic investments, then maybe you could go this route, but I think most people -- including me -- don't.) On the other hand, you can find mutual funds or ETFs that invest in large economic sectors that are high-risk, but because the investment is diversified within that sector, you need only compare the risk of the sectors. For instance, emerging markets are usually considered one of the highest-risk sectors. But if you restrict your choice to low-cost emerging-market index funds, they are unlikely to differ drastically in risk (at any rate, far less than individual companies). This eliminates the problem mentioned above: when you choose to invest in Emerging Markets Index Fund A, you don't need to worry as much about whether Emerging Markets Index Fund B might have been less risky; most of the risk is in the choice to invest in the emerging markets sector in the first place, and differences between comparable funds in that sector are small by comparison. You could do the same with other targeted sectors that can produce high returns; for instance, there are mutual funds and ETFs that invest specifically in technology stocks. So you could begin by exploring the mutual funds and ETFs available via your existing investment bank, or poke around on Morningstar. Fees will still matter no matter what sector you're in, so pay attention to those. But you can probably find a way to take an aggressive risk position without getting bogged down in the details of individual companies. Also, this will be less work than trying something more exotic, so you're less likely to make a costly mistake due to not understanding the complexities of what you're investing in.\"", "title": "" }, { "docid": "aac3d7275a71c19714675cdce0db0350", "text": "Most individuals do not need a personal financial advisor. If you are soon entering the world of work, your discretionary investments should be focused on index funds that you commit to over the long run. Indeed, the best advice I would give to anyone just starting out would be: For most average young workers, a financial advisor will just give you some version of the information above, but will change you for it. I would not recommend a financial advisor as a necessity until you have seriously complicated taxes. Your taxes will not be complicated. Save your money.", "title": "" }, { "docid": "542c6fa0b2b840983295e6ed8c709c4e", "text": "It doesn't matter which way you use. As long as your comfortable with the overall level of risk/reward in your portfolio, that's what matters. (Though I will say that there are more investment vehicles than stocks, bonds, and cash that are worth considering.)", "title": "" }, { "docid": "beed71391be81e99b6336575872a510f", "text": "Magazines like SmartMoney often have an annual issue that reviews brokers. One broker may have a wider variety of no-fee mutual funds, and if that's your priority, then the stock commissions may be a moot issue for you. In general, you can't go wrong with a Fidelity or Schwab, and to choose investments within the accounts with an eye toward low expenses.", "title": "" }, { "docid": "516c2d122e4ea621f52e35fbf8647cce", "text": "My figuring (and I'm not an expert here, but I think this is basic math) is: Let's say you had a windfall of $1000 extra dollars today that you could either: a. Use to pay down your mortgage b. Put into some kind of equity mutual fund Maybe you have 20 years left on your mortgage. So your return on investment with choice A is whatever your mortgage interest rate is, compounded monthly or daily. Interest rates are low now, but who knows what they'll be in the future. On the other hand, you should get more return out of an equity mutual fund investment, so I'd say B is your better choice, except: But that's also the other reason why I favour B over A. Let's say you lose your job a year from now. Your bank won't be too lenient with you paying your mortgage, even if you paid it off quicker than originally agreed. But if that money is in mutual funds, you have access to it, and it buys you time when you really need it. People might say that you can always get a second mortgage to get the equity out of it, but try getting a second mortgage when you've just lost your job.", "title": "" }, { "docid": "a452388558c5efe9cfa6b7e1088836e9", "text": "\"Give me your money. I will invest it as I see fit. A year later I will return the capital to you, plus half of any profits or losses. This means that if your capital under my management ends up turning a profit, I will keep half of those profits, but if I lose you money, I will cover half those losses. Think about incentives. If you wanted an investment where your losses were only half as bad, but your gains were only half as good, then you could just invest half your assets in a risk-free investment. So if you want this hypothetical instrument because you want a different risk profile, you don't actually need anything new to get it. And what does the fund manager get out of this arrangement? She doesn't get anything you don't: she just gets half your gains, most of which she needs to set aside to be able to pay half your losses. The discrepancy between the gains and losses she gets to keep, which is exactly equal to your gain or loss. She could just invest her own money to get the same thing. But wait -- the fund manager didn't need to provide any capital. She got to play with your money (for free!) and keep half the profits. Not a bad deal, for her, perhaps... Here's the problem: No one cares about your thousands of dollars. The costs of dealing with you: accounting for your share, talking to you on the phone, legal expenses when you get angry, the paperwork when you need to make a withdrawal for some dental work, mailing statements and so on will exceed the returns that could be earned with your thousands of dollars. And then the SEC would probably get involved with all kinds of regulations so you, with your humble means and limited experience, isn't constantly getting screwed over by the big fund. Complying with the SEC is going to cost the fund manager something. The fund manager would have to charge a small \"\"administrative fee\"\" to make it worthwhile. And that's called a mutual fund. But if you have millions of free capital willing to give out, people take notice. Is there an instrument where a bunch of people give a manager capital for free, and then the investors and the manager share in the gains and losses? Yes, hedge funds! And this is why only the rich and powerful can participate in them: only they have enough capital to make this arrangement beneficial for the fund manager.\"", "title": "" }, { "docid": "901f587ef6b4da5a2caa0612bf66b160", "text": "I think following the professional money managers is a strategy worth considering. The buys from your favorite investors can be taken as strong signals. But you should never buy any stock blindly just because someone else bought it. Be sure do your due diligence before the purchase. The most important question is not what they bought, but why they bought it and how much. To add/comment on Freiheit's points:", "title": "" } ]	fiqa
2d85c4c171b61dabb2c10df8a18742a4	What exactly happens during a settlement period?	[ { "docid": "22f5b5bd6ddbadb3f7c70481c5b68139", "text": "\"Securities clearing and settlement is a complex topic - you can start by browsing relevant Wikipedia articles, and (given sufficient quantities of masochism and strong coffee) progress to entire technical books. You're correct - modern trade settlement systems are electronic and heavily streamlined. However, you're never going to see people hand over assets until they're sure that payment has cleared - given current payment systems, that means the fastest settlement time is going to be the next business day (so-called T+1 settlement), which is what's seen for heavily standardized instruments like standard options and government debt securities. Stocks present bigger obstacles. First, the seller has to locate the asset being sold & make sure they have clear title to it... which is tougher than it might seem, given the layers of abstraction/virtualization involved in the chain of ownership & custody, complicated in particular by \"\"rehypothecation\"\" involved in stock borrowing/lending for short sales... especially since stock borrow/lending record-keeping tends to be somewhat slipshod (cf. periodic uproar about \"\"naked shorting\"\" and \"\"failure to deliver\"\"). Second, the seller has to determine what exactly it is that they have sold... which, again, can be tougher than it might seem. You see, stocks are subject to all kinds of corporate actions (e.g. cash distributions, spin-offs, splits, liquidations, delistings...) A particular topic of keen interest is who exactly is entitled to large cash distributions - the buyer or the seller? Depending on the cutoff date (the \"\"ex-dividend date\"\"), the seller may need to deliver to the buyer just the shares of stock, or the shares plus a big chunk of cash - a significant difference in settlement. Determining the precise ex-dividend date (and so what exactly are the assets to be settled) can sometimes be very difficult... it's usually T-2, except in the case of large distributions, which are usually T+1, unless the regulatory authority has neglected to declare an ex-dividend date, in which case it defaults to standard DTC payment policy (i.e. T-2)... I've been involved in a few situations where the brokers involved were clueless, and full settlement of \"\"due bills\"\" for cash distributions to the buyer took several months of hard arguing. So yeah, the brokers want a little time to get their records in order and settle the trade correctly.\"", "title": "" }, { "docid": "31bb2bcfa644d2d77d932c3d312c5cf9", "text": "During the settlement period, the buyer transfers payment to the seller and the seller transfers ownership to the buyer. This is really a holdover from the days when so much of stock trading was done by individual human traders, and computers were still not a huge part of the operation. Back then, paper tickets for trades exchanged hands, and the time period was actually 5 days, so 3 days is an improvement. A settlement period was necessary for everyone to figure out their trades and do what was necessary to make the settlements happen, so it was not always a quick process, mainly because of smaller trading firms that didn't have technology to help them along. Nowadays, technology makes settlements easy, and they usually occur at the end of the trading day. The trading firms sum up their trades, figure out who they owe, and send lump sum settlements to the counterparties to their trades. If anything, the 3-day period may just be used now to let parties verify trades before settling. I hope this helps. Good luck!", "title": "" } ]	[ { "docid": "b3ab4e4fb8cddfc0117247a078637e87", "text": "\"The settlement date for any trade is the date on which the seller gets the buyer's money and the buyer gets the seller's product. In US equities markets the settlement date is (almost universally) three trading days after the trade date. This settlement period gives the exchanges, the clearing houses, and the brokers time to figure out how many shares and how many dollars need to actually be moved around in order to give everyone what they're owed (and then to actually do all that moving around). So, \"\"settling\"\" a short trade is the same thing as settling any other trade. It has nothing to do with \"\"closing\"\" (or covering) the seller's short position. Q: Is this referring to when a short is initiated, or closed? A: Initiated. If you initiate a short position by selling borrowed shares on day 1, then settlement occurs on day 4. (Regardless of whether your short position is still open or has been closed.) Q: All open shorts which are still open by the settlement date have to be reported by the due date. A: Not exactly. The requirement is that all short positions evaluated based on their settlement dates (rather than their trade dates) still open on the deadline have to be reported by the due date. You sell short 100 AAPL on day 1. You then cover that short by buying 100 AAPL on day 2. As far as the clearing houses and brokers are concerned, however, you don't even get into the short position until your sell settles at the end of day 4, and you finally get out of your short position (in their eyes) when your buy settles at the end of day 5. So imagine the following scenarios: The NASDAQ deadline happens to be the end of day 2. Since your (FINRA member) broker has been told to report based on settlement date, it would report no open position for you in AAPL even though you executed a trade to sell on day 1. The NASDAQ deadline happens to be the end of day 3. Your sell still has not settled, so there's still no open position to report for you. The NASDAQ deadline happens to be the end of day 4. Your sell has settled but your buy has not, so the broker reports a 100 share open short position for you. The NASDAQ deadline happens to be the end of day 5. Your sell and buy have both settled, so the broker once again has no open position to report for you. So, the point is that when dealing with settlement dates you just pretend the world is 3 days behind where it actually is.\"", "title": "" }, { "docid": "e1fdcd7e54bb83602f5e55c5b27dc940", "text": "At the bottom of the page you linked to, NASDAQ provides a link to this page on nasdaqtrader.com, which states Each FINRA member firm is required to report its “total” short interest positions in all customer and proprietary accounts in NASDAQ-listed securities twice a month. These reports are used to calculate short interest in NASDAQ stocks. FINRA member firms are required to report their short positions as of settlement on (1) the 15th of each month, or the preceding business day if the 15th is not a business day, and (2) as of settlement on the last business day of the month.* The reports must be filed by the second business day after the reporting settlement date. FINRA compiles the short interest data and provides it for publication on the 8th business day after the reporting settlement date. The dates you are seeing are the dates the member firms settled their trades. In general (also from nasdaq.com), the settlement date is The date on which payment is made to settle a trade. For stocks traded on US exchanges, settlement is currently three business days after the trade.", "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": "e1869cf15c6b9a97003f6139f6dfb8f0", "text": "No, you cannot withdraw the money until settlement day. Some brokers will allow you to trade with unsettled funds, but you cannot withdraw it until it is settled. Think about it, when you buy stock you have to pay for them by T+3, so if you sell you actually don't receive the funds until T+3.", "title": "" }, { "docid": "6ad39f83aacc8997b0def6e760c28763", "text": "You have to call Interactive Brokers for this. This is what you should do, they might even have a web chat. These are very broker specific idiosyncrasies, because although margin rules are standardized to an extent, when they start charging you for interest and giving you margin until settlement may not be standardized. I mean, I can call them and tell you what they said for the 100 rep.", "title": "" }, { "docid": "32c2716abf18c9873139c68bc1960ebb", "text": "Looks like the result got decided recently, with a little uncertainty about exactly how much is the total allowed claims: http://www.wilmingtontrust.com/gmbondholders/plan_disclosure.html http://www.wilmingtontrust.com/gmbondholders/pdf/GUC_Trust_Agreement.pdf They give the following example: Accordingly, pursuant to Section 5.3 of the GUC Trust Agreement, a holder of a Disputed Claim in the Amount of $2,000,000 that was Allowed in the amount of $1,000,000 (A) as of the end of the first calendar quarter would receive: Corresponding to the Distribution to the Holders of Initial Allowed Claims: Corresponding to the First Quarter Distribution to Holders of Units: Total:", "title": "" }, { "docid": "df7fcd1a81102f1a96ffe8c8bfdb0914", "text": "\"Ignoring the complexities of a standardised and regulated market, a futures contract is simply a contract that requires party A to buy a given amount of a commodity from party B at a specified price. The future can be over something tangible like pork bellies or oil, in which case there is a physical transfer of \"\"stuff\"\" or it can be over something intangible like shares. The purpose of the contract is to allow the seller to \"\"lock-in\"\" a price so that they are not subject to price fluctuations between the date the contract is entered and the date it is complete; this risk is transferred to the seller who will therefore generally pay a discounted rate from the spot price on the original day. In many cases, the buyer actually wants the \"\"stuff\"\"; futures contracts between farmers and manufacturers being one example. The farmer who is growing, say, wool will enter a contract to supply 3000kg at $10 per kg (of a given quality etc. there are generally price adjustments detailed for varying quality) with a textile manufacturer to be delivered in 6 months. The spot price today may be $11 - the farmer gives up $1 now to shift the risk of price fluctuations to the manufacturer. When the strike date rolls around the farmer delivers the 3000kg and takes the money - if he has failed to grow at least 3000kg then he must buy it from someone or trigger whatever the penalty clauses in the contract are. For futures over shares and other securities the principle is exactly the same. Say the contract is for 1000 shares of XYZ stock. Party A agrees to sell these for $10 each on a given day to party B. When that day rolls around party A transfers the shares and gets the money. Party A may have owned the shares all along, may have bought them before the settlement day or, if push comes to shove, must buy them on the day of settlement. Notwithstanding when they bought them, if they paid less than $10 they make a profit if they pay more they make a loss. Generally speaking, you can't settle a futures contract with another futures contract - you have to deliver up what you promised - be it wool or shares.\"", "title": "" }, { "docid": "95c2adec4356b3c197307f57a31ce4a5", "text": "Brokerage firms must settle funds promptly, but there's no explicit definition for this in U.S. federal law. See for example, this article on settling trades in three days. Wikipedia also has a good write-up on T+3. It is common practice, however. It takes approximately three days for the funds to be available to me, in my Canadian brokerage account. That said, the software itself prevents me from using funds which are not available, and I'm rather surprised yours does not. You want to be careful not to be labelled a pattern day trader, if that is not your intention. Others can better fill you in on the consequences of this. I believe it will not apply to you unless you are using a margin account. All but certainly, the terms of service that you agreed to with this brokerage will specify the conditions under which they can lock you out of your account, and when they can charge interest. If they are selling your stock at times you have not authorised (via explicit instruction or via a stop-loss order), you should file a complaint with the S.E.C. and with sufficient documentation. You will need to ensure your cancel-stop-loss order actually went through, though, and the stock was sold anyway. It could simply be that it takes a full business day to cancel such an order.", "title": "" }, { "docid": "90ce3189b5431a3e5deccd34b726d818", "text": "The original option writer (seller) can close his short position in the contracts he wrote by purchasing back matching contracts (i.e. contracts with the same terms: underlying, option type, strike price, expiration date) from any others who hold long positions, or else who write new matching contract instances. Rather than buyer and seller settling directly, options are settled through a central options clearing house, being the Options Clearing Corporation for exchange-listed options in the U.S. See also Wikipedia - Clearing house (finance). So, the original buyer of the put maintains his position (insurance) and the clearing process ensures he is matched up with somebody else holding a matching obligation, if he chooses to exercise his put. I also answered a similar question but in more detail, here.", "title": "" }, { "docid": "526bc7b18ef95d6807cad2ecda7b09ab", "text": "If you participate, you will either get some money or some other renumeration. If you do not participate, you will not get anything. The only risk of participating is that if you have suffered actual damages, the settlement may under-compensate you. By significant, I mean thousands of dollars, since bringing suit yourself would be very expensive. Unless you can demonstrate that you have suffered from significant damages as a result of MBNA's bad behavior, joining the class to get whatever you are going to get is almost certainly a no-brainer decision.", "title": "" }, { "docid": "fe0000ec75eb49b8dd3971dad3a268c4", "text": "Typically there are several parties involved: (Sometimes one company plays multiple roles; for example AmEx is a network and an issuer.) When a merchant charges a card and the issuer approves it, money is transferred from the issuer to the acquirer to the merchant. This settlement process takes some time, but generally is completed within a day. Of course, most cardholders pay on a monthly basis. The issuer must use their own funds in the mean time. If the cardholder defaults, the issuer takes the loss.", "title": "" }, { "docid": "123b23a493b497031a0d631a994c11dc", "text": "The T+3 settlement date only affects cash accounts. In a cash account, you need to wait until the T+3 settlement date for your funds to be available to make your next trade. But if you convert your cash account into a margin account, then you do not need to wait until the T+3 settlement date for your next trade - your broker will allow you to make another trade immediately.", "title": "" }, { "docid": "12679eab5d95c3cab86365b68d69c28d", "text": "I used to work on the software in the front office (and a bit of the middle office) of a brokerage firm. This page describes the process pretty well. Basically there are three parts: So to your question: how does an order get executed? ETFs work the same since they are effectively shares of a mutual fund's assets. True mutual fund shares work differently since they don't get traded in the market. They get traded at the end of the market as just a bookkeeping exercise.", "title": "" }, { "docid": "79b730bea961def6987f5d292bed6251", "text": "Let P denote the amount of the investment, R the rate of return and I the rate of inflation. For simplicity, assume that the payment p is made annually right after the return has been earned. Thus, at the end if the year, the investment P has increased to P(1+R) and p is returned as the annuity payment. If I = 0, the entire return can be paid out as the payment, and thus p = PR. That is, at the end of the year, when the dust settles after the return PR has been collected and paid out as the annuity payment, P is again available at the beginning of the next year to earn return at rate R. We have P(1+R) - p = P If I > 0, then at the end of the year, after the dust settles, we cannot afford to have only P available as the investment for next year. Next year's payment must be p(1+I) and so we need a larger investment since the rate of return is fixed. How much larger? Well, if the investment at the beginning of next year is P(1+I), it will earn exactly enough additional money to pay out the increased payment for next year, and have enough left over to help towards future increases in payments. (Note that we are assuming that R > I. If R < I, a perpetuity cannot be created.) Thus, suppose that we choose p such that P(1+R) - p = P(1+I) Multiplying this equation by (1+I), we have [P(1+I)](1+R) - [p(1+I)] = P(1+I)^2 In words, at the start of next year, the investment is P(1+I) and the return less the increased payout of p(1+I) leaves an investment of P(1+I)^2 for the following year. Each year, the payment and the amount to be invested for the following year increase by a factor of (1+I). Solving P(1+R) - p = P(1+I) for p, we get p = P(R-I) as the initial perpetuity payment and the payment increases by a factor (1+I) each year. The initial investment is P and it also increases by a factor of (1+I) each year. In later years, the investment is P(1+I)^n at the start of the year, the payment is p(1+I)^n and the amount invested for the next year is P(1+I)^{n+1}. This is the same result as obtained by the OP but written in terms that I can understand, that is, without the financial jargon about discount rates, gradients, PV, FV and the like.", "title": "" }, { "docid": "b1e85d77351e39748acab3932a4c949f", "text": "I wish this was the case in Canada. I lost about 60k on my home in one year and have to sell now to move for work. In the US I could simply default and the bank takes the loss. In Canada if I default, CMHC pays the bank, then I'm sued by CMHC and stuck with the bad debt. Simply put - here the onus of repayment is on the lender, not the lending institution. It sounds good until you are the one looking at losing your shirt.", "title": "" } ]	fiqa
2a0fe0dc4cc341d0ee1d7688fc229fc0	Should I purchase a whole life insurance policy? (I am close to retirement)	[ { "docid": "abfe341af61637ca246e2c5f0a6d6b15", "text": "\"First of all, congratulations on being in an incredible financial position. you have done well. So let's look at the investment side first. If you put 400,000 in a decent index fund at an average 8% growth, and add 75,000 every year, in 10 years you'll have about $1.95 Million, $800k of which is capital gain (more or less due to market risk, of course) - or $560k after 30% tax. If you instead put it in the whole life policy at 1.7% you'll have about $1.3 Million, $133k of which is tax-free capital gain. So the insurance is costing you $430K in opportunity cost, since you could have done something different with the money for more return. The fund you mentioned (Vanguard Wellington) has a 10-year annualized growth of 7.13%. At that growth rate, the opportunity cost is $350k. Even with a portfolio with a more conservative 5% growth rate, the opportunity cost is $178k Now the life insurance. Life insurance is a highly personal product, but I ran a quick quote for a 65-year old male in good health and got a premium of $11,000 per year for a $2M 10-year term policy. So the same amount of term life insurance costs only $110,000. Much less than the $430k in opportunity cost that the whole life would cost you. In addition, you have a mortgage that's costing you about $28K per year now (3.5% of 800,000). Why would you \"\"invest\"\" in a 1.7% insurance policy when you are paying a \"\"low\"\" 3.5% mortgage? I would take as much cash as you are comfortable with and pay down the mortgage as much as possible, and get it paid off quickly. Then you don't need life insurance. Then you can do whatever you want. Retire early, invest and give like crazy, travel the world, whatever. I see no compelling reason to have life insurance at all, let alone life insurance wrapped in a bad investment vehicle.\"", "title": "" }, { "docid": "e15a5b72f9e1e52242505a6f3cc09a2c", "text": "I'll start by saying that if this is being explored to scratch a specific itch you have then great, if this was a cold call it's probably safe to ignore it. Certain whole life products (they vary in quality by carrier) can make sense for very high earners who are looking for additional tax preferred places to store money. So after you IRA, 401(k), etc options are maxed out but you still have income you'd like to hide from taxes whole life can be a potential vehicle because gains and death benefit are generally exempt from income taxes. Be on the look out for loads charged to your money as it comes in to the policy. Life insurance in general is meant to keep your dependents going without having to sell off assets in the event of your death. People may plan for things like school tuition, mortgage/property tax for your spouse. If you own a business with a couple of partners it's somewhat common for the partners to buy policies on each other to buyout a spouse to avoid potential operating conflicts. Sometimes there can be estate planning issues, if you're looking to transfer assets when you ultimately pass it can make sense to form a trust and load cash in to a whole life policy because death benefits can be shielded from income tax and the estate tax calculation; the current estate tax exemption is about $5.5 million today (judging from your numbers you might actually be close to that including the net value of the homes). Obviously, though, the tax rules are subject to change and you need to be deliberate in your formation of the trust in order to effectively navigate estate tax issues. You seem to have a very solid financial position from this perspective it looks like your spouse would be in good shape. If you are specifically attempting to manage potential estate tax liability you should probably involve an financial planner with experience forming and managing trusts; and you should be very involved with the process because it will absolutely make your finances more complicated.", "title": "" }, { "docid": "0022ac822ab0387b525238d0b7156096", "text": "There's nothing new about Whole Life Insurance. The agent stands to earn a pretty hefty commission if he can sell it to you. I don't think your assets warrant using it for avoiding the taxes that would be due on a larger estate. I don't see a compelling reason to buy it.", "title": "" }, { "docid": "d6919c986116458e4bbfc0dab46fc07c", "text": "\"Disclaimer: I work in life insurance, but I am not an agent. First things first, there is not enough information here to give you an answer. When discussing life insurance, the very first things we need to fully consider are the illustration of policy values, and the contract itself. Without these, there is no way to tell if this is a good idea or not. So what are the things to look for? A. Risk appetite. People love to discuss projections of the market, like for example, \"\"7-8% a year compounded annually\"\". Go look at the historical returns of the stock market. It is never close to that projection. Life insurance, however, can give you a GUARANTEED return (this would be show in the 'Guaranteed' section of the life insurance illustration). As long as you pay your premiums, this money is guaranteed to accrue. Now most life insurance companies also show 'Non-Guaranteed' elements in their illustrations - these are non-guaranteed projections based on a scale at this point in time. These columns will show how your cash value may grow when dividends are credited to your policy (and used to buy paid-up additional insurance, which generates more dividends - this can be compared to the compounding nature of interest). B. Tax treatment. I am definitely not an expert in this area, but life insurance does have preferential tax treatment, particularly to your beneficiaries. C. Beneficiaries. Any death benefit (again, listed as guaranteed and maybe non-guaranteed values) is generally completely tax free for the beneficiary. D. Strategy. Tying all of this together, what exactly is the point of this? To transfer wealth, to accrue wealth, or some combination thereof? This is important and unstated in your question. So again, without knowing more, there is no way to answer your question. But I am surprised that in this forum, so many people are quick to jump in and say in general that whole life insurance is a scam. And even more surprising is the fact the accepted answer has already been accepted. My personal take is that if you are just trying to accrue wealth, you should probably stick to the market and maybe buy term if you want a death benefit component. This is mostly due to your age (higher risk of death = higher premiums = lower buildup) and how long of a time period you have to build up money in the policy. But if a 25 year old asked this same question, depending on his purposes, I may suggest that a WL policy is in fact a good idea.\"", "title": "" } ]	[ { "docid": "a06d0f962d79ab8e476d9ed71d01f442", "text": "\"Buy term and invest the rest is something you will hear all the time, but actually cash value life insurance is a very misunderstood, useful financial product. Cash value life insurance makes sense if: If you you aren't maxing out your retirement accounts, just stick with term insurance, and save as much as you can for retirement. Otherwise, if you have at least 5 or 10k extra after you've funded retirement (for at least 7 years), one financial strategy is to buy a whole life policy from one of the big three mutual insurance firms. You buy a low face value policy, for example, say 50k face value; the goal is to build cash value in the policy. Overload the policy by buying additional paid up insurance in the first 7 years of the policy, using a paid-up addition rider of the policy. This policy will then grow its cash value at around 2% to 4% over the life of the policy....similar perhaps to the part of your portfolio that would would be in muni bonds; basically you are beating inflation by a small margin. Further, as you dump money into the policy, the death benefit grows. After 7 or 8 years, the cash value of the policy should equal the money you've put into it, and your death benefit will have grown substantially maybe somewhere around $250k in this example. You can access the cash value by taking a policy loan; you should only do this when it makes sense financially or in an emergency; but the important thing to realize is that your cash is there, if you need it. So now you have insurance, you have your cash reserves. Why should you do this? You save up your cash and have access to it, and you get the insurance for \"\"free\"\" while still getting a small return on your investment. You are diversifying your financial portfolio, pushing some of your money into conservative investments.\"", "title": "" }, { "docid": "431f89ea81976d1f00f23cea8adacaa5", "text": "\"You, yourself, cannot spend the money from life insurance because, well, you are dead. So the question becomes \"\"what is best for those you leave behind?\"\". Thus is a question that can only be answered by examining the individual(s) you would leave behind. Near as I can tell, you currently have no one else who may be significantly hurt by your passing. So you cannot answer this question until there is (are) that (those) other(s). In the meantime, 'self-insure' by saving (true investing) up the money that you would otherwise be spending on premiums.\"", "title": "" }, { "docid": "2d29f10957e2b14100a27d8ab2ce1cbd", "text": "\"There are two types of insurance: whole life and term. I don't recommend whole life insurance, because you are insuring against something that will happen, your death. Maybe you could buy it if members of your family have a history of outliving the averages. This is called \"\"adverse selection.\"\" Term is different: it insures against your UNTIMELY death. Many people I know take term insurance for the X years until their last child leaves college, or some other well defined \"\"term.\"\" They don't want to die before this term but will be satisfied with the insurance as a \"\"consolation\"\" prize.\"", "title": "" }, { "docid": "90a96629e1d1487295f45c0df0e5d43a", "text": "\"Note that it isn't always clear that \"\"turning it all into an annuity\"\" is the right answer. Annuities are essentially insurance policies -- you're paying them a share of your income to guarantee a specific payout. If you outlive the actuarial tables, that may be a win. If the market crashes, that may be a win. But I'm increasingly hearing the advice that staying in investments (albeit in a very conservative position) may pay better longer. There are tools which will do monte-carlo modelling based on what the market has done in the past. You give them your estimate of how much in today's dollars would be needed to \"\"maintain your lifestyle\"\", and they'll tell you how much savings you need -- and what form you might want to keep those savings in -- to have good odds of being able to live entirely off the earnings and never touch the capital My employer makes such a tool available to us, and in fact Quicken has a simpler version built into it; it's nice that the two agree.\"", "title": "" }, { "docid": "f72cb7e41ad67c99edfd822831b804ba", "text": "\"Life insurance may be tax-privileged under certain circumstances. The intent must be to buy an annuity, at retirement age. Unlike \"\"banksparen\"\", you must consider what happens if you die early.\"", "title": "" }, { "docid": "2af54e9f869b44c4f65083b7c30d1f2d", "text": "Though I do think it is important to have a diversified portfolio for your retirement, I also think it's more important to make sure you are at no point touching this money until you retire. Taking money out of your retirement early is a sure fire way to get in a bad habit of spending this money when you need a little help. Here's a tip: If you consider this money gone, you will find another way to figure out your situation. With that said, I also would rather not put a percentage on this. Start by building your emergency fund. You'll want to treat this like a bill and make a monthly payment to your savings account each month or paycheck. When you have a good nine times your monthly income in here, stop contributing to this fund. Instead start putting the same amount into your IRA instead. At this point you should no longer have to add to your emergency fund unless there is a true emergency and you are replacing that money. Keep in mind that the amount of money in your emergency fund changes significantly in each situation. Sit down with your bills and think about how much money you would need in the event you lost your job. How long would you be out of work? How many bills do you have each month that would need to be covered?", "title": "" }, { "docid": "bf53d98116e6b5288511d85a53574e6e", "text": "If you have doubts about the long term prospects at your employer or jobs in your area, you may want to keep the option of moving to find a new job open while you save up for a larger down payment on a house. While there are insurance products out there that claim to cover your mortgage, they often have loopholes which make them difficult to collect on. Insurance companies are in business to make money and premiums are high when it's likely that people will try to collect. Splitting those premiums into your mortgage and your own self-insured unemployment fund (i.e. an emergency fund in a money market bank account) will usually be a better deal. As always, make sure you have term life insurance for a family and long term disability insurance just in case something really bad happens in the near term. Buying a home is a better financial decision when you know you'll be in an area for at least 5 years. Saving until you have 20% down on place that you can afford to pay off in 15 years (even if you take a 30 year loan) will be a lot cheaper and less stressful.", "title": "" }, { "docid": "6f076dd3187018636d45d0f17fa3d758", "text": "\"Note: this answer was provided when the question was only about Life Insurance, therefore it does not address any other \"\"benefits\"\" Term Life Insurance is very easy to evaluate, once you have determined how much you need and for how long. For significant amounts of coverage they may require a physical to be performed. The price quotes will be for two levels of health, so you can compare costs from many companies quite easily. You have several sources in no particular order: employer, independent company, 3rd party like AARP, AAA, or via you bank or credit union. Note that the 3rd party will be getting a cut of the premium. Also some choices offered from the employer or 3rd party may be limited in size or duration. The independent companies will be able to have terms that extend for 10 years or more. So view the insurance offered by AARP as just another option that has to be compared to all your other options.\"", "title": "" }, { "docid": "dfd3f789eb8401cadbe5234c4f129e0f", "text": "\"Whole life is life insurance that lasts your whole life. Seriously. Since the insurance company must make a profit, and since they know they will always pay out on a whole life policy, whole life tends to be very expensive, and has lower \"\"death\"\" benefits than a term policy. Some of these policies are \"\"paid-up\"\" policies, meaning that they are structured so that you don't have to pay premiums forever. But what it amounts to is that the insurance company invests your premiums, and then pays you a smaller \"\"dividend,\"\" much like banks do with savings accounts. Unless you are especially risk-averse, it is almost always a better decision to get an inexpensive term policy, and invest the money you save yourself, rather than letting the insurance company invest it for you and reap most of the benefits. If you are doing things properly, you won't need life insurance your whole life, as retirement investments will eventually replace your working income.\"", "title": "" }, { "docid": "1ede2b51cdd872e298ff41ff9de74aa4", "text": "Yes, you should be saving for retirement. There are a million ideas out there on how much is a reasonable amount, but I think most advisor would say at least 6 to 10% of your income, which in your case is around $15,000 per year. You give amounts in dollars. Are you in the U.S.? If so, there are at least two very good reasons to put money into a 401k or IRA rather than ordinary savings or investments: (a) Often your employer will make matching contributions. 50% up to 6% of your salary is pretty common, i.e. if you put in 6% they put in 3%. If either of your employers has such a plan, that's an instant 50% profit on your investment. (b) Any profits on money invested in an IRA or 401k are tax free. (Effectively, the mechanics differ depending on the type of account.) So if you put $100,000 into an IRA today and left it there until you retire 30 years later, it would likely earn something like $600,000 over that time (assuming 7% per year growth). So you'd pay takes on your initial $100,000 but none on the $600,000. With your income you are likely in a high tax bracket, that would make a huge difference. If you're saying that you just can't find a way to put money away for retirement, may I suggest that you cut back on your spending. I understand that the average American family makes about $45,000 per year and somehow manages to live on that. If you were to put 10% of your income toward retirement, then you would be living on the remaining $171,000, which is still almost 4 times what the average family has. Yeah, I make more than $45,000 a year too and there are times when I think, How could anyone possibly live on that? But then I think about what I spend my money on. Did I really need to buy two new computer printers the last couple of months? I certainly could do my own cleaning rather than hiring a cleaning lady to come in twice a month. Etc. A tough decision to make can be paying off debt versus putting money into an investment account. If the likely return on investment is less than the interest rate on the loan, you should certainly concentrate on paying off the loan. But if the reverse is true, then you need to decide between likely returns and risk.", "title": "" }, { "docid": "2f3358b29eec782ddab5b1b3b864a075", "text": "\"Your wife is probably not going to be able to get a policy until all tests are complete and the doctors give her a clean bill of health. A change in your health could make your premiums 50% to 75% higher than they would be if you applied for a policy in perfect health. Health history is one of the biggest factor in calculating an LTCi premium. The average age for purchasing a policy is 59. Including all rate increases, the average long-term care insurance premium is $1,591 per year, based on my calculations from a 2015 National Association of Insurance Commissioners report with 2014 data. Because of new consumer protections designed to prevent rate increases, policies purchased today do cost more than older policies. In 2015, the average premium for a new policy was $2,532 per year, according to a LIMRA survey of most companies selling long-term care insurance. (Couples can get discounts as high as 30 percent when purchasing policies at the same time.) Do NOT work with just a local insurance agent who sells many different types of insurance. ONLY work with an insurance agent who specializes in LTC insurance and that represents at least 7 of the top companies. There are probably a couple of hundred agents in the country that specialize in LTC, are independent agents representing a lot of companies AND have a lot of experience. Interview at least 3 different agents. Get quotes from every agent you speak with and ask each of them their opinion about which policy you should get. Go with the agent who seems the most knowledgeable and professional. Do NOT buy LTC insurance from a \"\"financial advisor\"\". They are usually limited to offering only a few companies (because of their broker/dealer arrangements) and they rarely understand LTC underwriting. Do NOT buy LTC insurance from the company you get auto insurance or home insurance with. And do NOT buy a policy just because your retirement association or alumni association recommends it. SHOP around. In your wife's case it would probably be wise to apply to more than one company at the same time in case one of them denies her application. Here is an article I wrote for NextAvenue.org (a website owned by PBS) which answers some of the most common misconceptions about LTC insurance: An Insurance Agent’s Case for Buying Long-Term Care Insurance.\"", "title": "" }, { "docid": "21ff386e7a21906780042edb5ffa2a1d", "text": "Good news! It will be enough if you make the most important decision after retirement; that is, the decision to live within your means. With $220,000 per year in 2015 resources, will you live in the same size home in the same location as you do now? Or will you downsize a bit and move to a town with more reasonably priced homes and lower taxes? Apply the same thinking to all of your expenses. In my opinion, making the decision to live within your means is the biggest decision you can make going into retirement.", "title": "" }, { "docid": "25874c2a7eeab0057b1f0559a8b40762", "text": "\"Term is the way to go. Whole/universal are basically a combo of term and savings, so buy term life insurance and invest the difference in cost yourself. You should make a lot more that way (as far as savings go) than by buying whole life. By the time term life gets too expensive to be worth (when you're a lot older) you will have enough saved to become \"\"self-insured\"\". Just don't touch the savings :) You really only need insurance when there is income to replace and debts to cover - house/mortgage, kids/school, job income, etc.\"", "title": "" }, { "docid": "e986d00b1b65c89f70aea126b6dfa7a3", "text": "\"You are kind of thinking of this correctly, but you will and should pay for insurance at some point. What I mean by that is that, although the insurance company is making a profit, that removing the risk for certain incidents from your life, you are still receiving a lot of value. Things that inflict large losses in your life tend to be good insurance buys. Health, liability, long term care, long term disability and property insurance typically fall into this category. In your case, assuming you are young and healthy, it would be a poor choice to drop the major medical health insurance. There is a small chance you will get very sick in the next 10 years or so and require the use of this insurance. A much smaller chance than what is represented by the premium. But if you do get very sick, and don't have insurance, it will probably wipe you out financially. The devastation could last the rest of your life. You are paying to mitigate that possibility. And as you said, it's pretty low cost. While you seem to be really good at numbers it is hard to quantify the risk avoidance. But it must be considered in your analysis. Also along those lines is car insurance. While you may not be willing to pay for \"\"full coverage\"\" it's a great idea to max out your personal liability if you have sufficient assets.\"", "title": "" }, { "docid": "44d368f9c761debde9b6911dd5d7e889", "text": "The problem with the cash value is that it's really slow to accumulate. For the first many years you'll just be paying premiums which are front loaded until the insurance company gets their money back. Whole life is NOT an investment, regardless of what your 'advisor' says. It's insurance, and expensive insurance at that.", "title": "" } ]	fiqa
8835892871b61ef4de87a6ec64064dcd	Value of credit score if you never plan to borrow again?	[ { "docid": "1f1da2383bf77d16e0fca936499ad01e", "text": "\"In the United States, the Fair Credit Reporting Act allows companies to buy your credit information for \"\"legitimate business needs.\"\" The legitimate use of credit scores and credit reporting varies state to state, but like it or not, you can expect a lot more non-lending use of your credit information in the future. Companies and individuals use credit reports as an assessment of general behavior because, unfortunately, they work. You've seen the disclaimers about \"\"past performance…\"\", but unfortunately in this case… past performance really has been shown to be a pretty reliable indicator of future behavior. So…\"", "title": "" }, { "docid": "f56ea82cfd41bbaf3e175e705bb35301", "text": "\"what are the incentives to that person to actually pay off his/her debt as opposed to just walking away from it and relying on the cash (s)he has for the future spending needs as opposed to borrowing Well, you can't just \"\"walk away\"\" from debt - you still owe it. Eventually your creditors would end up suing you in court for the money, plus interest owed. I suppose you could try to continually duck the authorities, but you'd still owe the money legally.\"", "title": "" }, { "docid": "cf72b9016862b87ac26ec47661af81e8", "text": "If you're wealthy why do you think they wouldn't sue you for the money you owed?? And, as sunk818 says, credit scores can influence insurance costs. While you could self-insure your home you generally can't self-insure when it comes to liability coverage on a car.", "title": "" }, { "docid": "124cae85af8990ca07a7801c5d000706", "text": "Only reason I can think of is that having a credit card, or several, is handy for buying stuff on-line, or not having to haul around a fat wallet full of cash. Of course for some of us, getting the cash back and 0% interest periods are nice, too, even if we don't really need the money. Same as for instance trying to get good mpg when you're driving, even if you could easily afford to fill up a Hummer. It's a game, really.", "title": "" }, { "docid": "b7903f7bac6c4a5fce750be794314e88", "text": "According to Money Girl, home insurance premiums are higher if you have a poor credit score. You might self-insure though if you are wealthy.", "title": "" }, { "docid": "7cfb64bbf0a388ad9bda6cea06cdc2ce", "text": "\"There's many concrete answers, but there's something circular about your question. The only thing I can think of is that phone service providers ask for credit report when you want to start a new account but I am sure that could be worked around if you just put down a cash deposit in some cases. So now the situation is flipped - you are relying on your phone company's credit! Who is to say they don't just walk away from their end of the deal now that you have paid in full? The amount of credit in this situation is conserved. You just have to eat the risk and rely on their credit, because you have no credit. It doesn't matter how much money you have - $10 or $10000 can be extorted out of you equally well if you must always pay for future goods up front. You also can't use that money month-by-month now, even in low-risk investments. Although, they will do exactly that and keep the interest. And I challenge your assumption that you will never default. You are not a seraphic being. You live on planet earth. Ever had to pay $125,000 for a chemo treatment because you got a rare form of cancer? Well, you won't be able to default on your phone plan and pay for your drug (or food, if you bankrupt yourself on the drug) because your money is already gone. I know you asked a simpler question but I can't write a good answer without pointing out that \"\"no default\"\" is a bad model, it's like doing math without a zero element. By the way, this is realistic. It applies to renting in, say, New York City. It's better to be a tenant with credit who can withhold rent in issue of neglected maintenance or gross unfair treatment, than a tenant who has already paid full rent and has left the landlord with little market incentive to do their part.\"", "title": "" }, { "docid": "bd54cde816bd45947791601cbb7f80ee", "text": "\"You're definitely not the first to pose this question. During the peak of the housing crisis I noticed a decent amount of very high dollar properties get abandoned to their fates. Individuals who can afford the mortgage on a 5 million dollar home don't necessarily need their credit to survive so it made more sense to let the asset (now a liability) go and take the hit on their credit for a few years. Unsecured debt, as mentioned is a little trickier because its backed by default by your personal estate. If the creditor is active they will sue you and likely win unless there are issues with their paperwork. Thing is though, you might escape some impacts of the debt to your credit rating and you might not \"\"need\"\" credit, but if you were to act as a wealthy person and not \"\"new money\"\" you would observe the significant value of using credit. credit allows you to leverage your wealth and expand the capacity of your money to import your overall wealth picture. It may prove best to learn that and then make more wealth on your winnings than take the short sighted approach and welch on the debt.\"", "title": "" } ]	[ { "docid": "a6e78d648403a607c83fb538ac0fd1d7", "text": "I have recently been the lender to a couple people. It was substantially less money (~$3k), but I was trusting their good faith to pay me back. As a lender, I will never do it again. Reasons, Overall, not worth it.", "title": "" }, { "docid": "67b39f9d9a0fa81fd6d9e382b9752159", "text": "\"The conclusion that \"\"it's bad to have 0% utilization\"\" from the data you linked is misleading. When people have zero history, they also have zero utilization. The fact that generally people with zero utilization are credit virgins is what drives that average score. Obviously, people with zero, or limited, history will have significantly lower credit scores than folks with some utilization and a lot of history. In response to the couple comments regarding the dip on attaining 0% utilization. The data shows a 67 point drop in average score from 0% to 1%-10%. The stark deviation in average score between those two groups is not the result of a couple point change because of zero utilization.\"", "title": "" }, { "docid": "01f84dfb9ac0438003575fe35c16a1ed", "text": "Well, it is a negative point of view, but nobody in the history of money has ever loaned money because they like you. I suppose you could paint it as an honest point of view. All money lending is for profit. If you have a high score, you are very likely to repay your loan because you are lower risk. We always hear lower risk... but the risk is that they won't make money off of you. I think that just like we buy previously owned vehicles cars instead of used cars, and we banks call them service fees instead of junk fees, our credit score discusses our credit worthiness instead of profitability But none of that means you can't benefit from it. It isn't a fear tactic, it is a way to judge each other. You probably pay interest and fees to keep it high, but that is price of lending. I think the questioner has a negative view of credit (which I suppose is fine and is their right, I will defend their right to an opinion) but the way we do and judge credit is neither evil or benevolent. I could certainly agree that more transparency would be good, but only for honest folks. If the credit bureaus made it public how they judged us, there would be a new industry for people who want to game the system. Update Since it always will cost to use credit, and using credit is the only way to prove your a low credit risk, it will therefore always cost money to raise your credit score. However the return on investment is exemplified in this question: a person with no credit was able to get a loan, but at serious out of pocket cost. Later, after establishing credit at a price of real money, he was able to secure a nearly identical loan for considerably less cost (in terms of interest paid) because he had proven himself worthy. When I say proven, I mean paid interest. There is nothing wrong with questioning the system, change only occurs when people question the status quo. And for sure our current system is not perfect, but like many employed systems while it is terrible but there is nothing better.", "title": "" }, { "docid": "bf0dd5767867e5eaa5e7a011d127afa5", "text": "Has this already occurred, if not: why? What are the road blocks? I think it's just that the barriers to entry are rather high. Lenders would potentially be interested in a new score if it demonstrably saved them money (by more effectively weeding out risky borrowers), but because the FICO score already exists and they already know how to use it, there are costs and risks in making the transition, so lenders are unlikely to switch without solid evidence. But to get solid evidence, you would need to test out the new score and see how well it correlated with loan default and so forth. So there is a catch-22: no one will use the score until they know it works, but you can't know whether it works until people start using it. The existence of non-FICO credit scores (like VantageScore) shows that it is possible for alternatives to crop up. The question is just whether they have enough concrete advantages to overcome the track record and name recognition of FICO. Only time will tell. As for why an alternative score wouldn't be open source, you could ask the same about almost anything. Creating a measurably better score would likely take lots of time and money (to gather and analyze data both on characteristics of borrowers and on their record of debt payment). If someone is able to do that, they would probably rather do it secretly and then milk it for billions by selling the results of the secret for a long time without selling the secret itself, as FICO has done.", "title": "" }, { "docid": "a05dfe3bfec8a8b33e261f14d14cdadb", "text": "How bad would maxing out my credit card once a year affect my score is a related discussion. You shouldn't be using 20%, but rather keep the monthly statement below 20%. If the credit lines add to $5000, charging gas and paying in full each month will help your score (obviously, I assume you don't pay more than $1000/mo for gas). Letting the balance go unpaid month to month means you are paying interest. Probably 18% or more. This is bad.", "title": "" }, { "docid": "71e65b915ad5bd6b5e9fba34bd64e114", "text": "The whole point of a credit report and, by extension, a credit score, is to demonstrate (and judge) your ability to repay borrowed funds. Everything stems from that goal; available credit, payment history, collections, etc all serve to demonstrate whether or not you personally are a good investment for lenders to pursue. Revolving credit balances are tricky because they are more complicated than fixed loans (for the rest of this answer, I'll just talk about credit cards, though it also applies to lines of credit such as overdraft protection for checking accounts, HELOCs, and other such products). Having a large available balance relative to your income means that at any time you could suddenly drown yourself in debt. Having no credit cards means you don't have experience managing them (and personal finances are governed largely by behavior, meaning experience is invaluable). Having credit cards but carrying a high balance means you know how to borrow money, but not pay it back. Having credit cards but carrying no balance means you don't know how to borrow money (or you don't trust yourself to pay it back). Ideally, lenders will see a pattern of you borrowing a portion of the available credit, and then paying it down. Generally that means utilizing up to 30% of your available credit. Even if you maintain the balance in that range without paying it off completely, it at least shows that you have restraint, and are able to stop spending at a limit you personally set, rather than the limit the bank sets for you. So, to answer your question, 0% balance on your credit cards is bad because you might as well not have them. Use it, pay it off, rinse and repeat, and it will demonstrate your ability to exercise self control as well as your ability to repay your debts.", "title": "" }, { "docid": "58f282bc2b839fbc071dca805eaccf6c", "text": "\"Read the terms carefully. With promotional offers, if you do anything \"\"bad\"\", the promotion is terminated and you immediately revert to either your normal rate or a penalty rate. \"\"Bad\"\" includes things like: making a late payment, going over your limit, paying less than the minimum payment, etc. I wouldn't sweat the potential credit score impacts. These promotions are pretty much the best deals that you can get for an unsecured loan.\"", "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": "c0bd03783aee58b3f6f5ef4eb8fa4e86", "text": "You don't need a credit score. After I paid off my house mortgage many years ago I had this discussion with my mortgage agent (now bank VP). Your credit score is not a measure your ability to repay. It is a behavioral model and a statistical measure of the likelihood that the banks will make money off of you when they give you a loan, and a marketing tool that the banking industry uses to sell you long term and short term debt (mortgages and credit cards). Statistically speaking, people who close out major loans change their behaviors, and the model captures this change in behavior. In my own case, even though I have a credit history and sufficient cash is the bank to buy my next home outright, I have no credit score . What the model says is that people with my behavioral profile are not likely to take a loan, and if they did take one, they would pay it back so quickly that the bank would not even recoup the cost of initiating the loan. In short, people with my profile are bad news for the loans side of the bank. Thanks @quid for suggesting I capture this and post it as an answer", "title": "" }, { "docid": "a20d9562e99742ffa112be51363bb7c9", "text": "If I use my credit card on my ITIN and behave like a good guy (paying everything on time), will it create history for my SSN next year or will I have to start from scratch? Yes, you'll keep your history, it will be reported on your SSN when you update your creditors with it. I have an option of using a secured card v/s an unsecured one. Which one is better from the view of my credit history? The one which you don't have to pay for. Consider the value of money you're using for the secured card, and all the fees and interest you expect to pay. Unless you're planning on a mortgage in the next couple of years, there's no rush with the credit. It is definitely not worth paying money for.", "title": "" }, { "docid": "eeb983da9cfabadda4c0df8aeb8309d3", "text": "I have heard that it is better for your credit score to pay them down over time. Will it make much of a difference? I have never heard that, however, the financial institutions (who are charging you an amount of interest which was at one time in the not so distant past classified and punishable in state criminal codes) really enjoy you thinking that way. You are clearly capable of doing the math yourself. While I don't know the exact numbers, I am totally confident that you will find in about 5 or 10 minutes (if that long) that eliminating debt of any kind in your life will pay an immediate return that beats the great majority of other investments in terms of risk/reward. After the immediate financial return, there is a quieter, subtler, and even greater long term benefit. Basic principle: Highest Rates First Perhaps this decision could be considered slightly less important than deciding not to smoke during your youth; but I would put it as a close second. You are already in a position where you can see the damage that your prior decisions (about financial debt) have produced. Run the clock back to the time in your life when you were debt free. Now, pay off that debt with the big check, and start from zero. Now, turn on your psychic powers and predict the same amount of time, in the future, with the same amount of money (don't even try to adjust for inflation; just use flat dollars) WITHOUT losing the money which you have given to the financial institutions during this previous part of your life. Do you now see why the financial institutions want you to think about slowly paying them off instead of waking up tomorrow without owing them anything ?", "title": "" }, { "docid": "757f07686cc03e3eb9ce39fad86bef4b", "text": "\"The worth of a credit score (CS) is variable. If you buy your stuff outright with 100% down then your CS is worthless. If you take a loan to buy stuff then it is worth exactly what you save in interest versus a poor score. But there is also the \"\"access\"\" benefit of CS where loans will no longer be available to you, forcing you to rent. If you consider rent as money down teh tiolet then this could factor in. The formula for CS worth is different for everyone. Bill Gates CS is worth zero to him. Walking away from a mortage is not the same as walking away from a loan. A mortage has collateral. There are 2 objects: the money, and the house. If you walk away the bank gets the house as a fair trade. They keep all money you put against the house to boot! Sometimes the bank PROFITS when you walk away. So in a good market you could consider walking away to be the Moral Michael thing to do. :)\"", "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": "707710b1f52ebd3e174ecd48ca16ad0c", "text": "\"I have never had a credit card and have been able to function perfectly well without one for 30 years. I borrowed money twice, once for a school loan that was countersigned, and once for my mortgage. In both cases my application was accepted. You only need to have \"\"good credit\"\" if you want to borrow money. Credit scores are usually only relevant for people with irregular income or a past history of delinquency. Assuming the debtor has no history of delinquency, the only thing the bank really cares about is the income level of the applicant. In the old days it could be difficult to rent a car without a credit car and this was the only major problem for me before about 2010. Usually I would have to make a cash deposit of $400 or something like that before a rental agency would rent me a car. This is no longer a problem and I never get asked for a deposit anymore to rent cars. Other than car rentals, I never had a problem not having a credit card.\"", "title": "" }, { "docid": "9682391181e29e0ff28ebdd867c816e5", "text": "Your credit rating will rise once the loan is repaid or paid regularly (in time). It will not get back to normal instantly. If the property is dead weight you may want to sell it so your credit score will increase in the medium term.", "title": "" } ]	fiqa
78aefe3fc9be5b3f813e78302a8f32d2	For SSI, is “authorized user” status on a bank account the same as “ownership”?	[ { "docid": "a8d3723c9efcbb61d7eed84a2e6893c2", "text": "\"Having dealt with with Social Security, state agencies, and banks more than I'd care to, I would urge you to do the following: 1) Get a 100% clear answer on whether or not you are listed as \"\"joint\"\" or \"\"authorized user/signer\"\" for an account. This will probably require a call to the bank, but for less than an hour of you and your friend's time you will save yourself a whole lot of hassle. The difference is like this: if you worked at a business that added you as an authorized user for a credit or debit card, this would allow you to use the card to buy things. But that doesn't make the money in the bank yours! On the other hand if you are listed as \"\"joint\"\", this regards ownership, and it could become tricky to establish whether its your money or not to any governmental satisfaction. 2) You are completely correct in being honest with the agency, but that's not enough - if you don't know what the facts are, you can't really be honest with them. If the form is unclear it's ok to ask, \"\"on having a bank account, does being listed as an authorized user on someone else's account count if it isn't my money or bank account?\"\" But if you are listed as holding the account jointly, that changes the question to: \"\"I am listed as joint on someone else's checking account, but it isn't my money - how is that considered?\"\" To Social Security it might mean generating an extra form, or it might mean you need to have the status on the account changed, or they might not care. But if you don't get the facts first, they won't give you the right answers or help you need. And from personal experience, it's a heck of a lot easier to get a straight and clear answer from a bank than it is from a federal government agency. Have the facts with you when you contact them and you'll be ok - but trust me, you don't want them guessing!\"", "title": "" } ]	[ { "docid": "9cd038c053f0255c2835037a6e81d46d", "text": "The ownership of the house depends on what the original deed transferring title at the time of purchase says and how this ownership is listed in government records where the title transfer deed is registered. Hopefully the two records are consistent. In legal systems that descended from British common law (including the US), the two most common forms of ownership are tenancy in common meaning that, unless otherwise specified in the title deed, each of the owners has an equal share in the entire property, and can sell or bequeath his/her share without requiring the approval of the others, and joint tenancy with right of survivorship meaning that all owners have equal share, and if one owner dies, the survivors form a new JTWROS. Spouses generally own property, especially the home, in a special kind of JTWROS called tenancy by the entirety. On the other hand, the rule is that unless explicitly specified otherwise, tenancy in common with equal shares is how the owners hold the property. Other countries may have different default assumptions, and/or have multiple other forms of ownership (see e.g. here for the intricate rules applicable in India). Mortgages are a different issue. Most mortgages state that the mortgagees are jointly and severally liable for the mortgage payments meaning that the mortgage holder does not care who makes the payment but only that the mortgage payment is made in full. If one owner refuses to pay his share, the others cannot send in their shares of the mortgage payment due and tell the bank to sue the recalcitrant co-owner for his share of the payment: everybody is liable (and can be sued) for the unpaid amount, and if the bank forecloses, everybody's share in the property is seized, not just the share owned by the recalcitrant person. It is, of course, possible to for different co-owners to have separate mortgages for their individual shares, but the legalities (including questions such as whose lien is primary and whose secondary) are complicated. With regard to who paid what over the years of ownership, it does not matter as far as the ownership is concerned. If it is a tenancy in common with equal shares, the fact that the various owners paid the bills (mortgage payments, property taxes, repairs and maintenance) in unequal amounts does not change the ownership of the property unless a new deed is recorded with the new percentages. Now, the co-owners may decide among themselves as a matter of fairness that any money realized from a sale of the property should be divided up in accordance with the proportion that each contributed during the ownership, but that is a different issue. If I were a buyer of property titled as tenancy in common, I (or the bank who is lending me money to make the purchase) would issue separate checks to each co-seller in proportion to the percentages listed on the deed of ownership, and let them worry about whether they should transfer money among themselves to make it equitable. (Careful here! Gift taxes might well be due if large sums of money change hands).", "title": "" }, { "docid": "0d57a595cc31caf9543fc27603a5a3c4", "text": "Any institution that issues checks and is connected to the ACH system can be the passive side. Any institution that clears checks and is connected to the ACH system can be the originating side. Not any institution that can be - in fact is. Your credit union doesn't provide this service because they don't want to. It costs them money to implement and support it, but they don't see the required benefit to justify it. They can. My credit union does that.", "title": "" }, { "docid": "82ff187f4225026f40610da4f9d69f54", "text": "\"There's no difference between \"\"individual\"\" and \"\"business\"\" in this context. What is a personal transaction that involves credit card? You have a garage sale? Its business. You sell something on craigslist - business. Want to let people pay for your daughter's girlscout cookies - business. There's no difference between using Paypal (which has its own credit card reader, by the way) and Square in this context. No-one will ask for any business licenses or anything, just your tax id (be it SSN or EIN). Its exactly the same as selling on eBay and accepting credit cards through your Paypal account, conceptually (charge-back rules are different, because Square is a proper merchant account, but that's it).\"", "title": "" }, { "docid": "e0ceb337a0304f54629cb835061b53e1", "text": "I have a loan that was picked up by BofA, too. They required escrow, but there was a problem with one of their checks to my insurance company where it evidently got lost in the mail. My insurance company contacted me, and I called BofA, who said it had been paid and may just be taking the insurance company a while to credit all the individual accounts (they send a check for a lot of customers at a time). Well, since the check wasn't received, my insurance company contacted me again, and I finally straightened it out with everyone. After that, I complained that it would have been much easier for me if I paid it myself instead of being a middle man, so they canceled my escrow, refunded the money to me, and now I pay the taxes and insurance myself. I prefer it that way, as it simplifies things. I've been a little surprised that BofA has been really nice whenever I contact them, and always seems willing to make me happy. Maybe it's just because I pay on time and have paid a lot of extra on the principal so that there's no danger that I'll default.", "title": "" }, { "docid": "d3682701ac953d32c8db377f726f3726", "text": "Is anything possible, and if so, how? Because of the circumstances, there is nothing you can do. You do not have the ISIN, nor are you a part-owner of the account. The information you would need is: As always, good luck.", "title": "" }, { "docid": "fe924b06b4f744985a5c1a50c6871e3b", "text": "\"In your words, you want to \"\"easily determine whether an item was purchased as part of our individual accounts, or our combined family account.\"\" It's not clear exactly to me what kind of reporting you're trying to get. (I find a useful approach here to be to start with the output you're trying to get from a system, and then see how that maps to the input you want to give the system.) Here's some possibilities:\"", "title": "" }, { "docid": "e0032a751ea184ad652de18d6dacd66d", "text": "\"I would call the bank and ask how the person is on the account. If they are an owner, or are an authorized user, or what type of owner they are, etc. If the bank makes the distinction between \"\"user\"\" and \"\"owner\"\" then most likely, your funds are not able to be seized. If they are a joint owner, then, typically, 100% of the money is yours and 100% of the money is theirs and either of you could withdraw all the money, close the account, or have the money seized as part of a legal action.\"", "title": "" }, { "docid": "2d3c6d1520bf357ce948881b6c543ae4", "text": "No financial interest means that you have signing authority over the account, but you don't own the money in it and aren't allowed to withdraw from it at will. One example would be a business account owned by a company where you're employed as a purchasing manager, and you need to sign checks drawn on that account to pay invoices. FBAR doesn't care about income -- it just wants to know about every account that you having signing authority over.", "title": "" }, { "docid": "e4804894dbb9e010b600e66e16c27c06", "text": "You can open an account in US without having SSN. You need to be physically present to open the account.", "title": "" }, { "docid": "22ee74f1aa2b5b26d759731c67d0ae55", "text": "\"Social security number should only be needed for things that involve tax withholding or tax payment. Your bank or investment broker, and your employer, need it so they can report your earnings. You need it when filing tax forms. Other than those, nobody should really be asking you for it. The gym had absolutely no good reason to ask and won't have done anything with the number. I think we can ignore that one. The store cards are a bigger problem. Depending on exactly what was done with the data, you may have been messing up the credit record of whoever legitimately had that number... and if so you might be liable on fraud charges if they or the store figure out what happened and come after you. But that's unrelated to the fact that you have a legitimate SSN now. Basically, you really don't want to open this can of worms. And I hope you're posting from a disposable user ID and not using your real name... (As I noted in a comment, the other choice would be to contact the authorities (I'm not actually sure which bureau/department would be best), say \"\"I was young, foolish, and confused by America's process... do I need to do anything to correct this?\"\", and see what happens... but it might be wise to get a lawyer's advice on whether that's a good idea, a bad idea, or simply unnecessary.)\"", "title": "" }, { "docid": "ccae60b74d5d260a4fc4344aeeb06f8e", "text": "\"so I believe it should be under \"\"No Financial Interest Account Information.\"\" section ? Why? It's your account in your name. From legal perspective it is your personal account and you have financial interest in it.\"", "title": "" }, { "docid": "2de869e9b4c67e8ad0198cdafdbc1620", "text": "Per Md. REAL PROPERTY Code Ann. § 8-203: (d) (1) (i) The landlord shall maintain all security deposits in federally insured financial institutions, as defined in § 1-101 of the Financial Institutions Article, which do business in the State. (ii) Security deposit accounts shall be maintained in branches of the financial institutions which are located within the State and the accounts shall be devoted exclusively to security deposits and bear interest. (iii) A security deposit shall be deposited in an account within 30 days after the landlord receives it. (iv) The aggregate amount of the accounts shall be sufficient in amount to equal all security deposits for which the landlord is liable. (2) (i) In lieu of the accounts described in paragraph (1) of this subsection, the landlord may hold the security deposits in insured certificates of deposit at branches of federally insured financial institutions, as defined in § 1-101 of the Financial Institutions Article, located in the State or in securities issued by the federal government or the State of Maryland. (ii) In the aggregate certificates of deposit or securities shall be sufficient in amount to equal all security deposits for which the landlord is liable. As such, one or more accounts at your preference; it's up to the bank how to treat the account, so it may be a personal account or it may be a 'commercial' account depending on how they treat it (but it must be separate from your personal funds). A CD is perhaps the easiest way to go, as it's not a separate account exactly but it's easily separable from your own funds (and has better interest). You should also note (further down on that page) that you must pay 3% interest, once per six months; so try to get an account that pays as close as possible to that. You likely won't get 3% right now even in a CD, so consider this as an expense (and you'll probably find many people won't take security deposits in many situations as a result).", "title": "" }, { "docid": "34e6df966186974f602a13e3ae0d3721", "text": "A share of stock is an asset not much different than any other asset. If the share is being held in a joint account, it's being jointly owned. If the share is being held by a company with multiple owners then the share is owned by the various owners. If you're married and in a community property state, then it's technically owned by both parties.", "title": "" }, { "docid": "f8a3d5abf52e6cc6146c5e24b5cd8000", "text": "\"Furthermore, the \"\"trust fund\"\" the article talks about doesn't really exist - they SSAdmin just owns treasury bills, which as we all know are obligations of the U.S. government. So - in order to exhaust the \"\"trust fund\"\" you have to expect the U.S. treasury to repay the SSAdmin in full - which we can debate about whether that is a fair assumption or not.\"", "title": "" }, { "docid": "bf3c52ae294bd1bbf9893e00073baa4d", "text": "Securities or quite a few negotiable instruments can change title of ownership without any issue. Many at times the owner ship in implicit if you are holding a certain instrument. So for example in Stock its a fractional ownership in a company, this ownership transfers to the buyer from the seller without requiring any permission from the company. In case of say Loans, One cannot transfer the loan to some one else without the Banks permission.", "title": "" } ]	fiqa
358ccd45afeaf1f9bb8bc4789b143543	Insurance company sent me huge check instead of pharmacy. Now what?	[ { "docid": "af1106a29d58d5538e4e2baea1dc30ea", "text": "The insurance company issued the check. I'd contact the insurance company to have the current check voided and a new one issued to the pharmacy.", "title": "" }, { "docid": "2dbf908577422d9e9844958a62782629", "text": "Checks are awesome things in that, even if it gets lost the money doesn't change hands until the check is cashed. I would highly recommend NOT signing a check over and putting it in the mail though. Essentially putting your signature on it is saying yes, pay to whomever. Theoretically acceptable, rarely a good idea. Call the insurance company and have them cancel current check to reissue to the correct people. Don't forget to write VOID (in huge letters) on the check before throwing away and/or tearing it up.", "title": "" }, { "docid": "c472e28a902255d7f3e8918550a37e7f", "text": "Option 4: Go talk with someone in person at an office of the Insurance company. They have helped me several times with things like this. They can get everyone involved on a conference call and make something happen. But you have to go in. Calling is a good way to waste time and get nowhere, they will throw the issue back and forth. Find an office and go. This is the most effective solution.", "title": "" }, { "docid": "608ef839a75b4a9d959fb21bd1c79110", "text": "So: What you do:", "title": "" }, { "docid": "ec5f508e7f500cdad2d26fd1adf49a37", "text": "Deposit check and send a personal check (resulting in tax and IRS reporting issues) That's a bad idea, unless maybe the check you're receiving is a certified bank draft. Suppose the insurance company are crooks and the check is fraudulent. It could take weeks or months for some investigation to catch up to that, long after your own personal check was cashed by the pharmacy. The bank will then put you on hook for the 20 grand by reversing the check, even though the funds had been deposited into your account. Do not put yourself into the position of a money handler; you don't have the cash base, insurance, government protection and whatever else that a bank has. And, of course, you're being a free money handler if you do that. (You're not even compensated for postage, time and whatnot). If you're handling money between two parties, you should collect a percentage, or else refuse. That percentage has to be in proportion to the risk, since cashing a check for someone carries a risk similar to (and is effectively a form of) making a loan.", "title": "" }, { "docid": "857974453afa724ad8ac67c7e3956c66", "text": "In one of your comments you say: Even if the pharmacy is not in the insurance provider network? This is why you got the check instead of your insurance company. I have Blue Cross/Blue Shield, and recently my wife underwent a procedure in the hospital, where one of the physicians involved was not in my providers network. I got a letter from the physicians office stating that since they are out of network, the standard practice was for BCBS to issue the check to me, rather than to the provider. I received the check and made the payment. The main contention is the difference in price, and that is what you need to discuss with both the pharmacy (actual billing) and your insurance company (paid benefits).", "title": "" }, { "docid": "2765e690af1f88102daa11d29be4a1f0", "text": "You mentioned depositing the check and then sending a personal check. Be sure to account for time, since any deposit over $10,000 the money will be made available in increments, so it may take 10-14 days to get the full amount in your account before you could send a personal check. I would not recommend this option regardless, but if you do, just a heads up.", "title": "" }, { "docid": "d41d8cd98f00b204e9800998ecf8427e", "text": "", "title": "" }, { "docid": "1d260f2a8ecc297314ac859d57166400", "text": "\"This is not a mistake. This is done for \"\"Out of Network\"\" providers, and mainly when the patient is an Anthem member, be it Blue Shield or Blue Cross. Even though an \"\"Assignment of Benefits\"\" is completed by the patient, and all fields on the claim from (CMS1500 or UB04) are completed assigning the benefits to the provider, Anthem has placed in their policy that the Assignment of Benefits the patient signs is null and void. No other carrier that I have come across conducts business in this manner. Is it smart? Absolutely not! They have now consumed their member's time in trying to figure out which provider the check is actually for, the member now is responsible for forwarding the payment, or the patient spends the check thinking Anthem made a mistake on their monthly premium at some point (odds are slim) and is now in debt thousands of dollars because they don't check with Anthem. It creates a huge mess for providers, not only have we chased Anthem for payment, but now we have to chase the patient and 50% of the time, never see the payment in our office. It creates more phone calls to Anthem, but what do they care, they are paying pennies on the dollar for their representatives in the Philippines to read from a script. Anthem is the second largest insurance carrier in the US. Their profit was over 800 million dollars within 3 months. The way they see it, we issued payment, so stop calling us. It's amazing how they can accept a CMS1500, but not follow the guidelines associated with it. Your best bet, and what we suggest to patients, either deposit the check and write your a personal check or endorse and forward. I personally would deposit the check and write a personal check for tracking purposes; however, keep in mind that in the future, you may depend on your bank statements for proof of income (e.g. Social Security) and imagine the work having to explain, and prove, a $20,000 deposit and withdraw within the same month.\"", "title": "" } ]	[ { "docid": "9b677bf9fd32eb6bc39174c40ce70a5b", "text": "If the hospital is run like hospitals in the US it can take a long time just to determine the bill. The hospital, Emergency room, ER doctors, surgeons, anesthesiologists, X-Ray department, pharmacy and laboratory are considered separate billing centers. It can take a while to determine the charges for each section. Is there an insurance company involved? When there is one involved it can take weeks or months before the hospital determines what the individual owes. The co-pays, coverages, and limits can be very confusing. In my experience it can take a few months before the final amount is known. You may want to call the hospital to determine the status of the bills.", "title": "" }, { "docid": "1203172087dc797dbf83340a004bf503", "text": "\"check the DATE OF SERVICE on all your invoices carefully. It's possible you actually DID pay already. Sometimes when a medical provider gets \"\"mostly\"\" paid by a third party insurer, they just drop the (small) remainder, as it's more cost than it's worth if it is a trivial amount. Alternatively, they wait until you show up for another office visit, and \"\"ding\"\" you then!\"", "title": "" }, { "docid": "ed29c570eae7fb018586b19dfcde1b80", "text": "\"This is really unfortunate. In general you can't back date individual policies. You could have (if it was available to you) elected to extend your employer's coverage via COBRA for the month of May, and possibly June depending on when your application was submitted, then let the individual coverage take over when it became effective. Groups have some latitude to retroactively cover and terminate employees but that's not an option in the world of individual coverage, the carriers are very strict about submission deadlines for specific effective dates. This is one of the very few ways that carriers are able to say \"\"no\"\" within the bounds of the ACA. You submit an application, you are assigned an effective date based on the date your application was received and subsequently approved. It has nothing to do with how much money you send them or whether or not you told them to back date your application. If someone at the New York exchange told you you could have a retroactive effective date they shouldn't have. Many providers have financial hardship programs. You should talk to the ER hospital and see what might be available to you. The insurer is likely out of the equation though if the dates of service occurred before your policy was effective. Regarding your 6th paragraph regarding having paid the premium. In this day and age carriers can only say \"\"no\"\" via administrative means. They set extremely rigid effective dates based on your application date. They will absolutely cancel you if you miss a payment. If you get money to them but it was after the grace period date (even by one minute) they will not reinstate you. If you're cancelled you must submit a new application which will create a new coverage gap. You pay a few hundred dollars each month to insure infinity risk, you absolutely have to cover your administrative bases because it's the only way a carrier can say \"\"no\"\" anymore so they cling to it.\"", "title": "" }, { "docid": "fcc99ce53784564e60c8529112455a1e", "text": "You seem overly fixated on dead tree documentation of purchases. They are deducting this from your account monthly - the mere fact that the money was taken is enough to prove in court that they have you on their books and to hold them to paying out said insurance. The email copies is actually a better way to organize receipts in most cases (can't be destroyed as easily, etc.) You can cancel the insurance - but don't just stop paying (you'd owe them money then). I foresee increasing difficulty navigating the 21st century for you unless you can get past this concern about physical receipts. I doubt other companies would do much better. FWIW, I live in the continental US. I don't know how different the Philippines is with regard to moving everything to digital", "title": "" }, { "docid": "bbbeb5a0fef77fa10d779f442ce583e1", "text": "You didn't buy it. Your mother did. You can try to cancel it if it was purchased in your name; if your mother purchased it she would have to cancel it. Either way, the company has done it's part by carrying you until that cancellation and you have no grounds for demanding a refund for time already covered. If your mother was spending your money, that is something you need to take up with her unless you want to bring charges against her for theft/fraud. If she was spending her own money, then you may want to talk to a lawyer about getting her declared incompetent so someone else can control her spending. But the money paid is probably gone. It isn't the insurance company's fault that you didn't want it doesn't, and if you don't bring charges you can't complain about their having accepted stolen money. Even if you do bring charges and win, it isn't clear you can get a refund. If you really want to pursue any of this, your next step is to talk to a lawyer.", "title": "" }, { "docid": "8db1c181bc68dc201970efb4f4b3abab", "text": "\"There's nothing you can do. If he has indeed deposited the check, it would appear on your account fairly quickly - I've never seen it taking more than 2-3 business days. However, a check is a debt instrument, and you cannot close the account until it clears, or until the \"\"unclaimed property\"\" laws of your state kick in. If he claims that he deposited the check, ask it in writing and have your bank (or the bank where it was deposited) investigate why it takes so long to clear. If he's not willing to give it to you in writing - he's likely not deposited it. Whatever the reason may be, even just to cause you nuisance. Lesson learned. Next time - cashier's check with a signed receipt. Re closing the LLC: if you're the only two partners - you can just withdraw yourself from the LLC, take out your share, and drop it on him leaving him the only partner. Check with your local attorney for details.\"", "title": "" }, { "docid": "0d300a37caab11c1aad8bb3eaca7d4f2", "text": "It's an over crowded boat I'm sure. She hasn't had insurance all year either. She switched departments at the end of last year and they said she had to wait for open enrollment to come around again. So it wasn't by choice that she's been uninsured. It really baffles me that her company, a healthcare provider, would let their employees go through this.", "title": "" }, { "docid": "c4158d595a69b938712cdfcd60768492", "text": "No you do not insure the cheque. A cheque is just standardized form that instructs a bank to transfer money. It is no more important than an ordinary letter. A cheque carries no commercial value, especially when it has a designated recipient. No mail insurance will cover the financial loss as a result of bank fraud. It is a kind of indirect loss. Just tell her to write your account number at the back of the paper, walk into your bank's branch and tell the teller to deposit it. There is no need of mailing.", "title": "" }, { "docid": "28fbd6147331296e24091a48b5f615a7", "text": "It is important to understand that when or before you received services from your medical provider(s), you almost certainly signed a document stating that you understand that you are fully responsible for the entire bill, even though the provider may be willing to bill the insurer on your behalf as a service. In almost all cases, this is the arrangement, so it is very unlikely that you will be able to dispute the validity of the bill, since you did receive the service and almost certainly agreed to be fully responsible for the payments. With regard to the discounts, your medical provides have likely contracted with your insurer to provide services at a certain price or discount level, so I would base all of your negotiations with the providers and/or the collectors on those amounts. They can't legitimately bill you for the full amount since you are insured by a company they have a contract with, and you are not self-pay/uninsured, and the fact that they haven't been paid by your insurer doesn't change that, because the discount likely depends on the contact they have with your insurer and not whether or not they are billed/paid by your insurer. Please note - this is a common arrangement, but I'd recommend that you verify this with your insurer. Unfortunately, payment in 90+ days is often typical by insurance standards, so it's not yet clear to me whether or not your insurer has broken any laws such as a Prompt Pay law, or violated the terms of your policy with them (read it!). However, you need to find out which claims rep/adjuster is handling your claims and follow up with them until the payments are made. It's not personal, so make this person's life miserable until it is done and call them so often that they know it's you by the caller ID. I would also recommend contacting the collector(s), and letting them know that you don't have the money and so will not be able to pay, provide them with copies of the EOBs that state that the insurance company plans to pay the providers, and then ignore their calls/letters until the payments are made. When they call, simply reiterate that you don't have the money and that your insurance company is in the process of paying the bills. You have to expect that you will be dealing with a low-paid employee that is following a script. You are just the next person on their robo-call list, and they are not going to understand that you don't have a pile of money laying around with which to pay them, even if you tell them repeatedly. Make sure that you at no point give them access to any of your financial accounts, such as a checking or savings account, or a debit card - they will access it and clean you out. It is likely that your insurance provider will pay the providers directly since they were likely billed by the providers originally. If the providers have sold the debt to the collectors (and are not just employing a collector for debt they still own), you may have to follow up with the providers as well and make sure that the collection activity stops, since the providers may also need to forward the payments to the collectors once they are paid by the insurance company. Of course, if the insurer refuses to pay the claims, at that point I would recommend meeting with a lawyer to seek to force them to pay.", "title": "" }, { "docid": "c2b853fe46b7cbb9694b08f72eb9668b", "text": "What would happen if you was to cash a check, didn’t realize it was to you and your finance company, take it to a local business that has a money center, they cash the check without even having you sign let alone having the finance companies endorsement on it . The money cleared my account like a couple months ago and it was just brought up now .. ? The reason why the check was made out the owner and the lender is to make sure the repairs were done on the car. The lender wants to make sure that their investment is protected. For example: you get a six year loan on a new car. In the second year you get hit by another driver. The damage estimate is $1,000, and you decide it doesn't look that bad, so you decide to skip the repair and spend the money on paying off debts. What you don't know is that if they had done the repair they would have found hidden damage and the repair would have cost $3,000 and would have been covered by the other persons insurance. Jump ahead 2 years, the rust from the skipped repair causes other issues. Now it will cost $5,000 to fix. The insurance won't cover it, and now a car with an outstanding loan balance of $4,000 and a value of $10,000 if the damage didn't exist needs $5,000 to fix. The lender wants the repairs done. They would have not signed the check before seeing the proof the repairs were done to their satisfaction. But because the check was cashed without their involvement they will be looking for a detailed receipt showing that all the work was done. They may require that the repair be done at a certified repair shop with manufacturer parts. If you don't have a detailed bill ask the repair shop for a copy of the original one.", "title": "" }, { "docid": "cbd9dfe952f74b25dbcfbe52b673e532", "text": "\"A day or so later I get an email from the mattress company where the rep informs me that they will need to issue me a paper check for the full amount and that I would have to contact Affirm to stop charging me. To which I rapidly answered \"\"Please confirm that with Affirm prior to mailing anything out. On my end the loan was cancelled.\"\" To which the rep replied \"\"confirmed. It has been cancelled.\"\" I think your communication could have been more explicit mentioning that not only was the loan cancelled, you got your initial payments. You have not paid for the mattress. The refund if any should go to Affirm. The Rep has only confirmed that loan has been cancelled. at what point, if any, am i free to use this money? I was planning to just let it sit there until the shoe drops and just returning. But for how long is too long? Sooner or later the error would get realized and you would have to pay this back.\"", "title": "" }, { "docid": "1d2fefa7b803c708ff1d023b7780e877", "text": "\"•Have you had any problems with bills not being paid? NO •If you had issues, were they addressed satisfactorily? Answer: A big issue that blindsided me: With my bank, the funds come out of my account right away, but the actual payment is done through a third-party service. On my bank's online site it appears that the payment has been made, but that does not necessarily mean that the intended recipient has cashed it. Looking online at my credit union's site is useless, because all I can tell is that the payment has been sent. The only way to verify payment is to contact the intended recipient. Or I may telephone the online bill pay representative at my bank/credit union, who has access to the third party service. If I do nothing, after 90 days, the check is void, at which time the third party service notifies the bank/credit union and the funds will eventually end up back in my account. I learned this today, after a third-party paper check to a health care provider was returned to me via mail by the recipient (because insurance had already paid and I did not owe them anything). The money was in the hands of the third-party service, not in my account, nor that of my credit union nor the recipient. At first my credit union told me that I would have to contact the third-party service myself and work it out. I said \"\"NO WAY\"\" and the credit union did get the money back into account the same day. This is a sweet deal for the third party, who has my money interest-free anywhere from a few days to three months. And risk-free as well, because the money goes directly from my account to the third party service.\"", "title": "" }, { "docid": "cc7a6be9b8252d019482eb7a6c261482", "text": "Look up escheatment. Companies that have unclaimed property are supposed to send it to your State government. They should have a unclaimed property department of some sort. In short, the company is going to have to pay either you, or your State (In Your Name) so they have to pay it either way. It would be easier for them to just give you new check. Expect them to give you some grief in verifying it has not been cashed and such... but if you have the original, in hand, it shouldn't be too bad. A 'Lost' check may be harder to get replaced. Not a lawyer, don't want to be.", "title": "" }, { "docid": "b285e55976bdcb3fcc8739e2e1f1296e", "text": "Long story short, 8% turned out to be the tipping point because it was the average subordination level of the A rated tranches of the subprime MBS bonds. The reason this was the magic number is because of the way bonds were placed during the period. Basically no end user wanted to take on the risk of buying below A-rated paper, so instead of being sold directly, these BBB rated and below bonds were re-packaged into CDOs and tranched off. Again, the higher rated paper was sold off to whomever, while the BBB and below stuff got reshuffled and repackaged into other CDOs or CDO^2 , further levering up the initial subprime bonds. Now, back to the magic 8% number. Remember how I said that 8% was the subordination level for the A rated subprime paper? The other way of saying that is once defaults reached 8%, the BBB and below tranches of the the MBS were completely wiped out. Since the CDOs were largely made up of these BBB and below MBS, once they started getting written down so did the CDOs. When the lower rated CDO tranches started to go, because they were also repackaged in the same way, it just continued the negative feedback loop and before long even the AA and AAA rated paper was seeing massive losses. As more and more supposedly safe paper started to get wiped out, highly leveraged CDS contracts started coming due, causing AIG (which had written contracts on over $500 billion in assets) to get downgraded by the rating agencies, putting it on the brink of going under. Because basically every major bank had exposure to AIG, had they gone under, the other banks would have all had to write down those contracts at the same time, essentially causing the entire financial system to collapse.", "title": "" }, { "docid": "983d2b5de6ce0fa254f27f73d368e1d6", "text": "No, I felt that's what aweraw was trying to say, but they were not doing a good job of it so I took a crack at it from my point of view. I see where you are coming from too. Really, I suspect if we all sat down and had to write a unified view of the role luck plays in our lives we would be surprised how much we agree. :)", "title": "" } ]	fiqa
42537acc467cfa7432277c59811f30ee	How much of my home loan is coming from a bank, how much it goes back?	[ { "docid": "f0a908ea5267c38bd5bf4ac0b9187cee", "text": "\"Judging from your comments, you seem to be confused about the way banking works. Banks can only lend out money that they actually have: whether from deposits or investors or loans taken from other banks/government entities. The rules on how this works varies from country to country, but the principle is always the same. There is no magic money. Let's imagine a closed system. There's only one town, and that town only has one bank. There are 100 people total in town, and each has $10,000. Everyone deposits all of their money in the bank. The bank now has $1,000,000 in total deposits. You take a loan for $100,000 and buy a house. The bank now has $900,000. You make your payments of $965 per month: $833 of interest and $132 toward principal. In this ideal world, the bank has no costs associated with doing business. After one month, the bank has $1,000,000 in deposits, $900,965 in cash on hand, $99,868 in loans, and $833 in profit (from interest). Now here's the confusing part. You bought a house from someone. That person also lives in town. He takes the $100,000 you gave him and... deposits it in the bank. The bank now has $1,100,000 in deposits, $1,000,965 in cash, $99,868 in loans, and $833 in profit. Assume 10 more people buy houses at $100,000 each, taking loans for that whole amount (for the same terms you did). Assume those sellers then deposit the money back in the bank. The bank now has $2,100,000 in deposits, $1,000,965 in cash, $1,099,868 in loans, and $833 in profit. The bank is taking in $10,615 per month ($965 x 11) in loan payments, making profit of $9,163 ($833 x 11) per month from interest. This process of loans and deposits and payments can go on forever without any outside influence. This is the primary way money is created. It's like printing money without the paper. Of course, we're not in a closed system. Banks are limited in endlessly creating money, primarily by two things: Reserve Requirements are set by government agencies. They might say banks can lend until their cash on hand (or liquid equivalent) is, at minimum, 35% of total deposits. So a bank with $1,000,000 in deposits would have to keep $350,000 in cash at any given time. Capital Requirements work largely the same way. It's more the bank saying, \"\"What happens if a bunch of people want their deposits back?\"\" They plan a reasonable amount of cash to have on hand for that scenario.\"", "title": "" }, { "docid": "a5248e0a577f68808f7f7d876323e419", "text": "When you get a loan (car, home, student) the lending company (bank) give the (auto dealer, previous home owner, school) money. You as the borrow promise to pay this money back with interest. So in your case the 100,000 you borrow requires a payment for principal and interest of ~965 per month. After 240 payments you will have paid the bank ~231,605. So who got the ~131,000 in interest. The bank did. It was used to pay interest to the people who made deposits into the bank. It was also used to pay the expenses of the bank: salaries, retirement, rent, electricity, computers, etc. If the bank is a company with investors they may have to pay dividends to them to. Of course not all loans are successfully paid back, so some of the payment goes to cover the loans that are in default. In many cases loans are also refinanced, or the house is sold long before the 20-30 year term is up. In these cases the amount of interest received for that loan is much less than anticipated, but the good news is that it can be loaned out again.", "title": "" }, { "docid": "7bade0b287f3bbd6d84bd49df3fccd12", "text": "\"Ditto mhoran_psprep. I'm not quite sure what you're asking. Where does the money come from? When someone starts a bank, they normally get together a bunch of investors -- perhaps people they know personally, perhaps they sell stock -- to raise initial capital. But most of the money in the bank comes from depositors. Fundamentally, what a bank does is take money from depositors and loan it to borrowers. (Banks also borrow money from other banks and from the government.) They charge the borrowers interest on the loan, and they pay depositors interest on their deposits. The difference between those two interest rates is where the bank gets their profit. Where does the money go when you pay it back? As mhoran_psprep said, some of it goes to pay interest to the depositors; some of it goes to pay the bank's expenses like employee salaries, cost of the building, etc; and some of it goes as profit to the owners or stockholders of the bank. If you're thinking, \"\"Wow, I'm paying back a whole lot more than I borrowed\"\", well, yes. But remember you're borrowing that money for 20 or 30 years. The bank isn't making very much money on the loan each year that you have it -- these days something like 4 or 5% in the U.S., I don't know what the going rates are in other countries.\"", "title": "" } ]	[ { "docid": "c2cbdeaba89cdcfdfdb6a2a852cf51ba", "text": "\"Based on your information... The house is $130,000 all in (this might not be the case) Your payment term is 30 years. Your interest rate is about 7.35%. Your payments are about $895.66 Your total payments will total $322,438.95 That's not a very good interest rate for a mortgage, but this might be due to poor credit or limited credit history, too low income, or too much home value being financed (or a combination of the above and other factors). Northern Alabama may not specifically be higher interest rate: it might, honestly, just be you. The reason that you're paying $320,000 is that you're taking $130,000 from a bank and promising to pay it back with interest. Keep in mind, that's over thirty years. That's a LONG time. And the bank needs to earn enough interest to combat inflation (roughly 2% annually, generally). During that time, the bank can't invest that money elsewhere, return it to depositors, etc. A good rule to keep in mind is the \"\"rule of 72.\"\" It's a simple trick to determine, based on an interest rate, how quickly the value of something will double (in this case, the value of your loan payments). If your interest rate was exactly 7.2%, this method would calculate 10 years until doubling. In your case, 72 / 7.35 = 9.7959 years. Now, you're paying off your loan simultaneously, which lowers your interest over time, so your payments total 2.48x of loan value at origination. That still sucks, but remember, it's over a loooooooooooooooooooooooooooooooooong time.\"", "title": "" }, { "docid": "8d9a776d08c206dacd7cec3133072133", "text": "\"With (1), it's rather confusing as to where \"\"interest\"\" refers to what you're paying and where it refers to what you're being paid, and it's confusing what you expect the numbers to work out to be. If you have to pay normal interest on top of sharing the interest you receive, then you're losing money. If the lending bank is receiving less interest than the going market rate, then they're losing money. If the bank you've deposited the money with is paying more than the going market rate, they're losing money. I don't see how you imagine a scenario where someone isn't losing money. For (2) and (3), you're buying stocks on margin, which certainly is something that happens, but you'll have to get an account that is specifically for margin trading. It's a specific type of credit with specific rules, and you if you want to engage in this sort of trading, you should go through established channels rather than trying to convert a regular loan into margin trading. If you get a personal loan that isn't specifically for margin trading, and buy stocks with the money, and the stocks tank, you can be in serious trouble. (If you do it through margin trading, it's still very risky, but not nearly as risky as trying to game the system. In some cases, doing this makes you not only civilly but criminally liable.) The lending bank absolutely can lose if your stocks tank, since then there will be nothing backing up the loan.\"", "title": "" }, { "docid": "37eefec0f97bf0090dbd8ec66afcbf52", "text": "\"A bank may not like loaning money to you for this. That is one snag. You listed 500,000-600,000$ for a monster of a house (3000 sqft is over three times the average size of homes a hundred years ago). Add in the price of the land at 60K (600K divided ten ways). Where I live, there is a 15% VAT tax on new homes. I can't find out if California imposes a VAT tax on new homes. Anyway, returning back to the topic, because of the risk of loaning you 660K for a piece of land and construction, the bank may only let you borrow half or less of the final expected cost (not value). Another huge snag is that you say in a comment to quid \"\"I came up with this conclusion after talking to someone who had his property built in early 2000s in bay area for that average price\"\". Let's apply 3% inflation over 15 years to that number of 200$/sqft. That brings the range for construction costs to 780K-930K. Even at 2% inflation 670K-810K. Edit: OP later expanded the question making it an inquiry on why people don't collaborate to buy a plot of land and build their homes. \"\"Back in the day\"\" this wasn't all that atypical! For example, my pastor's parents did just this when he was a young lad. Apart from the individual issues mentioned above, there are sociological challenges that arrive. Examples: These are the easy questions.\"", "title": "" }, { "docid": "6a32ab6bf72d834302a6fca7bae388b3", "text": "\"So with any debt, be it a loan or a bond or anything else, you have two parts, the principal and the interest. The interest payment is calculated by applying the interest % to the principal. Most bonds are \"\"bullet bonds\"\" which means that the principle remains completely outstanding for the life of the bond and thus your interest payments are constant throughout the life of the bond (usually paid semi-annually). Typically part of the purpose of these is to be indefinitely refinanced, so you never really pay the principal back, though it is theoretically due at expiration. What you are thinking of when you say a loan from a bank is an amortizing loan. With these you pay an increasing amount of the principal each period calculated such that your payments are all exactly the same (including the final payment). Bonds, just like bank loans, can be bullet, partially amortizing (you pay some of the principle but still have a smaller lump sum at the end) and fully amortizing. One really common bullet structure is \"\"5 non-call 3,\"\" which means you aren't allowed to pay the principle down for the first three years even if you want to! This is to protect investors who spend time and resources investing in you!\"", "title": "" }, { "docid": "acc09c5d98f893e55f4d2b9ce0497689", "text": "Disclosure: I work for Wells Fargo Home Mortgage. This is normal. The bank is giving you a discount on the interest rate in exchange for the automatic payments. Unfortunately, the bank has the power here; they have your mortgage, and they have the right to call your loan in full at any time, and foreclose on your house if you don't pony up. It's okay to not like being pushed around, but you need to know when to hold'em and when to fold'em, and your facing a royal flush with pair of 4s.", "title": "" }, { "docid": "2091e876d65d16a2472976058dc08912", "text": "A security is a class of financial instrument you can trade on the market. A share of stock is a kind of security, for example, as is a bond. In the case of your mortgage, what happens: You take out a loan for $180k. The loan has two components. a. The payment stream (meaning the principal and the interest) from the loan b. The servicing of the loan, meaning the company who is responsible for accepting payments, giving the resulting income to whomever owns it. Many originating banks, such as my initial lender, do neither of these things - they sell the payment stream to a large bank or consortium (often Fannie Mae) and they also sell the servicing of the loan to another company. The payment stream is the primary value here (the servicing is worth essentially a tip off the top). The originating bank lends $180k of their own money. Then they have something that is worth some amount - say $450k total value, $15k per year for 30 years - and they sell it for however much they can get for it. The actual value of $15k/year for 30 years is somewhere in between - less than $450k more than $180k - since there is risk involved, and the present value is far less. The originating bank has the benefit of selling that they can then originate more mortgages (and make money off the fees) plus they can reduce their risk exposure. Then a security is created by the bigger bank, where they take a bunch of mortgages of different risk levels and group them together to make something with a very predictable risk quotient. Very similar to insurance, really, except the other way around. One mortage will either default or not at some % chance, but it's a one off thing - any good statistician will tell you that you don't do statistics on n=1. One hundred mortgages, each with some risk level, will very consistently return a particular amount, within a certain error, and thus you have something that people are willing to pay money on the market for.", "title": "" }, { "docid": "acb94a9e1d388b05abaf94b5a3a69cde", "text": "If the customer pays 20% of the payment in advance, then he is he owns 20% of the house and the bank owns 80%. Now they say he pays the rest of the amount and also the rent of the house until he becomes the sole owner of the house.", "title": "" }, { "docid": "f541367e5b705190aa955065d5e9950e", "text": "You are saving around 2.41% over the Car Loan for a duration of 35 months. Check out if the fees for redrawing on home loan and fees for closing the matches the money saved. Edit: If you are making your current car payments as additional monthy payments to your mortgage then you are in effect paying less interest than current car loan.", "title": "" }, { "docid": "c841acd1c29310d633242b8d2bf418ca", "text": "For a short term loan, the interest is closer to straight line, e.g. A $10K loan at 10% for 3 years will have approximately $1500 in interest. (The exact number is $1616, not too far off). You will save 2.41% on the rate, so you'll the extra payment you'll send to the mortgage will save you about 1000035(2.41/12)/2 or about $350 over the 3 year period.", "title": "" }, { "docid": "2ba27170201ca4c8ba04ce3df0e29ef2", "text": "Some countries, like the United States, allow a mortgage interest tax deduction. This means the interest you pay on a mortgage, which is typically much more than half of the monthly payment at the beginning of a 25 year mortgage, is tax deductible, so you might get 33% or more of the interest back, and that effectively makes the interest rate significantly lower. Therefore you are borrowing the money really cheap. That makes MrChrister's answer even more appropriate.", "title": "" }, { "docid": "c59b0cebec63a91223960ef08c299029", "text": "A lender will look at three things when giving a loan: Income. Do you make enough money each month to afford the payments. They will subtract from your income any other loans, credit card debt, student loan debt, mortgage. They will also figure in your housing costs. Your Collateral. For a mortgage the collateral is the house, for a car loan it is the car. They will only give you a loan to a specific percentage of the value of the collateral. Your money in the bank isn't collateral, but it can serve as a down payment on the loan. Your Credit score. This is a measure of how well you handle credit. The longer the history the better. Using credit wisely is better than not using the credit you have. If you don't have a credit card, get one. Start with your current bank. You have a history with them. If they won't help you join a credit union. Another source of car loans is the auto dealer. Though their rates can be high. Make sure that the purchase price doesn't require a monthly payment too high for your income. Good rules of thumb for monthly payments are 25% for housing and 10% for all other loans combined. Even a person with perfect credit can't get a loan for more than the bank thinks they can afford. Note: Don't drain all your savings, you will need it to pay for the unexpected expenses in life. You might think you have enough cash to pay off the student loan or to make a big down payment, but you don't want to stretch yourself too thin.", "title": "" }, { "docid": "879062f352451bc4ee852520a91ffa83", "text": "\"BEFORE you invest in a house, make sure you account for all the returns, risks and costs, and compare them to returns, risks and costs of other investments. If you invest 20% of a house's value in another investment, you would also expect a return. You also probably will not have the cost interest for the balance (80% of ???). I have heard people say \"\"If I have a rental property, I'm just throwing away money - I'll have nothing at the end\"\" - if you get an interest-only loan, the same will apply, if you pay off your mortgage, you're paying a lot more - you could save/invest the extra, and then you WILL have something at the end (+interest). If you want to compare renting and owning, count the interest against the rental incoming against lost revenue (for however much actual money you've invested so far) + interest. I've done the sums here (renting vs. owning, which IS slightly different - e.g. my house will never be empty, I pay extra if I want a different house/location). Not counting for the up-front costs (real estate, mortgage establishment etc), and not accounting for house price fluctuations, I get about the same \"\"return\"\" on buying as investing at the bank. Houses do, of course, fluctuate, both up and down (risk!), usually up in the long term. On the other hand, many people do lose out big time - some friends of mine invested when the market was high (everyone was investing in houses), they paid off as much as they could, then the price dropped, and they panicked and sold for even less than they bought for. The same applies if, in your example, house prices drop too much, so you owe more than the house is worth - the bank may force you to sell (or offer your own house as collateral). Don't forget about the hidden costs - lawn mowing and snow shoveling were mentioned, insurance, maintenance, etc - and risks like fluctuating rental prices, bad tenants, tenants moving on (loss of incoming, cleaning expenses, tidying up the place etc)....\"", "title": "" }, { "docid": "2ff9da401e9a1c69880e5a83ea5ad0c2", "text": "Banks and lenders have become a bit more conservative since the housing crisis. 80% is a typical limit. The reason is to minimize the lender's risk if declining property values would put the borrower upside-down on the loan. http://www.bankrate.com/finance/home-equity/how-much-equity-can-you-cash-out-of-home.aspx", "title": "" }, { "docid": "ab635d81d1df649f07e7120320dd0755", "text": "Forget about terms. Think about loans in terms of months. To simplify things, let's consider a $1000 loan with .3% interest per month. This looks like a ten month term, but it's equally reasonable to think about it on a month-to-month basis. In the first month, you borrowed $1000 and accrued $3 interest. With the $102 payment, that leaves $901 which you borrow for another month. So on and so forth. The payoff after five payments would by $503.54 ($502.03 principal plus $1.51 interest). You'd save $2.99 in interest after paying $13.54. The reason why most of the interest was already paid is that you already did most of the borrowing. You borrowed $502.03 for six months and about $100 each for five, four, three, two, and one month. So you borrowed about $4500 months (you borrowed $1000 for the first month, $901 for the second month, etc.). The total for a ten month $1000 loan is about $5500 months of borrowing. So you've done 9/11 of the borrowing. It's unsurprising that you've paid about 9/11 of the interest. If you did this as a six month loan instead, then the payments look different. Say You borrow $1000 for one month. Then 834 for one month. So on and so forth. Adding that together, you get about $168.50 * 21 or $3538.50 months borrowed. Since you only borrow about 7/9 as much, you should pay 7/9 the interest. And if we adding things up, we get $10.54 in interest, about 7/9 of $13.54. That's how I would expect your mortgage to work in the United States (and I'd expect it to be similar elsewhere). Mortgages are pretty straight-jacketed by federal and state regulations. I too once had a car loan that claimed that early payment didn't matter. But to get rid of the loan, I made extra payments. And they ended up crediting me with an early release. In fact, they rebated part of my last payment. I saved several hundred dollars through the early release. Perhaps your loan did not work the same way. Perhaps it did. But in any case, mortgages don't generally work like you describe.", "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": "" } ]	fiqa
28c50bb6ba850a7f49a70b8d81a502fd	Are there any statistics that support the need for Title Insurance?	[ { "docid": "b67f2b35494713624f0203abd7192d20", "text": "There seems to be no such information available. What is available is that number of claims are high and the Title Insurance companies have gone bankrupt as per the wikipedia article In 2003, according to ALTA, the industry paid out about $662 million in claims, about 4.3% percent of the $15.7 billion taken in as premiums. By comparison, the boiler insurance industry, which like title insurance requires an emphasis on inspections and risk analysis, pays 25% of its premiums in claims. However, no reference to the relationship between when claims are made and when policies are issued is found. As of 2008, the top three remaining title insurers all lost money, while LandAmerica went bankrupt and sold its title business to Fidelity http://en.wikipedia.org/wiki/Title_insurance#Industry_profitability The amount of premium received and claim made can be got from some of the companies balance sheet. For Fidelity its at http://www.investor.fnf.com/releasedetail.cfm?CompID=FNT&ReleaseID=363350 The article in here mentions the claims ratio as 5%. Refer http://www.federaltitle.com/blog/title-insuance-qaa", "title": "" }, { "docid": "87fa009194ec46688dcd92918388f273", "text": "The point of title insurance is that when you buy a house, it is possible that you may eventually find out that the seller didn't actually own the property - either because they were trying to deceive you, or some transfer of ownership in the past wasn't carried out properly. If that happens you can find yourself with no house, and still owing the mortgager the purchase price. Hardly anybody can afford to take that kind of hit, which is why you need some form of protection against it. The traditional way of doing this was to get a lawyer to do a title search, in which they check that everything in order. However this costs tens of dollars at least to do the work for every sale, and hardly ever finds anything. Title Insurance is a company volunteering to take the hit for you if there turns out to be a problem, in return for a payment of less than the title search would cost. In essence they are saying that it's cheaper to take the risk than do the work. What are the statistics? This report seems to indicate that payout is around 5% of premium, but title insurance is a one-off premium and the payout can theoretically happen many years down the line. However it is almost certain that the insurance companies have done the math and believe that selling this insurance will be profitable for them, so they believe that payouts are going to be substantially less than 100%. Is title insurance worth it for you? If the payout is 5% of premiums, the in a purely statistical sense it is not worth it. You would on average gain more by not taking it. However that is true of almost all insurance. The policy is there to protect you in the unlikely but not impossible event where you would otherwise lose a huge amount of money. Unless you can afford to lose the value of your house, you need some form of protection. We've already seen that the only other form of protection is a title search, and they cost more. The other issue is that if you are taking a mortgage, your mortgager will absolutely insist that you have either a title search or title insurance. There is no other way - and title insurance is the cheaper of the two. In this case it is best to look on the title insurance as simply a cost of doing business. It's irrelevant whether it's worth it or not - you can't do the transaction without it.", "title": "" }, { "docid": "36b4aa8281b6d0bed022cc321bfb03ee", "text": "\"I'm really surprised at the answers here. Claims/year per region isn't a statistic that is meaningful here... you need to think about the risk factors and the purpose of the insurance. First, what does title insurance do? It protects you against defects in the deed -- defects that may crop up and mean that your mortgage is no longer valid. This is different from most forms of insurance -- the events that render your title invalid are events that may have happened years, decades or even centuries ago. A big part of the insurance policy and its cost is conducting research to assess the validity of a deed. The whole point of the insurance is to reduce claims by improving data associated with the \"\"chain of custody\"\" of the property. So how do you evaluate the risk of finding out about something that happened a long time ago, that nobody appears to know about? IMO, you have to think about risk factors that increase the probability that things were screwed up in the past: You need to have an informed discussion with your attorney and figure out if it makes sense for you. Don't dismiss it out of hand.\"", "title": "" }, { "docid": "06ff1a68b432456d3375a7be0a7c84fa", "text": "When I bought the house I had my lawyer educate me about everything on the forms that seemed at all unclear, since this was my first time thru the process. On of the pieces of advice that he gave was that title insurance had almost no value in this state unless you had reason to believe the title might be defective but wanted to buy the property anyway. In fact I did get it anyway, as an impulse purchase -- but I'm fully aware that it was a bad bet. Especially since I had the savings to be able to self-insure, which is always the better answer if you can afford to risk the worst case scenario. Also: Ask the seller whether they bought title insurance. Often, it is transferrable at least once.", "title": "" } ]	[ { "docid": "c531e72f8977fc24c624a99cc206fe5c", "text": "On most of the consumer electronics it would not make much sense to get Insurance. Mostly these are not priced right [are typically priced higher]. IE there is no study to arrive at equivalent claim rates as in motor vehicle. Further on most of the items there is adequate manufacturing warranty to take care of initial defects. And on most it would make sense to buy a newer model as in todays world consumer electronics are not only getting cheaper by the day, but are also have more function & features.", "title": "" }, { "docid": "e17ffc2a0f6e9a51037f2a78ea0f3f8a", "text": "Title agencies perform several things: Research the title for defects. You may not know what you're looking at, unless you're a real-estate professional, but some titles have strings attached to them (like, conditions for resale, usage, changes, etc). Research title issues (like misrepresentation of ownership, misrepresentation of the actual property titled, misrepresentation of conditions). Again, not being a professional in the domain, you might not understand the text you're looking at. Research liens. Those are usually have to be recorded (i.e.: the title company won't necessarily find a lien if it wasn't recorded with the county). Cover your a$$. And the bank's. They provide title insurance that guarantees your money back if they missed something they were supposed to find. The title insurance is usually required for a mortgaged transaction. While I understand why you would think you can do it, most people cannot. Even if they think they can - they cannot. In many areas this research cannot be done online, for example in California - you have to go to the county recorder office to look things up (for legal reasons, in CA counties are not allowed to provide access to certain information without verification of who's accessing). It may be worth your while to pay someone to do it, even if you can do it yourself, because your time is more valuable. Also, keep in mind that while you may trust your abilities - your bank won't. So you may be able to do your own due diligence - but the bank needs to do its own. Specifically to Detroit - the city is bankrupt. Every $100K counts for them. I'm surprised they only charge $6 per search, but that is probably limited by the State law.", "title": "" }, { "docid": "e042485852dc24651d7e8ebc3a6289e4", "text": "\"Yes, a HELOC is great for that. I just had my roof done last month (~$15K, \"\"ugh\"\") and pretty much every major contractor in my area had a 0% same-as-cash for at least 12 months. So that helps - any balance that I don't bank by 11/15/2015 will be on the HELOC.\"", "title": "" }, { "docid": "1837651d08056accb28bde3581e2eb92", "text": "\"The two questions inherent in any decision to purchase an insurance plan is, \"\"how likely am I to need it?\"\", and \"\"what's the worst case scenario if I don't have it?\"\". The actuary that works for the insurance company is asking these same questions from the other end (with the second question thus being \"\"what would we be expected to have to pay out for a claim\"\"), using a lot of data about you and people like you to arrive at an answer. It really boils down to little more than a bet between you and the insurance company, and like any casino, the insurer has a house edge. The question is whether you think you'll beat that edge; if you're more likely than the insurer thinks you are to have to file a claim, then additional insurance is a good bet. So, the reasons you might decide against getting umbrella insurance include: Your everyday liability is low - Most people don't live in an environment where the \"\"normal\"\" insurance they carry won't pay for their occasional mistakes or acts of God. The scariest one for most is a car accident, but when you think of all the mistakes that have to be made by both sides in order for you to burn through the average policy's liability limits and still be ruined for life, you start feeling better. For instance, in Texas, minimum insurance coverage levels are 50/100/50; assuming neither party is hurt but the car is a total loss, your insurer will pay the fair market value of the car up to $50,000. That's a really nice car, to have a curbside value of 50 grand; remember that most cars take an initial hit of up to 25% of their sticker value and a first year depreciation of up to 50%. That 50 grand would cover an $80k Porsche 911 or top-end Lexus ES, and the owner of that car, in the U.S. at least, cannot sue to recover replacement value; his damages are only the fair market value of the car (plus medical, lost wages, etc, which are covered under your two personal injury liability buckets). If that's a problem, it's the other guy's job to buy his own supplemental insurance, such as gap insurance which covers the remaining payoff balance of a loan or lease above total loss value. Beyond that level, up into the supercars like the Bentleys, Ferraris, A-Ms, Rollses, Bugattis etc, the drivers of these cars know full well that they will never get the blue book value of the car from you or your insurer, and take steps to protect their investment. The guys who sell these cars also know this, and so they don't sell these cars outright; they require buyers to sign \"\"ownership contracts\"\", and one of the stipulations of such a contract is that the buyer must maintain a gold-plated insurance policy on the car. That's usually not the only stipulation; The total yearly cost to own a Bugatti Veyron, according to some estimates, is around $300,000, of which insurance is only 10%; the other 90% is obligatory routine maintenance including a $50,000 tire replacement every 10,000 miles, obligatory yearly detailing at $10k, fuel costs (that's a 16.4-liter engine under that hood; the car requires high-octane and only gets 3 mpg city, 8 highway), and secure parking and storage (the moguls in Lower Manhattan who own one of these could expect to pay almost as much just for the parking space as for the car, with a monthly service contract payment to boot). You don't have a lot to lose - You can't get blood from a turnip. Bankruptcy laws typically prevent creditors from taking things you need to live or do your job, including your home, your car, wardrobe, etc. For someone just starting out, that may be all you have. It could still be bad for you, but comparing that to, say, a small business owner with a net worth in the millions who's found liable for a slip and fall in his store, there's a lot more to be lost in the latter case, and in a hurry. For the same reason, litigious people and their legal representation look for deep pockets who can pay big sums quickly instead of $100 a month for the rest of their life, and so very few lawyers will target you as an individual unless you're the only one to blame (rare) or their client insists on making it personal. Most of your liability is already covered, one way or the other - When something happens to someone else in your home, your homeowner's policy includes a personal liability rider. The first two \"\"buckets\"\" of state-mandated auto liability insurance are for personal injury liability; the third is for property (car/house/signpost/mailbox). Health insurance covers your own emergency care, no matter who sent you to the ER, and life and AD&D insurance covers your own death or permanent disability no matter who caused it (depending on who's offering it; sometimes the AD&D rider is for your employer's benefit and only applies on the job). 99 times out of 100, people just want to be made whole when it's another Average Joe on the other side who caused them harm, and that's what \"\"normal\"\" insurance is designed to cover. It's fashionable to go after big business for big money when they do wrong (and big business knows this and spends a lot of money insuring against it), but when it's another little guy on the short end of the stick, rabidly pursuing them for everything they're worth is frowned on by society, and the lawyer virtually always walks away with the lion's share, so this strategy is self-defeating for those who choose it; no money and no friends. Now, if you are the deep pockets that people look for when they get out of the hospital, then a PLP or other supplemental liability insurance is definitely in order. You now think (as you should) that you're more likely to be sued for more than your normal insurance will cover, and even if the insurance company thinks the same as you and will only offer a rather expensive policy, it becomes a rather easy decision of \"\"lose a little every month\"\" or \"\"lose it all at once\"\".\"", "title": "" }, { "docid": "393cfe7f63759aa40272e57c8141fe59", "text": "\"The long and short of it is, the mortgage company has a significant interest in the resale value of the home in the event of a default. Imagine a scenario where you say to yourselves that you're not going to repair the deck just yet (\"\"meh, we'll do that next summer\"\") and something happens that causes a default on the mortgage. The resale value of the home may be harmed by the deck, even though you're willing to live with it. That being the case, the mortgage company has every right to insist that you carry out the repairs in order to maintain the property in salable condition, so the essence of it is, you don't have much choice but to do the repairs. Keep in mind too that the insurance company paid for the roof and the deck to be repaired. If they were to learn that you now have no intention of using the money to repair the property, you could end up in legal hot water with them. After all, you did accept the check for repairs that you're now not carrying out.\"", "title": "" }, { "docid": "1d811e4c8d28e6562ab2cec2b871a94d", "text": "Note: This is what one of the people responsible for this process told me quite a few years ago, it might be different today. I work in insurance, but I don't follow this particular process too closely. New cars necessitate a judgment call, which usually involves a look at claims rates for similar (existing) cars, manufacturer-specific labour and parts costs, expected regional distribution (for example, a new BMW will probably sell better in Bavaria than in other areas, which has higher labour rates than most of the rest of the country, and will be categorised accordingly), and other factors, depending on the situation. These preliminary judgments are largely discarded when the new statistics are compiled, though, which is once a year. New insurance groups are published in early September and usually applied to insurance contracts on January 1st.", "title": "" }, { "docid": "f84220fd43bec9562e69e878985ace2e", "text": "Insurance - get estimate from an insurance agent who works with policies for commercial real estate. See comments below regarding incorporation. Taxes - if this was basic income for a simple LLC, estimating 25-40% and adjusting over time might work. Rental property is a whole different prospect. Financial experts who specialize in rental properties would be a good source of advice, and worth the cost. See below regarding incorporating. Real estate appreciation - not something you can count on for developed property. Appreciation used to be almost guaranteed to at least keep up with inflation. Now property values are not even guaranteed to go up. Never have been but the general rule was improved real estate in good repair appreciated in price. Even if property values increase over time, rental properties depreciate. In fact, for rental properties, you can claim a certain rate of depreciation over time as an expense on taxes. This depreciation could mean selling for less than you paid for the property after a number of years, and owing capital gains taxes, since you would owe the difference between the depreciated value and the sale price. Related to taxes are local codes. Some areas require you to have a property management license to handle buildings with more than a certain number of units. If you are going to own rental properties, you should protect your private financial life by incorporating. Form a company. The company will own the property and hire any maintenance people or property managers or security staff or any similar employment activities. The company takes out the insurance and pays taxes. The company can pay you a salary. So, bottom line, you can have the company pay all the expenses and take all the risks. Then, assuming there's any money left after expenses, the company can pay you a manager's salary. That way if the worst happens and a tenant breaks their hip in the shower and sues you for ONE MILLION DOLLARS and wins, the company folds and you walk away. You might even consider two companies. One to own the property and lease it to a property management company. The property management company can then go bankrupt in case of some sort of liability issue, in which case you still keep the property, form a new management company, repaint and rename the property and move on. TL;DR: Get insurance advice from insurance agent before you buy. Same for taxes from an accountant. Get trained as a property manager if your local codes require it (might be a good idea anyway). Incorporate and have the company take all the risks.", "title": "" }, { "docid": "13ee4ee6cbf862faced136bfe3156ba8", "text": "\"Hi I'm the writer thanks for the read and the comment. With the statement you quoted, I'm trying to dispute the claim that \"\"people these days can't afford a house because they would have to pay their entire salary just to afford the mortgage,\"\" which I think is quite common in some circles. The data makes no statement as to whether home ownership is more affordable or not, but simply shows that those buying property are using around the same percentage of their income to pay for it, which the data clearly shows to be true. https://fred.stlouisfed.org/series/RHORUSQ156N As it turns out, home ownership levels have remained within ~5% of their 1980 levels based on percentage of the total population. I think there is an major classification flaw when comparing only sales because a great deal of people inherit property with no sale ever being made.\"", "title": "" }, { "docid": "de5aca707980d49571f86a463301d315", "text": "The bank doesn't have to do anything. It is your responsibility to provide the proof of insurance. It is the agent's job, which you through your HOA dues paid for, to provide that proof to you. You shouldn't be registering with icerts. They say so in the first sentence on the registration page: Unit Owners, Do Not Register Here! If you own an existing property, and have received a letter from your lender requiring an annual renewal/updated certificate for an association that has recently expired, please forward that letter to info@iCerts.com to receive instructions to place your order. If your request is a new loan of any kind, please contact your lender and request that they either contact us to place this order, or register below. So you can try that route (sending an email to info@icerts.com), and see if it works. It does cost money, in the range of $20-$100 (I used a different similar service at the time and they charged $75 for this). If it doesn't, you can try and work with the insurance agent. There are some ways to persuade them: California has very strong traditions of consumer protections. In this case, I suggest checking out this site. Let the insurance agent know that as the HOA member - they're working for you, and that in the next HOA meeting you will raise a request to change the insurance agency. Also, remind the agent that the CA Insurance Commission will knock on their doors to ask why they don't provide you with the proof you need. If the HOA management company doesn't help you, you can remind them that they too can be fired. This can be done, and isn't even all that hard. There's a lot of competition in the HOA management market, and it wouldn't be too hard to find a new management company. The HOA management company should have provided you the proof of coverage when they renewed the policy.", "title": "" }, { "docid": "f7713a2682895376021524cd3c65e3cf", "text": "When we got our mortgage in the state of Washington, in the United States, we had to get title insurance before our lender would loan the money. This ensures that the person selling us the house actually owns the title, clean and clear. If there are any surprises, the insurance covers us (or the lender, really).", "title": "" }, { "docid": "fc5200a551eb8da86019269ffc0be7db", "text": "Here's a good rule of thumb. In any situation where you are required to purchase insurance (Auto Liability, Property Mortgage Insurance, etc.) you can safely assume that you aren't the primary beneficiary. You are being required to buy that insurance to protect someone else's investment.", "title": "" }, { "docid": "b7903f7bac6c4a5fce750be794314e88", "text": "According to Money Girl, home insurance premiums are higher if you have a poor credit score. You might self-insure though if you are wealthy.", "title": "" }, { "docid": "9e3f53666b7c9d00610348c62925ba16", "text": "You are not asking for insurance purposes. So I'll go with this - I have two asset numbers I track. All investments, retirement accounts, etc, the kind that are valued at day's end by the market, etc. From that number I subtract the mortgage. This produces the number that I can say is my net worth with a paid in full house. The second number simply adds back the house's value, give or take. Unless I owned art that was valued in the six figures, it seems pointless to me to add it up, except for insurance. If my wife and I died tomorrow, the kid can certainly auction our stuff off, but knowing that number holds no interest for us. When most people talk 'net worth', I don't see them adding these things up. Cars, maybe, but not even that.", "title": "" }, { "docid": "e9971b7228c37ed52f6fedd32ba21e28", "text": "If all you look at is the people that can afford houses, then you're just primarily looking at banking policies -- who they will make a loan to, and on what loan terms; which are fairly consistent over time. FRED's home ownership statistic is calculated as the number of households that are owned; it makes no distinction between a household with a college grad still living with their parents because they can't afford living on their own. Apartment leases aren't getting cheap either.", "title": "" }, { "docid": "ce36cabdf10f05954d2cfe31dc253790", "text": "Why do people take out life insurance on their children? They do so largely because it's being sold to them. The insurance companies generally push them on the basis that if you have to pay for a funeral and burial, the cost would devastate a family's finances. In some rare instances that might actually be true, but not generally. Should I take out a policy on my child? Generally no. When they sell you a policy they have to dance around a catch-22 - if you have enough money to afford the 'cheap' life insurance, then you have enough money to pay for a funeral and burial that's probably not going to happen. If you don't have enough money to pay those expenses in the rare case that a child does die, then you really can't afford the insurance, even if it's only 'pennies a day for peace of mind.' And why would schools send these home to parents, year-after-year? The schools are paid a commission. It is not much more than a fundraiser for them, just like school pictures. Am I missing something? Yes, in fact, you could be making money hand over fist if you were willing to prey on parental insecurities. Just set up a stand outside the hospital and get parents who are just about to deliver to sign up for your amazing insurance plan in case the tragic occurs.", "title": "" } ]	fiqa
3de550d0846a6b23e01d679166f56c40	Would it make sense to take a loan from a relative to pay off student loans?	[ { "docid": "005db9a6ec7f3421984f8cbc462239c8", "text": "\"My biggest concern with this plan is that there's no going back should you decide that it is not going to work, either due to the strain on the relationship or for some other reason. If you were borrowing from a relative in place of a mortgage or a car loan, you can always refinance, and might just pay a little more interest or closing costs from a bank. Student loans are effectively unsecured, so your only option for a \"\"refinance\"\" would be to get a personal, unsecured loan (or borrow against existing collateral if you have it). You are going to have a tough time getting another 50k unsecured personal loan at anywhere near student-loan rates. The other negative aspects (overall risk of borrowing from family, loss of possible tax deduction) make this plan a no-go for me. (I'm NOT saying that it's always a good idea to borrow from family for homes or cars, only that there's at least an exit plan should you both decide it was a bad idea).\"", "title": "" }, { "docid": "ec55ffc0afb013f63119e61c57879329", "text": "\"Personally, I avoid making business deals with friends and relatives. There's just too much of a possibility that things can go wrong. Let's assume that you're honest people and you have no intention of cheating your mother-in-law. Still, all sorts of things could happen that could make it difficult for you to repay the loan. You could lose your job. You could get some big medical expense. Etc. Then what happens? Then your financial problems become family problems. There's a strong temptation when people borrow from relatives to make paying the loan the lowest priority in their budget. \"\"I know I promised to pay \\$X per month, but things are really tight right now and Mom should understand.\"\" Maybe she does understand and can manage without it. But maybe not. And then it becomes a family fight. \"\"You promised you'd pay it back.\"\" \"\"And we will, we're having a hard time right now. Can't you just give us a break?\"\" Etc. Or she might have some extra expense, and say, \"\"Hey, can't you pay a little more this month? I really need some extra cash.\"\" \"\"I'm sorry, we're struggling just to make the regular payments, we can't.\"\" \"\"Well I was willing to loan you all this money. The least you could do is pay me back when I need it.\"\" Etc. You can end up ruining family relationships over money. Your wife can find herself in the position of having to choose whether to side with her mother or her husband. Etc. I'm sure plenty of people do things like this and it works out just great. But there are big risks. And by the way, apparently this was your idea, not your mother-in-laws. I wonder what her reaction is. Is she eager to help out her daughter and son-in-law and had nothing in particular to do with the money anyway? Or is she feeling very imposed on? It's one thing to ask relatives to let you borrow their car for the weekend. Asking someone to loan you $50,000 is a very big request. If one of my kids asked me to loan them $50,000 from my retirement fund, I'd consider that a very presumptuous request. (Unless they needed the money for life-saving surgery for my grandchild or some such.)\"", "title": "" }, { "docid": "f62e1d6e5427c04a8259add514d801be", "text": "I struggle to see the value to this risk from the standpoint of your mother-in-law. This is not a small amount of money for a single person to lend to a single person ignoring your personal relationship. Right now, using a blended rate of about 8% and a 5 year payment period, your cost on that $50,000 is somewhere in the neighborhood of $11,000 with a monthly payment around $1,014. Using the same monthly payment but paying your MIL at 5% you'll complete the loan about 3.5 months sooner and save about $5,000, she will make about $6,000 in interest over 5 years against a $50,000 outlay. Alternatively, you can just prioritize payments to the more expensive loans. It's difficult to work out a total cost comparison without your expected payoff timelines and amount(s) you're currently paying toward all the loans. I'm sure a couple hours with a couple of spreadsheets could yield a plan that would net you a savings substantially close to the $5,000 you'd save by risking your mother in law's money. A lot of people think personal lending risk is about the relationship between the people involved, but there's more to it than that. It's not about you and your wife separating, it's not about the awkward dinner and conversations if you lose your job. Something might physically happen to you, you could become disabled or die. Right now, that's an extremely diversified and calculated risk taken by a gigantic lender. Unless your mother in law is very wealthy, this is not nearly enough reward to assume this sort of risk (in my opinion). Her risk FAR outpaces your potential five year savings. IF you wanted to pursue this as a means of paying interest to a family member rather than the bank, I'd only borrow an amount I budgeted and intended to pay within this single year. Say $10,000 against the highest interest loan.", "title": "" }, { "docid": "719361dd7da029956d981498d9b0fa43", "text": "I will start with the assumption that you will never have any late payments and will fully pay off the loan. This may be a big assumption, but if you can't assume that, then you wouldn't have asked the question in the first place. The answer depends on your income: You should calculate how much student loan interest you can deduct before and after the switch, and adjust the interest rate accordingly to compensate for any difference.", "title": "" }, { "docid": "a6e78d648403a607c83fb538ac0fd1d7", "text": "I have recently been the lender to a couple people. It was substantially less money (~$3k), but I was trusting their good faith to pay me back. As a lender, I will never do it again. Reasons, Overall, not worth it.", "title": "" }, { "docid": "caf5a078744cc54a81030ae60317e94b", "text": "\"Would it make sense to take a loan from a relative... Other people have pointed this out, but honestly, I'd be very reluctant to answer \"\"yes\"\" to this no matter how you completed that sentence. There's always an intangible risk to mixing money and relationships. There's a lot that can go wrong during the duration of the loan, and if it does, the consequences could be a lot greater than just a bad credit score.\"", "title": "" }, { "docid": "ec0dddc2268c033816cb2cfd2c347cbb", "text": "The interest that you are proposing to pay your MIL is actually quite low compared to even extremely conservative investing which easily earns 7% or more with quantifiable low risk. You claim that it would be no risk, but what would happen if you lost your job? The risk she faces is more or less exactly what a bank would experience while giving the loan, or in other words it is pretty much whatever your credit score says. Even worse, she does not have a large pool of investments to distribute this risk like a bank would. Making loans this large in a family situation is a recipe for disaster. Taking a huge risk with the relationship your wife has with her mother over three points of interest is exceptionally unwise. Are these private or federal student loans? Federal student loan debt is some of the safest to carry due to its income based repayment plans and eventual loan forgiveness after 25 years. Have you investigated income based repayment options?", "title": "" } ]	[ { "docid": "3f7daeb76a5bac2d245bcac8cf109e91", "text": "Every time I have loaned money to family members I have never gotten the money back. If they can't make the down payment, they should not be taking out the loan. It's a bad idea to loan money to friends, because when they can't pay you back (which might be forever) they avoid you. So, you lose both your money and your friends.", "title": "" }, { "docid": "8a3ebfa6c633c4958363319222831edb", "text": "\"Consider the \"\"opportunity cost\"\" of the extra repayment on a 15 year loan. If you owe money at 30% p.a. and money at 4% p.a. then it is a no brainer that the 30% loan gets paid down first. Consider too that if the mortgage is not tax deductable and you pay income tax, that you do not pay tax on money you \"\"save\"\". (i.e. in the extreme $1 saved is $2 earned). Forward thinking is key, if you are paying for someone's college now, then you would want to pay out of an education plan for which contributions are tax deductable, money in, money out. In my country most mortgages, be they 15,25,30 years tend to last 6-8 years for the lender. People move or flip or re-finance. I would take the 15 for the interest rate but only if I could sustain the payments without hardship. Maybe a more modest home ? If you cannot afford the higher repayments you are probably sailing a bit close to the wind anyway. Another thing to consider is that tax benefits can be altered with the stroke of a pen, but you may still have to meet repayments.\"", "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": "33d099c8da7f15157ff66e6ab94e8a96", "text": "My in-laws are pressuring me to buy a home. I don't really have much financial experience. In fact, I'm a nightmare with finances. I almost have my student loans payed off from school. My in-laws and husband are great with finances and with real-estate. My husband has a good job and $200k in savings. I have a good job too, and still have some debt from school. (approx $60k left of 180k). They say the house will be available in Jan or February for purchase, and that we should really try to buy it (prob $2-3 mil). My guess is they want to make it available to us off the market (which is a huge benefit in this area, there are really no houses available lately) . The problem is: I am uncomfortable because I don't have all of my loans payed off, I could divert money away from paying off the loans in order to save for a larger downpayment. I just got a bonus of $35k (after taxes) I don't think I'll have all of my loans payed off by January. Should I save my money for the downpayment or focus on my loans, should I go for the house? I don't know how to weigh these options against each other with such little experience.", "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": "1c7c7fc1cb06ec373f996b7a2740bf69", "text": "\"You should pay for grad school without taking loans if your circumstances permit. There is the possibility of a tax write off for interest paid on student loans, but it's slightly complicated and it's very much a \"\"give me $10, and I'll give you $5 back\"\" kind of deal. You're better off not borrowing the money to begin with, even though I tend to think that borrowing for things which appreciate-- e.g., a house-- or which can significantly increase your earning capability-- e.g., the right kind of graduate school-- is generally better/wiser/more permissible than borrowing for something which depreciates, like a car. Having no student loan debt after graduation means you have greater freedom than someone who is laboring to pay student loan debt in addition to all of their other bills. My $0.02\"", "title": "" }, { "docid": "18f63457e8334538d77a5766629da7ed", "text": "If this isn't a case where you would be willing to forgive the debt if they can't pay, it's a business transaction, not a friend transaction. Establish exactly what the interest rate will be, what the term of the loan is, whether periodic payments are required, how much is covered by those payments vs. being due at the end of the term as a balloon payment, whether they can make additional payments to reduce the principal early... Get it all in writing and signed by all concerned before any money changes hands. Consider having a lawyer review the language before signing. If the loan is large enough that it might incur gift taxes, then you may want to go the extra distance to make it a real, properly documented, intra-family loan. To do this you must charge (of at least pay taxes on) at least a certain minimal interest rate, and they have to make regular payments (or you can gift them the payments but you still won't up paying tax on the interest income). In this case you definitely want a lawyer to draw up the papers, I think. There are services on the web Antioch specialize in helping to set this up properly, and which offer services such as bookkeeping and monthly billing (aT extra cost) to make it less hassle for the lender. If the loan will be structured as a mortgage on the borrower's house -- making the interest deductible for the borrower in the US -- there are additional forms that need to be filled. The services can help with that too, for appropriate fees. Again, this probably wants experts writing the agreement, to make sure it's properly written for where you and the borrower live. Caveat: all the above is assuming USA. Rules may be very different elsewhere. I've done a formal intractability mortgage -- mostly to avoid gift tax -- and it wasn't too awful a hassle. Your mileage will vary.", "title": "" }, { "docid": "04e74a4f44ed1e8e97ae3bfd5f3b6892", "text": "\"Let's summarize your relative's problem: How is this possible? If both of those statements are true, then he should be able to explain exactly why those statements are true, and then you can explain it to us, and then we can all nod our heads and admit, \"\"Wow, that makes sense. Proceed if you want to.\"\" But until that happens I suggest you take the advice I offered in the first paragraph of this answer.\"", "title": "" }, { "docid": "ea7fdaf01a430e0832d8219c9145cfec", "text": "\"It's viable for you, but the \"\"investor\"\" is either stupid or willing and able to write off the investment as a gift for a friend in need, knowing it will probably end the friendship. The banks make their money off of indebtedness, with the highest returns being on the highest risk loans . If the bank isn't willing to give you that debt on your own, it's because they already know it's a bad debt. In this case, trust the banks. If you can't come up with the downpayment on your own, you won't be able to meet your other commitments on this contract.\"", "title": "" }, { "docid": "8be4b8c3196627390ff6bf2365f30916", "text": "\"My thoughts on loaning money to friends or family are outlined pretty extensively here, but cosigning on a loan is a different matter. It is almost never a good idea to do this (I say \"\"almost\"\" only because I dislike absolutes). Here are the reasons why: Now, all that said, if my sister or parents were dying of cancer and cosigning a loan was the only way to cure them, I might consider cosigning on a loan with them, if that was the only option. But, I would bet that 99.9% of such cases are not so dire, and your would-be co-borrower will survive with out the co-signing.\"", "title": "" }, { "docid": "512d7c4e1f8831007a9b824440f78073", "text": "Only if (or to put it even more bluntly, when) they default. If your friend / brother / daughter / whoever needs a cosigner on a loan, it means that people whose job it is to figure out whether or not that loan is a good idea have decided that it isn't. By co-signing, you're saying that you think you know better than the professionals. If / when the borrower defaults, the lender won't pursue them for the loan if you can pay it. You're just as responsible for the loan payments as the original borrower, and given that you were a useful co-signer, probably much more likely to be able to come up with the money. The lender has no reason to go after the original borrower, and won't. If you can't pay, the lender comes after both of you. To put it another way: Don't think of cosigning as helping them get a loan. Think of it as taking out a loan and re-loaning it to them.", "title": "" }, { "docid": "419ad6232fd4f86fa4f9ae3da5226128", "text": "\"In some cases, it might be rational to pay low-interest debt first, because the consequences of defaulting on that debt are worse. Consider this simplified example. Suppose you have two debts: a low-interest mortgage, secured by your house, and a high-interest unsecured credit card debt, both of which are within a few years of being paid off. There is a chance that sometime between now and then, something will happen to disrupt your income (e.g. medical problems), and it won't be possible to make the payments on either loan. Defaulting on the credit card loan will result in a lower credit score and calls from collection agencies. Defaulting on the mortgage will result in the foreclosure or forced sale of your house, at best forcing you to move, and at worst leaving you homeless, at a time when you are also facing other (e.g. medical) problems. So you might rationally judge that losing your house is much worse than bad credit. Therefore, you might rationally conclude that it would be better to direct extra income toward paying down the mortgage, to increase the chances that, if and when an income disruption might occur, the mortgage would already be paid off. In other words, you shorten the window of time where income disruption results in foreclosure. You might decide that this increased security is worth the extra interest you will pay, compared to the strategy where you pay the high-interest loan first. This is a fairly special situation, but you asked \"\"Why might it be a good idea to do this?\"\", and I am just giving an example where it could rationally be considered a good idea. (Of course, in a real-life version of this example, there might be other options available, such as refinancing the mortgage. If you like, you could imagine a more extreme example where the lower-interest debt is owed to Joey Knuckles the loanshark, who will come and break your kneecaps if you miss a payment.)\"", "title": "" }, { "docid": "7319e7d344e18f21491dba0ebe7e93f6", "text": "All of RonJohn's reasons to say no are extremely valid. There are also two more. First, the cost of a mortgage is not the only cost of owning a house. You have to pay taxes, utilities, repairs, maintenence, insurance. Those are almost always hundreds of dollars a month, and an unlucky break like a leaking roof can land you with a bill for many thousands of dollars. Second owning a house is a long term thing. If you find you have to sell in a year or two, the cost of making the sale can be many thousands of dollars, and wipe out all the 'savings' you made from owning rather than renting. I would suggest a different approach, although it depends very much on your circumstances and doesn't apply to everybody. If there is someone you know who has money to spare and is concerned for your welfare (your mention of a family that doesn't want you to work for 'academic reason' leads me to believe that might be the case) see if they are prepared to buy a house and rent it to you. I've known families do that when their children became students. This isn't necessarily charity. If rents are high compared to house prices, owning a house and renting it out can be very profitable, and half the battle with renting a house is finding a tenant who will pay rent and not damage the house. Presumably you would qualify. You could also find fellow-students who you know to share the rent cost.", "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": "87c67815a720af85f70f07a3783f1f6d", "text": "Paying off your student loan is an investment, and a completely risk-free one. Every payment of your loan is a purchase of debt at the interest rate of the loan. It would be extremely unusual to be able to find a CD, bond or other low-risk play at a better rate. Any investment in a risky asset such as stocks is just leveraging up your personal balance sheet, which is strictly a personal decision based on your risk appetite, but would nearly universally be regarded as a mistake by a financial advisor. (The only exception I can think of here would be taking out a home mortgage, and even that would be debatable.) Unless your loan interest rate is in the range of corporate or government bonds -- and I'm sure it isn't -- don't think twice about paying them off with any free cash you have.", "title": "" } ]	fiqa
ef89f0da4d6602ec4f71a4e7996f9de6	My medical bill went to a collection agency. Can I pay it directly to the hospital?	[ { "docid": "242d92e6c727e00a512f1db09b611ed6", "text": "Short Answer Collections agencies and the businesses they collect for are two different animals. If you don't want this to hurt your credit I suggest you deal directly with the hospital. Pay the bill, but prior to paying it get something in writing that specifically says that this will not be reported onto your credit. That is of course if the hospital even lets you pay them directly. Usually once something is sold to a collections company it's written off. Long Answer Credit reports are kind of a nightmare to deal with. The hospital just wants their money so they will sell debt off to collections companies. The collections companies want to make money on the debt they've bought so they will do what ever it takes to get it out of you, including dinging your credit report. The credit bureaus are the biggest nightmare to deal with of all. Once something is reported on your credit history they do little to nothing to remove it. You can report it online but this is a huge mistake because when you report online you wave your rights to sue the credit bureaus if they don't investigate the matter properly. This of course leads to massive amounts of claims being under investigated. So what are your options once something hits your credit history? I know this all sounds bleak but the reason I go into such depth is that they likely have already reported it to the credit bureaus and you just don't see it reported yet. Good luck to you. Get a bottle of aspirin.", "title": "" } ]	[ { "docid": "946ea126eae0ed43396aa7a733be9258", "text": "From accounting perspective, an unpaid bill for internet services, according to the Accruals Concept, is recorded as a liability under 'Current Liabilities' section of the Balance Sheet. Also as an expense on the Income Statement. So to answer your question it is both: a debt and an expense, however this is only the case at the end of the period. If you manage to pay it before the financial period ends this is simply an expense that is financed by cash or other liquid Asset on the Balance Sheet such as prepayment for example. For private persons you are generally given some time to pay the bill so it is technically a debt (Internet Provider would list you as a debtor on their accounts), but this is not something to worry about unless you are not considering to pay this bill. In which case your account may be sold as part of a factoring and you will then have a debt affecting your credit rating.", "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": "64c4ccde4ee50cfa5b1328ff7781c804", "text": "\"I had a similar issue take place at a hospital when the repeatedly billed the \"\"wrong me\"\" -- a stale insurance record left behind from when I was a dependent on my parent's insurance a decade earlier. They ended up billing me for anesthesia when I had a major surgery (everything else was billed to the correct insurance.) The outsourced billing people were pretty unhelpful (not usually the case with hospitals), so I became the squeaky wheel. I sent certified letters, had my priest rattle the cage (it was a Catholic hospital) and eventually talked myself into a meeting with the VP of Finance, who started paying attention when the incompetence of his folks became apparent. Total cost: $0 + my time.\"", "title": "" }, { "docid": "01716d3654fe82072d9cc6b57757c688", "text": "I was in a similar situation years back and I refused to pay the bill. My point of view was that I provided the hospital with all information needed to submit the claim in a timely matter and that I should not be held responsible for their failure to do so. In the end they waived the charges. So while technically I might have been responsible for paying the charges, in reality I think they decided it wasn't worth the hassle of making me (I would have fought it all the way up to the top). Not sure that I would recommend this approach though :)", "title": "" }, { "docid": "b4d0c174c50cc545ba42074ac6553474", "text": "If they had told me that I owe them $10,000 from 3 years ago, I wouldn't have anything to fight back. Why? First thing you have to do is ask for a proof. Have you received treatment? Have you signed the bill when you were done? This should include all the information about what you got and how much you agreed to pay. Do they have that to show to you, with your signature on it? If they don't - you owe nothing. If they do - you can match your bank/credit card/insurance records (those are kept for 7 years at least) and see what has been paid already. Can a doctor's office do that? They can do whatever they want. The right question is whether a doctor's office is allowed to do that. Check your local laws, States regulate the medical profession. Is there a statute of limitation (I'm just guessing) that forces them to notify me in a certain time frame? Statute of limitations limits their ability to sue you successfully. They can always sue you, but if the statute of limitations has passed, the court will throw the suite away (provided you bring this defense up on time of course). Without a judgement they cannot force you to pay them, they can only ask. Nicely, as the law quoted by MrChrister mandates. They can trash your credit report and send the bill to collections though, but if the statute of limitations has passed I doubt they'd do that. Especially if its their fault. I'm not a lawyer, and you should consult with a lawyer licensed in your jurisdiction for definitive answers and legal advice.", "title": "" }, { "docid": "1fe4a074acf2dedbd7602bad8191001c", "text": "If it was me, I'd wait until/if you get contacted again by the collection agency. Once you do, I'd offer to settle for less. Perhaps 1000-1250 to start, and I would not go any higher than 2K. Get it in writing that this settles your debt in full, and do not give them direct access to your checking account. You can pay them by certified check or with a prepaid credit card or something. If you do the latter, throw that prepaid card away, and never use it again. You may also try to get them to agree that you do not owe the full 5K, and again get that in writing. Otherwise, you will be 1099'd for the difference between it and the amount you settle and therefore it will be treated as income. I'd stick 2k in a bank account for a while, perhaps two years, and you are free to use the remaining 3K to meet other goals. After two years, I would check my credit and see if it is still in the report. You might also choose to dispute the collection and see what happens there. If it is successful it will come off your report. Prior to a big credit decision (aka buying a home), I would check on the status of this collection. Only at that time would I contact that collection agency and again try to settle. If I contacted them, I would start the negotiations around 500 or so.", "title": "" }, { "docid": "98f5a5c3112a53413b677af2502ccf97", "text": "In short, no, or not retroactively. There really are multiple companies involved, each of which bills you separately for the services they provided. This can be partly avoided by selecting either a high-end health plan with lower out-of-pocket maximum, (costs more up front, of course) or by selecting a genuine Health Management Organization (not a PPO) which gathers more of the services into a single business. Either of these would result in fewer cash payments needing to be sent. But I don't know of any way to simplify things after the fact. Even if there was a consolidation service, you would have to forward the bills to them, which really wouldn't be any easier than just paying the bills. (I'm assuming you are in the US, where we have a health insurance system rather than a health system. Other countries may handle this differently.)", "title": "" }, { "docid": "088598ffdbbf738ec5c4f533240a86ac", "text": "I understand that if I have multiple health insurance policies, I can only make claim from only one of them if ever I incur medical expenses (I'm from the Philippines). In the US, you cannot simultaneously submit a claim for payment of a medical bill, or request reimbursement for a bill already paid, to multiple insurance companies, but if you are covered by more than one policy, then any part of a claim not paid by one company can be submitted to another company that is also covering you. In fact, if you have employer-paid or employer-provided coverage, most insurance companies will want your employer-provided insurance company to be billed first, and will cover whatever is not paid by the employer coverage. For example, if the employer coverage pays 80% of your doctor's bill, the private insurance will pay the remaining 20%. But, the private insurance policies are also quite expensive. Some professional groups in the US offer major medical coverage to their US members, and might be offering this to non-US members as well (though I suspect not). These policies have large deductibles so that coverage kicks in only when the total medical expenses in that year (whether wholly or partially reimbursed, or not reimbursed at all) exceed the large deductible. These types of policies actually pay out to only a few people - if you have more than, say, $20,000 of medical expenses in a year, you have been quite ill, and thus the premiums are usually much smaller than full-fledged coverage insurance policies which pay out much more frequently because of much smaller deductibles.", "title": "" }, { "docid": "18d9cbc00c698170d9acdf0c488dd88c", "text": "If you read all that paperwork they made you fill out at the emergency room, there is probably something in there explicitly stating that you owe any bills you rack up regardless of what happens with the insurance company. They generally have a disclaimer that filing for you with your insurance company is a courtesy service they offer, but they are not obliged to do it. Ultimately, you are responsible for your bills even if the provider slow-billed you. Sorry.", "title": "" }, { "docid": "79f3951e521b723d7cec441f8987995e", "text": "\"They have forever to collect a balance from you. Furthermore they can add whatever penalties and fees they wish to increase that balance. Worst of all, they don't have to remind you or send you bills or any other notification. You owed it when you left the office. (There very well could be local laws that require notifications, but that isn't really the issue here.) That dentist has every right to deny you service until you settle the account. Forever. The statute of limitations on collecting that debt via court: http://www.bankrate.com/finance/savings/when-does-your-debt-expire.aspx Which covers the rules on HOW LONG they have to collect the debt. Owing the money is one thing, but the rules and tools that you creditor has to collect the debt are another. You are probably worried about them suing you. But if you don't pay the debt (or settle in some way), that dentist can refuse to provide services to you, even if they write off the debt. Ways you can be punished by your dentist for not paying the bill are: Depending on your jurisdiction and/or type of debt, they typically only report it on your credit (if they are reporting at all) for 7 years. Even if you pay and settle the account, it will still be reported on your credit report for 7 years. The difference is how it is reported. They can report that \"\"user133466 is a super reliable person who always pays debts on time\"\". They can say \"\"user133466 is a flake who pays, but takes a while to pay\"\". Or they can say \"\"user133466 is a bad person to provide services before collecting money, because user133466 don't pay bills\"\". Other people considering lending you money are going to read these opinions and decide accordingly if they want to deal with you or not. And they can say that for 7 years. The idea of credit reporting is that you settle up as soon as possible and get your credit report to reflect the truth. One popular way to collect a debt to is to sue you for it. There, each state has a different time period on how long a creditor has to sue you for a debt. http://www.bankrate.com/finance/credit-cards/state-statutes-of-limitations-for-old-debts-1.aspx If you pay part of the debt, that will often reset the clock on the statute of limitations, so be sure any partial or negotiated settlements state very clearly, in writing, that payment is considered payment in full on the debt. Then you keep that record forever. There are other interesting points in the Fair Debt Collection Practices Act. See Debt collectors calling? Know your rights. They can only contact you in certain ways, they must respond to you in certain ways, and they have limits on what they can say, who they can say it to, and when they can say it. There are protections from mean or vicious bill collectors, but that doesn't sound like who you are dealing with. I don't know that the FDCPA is a tool you need to use in this case. You should negotiate your debt and try your best to settle up. From your post, both parties dropped the ball, and both parties should give a little. You should pay no or minor late fees, and the doctor should report your credit positively when you do so. If you both made honest mistakes, they both parties should acknowledge that and be fair, and not defensive. This is not legal advice. But you owe the debt, so you should settle up. I don't think it is fair for you to not pay because they didn't mail you a paper. However I also do not think it is fair for the doctor to run up fees and not remind you of the bill. Finally, you didn't bring up insurance or many other details. Those details can change the answer.\"", "title": "" }, { "docid": "886fb7c068aaee1b85d19e542f0d6747", "text": "As far as I can tell, the direct deposit option would require you to have a US bank account, which you don't have. So wire transfer is your only option unless you can ask them to try something else, like one of the cheaper money transfer services around. The charges for wire transfers tend to be fairly significant (typically low tens of USD). Depending on your relationship with the payer and the nature of the payment, try to get them to send it with all charges paid so you actually receive the amount you are owed and they cover the charges.", "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": "28fbd6147331296e24091a48b5f615a7", "text": "It is important to understand that when or before you received services from your medical provider(s), you almost certainly signed a document stating that you understand that you are fully responsible for the entire bill, even though the provider may be willing to bill the insurer on your behalf as a service. In almost all cases, this is the arrangement, so it is very unlikely that you will be able to dispute the validity of the bill, since you did receive the service and almost certainly agreed to be fully responsible for the payments. With regard to the discounts, your medical provides have likely contracted with your insurer to provide services at a certain price or discount level, so I would base all of your negotiations with the providers and/or the collectors on those amounts. They can't legitimately bill you for the full amount since you are insured by a company they have a contract with, and you are not self-pay/uninsured, and the fact that they haven't been paid by your insurer doesn't change that, because the discount likely depends on the contact they have with your insurer and not whether or not they are billed/paid by your insurer. Please note - this is a common arrangement, but I'd recommend that you verify this with your insurer. Unfortunately, payment in 90+ days is often typical by insurance standards, so it's not yet clear to me whether or not your insurer has broken any laws such as a Prompt Pay law, or violated the terms of your policy with them (read it!). However, you need to find out which claims rep/adjuster is handling your claims and follow up with them until the payments are made. It's not personal, so make this person's life miserable until it is done and call them so often that they know it's you by the caller ID. I would also recommend contacting the collector(s), and letting them know that you don't have the money and so will not be able to pay, provide them with copies of the EOBs that state that the insurance company plans to pay the providers, and then ignore their calls/letters until the payments are made. When they call, simply reiterate that you don't have the money and that your insurance company is in the process of paying the bills. You have to expect that you will be dealing with a low-paid employee that is following a script. You are just the next person on their robo-call list, and they are not going to understand that you don't have a pile of money laying around with which to pay them, even if you tell them repeatedly. Make sure that you at no point give them access to any of your financial accounts, such as a checking or savings account, or a debit card - they will access it and clean you out. It is likely that your insurance provider will pay the providers directly since they were likely billed by the providers originally. If the providers have sold the debt to the collectors (and are not just employing a collector for debt they still own), you may have to follow up with the providers as well and make sure that the collection activity stops, since the providers may also need to forward the payments to the collectors once they are paid by the insurance company. Of course, if the insurer refuses to pay the claims, at that point I would recommend meeting with a lawyer to seek to force them to pay.", "title": "" }, { "docid": "78a3ef2b2e99a5dba21d383e0e5c778c", "text": "Due to the fact that months have gone by since the item was shipped to you it will be hard to resolve by sending it back. The collection agency is now only interested in getting as much of the money as they can from you. They may have sent a percentage of the debt to the original company when they bought the debt. They may also be working on a commission. Therefore they are not interested in having everybody happy with the result. They need to follow the law, but they don't care if you are a happy customer. The longer you wait to resolve it, the longer it will remain on the credit report. The fact that it went to collections has already hurt your score. Yes, make sure that they update your credit file to reflect that you have paid the debt. Get it in writing. Also check with your health insurance company to see if this is at least partially covered by insurance. They generally won't cover the $12 in fees from the collections company, but they might cover part of the original bill. Depending on the item, it might also be an allowable expense for your FSA (Flexible spending account) or your HSA (Health Spending account).", "title": "" }, { "docid": "20064feafb979b8e5119dc642d0de4de", "text": "I don't quite understand the NYSE argument that the credit system helps NASDAQ undercut NYSE on pricing and force brokers to trade on NASDAQ. I thought if you were trading a stock listed on NASDAQ, you traded through them and if you were trading a stock listed on NYSE, you'd trade over there. The choice of exchange coming down to the stocks you want to trade more than anything. Are the exchanges also acting as endpoints on trades for securities listed on the other exchange?", "title": "" } ]	fiqa
eeb64b4ec6c854e6c8e510a9d96f63b9	Can I buy a new house before selling my current house?	[ { "docid": "a5d1d152614dde74cea6e8431471e43b", "text": "\"You can make a contingent offer: \"\"I will buy this house if I sell my own.\"\" In a highly competitive environment, contingent offers tend to be ignored. (Another commentator described such a contingency clause as synonymous with \"\"Please Reject Me\"\".) You can get a bridge loan: you borrow money for a short term, at punishingly high interest. If your house doesn't sell, you're fscked. You pay for two mortgages (or even buy the other house for cash). If you can afford this, congratulations on, you know, being super-rich. Or you can do what I am doing: selling one house and then living at my mom's until I buy another one. (You will have to stay at your own mom's house; my mom's house will be full, of course.) Edit: A commentator with the disturbingly Kafkaesque name of \"\"R.\"\" made the not-unreasonable suggestion that you buy both and rent out one or the other. Consider this possibility, but remember: On the other hand, if the stars align, you might not want to extricate yourself. If the tenant is paying the mortgage and a little more, you have an appreciating asset, and one you can borrow against. With a little work and a little judicious use of leverage, doing this over and over, you can accumulate a string of income-producing rental properties.\"", "title": "" }, { "docid": "540f7bc42f160cb712f2a75dbd0dd4ee", "text": "The two most common scenarios are: Since you have more control of timing when you are the buyer compared to when you are the seller, #1 is probably more common, however, a good real estate attorney should be able to walk you through your options should #2 come up. Fortunately, many real estate attorneys do not charge you anything until the sale completes, and you will likely get a discount if you involve them in both the sale and purchase, so I would start by finding an attorney.", "title": "" }, { "docid": "60a8bb887508c315f7ed152a2ca94981", "text": "A bridge loan (or bridging loan) is designed for exactly this circumstance. They're short-term loans (6 months is common) designed to help home-buyers to bridge the gap between buying and selling. MoneySupermarket defines them like this: Bridging loans are designed to help people complete the purchase of a property before selling their existing home by offering them short-term access to money at a high-rate of interest. As well as helping home-movers when there is a gap between the sale and completion dates in a chain, this type of loan can also help someone planning to sell-on quickly after renovating a home, or help someone buying at auction. Interest rates are very high, and there are likely to be fees, because you'll only need the loan for a short period. Here are some links to Canadian websites that explain more.", "title": "" }, { "docid": "042b242265023ff11bf09c68b010334d", "text": "If you can qualify for two mortgages, this is certainly possible. For this you can talk to a banker. However, most people do not qualify for two mortgages so they go a different route. They make offers on a new home with a contingency to sell the existing home. A good Realtor will walk you through this and any possible side effects. Keep in mind that the more contingencies in an offer the less attractive that offer is to sellers. This is how cash buyers can get a better deal (no contingencies and a very fast close). Given the hotness of your market a seller might reject your offer as opposed to first time home buyer that does not need to sell an old home. On the other hand, they may see your contingency as low risk as the market is so hot. This is why you probably need a really good agent. They can frame the contingency in a very positive light.", "title": "" }, { "docid": "3a9a85134e2efec3d92f6f364cd2ee12", "text": "There's also the option to put most of your stuff into storage and rent an apartment or go to an extended stay hotel. Some apartments have month-by-month options at a higher rate, though you may need to ask around. I've known some people to use this as their primary plan because it was easier for them to keep the house clean and ready to show when it's empty. Basically, this option is to sell your current house then buy the new house with a (hopefully fairly short) transition time in the middle.", "title": "" }, { "docid": "518cb6ee8a76cbf5dcdd784be6dc8bc5", "text": "As the other answers suggest, there are a number of ways of going about it and the correct one will be dependent on your situation (amount of equity in your current house, cashflow primarily, amount of time between purchase and sale). If you have a fair amount of equity (for example, $50K mortgage remaining on a house valued at $300K), I'll propose an option that's similar to bridge financing: Place an offer on your new house. Use some of your equity as part of the down payment (eg, $130K). Use some more of your equity as a cash buffer to allow you pay two mortgages in between the purchase and the sale (eg, $30K). The way this would be executed is that your existing mortgage would be discharged and replaced with larger mortgage. The proceeds of that mortgage would be split between the down payment and cash as you desire. Between the closing of your purchase and the closing of your sale, you'll be paying two mortgages and you'll be responsible for two properties. Not fun, but your cash buffer is there to sustain you through this. When the sale of your new home closes, you'll be breaking the mortgage on that house. When you get the proceeds of the sale, it would be a good time to use any lump sum/prepayment privileges you have on the mortgage of the new house. You'll be paying legal fees for each transaction and penalties for each mortgage you break. However, the interest rates will be lower than bridge financing. For this reason, this approach will likely be cheaper than bridge financing only if the time between the closing of the two deals is fairly long (eg, at least 6 months), and the penalties for breaking mortgages are reasonable (eg, 3 months interest). You would need the help of a good mortgage broker and a good lawyer, but you would also have to do your own due diligence - remember that brokers receive a commission for each mortgage they sell. If you won't have any problems selling your current house quickly, bridge financing is likely a better deal. If you need to hold on to it for a while because you need to fix things up or it will be harder to sell, you can consider this approach.", "title": "" }, { "docid": "072657906959afacef76be19931af359", "text": "If you're living in a market where some houses are going for $150K over asking, then you MUST buy before you sell. In a seller's market, you will get multiple offers on your current house when you decide to sell, it will sell for (well) over asking, and you can dictate possession dates. You do not need to worry about selling your own home, if you have a competent realtor. But buying a home is an entirely different story. You may struggle to find something affordable, and there may be multiple buyers each time you decide to make an offer. You may go through this cycle several times over many months before your offer is accepted. You should do this while living in your own home, with the comfort of knowing that you can sell your own home easily at any time, instead of the stress of an imminent closing date on your own home. Or worse, move into rented space or Malvolio's mom's house for months or a year while the market increases by 15% and the houses in your old area are now selling for $100K more than you sold for. Ouch, now you really can't afford to buy what you want, and you may end up buying something equivalent to what you used to own, for more, plus legal, realtor, and land transfer costs. If the closing dates don't align, then bridge. This will only end up costing a few hundred dollars, less than $1K including legal fees (the lawyer will also charge to handle this). But by buying before you sell, you'll easily make up that difference. This advice only applies to hot property markets. I'm not a realtor, just a guy living in the GTA who went through this process last year. Lost out on three offers over 10 months, then bought for asking price on fourth offer (very fortunate), then sold for $90K over asking, then bridged for 2 months. My realtor is awesome and made the process as stress free as it can be. Get a good realtor, start house hunting while preparing your own house for sale, and enjoy the process. Also you should negotiate with your realtor, they may be willing to reduce their commission on your sale if they are also representing you on the purchase. Good luck! P.S. Do not make a contingent offer, and do not accept one. Get your financing in place before you make an offer, and if you are concerned about inspection, you can also do that before the offer, if you act quickly. The inspection will cost ~$500, but it will increase the value of your offer by much more than that since you will be going in without conditions. I spent ~$1,000 on two property inspections on homes I lost out on, and I don't regret it. That is the cost of doing business. The other offers on the home I eventually bought were for significantly more than my offer, but they had conditions. I saved at least $40K by being condition free, and I only spent $1,500 on three property inspections. And, some people will just drop out of the multiple offer scenario when they learn that one of the buyers has done an inspection.", "title": "" }, { "docid": "7758c3023162cce1343902f8f79088b2", "text": "You don't say why you want to move. Without knowing that, it is hard to recommend a course of action. Anyway... The sequence of events for an ECONOMICAL outcome in a strong market is as follows: (1) You begin looking for a new house (2) You rent storage and put large items into storage (3) You rent an apartment and move into the apartment (4) The house now being empty you can easily do any major cleaning and renovations needed to sell it (5) You sell the house (and keep looking for a new house while you do so). Since the house is empty it will sell a lot more easily than if you are in it. (6) You invest the money you get from selling the house (7) You liquidate your investment and buy the new house that you find. If you are lucky, the market will have declined in the meantime and you will get a good deal on the new house in addition to the money you made on your investment. (8) You move your stuff out of storage into the new house. There are other possibilities that involve losing a lot of money. The sequence of events above will make money for you, possibly a LOT of money.", "title": "" }, { "docid": "0d29769d517e99e0482e50bf6f7b4db8", "text": "I sold my house and had been in the market looking for a replacement house for over 6 months after I sold it. I found someone willing to give me a short term, 3 month lease, with a month to month after that, at an equitable rate, as renters were scarcer than buyers.By the time I found a house, there were bidding wars as surplus had declined (can be caused seasonally), and it was quite difficult to get my new house. However, appraisers help this to a degree because whatever the seller wants, is not necessarily what they get, even if you offer it. I offered $10k over asking just to get picked out of the large group bidding on the house. Once the appraisal came in at $10k below my offer, I was able to buy the house at what I expected. Of course I had to be prepared if it came in higher, but I did my homework and knew pretty much what the house was worth. The mortgage is the same as the lease I had, the house is only 10 years' old and has a 1 year warranty on large items that could go wrong. In the 3 months I've been in the house, I have gained nearly $8k in equity....and will have a tax writeoff of about $19,000 off an income off a salary of $72,000, giving me taxable income of $53,000... making by tax liability go down about $4600. If I am claiming 0 dependents I will get back about $5,000 this year versus breaking even.", "title": "" } ]	[ { "docid": "7e7de3d7eb3ed082e34779b92a3595cd", "text": "I would just do a loan for a different number of years on your new mortgage. For example, if you just spent 10 years paying off your first house, then for your second, close the first mortgage upon selling, and then open a 20 or 25 year mortgage and the loan end date as well as the payment should remain similar. This would be more do-able if you paid ahead a little to compensate all the early on interest you have to eat. So if you want to finish around the same time, you could look into doing that since you'll have more equity to make a stronger down payment.", "title": "" }, { "docid": "ca9cdf23b1db6fb5ca4fee410435c107", "text": "First of all, congratulations on your home purchase. The more equity you build in your house, the more of the sale price you get out of it when you move to your next house. This will enable you to consume more house in the future. Think of it as making early payments towards your next down payment. Another option is to save up a chunk of money and recast your mortgage, paying down the principal and having the resulting amount re-amortized to provide you with a lower monthly payment. You may be able to do this at least once during your time in the house, and if you do it early enough it can potentially help your savings in other areas. On the other hand, it is possible given today's low interest rates for mortgages that in other forms of investments (such as index funds) you could make more on the money you'd be putting towards your extra payments. Then you would have more money in savings when you go to sell this house and buy the next one that you would in equity if you didn't go that route. This is riskier than building equity in your home, but potentially has a bigger pay-off. You do the trade-offs.", "title": "" }, { "docid": "17b2928bee6da11bfcbf89b118b27938", "text": "I'll compare it to a situation that is different, but will involve the same cash flow. Imagine the buyer agrees that you buy only 70% of the house right now, and the remaining 30% in 7 years time. It would be obviously fair to pay 70% of today's value today, pay 30% of a reasonable rent for 7 years (because 30% of the house isn't owned by you), then pay 30% of the value that the house has in 7 years time. 30% of the value in 7 years is the same as 30% of the value today, plus 30% of whatever the house gained in value. Instead you pay 70% of today's value, you pay no rent for the 30% that you don't own, then in 7 years time you pay 30% of today's value, plus 50% of whatever the house gained in value. So you are basically exchanging 30% of seven years rent, plus interest, for 20% of the gain in value over 7 years. Which might be zero. Or might be very little. Or a lot, in which case you are still better off. Obviously you need to set up a bullet proof contract. A lawyer will also tell you what to put into the contract in case the house burns down and can't be rebuilt, or you add an extension to the home which increases the value. And keep in mind that this is a good deal if the house doesn't increase in value, but if the house increases in value a lot, you benefit anyway. A paradoxical situation, where the worse the deal turns out to be after 7 years, the better the result for you. In addition, the relative carries the risk of non-payment, which the bank obviously is not willing to do.", "title": "" }, { "docid": "1a1d91bc6d5291d5aba1cd395504dfff", "text": "What do you see as the advantage of doing this? When you buy a house with a mortgage, the bank gets a lien on the house you are buying, i.e. the house you are buying is the collateral. Why would you need additional or different collateral? As to using the house for your down payment, that would require giving the house to the seller, or selling the house and giving the money to the seller. If the house was 100% yours and you don't have any use for it once you buy the second house, that would be a sensible plan. Indeed that's what most people do when they buy a new house: sell the old one and use the money as down payment on the new one. But in this case, what would happen to the co-owner? Are they going to move to the new house with you? The only viable scenario I see here is that you could get a home equity loan on the first house, and then use that money as the down payment on the second house, and thus perhaps avoid having to pay for mortgage insurance. As DanielAnderson says, the bank would probably require the signature of the co-owner in such a case. If you defaulted on the loan, the bank could then seize the house, sell it, and give the co-owner some share of the money. I sincerely doubt the bank would be interested in an arrangement where if you default, they get half interest in the house but are not allowed to sell it without the co-owner's consent. What would a bank do with half a house? Maybe, possibly they could rent it out, but most banks are not in the rental business. So if you defaulted, the co-owner would get kicked out of the house. I don't know who this co-owner is. Sounds like you'd be putting them in a very awkward position.", "title": "" }, { "docid": "049447e698bc3a74b9f5938b8d8f921e", "text": "No. As long as you live in the house for 3 years, it's yours to keep. Financing has nothing to do with that.", "title": "" }, { "docid": "59962070028d867ee4b2d9d919702dd7", "text": "Shop lots of houses. Find at least three you want and start by offering a low price and working your way up. Your risk is that houses you would have liked get bought by someone else while you are negotiating, that is how you discover how much you actually have to pay to get a house. Brokers only get paid if a deal closes. That is their incentive to get you a better price. If they know you will buy a different house unless the one they are selling gets your business, then they will work to make that happen.", "title": "" }, { "docid": "12b48d3715194753802ef8cc74fc3d4d", "text": "\"Unless you are investing an insignificant amount of money for the home and renovations, you need title insurance. Without it multiple other parties can claim ownership in this property you are purchasing and investing in. Also you can know if there are any liens against the property which can cost you a significant amount in addition to the costs you are budgeting. For example liens against a property I bought a while back amounted to 26% of the price I paid. In my case the seller (a bank) paid those, while in your case you may need to pay any liens as I suspect the seller has little money. That \"\"bone\"\" in your body that has you worried about this transaction is really good. Pay attention to it.\"", "title": "" }, { "docid": "ea86135aefc19f735f834aa9cfa4eac0", "text": "\"Pre-edit, Pete mentioned that he feels real estate agents would (a) like you to buy as much house as you afford, and (b) would love to show you three houses and have you choose one. As a real estate agent myself, I believe his warnings were understated. As with any industry, there are good and bad people. Agents are paid to move houses. If the median US home is under $200K, and commissions average say 5%, the $10,000 to be gained is split between the buyer brokerage and selling agent. The $5000 to each is then shared with 'the house.' So, this sale would net me $2500, gross. Move one a week, and the income is great, one per month, not so much. Tire kickers will waste an agent's time for a potential decision to wait another year and continue renting. Their obligation is to tell you the truth, but not to offer financial advice. Remember the mortgage crisis? It seems the banks and brokers aren't watching out for you either. They will tell you what they'll lend you, but not what you can afford. These numbers are worlds apart. I strongly recommend a 20% downpayment. The FHA PMI calculator shows that a 90% LTV (i.e. a 10% downpayment) for a $100K house will cost you $1200/yr in PMI. Think about this. For the $10,000 that you didn't put down, you are paying an extra $1200 each year. This is on top of the interest, so even at 5%, that last $10,000 is costing nearly 17%. If you can't raise that $10K (or whatever 10% is on that house) in cheaper funds, you should hold off. Using the 401(k) loan for this purpose is appropriate, yet emotionally charged. As if suck loans are written by the devil himself. \"\"Buy the biggest house you can\"\"? No. I have a better idea. Buy the smallest place you can tolerate. I have a living room (in addition to family room) that has been used 3 times in 20 years. A dining room we actually use. Twice per year. When your house is 50% too big, you pay 50% more property tax, more utility bills, and more maintenance. Closing costs, commission, etc, isn't cheap, but the lifetime cost of living in a too-big house is a money pit.\"", "title": "" }, { "docid": "5a7975f7b904e476239cf8f0dc1eb4de", "text": "\"If I buy property when the market is in a downtrend the property loses value, but I would lose money on rent anyway. So, as long I'm viewing the property as housing expense I would be ok. This is a bit too rough an analysis. It all depends on the numbers you plug in. Let's say you live in the Boston area, and you buy a house during a downtrend at $550k. Two years later, you need to sell it, and the best you can get is $480k. You are down $70k and you are also out two years' of property taxes, maintenance, insurance, mortgage interest maybe, etc. Say that's another $10k a year, so you are down $70k + $20k = $90k. It's probably more than that, but let's go with it... In those same two years, you could have been living in a fairly nice apartment for $2,000/mo. In that scenario, you are out $2k * 24 months = $48k--and that's it. It's a difference of $90k - $48k = $42k in two years. That's sizable. If I wanted to sell and upgrade to a larger property, the larger property would also be cheaper in the downtrend. Yes, the general rule is: if you have to spend your money on a purchase, it's best to buy when things are low, so you maximize your value. However, if the market is in an uptrend, selling the property would gain me more than what I paid, but larger houses would also have increased in price. But it may not scale. When you jump to a much larger (more expensive) house, you can think of it as buying 1.5 houses. That extra 0.5 of a house is a new purchase, and if you buy when prices are high (relative to other economic indicators, like salaries and rents), you are not doing as well as when you buy when they are low. Do both of these scenarios negate the pro/cons of buying in either market? I don't think so. I think, in general, buying \"\"more house\"\" (either going from an apartment to a house or from a small house to a bigger house) when housing is cheaper is favorable. Houses are goods like anything else, and when supply is high (after overproduction of them) and demand is low (during bad economic times), deals can be found relative to other times when the opposite applies, or during housing bubbles. The other point is, as with any trend, you only know the future of the trend...after it passes. You don't know if you are buying at anything close to the bottom of a trend, though you can certainly see it is lower than it once was. In terms of practical matters, if you are going to buy when it's up, you hope you sell when it's up, too. This graph of historical inflation-adjusted housing prices is helpful to that point: let me just say that if I bought in the latest boom, I sure hope I sold during that boom, too!\"", "title": "" }, { "docid": "b11a00537c257f650ed6a54ae8d0c128", "text": "I'm not sure about your first two options. But given your situation, a variant of option three seems possible. That way you don't have to throw away your appraisal, although it's possible that you'll need to get some kind of addendum related to the repairs. You also don't have your liquid money tied up long term. You just need to float it for a month or two while the repairs are being done. The bank should be able to preapprove you for the loan. Note that you might be better off without the loan. You'll have to pay interest on the loan and there's extra red tape. I'd just prefer not to tie up so much money in this property. I don't understand this. With a loan, you are even more tied up. Anything you do, you have to work with the bank. Sure, you have $80k more cash available with the loan, but it doesn't sound like you need it. With the loan, the bank makes the profit. If you buy in cash, you lose your interest from the cash, but you save paying the interest on the loan. In general, the interest rate on the loan will be higher than the return on the cash equivalent. A fourth option would be to pay the $15k up front as earnest money. The seller does the repairs through your chosen contractor. You pay the remaining $12.5k for the downpayment and buy the house with the loan. This is a more complicated purchase contract though, so cash might be a better option. You can easily evaluate the difficulty of the second option. Call a different bank and ask. If you explain the situation, they'll let you know if they can use the existing appraisal or not. Also consider asking the appraiser if there are specific banks that will accept the appraisal. That might be quicker than randomly choosing banks. It may be that your current bank just isn't used to investment properties. Requiring the previous owner to do repairs prior to sale is very common in residential properties. It sounds like the loan officer is trying to use the rules for residential for your investment purchase. A different bank may be more inclined to work with you for your actual purchase.", "title": "" }, { "docid": "d155ae5534d0d32f1e77521fe072f09c", "text": "\"That sounds like a particularly egregious version of exclusivity. However, the way that you could handle that is to include a \"\"contingency\"\" in your purchase agreement stating that your offer is contingent upon the seller paying the brokerage fee. The argument against this, and something your broker might use to encourage you not to do so, is that it makes your offer less attractive to the buyer. If they have two offers in hand for the same price, one with contingencies and one without, they will likely take the no-contingency offer. In my area, right now, house offers are being made without very common contingencies like a financing contingency (meaning you can back out if you can't finance the property) or an inspection contingency. So, if your market is really competitive, this may not work. One last thought is that you could also use this to negotiate with your broker. Simply say you're only sign this expecting that any offer would have such a contingency. If it's untenable in your current market, it will likely cause your broker to move on. Either way, I'd say you should push back and potentially talk to some other brokers. A good broker is worth their weight in gold, and a bad one will cost you a boat load. And if you're in Seattle, I'll introduce you to literally the best one in the world. :-)\"", "title": "" }, { "docid": "1ce3b4c25472c83166561bff7a946771", "text": "The mortgage is a debt and you pay interest on it, typically more than you can earn elsewhere (especially once taxes are taken into account.) By lowering the principal, you lower the total interest you pay. This is true whether you sell the house after 1 year, 10 years, or 100 years. In your case, prepayments made in the next few years would mean that when you sell, your mortgage principal would be lower than it otherwise would have been, and your house equity will be higher. You can therefore either move up to more house for the same monthly payment, or have a lower monthly payment for the same kind of house. Either of those are good things, right? Now is the easiest time to find a little more money, so do it if you can. Later you will have more obligations, and develop a taste for more expensive things (statistically speaking) and therefore find a few hundred a month much harder to come by.", "title": "" }, { "docid": "c8a32bd41ce337dbffc94eb86141d43a", "text": "In response to one of the comments you might be interested in owning the new home as a rental property for a year. You could flip this thinking and make the current home into a rental property for a period of time (1 year seems to be the consensus, consult an accountant familiar with real estate). This will potentially allow for a 1031 exchange into another property -- although I believe that property can't then be a primary residence. All potentially not worth the complication for the tax savings, but figured I'd throw it out there. Also, the 1031 exchange defers taxes until some point in the future in which you finally sell the asset(s) for cash.", "title": "" }, { "docid": "fab78c04a66a89ee0cd7467bfa6429fa", "text": "In the context of EDV, 4.46 is the indicated dividend rate. The indicated dividend rate is the rate that would be paid per share throughout the next year, assuming dividends stayed the same as prior payment. sources:", "title": "" }, { "docid": "6027469fe2cb45ad372b8b736d78b610", "text": "\"The cause of the increase in 2006-2011 was the financial crisis, where, if you recall, the global banking system came close to collapse for reasons that are well documented. Rightly or wrongly, gold is seen as a safe haven asset in times of crisis. The price of gold began to decline in 2011 when the markets decided that the risk of a global banking system collapse had passed without further incident. In the period leading up to 2006, the price of gold was in a flat-to-down trend because there was little net buying interest in gold and large gold sales had been executed by various central banks around the world who felt that gold no longer had a place in central bank reserves. In modern economies gold is seen as a \"\"fringe\"\" asset. It has no role to play. The recent financial crisis may have dented that perception, but those dents are now being forgotten and the price of gold is returning to its long-term downward trend. When the next financial/banking crisis is upon us, the price of gold will again (probably) rally. The extent of the rally will depend on the extent of the crisis.\"", "title": "" } ]	fiqa
4399a20255c5301eafb6f7b947584bc2	How do you measure the value of gold?	[ { "docid": "6772c658a9ce2de9ba987109f7782764", "text": "\"Gold may have some \"\"intrinsic value\"\" but it cannot be accurately determined by investors by any known valuation techniques. In fact, if you were to apply the dividend discount model of John Burr Williams - a variation of which is the basis of Discounted Cash Flow (DCF) analysis and the basis of most valuation techniques - gold would have zero intrinsic value because it produces no cash flow. Legendary focus investor Warren Buffett argues that investing in gold is pure speculation because of the reason mentioned above. As others have mentioned, gold prices are affected by supply and demand, but the bigger influence on the price of gold is how the economy is. Gold is seen as a store of value because, according to some, it does not \"\"lose value\"\" unlike paper currency during inflation. In inflationary times, demand increases so gold prices do go up, which is why gold behaves similar to a commodity but has far less uses. It is difficult to argue whether or not gold gains or loses value because we can't determine the intrinsic value of gold, and anyone who attempts to justify any given price is pulling blinders over your eyes. It is indisputable that, over history, gold represents wealth and that in the past century and the last decade, gold prices rise in inflationary conditions as people dump dollars for gold, and it has fallen when the purchasing power of currency increases. Many investors have talked about a \"\"gold bubble\"\" by arguing that gold prices are inflated because of inflation and the Fed's money policy and that once interest rates rise, the money supply will contract and gold will fall, but again, nobody can say with any reasonable accuracy what the fair value of gold at any given point is. This article on seeking alpha: http://seekingalpha.com/article/112794-the-intrinsic-value-of-gold gives a quick overview, but it is also vague because gold can't be accurately priced. I wouldn't say that gold has zero intrinsic value because gold is not a business so traditional models are inappropriate, but I would say that gold certainly doesn't have a value of $1,500 and it's propped so high only because of investor expectation. In conclusion, I do not believe you can accurately state whether gold is undervalued or overvalued - you must make judgments based on what you think about the future of the market and of monetary policy, but there are too many variables to be accurate consistently.\"", "title": "" }, { "docid": "f2196a80356d985d1d3b618b47eb2137", "text": "\"There are three aspects of what to value gold over. It doesn't easily chemically react with anything, so it stays pure over a long period of time (vs, say a bar of iron or a bar of butter). So it's valuable so far as it doesn't rot. It is shiny, and there is the historical allure of having a bag of shiny, jingly gold coins. Other people will give you other items of perceived value in exchange for it. I believe it was Warren Buffett who stated his opinion on gold - paraphrased such: \"\"You pay people to dig it out of the ground, you pay people to purify it and pour into forms, you pay people to verify the number of nine's purity in it, you pay people to build a secure building to store it in, and you pay people to stand around and guard it. Where is the value in that?\"\"\"", "title": "" }, { "docid": "89301bf904b266e986a2adae98def27f", "text": "\"Intrinsic value is a myth. There is no such thing. Subjective human demand is the only thing that gives anything value. This subjectivity is different person to person and can change very quickly. Historically there are two main uses for gold: jewelry and money. How can you tell when a particular type of money is undervalued? It disappears from circulation since people prefer to use money that is overvalued. This phenomenon is paraphrased in Gresham's Law: Bad money drives out good money. The Coinage Act of 1792 established the US dollar as 371.25 grains of silver or 24.75 grains of gold. This established a government ratio of 15 ounces of silver to 1 ounce of gold. In the late 18th century there was a large production of silver from Mexico and the market ratio of silver to gold increased to 15.75 to 1 by 1805. The government ratio, however, was still 15 to 1. This was enough incentive for people to exchange their silver coins for gold coins at the government ratio, melt the gold, and sell the gold bullion overseas at the market value. Thus, gold coins disappeared from circulation as people either hoarded the gold or sent it abroad. People used the overvalued silver coins (i.e. the \"\"bad\"\" money) domestically and gold coins disappeared from the market. In an attempt to correct the problem of disappearing gold coins the Coinage Act of 1834 was enacted. It kept the US dollar at 371.25 grains of silver but changed the definition to 23.2 grains of gold which established a government ratio of 16 to 1. This was close to the market ratio of gold to silver at the time so both gold and silver coins appeared in circulation again. The gold rush of 1849 produced a lot of gold and the market ratio of silver to gold became 15.46 to 1. Now gold was overvalued so people began exchanging their gold coins for silver coins at the government ratio, melt the silver, and sell the silver bullion overseas at the market value. People used the overvalued gold coins (i.e. the \"\"bad\"\" money) domestically and silver coins disappeared from the market. When you see gold circulating everywhere you will know it is overvalued compared to other types of money. Paper money always drives gold out of circulation since the market ratio of paper to gold severely under values gold. Source here.\"", "title": "" }, { "docid": "adbf875f8d2517033d641b19a42c1ad0", "text": "\"1) Get some gold. 2) Walk around, yelling, \"\"Hey, I have some gold, who wants to buy it?\"\" 3) Once you have enough interested parties, hold an auction and see who will give you the most dollars for it. 4) Trade the gold for that many dollars. 5) You have just measured the value of your gold.\"", "title": "" }, { "docid": "52e43f337573ab8f2e5d232c5da4910f", "text": "\"I can describe the method for determining a price floor, which may help. It starts with looking at the cost of mining. There's a ridiculously small amount of gold in the best ore, so it's measured in tonnes of ore to produce a given ounce of gold. Mines will only operate at a loss for so long, so for any mine which focuses on gold, when the price of gold is below that price for long enough, the mine will cease operation. Since not all mines have the same cost, the supply will not appear as a step function, it will reduce slowly as mines close. \"\"Gold Drops Below Cash Cost, Approaches Marginal Production Costs\"\" offers a marginal cost of production just over $1100. This is not a floor price, as the market can act irrationally at times. It's just a number to consider. On the demand side, the industrial use (I am thinking gold plating in electronics manufacturing) will serve to provide demand almost regardless of price. When a $100 microprocessor uses say 10 cents worth of gold (at $300/oz) $1500 gold increases the final chip price by 1/2%. The industry is still trying to move away from Gold where they can, but that's a long process. As far as a ceiling goes, I highly recommend the book Extraordinary Popular Delusions & the Madness of Crowds which offers insight on a number of mania that have occurred not just in the past few decades, but over the centuries. At $1500/oz, the value of all the gold in the world is about US$7.5trillion (That's 12 zeros). Given that a portion of it is in jewelry and not available as an investment, it's safe to say that the entire world can only easily bid on about 1/3 of this (as the gold council cites 31% of gold going towards investments each year vs 57% jewelry and 11% industrial) or US$2.5T or so. With total world wealth at US$125T it would take a bit more hysteria to push gold from its current 2% of that value (funny how that number lined up perfectly) to much higher. Note: I provided a number of links, as it's too easy to just throw numbers around. See the links and provide more current data if you're so inclined. Data isn't real time.\"", "title": "" }, { "docid": "3ae49b8e9a9d40ae1f9aa9ea020b65ea", "text": "You acquire something because you expect to use it, or because you expect to exchange it for something that you want to use. Gold is a good candidate for storing value because it's rare, it's not easily counterfeited, it's divisible, it's portable, etc. Contrast this with your favorite currency: more can be printed up almost at will, etc. Overvaluedness/undervaluedness is only in reference to something else. How many dollars does it take to buy an ounce of gold? (About $1,500.) How many ounces does it take to equal the DJIA? (About 8.) How many ounces of silver does it take to buy an ounce of gold? How many barrels of oil can you buy with an ounce of gold? Etc., etc. But whatever measure you're using, the value of the gold you have is directly related to the mass of gold you own. Two ounces are twice as valuable as one ounce. As the old joke goes (no offense to taxi drivers intended!) when your cabbie starts talking about how to get rich with gold, it's probably overvalued. Sell it all! ;)", "title": "" }, { "docid": "a05e4b7eb3186e433bee9ebc1234649c", "text": "There is no such thing as intrinsic value. Gold has value because it is rare and has a market. If any of those things decline, the value plunges. The question of whether gold is overvalued or not is complicated and depends on a lot of factors. The key question in my mind is: Is gold more valuable in terms of US dollars because it is becoming more valuable, or because the value of US dollars, the prevailing medium of exchange, is declining?", "title": "" }, { "docid": "ad0187493c3ae900e0502326a87747e6", "text": "\"We measure the value of gold by comparing it to other things. Sorry, but there is no better answer than that. There is no gold standard (pun intended) by which objects can be measured in value because \"\"value\"\" is a subjective term. It would be comparable to asking how funny is an object. Different objects are funny to different people. Even if we gathered all the really \"\"funny\"\" object together, there is no guaranty those objects would be funny next year - unless we all agreed they were as part of a social contract. Which is basically what we do with currency. While gold does not need a social contract in order for it to retain its value, this is only because it is has been (1) very useful and (2) rare. If either of these two factors change, the value of gold will change - which it has on several occasions. WARRING: Rant about \"\"Intrinsic Value\"\" of gold below. Gold has no \"\"intrinsic\"\" value. None whatsoever. \"\"Intrinsic value\"\" makes just as much sense as a \"\"cat dog\"\" animal. \"\"Dog\"\" and \"\"cat\"\" are referring to two mutually exclusive animals, therefore a \"\"cat dog\"\" is a nonsensical term. Intrinsic Value: \"\"The actual value of a company or an asset based on an underlying perception of its true value ...\"\" Intrinsic value is perceived, which means it is worth whatever you, or a group of people, think it is. Intrinsic value has nothing, I repeat, absolutely nothing, to do with reality. The most obvious example of this is the purchase of a copy-right. You are assigning an intrinsic value to a copy-right by purchasing it. However, when you purchase a copy-right you are not buying ink on a page, you are purchasing an idea. Someone's imaginings that, for all intensive purposes, doesn't even exist in reality! By definition, things that do not exist do not have \"\"intrinsic\"\" properties - because things that don't exist, don't have any natural properties at all. \"\"Intrinsic\"\" according to Websters Dictionary: \"\"Belonging to the essential nature or constitution of a thing ... (the intrinsic brightness of a star).\"\" An intrinsic property of an object is something we know that exists because it is a natural property of that object. Suns emit light, we know this because we can measure the light coming from it. It is not subjective. \"\"Intrinsic Value\"\" by definition is the OPPOSITE of \"\"Intrinsic\"\"\"", "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": "9f395ab2911cf726f0f95ad459c5c8e8", "text": "Excellent explanation. Upvote to you sir. I would like to add something: How do we know how many bushels of apples is worth a chunk of deer meat? You did not touch on the concept of value. The way I see it, value is related to the human energy required to procure a specific good. For example: it takes a man all day to find a nugget of gold, while it take another man all day to pick 20 bushels of apples. Because gold is scarce, it is worth a lot of apples: it has a high value. At it's core, value is assigned based on the amount of human labor required to acquire a good or service. For example: Many years ago there may have been an equal number of bears and skunks. However, it would take many brave hunters with bows and arrows to kill a bear, while any hunter could kill a skunk solo. Thus, even though they had the same scarcity, a bear hide would be more valuable because the human labor required was greater. Many economics classes simply say value depends on supply and demand. However, if something is in low supply and high demand, it is BECAUSE it takes so much human effort to procure. If it did not take large amounts of human labor, everyone would sell said item and the value would drop. What is your take on this? do you have a better explanation for value?", "title": "" }, { "docid": "5d94ae385472b5e5bc693de99ac90847", "text": "I apply what you term 'money' to the word 'commodity'. And I agree with littleadv, you are just selling us your perspective on (such things as) precious metals. What I want you to think about is these truths: When used as currency gold just has two values: utility value and currency value. I hold it is better to separate the two. There is not enough gold in the earth to represent the value in aggregate economies of the world. Trying to go back to the gold standard would only induce an unimaginable hyperinflation in gold. Recent years shows that gold does not retain value. See the linked chart.", "title": "" }, { "docid": "726fbdba1e79487a1d8064202473751e", "text": "But how valuable is it in the Star Trek world? How much gold is available and how much do they need?Are there alternatives? Will they ever find another element that replaces it? These all affect the actual value... Nothing has value without demand, so how can anything be intrinsically valuable?", "title": "" }, { "docid": "8c5b9db4c3291be7f58d5a8b1126bda4", "text": "Gold is classified as a collectible so the gain rates are as follows: So you'd report a gain of $100 or $1,000 , depending on which coin you sold.", "title": "" }, { "docid": "cbe2602216d25f7f2f97e3625c46ea0b", "text": "\"(Value of shares+Dividends received)/(Initial investment) would be the typical formula though this is more of a percentage where 1 would indicate that you broke even, assuming no inflation to be factored. No, you don't have to estimate the share price based on revenues as I would question how well did anyone estimate what kind of revenues Facebook, Apple, or Google have had and will have. To estimate the value of shares, I'd likely consider what does my investment strategy use as metrics: Is it discounted cash flow, is it based on earnings, is it something else? There are many ways to determine what a stock \"\"should be worth\"\" that depending on what you want to believe there are more than a few ways one could go.\"", "title": "" }, { "docid": "94f18051e3c46aff0d139f67e81dc269", "text": "\"Gold has very useful physical properties for some engineering applications. Even tiny amounts of gold can substantially improve products, so it can be worthwhile to pay high prices per ounce for gold. For example: Gold can be \"\"beaten\"\" or electroplated to produce very thin shiny coatings. Entire roofs (of famous buildings) have been covered with \"\"gold leaf\"\", at a cost that was small compared to the supporting structure. A very thin layer of electroplated gold provides better protection against corrosion than a much thicker layer of electroplated nickel. Even if gold costs thousands of times more per ounce than nickel, it is cheaper to use gold as an anti-corrosion layer than nickel (for use in military-grade naval electronics). A thin layer of electroplated gold greatly increases the electrical current-carrying capacity of a thin copper wire.\"", "title": "" }, { "docid": "cc423b22c60f3fca9cbc3a00e6c7eddd", "text": "The calculators on this site should help: http://www.measuringworth.com/ They allow you to choose a currency (only about half a dozen are available), enter an amount and the years to compare, and then provides feedback in a table. Obviously you will need to be careful which calculator you choose. If they don't cover the currencies you are dealing with, see this site: http://projects.exeter.ac.uk/RDavies/arian/current/howmuch.html They provide numerous links that, while they don't provide sleek calculators per se, they do offer guidance on how to handle conversions yourself. Regarding comparing the cost to something like gold, to try and help younger readers, I think it's a good idea but gold is not the ideal choice for comparison. I'd recommend something more tangible like household goods - what a Playstation would have cost in 1930s money etc. In short: the value of gold is esoteric even for most adults - concrete examples would be better.", "title": "" }, { "docid": "dfce008a3bea0d55d073d6ecaa183625", "text": "\"Gold had value because it could be stamped with a value. The value is the number on the coin. Gold really doesn't have intrinsic value and it's value during a actual famines is very very low. For more info, see a very interesting digression in \"\"Wealth of Nations.\"\"\"", "title": "" }, { "docid": "500707114934997f55ec17ae6020bf57", "text": "Gold isn't constant in value. If you look at the high price of $800 in January of 1980 and the low of $291 in 2001, you lost a lot of purchasing power, especially since money in 2001 was worth less than in 1980. People claim gold is a stable store of value but it isn't.", "title": "" }, { "docid": "9f910dd25fe2c3ef06ed799d1f813b10", "text": "\"It's very hard to measure the worth of an abstract concept like money, particularly over long periods of time. In the modern era we have things like the Consumer Price Index (CPI) in the United States, where the Bureau of Labor Statistics literally sends \"\"shoppers\"\" out to find prices of things and surveys people to find out what they buy. This results in a variety of \"\"indexes\"\" which variously get reported by media outlets as \"\"inflation\"\" (or \"\"deflation\"\" if the change in value goes the other way). There are also other measurements available like the MIT Billion Prices Project which attempt to make their own reading of the \"\"worth\"\" of currencies. Those kinds of things are about the only ways to measure a currency's change in \"\"value to itself\"\" because a currency is basically only worth what one can buy with it. While it isn't \"\"all the world's currencies combined\"\", there is a concept of the International Monetary Fund's \"\"Special Drawing Rights (SDR)\"\", which is a basket of five currencies used by world central banks to help \"\"back\"\" each other's currencies, and is (very) occasionally used as a unit of currency for international contracts. One might be able to compare the price of one currency to that of the SDR, or even to any other weighted average of world currencies that one wanted, but I don't think it's done nearly as often as comparing currencies to the basket of goods one can buy to find \"\"inflation\"\". Even though one might think what would be important to measure would be overall Money Supply Inflation, much more often people care more about measuring Price Inflation. (Occasionally people worry about Wage Inflation, but generally that's considered a result of high Price Inflation.) In order to try to keep this on topic as a \"\"personal finance\"\" thing rather than an \"\"economics\"\" thing, I guess the question is: Why do you want to know? If you have some assets in a particular currency, you probably care most about what you'll be able to buy with them in the future when you want or need to spend them. In that sense, it's inflation that you're likely caring about the most. If you're trying to figure out which currency to keep your assets in, it largely depends on what currency your future expenses are likely to be in, though I can imagine that one might want to move out of a particular currency if there's a lot of political instability that you're expecting to lead to high inflation in a currency for a time.\"", "title": "" }, { "docid": "0af1d1dcebdbdfeaaa3645ad359906e4", "text": "\"Are you talking about a country besides the US? And you're talking about a commercial bank, right? In the US, banks don't buy gold from consumers. The last time they sort of did (in the early 1900s), they were trading gold coins for gold certificates, and then they later stopped allowing consumers to trade them back. This is known by a well-known financial term: \"\"Gotcha, suckers!\"\" If someone were naive enough to deposit a $50 Gold American Eagle today in a bank, the depositor will get a credit of $50 on their account, and later some clever person will ask the teller if they have any \"\"strange money\"\" lying around, and that lucky person will be able to withdraw a $1,700 coin for $50, if it lasted for even a second in the teller's drawer. But let's say you're going to a place that does indeed still buy gold coins. The discount depends on the type of coin, and the type of damage. An old (collectible) coin has a part of its value set by the gold value, and part by the collector's premium. Better specimens command better collector's premiums, so a damaged coin, as long as it isn't a chunk of the coin missing, won't be worth less than the melt value. (You may not get that much from a dealer, but it should be fairly close.) If part of the coin is missing, then the person buying it should weigh the coin and adjust the price proportionately. It's likely, though, that if you have the items in a safe, you may have a puddle or blob of gold, but it should still all be there unless someone takes it. Gold melts at about 1850 degrees Fahrenheit, but it would take half the surface temperature of the sun for it to boil away. If it's unidentifiable, it may need to be assayed again.\"", "title": "" }, { "docid": "8adfda019d784320770ca81ca7ff918d", "text": "\"Why does the value of gold go up when gold itself doesn't produce anything? Why do people invest in gold? Your perception, that the value of gold goes up in the long run, is based on the price of gold measured in your favorite paper currency, for example the US Dollar. An increasing price of gold means that in the visible gold market, market participants are willing to exchange more paper currency units for the same amount of gold. There are many possible reasons for this: While HFT became extremely important for the short term price movements, I will continue with long term effects, excluding HFT. So when - as a simple thought experiment - the amount of available paper currency units (US $ or whatever) doubles, and the amount of goods and services in an economy stay the same, you can expect that the price of everything in this economy will double, including gold. You might perceive that the value of gold doubled. It did not. It stayed the same. The number of printed dollars doubled. The value of gold is still the same, its price doubled. Does the amount of paper currency units grow over time? Yes: https://research.stlouisfed.org/fred2/series/BASE/ In this answer my term \"\"paper currency units\"\" includes dollars that exist only as digits in bank accounts and \"\"printing currency\"\" includes creating those digits in bank accounts out of thin air. So the first answer: gold holds its value while the value of paper currency units shrinks over time. So gold enables you to pass wealth to the next generation (while hiding it from your government). That gold does not produce anything is not entirely true. For those of us mortals who have only a few ounces, it is true. But those who have tons can lease it out and earn interest. (in practice it is leased out multiple times, so multiple that gain. You might call this fraud, and rightfully so. But we are talking about tons of gold. Nobody who controls tons of physical gold goes to jail yet). Let's talk about Fear. You see, the perceived value of gold increases as more paper currency is printed. And markets price in expected future developments. So the value of gold rises, if a sufficient number of wealthy people fear the the government(s) will print too much paper currency. Second Answer: So the price of gold not only reflects the amount of paper currency, it is also a measurement of distrust in government(s). Now you might say something is wrong with my argument. The chart mentioned above shows that we have now (mid 2015) 5 times as much printed currency units than we had 2008. So the price of gold should be 5 times as high as 2008, assuming the amount of distrust in governments stayed the same. There must be more effects (or I might be completely wrong. You decide). But here is one more effect: As the price of gold is a measurement of distrust in governments (and especially the US government since the US Dollar is perceived as the reserve currency), the US government and associated organizations are extremely interested in low gold prices to prove trust. So people familiar with the topic believe that the price of gold (and silver) is massively manipulated to the downside using high frequency trading and shorts in the futures markets by US government and wall street banks to disprove distrust. And wall street banks gain huge amounts of paper currency units by manipulating the price, mostly to the downside. Others say that countries like china and russia are also interested in low gold prices because they want to buy as much physical gold as possible. Knowing of the value that is not reflected by the price at the moment. Is there one more source of distrust in governments? Yes. Since 1971, all paper currencies are debt. They receive their value by the trust that those with debt are willing and able to pay back their debt. If this trust is lost, the downward manipulation (if you think that such a thing exists) of the gold and silver prices in the futures markets might fail some day. If this is the case (some say when this is the case). you might see movements in gold and silver prices that bring them back to equilibrium with the amount of printed paper currencies. In times of the roman empire you got a good toga and a pair of handmade shoes for an ounce of gold. In our days, you get a nice suite and a good pair of shoes for an ounce of gold. In the mean time, the value of each paper currency in the history of each country went to zero and the US $ lost 98% of its initial value. As long as there is not enough distrust, more paper currency is made in equity markets and bond markets on average. (Be aware that you earn that currency only after you were able to sell at this price, not while you hold it) Gerd\"", "title": "" }, { "docid": "5ec249d15cdf8b304ba16f6bff83fc77", "text": "\"Nobody can give you a definitive answer. To those who suggest it's expensive at these prices, [I'd point to this chart](http://treo.typepad.com/.a/6a0120a6002285970c014e8c39f2c3970d-850wi) showing the price of gold versus the global money supply over the past decade or so. It's not conclusive, but it's evidence that gold tracks the money supply relatively well. There might be a bit of risk premium baked in that it would shed in a stable economy, but that premium is unknowable. It's also (imo) probably worth the protection it provides. In an inflationary scenario (Euro devaluation) gold will hold its buying power very well. It also fares well in a deflationary environment, just not quite as well as holding physical currency. Note that in such an environment, bank defaults are a big danger: that 50k might only be safe under your mattress (rather than in a fractionally reserved bank account). If you're buying gold, certificates aren't exactly a bad option, although there still exists the counterparty risk of the agent storing your gold, as well as political risk of the nation where it's being held. Buying physical bullion ameliorates these risks, but then you face the problem of protecting it. Safe deposit boxes, a home safe, or burying it in your backyard are all possible options. The merits of each, I'll leave as an exerice to the reader. Foreign currency might be a little bit better than the Euro, but as we've seen in the past year or so, the Swiss Franc has been devalued to match the Euro in the proverbial \"\"race to the bottom\"\". It's probably not much better than another fiat currency. I don't know anything about Norway. Edit: Depending on your time horizon, my personal opinion would be to put no less than 5-10% of your savings in a hard store of value (e.g. gold, silver, platinum). Depending on your risk appetite, you could probably stand to put a lot more into it, especially given the Eurozone turmoil. Of course, as with anything else, your mileage may vary, past performance does not guarantee future results, this is not investment advice, seek professional medical help if you experience an erection lasting longer than four hours.\"", "title": "" }, { "docid": "43ffaa8b095662452f8d5ec8a43c82bc", "text": "You should invest a trivial (<500$USD) amount of money in a stock portfolio. If you aren't able to make more on the market than the interest rates of your loans, you are losing money. This question has discussed this topic as well.", "title": "" } ]	fiqa
dfe369d62c2dd6e9f906ea97fe30fac0	If I want a Credit Card offered through a different Credit Union should I slowly transition my banking to that CU?	[ { "docid": "8b640edb8b56e08cfad2eeea936c8a8b", "text": "No. There's no inherent reason to link the place that you bank with any other financial service. There may occasionally be benefits; for instance you can sometime get lower rates on mortgages or loans by having a a checking account with an institution. Or perhaps it'll be easier for you to make a same-day payment on a credit account. There could be some negatives as well. If you fall behind on a loan account, the bank may take money from your savings/checking account to satisfy your debt. Choose a bank or CU that's convenient to you. Choose a credit card from whatever bank or CU provides you with the best benefits. If that credit card is coming from a CU that requires a savings account for membership, open a minimum balance savings account and apply for the product you're interested in. If your credit is as good as you claim, they'll be happy to offer you the credit card regardless of whether you do your day-to-day banking with them.", "title": "" }, { "docid": "436a77a7a99c6137a6a3c3394e5508b9", "text": "I don't have an account with either of those CUs, but I do have membership at 2 different CUs. If they accept credit card payments online via transfer from another institution, there's no reason to move your money, unless there are other benefits (higher interest rates). All the CUs would likely require is membership ($5 deposit minimum?). If you were to get a card through Chase or Capital One, you wouldn't be expected to open a checking/savings account with them and transition over to those accounts.", "title": "" }, { "docid": "d99c0fecb93d42157abb6924bf80d1c7", "text": "As has been stated, you don't need to actively bank with a credit union to apply for one of their credit cards. That said, one benefit to having account activity, and significant capital with a CU, is to increase the likelihood of having a larger credit line granted to you, when you do apply. If you are going to use the card sparingly however, then this is a non issue. That said, if you really want to maximize card benefits, then you want to look for cards with large sign up bonuses (e.g. Chase Sapphire, or Ink Bold if you have a business) and sign up exclusively for those bonuses. These cards offer rewards in excessive value of $1000 in travel services (hotels/plane tickets), or $500 cash back if you prefer straight cash back redemptions. If you prefer to keep it really simple, you can sign up for a cash back card, like the Amex Fidelity, which offers 2% cash back everywhere, with no annual fee (albeit the cash back is through their investment account, which you don't actually have to 'invest' with). Personally, I have the Penfed card, and use it exclusively for gas (5% cash back). I also have a Charles Schwab bank account, which I keep funded exclusively for ATM withdrawals (free ATM usage, worldwide, 100% fee reimbursement). I use the accounts exclusively for the benefit they provide me, and no more and have never had an issue. I also have 3 dozen other credit cards which I signed up for exclusively for the sign up bonus, but that's outside the scope of this question. I only mention it because you seem to believe it is difficult to get approved for a new credit line. If your credit is good however, you won't have a problem. For a small idea, of how to maximize credit card bonus categories, I would advise you read this. As mentioned in the article, its possible to get rewards almost everywhere you shop. In short, anytime you use cash, you are missing out on a multitude of benefits a credit card offers you (e.g. see the benefits of a visa signature card) in addition to points/cash back.", "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": "f065b8be944fd034e311cad20e89a83e", "text": "I hear this a lot but how does it work exactly? Is it the more money you have in your share (savings) account the more weight your vote carries? Or does each member get one vote? I've been a credit union member for 15 years and have never had any say in anything. I also work for a small bank and both institutions are basically the same. My bank has better rates than my credit union on lended money but my CU pays higher rates on my money. My bank is also a publicly traded company and has regular meetings in which any shareholders can come voice their opinion, I've never heard anything about such activity with my credit union.", "title": "" }, { "docid": "79d2333883311c3f95c3dc99d8619d1d", "text": "Not sure if this is possible... It is possible! It is called a balance transfer card and most of the major credit card companies offer them. It is possible to save a significant amount on interest during the grace period. However... Is this a viable option? Not really. Any card will charge you an upfront fee of 3% to 5% of the balance you are transferring. This really only buys you some time in case you are about to fall behind on payments. For many people it's just a way to shuffle around debt, digging themselves a little deeper into consumer debt with each transfer.", "title": "" }, { "docid": "2719727152ef15ef114555e18b31596d", "text": "\"Not exactly. In a credit union, all members are \"\"shareholders.\"\" The CUs \"\"pass\"\" onto their shareholders in the form of significantly lower interest rates, higher savings interest rates, complementary perks like paid life insurance, and others depending on your CU.\"", "title": "" }, { "docid": "15719a8b8ee5b0361f43e22b91f3d55b", "text": "\"Generally not. Since authorized user cards are the same account and the difference between the two (the original and the AU card) are minimal. Note, there's nothing technically stopping banks from offering this as a feature, two cards do have identifiers that indicate they're separate cards, but the banks concern for your needs stops at how much they can bleed from you, and \"\"helping you control your spending\"\" is not part of that.\"", "title": "" }, { "docid": "e68db5c2c9a5586f8320886ebec6055e", "text": "Another thing to factor in are deals provided by banks. In general, banks care about new customers more than their existing customers. Hence they explicitly restrict the best deals on credit cards, savings accounts, etc, to new customers only. (Of course, there are occasionally good deals for existing customers, and some banks choose not to discriminate.) If you have many different bank accounts, you are making yourself unavailable for switching bonuses and introductory rates.", "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": "870698d1faf244c51861b34a51f37bd5", "text": "\"As anecdotal experience, we have a credit account in my name as offered by bank's marketing before I could qualify by common rules for newcomers (I have an account there for years so they knew my history and reliability dynamics I guess), and my wife is subscribed as a secondary user to the same credit account with a separate card. So we share the same limits (e.g. max month usage/overdraft) and benefits (bank's discounts and bonuses when usage passes certain thresholds - and it's easier to gain these points together than alone) so in the end maintenance of the card costs zero or close to that on most months, while the card is in a program to get discounts from hundreds of shops and even offers a free or discounted airport lounge access in some places :) But the bonus program is just that - benefits come and go as global economics changes; e.g. we had free car assistance available for a couple of years but it is gone since last tariff update. Generally it is beneficial for us to do all transactions including rent etc. via these two credit cards to the same account, and then recharge its overdraft as salaries come in - we have an \"\"up to 50 days\"\" cooloff period (till 20th of next calendar month) with no penalties on having taken the loans - but if we ever did overstretch that, then tens of yearly percents would kick in. Using the card(s) for daily ops, there is a play on building up the credit history as well: while we don't really need the loans to get from month to month, it helps build an image in the face of credit organizations, which can help secure e.g. favorable mortgage rates (and other contract conditions) which are out of pocket money range :) I'd say it is not only a \"\"we against the system\"\" sort of game though, as it sort of trains our own financial discipline - every month we have (a chance) to go over our spendings to see what we did, and so we more regularly think about it in the end - so the bank probably benefits from dealing with more-educated less-random customers when it comes to the bigger loans. Regarding internet, we tend to trust more to a debit card which we populate with pocket money sufficient for upcoming or already placed (blocked) transactions. After all, a malicious shop can not sip off thousands of credit money - but only as much as you've pre-allocated there on debit.\"", "title": "" }, { "docid": "a6d66922dcd3d2189c4d20eef7cc9223", "text": "I've had all my account with the same bank for all my life. Generally, the disadvantage is that if I want some kind of product like a credit extension or a mortgage, I have the one bank to go to and if they don't want to help me I'm out of luck. However, occasionally there are also perks like the bank spontaneously offering you increased credit or even a whole line of credit. They can do this because they have your whole history and trust you.", "title": "" }, { "docid": "5ccf39b3489f7603142b6c9326d7289e", "text": "Don't switch just because you hear people panicking on the talk shows. Banks are competitive business and won't start charging for using debit cards too fast. If and when they decide to do such a thing after all - then start shopping and see who doesn't catch up with the fees and still provides the services you want for the price you're willing to pay.", "title": "" }, { "docid": "2b198461ba3b9f14c0cfd3e01b893a69", "text": "I don't believe they're right. For international wire transfers you'd need either IBAN or SWIFT codes. I don't think any US bank participates in the IBAN network (mostly Europe and the Far East), so SWIFT is they way to go with the US. Credit unions frequently don't know what and how to do with international transactions because they don't have them that often. Some don't even have SWIFT codes of their own (many, in fact) and use intermediaries to receive money.", "title": "" }, { "docid": "eb2ac77cfda30b9880d048969dd608a1", "text": "You can also take a major credit card to almost any bank, walk up to the counter, and take a cash advance there as well. Doing it at the counter will save you the ATM fee, though the bank may charge a processing fee so it could turn out more expensive.", "title": "" }, { "docid": "388cfa647237827e2374fa3143f898a5", "text": "\"Usually you need to switch accounts. Lower rate cards usually offer less generous benefits. I'd advise looking at the charts on credit card rates in the back of a magazine like \"\"Money\"\" or \"\"Kiplingers\"\".\"", "title": "" }, { "docid": "733a24dc9aff8589d4a617d2d8f05503", "text": "Each of those is a network. Merchants displaying their logos - participate in their network and will accept cards that bear the same logo. Most merchants participate in more than one network. Discover is mostly used in the US, while Visa, Mastercard and American Express are more widely spread in the world (Amex less, Visa and MC are much more widely spread). In addition to being widely spread in the US, Discover is accepted everywhere where UnionPay is accepted (mostly in China) and Diners Club (mostly in EMEA). Advantages/disadvantages? You'll have to compare specific cards, but if you're a traveler in the world - then Discover will probably not be as appealing as Visa or Mastercard.", "title": "" }, { "docid": "0f831a87251b5b0650787d224c5b200c", "text": "Thanks, at the moment I don't plan to do alot of trading just need to sell a few shares at the moment and might sell some more more at another point, but other than that I don't plan on touching the stock and just plan on letting it re-invest itself. Since I don't plan on doing alot of selling I don't know how much I need to worry about fee's as long as they aren't too steep.", "title": "" } ]	fiqa
c9e75e51f5c11269e9d6ecb105158ea9	Flex spending accounts and hsa when changing jobs	[ { "docid": "7acb0fe6e2fb77240b7fcaafd353a62b", "text": "\"Some of this may depend on how your employer chose to deal with your notice period. Most employers employ you for the duration (which means you'd be covered for March on your insurance). They could 'send you home' but pay you (in which case you're an employee for the duration still); or they could terminate you on your notice day, and give you effectively a severance equal to two weeks' pay. That is what it sounds like they did. They should have made this clear to you when you left (on 2/23). Assuming you work in an at-will state, there's nothing wrong (legally) with them doing it this way, although it is not something I believe is right morally. Basically, they're trying to avoid some costs for your last two weeks (if they employ you through 3/6, they pay for another month of insurance, and some other things). In exchange, you lose some insurance benefits and FSA benefits. Your FSA terminates the day you terminate employment (see this pdf for a good explanation of these issues). This means that the FSA administrator is correct to reject expenses incurred after 2/23. The FSA is in no way tied to your insurance plan; you can have one or the other or both. You still can submit claims for expenses prior to 2/23 during your runout period, which is often 60 or 90 days. In the future, you will want to think ahead when leaving employment, and you may want to time when you give notice carefully to maximize your benefits in the event something like this happens again. It's a shady business practice in my mind (to terminate you when you give notice), but it's not unknown. As far as the HSA/FSA, you aren't eligible to contribute to an HSA in a year you're also in an FSA, except that they use \"\"plan year\"\" in the language (so if your benefits period is 6/1/yy - 5/31/yy, that's the relevant 'year'). I'd be cautious about opening a HSA without advice from a tax professional, or at least a more knowledgeable person here.\"", "title": "" } ]	[ { "docid": "982ffd45954941685ad57a46d745f40b", "text": "Don't panic this happens all the time. I looked online for a form that can be used to redeposit funds back into the HSA. This form can be used to redeposit funds withdrawn in error and cannot be used to correct an Excess Contribution Return. Funds will be posted as a correction and not as a contribution. The deposit will be entered for the year the distribution occurred. It allows you to specify the year the incorrect distribution occurred. I authorize Optum Bank to make the withdrawal correction indicated above. I have enclosed a check made payable to Optum Bank for the amount I’d like redeposited to my account. I understand that this can result in a possible corrected 1099-SA for the tax year indicated above. Of course you need to get the forms for your account.", "title": "" }, { "docid": "c4eeed1ef12f17beb4e7a2a0d12b5fcc", "text": "\"Since it's not tagged united-states, I'd like to offer a more general advice. Your emergency fund should match the financial risks that are relevant to you. The two main classes of financial risk are of course a sudden increase in costs or a decrease in income. You'd have to address both independently. First, loss of income. For most, this would simply equate to the loss of a job. How much benefits would you expect to get, and for how long? This is often the most important question; the 6 months advise in the US is based on a lack of benefits. With two incomes, you're less likely to lose both jobs at the same time. That's a general advise, though. If you both work for the same employer, the risk of losing two jobs at the same time is certainly real. Also, in countries with little protection against dismissal (such as the US), the chance of being layed off at the same time is also higher. On the debit side, there are also two main risks. The first is the loss or failure of an essential possession, i.e. one which requires immediate replacement. This could include a car, or a washing machine. You already paid for one before, so you should have a good idea how much it costs. The second expenditure risk is health-related costs. Those can suddenly crop up, but often you have some kind of insurance. If not, you'd need to account for some costs, but it's hard to come up with an objective number here. The two categories are dependent, of course. Health-related costs may very well coincide with a loss of income, especially if you're self-employed. Now, once you've figured out what the risks are, it's time to figure out how to insure against them. Insurance might be a better choice than an emergency fund, especially for the health costs. You might even discover that you don't need an emergency fund at all. In large parts of Europe, you could establish a credit margin that's not easily revoked (i.e. overdraft agreements), and unemployment benefits are sufficient to cover your regular cost of living. The main risk would then be a sudden lack of liquidity if your employer goes bankrupt and fails to pay the monthly wages, which means your credit should be guaranteed sufficient to borrow one month of expenses. (This of course assumes quite good credit; \"\"pay off my car\"\" doesn't suggest that.)\"", "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": "028229a8f677a80531cc3c162478e380", "text": "Your spouse is eligible for an HSA even if you have one as long as she is covered by a qualified high-deductible plan. In the case that you both had HSAs you would be limited in how much you contribute each year, but both can have accounts. In 2015, you could each contribute $3350 to your separate HSA plans. If you have a combined plan, and even if you switched mid year, you could contribute $6650 during that year total to the two HSAs. That can be divided any way you want as long as the total does not exceed that maximum for the year. You can contribute an extra $1000 if you are over 55 years old. (I should probably also mention that you can still make contributions for the 2015 year until April 15, 2016, because it's relevant to most who would read this. Also you can only contribute a percentage of that limit matching the percentage of months that you are covered, but if you are covered for the last month of the year, you can contribute the full amount as long as you are covered for the ENTIRE following year.)", "title": "" }, { "docid": "efd610253ac92ccec4c68d7e254a7182", "text": "\"I have a couple other important considerations regarding external HSA accounts vs employer sponsored HSA accounts. Depending on your personal financial situation and goals; some people like to use HSA accounts as an extra retirement account (since the money can be withdrawn penalty free in retirement for non-medical expenses, and completely tax & penalty free at any time for medical expenses). If your intended use for the HSA account is an investment vehicle for retirement, then you may find more use/benefit out of an external provider that may provide more or better investment options than your employers HSA investment options. There can be a lot of additional value in those extra investment options over greater periods of time. Another VERY important consideration for FICA taxes (FICA includes Social Security & Medicare) that I don't believe was mentioned before - for those earners who are under the maximum social security wage limit, you are paying 6.2% of each paycheck into social security taxes. As others have mentioned you can \"\"save\"\" this tax through your employer’s plan if you set up the account to be funded pre-tax from your paychecks. However, in doing so, you are lowering your overall contributions into social security, which may lower your social security benefits in your retirement years! If this is ultimately going to lower your SSA benefits in retirement then that is a big future cost that may steer you against the pre-tax employer contributions. Think of social security as part of your retirement plan, not as a tax but instead as an additional check you put away for yourself for retirement every month. Of course, this is only an important consideration if SSA is still going to be around when you retire, but let's assume that it will be. This is not an issue for higher earners, earning well above the max SSA taxable wages. There is no wage limit on the 1.45% Medicare tax withholding's, and there is certainly no harm in saving Medicare taxes because it will not affect future Medicare benefits. So for taxpayers earning well over the max SSA wages, they will just save the 1.45% Medicare taxes without affecting their SSA contributions and resulting retirement benefits. So again, it all comes down to personal situations. Depending on your earnings and goals, employer plan may or may not be the way to go. Personally, for my lower earning clients, friends and family, I tend to recommend that they do whatever they can to maximize their social security benefits in retirement. So I would advise them to either use the external provider account, or the employer plan but with post-tax contributions so you don't lower the SSA withholding's but can still claim the income tax deduction on your tax return. YMMV -Dan\"", "title": "" }, { "docid": "597775cd26c6519787a8dcf2492dd0ec", "text": "If you mistakenly pull money out of the HSA all the ones I have looked at have a mechanism of returning the funds. Sometimes they have a form, other times the doctor or pharmacy can put the money back in. Money put back into the fund doesn't count as a contribution for that year. You shouldn't have to pull money out that you know will just be reimbursed. But there are occasions where there is no other way. Sometimes you are not sure what the exact fee will be when visiting the doctor. In other cases you have a rebate that will only be received weeks later.", "title": "" }, { "docid": "07bc2c7918c691c5b0e5749c90b126ab", "text": "This will likely cause either (a) running out of funds in HSA #2, as the aggregate $6500 limit is nearing (b) an over-contribution situation between HSA #1 and HSA #2. .... 2014 HSA contributions are under the limit by $3000. 2015 expenses currently sit at about $3000. The solution is to stop putting money into HSA #2 so that you don't go over the aggregate limit for this tax year; But then using the money in HSA #1 to pay the medical costs. If the person making the contribution had the ability to put money into either HSA then they should have the ability to spend that money from either account. I realize the goal of the April transaction was to be able to effectively put $9500 into the HSA system in CY 2015. With the transaction that missed the deadline by seconds that opportunity is lost. But any medical costs that can be paid with money in HSA #1 should be paid for with money from that account. You don't have to keep funds in HSA #1, while worrying about HSA# 2 running out of funds. The beauty of an HSA is that you can continue to pay medical expenses out of an account for years after you no longer have a High deductible insurance plan. It can even be used in retirement.", "title": "" }, { "docid": "6e39fe07dfeadb4e84115f0978785d46", "text": "When you take any money out of an HSA, you'll get a 1099-SA. HSAs work a little differently than a 401(k). With a 401(k), you aren't supposed to take any money out until retirement. HSAs, however, are spending accounts. I take money out of my HSA every year. As long as you spend the money you take out of your HSA on qualified medical expenses, there are no taxes or penalties due. The bank that holds your HSA doesn't know or care what you spend the money on; they will certainly allow you to empty your HSA account. Anything you take out will be reported to the IRS (and to you) on a 1099-SA. At tax time, along with your tax return, you send in a form 8889, on which you report to the IRS what you took out of HSA, and you also certify how much of that money was spent on medical expenses. If any of it was spent on something else, taxes and penalties are due.", "title": "" }, { "docid": "451d72904d2463edaf67fad3277b2036", "text": "Yes, you will need to deposit the funds into your HSA, then withdraw them to reimburse yourself for the expenses. The tax deduction comes when you contribute (deposit) to your HSA. If you do not deposit the money there, you will not be able to claim the deduction. Your HSA provider reports the amount of your contributions to the IRS, so the amount you say you contribute to your HSA on your tax return has to match what your HSA provider reports. When you deposit the money to your HSA, you need to explicitly tell your provider that the contribution is for tax year 2014. The reason is that you want to make sure that they report the amount of your 2014 contributions to the IRS correctly. After you've deposited the amount into your HSA, you can withdraw it to reimburse yourself for an eligible medical expense. In order to be eligible, it needs to be an expense that was incurred while you had the HSA in place. If you had your HSA account in place before you paid the expense, no problem. But if you set up the HSA account after you paid for the expense, you might be out of luck. The distribution (withdrawal) will be a part of tax year 2015, and you'll see this amount included as part of the gross distributions on your 1099-SA form next year. When I first set up my HSA, I didn't have any extra money to fund the HSA, so I handled it just like you are talking about. I would wait until I had a medical bill, then deposit the amount I needed into my HSA and withdraw it back out to pay the bill.", "title": "" }, { "docid": "659b4f7a7453d785961511d21f6d42d9", "text": "With only $2000 in the account, I wouldn't worry about investing it. Instead, I would roll this over into a new HSA account with a different provider. Find a provider that doesn't charge ongoing fees, perhaps with a local credit union or bank. Although you won't be able to add money to it, you can withdraw as you have eligible medical expenses, until it is gone.", "title": "" }, { "docid": "5be55b3e5c91e876243c064a7e5e1d0a", "text": "\"Based on the updated information \"\"I'm able to get my health insurance in full from my old job which is why still have it(ABC). Anthem Blue cross only costs me about 15 dollars a month. At my new job I work full time so I took up the healthcare because eventually I will more than likely get rid of my old one(or loose it).\"\" There are a couple of issues: The old company will no longer be paying for the ABC policy, you will have to cover the entire cost. The cost could be significantly m ore than $15 a month. One will be primary and one will be secondary. You will have to tell them about each other. How they will interact when one is a percentage and the other a copay will have to be investigated. Look back at all your procedures from last year, and ask how they would cover them. You will also need to see if your doctors and specialists are in both networks. This could create situations where the 2nd policy provides no coverage because you went out of their network. You could also require multiple referrals.\"", "title": "" }, { "docid": "1a6add56a8edfee908054fb0814ec892", "text": "Contributing the $150 to put you over the $3k mark is somewhat pointless. The reason is that, although you won't be accumulating any fees, you won't be able to use the money, either, because as soon as you take a distribution, you'll be back under $3k. Instead, I would look at two things: First, are you considering all the ways you can spend this money? Doctor visits, dentist, prescriptions, eyeglasses, chiropractic, and more: there are lots of ways to spend this money, and if you can spend it all in a relatively short amount of time, your problem is solved. The full list of things you can spend it on is in IRS Publication 502. Second, have you talked to a local credit union? Credit unions often offer an HSA account with only a small setup fee and no ongoing monthly fee or minimum balance. If you roll your current HSA money over into your new account, you can then take your time spending the money until it is gone. If you are having trouble locating a good HSA, there is a large list at hsarates.com. Look for one that is available in your state (or nationwide) and has low/no fees.", "title": "" }, { "docid": "92a1adcf9624d185493c4554d7f83703", "text": "\"The FSA, in contrast to the HSA, is not an \"\"account\"\" that you put money in. FSA stands for \"\"Flexible Spending Arrangement,\"\" not \"\"Account.\"\" Technically, it is a defined-benefit plan. Here is the difference: With an account such as an HSA, you put money into the account, and you get that same money out. You can't take money out unless you first put money in. The FSA doesn't work that way. Instead, you pick an annual amount that your FSA will cover, and work out a monthly fee to pay for it. For example, you might decide on a $1800 FSA, which will cost you $150 per month. However, the $150 you pay each month does not go into an account for you; instead, it goes to your employer, who is managing the plan. Let's say that in January, at the beginning of the plan year, you have a large medical expense of $1000. You've only had $150 taken out of your paycheck so far this year, but you are covered for $1800, so you get reimbursed the full $1000. This is referred to as \"\"uniform coverage\"\", meaning that you get the full $1800 of coverage on day 1 of the year. Now let's say that you leave your job in March. You've only paid $450, and you've received $1000 in benefit. You do not owe your employer the rest of the money; your employer eats this cost. This is the trade-off that the FSA offers over other types of accounts: depending on an employee's circumstances, an employer might make money (use-it-or-lose-it) or might lose money (uniform coverage) on an individual employee. The idea behind the use-it-or-lose-it provision of the FSA is to help the employer pay for the uniform coverage provision. The details behind the FSA (and other types of health plans) are outlined in IRS Publication 969. I'm sure that a secondary reason behind the use-it-or-lose-it provision is that it encourages an employee to keep his FSA plan small, so he can use it all up and not have to lose too much of it at the end of the year. And a smaller FSA contribution means more tax money for the government. To address your point that it shouldn't be this way: I'm personally not a fan of the FSA because of the use-it-or-lose-it provision. But participation is voluntary, for both employers and employees. You proposed an alternative set of rules for the FSA, but you are basically describing an HSA, in which you cannot spend more than you have, and you get to keep whatever is left over. The recent rules changes that allow plans to feature a grace period or a small carryover balance were an attempt to make the FSA a little more attractive/useful, but if you want the ability to keep your money and not have to spend it at all, use an HSA instead.\"", "title": "" }, { "docid": "051cba379b6108354ac4a5be546f8b01", "text": "\"I also talked to the IRS yesterday to get a few of my own questions answered, and I asked a few of these while I was at it (as I didn't know the answers for sure either, even after reading IRS pub 969). To answer your specific questions: I would, however, like to confirm a few things: You are allowed to have multiple HSA accounts. My company forces me to use a specific bank if they are going to be make contributions. However, I would like to move this money to a higher-risk/higher-yield account. You are allowed to withdraw money to reimburse any past payments that were made after the HSA is opened – perhaps years later. This would allow me to accumulate interest on the money and then get reimbursed later. You can transfer money between HSAs, etc. and the money will still cover any payments since the first HSA was opened? I am currently unmarried and without children. An HSA can be made to pay for any dependent or spouse medical bills as well. I am currently signed up with an HSA that is marked as \"\"individual\"\" or something. I assume that once I get married, I should have no issues using this money from the past on my wife and kids? Note that I am not a certified tax professional and you should not rely on this information for your own tax decisions, but should investigate or contact the IRS yourself.\"", "title": "" }, { "docid": "24f7b76c78be9771d8f654e4df9d6cde", "text": "No. An HSA is similar to an IRA, in that it's an individual account. I'd suggest you use hers for all expenses and make new deposits to yours until your wife's HSA is depleted.", "title": "" } ]	fiqa
13ebdbaeeb537314f9119e069f418ad0	Buying my first car: why financing is cheaper than paying cash here and now?	[ { "docid": "4f9f5b030ba22a07c5635bb76abf7cda", "text": "The dealership is getting a kickback for having you use a particular bank to finance through. The bank assumes you will take the full term of the loan to pay back, and will hopefully be a repeat customer. This tactic isn't new, and although it maybe doesn't make sense to you, the consumer, in the long run it benefits the bank and the dealership. (They wouldn't do it otherwise. These guys have a lot of smart people running #s for them). Be sure to read the specifics of the loan contract. There may be a penalty for paying it off early. Most customers won't be able to pay that much in cash, so the bank makes a deal with the dealership to send clients their way. They will lose money on a small percentage of clients, but make more off of the rest of the clients. If there's no penalty for paying it off early, you may just want to take the financing offer and pay it off ASAP. If you truly can only finance $2500 for 6 mos, and get the full discount, then that might work as well. The bank had to set a minimum for the dealership in order to qualify as a loan that earns the discount. Sounds like that's it. Bonus Info: Here's a screenshot of Kelley Blue Book for that car. Car dealers get me riled up, always have, always will, so I like doing this kind of research for people to make sure they get the right price. Fair price range is $27,578 - $28,551. First time car buyers are a dealers dream come true. Don't let them beat you down! And here's more specific data about the Florida area relating to recent purchases:", "title": "" }, { "docid": "1998aad62501d90096f94e435b798ef6", "text": "The advice given at this site is to get approved for a loan from your bank or credit union before visiting the dealer. That way you have one data point in hand. You know that your bank will loan w dollars at x rate for y months with a monthly payment of Z. You know what level you have to negotiate to in order to get a better deal from the dealer. The dealership you have visited has said Excludes tax, tag, registration and dealer fees. Must finance through Southeast Toyota Finance with approved credit. The first part is true. Most ads you will see exclude tax, tag, registration. Those amounts are set by the state or local government, and will be added by all dealers after the final price has been negotiated. They will be exactly the same if you make a deal with the dealer across the street. The phrase Must finance through company x is done because they want to make sure the interest and fees for the deal stay in the family. My fear is that the loan will also not be a great deal. They may have a higher rate, or longer term, or hit you with many fee and penalties if you want to pay it off early. Many dealers want to nudge you into financing with them, but the unwillingness to negotiate on price may mean that there is a short term pressure on the dealership to do more deals through Toyota finance. Of course the risk for them is that potential buyers just take their business a few miles down the road to somebody else. If they won't budge from the cash price, you probably want to pick another dealer. If the spread between the two was smaller, it is possible that the loan from your bank at the cash price might still save more money compared to the dealer loan at their quoted price. We can't tell exactly because we don't know the interest rates of the two offers. A couple of notes regarding other dealers. If you are willing to drive a little farther when buying the vehicle, you can still go to the closer dealer for warranty work. If you don't need a new car, you can sometimes find a deal on a car that is only a year or two old at a dealership that sells other types of cars. They got the used car as a trade-in.", "title": "" } ]	[ { "docid": "75a26be06709df3f36a688e5dfa26a49", "text": "Cash is very effective at getting a discount when buying from individuals (craigslist, garage sales, estate sales, flea markets, etc.). I'll make an offer, then thumb through the cash while they consider it. There eyes will dart back and forth between my eyes and the cash as they decide whether to take my offer. Car dealers do seem to be very unique. The dealer I bought at recently said that 70% of their deals were cash purchases, JoeTaxpayer's dealer said 1% were cash purchases. I've had good luck negotiating with cash for well-loved cars (under $10K) from both individuals or used dealers. I'm also looking for carpet for my house and the first vendor I went to offered at 5% discount if I paid up front (no financing).", "title": "" }, { "docid": "086a9ad3b409d1498b7d28307f1f69f3", "text": "If you have the money to pay cash for the car. Then 0 months will save you the most money. There are of course several caveats. The money for the car has to be in a relatively liquid form. Selling stocks which would trigger taxes may make the pay cash option non-optimal. Paying cash for the car shouldn't leave you car rich but cash poor. Taking all your savings to pay cash would not be a good idea. Note: paying cash doesn't involve taking a wheelbarrow full of bills to the dealer; You can use a a check. If cash is not an option then the longest time period balanced by the rates available is best. If the bank says x percent for 12-23 months, y percent for 24-47 months, Z percent for 48 to... It may be best to take the 47 month loan, because it keeps the middle rate for a long time. You want to lock in the lowest rate you can, for the longest period they allow. The longer period keeps the required minimum monthly payment as low as possible. The lower rate saves you on interest. Remember you generally can pay the loan off sooner by making extra or larger payments. Leasing. Never lease unless you are writing off the monthly lease payment as a business expense. If the choice is monthly lease payments or depreciation for tax purposes the lease can make the most sense. If business taxes aren't involved then leasing only means that you have a complex deal where you finance the most expensive part of the ownership period, you have to watch the mileage for several years, and you may have to pay a large amount at the end of the period for damages and excess miles. Plus many times you don't end up with the car at the end of the lease. In the United States one way to get a good deal if you have to get a loan: take the rebate from the dealer; and the loan from a bank/credit Union. The interest rate at banking institution is a better range of rates and length. Plus you get the dealer cash. Many times the dealer will only give you the 0% interest rate if you pay in 12 months and skip the rebate; where the interest paid to the bank will be less than the rebate.", "title": "" }, { "docid": "ba37f8fbac914f2ec53278db02793614", "text": "Dealer financing should be ignored until AFTER you have agreed on the price of the car, since otherwise they tack the costs of it back onto the car's purchase price. They aren't offering you a $2500 cash incentive, but adding a $2500 surcharge if you take their financing package -- which means you're actually paying significantly more than 0.9% for that loan! Remember that you can borrow from folks other than the dealer. If you do that, you still get the cash price, since the dealer is getting cash. Check your other options, and calculate the REAL cost of each, before making your decisions. And remember to watch out for introductory/variable rates on loans! Leasing is generally a bad deal unless you intend to sell the car within three years or so.", "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": "2f23b324328a3959962de22867d43218", "text": "\"Like many things, there are pros and cons to using credit cards. The other folks on here have discussed the pros and length, so I'll just quickly summarize: Convenience of not having to carry cash. Delay paying your bills for a month with no penalty. Build your credit rating for a time when you need a big loan, like buying a house or starting a business. Provide easy access to credit for emergencies or special situations. Many credit cards provide \"\"rewards\"\" of various sorts that can effectively reduce the cost of what you buy. Protection against fraud. Extended warranty, often up to one year Damage warranty, covering breakage that might be explicitly excluded from normal warranty. But there are also disadvantages: One of the advantages of credit cards -- easy access to credit -- can also be a disadvantage. If you pay with cash, then when you run out of cash, you are forced to stop buying. But when you pay with credit, you can fall into the trap of buying things that you can't afford. You tell yourself that you'll pay for it when you get that next paycheck, but by the time the paycheck arrives, you have bought more things that you can't afford. Then you have to start paying interest on your credit card purchases, so now you have less money left over to pay off the bills. Many, many people have gotten into a death spiral where they keep piling up credit card debt until they are barely able to pay the interest every month, never mind pay off the original bill. And yes, it's easy to say, \"\"Credit cards are great as long as you use them responsibly.\"\" That may well be true. But some people have great difficulty being responsible about it. If you find that having a credit card in your pocket leads you to just not worry about how much you buy or what it costs, because, hey, you'll just put it on the credit card, then you will likely end up in serious trouble. If, on the other hand, you are just as careful about what you buy whether you are paying cash or using credit, and you never put more on the credit card than you can pay off in full when the bill arrives, then you should be fine.\"", "title": "" }, { "docid": "979150f0ed4d6e0a2bded0486e3ed0a7", "text": "\"They aren't actually. It appears to be a low interest rate, but it doesn't cover their true cost of capital. It is a sales tactic where they are raising the sticker price/principal of the car, which is subsidizing the true cost of the loan, likely 4% or higher. It would be hard to believe that the true cost of a car loan would be less than for a mortgage, as with a mortgage the bank can reclaim an asset that tends to rise in value, compared to a used car, which will have fallen in value. This is one reason why you can generally get a better price with cash, because there is a margin built in, in addition to the fact that with cash they get all their profit today versus a discount of future cash flows from a loan by dealing with a bank or other lending company. So if you could see the entire transaction from the \"\"inside\"\", the car company would not actually be making money. The government rate is also so low that it often barely covers inflation, much less operating costs and profit. This is why any time you see \"\"0% Financing!\"\", it is generally a sales tactic designed to get your attention. A company cannot actually acquire capital at 0% to lend to you at 0%, because even if the nominal interest rate were 0%, there is an opportunity cost, as you have observed. A portion of the sticker price is covering the real cost, and subsidizing the monthly payment.\"", "title": "" }, { "docid": "9d174defc8801df83b7f99517cd0d43f", "text": "At first guess, people have less and less disposable cash/income for a down payment which subsequently results in longer loan duration. I thought I recall reading an article not too long ago where average auto loan term was 70 something months and average new car is $30k+. That’s a lot of $$$ for a country where median household income is $50k.", "title": "" }, { "docid": "c1589d69152a6c39b837a4cbea6147ad", "text": "I have a job and would like to buy equipment for producing music at home and it would be easier for me to pay for the equipment monthly I just want to address your contention that it would be easier to pay monthly, with an interest calculation. Lets say you get a credit card with a very reasonable rate of 12% and you buy $2,500 of equipment. A typical credit card minimum payment is interest charges + 1% of the principle. You can see how this is going. You've paid nearly $200 to clear about $100 off your principle. Obviously paying the minimum payment will take forever to wipe out this debt. So you pay more, or maybe you get 0% interest for a while and take advantage of that. Paying $100 per month against $2,500 at 12% per year will take 29 months and cost about $390 in interest. At $200 per month it'll take 14 months and cost $184 in interest. Also note, you'll probably get an interest rate closer to 16 or 17%. It's always easier to pay small amounts frequently than it is to pay a lot of money all at once, that ease has a cost. If you're buying the gear to start a little business, or you already have a little business going and want to upgrade some gear, great; disciplined debt handling is a wonderful skill to have in business. If you want to start yourself in to a new hobby, you should not do that with debt. If interest rates are low enough financing something can make sense. 0.9% apr on a car, sure; 15% apr on a mixing board, no. Credit card interest rates are significant and really should not be trifled with.", "title": "" }, { "docid": "277d4423be680399e5c346d4177ce244", "text": "In the UK at least, dealers definitely want you to take finance. They get benefits from the bank (which are not insubstantial) for doing this; these benefits translate directly to increased commission and internal rewards for the individual salesman. It's conceivable that the salesman will be less inclined to put himself out for you in any way by sweetening your deal as much as you'd like, if he's not going to get incentives out of it. Indeed, since he's taking a hit on his commission from you paying in cash, it's in his best interests to perhaps be firmer with you during price negotiation. So, will the salesman be frustrated with you if you choose to pay in cash? Yes, absolutely, though this may manifest in different ways. In some cases the dealer will offer to pay off the finance for you allowing you to pay directly in cash while the dealer still gets the bank referral reward, so that everyone wins. This is a behind-the-scenes secret in the industry which is not made public for obvious reasons (it's arguably verging on fraud). If the salesman likes you and trusts you then you may be able to get such an arrangement. If this does not seem likely to occur, I would not go out of my way to disclose that I am planning to pay with cash. That being said, you'll usually be asked very early on whether you are seeking to pay cash or credit (the salesman wants to know for the reasons outlined above) and there is little use lying about it when you're shortly going to have to come clean anyway.", "title": "" }, { "docid": "3f2d7cb8ce82aa73b1882a63e63724e8", "text": "\"Yea but they might feel swindled and that you pulled a fast one on them, and not be as willing to give you good deals in the future. Like, as a totally non mathematical example, they have a car for $50k. They lower the price to 40k with a financing that will bring total payment to 60k. Their break even on that car is let's say 45k. The financier cuts them a commission on expected profits, of maybe 7k? They made an expected 2k on the car. But if you pay it all off asap, they may lose that commission, be 5k in the hole on the sale, and pretty upset. Even more upset if they finance in house. So when you go back to buy another car they'll say \"\"fuck this guy, we need to recoup past lost profits, don't go below 4K above break even.\"\" I'm not really 100% on how financing workings when it comes to cars but from my background in sales this is the bar I would set for a customer that made me take a loss by doing business with them if they tried to come back in the future. This doesn't take into account how car dealerships don't own their inventory, finance all of their cars and actually ARE willing to take a loss on a car just to get it off the lot some times.\"", "title": "" }, { "docid": "584d3a1d780d21200d209d91a428d8b4", "text": "Cash price is $22,500. Financed, it's the same thing (0% interest) but you pay a $1500 fee. 1500/22500 = 6.6%. Basically the APR for your loan is 1.1% per year but you are paying it all upfront. Opportunity cost: If you take the $22,500 you plan to pay for the car and invested it, could you earn more than the $1500 interest on the car loan? According to google, as of today you can get 1 year CD @ 1.25% so yes. It's likely that interest rates will be going up in medium term so you can potentially earn even more. Insurance cost: If you finance you'll have to get comprehensive insurance which could be costly. However, if you are planning to get it anyway (it's a brand new car after all), that's a wash. Which brings me to my main point: Why do you have $90k in a savings account? Even if you are planning to buy a house you should have that money invested in liquid assets earning you interest. Conclusion: Take the cheap money while it's available. You never know when interest rates will go up again.", "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": "" }, { "docid": "63c200f9812b79185eda09b2cf23f12d", "text": "I never understood why people lease rather than buy or finance. I'm financing a new civic 09 @ 0.9%. At the end of the 5 year terms I will have paid less than $800 in interest.", "title": "" }, { "docid": "14fbd60f61528b74f681f6033acfc003", "text": "The risk besides the extra interest is that you might be upside down on the loan. Because the car loses value the moment you drive off the lot, the slower you pay it off the longer it takes to get the loan balance below the resale value. Of course if you have a significant down payment, the risk of being upside down is not as great. Even buying a used car doesn't help because if you try to sell it back to the dealer the next week they wont give you the full price you paid. Some people try and split the difference, get the longer term loan, but then pay it off as quickly as the shorter term loan. Yes the interest rate is higher but if you need to drop the payment back to the required level you can do so.", "title": "" }, { "docid": "ac5e3eceb0f3f7efed7542521895e212", "text": "I have gotten a letter of credit from my credit union stating the maximum amount I can finance. Of course I don't show the dealer the letter until after we have finalized the deal. I Then return in 3 business days with a cashiers check for the purchase price. In one case since the letter was for an amount greater then the purchase price I was able drive the car off the lot without having to make a deposit. In another case they insisted on a $100 deposit before I drove the car off the lot. I have also had them insist on me applying for their in-house loan, which was cancelled when I returned with the cashiers check. The procedure was similar regardless If I was getting a loan from the credit union, or paying for the car without the use of a loan. The letter didn't say how much was loan, and how much was my money. Unless you know the exact amount, including all taxes and fees,in advance you can't get a check in advance. If you are using a loan the bank/credit Union will want the car title in their name.", "title": "" } ]	fiqa
07fb371ea0b1c0b9872e39b5d815b248	What are the typical repayment plans for Credit Cards in the United States?	[ { "docid": "1131ea022efbd4bd7a9368c166a70f78", "text": "\"In the U.S., when you receive your credit card bill each month there's a \"\"minimum payment amount.\"\" That minimum payment is usually the greater of $25 or 1% of the new balance on the card plus new interest and fees. As long as you pay the minimum payment amount, you can pay as much as you want each month. Note, in your example, you would be required to pay more than $1000 to pay off the balance, as interest would accrue each month on the unpaid principal. How much more is dependent on the interest rate of the card.\"", "title": "" }, { "docid": "b4e97de34cef36c0dad6a1c09fff5040", "text": "\"It is called \"\"Credit card installments\"\" or \"\"Equal pay installments\"\", and I am not aware of them being widely used in the USA. While in other countries they are supported by banks directly (right?), in US you may find this option only in some big stores like home improvement stores, car dealerships, cell phone operators (so that you can buy a new phone) etc. Some stores allow 0% financing for, say, 12 months which is not exactly the same as installments but close, if you have discipline to pay $250 each month and not wait for 12 months to end. Splitting the big payment in parts means that the seller gets money in parts as well, and it adds risks of customer default, introduces debt collection possibility etc. That's why it's usually up to the merchants to support it - bank does not care in this case, from the bank point of view the store just charges the same card another $250 every month. In other countries banks support this option directly, I think, taking over or dividing the risk with the merchants. This has not happened in US. There is a company SplitIt which automates installments if stores want to support it but again, it means stores need to agree to it. Here is a simple article describing how credit cards work: https://www.usbank.com/credit-cards/how-credit-cards-work.html In general, if you move to US, you are unlikely to be able to get a regular credit card because you will not have any \"\"credit history\"\" which is a system designed to track each customer ability to get & pay off debt. The easiest way to build the history - request \"\"secured credit card\"\", which means you have to give the bank money up front and then they will give you a credit card with a credit limit equal to that amount. It's like a \"\"practice credit card\"\". You use it for 6-12 months and the bank will report your usage to credit bureaus, establishing your \"\"credit score\"\". After that you should be able to get your money back and convert your secured card into a regular credit card. Credit history can be also built by paying rent and utilities but that requires companies who collect money to report the payments to credit bureaus and very few do that. As anything else in US, there are some businesses which help to solve this problem for extra money.\"", "title": "" } ]	[ { "docid": "eb21a97ee6426ddc9847c796e9371b2b", "text": "\"Without knowing what the balances are, I associate \"\"uncomfortable\"\" with high, as in tens of thousands. What I would do: is 1) cut up the cards and stop using them, and 2) have some balance transfer offers in hand the next time you call to negotiate with the companies. Essentially, you will have to convince them that they will have to explain one of two things to their boss: why they lowered your rate or why you left. They can collect less interest from you or no interest from you. It's up to them. If they don't offer you something that's in the ballpark of your balance transfer offer, then bid them goodbye and complete the balance transfer. As far as paying them off, the top two modes of repayment are lowest balance first (aka snowball) or high interest rate first. Both methods are similar in that you pay minimums on all but the method's focus point. Whether it is lowest balance or highest interest rate, you pay ALL of your extra money on the lowest balance or the highest interest debt until it is gone and then you move onto the next one in the list. For what it's worth, I prefer the lowest balance method, you see progress faster.\"", "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": "8d496f9c067c99654f535358fd6df3ad", "text": "\"I too am a full-monthly-statement-balance payer and I received a balance transfer offer from my credit-card company. This one was quite different from many others that I have read about on this forum. I could do a balance transfer for any amount up to $X from another credit card, or use the enclosed \"\"checks\"\" to pay some other (non-credit-card) bills, and I would not have to pay any interest for 12 months on the amount thus borrowed. But, There would be a 2% service charge on the amount I was borrowing. This amount would be billed on the next monthly statement, and it would have to be paid in full by the due date of that month's payment, that is, within the 25-day grace period allowed for payment of monthly statements. Else, interest would start being charged on the unpaid part of the service charge at the usual humongous rate of H% per month. If I had not paid the previous month's balance in full, I would be charged interest at H% per month on the service charge starting from Day One; no free ride till the due date of the next month's statement. Of course, the balance carried over from last month would also be charged interest at H%. If I had paid last month's bill in full, but there were any other charges (purchases) during the current month, then unless the entire amount due, this month's purchases plus service charge and that \"\"interest-free-for-twelve-months loan\"\" balance was paid off within the 25-day grace period, my purchases would be deemed unpaid and would start being charged interest. In short, the only way to avoid paying interest on the amount borrowed was to start with a card showing a $0 balance due on the previous month's statement, not make any charges on that card for a whole year, and pay off that 2% service charge within the grace period. It might also have required that one-twelfth of that interest-free loan be repaid each month, but I had stopped reading the offer at this point and filed it in the round circular file. In short, while @JoeTaxpayer's tale of how \"\"As a pay-in-full user, I've used the zero rate to throw $20K at the 5.25% mortgage\"\" is undoubtedly how things worked once, it is not at all clear that they still work that way. At least, they don't work that way for me. Heck, once upon a time, for a period of about 3 months, you could earn 1.5% interest per month from the credit card company by overpaying your credit card bill considerably. Their computers then just \"\"added on\"\" 1.5% interest by multiplying your credit balance -$X by 1.015 and so you got 1.5% per month interest from the credit card company. The credit card agreements (and the software!) got changed in a hurry, and nowdays all credit-card agreements state in the fine print that if you overpay your bill, you don't earn any interest on the overpayment.\"", "title": "" }, { "docid": "71486c3af9f2152dba6dc27d4088a4a3", "text": "\"Basically, your CC is (if normal) compounded monthly, based on a yearly APR. To calculate the amount of interest you'd pay on each of these accounts in a year, pull up a spreadsheet like Office Excel. Put in your current balance, then multiply it by the annual interest rate divided by 12, and add that quantity to the balance. Subtract any payment you make, and the result is your new balance. You can project this out for several months to get a good estimate of what you'll pay; in accounting or finance terms, what you're creating is an \"\"amortization table\"\". So, with a $10,000 balance, at 13.99% interest and making payments of $200/mo, the amortization table for one year's payments might look like: As you can see, $200 isn't paying down this card very quickly. In one year, you will have paid $2,400, of which $1,332.25 went straight into the bank's pockets in interest charges, reducing your balance by only $1,067.75. Up the payments to $300/mo, and in 1 year you will have paid $3,600, and only been charged $1,252.24 in interest, so you'll have reduced your balance by $2,347.76 to only $7,652.24, which further reduces interest charges down the line. You can track the differences in the Excel sheet and play \"\"what-ifs\"\" very easily to see the ramifications of spending your $5,000 in various ways. Understand that although, for instance, 13.99% may be your base interest rate, if the account has become delinquent, or you made any cash advances or balance transfers, higher or lower interest rates may be charged on a portion of the balance or the entire balance, depending on what's going on with your account; a balance transfer may get 0% interest for a year, then 19.99% interest after that if not paid off. Cash advances are ALWAYS charged at exorbitantly high rates, up to 40% APR. Most credit card bills will include what may be called an \"\"effective APR\"\", which is a weighted average APR of all the various sub-balances of your account and the interest rates they currently have. Understand that your payment first pays off interest accrued during the past cycle, then pays down the principal on the highest-interest portion of the balance first, so if you have made a balance transfer to another card and are using that card for purchases, the only way to avoid interest on the transfer at the post-incentive rates is to pay off the ENTIRE balance in a year. The minimum payment on a credit card USED to be just the amount of accrued interest or sometimes even less; if you paid only the minimum payment, the balance would never decrease (and may increase). In the wake of the 2008 credit crisis, most banks now enforce a higher minimum payment such that you would pay off the balance in between 3 and 5 years by making only minimum payments. This isn't strictly required AFAIK, but because banks ARE required by the CARD Act to disclose the payoff period at the minimum payment (which would be \"\"never\"\" under most previous policies), the higher minimum payments give cardholders hope that as long as they make the minimum payments and don't charge any more to the card, they will get back to zero.\"", "title": "" }, { "docid": "e21104c1100dde4ce0246351b25ca8f8", "text": "\"I'm not going to recommend a specific card. New card offers pop up all the time. My answer would be out of date in a month! As a general rule, if you pay off your balance every month, you should be looking at a cash-back or a rewards card. Cash-back cards will give you some money (say 1%) of every dollar you spend. Some will give you larger amounts of cash-back for certain types of spending (e.g. groceries). With a Rewards card, you usually get \"\"points\"\" or \"\"airline miles\"\", which can be redeemed for merchandise, flights around the wold, concert tickets, etc. With these types of cards, it makes sense to do as much of your spending as possible with the cards, so you can maximize the benefits. Which specific card is best will depend on your shopping habits, and which bank is offering the best deal that week. I recommend you start at http://www.creditcards.com to compare card offerings. For cash-back cards, you can also go to http://www.creditcardtuneup.com, enter some details of your spending, and see which one will give you the most cash back.\"", "title": "" }, { "docid": "bf83cd0a41ae7488023b5b518debfe03", "text": "\"Your companies are declining to lower your rates because you are describing it as being kind. When I was in a similar situation, I called each one, starting with the highest rate, and said this: For the last little while things have been tight and my balances have crept up on all my cards. Now I'm about to start a fairly dramatic paydown. I'm going to be doing highest-rate fastest, which is you. Are you able to lower my rate so that you can continue to collect it? Some said no. Some said \"\"ask again when you've paid more than the minimum three months in a row.\"\" Most said yes, and sometimes by a dramatic amount. It made a real difference to getting things under control. I agree with the other answers that $50 extra on each card is just not as fulfilling as putting all the extra to a single card. If you must still use a card (to put gas in your car, buy groceries etc) getting one card to zero will return you to not paying interest even when you use it, so you might want to start with your lowest balance and then go to highest-rate once you have one clear one you can use. (If your balances are all so high that it will take a year or more to get one to zero, then maybe not. But if one is low drive it down first.) As for the consolidation loan, for some people it's the key to saving interest and getting the debt behind them. For others it's a chance to catch their breath and run up even more debt. Most people cannot predict in advance which they will be or which others will be. Be aware that it is a risk. You can vow that you will never again cover payroll with a cash advance from the company credit card (or your personal one) but when push comes to shove, you just might anyway.\"", "title": "" }, { "docid": "7ea0e94b3b42882c6e4728b553106d16", "text": "yeah... no track record. Here's what I'm predicting: PayPal-like policies designed to keep money in limbo (aka a float operation). Personally, I'm surprised that Visa, Mastercard, et. al. haven't applied Dodd-frank transaction fee limits to prevent square from inserting itself between the consumer and creditor.", "title": "" }, { "docid": "ab635d81d1df649f07e7120320dd0755", "text": "Forget about terms. Think about loans in terms of months. To simplify things, let's consider a $1000 loan with .3% interest per month. This looks like a ten month term, but it's equally reasonable to think about it on a month-to-month basis. In the first month, you borrowed $1000 and accrued $3 interest. With the $102 payment, that leaves $901 which you borrow for another month. So on and so forth. The payoff after five payments would by $503.54 ($502.03 principal plus $1.51 interest). You'd save $2.99 in interest after paying $13.54. The reason why most of the interest was already paid is that you already did most of the borrowing. You borrowed $502.03 for six months and about $100 each for five, four, three, two, and one month. So you borrowed about $4500 months (you borrowed $1000 for the first month, $901 for the second month, etc.). The total for a ten month $1000 loan is about $5500 months of borrowing. So you've done 9/11 of the borrowing. It's unsurprising that you've paid about 9/11 of the interest. If you did this as a six month loan instead, then the payments look different. Say You borrow $1000 for one month. Then 834 for one month. So on and so forth. Adding that together, you get about $168.50 * 21 or $3538.50 months borrowed. Since you only borrow about 7/9 as much, you should pay 7/9 the interest. And if we adding things up, we get $10.54 in interest, about 7/9 of $13.54. That's how I would expect your mortgage to work in the United States (and I'd expect it to be similar elsewhere). Mortgages are pretty straight-jacketed by federal and state regulations. I too once had a car loan that claimed that early payment didn't matter. But to get rid of the loan, I made extra payments. And they ended up crediting me with an early release. In fact, they rebated part of my last payment. I saved several hundred dollars through the early release. Perhaps your loan did not work the same way. Perhaps it did. But in any case, mortgages don't generally work like you describe.", "title": "" }, { "docid": "c1589d69152a6c39b837a4cbea6147ad", "text": "I have a job and would like to buy equipment for producing music at home and it would be easier for me to pay for the equipment monthly I just want to address your contention that it would be easier to pay monthly, with an interest calculation. Lets say you get a credit card with a very reasonable rate of 12% and you buy $2,500 of equipment. A typical credit card minimum payment is interest charges + 1% of the principle. You can see how this is going. You've paid nearly $200 to clear about $100 off your principle. Obviously paying the minimum payment will take forever to wipe out this debt. So you pay more, or maybe you get 0% interest for a while and take advantage of that. Paying $100 per month against $2,500 at 12% per year will take 29 months and cost about $390 in interest. At $200 per month it'll take 14 months and cost $184 in interest. Also note, you'll probably get an interest rate closer to 16 or 17%. It's always easier to pay small amounts frequently than it is to pay a lot of money all at once, that ease has a cost. If you're buying the gear to start a little business, or you already have a little business going and want to upgrade some gear, great; disciplined debt handling is a wonderful skill to have in business. If you want to start yourself in to a new hobby, you should not do that with debt. If interest rates are low enough financing something can make sense. 0.9% apr on a car, sure; 15% apr on a mixing board, no. Credit card interest rates are significant and really should not be trifled with.", "title": "" }, { "docid": "e37fee42606d87823a1ba83b3875c0bc", "text": "\"These days, just about any bank has the ability to schedule payments for free. I usually use this. My wife has a Chase MasterCard, because they used to automatically credit the 1% cash back monthly. Now they \"\"improved\"\" the card, and you need to go online and redeem the rewards, either in $20 increments, or to pay off a previous purchase, which seems to be a real gimmick. They probably get back the 1% cash back for that purchase if you use this feature. Weird people.\"", "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": "902d883dc904b70b034cc564964afb21", "text": "\"Credit Cards typically charge interest on money you borrow from them. They work in one of two ways. Most cards will not charge you any interest if you pay the balance in full each month. You typically have around 25 days (the \"\"grace period\"\") to pay that off. If that's the case, then you will use your credit card without any cost to yourself. However, if you do not pay it in full by that point, then you will owe 19.9% interest on the balance, typically from the day you charged the payment (so, retroactively). You'll also immediately begin owing interest on anything else you charge - typically, even if you do then pay the next month the entire balance on time. It's typically a \"\"daily\"\" rate, which means that the annual rate (APR) is divided into its daily rate (think the APR divided by 365 - though it's a bit different than that, since it's the rate which would be 19.9% annualized when you realize interest is paid on interest). Say in your case it's 0.05% daily - that means, each day, 0.05% is added to your balance due. If you charged $1000 on day one and never made a payment (but never had to - ignore penalties here), you'd owe $1199 at the end of the year, paying $199 interest (19.91000). Note that your interest is calculated on the daily balance, not on your actual credit limit - if you only charge $100, you'd owe $19.90 interest, not $199. Also note that this simplifies what they're actually doing. They often use things like \"\"average daily balance\"\" calculations and such to work out actual interest charged; they tend to be similar to what I'm describing, but usually favor the bank a bit (or, are simpler to calculate). Finally: some credit cards do not have a grace period. In the US, most do, but not all; in other countries it may be less common. Some simply charge you interest from day one. As far as \"\"Standard Purchases\"\", that means buying services or goods. Using your credit card for cash advances (i.e., receiving cash from an ATM), using those checks they mail you, or for cash-like purchases (for example, at a casino), are often under a different scheme; they may have the same rate, or a different rate. They likely incur interest from the moment cash is produced (no grace period), and they may involve additional fees. Never use cash advances unless you absolutely cannot avoid it.\"", "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": "bbff14d0604cfd236b9c40dcd9f54084", "text": "\"A credit card is basically a \"\"revolving\"\" loan, in which you're allowed to borrow up to a certain amount (the limit), and any time you borrow, you pay interest. If you were to borrow* $100 to pay for something via a credit card, you'd have a $100 balance on the card. If you then pay $70 cash to the card, there would be $30 remaining. That $30 balance could accrue interest. The timing of that interest charge could vary. The 20% you've quoted is almost certainly \"\"APR,\"\" of which the \"\"A\"\" stands for \"\"annual,\"\" so that 20% would be an annual rate. It makes the most sense, mind you, to keep a minimal balance on a credit card, as the interest rate is higher than most other loans.\"", "title": "" }, { "docid": "318d8f36eb6e2ab8c6c7ecbd948c3e6f", "text": "One important answer is still missing: governments may not be able to do print money because of international agreements. This is in fact a very important reason: it applies to the entire Eurozone. (I admit that many Eurozone countries also not allowed to borrow as much as they do now, but somehow that's considered a far lesser sin).", "title": "" } ]	fiqa
e2d938368b8ad8d6728add755e7e798a	Joint account that requires all signatures of all owners to withdraw money?	[ { "docid": "02a058752d659ec81be42f03e06b6ccb", "text": "Savings accounts have lower fees. If you don't anticipate doing many transactions per month, e.g. three or fewer withdrawals, then I would suggest a savings account rather than a checking account. A joint account that requires both account holder signatures to make withdrawals will probably require both account holders' signature endorsements, in order to make deposits. For example, if you are issued a tax refund by the U.S. Treasury, or any check that is payable to both parties, you will only be able to deposit that check in a joint account that has both persons as signatories. There can be complications due to multi-party account ownership if cashing versus depositing a joint check and account tax ID number. When you open the account, you will need to specify what your wishes are, regarding whether both parties or either party can make deposits and withdrawals. Also, at least one party will need to be present, with appropriate identification (probably tax ID or Social Security number), when opening the account. If the account has three or more owners, you might be required to open a business or commercial account, rather than a consumer account. This would be due to the extra expense of administering an account with more than two signatories. After the questioner specified interest North Carolina in the comments, I found that the North Carolina general banking statutes have specific rules for joint accounts: Any two or more persons may establish a deposit account... The deposit account and any balance shall be as joint tenants... Unless the persons establishing the account have agreed with the bank that withdrawals require more than one signature, payment by the bank to, or on the order of (either person on) the account satisfys the bank's obligation I looked for different banks in North Carolina. I found joint account terms similar to this in PDF file format, everywhere, Joint Account: If an item is drawn so that it is unclear whether one payee’s endorsement or two is required, only one endorsement will be required and the Bank shall not be liable for any loss incurred by the maker as a result of there being only one endorsement. also Joint accounts are owned by you individually or jointly with others. All of the funds in a joint account may be used to repay the debts of any co-owner, whether they are owed individually, by a co-owner, jointly with other co-owners, or jointly with other persons or entities having no interest in your account. You will need to tell the bank specifically what permissions you want for your joint account, as it is between you and your bank, in North Carolina.", "title": "" } ]	[ { "docid": "eeca0a2b4af05100ffe716150b4feb26", "text": "\"I'm pretty sure that the banks here will only allow a joint account with either all citizens or all \"\"foreign resident\"\" or tourists. You may be able to do something with Leumi since they have a US branch in NYC. What many people do (who are US citizens) is open a bank account either at a physical branch or online and then it can be managed all online. Make sure no monthly balance fees or atm fees etc. If you need to transfer money most banks will \"\"buy\"\" a US check (I have done this with Leumi) or you can go to the ATM and pull out a few thousand shekel from the USA account and deposit it right back into the Israeli account. My wife and I did this when we first arrived. Discount Bank seemed to have no fees for pulling money out and a good USD/ILS rate. Just make sure you don't have foreign transaction fees / high rates on the US account. If you need to deposit checks for him you can use the remote deposit feature and just take a picture. בהצלחה!\"", "title": "" }, { "docid": "2931ed836111fe94d3fdb3cbf23826a0", "text": "Do you have signature authority or interest in the account? Then yes. Interest in the account means that you wire $25K to your dad, but the money still belongs to you (I.e.: if you ask for it your dad will give it back to you).", "title": "" }, { "docid": "532ccb785de284ab88f3b35849ce2e55", "text": "No. But the scenario is unrealistic. No bank will give the LLC any loan unless the members personally co-sign to guarantee it. In which case, the members become personally liable in addition to the LLC.", "title": "" }, { "docid": "cd55f90bd71c1fc6fbf7018fd284c21f", "text": "\"Uniform Transfer to Minors Act (UTMA) and Uniform Gift to Minors Act (UGMA) accounts in the United States are accounts that belong to your child, but you can deposit money into. When the child attains his/her majority, the money becomes theirs to spend however they wish. Prior to attaining their majority, a custodian must sign off on withdrawals. Now, they are not foolproof; legally, you can withdraw money if it is spent on the child's behalf, so that can be gamed. What you can do to protect against that is to make another person the custodian (or, perhaps make them joint custodians with yourself, requiring both signatures for withdrawals). UTMA/UGMA accounts do not have to be bank savings accounts; for example, both of my children have accounts at Vanguard which are effectively their college savings accounts. They're invested in various ETFs and similar kinds of investments; you're welcome to choose from a wide variety of options depending on risk tolerance. Typically these accounts have relatively small fees, particularly if you have a reasonable minimum balance (I think USD$10k is a common minimum for avoiding larger fees). If you are looking for something even more secure than a UGMA or UTMA account, you can set up a trust. These have several major differences over the UGMA/UTMA accounts: Some of course consider the second point an advantage, some a disadvantage - we (and Grandma) prefer to let our children make their own choices re: college, while others may not prefer that. Also worth noting as a difference - and concern to think about - in these two. A UGMA or UTMA account that generates income may have taxable events - interest or dividend income. If that's over a relatively low threshhold, about $1050 this year, those earnings will be taxed (on the child's own tax return). If it's over $2100 (this year), those earnings will be taxed at the parents' tax rate (\"\"kiddie tax\"\"). Trusts are slightly different; trusts themselves are taxed, and have their own tax returns. If you do set one of those up, the lawyer who helps you do so should inform you of the tax implications and either hook you up with an accountant or point you to resources to handle the taxes yourself.\"", "title": "" }, { "docid": "8a46ce492ee495a06054dae7c4ee929c", "text": "\"What you describe is called a \"\"partnership\"\" (\"\"General Partnership\"\", more precise). Partnership are unincorporated associations of people with a common goal in mind. Every partner shares the same responsibility and obligations, and the duties and authorizations to act on behalf of the partnership should be written down and signed by all the partners in a contract, which is called \"\"Operating Agreement\"\". With that in place, you (if you're given the authority by the partners) can open a bank account on behalf of the partnership, and allow other partners access to it (with or without signature authority, per the operating agreement). If you're talking about a group of homeowners - you should set up a \"\"Homeowners Association\"\" (HOA). Per applicable state law it would either be a limited partnership or a special kind of incorporated entity. That entity can enter contracts (hire a lawyer, for example) on behalf of all the owners.\"", "title": "" }, { "docid": "79da6c65d434de3aca1f6e2abf11aa5d", "text": "\"You need to consult a lawyer in your area. Generally speaking though, if you breach the T&C, they don't have to follow them either, which means that whatever they were responsible for in those terms and conditions, they're no longer responsible. So if you get hacked, and they can prove you breached T&C by sharing your credentials, they are absolutely off the hook for your financial losses. So if they detect you're in breach, they may record it and not pursue any other action unless/until you have an issue, in which case they say, \"\"they're in breach, see here, here and here.\"\" Or there may be regulations that require they notify you of their detection of the breach. If this sort of regulation exists, I suspect that the notification would also include a termination of all accounts as well. I can also picture situation where a company might have such a policy built into the T&C so that they can steer as clear as possible from any situations involving liability and cyber-crime in the same sentence. My suggestion would be to take the terms and conditions for your banks to some kind of legal clinic and get them to explain the parts that you do not understand.\"", "title": "" }, { "docid": "9a838469fa155163c0b924eaa6f44b0e", "text": "\"Cosigning is explicitly a promise that you will make the payments if the primary signer can not. Don't do it unless you are able to handle the cost and trust the other party will \"\"make you whole\"\" when they can... which means don't do it for anyone you would not lend your money to, since it comes out to about the same level of risk. Having agreed, you're sorta stuck with your ex-friend's problem. I recommend talking to a lawyer about the safest way get out of this. It isn't clear you can even sue the ex-friend at this point.\"", "title": "" }, { "docid": "b2c42bddf3080ea7ae21817338063ec0", "text": "The bank won't let you because: Differences in required account features — Business accounts have different features (many of them legal features) that are required by businesses. For instances: Do you want to be able to deposit cheques that are written out to your business name? You need a business account for that. Your business could be sold. Then it wouldn't be your business, so it wouldn't make sense to put the business account under your personal name. The bank account and the cash it holds is a business asset and should be owned by the business, so when the business is sold the account goes with it. This is especially the case for a corporation that has shareholders, and not a sole proprietorship. For a business, you could also, in theory, assign other people as signing authorities on the business account (e.g. your corporate treasurer), and the individuals performing that role could change over time. Business accounts allow for this kind of use. Market segmentation — The bank has consciously undertaken to segment their product offerings in order to maximize their profit. Market segmentation helps the bottom line. Even if there were zero legal reasons to have separate personal vs. business accounts, banks would still make it their policy to sell different account types according to use because they can make more money that way. Consider an example in another industry: The plain-old telephone company also practices segmentation w.r.t. personal/business. Do you want a telephone line for a business and listed as such in the phone book? You need a business line. Do you want a phone line hooked up at a non-residential address? You need a business line. Here it's clear it is less of a legal issue than with the bank account, and it doesn't matter that the technical features of the phone line may be identical for the basic product offerings within each segment. The phone company has chosen to segment and price their product offerings this way. Q. Why do companies choose to charge some kinds of customers more than others for essentially the same underlying service? A. Because they can.", "title": "" }, { "docid": "96159077e368527db2d43f985f7595bd", "text": "\"Your money in the bank is yours. If you lose your bank card and forget the account number, it's still yours. It's just harder to prove. If your name is Joe Smith, it might be harder to find your bank account and to prove it's yours. If \"\"go to the bank\"\" means walking into a branch of the bank and walking out with your money fifteen minutes later, that's unlikely to happen. More likely they will give you forms to fill in to maximise chances of finding your account, and tell you what evidence to bring to prove that you are the owner of the account.\"", "title": "" }, { "docid": "02c78bcfa77c8f9dce19cef17e2a50db", "text": "It will not affect your tax bracket so long as he files his taxes. It will not affect your credit negatively so long as the joint account takes out no debts. If it does take out debts, then someone would need to pay them to avoid negative credit. Ideally debts should take signatures from both of you (ask the bank). The IRS will not automatically assume that the only reason that two people might have a joint account is illegal activities. If he withdraws money from the account in such a way to cause an overdraft, you might be responsible for it. However, it sounds like he isn't supposed to be withdrawing money from that account. So that's a potential problem but not a guaranteed problem. Make sure that you have the power to close the account without him (so if you break up later, you can take your name off unilaterally). Realize that you might have to pay a little to close the account if he overdraws it. If possible, have the bank refuse overdrafts. Consider a savings account rather than a checking account. The rules may better fit what you want to do. In particular, if you are limited to transfers, that's safer than checks. Schedule a time to talk to someone at the bank about the account. Ask them to leave plenty of time because you have questions. Explain what you want and let them tell you how to structure the account.", "title": "" }, { "docid": "04f81083600e6efd66a27ac1fd14ac8a", "text": "In my experience, this choice is entirely up to the bank itself. There was a time when, given my mothers ATM card I could go to the bank and pull money for her, but the bank has since changed their rules and now they only will allow people listed on the account to access it, card or no card. If the bank is aware of who you are and knows that your friend is not you, they may be skeptical of allowing your friend to withdraw any money, or they might not care, it's at their discretion. If they do not know who either of you are, if your friend has the card and information needed, that will likely be sufficient, unless they ask for identification.", "title": "" }, { "docid": "ca3869dabd29a013aa9458ceadfec2c0", "text": "My answer is with respect to the United States. I have no idea about India's regulatory environment. You are opening yourself up to massive liabilities and problems if you deposit their money in your account. I managed investment accounts as a private investment advisor for years (those with less than 15 clients were not required to register) until Dodd-Frank changed the rules. Thus you would have to register as an advisor, probably needing to take the series 65 exam (or qualifying some other way, e.g. getting your CFP/CFA/etc...). I used a discount broker/dealer (Scottrade) as the custodian. Here's how it works: Each client's account was their own account, and I had a master account that allowed me to bill their accounts and manage them. They signed paperwork making me the advisor on their account. I had very little accounting to handle (aside from tracking basis for taxed accounts). If you take custody of the money, you'll have regulatory obligations. There are always lots of stories in the financial advisor trade publications about advisors who go to jail for screwing their clients. The most common factor: they took custody of the assets. I understand why you want a single account - you want to ensure that each client gets the same results, right? Does each client want the same results? Certainly the tax situation for each is different, yes? Perhaps one has gains and wants to take losses in one year, and the other doesn't. If their accounts are managed separately, one can take losses while the other realizes gains to offset other losses. Financial advisors offer these kinds of accounts as Separately Managed Accounts (SMAs). The advisors on these kinds of accounts are mutual funds managers, and they try to match a target portfolio, but they can do things like realize gains or losses for clients if their tax situation would prefer it. You certainly can't let them put retirement accounts into your single account unless the IRS has you on their list of acceptable custodians. I suggest that you familiarize yourself thoroughly with the regulatory environment that you want to operate under. Then, after examining the pros and cons, you should decide which route you want to take. I think the most direct and feasible route is to pass the Series 65, register as an investment advisor, and find a custodian who will let you manage the assets as the advisor on the account. Real estate is another matter, you should talk to an attorney, not some random guy on the internet (even if he has an MBA and a BS in Real Estate, which I do). This is very much a state law thing.", "title": "" }, { "docid": "14dfd4204061a8a6f575f0f1353fff93", "text": "In my experience, you don't need to endorse a check with a signature to deposit it into your account. You do if you are exchanging the check for cash. Businesses usually have a stamp with their account number on them. Once stamped, those checks are only able to be deposited into that account. Individuals can do the same. I have had issues depositing insurance and government checks in the past that had both my and my wife's name on them. Both of us had to endorse the check to be able to deposit them. I think this was some kind of fraud prevention scheme, so that later one of us couldn't claim they didn't know anything about the check.", "title": "" }, { "docid": "a94776ff15107b4078eabd2f71906a41", "text": "\"Welcome to the 21st century, the New Order. Forget all that legal mumbo jumbo you may have read back in law school in the 1960s about commercial code. Its all gone now. Now we have Check 21 and the Patriot Act !!! Basically what this means is that because some Arab fanatics burned down the World Trade Center, the US government and its allied civilian banking company henchmen now have total control and dictatorship over \"\"your\"\" money, which is no longer really money, but more like a \"\"credit\"\" to your account with THEM which they can do with what they want. Here are some of the many consequences of the two aforementioned acts: (1) You can no longer sue a bank for mishandling your money (2) All your banking transaction information is the joint property of the bank, its \"\"affiliates\"\" and the US Treasury (3) You can no longer conduct private monetary transactions with other people using a bank as your agent; you can only request that a bank execute an unsecured transaction on your behalf and the bank has total control over that transaction and the terms on which occurs; you have no say over these terms and you cannot sue a bank over any financial tort on you for any reason. (4) All banks are required to spy on you, report any \"\"suspicious\"\" actions on your part, develop and run special software to detect these \"\"suspicious actions\"\", and send their employees to government-run educational courses where they are taught to spy on customers, how to report suspicious customers and how to seize money and safe deposit boxes from customers when the government orders them to do so. (5) All banks are required to positively identify everyone who has a bank account or safe deposit box and report all their accounts to the government. (6) No transactions can be done anonymously. All parties to every banking transaction must be identified and recorded. So, from the above it should be clear to (if you are a lawyer) why no endorsement is present. That is because your check is not a negotiable instrument anymore, it is merely a request to the bank to transfer funds to the Treasury. The Treasury does not need to \"\"endorse\"\" anything. In fact, legally speaking, the Treasury could simply order your bank to empty your account into theirs, and they actually do this all the time to people they are \"\"investigating\"\" for supposed crimes. You don't need to endorse checks you receive either because, as I said above, the check is no longer a negotiable instrument. Banks still have people do it, but it is just a pro forma habit from the old days. Since you can't sue the bank, the endorsement is pretty meaningless because it cannot be challenged in court anyway. You could probably just write \"\"X\"\" there and they would deposit it.\"", "title": "" }, { "docid": "cda7eea9124be207c47508a4ae82b316", "text": "\"we can then start taking penalty free withdrawals from it? There's no \"\"we\"\" in IRA. There's \"\"I\"\". That stands for \"\"Individual\"\". So your wife's age has no influence whatsoever on your ability to make qualified distributions from your IRA. The reason courts order distributions from IRAs is due to the community property laws of various States or other considerations that make spouses entitled to the amounts in the IRAs. However, you're talking about family law here, not tax law. For Federal tax purposes, a distribution ordered by the court doesn't trigger penalty (but is taxable), but any other distribution has to follow the regular qualification criteria.\"", "title": "" } ]	fiqa
e308340c8064ce94411c52c55d1e89bf	I am trying to start a “hedge fund,” and by that, I really just mean I have a very specific and somewhat simple investment thesis that I want to	[ { "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": "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": "d356e065a65de9c35e9d108e23d322f2", "text": "2 + 20 isn't really a investment style, more of a management style. As CTA I don't have specific experience in the Hedge Fund industry but they are similar. For tech stuff, you may want to check out Interactive Brokers. As for legal stuff, with a CTA you need to have power of attorney form, disclosure documents, risk documents, fees, performance, etc. You basically want to cover your butt and make sure clients understand everything. For regulatory compliance and rules, you would have to consult your apporiate regulatory body. For a CTA its the NFA/CFTC. You should look at getting licensed to provide crediabilty. For a CTA it would be the series 3 license at the very least and I can provide you with a resource for study guides and practice test taking for ALL licenses. I can provide a brief step by step guide later on.", "title": "" }, { "docid": "d90eee831074d1ae1186eafdfeef3179", "text": "\"One topic that I've been trying to learn more about is the affects of the low interest rates on businesses and the economy from quantitative easing. Due to the amount of \"\"free money\"\" corporations have received over the last 5 years there has been a few interesting consequences. There are several corporations that have borrowed money at little to no interest with the feds intentions of seeing it go back into the economy however instead corporations have used it to buy back stock which was not necessarily the plan in the first place. You could definitely have a unique thesis written about something within that flow of funds. If that makes no sense apologies stupid undergrad here.\"", "title": "" }, { "docid": "100c16089b98c6da4bdec9e3d52ba91b", "text": "\"The raw question is as follows: \"\"You will be recommending a purposed portfolio to an investment committee (my class). The committee runs a foundation that has an asset base of $4,000,000. The foundations' dual mandates are to (a) preserve capital and (b) to fund $200,000 worth of scholarships. The foundation has a third objective, which is to grow its asset base over time.\"\" The rest of the assignment lays out the format and headings for the sections of the presentation. Thanks, by the way - it's an 8 week accelerated course and I've been out sick for two weeks. I've been trying to teach myself this stuff, including the excel calculations for the past few weeks.\"", "title": "" }, { "docid": "1bc74e62ca904c2fa211d9e6970e0eab", "text": "Technically a hedge fund is nothing more than a private investment partnership. I was my own full time employee, with investment partners. I traded for years, and own(ed) another business which was already more than paying all my bills, so why not start a hedge fund, doing something else I loved to generate additional income, and hopefully, someday, make it to the big leagues?", "title": "" }, { "docid": "45b1a38690b63fd53c9704a2b7767d55", "text": "\"Assuming this is real, the Q's (QQQ) is an ETF that tracks the Nasdaq-100. It would be the approximate equivalent of saying \"\"Just put your money in SPY\"\" or any other ETF. I didn't see the thread in question (looks like it was in /r/personalfinance not /r/finance; so, not the \"\"rules\"\" here), but my guess is people down voted you (and you were eventually removed by the mod) for \"\"low effort\"\", which simply stating \"\"Put your money in an ETF\"\" could possibly be construed as. That said, the top rated comment in that thread did suggest putting some portion of the funds in an ETF, it's just rarely an appropriate answer for all of someone's investment capital.\"", "title": "" }, { "docid": "8a40781c6cc6216df49c39206af5610c", "text": "\"Thanks for the info, things are starting to make more sense now. For some reason I've always neglected learning about investments, now that Im in a position to invest (and am still fairly young) I'm motivated to start learning. As for help with TD Ameritrade, I was looking into Index Funds (as another commenter mentioned that I should) on their site and am a little overwhelmed with the options. First, I'm looking at Mutual Funds, going to symbol lookup and using type = \"\"indeces\"\". I'm assuming that's the same thing as an \"\"Index Fund\"\" but since the language is slightly different I'm not 100% sure. However, at that point I need some kind of search for a symbol in order to see any results (makes sense, but I dont know where to start looking for \"\"good\"\" index funds). So my first question is: If I FIND a good mutual fund, is it correct to simply go to \"\"Buy Mutual Funds\"\" and find it from there? and if so, my second question is: How do I find a good mutual fund? My goal is to have my money in something that will likely grow faster than a savings account. I don't mind a little volatility, I can afford to lose my investment, I'd plan on leaving my money in the fund for a several years at least. My last question is: When investing in these types of funds (or please point me in another direction if you think Index Funds aren't the place for me to start) should I be reinvesting in the funds, or having them pay out dividends? I would assume that reinvesting is the smart choice, but I can imagine situations that might change that in order to mitigate risk...and as I've said a few times in this thread including the title, I'm a complete amateur so my assumptions aren't necessarily worth that much. Thanks for the help, I really appreciate all the info so far.\"", "title": "" }, { "docid": "6d6f870f48d0f4bf8e0c576af96e9095", "text": "\"I'd argue the two words ought to (in that I see this as a helpful distinction) describe different activities: \"\"Investing\"\": spending one's money in order to own something of value. This could be equipment (widgets, as you wrote), shares in a company, antiques, land, etc. It is fundamentally an act of buying. \"\"Speculating\"\": a mental process in which one attempts to ascertain the future value of some good. Speculation is fundamentally an act of attempted predicting. Under this set of definitions, one can invest without speculating (CDs...no need for prediction) and speculate without investing (virtual investing). In reality, though, the two often go together. The sorts of investments you describe are speculative, that is, they are done with some prediction in mind of future value. The degree of \"\"speculativeness\"\", then, has to be related to the nature of the attempted predictions. I've often seen that people say that the \"\"most speculative\"\" investments (in my use above, those in which the attempted prediction is most chaotic) have these sorts of properties: And there are probably other ideas that can be included. Corrections/clarifications welcome! P.S. It occurs to me that, actually, maybe High Frequency Trading isn't speculative at all, in that those with the fastest computers and closest to Wall Street can actually guarantee many small returns per hour due to the nature of how it works. I don't know enough about the mechanics of it to be sure, though.\"", "title": "" }, { "docid": "43365c974a9498c87b911d593b9ced47", "text": "Mutual Funds are relatively evaluated and this is likely what you want. Your answer is likely the information ratio. If your interested, Active Portfolio Management by Grinold, Kahn is probably a good book to read. That being said, hedge funds will generally have absolute mandates and will be more likely to use a sharpe ratio.", "title": "" }, { "docid": "a146fdf08da2e1eb362314864ea79faf", "text": "All of this makes perfect sense and I can definitely see the logic behind it. But I don't think Hedge Funds are the way to go. The real money lies in real estate, more specifically land-banking. The problem, though, is that a lot of land-banking investments are really just scams and it's really hard to tell which ones are real and which ones are fake.", "title": "" }, { "docid": "5b683b5c56dadebd966fea31964fadf1", "text": "\"One alternative to bogleheadism is the permanent portfolio concept (do NOT buy the mutual fund behind this idea as you can easily obtain access to a low cost money market fund, stock index fund, and bond fund and significantly reduce the overall cost). It doesn't have the huge booms that stock plans do, but it also doesn't have the crushing blows either. One thing some advisers mention is success is more about what you can stick to than what \"\"traditionally\"\" makes sense, as you may not be able to stick to what traditionally makes sense (all people differ). This is an excellent pro and con critique of the permanent portfolio (read the whole thing) that does highlight some of the concerns with it, especially the big one: how well will it do in a world of high interest rates? Assuming we ever see a world of high interest rates, it may not provide a great return. The authors make the assumption that interest rates will be rising in the future, thus the permanent portfolio is riskier than a traditional 60/40. As we're seeing in Europe, I think we're headed for a world of negative interest rates - something in the past most advisers have thought was very unlikely. I don't know if we'll see interest rates above 6% in my lifetime and if I live as long as my father, that's a good 60+ years ahead. (I realize people will think this is crazy to write, but consider that people are willing to pay governments money to hold their cash - that's how crazy our world is and I don't see this changing.)\"", "title": "" }, { "docid": "ed8ac5cafaa4a0d9cf5ad7b74ff04938", "text": "\"As other people have posted starting with \"\"fictional money\"\" is the best way to test a strategy, learn about the platform you are using, etc. That being said I would about how Fundamental Analysis works . Fundamental Analysis is the very basis of learning about an assets true value is priced. However in my humble opinion, I personally just stick with Index funds. In layman's terms Index Funds are essentially computer programs that buy or sell the underlying assets based on the Index they are associated with in the portion of the underlying index. Therefore you will usually be doing as good or as bad as the market. I personally have the background, education, and skillsets to build very complex models to do fundamental analysis but even I invest primarily in index funds because a well made and well researched stock model could take 8 hours or more and Modern Portfolio Theory would suggest that most investors will inevitably have a regression to the mean and have gains equal to the market rate or return over time. Which is what an index fund already does but without the hours of work and transaction cost.\"", "title": "" }, { "docid": "03fae21fae9758209c96b5f5b74ad594", "text": "Man who made fortune as hedge fund, active investor decries passive investment. Shocker. Even if passive investment was a bad thing, which I don't think it is, wouldn't it result in a less efficient allocation of capital, allowing for more opportunities for active investors?", "title": "" }, { "docid": "3947d4b6cc5d4b0c7caa6eab42a99285", "text": "Keep in mind that it's a cliche statement used as non-controversial filler in articles, not some universal truth. When you were young, did you mom tell you to eat your vegetables because children are starving in Ethiopia? This is the personal finance article equivalent of that. Generally speaking, the statement as an air of truth about it. If you're living hand to mouth, you probably shouldn't be thinking about the stock market. If you're a typical middle class individual investor, you probably shouldn't be messing around with very speculative investments. That said, be careful about looking for some deeper meaning that just isn't there. If the secret of investment success is hidden in that statement, I have a bridge to sell you that has a great view of Brooklyn.", "title": "" }, { "docid": "cedbdc99a922a2cb2d174e2739d79074", "text": "The Khan Academy has a huge series on finance (Sal Khan used to work at a hedge fund before he started his magnum opus): http://www.khanacademy.org/#core-finance Some are pretty basic stuff, but he does have some interesting commentary and snippets of more interesting topics. They're all very low-commitment and bite-sized.", "title": "" } ]	fiqa
7dd53eb10bb57260cac5066373ca5ac4	How should minor children be listed as IRA beneficiaries?	[ { "docid": "8459f004f4e0af10ecbb3300600c0704", "text": "\"First - for anyone else reading - An IRA that has no beneficiary listed on the account itself passes through the will, and this eliminates the opportunity to take withdrawals over the beneficiaries' lifetimes. There's a five year distribution requirement. Also, with a proper beneficiary set up on the IRA account the will does not apply to the IRA. An IRA with me as sole beneficiary regardless of the will saying \"\"all my assets I leave to the ASPCA.\"\" This is also a warning to keep that beneficiary current. It's possible that one's ex-spouse is still on IRA or 401(k) accounts as beneficiary and new spouse is in for a surprise when hubby/wife passes. Sorry for the tangent, but this is all important to know. The funneling of a beneficiary IRA through a trust is not for amateurs. If set up incorrectly, the trust will not allow the stretch/lifetime withdrawals, but will result in a broken IRA. Trusts are not cheap, nor would I have any faith in any attorney setting it up. I would only use an attorney who specializes in Trusts and Estate planning. As littleadv suggested, they don't have to be minors. It turns out that the expense to set up the trust ($1K-2K depending on location) can help keep your adult child from blowing through a huge IRA quickly. I'd suggest that the trust distribute the RMDs in early years, and a higher amount, say 10% in years to follow, unless you want it to go just RMD for its entire life. Or greater flexibility releasing larger amounts based on life events. The tough part of that is you need a trustee who is willing to handle this and will do it at a low cost. If you go with Child's name only, I don't know many 18/21 year old kids who would either understand the RMD rules on IRAs or be willing to use the money over decades instead of blowing it. Edit - A WSJ article Inherited IRAs: a Sweet Deal and my own On my Death, Please, Take a Breath, an article that suggests for even an adult, education on how RMDs work is a great idea.\"", "title": "" }, { "docid": "bd6a203f0f20f063ccea42c51a938996", "text": "\"I think that \"\"better\"\" is up to a discussion, but the difference is that while in trust you can control the money after your death in some way - giving it directly to children means you have no such control. I.e.: in trust you can stipulate that the children will be able to spend the money under certain terms or in certain ways (for example - for college, only after getting married, no more than 10% of the value a year, etc), giving their names as the beneficiaries means that they get the money and can do with it whatever they please. BTW: \"\"Minor\"\" has nothing to do with it. They don't have to be minors, or your children at all.\"", "title": "" }, { "docid": "0697788dca2daa7c13f290a79f500893", "text": "I would like to bring up some slightly different points than the ones raised in the excellent answers from JoeTaxpayer and littleadv. The estate can be the beneficiary of an IRA -- indeed, as has been pointed out, this is the default beneficiary if the owner does not specify a beneficiary -- but a testamentary trust cannot be the designated beneficiary of an IRA. A testamentary trust that meets the requirements laid out on page 36 of Publication 590 is essentially a pass-through entity that takes distributions from the IRA and passes them on to the beneficiaries. For the case being considered here of minor beneficiaries, the distributions from the IRA that pass through the trust must be sent to the legal guardians (or other custodians) of the minors' UTMA accounts, and said guardians must invest these sums for the benefit of the minors and hand the monies over when the minors reach adulthood. Minors are not responsible for their support, and so these monies cannot be used by the legal guardian for oaying the minors' living expenses except as provided for in the UTMA regulations. When the minors become adults, they get all the accumulated value on their UTMA accounts, and can start taking the RMDs personally after that, and blowing them on motorcycles if they wish. Thus, the advantage of the testamentary trust is essentially that it lets the trustee of the trust to decide how much money (over and above the RMD) gets distributed each year. The minors and soon-to-be young adults cannot take the entire IRA in a lump sum etc but must abide by the testamentary trustee's ideas of whether extra money (over and above the RMD) should be taken out in any given year. How much discretion is allowed to the trustee is also something to be thought through carefully. But at least the RMD must be taken from the IRA and distributed to the minors' UTMA accounts (or to the persons as they reach adulthood) each year. Regardless of whether the Traditional IRA goes to beneficiaries directly or through a testamentary trust, its value (as of the date of death) is still included in the estate, and estate tax might be due. However, beneficiaries can deduct the portion of estate tax paid by the estate from the income tax that they have to pay on the IRA withdrawals. Estate planning is very tricky business, and even lawyers very competent in estate and trust issues fall far short in their understanding of tax law, especially income tax law.", "title": "" } ]	[ { "docid": "8cf516a6018b9748b2cbfb5d09df5214", "text": "The most important thing is to keep in mind the deadline. If you want to have it count for 2016, you need to open the account and transfer the funds by tax day. Don't wait until the last day to do it, or you could run out of time. Setting up the initial account, and them verifying your information and transferring the money could take a few days. First decide how much of a lump sum you want to invest initially. This will determine some of your options because the mutual fund will have a minimum initial investment. Many of the funds will allow subsequent investments to be smaller. The beauty of a IRA or Roth IRA is that if the fund you want is out of reach for this initial investment in a few years you can transfer the money into another fund or even another fund family without having to worry about tax issues. Now decide on your risk level and you time horizon. Because you said you are student and you want a Roth IRA, it is assumed that you will not need this money for 4+ decades; so you can and should be willing to be a little more risky. As NathanL said an index fund is a great idea. Many also advise an aged based fund. My kids found that when they made their initial investments the age based funds were the only one with a low enough initial investment for their first few years. Then pick a fund family based on the general low fees, and a large mix of options. The best thing is that in a few years as you have more money and more options, you can adjust your choices.", "title": "" }, { "docid": "bd3533b04acbb4092451191540859a7c", "text": "You can open a 529 plan for your child. The minimum contribution for my state is only $25. You can setup automatic deposits, or deposit money only a few times a year; or both. You can save money on state taxes, and the money grows tax free if the money is used for educational expenses. They generally have age based portfolios, but some also let you pick from a variety of portfolios.", "title": "" }, { "docid": "ad483c1c2fe5cca8043fa37dd1a07324", "text": "In the US, an opposite-sex spouse who is a citizen as well, can receive an unlimited inheritance with no tax due from the estate. IRAs and retirement accounts which were pretax accounts, are inherited by a spouse who can then either treat the accounts as her own, i.e. even co-mingle with current IRAs, or treat as inherited IRA, and begin RMDs. In which case tax is due to the extent the money wasn't already taxed. I see the edits above. No tax should have been due. Mom can gift the kids up to $14,000 per year per kid with no paperwork at all. And another $14K to the kid's spouses or grandchildren. Above this number, a form 709 is used to tap into the lifetime exclusion. As it stands now, it's unclear why any tax would have been due in the first place.", "title": "" }, { "docid": "701bdcfae7c89d8354151051c10d5239", "text": "IANAL, nor am I a financial professional. However, I've just looked into this because of a relative's death, and I have minor children. I am in the US. First, a named beneficiary on many accounts means that any proceeds are kept out of the estate and do not have to go through probate. That usually means that they're available much more quickly. Second, a beneficiary statement trumps a will. The account may pay out long before a will is even filed with the probate court. Third, you can name a trust as the beneficiary. In this case, because you want to make sure the money goes to your children, that's likely your best option.", "title": "" }, { "docid": "4980192c3f779c441f64ac1c8d84fc17", "text": "A trust is a financial arrangement to put aside money over a period of time (typically years), for a specific purpose to benefit someone. Two purposes of trusts are 1) providing for retirement and 2) providing for a child or minor. There are three parties to a trust: 1) A grantor, the person who establishes and funds a trust. 2) A beneficiary, a person who receives the benefits. 3) a trustee, someone who acts in a fiduciary capacity between the grantor and beneficiary. No one person can be all three parties. A single person can be two of out those three parties. A RETIREMENT trust is something like an IRA (individual retirement account). Here, a person can be both the grantor (contributor) to the IRA, and the beneficiary (a withdrawer after retirement). But you need a bank or a broker to act as a fiduciary, and to handle the reporting to the IRS (Internal Revenue Service). Pension plans have employers as grantors, employees as beneficiaries, and (usually) a third party as trustee. A MINORS' trust can be established under a Gift to the Minors' Act, or other trust mechanisms, such as a Generation Skipping Trust. Here, a parent may be both grantor and trustee (although usually a third party is a trustee). A sum of money is put aside over a period of years for the benefit of a minor, for a college education, or for the minor's attaining a certain age: a minimum of 18, sometimes 21, possibly 25 or even older, depending on when the grantor feels that the minor is responsible enough to handle the money.", "title": "" }, { "docid": "4c9533ac83e1214c5d5cca2cbef4e8ff", "text": "According to the link below, it does appear that you must take an RMD, or Required Minimum Distribution, from your IRA at age 70½, or face a 50% penalty of the RMD AMOUNT that has NOT been taken, which is going to be much less than 50% of your entire account balance. Why specifically this happens would be opinion based on my interpretation of the reasoning behind those that enacted the law. I can tell you penalties like this are used to encourage behavior - you can't just leave your money in a tax-free account forever. The IRA is meant to help you build your savings for retirement, and at age 70½ you should be ready for retirement. This means you must begin withdrawing the money - but that doesn't mean you have to spend it. In the link below, there are outlines on what you can do to satisfy the required minimum distribution. As it specifies, you can take one lump sum, or spread it out over multiple payments, and there's a calculator to identify what your RMD will be. http://www.schwab.com/public/schwab/investing/retirement_and_planning/understanding_iras/withdrawals_and_distributions/age_70_and_a_half_and_over As noted in the linked page, you DO NOT have to take an RMD on a Roth IRA. If this is important to you, you may want to consider Rolling Over your current IRA to a Roth.", "title": "" }, { "docid": "5980be7c0d9e69f125b921f78cbe28a5", "text": "Distributions from an inherited IRA will be taxed as ordinary income and there are required minimum distributions for the inherited account. Assuming you were 55 at the time of your mother's death, your life expectancy according to the IRS is 29.6 years. Your required yearly distributions on $200,000 would be roughly $6800. For each year that you didn't withdraw that, you would owe a 50% penalty of the distribution amount (~$3400). That's probably better than the tax hit you would take if you pulled it all in as income in a 5 year window (ie. all right now since you're at the end of the window).", "title": "" }, { "docid": "397fc9fe5fe7c3c5b0faf02eb5db5b07", "text": "\"The biggest issue is determining how committed you are to this \"\"niece\"\". When setting up an account (529/prepaid tuition/Universal Gift to Minors/Coverdell/Roth) you are making a commitment that locks you into some provisions. They all have different amounts of control, and can impact taxes and financial aid. The states involved can even be important. Some will give tax breaks. How they handle state vs private schools and out of state schools will also differ. The problem is that it is hard enough knowing what a kid 10-18 years from now is going to want to do, or be able to do. The government has crafted some provisions to handle these complex issues: scholarships, going to a service academy, going to a private school, death of the child...what I don't think they have covered is ending the relationship. The best option is to set aside the money in a regular account, with no special tax provisions; and then when they are close to graduating determine the best way to handle the transfer. Yes you may have given up some tax benefits, but it will still be your money. You will have to determine how this money will be transferred, but that will depend on the tax rules, and financial aid policies in the future. Options include gift to niece, direct payment, graduation gift...\"", "title": "" }, { "docid": "e409101aacee5b31d46831cc1500c13c", "text": "For an inherited IRA, there are a few options for taking distributions. You clearly haven't done option 1. It sounds like you haven't done option 2 because otherwise you would probably know how it is taxed. That leaves you with option 3. With option 3, you must distribute the entire amount within 5 years. For you, I'm not sure if that means you need to distribute the entire amount by the end of 2016 or 2017. If it was 2016, then you'll probably have to pay penalties. Distributions from an inherited IRA are taxed as ordinary income regardless of your age or the distribution option you select.", "title": "" }, { "docid": "cd55f90bd71c1fc6fbf7018fd284c21f", "text": "\"Uniform Transfer to Minors Act (UTMA) and Uniform Gift to Minors Act (UGMA) accounts in the United States are accounts that belong to your child, but you can deposit money into. When the child attains his/her majority, the money becomes theirs to spend however they wish. Prior to attaining their majority, a custodian must sign off on withdrawals. Now, they are not foolproof; legally, you can withdraw money if it is spent on the child's behalf, so that can be gamed. What you can do to protect against that is to make another person the custodian (or, perhaps make them joint custodians with yourself, requiring both signatures for withdrawals). UTMA/UGMA accounts do not have to be bank savings accounts; for example, both of my children have accounts at Vanguard which are effectively their college savings accounts. They're invested in various ETFs and similar kinds of investments; you're welcome to choose from a wide variety of options depending on risk tolerance. Typically these accounts have relatively small fees, particularly if you have a reasonable minimum balance (I think USD$10k is a common minimum for avoiding larger fees). If you are looking for something even more secure than a UGMA or UTMA account, you can set up a trust. These have several major differences over the UGMA/UTMA accounts: Some of course consider the second point an advantage, some a disadvantage - we (and Grandma) prefer to let our children make their own choices re: college, while others may not prefer that. Also worth noting as a difference - and concern to think about - in these two. A UGMA or UTMA account that generates income may have taxable events - interest or dividend income. If that's over a relatively low threshhold, about $1050 this year, those earnings will be taxed (on the child's own tax return). If it's over $2100 (this year), those earnings will be taxed at the parents' tax rate (\"\"kiddie tax\"\"). Trusts are slightly different; trusts themselves are taxed, and have their own tax returns. If you do set one of those up, the lawyer who helps you do so should inform you of the tax implications and either hook you up with an accountant or point you to resources to handle the taxes yourself.\"", "title": "" }, { "docid": "6aa022f401826c82028f3335f5cd8c4d", "text": "I'm going to give the checkmark to Joe, but I wanted to convey my personal experience. I bank with TD in New Jersey and was informed by the teller that I simply needed to endorse the check myself and indicate Parent of Minor. I cannot attest if other banks will accept this, but it at least works for TD and my situation in particular.", "title": "" }, { "docid": "da86b2a6326a363f8c2b145ab436c8c8", "text": "\"First of all, since you're 16 - you will not invest in anything. You cannot, you're a minor. You cannot enter contracts, and as such - you cannot transact in property. Your bank accounts are all UGMA accounts. I.e.: your guardian (or someone else who's the trustee on the account) will be the one transacting, not you. You can ask them to do trades, but they don't have to. They must make decisions in your best interest, which trades may not necessarily be. If however they decide to make trades, or earn interest, or make any other decision that results in gains - these are your gains, and you will be taxed on them. The way taxes work is that you're taxed on income. You're free to do with it whatever you want, but you're taxed on it. So if you realized gains by selling stocks, and reinvested them - you had income (the gains) which you did with whatever you felt like (reinvested). The taxman doesn't care what you did with the gains, the taxman cares that you had them. For losses it is a bit more complicated, and while you can deduct losses - there are limitations on how much you can deduct, and some losses cannot be deducted at all when realized (like wash sale losses or passive activity losses). When you have stock transactions, you will probably need to file a tax return reporting the transactions and your gains/losses on them. You may end up not paying any tax at all, but since the broker is reporting the transactions - you should too, if only to avoid IRS asking why you didn't. This, again, should be done by your guardian, since you personally cannot legally sign documents. You asked if your gains can affect your parents' taxes. Not exactly - your parents' taxes can affect you. This is called \"\"Kiddie Tax\"\" (unofficially of course). You may want read about it and take it into account when discussing your investments with your guardian/parents. If kiddie tax provisions apply to you - your parents should probably discuss it with their tax adviser.\"", "title": "" }, { "docid": "8652690b85960261fc5a633ff007bb28", "text": "The deposit slip at the institution that keeps your Roth IRA should have a place where you can designate the tax year the contribution should apply to.", "title": "" }, { "docid": "6a7ad0dfe6e58a699a893680ecdf1566", "text": "\"They may be confused. The combination of \"\"my wife received stock when younger\"\" and \"\"her father just died\"\" leaves questions. A completed gift, when she was a kid, means she has a basis (cost) same as the original owner of that stock. This may need to be researched. The other choice is that she gets a price based on the date of dad's death, a stepped up basis, if it was his, but she got it when he passed. No offense to them, but brokers are not always qualified to offer tax advice. How/when exactly did she get to own the stock. Upon second reading it appears I answered this from a tax perspective. You seem to have issues of ownership. What exactly does the broker tell you? In whose name is the statement for the account holding these shares? Scott, saw your update. For the accounts I have for my 13 year old, I am custodian, but the tax ID is her social security number. When 21, she doesn't need my permission to sell anything, just valid ID. What exactly does the broker tell her?\"", "title": "" }, { "docid": "46f47d77f54a1225e0d71c751e5a7c88", "text": "In the US, a surviving family member that inherits the entire property may also assume the mortgage. If the new mortgagee fails to uphold the terms of the mortgage (i.e. make timely payments), the mortgagor can begin foreclosure proceedings. There is generally no requirement to pay off the mortgage quickly. This is obviously the simple case where one person inherits the entire property. If the estate is split and no one person inherits the house, or if the house is left to a non-relative, things get more complicated. Effectively in that case the house is either sold to pay off the mortgage or the inheritor needs to take out a new mortgage to pay off the old one.", "title": "" } ]	fiqa
7cbcb660f24334601de3db2175f24564	What could be the harm in sharing my American Express statements online?	[ { "docid": "334b64dd9b69e5dcffb441f922e147ed", "text": "\"American Express is great for this use case -- they have two user roles \"\"Account Agent\"\" and \"\"Account Manager\"\" which allow you to designate logins to review your account details or act on your behalf to pay bills or request service. This scheme is designed for exactly what you are doing and offers you more security and less hassle. More details here.\"", "title": "" }, { "docid": "8dec97805d71df6a1e4966b5cb02aa13", "text": "\"If someone gains access to these data, he could use social engineering approach to impersonate you - i.e. call the American Express and ask tell he he is you and he lost the access to the account and he needs the access to be reset and sent to certain email, and if they doubt it's you he would send them the statement data, even on company letterhead (which he would be able to fake since he has the data from the statements, and AE has no idea how the authentic letterhead looks like). He could also do the opposite trick - like calling your assistant or even yourself and saying something like \"\"I'm from American Express, calling about the transaction at this-and-this date and this-and-this time, this amount, please confirm you are {your name} and your address is {your address}, I need to confirm something\"\" - which would make it appear as he is really from AE since he knows all these details - and then ask you some detail he's missing \"\"for security\"\" - like your birth date or last digits of SSID or anything like that - and then use these details to impersonate you to AE. So putting all this info together where it can be accessed by strangers does have risks. It may not work out if both you and AE personnel are vigilant and follow instructions to the letter, but we know it not always so.\"", "title": "" }, { "docid": "7961bf8b2194c12d5745e927e5942934", "text": "Call me overly paranoid, but letting unknown people know your charges and your personal information is asking for trouble. They know who you are and how to find you and how much money you typically make. If they are decent people - okay, but otherwise they have good ground for comitting a crime against you - blackmail you, con you, target thieves on you, steal your identity, anything else which you won't like if it happens. And it has noting to do with being from Philippines - disonest people are everywhere. Crimes happen all the time, just the less you expose yourself the less likely a crime will be committed against you. My suggestion would be to share as little financial and personal data as possible, especially to share as little actual money figures as possible. Also see this question.", "title": "" }, { "docid": "9410aac2831c33bba5318245fae862a3", "text": "\"As a person who has had several part time assistants in the past I will offer you a simple piece of advise that should apply regardless of what country the assistant is located. If you have an assistant, personal or business, virtual or otherwise, and you don't trust that person with this type of information, get a different assistant. An assistant is someone who is supposed to make your life easier by off loading work. Modifying your records before sending them every month sounds like you are creating more work for yourself not less. Either take the leap of faith to trust your assistant or go somewhere else. An assistant that you feel you have to edit crucial information from is less than useful. That being said, there is no fundamental reason to believe that an operation in the Philippines or anywhere else is any more or less trustworthy than an operation in your native country. However, what is at issue is the legal framework around your relationship and in particular your recourse if something goes wrong. If you and your virtual assistant are both located in the US you would have an easier time collecting damages should something go wrong. I suggest you evaluate your level of comfort for risk vs. cost. If you feel that the risk is too high to use an overseas service versus the savings, then find someone in the states to do this work. Depending on your needs and comfort you might want to seek out a CPA or other licensed/bonded professional. Yes the cost might be higher however you might find that it is worth it for your own piece of mind. As a side note you might even consider finding a local part-time assistant. This can often be more useful than a virtual assistant and may not cost as much as you think. If you can live without someone being bonded. (or are willing to pay for the bonding fee) yourself, depending on your market and needs you may be able to find an existing highly qualified EA or other person that wants some after hours work. If you are in a college town, finance, accounting or legal majors make great assistants. They will usually work a couple hours a week for \"\"beer money\"\", they have flexible schedules and are glad to have something pertinent to their degree to put on their resume when they graduate. Just be prepared to replace them every few years as they move on to real jobs.\"", "title": "" } ]	[ { "docid": "013e7bbdcf2f60f8c14ed6aeb7d90a95", "text": "\"This is most likely protecting Square's relationship with Visa/Mastercard/AMEX/etc. Credit card companies typically charge their customers a much higher interest rate with no grace period on cash advances (withdrawals made from an ATM using a credit card). If you use Square to generate something that looks like a \"\"merchandise transaction\"\" but instead just hand over a wad of banknotes, you're forcing the credit card company to apply their cheaper \"\"purchases\"\" interest rate on the transaction, plus award any applicable cashback offers†, etc. Square would absolutely profit off of this, but since it would result in less revenue for the partner credit card companies, that would quickly sour the relationship and could even result in them terminating their agreements with Square altogether. † This is the kind of activity they are trying to prevent: 1. Bill yourself $5,000 for \"\"merchandise\"\", but instead give yourself cash. 2. Earn 1.5% cashback ($75). 3. Use $4,925 of the cash and a $75 statement credit to pay your credit card statement. 4. Pocket the difference. 5. Repeat. Note, the fees involved probably negate any potential gain shown in this example, but I'm sure with enough creative thinking someone would figure out a way to game the system if it wasn't expressly forbidden in the terms of service\"", "title": "" }, { "docid": "5823db14aaace486dab89c419822af6d", "text": "If you go to a grocery store and purchase retail gift cards along with other products, and you pay with a credit card, your credit card company generally does not know what you spent the money on; they don't get an itemized receipt.* If this is the case with your rewards card, then yes, you would get the cashback reward on the gift cards, because all the credit card company knows is that you spent $100 at the grocery store; they don't know (or care, really) that $50 of it was for an Olive Garden gift card. This, of course, should be fairly easy to test. Buy the gift card, wait for your statement, and see if they included the purchase when calculating your rewards. * Note: I don't have an American Express card, but from some quick googling I see that it is possible that American Express does actually receive itemized billing details on your purchases from some merchants. If your grocery store is sending this data to AmEx, it is possible that the gift cards could be excluded from rewards. But again, I suggest you just test it out and see.", "title": "" }, { "docid": "a34e9337f07354d312028fd984a24ae9", "text": "That all makes sense, but all of those things are the responsibility of the cardholder. If you want to pay off your balance, anything quoted would obviously not include any transaction yet to post. The problem is a creditor refusing to give the balance AND refusing to take a payment for an amount over the previous statement balance. This is essentially forcing the customer to pay more interest after they declare their intent to pay the full amount. Good points, but I don't believe those were factors in this case.", "title": "" }, { "docid": "fcc99ce53784564e60c8529112455a1e", "text": "You seem overly fixated on dead tree documentation of purchases. They are deducting this from your account monthly - the mere fact that the money was taken is enough to prove in court that they have you on their books and to hold them to paying out said insurance. The email copies is actually a better way to organize receipts in most cases (can't be destroyed as easily, etc.) You can cancel the insurance - but don't just stop paying (you'd owe them money then). I foresee increasing difficulty navigating the 21st century for you unless you can get past this concern about physical receipts. I doubt other companies would do much better. FWIW, I live in the continental US. I don't know how different the Philippines is with regard to moving everything to digital", "title": "" }, { "docid": "10fb3876dfd56ac3b8ae39c4aaf46346", "text": "Do you need it? It doesn't sound like it - you seem to be able to manage with just the cards you have. Will it hurt anything? Probably not either, unless it entices you to spend more than you make. Another downside might be that you would spend more than you normally would just to have activity on every card. So all in all, I don't see much upside.", "title": "" }, { "docid": "306bb354eb7a9ffb5fae3393a9007d2d", "text": "\"Others have already commented on the impact of anything which dissuades merchants from raising possible breaches, so I won't dwell on that. Maybe we need stronger legislation, maybe we don't, but it doesn't change today's answer. Often it works the other way around to what you might expect - rather than the merchant noticing and notifying Visa/MC/others, Visa/MC/others spot patterns of suspicious activity (example 1). I don't have any data on the relative numbers of who is being notified/notifying between merchants and payment processors, but at the point when your card is identified as compromised there's no reason to suppose that an individual merchant in the traditional sense has been compromised, let alone identified. In fact because there's a fast moving investigation it could even be a false alarm that led to your card getting cancelled. Conversely it could be a hugely complex multinational investigation which would be jeopardised. It's simply not safe to assume that simply \"\"brand X\"\" has been compromised, therefore everything \"\"brand X\"\" knows about you is also compromised: Furthermore there's no reason to assume the merchant has even admitted to, or discovered the root cause. MC/Visa/Banks, at the point at which they're cancelling cards simply can't say (at least not in a way that might expensively backfire involving lots of lawyers) because the standard of proof needed to go on record blaming someone is simply not yet met. So: yes it's common that you aren't told anything for all of the above reasons. And of course if you really want to find out more you may have some success with your local data protection legislation and formally make a subject access request (or local equivalent) to see what that brings back. Be sure to do it in writing, to the official address of both mastercard and your bank.\"", "title": "" }, { "docid": "dabeca4966bcc58743a28badc128b907", "text": "There are a couple of things to consider. First, in order to avoid interest charges you generally just need to pay the statement balance before the statement due date. This is your grace period. You don't need to monitor your activity every day and send immediate payments. If you're being really tight with money, you can actually make a little profit by letting your cash sit in an interest bearing account before you pay your credit card before the due date. Second, credit card interest rates are pretty terrible, and prescribed minimum payments are comically low. If you buy furniture using your credit card you will pay some interest, be sure to pay way more than the minimum payment. You should avoid carrying a balance on a credit card. At 20% interest the approximate monthly interest charge on $1,000 is $16.67. Third, if you carry a balance on your credit card you lose the interest grace period (the first point above) on new charges. If you buy your couch, and carry the balance, when you buy a soda at 7-11, the soda begins to accrue interest immediately. If you decide to carry a balance on a credit card, stop using that card for new charges. It generally takes two consecutive billing period full balance payments to restore the grace period. Fourth, to answer your question, using a credit card to carry a balance has no impact on your score. Make your payments on time, don't exceed your limits, keep your utilization reasonable. The credit agencies have no idea if you're carrying a balance or how much interest you're paying. To Appease the people who think point four needs more words: Your credit report contains your limit, your reported balance (generally your statement balance), and approximate minimum payment. There is no indication related to whether or not the balance contains a carried balance and/or accrued interest. The mere fact of carrying a balance will not impact your credit score because the credit reporting bureaus don't know you're carrying a balance. Paying interest doesn't help or hurt your score. Obviously if your carried balance and interest charges push your utilization up that will impact your score because of the increased utilization. Make your payments on time, don't exceed your limits, keep your utilization reasonable and your score will be fine.", "title": "" }, { "docid": "0e099e701dd6df16a91d3ffbb155fbb2", "text": "I would behave exactly as I would expect it from others. If you were the one giving away too many points by accident you would be thankful if somebody notifies you about this error. You can write a letter or call them. I would not use the points (of course only not use the points which are added in error). Other options are possible but I would advise against them. It's just about fair play and the points are clearly not yours.", "title": "" }, { "docid": "0507b77c98c3fcf6da71fa48b8d2b9c8", "text": "My bank will let me download credit card transactions directly into a personal finance program, and by assigning categories to stores I can get at least a rough overview of that sidd of things, and then adjust categories/splits when needed. Ditto checks. Most of my spending is covered by those. Doesn't help with cash transactions, though; if I want to capture those accurately I need to save receipts. There are ocr products which claim to help capture those; haven't tried them. Currently, since my spending is fairly stable, I'm mostly leaving those as unknown; that wouldn't work for you.", "title": "" }, { "docid": "98deac234312b8b39ece2d300ed8d336", "text": "I don't use debit cards, but if I did I would review that portion of the statement. I look at my credit card statements pretty closely, and probably catch one or two mistakes or things I want to question every year.", "title": "" }, { "docid": "1a3e7d460ce8ded7774fc6fbcc04ec54", "text": "Some (most) credit cards have a way to get a one-time use number. If that is an available option for one of your cards, that is probably the way to do the very risky transaction. These numbers can be good for only one purchase, or for multiple purchases with a single vendor. This will limit your exposure because they won't have access to your entire account. Also review your fraud protections with your credit card. With the single use number, it won't matter if you use the electronic form or the email. Just make sure you keep the confirmation email or a screen capture of the form.", "title": "" }, { "docid": "c379054d9bb2f8f8e00c23276160b954", "text": "Close your card, now. Let your credit card provider / bank know about the situation. Never, ever ever, give out your password. Not to a friend, not to your bank and not even to your cat.", "title": "" }, { "docid": "9efcd54fdc54c52fb10a140211e2b41e", "text": "The only people who should know my online bank password are me & my spouse. Forget it, I won't share that sensitive information with any other company. I might as well give a blank check! Besides, don't banks require people to keep their username & password & PIN private? I signed an agreement to that effect, I think! So even if I did find the online services compelling enough to try, I would want to check with my own bank first & ask them if it's OK to give my password to somebody else. I wonder what they would say to that!!", "title": "" }, { "docid": "403ee36ddc52aed7be3f9ff2502f494f", "text": "\"The link you originally included had an affiliate code included (now removed). It is likely that your \"\"friend\"\" suggested the site to you because there is something in it for your \"\"friend\"\" if you sign up with their link. Seek independent financial advice, not from somebody trying to earn a commission off you. Don't trust everything you read online – again, the advice may be biased. Many of the online \"\"reviews\"\" for Regal Assets look like excuses to post affiliate links. A handful of the highly-ranked (by Google Search) \"\"reviews\"\" about this company even obscure their links to this company using HTTP redirects. Whenever I see this practice in a \"\"review\"\" for a web site, I have to ask if it is to try and appear more independent by hiding the affiliation? Gold and other precious metal commodities can be part of a diversified portfolio, a small part with some value as a hedge, but IMHO it isn't prudent to put all your eggs in that basket. Look up the benefits of diversification. It isn't hard to find compelling evidence in favor of the practice. You should also look up the benefits of low-fee passively-managed index funds. A self-directed IRA with a reputable broker can give you access to a wide selection of low-fee funds, not just a single risky asset class.\"", "title": "" }, { "docid": "0eeb5183d169e66dbe014066095e48da", "text": "You have little chance of getting it deleted. I have the same situation, I closed mine in 2006, and the login still works. Keep the paperwork that you closed it (or print a PDF of the site showing so), and forget about it. If someone is trying to cheat, re-opening it should be the same difficulty as making a new one in your name, so it is not really an additional risk. You could also set the username and password both to a long random string, and not keep them. That soft-forces you to never login again. Note that it will also stay on your credit record for some years (but that's not a bad thing, as it is not in default; in the contrary). The only negative is that if you apply for credit, you might be ashamed of people seeing you ever having had a Sears or Macy's card or so.", "title": "" } ]	fiqa
d171199a2f35fced645fa20303dd468e	Borrowing money for a semi-urgent medical expense	[ { "docid": "a46c1561e9a7dba170df3a8253d3ead3", "text": "The best option would be to have the dental office allow you pay in installments. That would be probably the cheapest and most convenient way. When high amounts are involved - many medical offices are flexible with payments and allow spreading over long period of time, so you should check it out. Otherwise, credit cards would probably be the most expensive loan, but you should shop around and compare the rates offered to you, it is hard to guess would you may get.", "title": "" }, { "docid": "96e522fb519872fcc3fe3b02aeb5bc18", "text": "\"I am a bit confused here as to how a 4K loan will negatively effect your credit score if payments are made on time. FICO scores are based upon how well you borrow. If you borrow, pay back on time, your score will not go down. Perhaps a bit in the short run when you first secure the loan, but that should come back quickly. In the long run it will help improve your score which seems like it would be more important to you. Having the provider finance your loan will probably not show up on your credit unless you fail to pay and they send to collections. If the score is so important to you, which I think is somewhat unwise, then use a credit card. With a 750 you should be able to get a pretty good rate, but assume it is 18%. In less then 9 months you will have it paid off, paying about $293 in interest. You could consider that a part of the cost of doing business for maintaining a high credit score. Again not what I would advise, but it might meet your needs. One alternative is go with lending club. With that kind of score, you are looking at 7% or so. At $500 a month, you are still looking at just over 8 months and paying about $100 in interest. Much less money for improving your credit score. Edit based upon the comment: \"\"My understanding is that using a significant portion of your available credit balance is bad for your credit, even if you pay your bills on time.\"\" Define bad. As I said it might go down slightly in the short term. In three months you will have almost 33% of the loan paid off, which is significantly lower then the original balance. If you go the credit card route, you may be approved for quite a bit more then the 4000, which may not move the needle at all. Are you planning on buying a home in the next 90 days? If not, why does a small short term dip matter? Will your life really be effected if your score goes down to 720 for three months? Keep in mind this is exactly the kind of behavior that the banks want you to engage in. If you worship your FICO score, which gives no indication of wealth then you should do exactly what I am suggesting.\"", "title": "" } ]	[ { "docid": "ee8811b2d81aab7d77767fffc1331f20", "text": "Emergency funds, by the name it implies that they should be available on hand at a very short notice if needed. Conservation of principal (not withstanding inflation, but rather in absolute terms) is also a very important criteria of any kind of account that you will use to save the emergency fund. I would suggest the following breakup. The number in brackets signifies the amount of per month expenses that you can keep in that account. = total 6 months living expenses", "title": "" }, { "docid": "d4a7824dea6df0994920939dd1e862e6", "text": "\"The concept of emergency fund is a matter of opinion. I can tell you the consensus is that one should have 6-9 months worth of expenses kept as liquid cash. This is meant to cover literally all bills that you might encounter during that time. That's a lot of money. There are levels of savings that are shy of this but still responsible. Not enough to cover too much in case of job loss, but enough to cover the busted transmission, the broken water heater, etc. this is still more than many people have saved up, but it's a worthy goal. The doctor visit is probably the lowest level. Even without insurance, the clinic visit should be under $200, and this shouldn't cause you to have to carry that amount beyond the time the bill comes in. The point that shouldn't be ignored is that if you owe money at 18% on a credit card, the emergency fund is costing you money, and is a bit misguided. I'd send every cent I could to the highest rate card and not have more than a few hundred $$ liquid until the cards were at zero. Last - $5K, $10K in the emergency account is great, unless you are foregoing matched 401(k) dollars to do it. All just my opinion. Others here whom I respect might disagree with parts of my answer, and they'd be right. Edit - Regarding the 'consensus 6-9 months' I suggest - From Investopedia - \"\"...using the conservative recommendation to sock away eight months’ worth of living expenses....\"\" The article strongly support my range for the fact that it both cites consensus, yet disagrees with it. From Money Under 30 The more difficult you rank your ability to find a new job, the more we suggest you save — up to a year’s worth of expenses if you think your income would be very difficult to replace. From Bank of America I have no issue with those comfortable with less. A dual income couple who is saving 30% of their income may very well survive one person losing a job with no need to tap savings, and any 'emergency' expense can come from next month's income. That couple may just need this month's bills in their checking account.\"", "title": "" }, { "docid": "b2ea0cf0c472d2cb95c2b6b9cdac798e", "text": "\"They are right to ask for the money back because you were not entitled to that money. However, you may have a defense called \"\"laches\"\". Basically, you can try to show that because of the government's unreasonable delay in asking for the money back, in the meantime you relied on the assumption that it was your money in good faith, and spent it, and now to have to come up with the money that you assumed you wouldn't need would cause great harm to you.\"", "title": "" }, { "docid": "e401a8ff82d95f592eab06973e952461", "text": "While this question is old and I generally agree with the answers given I think there's another angle that needs a little illuminating: insurance. If you go with an 84 month loan your car will likely be worth less than the amount owed for substantially all of the entire 84 month loan period; this will be exacerbated if you put zero down and include the taxes and fees in the amount borrowed. Your lender will require you to carry full comprehensive/collision/liability coverage likely with a low maximum deductible. While the car is underwater it will probably also be a good idea to carry gap insurance because the last thing you want to do is write a check to your lender to shore up the loan to value deficit if the thing is totaled. These long term car loans (I've seen as high as 96 months) are a bear when it comes to depreciation and related insurance costs. There is more to this decision than the interest calculation. Obviously, if you had the cash at the front of this decision presumably you'll have the cash later to pay off the loan at your convenience. But while the loan is outstanding there are costs beyond interest to consider.", "title": "" }, { "docid": "0767e00f54d58b1f0aaf5bea7160f835", "text": "You can take out a personal loan for any reason - to burn the money for fun, if you like. But be aware that you owe it back, not your mother, or anyone else. They will come to you for the repayments.", "title": "" }, { "docid": "c7c28f4c19bec73bdb506f07d5a19e6f", "text": "One situation where it would be prudent not to contribute would be if expenses are so tight that you cannot afford to contribute because you need that cashflow for expenses.", "title": "" }, { "docid": "ec5f508e7f500cdad2d26fd1adf49a37", "text": "Deposit check and send a personal check (resulting in tax and IRS reporting issues) That's a bad idea, unless maybe the check you're receiving is a certified bank draft. Suppose the insurance company are crooks and the check is fraudulent. It could take weeks or months for some investigation to catch up to that, long after your own personal check was cashed by the pharmacy. The bank will then put you on hook for the 20 grand by reversing the check, even though the funds had been deposited into your account. Do not put yourself into the position of a money handler; you don't have the cash base, insurance, government protection and whatever else that a bank has. And, of course, you're being a free money handler if you do that. (You're not even compensated for postage, time and whatnot). If you're handling money between two parties, you should collect a percentage, or else refuse. That percentage has to be in proportion to the risk, since cashing a check for someone carries a risk similar to (and is effectively a form of) making a loan.", "title": "" }, { "docid": "0ad0a10b997fe694ff570c21f460ebae", "text": "Typically the least formal agreement for any type of lending is a Promisory Note (of which you can find plenty across the web, although I'd suggest picking up a Nolo book from the library and using their templates -- I think the book holding your type of form would be the Personal Legal forms Book). Still, $10k is a very large amount of money to lend to a friend and he probably is better off going to a bank and asking for an unsecured line of credit (not a credit card, but rather a general loan) and doing the money that way because typically that amount of money is small to the bank and they will already have the licenses/assets in place to handle collateral and such (which can be very tricky to do on your own).", "title": "" }, { "docid": "89c79267825f4b73a1ce668d674e5ba3", "text": "A medical expense is only a qualified medical expense eligible for an HSA distribution if it is not reimbursed by insurance. If you know that you will be reimbursed, do not pay for it through your HSA. Think of it this way: you can only be reimbursed for a medical expense once. Either you get reimbursed by your insurance, or you get reimbursed by your HSA, but not both. If you pay for the expense with your HSA and are later reimbursed, you need to return the money to your HSA through a mistaken distribution repayment. This is not considered a contribution, but you need to make sure to tell your HSA provider that it is a mistaken distribution repayment and not a contribution, so that it gets accounted for correctly.", "title": "" }, { "docid": "be5c91f7bd36d9bf2dcb82eb375ffbdb", "text": "You should not continue contributing, as you're no longer qualified for it. You can keep it, and use the money in it toward the current medical expenses, without a problem. There are specific examples in pub 969.", "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": "4414e027b470e0bbfd52df49d5900c61", "text": "I would advise against this, answering only the first part of question #1. Borrowing and lending money among friends and family members can often ruin relationships. While it can sometimes be done successfully, this is most likely not the case. All parties involved have to approach this uniquely in order for it to work. This would include your son's future significant other. Obviously you have done very well financially, congratulations. Your view for your son might be for him to pay you off ASAP: Even after becoming a doctor, continue to live like a student until the loan is paid off. His view might be more conventional; get the car and house and pay off my loans before I am 50. He may start with your view, but two years in he marries a woman that pressures him to be more conventional. My advice would be to give if you can afford to, but if not, do not lend. If you decide to lend then come up with a very clear agreement on the repayment schedule and consequences of non-payment. You may want to see a lawyer. For the rest of it, interest payments received are taxable.", "title": "" }, { "docid": "45f2d7b866471abc707589c4e09d5403", "text": "Seems like the doctor's office is not very organized. Ask for a line itemized bill. You want the date and the specific service(s) performed on those dates. If the bill seems fair and correct, try to negotiate cash discount payment. Ask how much they would settle for if you paid cash. If it is higher than you were thinking, say you were not expecting this sudden bill and if they would accept $xxx. If they say yes, great. If not, try to compromise, pay the suggested offer, or not pay and hope they don't send it to collections.", "title": "" }, { "docid": "624be7119d309f77ccbe708210bd6d79", "text": "Here's your problem: The debt is valid and it is your debt, regardless of your arrangement with the insurance company. The insurance company (possibly) owes you money, and you owe the Doctor money. You are stuck in the middle, and in the end it doesn't matter whether the insurance company pays as to whether you owe the money. Don't ignore them. Also, disputing the debt it pointless because the truth is that you do owe the debt. The insurance company may owe you money (which is in dispute), but the debt to your medical provider is your own. You are just stuck in the middle. It sucks, but is pretty common. I think the best you can do is keep working on the insurance company and responding to the bill collectors letting them know that you are working on it and will need to pay late. In theory they deal with this a lot and probably understand, not that it will make them lay off you in the meantime. In the end it is possible you might have to sue the insurance company to get the money. One thing to be careful about: If the debt is fairly old (several years) you may want to avoid making partial payments because if this goes on your credit report, that payment may extend the period where the negative information can appear on your credit history.", "title": "" }, { "docid": "985486a39815f1162e41ebf5d72f5ae5", "text": "I can safely assume that a credit union or a bank, probably a bank based on the size of the short term loan would allow use of the annuity as collateral for the loan. Since the future payouts from the annuity will more than cover the total costs coming due for your education I'm sure the bank will have no problem loaning the money and you can see if doing a direct payment monthly to them will reduce the rate. You can try a credit union since they will most likely give you a more favorable rate. If you can get a credit union to do it, you will most likely be paying a lot less, but typically they want interest paid monthly and not at the end of the 6 months term. There is also a service called TMS or Tuition Management Services which you can find at Tuition Management Services They typically also expect monthly payments but might do an alternative for you, they charge I believe a $60USD fee to use their service. Also just flat out bank shop and demand the lowest rate, its guaranteed money so you should be paying LIBOR plus 1 at most, see if you can direct your next payout to them with the balance coming to you.", "title": "" } ]	fiqa
73ed04ca4c181d2e7e2b02e49e43b1bc	Saving/ Investing a lump sum	[ { "docid": "b41317e91da402872831179ca16e4e1b", "text": "In my mind, when looking at a five year period you have a number of options. You didn't specify where you are based, which admittedly makes it harder, to give you good advice. If you are looking for an investment that can achieve large gains, equities are impossible to ignore. By investing in an index fund or other diverse asset forms (such as mutual funds), your risk is relatively minimal. However there has historically been five year periods where you would lose/flatline your money. If this was to be the case you would likely be better off waiting more than five years to buy a house, which would be frustrating. When markets rebound, they often do it hard. If you are in a major economy, taking something like the top 100 of your stock market is a safe bet, although admittedly you would have made terrible returns if you invested in the Polish markets. While they often achieve lower returns than equity investments, they are generally considered safer - especially government issued bonds. If you were willing to sacrifice returns for safety, you must always consider them. This is an interesting new addition, and I can't comment on the state of it in the United States, however in Europe we have a number of platforms which do this. In the UK, for example you can achieve ~7.3% returns YoY using sites like Funding Circle. If you invest in a diverse range of businesses, you have minimal risk from and individual company not paying. Elsewhere in Europe (although not appropriate for me as everything I do is denominated in Sterling), you can secure 12% in places like Georgia, Poland, and Estonia. This is a very good rate and the platforms seem reputable, and 'guarantee' their loans. However unlike funding circle, they are for consumer loans. The risk profile in my mind is similar to that of equities, but it is hard to say. Whatever you do, you need to do your homework, and ensure that you can handle the level of risk offered by the investments you make. I haven't included things like Savings accounts in here, as the rates aren't worth bothering with.", "title": "" }, { "docid": "fa2b0a6b3793f38dafffe53ce49dc70d", "text": "5 years is very short term, and since you are sure you'll need the money, investing it into the markets should probably not be done. You can toss it in Ally bank for 1% or consider a 5 yr raise your rate CD A decent write-up on time horizons: http://www.investopedia.com/articles/investing/110813/using-time-horizons-investing.asp If you want to go the stock/bond route you can assess the benefits of using something like a vanguard target date fund, or a roboadvisor such as wealthfront or betterment. You need to assess whether you think you may move up your time horizon, say you want to buy a house in 4 years, or, if it is 5 years, are you ok with it being 6.5-7 if there is a market downturn.", "title": "" } ]	[ { "docid": "94ea24f9daf0be1aa8cc556f394a7c9f", "text": "\"Don't mind the percentages. They are highly misleading. First, \"\"saving\"\" is making available for future use. It might be \"\"hoarding\"\", \"\"investing\"\" or a combination thereof. It might be for a specific use (a car, a college education, retirement, etc.), or for a non-specific use (for an emergency, for when you decide to spend some of those savings, or just for lack of a compelling use as of the moment). In first case, whatever you save should be available by the date you intend to use it. In second case, it might be prudent to have savings (and investments, see below) of various liquidity (cash you have at hand, bank account you can draw next day, mutual fund account you can draw in a month, maybe something you can only cash in a year etc.). You will see that the actual percentages you \"\"save\"\" fluctuate enormously throughout your life, varying with the progress of your career, changes of marital status and family cmposition, etc., etc. What you should really do is to come up with a rough plan of how you expect, from right now and to the end of your life at whatever age, have enough money for whatever level of comfort you plan for each period of your life, allowing for some specified level of perturbations. Then you just execute that plan or change it as you go.\"", "title": "" }, { "docid": "f968ac77c114449dadf53ee74f7830b8", "text": "You can't get there from here. This isn't the right data. Consider the following five-year history: 2%, 16%, 32%, 14%, 1%. That would give a 13% average annual return. Now compare to -37%, 26%, 15%, 2%, 16%. That would give a 4% average annual return. Notice anything about those numbers? Two of them are in both series. This isn't an accident. The first set of five numbers are actual stock market returns from the last five years while the latter five start three years earlier. The critical thing is that five years of returns aren't enough. You'd need to know not just how you can handle a bull market but how you do in a bear market as well. Because there will be bear markets. Also consider whether average annual returns are what you want. Consider what actually happens in the second set of numbers: But if you had had a steady 4% return, you would have had a total return of 21%, not the 8% that would have really happened. The point being that calculating from averages gives misleading results. This gets even worse if you remove money from your principal for living expenses every year. The usual way to compensate for that is to do a 70% stock/30% bond mix (or 75%/25%) with five years of expenses in cash-equivalent savings. With cash-equivalents, you won't even keep up with inflation. The stock/bond mix might give you a 7% return after inflation. So the five years of expenses are more and more problematic as your nest egg shrinks. It's better to live off the interest if you can. You don't know how long you'll live or how the market will do. From there, it's just about how much risk you want to take. A current nest egg of twenty times expenses might be enough, but thirty times would be better. Since the 1970s, the stock market hasn't had a long bad patch relative to inflation. Maybe you could squeak through with ten. But if the 2020s are like the 1970s, you'd be in trouble.", "title": "" }, { "docid": "e155a7538f8822b59bcea7d7e2f5090d", "text": "In addition to what others have said, I think it is important to consider that government retirement assistance (whatever it is called in each instance) is basically a promise that can be revoked. I talked to a retired friend of mine just yesterday and we got onto that subject; she mentioned that when she was young, the promise was for 90% of one's pay, paid by the government after retiring. It is very different today. Yes, you can gamble that you won't need the saved money, and thus decide not to save anything. What then if you do end up needing the money you did not set aside, but rather spent? You are just now graduating college, and assuming of course that you get a decently-paying job, are likely going to have loads more money than you are used to. If you make an agreement with yourself to set aside even just 10-15% of the difference in income right from the start, that is going to grow into a pretty sizable nest egg by the time you approach retirement age. Then, you will have the option of continuing to work (maybe part-time) or quitting in a way you would not have had otherwise. Now I'm going to pull numbers out of thin air, but suppose that you currently have $1000/month net, before expenses, and can get a job that pays $1800/month net starting out. 10-15% of the difference means you'll be saving around $100/month for retirement. In 35 years, assuming no return on investment (pessimistic, but works if returns match inflation) and no pay rises, that will still be over $40K. That's somewhere on the order of $150/month added to your retirement income for 25 years. Multiply with whatever inflation rate you think is likely if you prefer nominal values. It becomes even more noticable if you save a significant fraction of the additional pay; if you save 1/3 of the additional money (note that you still effectively get a 50% raise compared to what you have been living on before), that gives you a net income of $1500/month instead of $1800 ($500/month more rather than $800/month more) which grows into about $110K in 35 years assuming no return on investment. Nearly $400 per month for 25 years. $100 per week is hardly chump change in retirement, and it is still quite realistic for most people to save 30% of the money they did not have before.", "title": "" }, { "docid": "37d96adb2a4325aba75b2c5be6005d57", "text": "There are been many tests about invest all the money immediately and average it out during a period of time. The results favor to invest the lump sum immediately, so your money starts to work and produce income with dividends. Cash don't produce any income.", "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": "2d1c127a3e9e3982f880d91565d518c2", "text": "I recall similar strategies when (in the US) interest rates were quite a bit higher than now. The investment company put 75% or so into into a 5 year guaranteed bond, the rest was placed in stock index options. In effect, one had a guaranteed return (less inflation, of course) of principal, and a chance for some market gains especially if it went a lot higher over the next 5 years. The concept is sound if executed correctly.", "title": "" }, { "docid": "2c20c5d5624b3de97beca5b90c1b1dc8", "text": "As others have said, this opinion is predicated on an assumption that early in your life you have no need to actually USE the money, so you are able to take advantage of compounding interest (because the money is going to be there for many many years) and you are far more tolerant of loss (because you can simply wait for the markets to recover). This is absolutely true of a pension pot, which is locked away for a great many years. But it is absolutely NOT true of general investments. Someone in the mid-20s to mid-30s is very likely to want to spend that money on, say, buying a house. In which case losing 10% of your deposit 3 months before you start looking for a house could potentially be a disaster. Liekwise, in your mid-40s if your child's school/college fund goes up in smoke that's a big deal. It is a very commonly espoused theory, but I think it is also fundamentally flawed in many scenarios.", "title": "" }, { "docid": "22b3b000de1845fc6e8c7e67f098f7dc", "text": "\"Sure. For starters, you can put it in a savings account. Don't laugh, they used to pay noticeable interest. You know, back in the olden days. You could buy an I-bond from Treasury Direct. They're a government savings bond that pays a specified amount of interest (currently 0%, I believe), plus the amount of the inflation rate (something like 3.5% currently, I believe). You don't get paid the money -- the I-bond grows in value till you sell it. You can open a discount brokerage account, and buy 1 or more shares of stock in a company you like. Discount brokerages generally have a minimum of $500 or so, but will waive that if you set the account up as an IRA. Scot Trade, for instance. (An IRA, in case you didn't know, is a type of account that's tax free but you can't touch it till you turn 59 1/2. It's meant to help you save for retirement.) Incidentally, watch out of \"\"small account\"\" fees that some brokerages might charge you. Generally they're annual or monthly charges they'd charge you to cover their costs on your account -- since they're certainly not going to make it in commissions. That IRA at Scot Trade is no-fee. Speaking of commissions, those will be a big chunk of that $100. It'll be like $7-$10 to buy that stock -- a pretty big bite. However, many of these discount brokerages also offer some mutual funds for no commission. Those mutual funds, in turn, have minimums too, but once again if your account's an IRA many will waive the minimum or set it low -- like $100.\"", "title": "" }, { "docid": "7c7dbf0512932aa995f8d4924466f134", "text": "\"Here's what I suggest... A few years ago, I got a chunk of change. Not from an inheritance, but stock options in a company that was taken private. We'd already been investing by that point. But what I did: 1. I took my time. 2. I set aside a chunk of it (maybe a quarter) for taxes. you shouldn't have this problem. 3. I set aside a chunk for home renovations. 4. I set aside a chunk for kids college fund 5. I set aside a chunk for paying off the house 6. I set aside a chunk to spend later 7. I invested a chunk. A small chunk directly in single stocks, a small chunk in muni bonds, but most just in Mutual Funds. I'm still spending that \"\"spend later\"\" chunk. It's about 10 years later, and this summer it's home maintenance and a new car... all, I figure it, coming out of some of that money I'd set aside for \"\"future spending.\"\"\"", "title": "" }, { "docid": "beb1fdddf8e9c18e2038837e823bed0d", "text": "In the United States, the Securities Investor Protection Corporation protects the first $500,000 you have at a brokerage including up to $250,000 in cash. This means that if the firm holding your securities fails financially, you have some coverage. That insurance does not prevent your investment itself from losing money. Even traditionally save money market funds can potentially lose value in a situation called Breaking the buck. This means that the Net Asset Value of the fund falls below $1/share. Alas, during periods of market calamity, even traditionally safe stores of value are subject to increased risk.", "title": "" }, { "docid": "5b1421ff7cbe19205c82ece4c8d8d6c7", "text": "The straight math might favor leaving it, but I'd personally prefer to have it in my control in an IRA. My own employer offered a buyout on the pension program, and the choice between a nice lump sum vs some fixed number 20 years hence was a simple one for me. Both my wife and I (same company) took the lump sum, and never regretted it.", "title": "" }, { "docid": "175eb77b00771165926f3d2ac67c4b6d", "text": "I think is an excellent idea. Use free money or almost free to do a lump sump payment. My recommendation is to have a reminder to pay credit card before, almost finishing, the 0% APR period.", "title": "" }, { "docid": "57d4f1523f9fd61903f121d578b425fb", "text": "I recommend saving for retirement first to leverage compound interest over a long time horizon. The historical real return on the stock market has been about 7%. Assuming returns stay at 7% in the future (big assumption, but don't have any better numbers to go off of), then $8,000 saved today will be worth $119,795 in 40 years (1.07^40*8000). Having a sizable retirement portfolio will give you peace of mind as you progress through life and make other expenditures. If you buy assets that pay you money and appreciate, you will be in a better financial position than if you buy assets that require significant cash outflows (i.e. property taxes, interest you pay to the bank, etc.) or assets that ultimately depreciate to zero (a car). As a young person, you are well positioned to pay yourself (not the bank or the car dealership) and leverage compound interest over a long time horizon.", "title": "" }, { "docid": "e0b0784f9fc25a8f78170f45e68b67e6", "text": "There are more than a few ideas here. Assuming you are in the U.S., here are a few approaches: First, DRIPs: Dividend Reinvestment Plans. DRIP Investing: How To Actually Invest Only A Hundred Dollars Per Month notes: I have received many requests from readers that want to invest in individual stocks, but only have the available funds to put aside $50 to $100 into a particular company. For these investors, keeping costs to a minimum is absolutely crucial. I have often made allusions and references to DRIP Investing, but I have never offered an explanation as to how to logistically set up DRIP accounts. Today, I will attempt to do that. A second option, Sharebuilder, is a broker that will allow for fractional shares. A third option are mutual funds. Though, these often will have minimums but may be waived in some cases if you sign up with an automatic investment plan. List of mutual fund companies to research. Something else to consider here is what kind of account do you want to have? There can be accounts for specific purposes like education, e.g. a college or university fund, or a retirement plan. 529 Plans exist for college savings that may be worth noting so be aware of which kinds of accounts may make sense for what you want here.", "title": "" }, { "docid": "ee2c4b844bf6867deea08781a2c05ee9", "text": "\"Between 1 and 2 G is actually pretty decent for a High School Student. Your best bet in my opinion is to wait the next (small) stock market crash, and then invest in an index fund. A fund that tracks the SP500 or the Russel 2000 would be a good choice. By stock market crash, I'm talking about a 20% to 30% drop from the highest point. The stock market is at an all time high, but nobody knows if it's going to keep going. I would avoid penny stocks, at least until you can read their annual report and understand most of what they're claiming, especially the cash flow statement. From the few that I've looked at, penny stock companies just keep issuing stock to raise money for their money loosing operations. I'd also avoid individual stocks for now. You can setup a practice account somewhere online, and try trading. Your classmates probably brag about how much they've made, but they won't tell you how much they lost. You are not misusing your money by \"\"not doing anything with it\"\". Your classmates are gambling with it, they might as well go to a casino. Echoing what others have said, investing in yourself is your best option at this point. Try to get into the best school that you can. Anything that gives you an edge over other people in terms of experience or education is good. So try to get some leadership and team experience. , and some online classes in a field that interests you.\"", "title": "" } ]	fiqa
b35d9ca13e5785b2683b77c1b7b2b742	CFD market makers: How is the price coupled to the underlying security?	[ { "docid": "594803b02ac90fe896d6011a89567cdb", "text": "CFD providers typically offer CFDs to investors using either the direct market access (DMA) model or the market maker (MM) model. Direct Market Access The DMA model gives you access to trade the Underlying instrument on the relevant Exchange from which the CFD is then derived. All CFD Transactions under the DMA model have corresponding trades in the Underlying instrument. Under the DMA model, providers typically charge their clients Commission based on the notional contract value of the CFD. Market Maker The MM model uses the price of the Underlying instrument to derive the price of the CFD that is offered. Trading under the MM model does not necessarily mean that your CFD will be reflected by a corresponding trade in the Underlying instrument. Under the MM model each CFD Transaction creates a direct financial exposure for the provider, which may or may not be hedged in the Underlying instrument. Where the financial exposure is not hedged, the market risk may increase for the market maker. The MM model enables the provider to offer CFDs against synthetic assets, even if there is little Liquidity in the Underlying instrument, which can result in a wider range of products on offer than with the DMA model. Volatility and Illiquidity in the Underlying instrument can affect the pricing of MM CFDs. The MM model can charge its clients Commission based on the notional contract value or it can incorporate costs and fees in the dealing Spread, which represents the difference in price at which the issuer is prepared to Buy and Sell the CFD. What Do I use and why? I have traded with both DMA and MM models and prefer the MM. The big advantage with MM is that they will provide a market even when the underlying is very illiquid and only might have a few trades each day. Regarding the spread of the MM to the spread of the underlying, I have found the MM to be practically in line with the underlying spread about 95% of the time. The other 5% it may have been slightly wider than the spread of the underlying by usually 1c or 2c. Most MMs aim to give you the best spread they can because they want to keep your business. If they gave too wide a spread (compared to the underlying) it wouldn't be long before they had no customers.", "title": "" } ]	[ { "docid": "2967b77ae227b3ece809a193dbd635fa", "text": "\"The most fundamental observation of bond pricing is this: Bond price is inversely proportional to bond yields When bond yields rise, the price of the bond falls. When bond yields fall, the price of the bond rises. Higher rates are \"\"bad\"\" for bonds. If a selloff occurs in the Russian government bond space (i.e. prices are going down), the yield on that bond is going to increase as a consequence.\"", "title": "" }, { "docid": "35b8026c69f4757eea3e2ab494b55195", "text": "If you are trading CFDs, which are usually traded on margin, you will usually be charged an overnight financing fee for long positions held overnight and you will receive an overnight financing credit for short positions held overnight. Most CFD brokers will have their overnight financing rates set at + or - 2.5% or 3% from the country's official interest rates. So if your country's official interest rate is 5% and your broker uses + or - 2.5%, you will get a 2.5% credit for any short positions held overnight and pay 7.5% fee for any long positions held overnight. In Australia the official interest rate is 2.5%, so I get 0% for short positions and pay 5% for long positions held overnight. If you are looking to hold positions open long term (especially long positions) you might think twice before using CFDs to trade as you may end up paying quite a bit in interest over a long period of time. These financing fees are charged because you are borrowing the funds to open your positions, If you buy shares directly you would not be charged such overnight financing fees.", "title": "" }, { "docid": "9bd15c1001b57459bb29d361ded4fa40", "text": "\"Realize this is almost a year old, but I just wanted to comment on something in Dynas' answer above... \"\"Whenever you trade always think about what the other guys is thinking. Sometimes we forget their is someone else on the other side of my trade that thinks essentially the exact opposite of me. Its a zero sum game.\"\" From a market maker's perspective, their primary goal is not necessarily to make money by you being wrong, it is to make money on the bid-offer spread and hedging their book (and potentially interalize). That being said, the market maker would likely be quoting one side of the market away from top of the book if they don't want to take exposure in that direction (i.e. their bid will be lower than the highest bid available or their offer higher than the lowest offer available). This isn't really going to change anything if you're trading on an exchange, but important to consider if you can only see the prices your broker/dealer provides to you and they are your counterparty in the trade.\"", "title": "" }, { "docid": "c4c7c31d92616a46d5995d00c6fcea8c", "text": "You will tend to find as options get closer to expiry (within 2 months of expiry) they tend to be traded more. Also the closer they are to being in the money they more they are traded. So there tends to be more demand for these options than long dated ones that are far out of the money. When there is this higher demand there is less need for a market maker to step in to assure liquidity, thus there should be no effect on the underlying stock price due to the high demand for options. I would say that market makers would mainly get involved in providing liquidity for options way out of the money and with long periods until expiry (6+ months), where there is little demand to start with and open interest is usually quite low.", "title": "" }, { "docid": "df8064640cb8309f77df6ce7ab98bf82", "text": "I think your confusion has arisen because in every transaction there is a buyer and a seller, so the market maker buys you're selling, and when you're buying the market maker is selling. Meaning they do in fact buy at the ask price and sell at the bid price (as the quote said).", "title": "" }, { "docid": "18aa96f3262074f80fbd3733e132a152", "text": "I think you're over complicating it! There is the market maker in the pure sense as what chilldontkill said - a bookie, a middleman. They are just the brokers in between the buyers and sellers, and they simply make profit off of the spread differential. But market maker is also used to refer to large, high volume buyers and sellers that can influence the price because they control a larger % of volume. These only really exist on low volume products, and they slowly ween out the larger the volume. On higher volume products, I like to refer to them as institutions - that is, well informed, large pockets - whether is be central banks, clearing houses, hedge funds, boutique firms. These are the people who are generally in the know and they often bet against eachother.hope this helps ...", "title": "" }, { "docid": "6e6390bc4bd318df463271b969ab2ba9", "text": "This has never really adequately explained it for me, and I've tried reading up on it all over the place. For a long time I thought that in a trade, the market maker pockets the spread for that trade, but that's not the case. The only sensible explanation I've found (which I'm not going to give in full...) is that the market maker will provide liquidity by buying and selling trades they have no actual view on (short or long), and if the spread is higher, that contributes directly to the amount they make over time when they open and close positions they've made. It would be great to see a single definitive example somewhere that shows how a market maker makes money.", "title": "" }, { "docid": "7bbbf20026295d71ea3dca0ed2c39b2e", "text": "Consider the price history to be the sum of short term movements and long term movements. If you hold a stock for a long time you will benefit (or lose) from its long term movement. If a sufficiently large and very good short term trader existed he would tend to reduce short term volatility, eventually to nearly zero. At that point, the price would rise gently over the course of the day in line with the long term variation in price. Presumably robot traders will increase the time horizon of their trades when they have exhausted the gains they can make from short term trades.", "title": "" }, { "docid": "1794254f59d47800357fec690d5f1a3a", "text": "A CFD is like a bet. Bookies don't own horses or racetracks but you still pay them and they pay you if the horses win. If you buy a CFD the money goes to the firm you bought it from and if the stock price changes in your favour, they will pay you. However, if it goes against you they may ask you for more money than you originally invested to cover your losses. Constacts for difference are derivatives, i.e. you gain on the change in the price or delta of something rather than on its absolute value. Someone bets one way and is matched with someone (or perhaps more than one) betting the other way. Both parties are bound by the contract to pay or be payed on the outcome. One will win and the other will necessarily lose. It's similar in concept to a spread bet, although spread bets often have a fixed timescale whereas CFDs do not and CFDs generally operate via the payment of a commission rather than via charges included in the spread. There's more information on both CFDs and spread betting here If somone has a lot of CFDs that might affect the stock price if it's known about as others may buy/sell real stock to either make the CFD pay or may it not pay depending on whether they think they can make money on it. Otherwise CFDs don't have much of an effect on stock prices.", "title": "" }, { "docid": "351f89bd9a41b943744b8ce95e967cdb", "text": "Excellent, very sharp. No it will not be vega neutral exactly! If you think about it, what does a higher vol imply? That the delta of the option is higher than under BS model. Therefore, the vega should also be greater (simplistic explanation but generally accurate). So no, if you trade a 25-delta risky in equal size per leg, the vega will not be neutral. But, in reality, that is a very small portion of your risk. It plays a part, but in general the vanna position dominates by many many multiples. What do you do that you asked such a question, if you don't mind?", "title": "" }, { "docid": "b61eb81f67a953cfb6e04afe443616a9", "text": "Huh? I don't see how this effects inflation in practice.... (only in theory) Basically, I sell short end bonds and buy longer end bonds pocketing the difference in yield and increasing my duration. GLD and mining are hedges against inflation, markets are stupidly short term looking and care only about current expectations, if the current macro situation deteoriates we see prices fall.", "title": "" }, { "docid": "f824112e5846e465882fb442b9ec6dd2", "text": "\"As an exercise, I want to give this a shot. I'm not involved in a firm that cares about liquidity so all this stuff is outside my purview. As I understand it, it goes something like this: buy side fund puts an order to the market as a whole (all or most possibly exchanges). HFTs see that order hit the first exchange but have connectivity to exchanges further down the pipe that is faster than the buy side fund. They immediately send their own order in, which reaches exchanges and executes before the buy side fund's order can. They immediately put up an ask, and buy side fund's order hits that ask and is filled (I guess I'm assuming the order was a market order from the beginning). This is in effect the HFT front running the buy side fund. Is this accurate? Even if true, whether I have a genuine issue with this... I'm not sure. Has anyone on the \"\"pro-HFT\"\" side written a solid rebuttal to Lewis and Katsuyama that has solid research behind it?\"", "title": "" }, { "docid": "be31b0d0a6d96cd68b06fdd5cbdf2958", "text": "This is great. Thanks! So, just assuming a fund happened to average out to libor plus 50 for a given year, would applying that rate to the notional value of the index swaps provide a reasonable estimate of the drag an ETF investor would experience due to the cost associated with the index swaps? For instance, applying this to the hypothetical I linked to in the original question, they assumed fund assets of $100M with 2x leverage achieved through $85M of S&P500 stocks, $25M of S&P500 futures, and a notional value of the S&P500 swaps at $90M. So the true costs to an ETF investor would be: expense ratio + commissions on the $85M of S&P500 holdings + costs associated with $25M of futures contracts + costs associated with the $90M of swaps? And the costs associated with the $90M of swaps might be roughly libor plus 50?", "title": "" }, { "docid": "0e56536646a6bb78b874992c3447e0b7", "text": "Thanks for your reply. I’m not familiar with the term “Held-For-Trading Security”. My securities are generally held as collateral against my shorts. To clarify, I am just trying to track the “money in” and “money out” entries in my account for the shorts I write. The transaction is relatively straight forward, except there is a ton of information attached! In simple terms, for the ticker CSR and short contract CSRUQ8, the relevant entries look something like this: There are no entries for expiries. I need to ensure that funds are available for future margin calls and assignments. The sale side using covered calls is as involved.", "title": "" }, { "docid": "08195dbfa4527437a69f5a81e359ea3e", "text": "Yes, you've got it right. The change in price is less meaningful as the instrument is further from the price of the underlying. As the delta moves less, the gamma is much less. Gamma is to delta as acceleration is to speed. Speed is movement relative to X, and acceleration is rate of change in speed. Delta is movement relative to S, and gamma is the rate of change in delta. Delta changes quickly when it is around the money, which is another way of saying gamma is higher. Delta is the change of the option price relative to the change in stock price. If the strike price is near the market price, then the odds of being in or out of the money could appear to be changing very quickly - even going back and forth repeatedly. Gamma is the rate of change of the delta, so these sudden lurches in pricing are by definition the gamma. This is to some extent a little mundane and even obvious. But it's a useful heuristic for analyzing prices and movement, as well as for focusing analyst attention on different pricing aspects. You've got it right. If delta is constant (zero 'speed' for the change in price) then gamma is zero (zero 'acceleration').", "title": "" } ]	fiqa
ca4e691bdf8fc800d741309897a5ecdc	Can individuals day-trade stocks using High-Frequency Trading (HFT)?	[ { "docid": "c2818bdbcd005e911a4f2012b17a4d0a", "text": "The answer is to your question is somewhat complicated. You will be unable to compete with the firms traditionally associated with High Frequency Trading in any of their strategies. Most of these strategies which involve marketing making, latency arbitrage, and rebate collection. The amount of engineering required to build the infrastructure required to run this at scale makes it something which can only be undertaken by a team of highly skilled engineers. Indeed, the advantage of firms competing in this space such as TradeBot, TradeWorx, and Getco comes from this infrastructure as most of the strategies that are developed are necessarily simple due to the latency requirements. Now if you expand the definition of HFT to include all computerized automated trading you most certainly can build strategies that are profitable. It is not something that you probably want to tackle on your own but I know of a couple of people that did go it alone successfully for a couple of years before joining an established firm to run a book for them. In order to be successful you will most likely need to develop a unique strategies. The good news is because that you are trying to deploy a very tiny amount of capital you can engage in trades that larger firms would not because the strategies cannot hold enough capital relative to the firms capital base. I am the co-founder of a small trading firm that successfully trades the US Equities and Equity Derivatives markets. A couple of things to note is that if you want to do this you should consider building a real business. Having some more smart brains around you will help. You don't need exchange colocation for all strategies. Many firms, including ours, colocate in a data center that simply has proximity to the exchanges data centers. You will need to keep things simple to be effective. Don't except all the group think that this is impossible. It is possible although as a single individual it will be more difficult. It will require long, long hours as you climb the algorithmic trading learning curve. Good luck.", "title": "" }, { "docid": "149272851f5d804a7cdfb8b8d0c1e600", "text": "Nobody is going to stop you if you want to try that. But you should keep in mind that you have to invest a lot in getting the best hardware you can lay your hands on, best fail-safe connectivity to the exchanges, best trading algorithms and software that money can buy and loads of other stuff. This all needs quite a big amount of upfront investment without guaranteeing returns. That is why you see institutions with deep pockets i.e. banks and trading firms only involve themselves in HFT.", "title": "" }, { "docid": "6335dc2c13c1699721868158f6084e78", "text": "\"Yes you can, but to do so successfully, you need lots of money. You also need to be able to meet the criteria for being classified as a \"\"professional trader\"\" by the IRS. (If not, you'll be buried in paperwork.) The fact that you're asking about it here probably means that you do not have enough money to succeed at HFT.\"", "title": "" }, { "docid": "746fadc47e6606d3a1730a15c59391f2", "text": "I just finished a high frequency trading project. Individuals can do it, but you need a lot of capital. You can get a managed server in Times Square for $1500/month, giving you access to 90% of the US exchanges that matter, their data farms are within 3 milliseconds of distance (latency). You can also get more servers in the same building as the exchanges, if you know where to look ;) thats all I can divulge good luck", "title": "" } ]	[ { "docid": "2497dced1eee532e6563c6de5196b408", "text": "It's not necessarily the case that HFT acts as a tax on small traders. I haven't seen any studies demonstrating that HFT increases the average cost of shares; if anything small investors will be largely unaffected by HFT as it will be random noise to them, sometimes creating a slight increase, sometimes a slight decrease. The people most affected by HFT are institutional investors, whom HFT desks are pretty good at predicting the order pattern of and hence exploiting. They have no interest or capacity to exploit the small guys.", "title": "" }, { "docid": "3816bdadaff52d8404cf2217ab792410", "text": "There's a lot of hype about HFT. It involves computers doing things that people don't really understand and making a bunch of rich guys a bunch of money, and there was a crisis and so we hate rich wall street guys this year, and so it's a hot-button issue. Meh. There's some reason for concern about the safety of the markets, but I think there's also a lot more of people trying to sell you a newspaper. Remember that while HFT may mean there are a lot of trades, the buying and the selling add up to the same thing. Meanwhile, people who buy stock to hold on to it for significant periods of time will still affect the quantity of stock out there on the market, applying pressure to the price, buying and selling at the prices that they think the security is worth. As a result, it's unlikely that high-frequency trading moves the stock price very far from the price that the rest of the market would determine for very long; if it did, the lower-frequency traders could take advantage of it, buying if it's too low and selling if it's too high. How long do you plan to hold a stock? If you're trying to do day-trading, you might have some trouble; these people are competing with you to do the same thing, and have significant resources at their disposal. If you're holding onto your stock for years on end (like you probably should be doing with most stock) then a trivial premium or discount on the price probably isn't going to be a big deal for you.", "title": "" }, { "docid": "a22dc88fd01f8f0f81bf8091d8020c80", "text": "Can't totally agree with that. Volatility trading is just one trading type of many. In my opinion it doesn't depend on whether you are a professional trader or not. As you might have heard, retail traders are said to create 'noise' on the market, mainly due to the fact that they aren't professional in their majority. So, I would assume, if an average retail trader decided to trade volatility he would create as much noise as if would have been betting on stock directions. Basically, most types of trading would require a considerable amount of effort spent on fundamental analysis of the underlying be it volatility or directional trading. Arbitrage trading would be an exception here, I guess. However, volatility trading relies more on trader's subjective expectations about future deviations, whereas trading stock directions requires deeper research of the underlying. Is it a drawback or an advantage? I.d.k. On the other hand-side volatility trading strategies cover both upward and downward movements, but you can set similar hedging strategies when going short or long on stocks, isn't it? To summarise, I think it is a matter of preference. Imagine yourself going long on S&P500 since 2009. Do you think there are many volatility traders who have outperformed that?", "title": "" }, { "docid": "96eaaf4d4da27faaa9cee053a3e9931b", "text": "\"If you're going to be a day trader, you really need to know your stuff. It's risky, to say the least. One of the most important elements to being successful is having access to very fast data streams so that you can make moves quickly as trends stat to develop in the markets. If you're planning on doing this using consumer-grade sites like eTrade, that's not a good idea. The web systems of many of the retail brokerage firms are not good enough to give you data fast enough for you to make good, timely decisions or to be able to execute trades way that day traders do in order to make their money. Many of those guys are living on very thin margins, sometimes just a few cents of movement one way or the other, so they make up for it with a large volume of trades. One of the reasons you were told you need a big chunk of money to day trade is that some firms will rent you out a \"\"desk\"\" and computer access to day trade through their systems if you're really serious about it. They will require you to put up at least a minimum amount of money for this privilege, and $25k may not be too far out of the ballpark. If you've never done day trading before, be careful. It doesn't take much to get caught looking the wrong way on a trade that you can't get out of without losing your shirt unless you're willing to hold on to the stock, which could be longer than a day. Day trading sounds very simple and easy, but it isn't. You need to learn about how it works (a good book to read to understand this market is \"\"Flash Boys\"\" by Michael Lewis, besides being very entertaining), because it is a space filled with very sophisticated, well-funded firms and individuals who spend huge sums of money to gain miniscule advantages in the markets. Be careful, whatever you do. And don't play in day trading with your retirement money or any other money you can't afford to walk away from. I hope this helps. Good luck!\"", "title": "" }, { "docid": "4cb4cf822b300219efe529fc8b57c8e3", "text": "\"Day trading is an attempt to profit on high frequency signal changes. Long term investing profits on low frequency changes. What is the difference? High Frequency Signal = the news of the day. This includes things like an earnings report coming out, panic selling, Jim Cramer pushing his \"\"buy buy buy\"\" button, an oil rig blowing up in the ocean, a terrorist attack in some remote region of the globe, a government mandated recall, the fed announcing an interest rate hike, a competitor announcing a new product, hurricanes, cold winters, a new health study on child obesity, some other company in the same sector missing their earnings, etc. Think daily red and green triangles on CNBC: up a buck, down a buck. Low Frequency Signal = The long term effectiveness of a company to produce and sell a product efficiently plus the sum of the high frequency signal over a long period of time. Think 200 day moving average chart of a stock. No fast changes, just, long term trends. Over time, the high frequency changes tend to negate each other. To me, long term investing is wiser because the low frequency signal is dominated by a companies ability to function well over time. That in turn is driven by the effectiveness of its leadership coupled with the skill and motivation of its employees. You are betting on the company and its people. Pseudo-random shorterm forces, which you can't control, play less of a role. The high frequency signal, on the other hand, is dominated by sporadic and unpredictable forces that typically can't be controlled by the company. It has some tinge of randomness about it. Trying to invest on that random component is not investing at all, it is gambling (akin to \"\"investing\"\" in that next coin flip coming up heads) I understand the allure of high frequency trading. Look at the daily chart of a popular stock and focus on the up and down ticks. Mathematically, you could make a killing if you could just stack all those upticks on top of each other. If only it was that easy.\"", "title": "" }, { "docid": "f35dc2b4f733eb9ba74e1f60e5b27dd4", "text": "\"FYI, USA is not the only country in the world. If you try to stop people from making money, they will go do it elsewhere. Other countries are more than willing and competent, to accept these HFT folk. Even if all countries stop HFT. There will be encrypted black markets for this on the internets. Google \"\"dark pools\"\". Regulators are light years behind the ingenuity shown by Wall Street to find inefficiencies in the market. Computers and quantitative finance are here to stay. You cannot ask people to trade using emotions like during the Great Depression Era.\"", "title": "" }, { "docid": "429efb22f2ab89118366a6888d7077f2", "text": "\"n1. go to tradeworx.com and you can read some papers. 2. Revenues of hft have gone down substantially. About 15 years ago the total market was around 7 billion, it has dropped to 1 billion this year. 3. \"\"no goods or valuable services are produced.- That is false. hft provides liquidity and low spreads. There is a reason why you can buy or sell a share of a stock and the spread is 1 penny. One of the main reasons to go public is to have the secondary market liquid. There is a reason you can instantly sell or buy a stock... Do you realize you used to have to actually call your broker and he had to negotiate an order on the floor? hft makes the markets more efficient. The average person can sign up an online acct and trade/invest for basically nothing. Why do you think that is? finally who are you to say how I can or can not allocate my money. If I develop my own strategy that trades every second why can't I?\"", "title": "" }, { "docid": "d44654282465ebd3ebad8d3665381e99", "text": "If #2 is how it really worked I would approve. In the real world, entities who have the money to purchase access have systems which are in a position to execute strategies which shave pennies of of people who want to make real trades. I want to sell for $61.15 and someone wants to buy for $61.10 and the HFT traders force both hands and make their money on that nickel in between us.", "title": "" }, { "docid": "67a2494bdf2b722f64eb4ffdaa9ee679", "text": "Lowered bid ask spread. If you as a market market have to onto inventory (risk) for a long period then you have to charge your customers a commensurate premium. The groups who have lost because of HFT are big banks, any large investor who used to get preferential treatment from brokers, and floor traders. The groups who have won are retail investors and those investors who weren't large or connected enough to get preferential treatment from brokers (majority of investors).", "title": "" }, { "docid": "3a66a5e43fcafe49252adcf58e4aacba", "text": "I will assume that you are not asking in the context of high frequency trading, as this is Personal Finance Stack Exchange. It is completely acceptable to trade odd lots for retail brokerage customers. The odd lot description that you provided in your link, from Interactive Brokers is correct. But even in that context, it says, regarding the acceptability of odd lots to stock exchanges: The exception is that odd lots can be routed to NYSE/ARCA/AMEX, but only as part of a basket order or as a market-on-close (MOC) order. Google GOOG is traded on the NASDAQ. Everything on the NASDAQ is electronic, and always has been. You will have no problem selling or buying less than 100 shares of Google. There is also an issue of higher commissions with odd lots: While trading commissions for odd lots may still be higher than for standard lots on a percentage basis, the popularity of online trading platforms and the consequent plunge in brokerage commissions means that it is no longer as difficult or expensive for investors to dispose of odd lots as it used to be in the past. Notice what it says about online trading making it easier, not more difficult, to trade odd lots.", "title": "" }, { "docid": "bac9d17624dca5bf1c7d6d7eb66b7d34", "text": "There is indeed a market for single stock futures, and they have been trading on the OneChicago exchange since 2002. Futures are available in 12,509 individual stocks, according to the exchange's current product listing. One advantage they offer over trading the underlying stock is the significantly higher leverage that is available, combined with the lack of pattern day trader rules that apply to stocks and similar securities. Single stock futures have proven to be something of a regulatory challenge as it has been unclear whether their oversight is the remit of the SEC/FINRA or the CFTC/NFA.", "title": "" }, { "docid": "0b8a316de1395303b95c0c860191c913", "text": "High frequency trades are intra day. The would buy a stock for 100 and sell for 100.10 multiple times. So If you start with 100 in your broker account, you buy something [it takes 2-3 days to settle], you sell for 100.10 [it takes 2-3 days to settle]. You again buy something for 100. It is the net value of both buys and sells that you need to look at. Trading on Margin Accounts. Most brokers offer Margin Accounts. The exact leverage ratios varies. What this means is that if you start with 10 [or 15 or 25] in your broker you can buy stock of 100. Of course legally you wont own the stock unless you pay the broker balance, etc.", "title": "" }, { "docid": "77986266e05864064b966505301f2aae", "text": "I agree. Small investors got screwed worse with manually traded shares. Electronic trading was a big part of why fees for trades have come down so much over the years. HFT acts as a tax on small traders, but it is fairly insignificant. This isn't to say that HFT isn't a problem. Systems that cause flash crashes with no one understanding why, isn't good for the market. A small fee is a small change that could provide a solution to the problem.", "title": "" }, { "docid": "07cf897e53c911848657e7b6a68ecaca", "text": "\"This is a very important question and you will find arguments from both sides, in part because it is still understudied. Ben Golub, Economics Ph.D., from Stanford answers \"\"Is high-frequency trading good for the economy?\"\" on Quoram quite well. This is an important but understudied question. There are few published academic studies on it, though several groups are working on the subject. You may be interested in the following papers: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1569067 http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1361184 These document some of the phenomena that arise in high frequency trading, from a theoretical and an empirical perspective. However, a full equilibrium analysis of the unique features of high frequency trading is still missing, and until it is done, all our answers will be kind of tentative. Nevertheless, there are some obvious things one can say. Currently, high frequency traders are competing to locate physically closer and closer to exchanges, because milliseconds matter. Thus, large amounts of money are being spent to beat other market makers by tiny fractions of a second. Once many firms make these investments, the market looks like it did before in terms of competition and prices, but is a tiny bit faster. This investment is unlikely to be socially efficient: that is, the users of the market don't actually benefit from the fact that their trades are executed half a millisecond faster -- certainly not enough to cover all the investment that went into making that happen. Some people who study the issue believe that high frequency trading (HFT) actually exacerbates market volatility; some plots to this effect are found in the second paper linked above. There is certainly no widely accepted theory that says faster trading technology necessarily increases efficiency, and it is easy to think of algorithms that can make money (at least in the short run) but hurt most other investors, as well as the informational value of the market. One caution is that some of the complaining about HFT comes from those who lose when HFT gets better -- old-style market makers. They certainly have an incentive to make HFT out to be very bad. So some complaints about the predatory nature of HFT should be taken with a grain of salt. There is no strong economic consensus about the value of this activity. For what it's worth, my personal impression is that this is more bad than good. I'll post an update here as more definitive research comes out. You can also find a debate on High-frequency trading from the Economist which gives both sides of the argument. In conclusion: Regardless of how you feel about HFT it seems like it's here to stay and won't be leaving in the foreseeable future. So the debate will rage on... Additional resource you may finding interesting: Europe Begins Push To Ban HFT High Frequency Trading Discussion On CNBC Should High Frequency Trading (HFT) be banned ?\"", "title": "" }, { "docid": "557de771f5d36064911e7a767f197b57", "text": "\"In US public stock markets there is no difference between the actions individual retail traders are \"\"permitted\"\" to take and the actions institutional/corporate traders are \"\"permitted\"\" to take. The only difference is the cost of those actions. For example, if you become a Registered Market Maker on, say, the BATS stock exchange, you'll get some amazing rebates and reduced transaction prices; however, in order to qualify for Registered Market Maker status you have to maintain constant orders in the book for hundreds of equities at significant volumes. An individual retail trader is certainly permitted to do that, but it's probably too expensive. Algorithmic trading is not the same as automated trading (algorithmic trading can be non-automated, and automated trading can be non-algorithmic), and both can be anywhere from low- to high-frequency. A low-frequency automated strategy is essentially indistinguishable from a person clicking their mouse several times per day, so: no, from a legal or regulatory perspective there is no special procedure an individual retail trader has to follow before s/he can automate a trading strategy. (Your broker, on the other hand, may have all sorts of hoops for you to jump through in order to use their automation platform.) Last (but certainly not least) you will almost certainly lose money hand over fist attempting bid-ask scalping as an individual retail trader, whether your approach is algorithmic or not, automated or not. Why? Because the only way to succeed at bid-ask scalping is to (a) always be at/near the front of the queue when a price change occurs in your favor, and (b) always cancel your resting orders before they are executed when a price change occurs against you. Unless your algorithms are smarter than every other algorithm in the industry, an individual retail trader operating through a broker's trading platform cannot react quickly enough to succeed at either of those. You would have to eschew the broker and buy direct market access to even have a chance, and that's the point at which you're no longer a retail trader. Good luck!\"", "title": "" } ]	fiqa
d2a83f600d6376e069066778242cc300	Is debt almost always the cause of crashes and recessions?	[ { "docid": "c07159e245303172793305c3a1d8a2be", "text": "While debt increases the likelihood and magnitude of a crash, speculation, excess supply and other market factors can result in crashes without requiring excessive debt. A popular counter example of crashes due to speculation is 16th century Dutch Tulip Mania. The dot com bubble is a more recent example of a speculative crash. There were debt related issues for some companies and the run ups in stock prices were increased by leveraged traders, but the actual crash was the result of failures of start up companies to produce profits. While all tech stocks fell together, sound companies with products and profits survive today. As for recessions, they are simply periods of time with decreased economic activity. Recessions can be caused by financial crashes, decreased demand following a war, or supply shocks like the oil crisis in the 1970's. In summary, debt is simply a magnifier. It can increase profits just as easily as can increase losses. The real problems with crashes and recessions are often related to unfounded faith in increasing value and unexpected changes in demand.", "title": "" }, { "docid": "645ffcd5f477c364552f62afc998402d", "text": "\"The statement can be true, but isn't a general rule. Crashes and recessions are two different things. A crash is when the market rapidly revalues something when prices are out of equilibrium, whether it be stocks, a commodity or even a service. When the internet was new, nobody knew how to design webpages, so web page designers were in huge demand and commanded insane price premiums. I literally had college classmates billing real companies $200+/hr for marginal web skills. Eventually, the market \"\"clued up\"\" and that industry collapsed overnight. Another example of a crash from the supply point of view was the discovery of silver in the western US during the 19th century -- these discoveries increased the supply of the commodity to the point that silver coin eroded in value and devastated small family farms, who mostly dealt in silver currency. Recessions are often linked to crashes, but you don't need a crash to have a recession. Basically, during a recession, trade and industrial activity drop. The economy operates in cycles, and the euphoria and over-optimistic projections of a growing or booming economy lead to periods of reduced growth where the economy essentially reorganizes itself. Capital is a (if not the) key element of the economic cycle -- it's a catalyst that makes things happen. Debt is one form of capital -- it's not good, not bad. Generally cheap capital (ie. low interest rates) bring economic growth. Why? If I can borrow at 4%, I can then perform some sort of economic activity (bake bread, make computers, assemble cars, etc) that will earn myself 6, 8 or 10% on the dollar. When interest rates go up, economic activity slows, because the higher cost of credit increases the risk of losing money on an investment. The downside of cheap capital is that risk taking gets too easy and you can run into situations like the $2M ranch houses in California. The downside of expensive/tight capital is that it gets harder for businesses to operate and economic activity slows down. The effects of either extreme cascade and snowball.\"", "title": "" }, { "docid": "7fa4236619f0c3895073c76edb5eb278", "text": "The root cause can be said to always be a crisis in confidence. It may be due to a very real event. However, confidence is what pushes the markets up and worries are what bring them down.", "title": "" }, { "docid": "e35a68f6566711783b486d9bc1f8496e", "text": "A lack of trust in the regulator can also stop everyone trading. If you don’t believe the bank notes you are getting paid with are real, why do any work?", "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": "2d4595c4e33035d108c772b10d26fa5b", "text": "It depends on why the stocks crashed. If this happened because interest rates shot up, bonds will suffer also. On the other hand, stocks could be crashing because economic growth (and hence earnings) are disappointing. This pulls down interest rates and lifts bonds.", "title": "" }, { "docid": "b8f6e63d5633a6b93d55ac418d50aa71", "text": "Typically the debt is held by individuals, corporations and investment funds, not by other countries. In cases where substantial amounts are held by other countries, those countries are typically not in debt themselves (e.g. China has huge holdings of US Treasuries). If the debts were all cancelled, then the holders of the debt (as listed above) would lose out badly and the knock-on effects on the economy would be substantial. Also, governments that default tend to find it harder to borrow money again in the future.", "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": "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": "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": "7f66a841d1b8220b8ac3b9817ba46358", "text": "Isn't it clear to everyone that something that isn't measured by economists yet is going horribly wrong in the US since they started with the debt bing? I know so many people with no savings whatsoever and just hanging on.", "title": "" }, { "docid": "8e50170e3079427d32863a48ed4f6907", "text": "I was being sarcastic. Student loan crash is a major circle jerk in some Financial subs If anything, it's more likely to manifest itself as OP described. Economic growth is going to be lower is a substantial portion of the populus is servicing debt than consuming goods.", "title": "" }, { "docid": "dfaeffe85aafea3a5e7818563474d004", "text": "Since 2008, when it all came crashing down, I read a variety of solid data sources that said this asset bubble and mortgage/HELOCs were going to reset (blow up) in slow motion for years, maybe decades. Nothing changed from that time. This has been happening for hundreds of years from what I understand now.", "title": "" }, { "docid": "bc36975d7683f568850949230c160c80", "text": "By the phrasing of your question it seems that you are under the mistaken impression that countries are borrowing money from other countries, in which case it would make sense to question how everyone can be a borrower with no one on the other side of the equation. The short answer is that the debt is owed mostly to individuals and institutions that buy debt instruments. For example, you know those US savings bonds that parents are buying to save for their children's education? Well a bond is just a way to loan money to the Government in exchange for the original money plus some interest back later. It is as simple as that. I think because the debt and the deficit are usually discussed in the context of more complex macroeconomic concerns people often mistakenly assume that national debts are denominated in some shadow banking system that is hidden from the common person behind some red-tape covered bureaucracy. This is not the case here. Why did they get themselves into this much debt? The same reason the average person does, they are spending more than they bring in and are enabled by access to easy credit. Like many people they are also paying off one credit card using another one.", "title": "" }, { "docid": "d366215b375cef0820dc85e6d867f191", "text": "I agree that the cause of the crash can make a huge difference in the effect on the bond market. Here's a few other possibilities: All that to say that there's no definitive answer as to how the bond market will respond to an equity crash. Bonds are much more highly correlated to equities lately, but that could be due to much lower interest rates pushing more of the risk of bonds to the credit worthiness of the issuer, increasing correlation.", "title": "" }, { "docid": "49298734e5683df12355c7dbccf30bb4", "text": "\"The default scenario that we're talking about in the Summer of 2011 is a discretionary situation where the government refuses to borrow money over a certain level and thus becomes insolvent. That's an important distinction, because the US has the best credit in the world and still carries enormous borrowing power -- so much so that the massive increases in borrowing over the last decade of war and malaise have not affected the nation's ability to borrow additional money. From a personal finance point of view, my guess is that after the \"\"drop dead date\"\" disclosed by the Treasury, you'd have a period of chaos and increasing liquidity issues after government runs out of gimmicks like \"\"borrowing\"\" from various internal accounts and \"\"selling\"\" assets to government authorities. I don't think the markets believe that the Democrats and Republicans are really willing to destroy the country. If they are, the market doesn't like surprises.\"", "title": "" }, { "docid": "bbbf2a6b23742336462b8913f03a364a", "text": "\"Your argument is biased vastly in favor of the banks: Doesn't the simultaneous growth of the residential and commercial real estate pricing bubbles undermines the case made by yourself that Fannie and Freddie were at the root of the problem? Why does your explanation also leave out predatory lending? Or that during 2006, 22% of homes purchased (1.65 million units) were for investment purposes, with an additional 14% (1.07 million units) purchased as vacation homes. During 2005, these figures were 28% and 12%, respectively. In other words, a record level of nearly 40% of homes purchased were not intended as primary residences. Or that housing prices nearly doubled between 2000 and 2006, a vastly different trend from the historical appreciation at roughly the rate of inflation. Or that the proportion of subprime ARM loans made to people with credit scores high enough to qualify for conventional mortgages with better terms increased from 41% in 2000 to 61% by 2006. From wikipedia: So why did lending standards decline? In a Peabody Award winning program, NPR correspondents argued that a \"\"Giant Pool of Money\"\" (represented by $70 trillion in worldwide fixed income investments) sought higher yields than those offered by U.S. Treasury bonds early in the decade. Further, this pool of money had roughly doubled in size from 2000 to 2007, yet the supply of relatively safe, income generating investments had not grown as fast. Investment banks on Wall Street answered this demand with financial innovation such as the mortgage-backed security (MBS) and collateralized debt obligation (CDO), which were assigned safe ratings by the credit rating agencies. In effect, Wall Street connected this pool of money to the mortgage market in the U.S., with enormous fees accruing to those throughout the mortgage supply chain, from the mortgage broker selling the loans, to small banks that funded the brokers, to the giant investment banks behind them. By approximately 2003, the supply of mortgages originated at traditional lending standards had been exhausted. However, continued strong demand for MBS and CDO began to drive down lending standards, as long as mortgages could still be sold along the supply chain. Eventually, this speculative bubble proved unsustainable.\"", "title": "" }, { "docid": "e06513ea6682d175b2be99e6ede27c69", "text": "The short answer is if you own a representative index of global bonds (say AGG) and global stocks (say ACWI) the bonds will generally only suffer minimally in even the medium large market crashes you describe. However, there are some caveats. Not all bonds will tend to react the same way. Bonds that are considered higher-yield (say BBB rated and below) tend to drop significantly in stock market crashes though not as much as stock markets themselves. Emerging market bonds can drop even more as weaker foreign currencies can drop in global crashes as well. Also, if a local market crash is caused by rampant inflation as in the US during the 70s-80s, bonds can crash at the same time as markets. There hasn't been a global crash caused by inflation after countries left the gold standard, but that doesn't mean it can't happen. Still, I don't mean to scare you away from adding bond exposure to a stock portfolio as bonds tend to have low correlations with stocks and significant returns. Just be aware that these correlations can change over time (sometimes quickly) and depend on which stocks/bonds you invest in.", "title": "" }, { "docid": "0d2b6fbe48101ebb881deb9bc368cca2", "text": "Inflation is bad for people with lots of cash assets. It's good for debtors, particularly debtors with unsecured debt.", "title": "" } ]	fiqa
4731277261774ff58c24662576cba182	What factors you have do you count on to speculate effectively?	[ { "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": "5dc7c6c4c4755343d23684696896d141", "text": "\"Well said. And I get it, really I do. Rational means something very specific in the theoretical model of EMH, and it's not the same way that \"\"rational\"\" is usually used. When a person actually gets to the point where he can trade on the stock market, you expect they would have information like \"\"know which stock you're trading\"\". Maybe these people didn't. And even if we assume people have perfect information, they still make mistakes. Regularly. Repeatedly. Sometimes predictably. And those mistakes can overwhelm the right-price-finding effect of EMH.\"", "title": "" }, { "docid": "78ae8d2e3a6fd1e9b448c0e6d931e615", "text": "thanks for the advice, I still have few weeks before my master course starts and would like to do more reading regarding trading, any books that you would recommend ? Also I always assume that modelling skill is not that important in sales and trading, is my assumption correct ? Modelling is probably one of my weak skills but if it is needed I would like to work further on it thank you", "title": "" }, { "docid": "9feb3b7674d2e90e21edb01d70da252e", "text": "I'd say the opposite of hedging is speculating. If you are convinced an asset will appreciate in value, or rather the probability of gains is enough to induce you to hold the asset, you are a speculator. There are lots of ways of speculating, including holding risky assets without hedging that risk and possibly magnifying that risk and return via leverage or the embedded leverage in a derivative contract. Generally speaking, if in expectation you are paying to reduce your risk, you are a hedger. If you are (in expectation) being paid to bear the risk that otherwise someone else would bear, you are a speculator. The word speculation has been tainted by politicians and others trying to vilify the practice, but at the end of the day it's what we are all doing when we buy stock or any other risky asset.", "title": "" }, { "docid": "5cdb058b7288ffbea2090e1acee56472", "text": "Do You Consult Or Just Do The Job?….. For as long as I can remember I have always sought out information, knowledge, facts, figures. One of my ex-bosses once said to me that I could always be relied on to find untapped resources & deliver. This was when I was in my early 20′s & its a skill that I feel is vital for the success of any business. My second job, when I was 19yrs old was in an Advertising / PR company - I was the Secretary. Part of my remit was credit control & book-keeping, for some reason I was always naturally interested in sales units sold & values – then see how the total sales compared to the previous month / year. Little did I know, this was a good skill for Profit & Loss sheets in years to come!", "title": "" }, { "docid": "ab0c1e82e1e9f0cc6156e8c9f7686003", "text": "Well, yes. Lewis (and anybody) is presuming that you accept take advantage of good fortune. In his own example, though, he wasn't in any way prepared to go into finance. Having gotten there, and established himself even, he pitched it in favor of writing a book. Neither of those examples supports everyone calling luck the result of work plus brains.", "title": "" }, { "docid": "819e593b222cf536ee9048d12356cb06", "text": "\"Be familiar with and able to verbally run through how to do a discounted cash flow analysis. Additionally be up to date with current financial market(s) trends, both domestically and globally. Know where the U.S bond yields are trading, and where they are going, interest rates too. Apart from that big picture stuff I wouldn't stress too much about technicals because he/she may not even ask about them at all if its more of a \"\"fit\"\" interview.\"", "title": "" }, { "docid": "7c12795e883710dd4847c9cedd4ede24", "text": "\"Suggest concretely writing out the 3-5 traits you're looking for, gaps you're looking to fill. Assign an acronym to each bullet. When you plan out your questions, write the acronym of the bullet you're looking to assess next to each Q. If none fit, you should seriously consider why you're asking the question. Here's some examples I used for a sales-related search: \"\"(PO) Process Orientation - Understands the anatomy of sales, stage breakdown and discrete steps in a sales process. (CR) Creativity - Doesn't need a well established playbook of scripts, processes to make deals happen. ...\"\"\"", "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": "bb1cf8423107a911bd071f131354e0dc", "text": "If you are looking for money to speculate in the capital markets, then your brokers will already lend to you at a MUCH more favorable rate than an outside party will. For instance, with $4,000 you could EASILY control $40,000 with many brokers, at a 1% interest rate. This is 10:1 leverage, much like how US banks operate... every dollar that you deposit with them, they speculate with 10x as much. Interactive Brokers will do this for you with your current credit score. They are very reputable and clear through Goldman Sachs, so although reputable is subjective in the investment banking world, you won't have to worry the federal government raiding them or anything. If you are investing in currencies than you can easily do 50:1 leverage as an American, or 100:1 as anyone else. This means with only $400 dollars you can control $40,000 account. If you are investing in the futures market, then there are many many ways to double and triple and quadruple your leverage at the lowest interests rates. Any contract you enter into is a loan from the market. You have to understand, that if you did happen to have $40,000 of your own money, then you could get $4,000,000 account size for speculating, at 1% interest. Again, these are QUICK ways to lose your money and owe a lot more! So I'd really advise against it. A margin call in the futures market can destroy you. I advise you to just think more efficiently until you come up with a way to earn that much money initially, and then speculate.", "title": "" }, { "docid": "6e565dff7908157a23a049aca8e6aa30", "text": "No, and using a 37 year old formula in finance that is as simple as: should make it obvious technical analysis is more of a game for retail traders than investment advice. When it comes to currencies, there are a myriad of macroeconomic occurrences that do not follow a predictable timescale. Using indicators like RSI on any time frame will not magically illuminate broad human psychology and give you an edge. It is theoretically possible for a single public stock's price to be driven by a range of technical traders who all buy at RSI 30 and sell at RSI 70, after becoming a favorite stock on social media, but it is infinitely more likely for all market participants to have completely different goals.", "title": "" }, { "docid": "8fd096c812c0ad78c3fd458f3ed8988e", "text": "In fact markets are not efficient and participants are not rational. That is why we have booms and busts in markets. Emotions and psychology play a role when investors and/or traders make decisions, sometimes causing them to behave in unpredictable or irrational ways. That is why stocks can be undervalued or overvalued compared to their true value. Also, different market participants may put a different true value on a stock (depending on their methods of analysis and the information they use to base their analysis on). This is why there are always many opportunities to profit (or lose your money) in liquid markets. Doing your research, homework, or analysis can be related to fundamental analysis, technical analysis, or a combination of the two. For example, you could use fundamental analysis to determine what to buy and then use technical analysis to determine when to buy. To me, doing your homework means to get yourself educated, to have a plan, to do your analysis (both FA and TA), to invest or trade according to your plan and to have a risk management strategy in place. Most people are too lazy to do their homework so will pay someone else to do it for them or they will just speculate (on the latest hot tip) and lose most of their money.", "title": "" }, { "docid": "f005627c0a65c90c24df227befe02560", "text": "There's a grey area where investing and speculating cross. For some, the stock market, as in 10% long term return with about 14% standard deviation, is too risky. For others, not enough action. Say you have chosen 10 penny stocks, done your diligence, to the extent possible, and from a few dozen this is the 10 you like. I'd rather put $100 into each of 10 than to put all my eggs in one basket. You'll find that 3 might go up nicely, 3 will flounder around, and 4 will go under. The gambler mentality is if one takes off, you have a profit. After the crash of '08, buying both GM and Ford at crazy prices actually worked, GM stockholders getting nothing, but Ford surviving and now 7X what I bought it for. Remember, when you go to vegas, you don't drop all your chips on Red, you play blackjack/craps as long as you can, and get all the free drinks you can.", "title": "" }, { "docid": "317fdf0e949f3e98c8a3d0b63e256340", "text": "I was referring to insider information as a seperate means of profiting. So I assumed: 1. Fundamental analysis/picking the direction 2. Insider information 3. Gaming the market (illiquid markets) If this is true. What makes a good market maker? Stoploss/takeprofit management and hope there are enough players in it not to win it (i.e. hedge positions) to take profit from? Sounds very luck base or is there something im missing? Thanks", "title": "" }, { "docid": "92ee9cadaa14d9d89f6ca7d5aaa4a99e", "text": "\"There are some assumptions which can be made in terms of the flexibility you have - I will start with the least flexible assumption and then move to more flexible assumptions. If you must put down a number 1, your go-to for this(\"\"Change the start period to 1\"\"), is pretty good, and it's used frequently for other divide-by-zero calculations like kda in a video game. The problem I have with '1' is that it doesn't allow you to handle various scales. Some problems are dealt with in thousands, some in fractions, and some in hundreds of millions. Therefore, you should change the start period to the smallest significantly measurable number you could reasonably have. Here, that would take your example 0 and 896 and give you an increase of 89,500%. It's not a great result, but it's the best you can hope for if you have to put down a number, and it allows you to keep some of the \"\"meaning in the change.\"\" If you absolutely must put something This is the assumption that most answers have taken - you can put down a symbol, a number with a notation, empty space, etc, but there is going to be a label somewhere called 'Growth' that will exist. I generally agree with what I've seen, particularly the answers from Benjamin Cuninghma and Nath. For the sake of preservation - those answers can be summarized as putting 'N/A' or '-', possibly with a footnote and asterisk. If you can avoid the measurement entirely The root of your question is \"\"What do my manager and investors expect to see?\"\" I think it's valuable to dig even further to \"\"What do my manager and investors really want to know?\"\". They want to know the state of their investment. Growth is often a good measurement of that state, but in cases where you are starting from zero or negative, it just doesn't tell you the right information. In these situations, you should avoid % growth, and instead talk in absolute terms which mention the time frame or starting state. For example:\"", "title": "" }, { "docid": "fd07e3d575eb4ffa0cedff232d7267c4", "text": "I trade futures. No FX or equities though. It is my only source of income, and has been for about 5 years now. Equities and FX, to me, seems like more of a gamble than Vegas. I don't know how people do it.", "title": "" } ]	fiqa
01f24796c8a0cdef09188afefe2ef9e7	As a minor in the UK do I need to pay taxes on self-employment income, and if so how?	[ { "docid": "5d1c66612658bf992773115012c6c163", "text": "\"As a minor you certainly can pay tax, the government wants its cut from you just like everyone else :-) However you do get the personal allowance like everyone else, so you won't have to pay income tax until your net income reaches £10,800 (that's the figure for the tax year from April 2015 to April 2016, it'll probably change in future years). Once you're 16, you will also have to pay national insurance, which is basically another tax, at a lower threshold. The current rates are £2.80/week if you are making £5,965 a year or more, and also 9% on any income above £8,060 (up to £42,385). Your \"\"net income\"\" or \"\"profits\"\" are the income you receive minus the expenses you have to support that income. Note that the expenses must be entirely for the \"\"business\"\", they can't be for personal things. The most important thing to do immediately is to start keeping accurate records. Keep a list of the income you receive and also the expenses you pay for hardware etc. Make sure you keep receipts (perhaps just electronic ones) for the expenses so you can prove they existed later. Keep track of that net income as the year goes on and if it starts collecting at the rate you'd have to pay tax and national insurance, then make sure you also put aside enough money to pay for those when the bill comes. There's some good general advice on the Government's website here: https://www.gov.uk/working-for-yourself/what-you-need-to-do In short, as well as keeping records, you should register with the tax office, HMRC, as a \"\"sole trader\"\". This should be something that anyone can do whatever their age, but it's worth calling them up as soon as you can to check and find out if there are any other issues. They'll probably want you to send in tax returns containing the details of your income and expenses. If you're making enough money it may be worth paying an accountant to do this for you.\"", "title": "" } ]	[ { "docid": "ed074af8df6c82582056af6264b514f1", "text": "\"What you're asking about is called a \"\"distribution\"\" when it comes to an LLC. It's basically you paying yourself some or all of the proceeds of the business, depending on how you're set up. You can pay yourself distributions on a regular schedule, say monthly, or you can do it at the end of the year. Whatever you do in this regard, what you take out as distributions is reported on your personal income tax as taxable income. LLCs in the U.S. use pass-through taxation (unless you intentionally elect to have the LLC treated as a corporation for tax purposes, which some people do), so whatever the principals receive in distribution is personally taxable. Keep in mind that you'll have to pay ALL of the taxes normally covered by an employer, such as self-employment tax (usually about 15%), social security tax, and so on. This is in addition to income tax, so remember that. I hope this helps. Good luck!\"", "title": "" }, { "docid": "2f6fc677d6cb6bd6df28c89bea847238", "text": "Another person, not a shareholder or director, will be treated as when a bank loans you money. You are loaning out money and you are sort of getting interest income out of it or some other benefit, which needs to be put down in you company's annual return. Full source on the HMRC website. But for a shareholder or director is different matter. Check the HMRC source for sure and check with your accountant, if you have one. If you owe your company money You or your company may have to pay tax if you take a director’s loan. Your personal and company tax responsibilities depend on how the loan is settled. You also need to check if you have extra tax responsibilities if: If the loan was more than £10,000 (£5,000 in 2013-14) If you’re a shareholder and director and you owe your company more than £10,000 (£5,000 in 2013 to 2014) at any time in the year, your company must: You must report the loan on your personal Self Assessment tax return. You may have to pay tax on the loan at the official rate of interest. If you paid interest below the official rate If you’re a shareholder and director, your company must: You must report the interest on your personal Self Assessment tax return. You may have to pay tax on the difference between the official rate and the rate you paid.", "title": "" }, { "docid": "328d9ea0fda297f04389a4d04d3ab323", "text": "It is unlikely that UK tax will be due on the money -- see here: Foreign students usually don’t pay UK tax on foreign income or gains, as long as they’re used for course fees or living costs But if the UK doesn't tax you on the money then double-taxation agreements probably won't apply, and so any Italian tax due will be payable.", "title": "" }, { "docid": "0405c80b946e2a2c2c2ceae2b78ccae7", "text": "In a simple case as the sole UK resident director/shareholder of a company, with that company as your only income, you are usually best paying yourself a salary of the maximum tax free amount allowed under your tax code (~£11k for most people at present). On this you will have to pay some employer and employee National Insurance (NI) contributions (totalling around £1000). Your salary/employer NI counts as an expense, so that is taken off the company profits. You then pay corporation tax on the remainder (20%). The first £5k you take as dividends is tax free, the remainder at a lower tax rate than the equivalent combined income tax/NI (starting at 7.5% instead of 20% tax plus employee plus employer NI), giving a significant saving compared to salaried income even after corporation tax. To declare and pay the tax, you would need to complete a self-assessment tax return. Your company will also need to file a return. The Contractor UK website, although aimed at IT contractors, has some very useful information on operating Ltd companies. That said, finances are rarely that simple so I would concur with the recommendation you engage an accountant, which is a tax-deductible expense.", "title": "" }, { "docid": "076e0d5e64e17e91c7161a310b3c440e", "text": "\"AFAIK, there are two kinds of taxes your web freelancing income may be subject to in Quebec: On the income taxes: The net income you realize from your web freelancing activities would be considered taxable income. Assuming you are not operating as an incorporated business, you would need to declare the freelancing income on both your federal and provincial tax returns. You should be able to deduct certain costs related to your business – for instance, if you paid for software, hosting, domain name registration, etc. That is, only the profit from your business would be subject to income tax. With income and expenses arising from self-employment, you may want to use a professional to file your taxes. On the sales taxes: You may also need to charge federal GST and provincial QST (Quebec Sales Tax) on your services: You must enroll and charge GST and QST once you exceed the \"\"small supplier\"\" revenue threshold of $30,000 measured over four consecutive quarters. (You can still choose to enroll for GST/QST before you reach that amount, but over that amount enrollment becomes mandatory. Some businesses enroll before the threshold is reached so they can claim input tax credits for tax paid on expenses, but then there's more paperwork – one reason to perhaps avoid enrolling until necessary.) In Quebec, the Ministère du Revenu du Québec administers both GST (on behalf of the federal government) as well as provincial QST. Be sure to also check out their informative booklet, Should I Register with Revenu Quebec? (PDF). See also General Information Concerning the QST and the GST/HST (PDF).\"", "title": "" }, { "docid": "9d86d2dee6b62b0b7c9130b5bfe2fd4f", "text": "To be honest I don't know how any of this work in the US so my answer will be of very limited value to yourself, I suspect, but when it comes to the UK if you're going to get the same pay gross either way than being independent makes very little sense. Running your own business is hassle, is generally more risky (although possibly not in your case) and costs money. Some of the most obvious costs are the added NI, probably the need for an accountant, at around £1200 p/a for basic accountancy service, you are obliged by law to have liability insurance and you probably want professional indemnity insurance, this will be around £600 p/a minmum, and so on and so forth. On top of that, oficially anyway, as a contractor, you really shouldn't be getting any benefits from the client, and so health insurance, company car, even parking are all meant to be arranged by, and paid by, your company, and can't (or rather - shouldn't) be charged to the client. So - I would say - if you're seriously thinking about setting up a consultancy company, and this client is first of many - set up a company, but take into account the sums you need to earn. If you're really thinking about employment - be an employee.", "title": "" }, { "docid": "5bf66ce31f1e8493ec3ca7a5dc1cca9b", "text": "In principle, when you are the sole owner of a limited company, and also the sole employee, then it is much easier to assume that someone else is the employee. Let's say your twin brother John Adler. John Adler receives a salary from David Adler's company. Of course John has to pay income tax on his salary. Absolutely in the UK, and in Estonia as well if they have any sensible tax laws at all (which I assume but don't know for sure). Then there is the company. It's profit equals revenue, minus cost. You said £4000 revenue, and John Adler's salary, plus anything the company has to pay on top of the salary, is cost, which is subtracted from the revenue to calculate profit. In the UK, the company pays 20% corporation tax on those profits, and the rest stays in its bank account (or may be in goods that the company purchased). Where does David Adler come in? He owns the company, but doesn't work for it and gets no salary. He owns the company, but he does not own the company's money. He can't just help himself to the money. He can get a loan from the company, and is personally responsible for repaying that loan. If it's not repaid, HMRC will be very angry which will hurt. Or he can pay himself a dividend, and pays dividend tax on it. Or of course he can leave the money in the company. That's exactly how it works in the UK, and I would assume Estonia to be similar. And of course if it's not the twin brother who is the employee, but the OP himself, then the situation is exactly the same.", "title": "" }, { "docid": "2812388430ff172ca4833291dd7e995d", "text": "13 or 30, the only real difference is that as a minor, you are claimed as a dependent on your parent's return, so you don't have you own exemption. But you do have a standard deduction of $6300 when it comes to earned income. Yes, you'll pay taxes, federal, state, and tax for social security. There's nothing wrong with paying taxes. In fact, I hope you have to pay a small fortune in tax! That would mean you've made a large fortune, and after taxes, still got to keep a good chunk of it. If your income is minimal, you'll actually pay very little in taxes, not enough to even think about wanting to give away what you can sell.", "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": "24f57d4a14e3f6a6a4a25536b8f3d554", "text": "The fact that you're a minor really only factors into who pays the taxes, you or your parents. If you are below the age where you can legally earn money (and therefore pay taxes), then the income will be considered your parent's or guardian's income, and they will be responsible for the taxes. If you are of the age where you are legally allowed to earn your own money, then yes, you will have to pay taxes. Either way, taxes must be paid. If age were a way of escaping the taxes, every big youtuber would simply open their account in the name of one of their children or a child they know...", "title": "" }, { "docid": "85ff947d923a0fb0c528b80bbdf65584", "text": "HMRC may or may not find out about it; the risks and penalties involved if they do find out make it unwise not to just declare it and pay the tax on it. Based on the fact you asked the question, I am assuming that you currently pay all your tax through PAYE and don't do a tax return. You would need to register for Self Assessment and complete a return; this is not at all difficult if your tax situation is straightforward, which it sounds like yours is. Then you would owe the tax on the additional money, at whatever applicable rate (which depends on how much you earn in your main job, the rate tables are here: https://www.gov.uk/income-tax-rates/current-rates-and-allowances ). If it truly is a one off you could simply declare it on your return as other income, but if it is more than that then you would need to look at setting up as Self Employed - there is some good advice on the differences here: http://www.brighton-accountants.com/blog/tax-self-employment-still-employed/ : Broadly, you are likely to be running a business if you have a regular, organised activity with a profit motive, which continues for at least a few months. If the work is one-off, or very occasional (say, a few times per year), or not very organised, or of very low value (say, under £2,000 per year), then it might qualify as casual income. If you think it is beyond the definition of casual income then you would also need to pay National Insurance, as described in the previous link, but otherwise the tax treatment would be the same.", "title": "" }, { "docid": "7200a89dbbfa7bb7d5c587cfb8532ebb", "text": "\"Being self employed just means you fill out some more forms in your annual self assessment for your \"\"profit\"\" from being self employed. Profit = all the money you receive, minus any tax deductible cost that you spent for making that money (and all the cost must be documented, which means you have a folder with all the receipts and keep it safe). You pay normal income tax on all the profit, which means it is just added to your taxable income. What you do with the profit is up to you; you don't pay yourself a salary, just take the money (make sure you leave enough to pay your taxes).\"", "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": "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": "d382dad448f0554e3dda16e8fb3a7f7d", "text": "First of all, consult an accountant who is familiar with tax laws and online businesses. While most accountants know tax laws, fewer know how to handle online income like you describe although the number is growing. Right now, since you're a minor, this complicates things a bit. That's why you'll need a tax accountant to come up with the best business structure to use. You'll need to keep your own records to estimate your quarterly taxes. At the amount you're making, you'll want to do this since you'll pay a substantial penalty at the end of the year if you don't. You can use a small business accounting software package for this or just track everything using Excel or the like. As long as taxes are paid, you won't go to jail. But you need to pay them along with any penalties by April 15, 2013. If you don't do this, then the IRS will want to have a 'discussion' with you.", "title": "" } ]	fiqa
7a579b2758d471292b83fd8aa7789c02	What factors should I consider when evaluating index funds?	[ { "docid": "2b6cde81fdb549260eac7262ff180761", "text": "The idea of an index is that it is representative of the market (or a specific market segment) as a whole, so it will move as the market does. Thus, past performance is not really relevant, unless you want to bank on relative differences between different countries' economies. But that's not the point. By far the most important aspect when choosing index funds is the ongoing cost, usually expressed as Total Expense Ratio (TER), which tells you how much of your investment will be eaten up by trading fees and to pay the funds' operating costs (and profits). This is where index funds beat traditional actively managed funds - it should be below 0.5% The next question is how buying and selling the funds works and what costs it incurs. Do you have to open a dedicated account or can you use a brokerage account at your bank? Is there an account management fee? Do you have to buy the funds at a markup (can you get a discount on it)? Are there flat trading fees? Is there a minimum investment? What lot sizes are possible? Can you set up a monthly payment plan? Can you automatically reinvest dividends/coupons? Then of course you have to decide which index, i.e. which market you want to buy into. My answer in the other question apparently didn't make it clear, but I was talking only about stock indices. You should generally stick to broad, established indices like the MSCI World, S&P 500, Euro Stoxx, or in Australia the All Ordinaries. Among those, it makes some sense to just choose your home country's main index, because that eliminates currency risk and is also often cheaper. Alternatively, you might want to use the opportunity to diversify internationally so that if your country's economy tanks, you won't lose your job and see your investment take a dive. Finally, you should of course choose a well-established, reputable issuer. But this isn't really a business for startups (neither shady nor disruptively consumer-friendly) anyway.", "title": "" }, { "docid": "9a71e54c51a33edaa86448edea5040c1", "text": "Your link is pointing to managed funds where the fees are higher, you should look at their exchange traded funds; you will note that the management fees are much lower and better reflect the index fund strategy.", "title": "" } ]	[ { "docid": "b37971b421af08c8675b6b64c044e31f", "text": "One thing to be aware of when choosing mutual funds and index ETFs is the total fees and costs. The TD Ameritrade site almost certainly had links that would let you see the total fees (as an annual percentage) for each of the funds. Within a category, the lowest fees percentage is best, since that is directly subtracted from your performance. As an aside, your allocation seems overly conservative to me for someone that is 25 years old. You will likely work for 40 or so years and the average stock market cycle is about 7 years. So you will likely see 5 or so complete cycles. Worrying about stability of principal too young will really cut into your returns. My daughter is your age and I have advised her to be 100% in equities and then to start dialing that back in about 25 years or so.", "title": "" }, { "docid": "bdcf05dafe8669ec0c776f77e15f1190", "text": "Yes you should take in the expenses being incurred by the mutual fund. This lists down the fees charged by the mutual fund and where expenses can be found in the annual statement of the fund. To calculate fees and expenses. As you might expect, fees and expenses vary from fund to fund. A fund with high costs must perform better than a low-cost fund to generate the same returns for you. Even small differences in fees can translate into large differences in returns over time. You don't pay expenses, so the money is taken from the assets of the fund. So you pay it indirectly. If the expenses are huge, that may point to something i.e. fund managers are enjoying at your expense, money is being used somewhere else rather than being paid as dividends. If the expenses are used in the growth of the fund, that is a positive sign. Else you can expect the fund to be downgraded or upgraded by the credit rating agencies, depending on how the credit rating agencies see the expenses of the fund and other factors. Generally comparison should be done with funds invested in the same sectors, same distribution of assets so that you have a homogeneous comparison to make. Else it would be unwise to compare between a fund invested in oil companies and other in computers. Yes the economy is inter twined, but that is not how a comparison should be done.", "title": "" }, { "docid": "b1551ce33e769d1897d208ca91c38a52", "text": "\"There are a few reasons why an index mutual fund may be preferable to an ETF: I looked at the iShare S&P 500 ETF and it has an expense ratio of 0.07%. The Vanguard Admiral S&P 500 index has an expense ratio of 0.05% and the Investor Shares have an expense ratio of 0.17%, do I don't necessarily agree with your statement \"\"admiral class Vanguard shares don't beat the iShares ETF\"\".\"", "title": "" }, { "docid": "642605635985e7e03e7dea5aa0e99d77", "text": "Foreign stocks tend to be more volatile -- higher risk trades off against higher return potential, always. The better reason for having some money in that area is that, as with bonds, it moves out-of-sync with the US markets and once you pick your preferred distribution, maintaining that balance semi-automatically takes advantage of that to improve your return-vs-risk position. I have a few percent of my total investments in an international stock index fund, and a few percent in an international REIT, both being fairly low-fee. (Low fees mean more of the money reaches you, and seems to be one of the better reasons for preferring one fund over another following the same segment of the market.) They're there because the model my investment advisor uses -- and validated with monte-carlo simulation of my specific mix -- shows that keeping them in the mix at this low level is likely to result in a better long-term outcome than if i left them out. No guarantees, but probabilities lean toward this specfic mix doing what i need. I don't pretend to be able to justify that via theory or to explain why these specific ratios work... but I understand enough about the process to trust that they are on (perhaps of many) reasonable solutions to get the best odds given my specific risk tolerance, timeline, and distaste for actively managing my money more than a few times a year. If that.", "title": "" }, { "docid": "cbbe1fd1341e1ff9781db641f39c960f", "text": "My main criterion for choosing a broker is the fee schedule. I care about investing in index funds and paying as little as possible in fees. In the US that brings everyone to Vanguard or Fidelity, and currently Vanguard edges Fidelity out on costs for the particular funds I am invested in.", "title": "" }, { "docid": "78edcf3c84f09c26a42e0c97f2ab44b3", "text": "Index Funds & ETFs, if they are tracking the same index, will be the same in an ideal world. The difference would be because of the following factors: Expense ratio: i.e. the expense the funds charge. This varies and hence it would lead to a difference in performance. Tracking error: this means that there is a small percentage of error between the actual index composition and the fund composition. This is due to various reasons. Effectively this would result in the difference between values. Demand / Supply: with ETFs, the fund is traded on stock exchanges like a stock. If the general feeling is that the index is rising, it could lead to an increase in the price of the ETF. Index funds on the other hand would remain the same for the day and are less liquid. This results in a price increase / decrease depending on the market. The above explains the reason for the difference. Regarding which one to buy, one would need to consider other factors like: a) How easy is it to buy ETFs? Do you already hold Demat A/C & access to brokers to help you conduct the transaction or do you need to open an additional account at some cost. b) Normally funds do not need any account, but are you OK with less liquidity as it would take more time to redeem funds.", "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": "5103c63d89644a428f070da7464eb105", "text": "\"Ah ok, I can appreciate that. I'm fluent in English and Mr. Graham's command of English can be intimidating (even for me). The edition I have has commentary by Mr. Jason Zweig who effectively rewrites the chapters into simpler English and updates the data (some of the firms listed by Mr. Graham don't exist either due to bankruptcy or due to consolidation). But I digress. Let's start with the topics you took; they're all very relevant, you'd be surprised, the firm I work for require marketing for certain functions. But not being good at Marketing doesn't block you from a career in Finance. Let's look at the other subjects. You took high level Maths, as such I think a read through Harry Markowitz's \"\"Portfolio Selection\"\" would be beneficial, here's a link to the paper: https://www.math.ust.hk/~maykwok/courses/ma362/07F/markowitz_JF.pdf Investopedia also has a good summary: http://www.investopedia.com/walkthrough/fund-guide/introduction/1/modern-portfolio-theory-mpt.aspx This is Mr. Markowitz's seminal work; while it's logical to diversify your portfolio (remember the saying \"\"don't put all your eggs in one basket\"\"), Mr. Markwotiz presented the relationship of return, risk and the effects of diversification via mathematical representation. The concepts presented in this paper are taught at every introductory Finance course at University. Again a run through the actual paper might be intimidating (Lord knows I never read the paper from start to finish, but rather read text books which explained the concepts instead), so if you can find another source which explains the concepts in a way you understand, go for it. I consider this paper to be a foundation for other papers. Business economics is very important and while it may seem like it has a weak link to Finance at this stage; you have to grasp the concepts. Mr. Michael Porter's \"\"Five Forces\"\" is an excellent link between industry structure (introduced in Microeconomics) and profit potential (I work in Private Equity, and you'd be surprised how much I use this framework): https://hbr.org/2008/01/the-five-competitive-forces-that-shape-strategy There's another text I used in University which links the economic concept of utility and investment decision making; unfortunately I can't seem to remember the title. I'm asking my ex-classmates so if they respond I'll directly send you the author/title. To finish I want to give you some advice; a lot of subjects are intimidating at first, and you might feel like you're not good enough but keep at it. You're not dumber than the next guy, but nothing will come for free. I wasn't good at accounting, I risked failing my first year of University because of it, I ended up passing that year with distinction because I focused (my second highest grade was Accounting). I wasn't good in economics in High School, but it was my best grades in University. I wasn't good in financial mathematics in University but I aced it in the CFA. English is your second language, but you have to remember a lot of your peers (regardless of their command of the language) are being introduced to the new concepts just as you are. Buckle down and you'll find that none of it is impossible.\"", "title": "" }, { "docid": "0918254a089cca9fd94fee63324ec519", "text": "\"Your bank's fund is not an index fund. From your link: To provide a balanced portfolio of primarily Canadian securities that produce income and capital appreciation by investing primarily in Canadian money market instruments, debt securities and common and preferred shares. This is a very broad actively managed fund. Compare this to the investment objective listed for Vanguard's VOO: Invests in stocks in the S&P 500 Index, representing 500 of the largest U.S. companies. There are loads of market indices with varying formulas that are supposed to track the performance of a market or market segment that they intend to track. The Russel 2000, The Wilshire 1000, The S&P 500, the Dow Industrial Average, there is even the SSGA Gender Diversity Index. Some body comes up with a market index. An \"\"Index Fund\"\" is simply a Mutual Fund or Exchange Traded Fund (ETF) that uses a market index formula to make it's investment decisions enabling an investor to track the performance of the index without having to buy and sell the constituent securities on their own. These \"\"index funds\"\" are able to charge lower fees because they spend $0 on research, and only make investment decisions in order to track the holdings of the index. I think 1.2% is too high, but I'm coming from the US investing world it might not be that high compared to Canadian offerings. Additionally, comparing this fund's expense ratio to the Vanguard 500 or Total Market index fund is nonsensical. Similarly, comparing the investment returns is nonsensical because one tracks the S&P 500 and one does not, nor does it seek to (as an example the #5 largest holding of the CIBC fund is a Government of Canada 2045 3.5% bond). Everyone should diversify their holdings and adjust their investment allocations as they age. As you age you should be reallocating away from highly volatile common stock and in to assets classes that are historically more stable/less volatile like national government debt and high grade corporate/local government debt. This fund is already diversified in to some debt instruments, depending on your age and other asset allocations this might not be the best place to put your money regardless of the fees. Personally, I handle my own asset allocations and I'm split between Large, Mid and Small cap low-fee index funds, and the lowest cost high grade debt funds available to me.\"", "title": "" }, { "docid": "07f7202017432ca3558e5ec9494595bc", "text": "Current evidence is that, after you subtract their commission and the additional trading costs, actively managed funds average no better than index funds, maybe not as well. You can afford to take more risks at your age, assuming that it will be a long time before you need these funds -- but I would suggest that means putting a high percentage of your investments in small-cap and large-cap stock indexes. I'd suggest 10% in bonds, maybe more, just because maintaining that balance automatically encourages buy-low-sell-high as the market cycles. As you get older and closer to needing a large chunk of the money (for a house, or after retirement), you would move progressively more of that to other categories such as bonds to help safeguard your earnings. Some folks will say this an overly conservative approach. On the other hand, it requires almost zero effort and has netted me an average 10% return (or so claims Quicken) over the past two decades, and that average includes the dot-bomb and the great recession. Past results are not a guarantee of future performance, of course, but the point is that it can work quite well enough.", "title": "" }, { "docid": "8b90dc3f316e64f6d93f0fd4e355334d", "text": "An index fund is inherently diversified across its index -- no one stock will either make or break the results. In that case it's a matter of picking the index(es) you want to put the money into. ETFs do permit smaller initial purchases, which would let you do a reasonable mix of sectors. (That seems to be the one advantage of ETFs over traditional funds...?)", "title": "" }, { "docid": "ef0e9ae89d9c52b31c87383d6b21d9af", "text": "Financial advisers like to ask lots of questions and get nitty-gritty about investment objectives, but for the most part this is not well-founded in financial theory. Investment objectives really boils down to one big question and an addendum. The big question is how much risk you are willing to tolerate. This determines your expected return and most characteristics of your portfolio. The addendum is what assets you already have (background risk). Your portfolio should contain things that hedge that risk and not load up on it. If you expect to have a fixed income, some extra inflation protection is warranted. If you have a lot of real estate investing, your portfolio should avoid real estate. If you work for Google, you should avoid it in your portfolio or perhaps even short it. Given risk tolerance and background risk, financial theory suggests that there is a single best portfolio for you, which is diversified across all available assets in a market-cap-weighted fashion.", "title": "" }, { "docid": "663374eb1366efd15357a239d1becb56", "text": "Thanks for the advice. I will look into index funds. The only reason I was interested in this stock in particular is that I used to work for the company, and always kept an eye on the stock price. I saw that their stock prices recently went down by quite a bit but I feel like I've seen this happen to them a few times over the past few years and I think they have a strong catalogue of products coming out soon that will cause their stock to rise over the next few years. After not being able to really understand the steps needed to purchase it though, I think I've learned that I really don't know enough about the stock system in general to make any kind of informed decisions about it and should probably stick to something lower-risk or at least do some research before making any ill-informed decisions.", "title": "" }, { "docid": "0643549bec4cfd3d47f375fa02daa3dc", "text": "\"From How are indexes weighted?: Market-capitalization weighted indexes (or market cap- or cap-weighted indexes) weight their securities by market value as measured by capitalization: that is, current security price * outstanding shares. The vast majority of equity indexes today are cap-weighted, including the S&P 500 and the FTSE 100. In a cap-weighted index, changes in the market value of larger securities move the index’s overall trajectory more than those of smaller ones. If the fund you are referencing is an ETF then there may be some work to do to figure out what underlying securities to use when handling Creation and Redemption units as an ETF will generally have shares created in 50,000 shares at a time through Authorized Participants. If the fund you are referencing is an open-end fund then there is still cash flows to manage in the fund as the fund has create and redeem shares in on a daily basis. Note in both cases that there can be updates to an index such as quarterly rebalancing of outstanding share counts, changes in members because of mergers, acquisitions or spin-offs and possibly a few other factors. How to Beat the Benchmark has a piece that may also be useful here for those indices with many members from 1998: As you can see, its TE is also persistently positive, but if anything seems to be declining over time. In fact, the average net TE for the whole period is +0.155% per month, or an astounding +1.88% pa net after expenses. The fund expense ratio is 0.61% annually, for a whopping before expense TE of +2.5% annually. This is once again highly statistically significant, with p values of 0.015 after expenses and 0.0022 before expenses. (The SD of the TE is higher for DFSCX than for NAESX, lowering its degree of statistical significance.) It is remarkable enough for any fund to beat its benchmark by 2.5% annually over 17 years, but it is downright eerie to see this done by an index fund. To complete the picture, since 1992 the Vanguard Extended Index Fund has beaten its benchmark (the Wilshire 4500) by 0.56% per year after expenses (0.81% net of expenses), and even the Vanguard Index Trust 500 has beaten its benchmark by a razor thin 0.08% annually before (but not after) expenses in the same period. So what is going on here? A hint is found in DFA's 1996 Reference Guide: The 9-10 Portfolio captures the return behavior of U.S. small company stocks as identified by Rolf Banz and other academic researchers. Dimensional employs a \"\"patient buyer\"\" discount block trading strategy which has resulted in negative total trading costs, despite the poor liquidity of small company stocks. Beginning in 1982, Ibbotson Associates of Chicago has used the 9-10 Portfolio results to calculate the performance of small company stocks for their Stocks, Bonds, Bills, and Inflation yearbook. A small cap index fund cannot possibly own all of the thousands of stocks in its benchmark; instead it owns a \"\"representative sample.\"\" Further, these stocks are usually thinly traded, with wide bid/ask spreads. In essence what the folks at DFA learned was that they could tell the market makers in these stocks, \"\"Look old chaps, we don't have to own your stock, and unless you let us inside your spread, we'll pitch our tents elsewhere. Further, we're prepared to wait until a motivated seller wishes to unload a large block.\"\" In a sense, this gives the fund the luxury of picking and choosing stocks at prices more favorable than generally available. Hence, higher long term returns. It appears that Vanguard did not tumble onto this until a decade later, but tumble they did. To complete the picture, this strategy works best in the thinnest markets, so the excess returns are greatest in the smallest stocks, which is why the positive TE is greatest for the DFA 9-10 Fund, less in the Vanguard Small Cap Fund, less still in the Vanguard Index Extended Fund, and minuscule with the S&P500. There are some who say the biggest joke in the world of finance is the idea of value added active management. If so, then the punch line seems to be this: If you really want to beat the indexes, then you gotta buy an index fund.\"", "title": "" }, { "docid": "4babe885cc0b9c925ba104bf0a8636c8", "text": "\"Nope, its not legal. Easy to explain: If you know something that isn't public known (\"\"inside\"\") it's called insider trading. Hard to prove (impossible), but still illegal. To clarify: If the CEO says it AND its known in public its not illegal. In any case the CEO could face consequences (at least from his company).\"", "title": "" } ]	fiqa
9b1bef2377f681bfa5417551f9ccf4ab	Is keeping track of your money and having a budget the same thing?	[ { "docid": "ee510b366ce1f9f90801a38b00b1aefc", "text": "A budget is a plan for spending money in the future. Tracking spending is only looking at what happened in the past. Many people only track their spending, a proper budget can be key to achieving financial goals. You might earn enough and not spend frivolously enough that you aren't hamstrung by lack of a budget, but if you have specific financial goals, odds are you'll be more successful at achieving them by budgeting rather than only tracking spending. I'm a fan of zero-sum budgets, where every dollar is allocated to a specific bucket ahead of time. Here's a good write-up on zero-sum budgets: How and Why to Use a Zero-Sum Budget", "title": "" }, { "docid": "57c1187f6f4dbb66379c306eff33bdef", "text": "The two are closely related. A budget is a detailed plan for how to spend. Expense tracking is a tool to analyze your previous spending performance. Creating a plan for how to spend your money without any record of your previous spending--is an empty promise to yourself that you will never follow up on. Did I stay within my budget? Doesn't matter, I didn't track the spending anyway. Even if you do plan to track your performance, if you have not previously done so, you won't have a good basis for how much to expect in each category. Most people have a general idea of how much they have spent and many budgets are formed based on that general intuition, but they are often surprised when they track how every penny is spent and look at the totals from month to month and over years. By actually seeing how much has been spent it's easier to pick the big financial drains and target them for reduction, if your desire is more savings, for example. I know people who keep a close eye on what they spend each month, but they don't allocate money in categories for the next month. They don't perform as well on reducing spending, but they often don't care. They feel like they make enough and they save enough, so why worry? I also know people who create an unrealistic budget each month because they haven't done a good job tracking their previous spending. They know what the monthly bills are, but they don't account well for variable or cyclical expenses like repairs, Christmas, etc. Both tools are essential for maximizing your own personal finance.", "title": "" }, { "docid": "1406719d95ff278f1cb5ba03b6d36915", "text": "\"What you are doing is neither one. You are simply watching to make sure you don't overdraw, which itself suggests you might be living hand to mouth and not saving. Keeping track of your money and budgeting are useful tools which help people get on top of their money. Which tends to have the effect of allowing you to save. How much did you spend on groceries last month? Eating out? Gas? If you were \"\"keeping track of your money\"\", you could say immediately what you spent, and whether that is above or below average, and why. How much do you plan to spend in the next 3 months on gas, groceries, eating out? If you knew the answer to that question, then you would have a \"\"budget\"\". And if those months go by, and your budget proves to have been accurate, or educates you as to what went wrong so you can learn and fix it... then your budget is a functioning document that is helping you master your money. Certainly the more powerful of the two is the \"\"keeping track\"\", or accounting of what has happened to you so far. It's important that you keep track of every penny without letting stuff \"\"slip through the cracks\"\". Here you can use proper accounting techniques and maybe accounting software, just like businesses do where they reconcile their accounting against their bank statements and wallet cash. I shortcut that a little. I buy gift cards for McDonalds, Panera, Starbucks, etc. and buy my meals with those. That way, I only have one transaction to log, $40 - McDonalds gift card instead of a dozen little meals. It works perfectly fine since I know all that money went to fast food. A little more dangerous is that I treat wallet cash the same way, logging say two monthly entries of $100 to cash rather than 50 little transactions of left $1 tip at restaurant. This only works because cash is a tiny part of my overall expenditures - not worth accounting. If it added up to a significant part, I'd want accounting on that.\"", "title": "" }, { "docid": "87ff9493c12684fd4f58b6a01cee10ed", "text": "\"A budget is a predetermined plan for spending allocated funds to a fixed set of categories according to a schedule. If by, \"\"Keeping track of your money\"\" you mean you are only recording your spending to see on what it is being spent and when, then the answer is no. A budget has constraints on three things: Schedule: The mortgage has to be paid at the 1st of the month with a 2 day grace period. Amount: The mortgage payment is 1500.00 Category: The mortgage. Tracking your money would be as follows: 10/5/2016: $25 for a video game. 10/5/2016: $129.99 for two automobile tires. 10/6/2016: $35.25 for luncheon. I didn't like him! Why did I blow this money? 10/7/2016: nothing spent...yoohoo! 10/8/2016: Payday, heck yeah! I'm financially solvent YET AGAIN! How do I do it?! See the difference?\"", "title": "" } ]	[ { "docid": "54572d665f17daa6265547ad4047434a", "text": "\"Money management is data-driven. You've been operating on \"\"how you feel\"\" and \"\"what should be\"\", and that's why it hasn't been working. First you collect data on how you actually are spending money. Record every expenditure and categorize what it was used for. Go back 6-12 months if you can. You don't need blistering detail, in fact I adjusted my lifestyle to make that easy. Fast food meals, movie tickets, USB cables, anything too small to bother recording, I just pay cash for that. Everything else: check, ACH or credit card. It is not excessive to do it in Quickbooks or similar if you know the app. Whatever is most efficient for you. Now you have a log of what you've been spending on what in a time oeriod, and a log of your income. Congratulations, you have a \"\"Profit & Loss Statement\"\", a basic financial planning tool. Now you can look at it accurately, decide if the money you are spending in each department brings the value and joy that fits the expenditure, and change what you want. You may decide you'd rather save $1000/mo than run a $200/mo deficit. Changing is simply coming up with different numbers that you think are achievable. Congratulations, you have a budget or spending plan. Again, data driven. The point is, your spending plan is based on your actual experience with past expenditures, not blind-guessing. Then, go out and make it happen.\"", "title": "" }, { "docid": "ec13e0b91f191cd39a8984f1b9cf65aa", "text": "Get on a written budget at the BEGINNING of the month. If you dont write down where your money goes BEFORE you spend it, you have no way of keeping track of it. I couldn't do a thing until I got on a written budget but now that I am, I've paid off $10,000 in 7 months.", "title": "" }, { "docid": "08ce38aafaf9fbec87735e5eb5c28727", "text": "\"I'm reminded of a conversation I had regarding food. I used the word 'diet' and got pushback, as I meant it in sense of 'what one eats'. That's what a diet is, what you eat in an average week, month, year. That list has no hidden agenda unless you want it to. If your finances are in good shape, debt under control, savings growing, etc, a budget is more of an observation than a constraint. In the same way that my bookshelf tells you a lot about who I am, books on finance, math, my religion, along with some on English and humor, my budget will also tell you what my values are. Edit - In a recent speech, regarding Joe Biden, Hillary Clinton said \"\"He has a saying: ‘Don’t tell me what you value. Show me your budget and I will tell you what you value.’ \"\" - nearly exactly my thoughts on this. For the average person, a budget helps to reign in the areas where spending is too high. $500/mo eating out? For the couple hacking away at $30k in credit card debt, that would be an obvious place to cut back. If this brings you happiness, there's little reason to cut back. The budget becomes a reflection of your priorities, and if, at some point in the future, you need to cut back, you'll have a good understanding of where the money is going.\"", "title": "" }, { "docid": "770b55a96711bfa89c581bb4fd39eeae", "text": "You don't. My budget for the year takes my gross income and nets out tax, spending, etc to account for every dollar. My assets (and the target of the savings during the year) are a balance sheet item. The sum already there isn't part of each year's budget.", "title": "" }, { "docid": "edcdae945b83a18c7c90645115ed8420", "text": "\"What you are describing sounds a lot like the way we handle our household budget. This is possible, but quite difficult to do with an Excel spreadsheet. It is much easier to do with dedicated budgeting software designed for this purpose. When choosing personal budgeting software, I've found that the available packages fall in two broad categories: Some packages take what I would call a proactive approach: You enter in your bank account balances, and assign your money into spending categories. When you deposit your paycheck, you do the same thing: you add this money to your spending categories. Then when you spend money, you assign it to a spending category, and the software keeps track of your category balances. At any time, you can see both your bank balances and your spending category balances. If you need to spend money in a category that doesn't have any more money, you'll need to move money from a different category into that one. This approach is sometimes called the envelope system, because it resembles a digital version of putting your cash into different envelopes with different purposes. A few examples of software in this category are You Need a Budget (YNAB), Mvelopes, and EveryDollar. Other packages take more of a reactive approach: You don't bother assigning a job to the money already in your bank account. Instead, you just enter your monthly income and put together a spending plan. As you spend money, you assign the transactions to a spending category, and at the end of the month, you can see what you actually spent vs. what your plan was, and try to adjust your next budget accordingly. Software that takes this approach includes Quicken and Mint.com. I use and recommend the proactive approach, and it sounds from your question like this is the approach that you are looking for. I've used several different budgeting software packages, and my personal recommendation is for YNAB, the software that we currently use. I don't want this post to sound too much like a commercial, but I believe it will do everything you are looking for. One of the great things about the proactive approach, in my opinion, is how credit card accounts are handled. Since your spending category balances only include real money actually sitting in an account (not projected income for the month), when you spend money out of a category with your credit card, the software deducts the money from the spending category immediately, as it is already spent. The credit card balance goes negative. When the credit card bill comes and you pay it, this is handled in the software as an account transfer from your checking account to your credit card account. The money in the checking account is already set aside for the purpose of paying your credit card bill. Dedicated budgeting software generally has a reconcile feature that makes verifying your bank statements very easy. You just enter the date of your bank statement and the balance, and then the software shows you a list of the transactions that fall in those dates. You can check each one against the transactions on the statement, editing the ones that aren't right and adding any that are missing from the software. After everything checks out, the software marks the transactions as verified, so you can easily see what has cleared and what hasn't. Let me give you an example to clarify, in response to your comment. This example is specific to YNAB, but other software using the same approach would work in a similar way. Let's say that you have a checking account and a credit card account. Your checking account, named CHECKING, has $2,000 in it currently. Your credit card currently has nothing charged on it, because you've just paid your bill and haven't used it yet this billing period. YNAB reports the balance of your credit card account (we'll call this account CREDITCARD), as $0. Every dollar in CHECKING is assigned to a category. For example, you've got $200 in \"\"groceries\"\", $100 in \"\"fast food\"\", $300 in \"\"rent\"\", $50 in \"\"phone\"\", $500 in \"\"emergency fund\"\", etc. If you add up the balance of all of your categories, you'll get $2,000. Let's say that you've written a check to the grocery store for $100. When you enter this in YNAB, you tell it the name of the store, the account that you paid with (CHECKING), and the category that the expense belongs to (groceries). The \"\"groceries\"\" category balance will go down from $200 to $100, and the CHECKING account balance will go down from $2,000 to $1,900. Now, let's say that you've spent $10 on fast food with your credit card. When you enter this in YNAB, you tell it the name of the restaurant, the account that you paid with (CREDITCARD), and the category that the expense belongs to (fast food). YNAB will lower the \"\"fast food\"\" category balance from $100 to $90, and your CREDITCARD account balance will go from $0 to $-10. At this point, if you add up all the category balances, you'll get $1,890. And if you add up your account balances, you'll also get $1,890, because CHECKING has $1,900 and CREDITCARD has $-10. If you get your checking account bank statement at this time, the account balance of $1,900 should match the statement and you'll see the payment to the grocery store, assuming the check has cleared. And if the credit card bill comes now, you'll see the fast food purchase and the balance of $-10. When you write a check to pay this credit card bill, you enter this in YNAB as an account transfer of $10 from CHECKING to CREDITCARD. This transfer does not affect any of your category balances; they remain the same. But now your CHECKING account balance is down to $1,890, and CREDITCARD is back to $0. This works just as well whether you have one checking account and one credit card, or 2 checking accounts, 2 savings accounts, and 3 credit cards. When you want to spend some money, you look at your category balance. If there is money in there, then the money is available to spend somewhere in one of your accounts. Then you pick an account you want to pay with, and, looking at the account balance, if there isn't enough money in that account to pay it, you just need to move some money from another account into that one, or pick a different account. When you pay for an expense with a credit card, the money gets deducted from the category balances immediately, and is no longer available to spend on something else.\"", "title": "" }, { "docid": "1ee3149b12c0eb37a8beb933962a0205", "text": "I recently made the switch to keeping track of my finance (Because I found an app that does almost everything for me). Before, my situation was fairly simple: I was unable to come up with a clear picture of how much I was spending vs saving (altho I had a rough idea). Now I here is what it changes: What I can do now: Is it useful ? Since I don't actually need to save more than I do (I am already saving 60-75% of my income), 1) isn't important. Since I don't have any visibility on my personal situation within a few years, 2) and 3) are not important. Conclusion: Since I don't actually spend any time building theses informations I am happy to use this app. It's kind of fun. If I did'nt had that tool... It would be a waste of time for me. Depends on your situation ? Nb: the app is Moneytree. Works only in Japan.", "title": "" }, { "docid": "59001b744c03bd891f700de8949fd673", "text": "\"First of all, kudos for thinking about budgeting at 21 years old. So many people don't plan with their money, and years later wonder where it all went. You are doing a lot of things right with your budget. You've got saving goals, namely your next car and a down payment on a house. You are saving almost 20% of your income for retirement, which is amazing. I like the luxury fund, too. It is good to put some money aside that you can spend on whatever you want, guilt free, because you know that everything important is already planned for. When it comes to budgeting, one thing to remember is that your budget does not have to be perfect, and it is not set in stone. If you find that your amount for \"\"living costs\"\" (which I'm assuming includes things like food, utilities, and rent) is too low, you can allocate more money to it and reduce something else. There is no need to feel bad if you end up having to change some things around in the budget. Congratulations on being debt free! I would encourage you to stay out of debt. Keep the credit cards paid in full each month, and save up for your next car so you can pay cash for that, too. Another saving goal that I would recommend adding to your budget would be an emergency fund. This is basically a pile of cash that is available to you in case something unexpected and urgent comes up that you haven't planned for. By having the emergency fund in place, you won't be forced to go into debt due to an emergency. The amount recommended is usually 3 to 6 months' worth of your expenses.\"", "title": "" }, { "docid": "65c0e3b68efbc4fd3788f304e00d70b7", "text": "\"I'm currently using You Need A Budget for this. It lets you track spending my category and \"\"save\"\" money in particular accounts from month to month. They also have some strong opinions about how one should manage one's cashflow, so check it out to see if it'll work for you. It's neither web-based nor free, but the licensing terms are very reasonable.\"", "title": "" }, { "docid": "9c806ddf329c98ccf57a67bdaa8d97fa", "text": "It's hard to be disciplined when the money is right there to be spent. So what you should do is have two bank accounts. One for savings and one for spending. Figure out how much you need to spend per week and have your pay automatically deposit that much into the spending account and divert the rest into these accounts. Never touch your savings account unless it is an emergency or whatever. In fact, if you really want, you should put it as a termed deposit which you can't touch. As the only thing you see is your spending balance, you'll be forced to get used to living within your means. After a while, you're going to forget that you have that savings account at all.", "title": "" }, { "docid": "0f7e29383446f4f67dd080e3f8938a28", "text": "\"As others have said, doing a monthly budget is a great idea. I tried the tracking expenses method for years and it got me nowhere, I think for these reasons: If budgeting isn't your cup of tea, try the \"\"pay yourself first\"\" method. Here, as soon as you get a paycheck take some substantial portion immediately and use it to pay down debt, or put it in savings (if you have no debt). Doing this will force you to spend less money on impulse items, and force you to really watch your spending. If you take this option, be absolutely sure you don't have any open credit accounts, or you'll just use them to make up the difference when you find yourself broke in the middle of the month. The overall key here is to get yourself into a long term mind set. Always ask yourself things like \"\"Am I going to care that I didn't have this in 10 years? 5 years? 2 months? 2 days even? And ask yourself things like \"\"Would I perfer this now, or this later plus being 100% debt free, and not having to worry if I have a steady paycheck\"\". I think what finally kicked my butt and made me realize I needed a long term mind set was reading The Millionaire Next Door by Tom Stanley. It made me realize that the rich get rich by constantly thinking in the long term, and therefore being more frugal, not by \"\"leveraging\"\" debt on real estate or something like 90% of the other books out there tell you.\"", "title": "" }, { "docid": "482c834cf825bd1f559658f73a034ad2", "text": "In a word: budgeting. In order to have money left over at the end of the month, you need to be intentional about how you spend it. That is all a budget is: a plan for spending your money. Few people have the discipline and abundance of income necessary to just wing it and not overspend. By making a plan at home ahead of time, you can decide how much you will spend on food, entertainment, etc, and ensure you have enough money left over for things like rent/mortgage and utility bills, and still have enough for longer-term savings goals like a car purchase or retirement. If you don't have a plan, it's simply not reasonable to expect yourself to know if you have enough money for a Venti cup as you drive past the Starbucks. A good plan will allow you to spend on things that are important to you while ensuring that you have enough to meet your obligations and long-term goals. Another thing a budget will do for you is highlight where your problem is. If your problem is that you are spending too much money on luxuries, the budget will show you that. It might also reveal to you that your rent is too high, or your energy consumption is too great. On the other hand, you might realize after budgeting that your spending is reasonable, but your income is too low. In that case, you should focus on spending more of your time working or looking for a better paying job.", "title": "" }, { "docid": "bbc830aab6f767674a4253f0588992bc", "text": "\"Here is what we do. We use YNAB to do our budgeting and track our expenses. Anything that gets paid electronically is tracked to the penny. It really needs to be, because you want your transaction records to match your bank's transaction records. However, for cash spending, we only count the paper money, not the coins. Here is how it works: If I want a Coke out of a vending machine for 75 cents, and I put a dollar bill in and get a quarter back as change, I record that as a $1.00 expense. If, instead, I put 3 quarters in to get the Coke, I don't record that expense at all. Spending coins is \"\"free money.\"\" We do this mainly because it is just easier to keep track of. I can quickly count the cash in my wallet and verify that it matches the amount that YNAB thinks I have in my wallet, and I don't need to worry about the coins. Coins that are in my car to pay for parking meters or coins in the dish on my dresser don't need to be counted. This works for us mainly because we don't do a whole lot of cash spending, so the amount we are off just doesn't add up to a significant portion of our spending. And, again, bank balances are exact to the penny.\"", "title": "" }, { "docid": "abdc0f634367fb8d5f4ae7281c1843c7", "text": "Good question, very well asked! The key here is that you need to find a solution that works for you two without an overt amount of effort. So in a sense it is somewhat behavior driven, but it is also technology driven. My wife and I use spreadsheets for both checking account management and budgeting. A key time saver is that we have a template sheet that gets copied and pasted, then modified for the current month. Typically 90% of the stuff is the same and each month requires very little modification. This is one of my problems with EveryDollar. I have to enter everything each and every month. We also have separate checking accounts and responsibility for different areas of the family expenses. Doing this risks that we act as roommates, but we both clearly understand the money in one persons account equally belongs to the other and during hard times had to make up for shortfalls on the part of the other. Also we use cash for groceries, eating out, and other day to day expenses. So we don't have a great need to track expenses or enter transactions. That is what works for us, and it takes us very little time to manage our money. The budget meeting normally lasts less than a half hour and that includes goal tracking. We kind of live by the 80/20 principle. We don't see a value in tracking where every dime went. We see more value in setting and meeting larger financial goals like contributing X amount to retirement and things of that nature. If we overspent a bit at Walgreens who cares provided the larger goals are meant and we do not incur debt.", "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": "6bb718a4b47000594f78c65fa8a33aee", "text": "Because it's a good indicator of how much their asset worth. In oversimplified example, wouldn't you care how much your house, car, laptop worth? Over the course of your life you might need to buy a bigger house, sell your car etc. to cope with your financial goal / situation. It's similar in company's case but with much more complexity.", "title": "" } ]	fiqa
f4702379f2ea993f5c79b7ab0660b2cf	How does a big lottery winner cash his huge check risk-free?	[ { "docid": "dffcb5eda0d2611e3115fcc4a6af855f", "text": "If the funds are deposited into a noninterest-bearing account, they will be covered by FDIC insurance regardless of the amount (However, this extended coverage may not be valid after Dec. 31, 2012): On November 9, 2010, the FDIC issued a Final Rule implementing section 343 of the Dodd-Frank Wall Street Reform and Consumer Protection Act that provides for unlimited insurance coverage of noninterest-bearing transaction accounts. Beginning December 31, 2010, through December 31, 2012, all noninterest-bearing transaction accounts are fully insured, regardless of the balance of the account, at all FDIC-insured institutions. (Source: http://www.fdic.gov/deposit/deposits/changes.html)", "title": "" }, { "docid": "ee4f001deb30303964cbc1f65c10cfb3", "text": "You have a few options: Personally, I would cash the check at my broker and buy a mixture of US Government and New York Tax-Exempt securities until I figured out what to do with it.", "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": "7974d3ee3f0a0b0419c5ad0e5b586466", "text": "\"Looking at some large lotto games out there, it seems that the lump sum (cash) option comes in at anywhere from about 50 to 70 percent of the jackpot amount (sum of annual payouts, typically over 20 to 30 years). I'm a fan of the phrase \"\"money today is better than money tomorrow.\"\" There's no telling how laws will change, taxes will change, if inflation will skyrocket, if you'll die early, if you or a family member will encounter a life-changing event, etc. By taking the lump sum option you trade a percentage of the winnings for the risk of the future unknowns. How much are those unknowns worth to you? The tax implications are something else to consider. In your example of a \"\"small\"\" jackpot with $50,000 annual payouts, it's likely that you could still avoid the highest tax bracket each year, whereas taking the lump sum would be taxed at the highest rate (35% of the amount above $373k, for a single filer in 2010). However, this might not make much of a difference for large jackpots with higher annual payouts. With the lump sum option, you also have a greater potential of investment returns (and losses) since you can put all the money to work for you right away. It also allows you to purchase larger assets sooner, if that's something that interests you. In the end, I'd say the reduced risk and the higher return potential of the lump sum option is well worth the reduced payout. I'd also suggest not playing the lottery :)\"", "title": "" }, { "docid": "0ab045a99c76a8f6c9dac6c9730b8bab", "text": "Yes, but it's a matter of paper trail and lifestyle. Your $600K guy may get questioned when he makes the deposit, but would show the record of having that money elsewhere. People buy cars with cash (a check) all the time. The guy filing a tax return claiming little to no income or no return at all, is more likely to get flagged than the $100K+ earning couple who happened to be able to save to buy their $25K car every 10 years with cash. On reading the article, the bank had its own concerns. The guy who was trying to withdraw the money was elderly, and the bank seemed pretty concerned to make sure he wasn't about to be scammed. It may not be spelled out as such, but a custodian of one's money does have an obligation to not be party to a potential scam, and the very request for such a huge sum of money in cash is a red flag.", "title": "" }, { "docid": "fd8d9237bd2d0276394dd62710a65540", "text": "Will 2 millions dollars check to be cash? Will a bank convert a check to cash? In my experience, no. Even for small checks. Unless you happen to have a VERY good relationship with your banker (read as: have an existing large bank balance.) The exception is if you go to the bank the check is drawn on. But even then, I doubt they'll cash a $2M dollar check. Can you deposit a $2M dollar check? Most definitely. How long will 2 millions dollars check to be cash? Depends on your bank's policies, relationship with you, and the origination of the check. You'll need to talk to the exact bank in question to find out. Some guidelines from my own experiences: Out of country checks will take quite awhile, say 4 weeks, even for trivial amounts. I'm not sure what a $2M size would do. Beyond that situation, it will likely depend on whether you have more money than the check's worth in your bank accounts. If so, they may be willing to give you cash in a few days. Or if you only want some of the money as cash in a few days, that might be possible. If the bank couldn't cash for him, will the bank give him some of cash for example, $500,000 for now, and the rest wait to be cash at later time like 24 hours or 1 week? Unless you already have a lot of money in your relationship with the bank, I think it is HIGHLY UNLIKELY they will let you have ANY of the money in 24 hours. You MIGHT get some of it in a week. The issue will be that such a large check will be viewed as having a high chance of being fraudulent, so they will want to be exceptionally conservative.", "title": "" }, { "docid": "1ea22f3848d931782d35dccdbe5fdeed", "text": "The only certain way is to have the issuer confirm it. You'd think there would be a better way, but no there isn't. I suggest you read this story about what can happen even if you are the innocent victim trying to cash a fraudulent Cashier's Check. The consequences included some jail time and huge attorney fees for this unlucky person.", "title": "" }, { "docid": "d7d4ec3f4b46b3085ba58507580e1240", "text": "If I needed a safe-ish way to bank a lot of cash in vegas I'd exchange for high value chips at the local gambling establishments. I have to imagine that's being done already for other less than legal enterprises.", "title": "" }, { "docid": "58654a927a52b3436e6c0ccfaf535765", "text": "Avoid talking to a person: Just use an automated system, such as an ATM or a cellphone app. Automated systems will ONLY scan for the RTN # and Account number at the bottom of the check (the funny looking blocky numbers). The automated system will not care who the check is made out to, or who is present, so long as you have an account to credit the money into, and the account number on the check can get the money debited properly.", "title": "" }, { "docid": "9b3bd63f5d55ca2eb550414c3182b710", "text": "Setting aside for the moment the very relevant issue of whether you need the full amount quickly, I'll just tackle comparing which option gives you to maximum amount of money (in terms of real dollars). The trick is, unless you think inflation will suddenly reverse itself or stop entirely (not likely), $50K today is worth a LOT more than $50K in 20 years. If you don't believe me, consider that just 30 years ago the average price for a mid-level new car was around $3k. When you grandfather says he got a burger for a nickel, he isn't talking about 2010 dollars. So, how do you account for this? Well, the way financial people and project managers do it to estimate how much to pay today for $1 at some point in the future is through a net present value (NPV) calculation. You can find a calculator here. In your question, you gave some numbers for the payout, but not the lump sum prize amount. Going solely on what you have provided, I calculate that you should take the lump sum if it is greater than $766,189.96 which is the net present value of 20 years of $50K Payments assuming 3% annual inflation, which is fairly a fairly reasonable number given history. However, if you think the out-of-control Gov't spending is going to send inflation through the roof (possible, but not a given), then you almost certainly would want the lump sum. I suppose in that scenario you might want the lump sum anyway because if the Govt starts filching on their obligations, doing it to a small number of lottery winners might be politically more popular than cutting other programs that affect a large number of voters.", "title": "" }, { "docid": "6a3ec9b0c7870ef5eef3a926d09037f6", "text": "\"There are no risk-free high-liquidity instruments that pay a significant amount of interest. There are some money-market accounts around that pay 1%-2%, but they often have minimum balance or transaction limits. Even if you could get 3%, on a $4K balance that would be $120 per year, or $10 per month. You can do much better than that by just going to $tarbucks two less times per month (or whatever you can cut from your expenses) and putting that into the savings account. Or work a few extra hours and increase your income. I appreciate the desire to \"\"maximize\"\" the return on your money, but in reality increasing income and reducing expenses have a much greater impact until you build up significant savings and are able to absorb more risk. Emergency funds should be highly liquid and risk-free, so traditional investments aren't appropriate vehicles for them.\"", "title": "" }, { "docid": "963bb09f1dcdfde66c39c1c8ecf380be", "text": "The billion dollar jackpot is a sunk cost, a loss for prior bettors. If you had $250M and could buy every ticket combination, you'd be betting that not more than 4 other tickets will win on the next drawing. Even if 5 won, you'd have all the second place, third place, etc tickets, and would probably break even at worst. Forget this extreme case. If I gave you a game where you had a chance to bet $100,000 for a 1 in 9 chance to win a million dollars, would you do it? Clearly, the odds are in your favor, right? But, for this kind of money, you'd probably pass. There's a point where the market itself seems to reflect a set of probable outcomes and can be reduced to gambling. I've written about using options to do this very thing, yet, even in my writing, I call it gambling. I'm careful not to confuse the two (investing and gambling, that is.)", "title": "" }, { "docid": "51863cda125d76edb58e5d99691c7392", "text": "\"As you've observed, when you're dealing with that amount of money, you're going to have to give up FDIC guarantees. That means that keeping the money in a bank account carries some risk with it: if that particular bank goes bust, you could lose most of your money. There are a few options to stretch the FDIC limit such as CDARS, but likely can't handle your hypothetical $800 million. So, what's a lucky winner to do? There are a few options, including treasury securities, money market funds, and more general capital investments such as stocks and bonds. Which one(s) are best depend on what your goals are, and what kind of risks you find acceptable. Money in the bank has two defining characteristics: its value is very stable, and it is liquid (meaning you can spend it very easily, whenever you want, without incurring costs). Treasury securities and money market funds each focus on one of these characteristics. A treasury security is a piece of paper (or really, an electronic record) saying that the US Federal Government owes you money and when they will pay it back. They are very secure in that the government has never missed a payment, and will move heaven and earth to make sure they won't miss one in the future (even taking into account recent political history). You can buy and sell them on an open market, either through a broker or directly on the Treasury's website. The major downside of these compared to a bank account is that they're not as liquid as cash: you own specific amounts of specific kinds of securities, not just some number of dollars in an account. The government will pay you guaranteed cash on specified dates; if you need cash on different dates, you will need to sell the securities in the open market and the price will be subject to market fluctuations. The other \"\"cash-like\"\" option is money market funds. These are a type of mutual fund offered by financial companies. These funds take your money and spread it out over a wide variety of very low risk, very short term investments, with the goal of ensuring that the full value will never go down and is available at any time. They are very liquid: you can typically transfer cash quickly and easily to a normal bank account, write checks directly, and sometimes even use \"\"online bill pay\"\"-like features. They have a very good track record for stability, too, but no one is guaranteeing them against something going terribly wrong. They are lower risk than a (non-FDIC-insured) bank account, since the investments are spread out across many institutions. Beyond those two somewhat \"\"cash-like\"\" options, there are of course other, more general investments such as stocks, bonds, and real estate. These other options trade away some degree of stability, liquidity, or both, in exchange for better expected returns.\"", "title": "" }, { "docid": "37744cb356d487c24fefaa8b68df185c", "text": "Not really. A bank will honor a million dollar check if there are funds there to let it clear.", "title": "" }, { "docid": "a899e12d589d25e5d3cb4db5cd2bb4a6", "text": "\"Document how you came to have the stuff in the first place. First to defend against potential government inquiry; and second to establish that you held the asset more than one year, so you qualify for long-term capital gains rate. I wouldn't sell it privately all at once, if you can avoid it. If you can prove you held it more than a year, you should pay the long-term capital gains tax rate, which is fairly low. You'll keep most of it. A huge windfall often goes very badly. People don't change their financial habits, burn through their winnings shockingly fast, overspend it, and wind up deep in debt. At the end of the crazy train, their lives end up worse. That wasn't your question, but you'll do better if you're on guard for that, with good planning and a desire to invest it in things which give you deferred income in the future. That's the cooler thing, when your investments mean you don't have to go to work! I don't mean donate ALL of it to charity. But feel free. If you hold a security more than one year, and donate it to charity, you get a tax deduction for the appreciated value (even though the security didn't actually cost you that). (link) Do not convert the BTC to cash then donate the cash. Donate it as BTC. Your tax deduction works against your highest tax bracket. If you are paying in a 28% tax bracket (your next $100 of income has $28 tax), then for every $100 of charitable donation, you get $28 back on Federal. It does the same to state tax, and you also avoid the 10-15% capital gains tax because you didn't sell the securities. Do your 1040 both ways and note the difference.*** Your charitable deduction of appreciated securities is capped at 30% of AGI. Any excess will carryover and becomes a tax deduction for the next year, and it can carryover for several years. Use a donor-advised fund. If you have are donating more than $5000, you don't need to search for a charity that will take Bitcoin, and you also don't need to pick a charity now. Instead, open a special type of giving account called a Donor-Advised Fund. The DAF, itself, is a charity. It specializes in accepting complex donations and liquidating them into cash. The cash credits to your giving account. You take the tax deduction in the year you give to the DAF. Then, when you want to give to a charity, you tell the DAF to donate on your behalf*. You can tell them to give on your behalf anonymously, or merely conceal your address so you don't get the endless charity junk mail. The DAF lets you hold the money in index funds, so your \"\"charity nest egg\"\" can grow with the market. Mine has more than doubled thanks to the market. This money is no longer yours at this point; you can't give it back to yourself, only to licensed charities. The Fidelity Donor Advised Fund makes a big thing of taking Bitcoin, and I really like them. I love my DAF, and it has been a charitable-giving workhorse. It turns you into a philanthropist, and that changes you life in ways I cannot describe. Certainly makes me more level-headed about money. Lottery winner syndrome is just not a risk for me (partly because I'm now on the board of charities, and oversee an endowment.) Donating generally will reduce suspicion (criminals don't do that), but donating to a DAF even moreso. Since the DAF would have to return ill-gotten gains, they're involved. Their lawyers will back you up. The prosecutor is up against a billion dollar corporation instead of just you. With Fidelity particularly, Bitcoin is a crusade for them, and their lawyers know how to defend Bitcoin. A Fidelity DAF is a good play for that reason alone IMO. The gory details: Presumably you are donating to regular charities or a Donor Advised Fund, and these are \"\"50% limit organizations\"\". Since it's capital gains, you have a 30% limit. If your donation is more than 30% of AGI, or if you have carryover from last year, you use Worksheet 2 in Publication 526. You plug your donations into line 4, then the worksheet grinds through all the math and shows what part you deduct this year and what part you carryover to the next year. * I specifically asked managers at two DAFs whether they were OK with someone donating a complex asset to the DAF, and immediately giving the entire cash amount to a charity. The DAF doesn't get any fees if you do that. They said not only are they OK with it, most of their donors do exactly that and most DAF accounts are empty. They make it on the 0.6% a year custodial fee on the other accounts, and charitable giving to them. Mind you, you can only donate to 501C3 type charities, what IRS calls \"\"50% limit organizations\"\". This actually protects you from donating to organizations who lie about their status. I'm not with Fidelity, but I am a satisfied DAF customer. The DAF funds its overhead by deducting 0.6% per year from your giving account. If you invest the funds in a mutual fund within the DAF, that investment pays the 0.08% to 1.5% expense ratio of the fund. I can live with that. *** I just Excel'd the value of donating $100 of appreciated security instead of taking it as capital gains income. 28% Fed tax, 15% Fed cap gains, 8% state tax on both. Take the $100 as income, pay $23 in cap gains tax. Donate $100 in securities, the $23 tax goes away since you didn't sell it. Really. The $100 charitable deduction offsets $100 in income, also saving you $36 in regular income tax. Net tax savings $59. However you lost the $100! So you are net $41 poorer. It costs you $41 to donate $100 to charity. This gets better in higher brackets.\"", "title": "" }, { "docid": "d8209f4c9de8d573f190b134f7b2fb0b", "text": "\"What are the options available for safe, short-term parking of funds? Savings accounts are the go-to option for safely depositing funds in a way that they remain accessible in the short-term. There are many options available, and any recommendations on a specific account from a specific institution depend greatly on the current state of banks. As you're in the US, If you choose to save funds in a savings account, it's important that you verify that the account (or accounts) you use are FDIC insured. Also be aware that the insurance limit is $250,000, so for larger volumes of money you may need to either break up your savings into multiple accounts, or consult a Accredited Investment Fiduciary (AIF) rather than random strangers on the internet. I received an inheritance check... Money is a token we exchange for favors from other people. As their last act, someone decided to give you a portion of their unused favors. You should feel honored that they held you in such esteem. I have no debt at all and aside from a few deferred expenses You're wise to bring up debt. As a general answer not geared toward your specific circumstances: Paying down debt is a good choice, if you have any. Investment accounts have an unknown interest rate, whereas reducing debt is guaranteed to earn you the interest rate that you would have otherwise paid. Creating new debt is a bad choice. It's common for people who receive large windfalls to spend so much that they put themselves in financial trouble. Lottery winners tend to go bankrupt. The best way to double your money is to fold it in half and put it back in your pocket. I am not at all savvy about finances... The vast majority of people are not savvy about finances. It's a good sign that you acknowledge your inability and are willing to defer to others. ...and have had a few bad experiences when trying to hire someone to help me Find an AIF, preferably one from a largish investment firm. You don't want to be their most important client. You just want them to treat you with courtesy and give you simple, and sound investment advice. Don't be afraid to shop around a bit. I am interested in options for safe, short \"\"parking\"\" of these funds until I figure out what I want to do. Apart from savings accounts, some money market accounts and mutual funds may be appropriate for parking funds before investing elsewhere. They come with their own tradeoffs and are quite likely higher risk than you're willing to take while you're just deciding what to do with the funds. My personal recommendation* for your specific circumstances at this specific time is to put your money in an Aspiration Summit Account purely because it has 1% APY (which is the highest interest rate I'm currently aware of) and is FDIC insured. I am not affiliated with Aspiration. I would then suggest talking to someone at Vanguard or Fidelity about your investment options. Be clear about your expectations and don't be afraid to simply walk away if you don't like the advice you receive. I am not affiliated with Vanguard or Fidelity. * I am not a lawyer, fiduciary, or even a person with a degree in finances. For all you know I'm a dog on the internet.\"", "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": "f20b119435dc7ba0c27a33ff5b42b5a5", "text": "If you've got millions in a wallet but only make 50k a year, the government will go after you for tax evasion if you ever try to spend a significant amount of it. You can never cash out, that's not clean money", "title": "" } ]	fiqa
f10d7287e5a10fba9e58df46ad168d91	Lending to the bank	[ { "docid": "033cc75052b075d066d1a2b1420dfe42", "text": "\"This will happen automatically when you open an interest-bearing account with a bank. You didn't think that banks just kept all that cash in a vault somewhere, did you? That's not the way modern banking works. Today (and for a long, long time) banks will keep only a small fraction of their deposits on hand (called the \"\"reserve\"\") to fund daily withdrawals and other operations. The rest they routinely lend out to other customers, which is how they pay for their operations (someone has to pay all those tellers, branch managers, loan officers) and pay interest on your deposits, as well as a profit for their owners (it's not a charity service). The fees charged for loan origination, as well as the difference between the loan interest rate and the deposit rate, make up the profit. Banks rarely hold their own loans. Instead, they will sell the loans in portfolios to investors, sometimes retaining servicing rights (they continue to collect the payments and pass them on) and sometimes not (the payments are now due to someone else). This allows them to make more loans. Banks may sometimes not have enough capital on hand. In this case, they can make inter-bank loans to meet their short-term needs. In some cases, they'll take those loans from a government central bank. In the US, this is \"\"The Fed\"\", or the Federal Reserve Bank. In the US, back around the late 1920's, and again in the 1980's some banks experienced a \"\"run\"\", or a situation where people lost confidence in the bank and wanted to withdraw their money. This caused the bank to have insufficient funds to support the withdrawals, so not everyone got their money. People panicked, and others wanted to take their money out, which caused the situation to snowball. This is how many banks failed. (In the '80s, it was savings-and-loans that failed - still a kind of \"\"bank\"\".) Today, we have the FDIC (Federal Deposit Insurance Corporation) to protect depositors. In the crashes in the early 2000's, many banks closed up one night and opened the next in a conservatorship, and then were literally doing business as a new bank without depositors (necessarily) even knowing. This protected the consumers. The bank (as a company) and its owners were not protected.\"", "title": "" }, { "docid": "ed9675710736f4aa5511d789cf99fdf3", "text": "The easiest way would be to set up a common savings account. Most of them pay some meager interest rate, and over one night it would be especially meager. A Certificate of Deposit is another way, but you'd have to lock the funds in for an extended period of time.", "title": "" } ]	[ { "docid": "ba18ba31775842e53398358765bef09d", "text": "Construction loans have an entirely set of rules and factors than mortgages and that's hard to reconcile into one instrument. Also, I'm guessing the bank would be a bit shy about giving a commitment to a home loan before they have any information about how the construction process is going. There would have to be a ton of contingencies put into mortgage and they probably can't account for everything.", "title": "" }, { "docid": "e6992373f1b09191f18ab3bef9dc26b8", "text": "The bank will consider total of both parties income for the loan qualification. Provided both parties will be listed on the mortgage.", "title": "" }, { "docid": "5d0da9039fa2a5ac7e3b29b1bc045a97", "text": "I have a couple of questions regarding Bank Loans. 1.) can they ever trade above par? From my understanding, most get called due to refinancing. 2.) if a bank loan has a floor attached to it that's tied to LIBOR, say 100bps, and that floor is pierced, does the floor automatically disappear, or does that specific loan need to be refinanced before the floor can be done away with? Additionally, should an investor be more cautious when investing in a bank loan without a floor? With regard to the second half of my question, I would think an investor would demand a higher yield without the assurance of a floor.", "title": "" }, { "docid": "a4777ce9064e80c707b0fc4fbf7440d7", "text": "It's complicated. Really, there's no solid answer for your question. Everybody's risk tolerance and time horizon is going to be different. Those who can take on more risk can take on lower-grade C-G loans at Lending Club. Those with less risk tolerance should emphasize As and Bs.", "title": "" }, { "docid": "d58ba7d3f0ce9b53e8dbb7b38c4c24bf", "text": "Large businesses are, in every model, considered to be less likely to default, and Lehman brothers etc notwithstanding, this is historically correct. However, this is still stupid, since the diversification of lending money to many small businesses is way better. This, in turn, is not mapped properly by the regulations on reserve capital. Tl;dr: Banks get punished by regulations if they lend money to small institutions instead of large ones.", "title": "" }, { "docid": "41588ea0e3fb3c70179dae48f6a20e19", "text": "#####&#009; ######&#009; ####&#009; [History of banking](https://en.wikipedia.org/wiki/History%20of%20banking): [](#sfw) --- >The __history of banking__ begins with the first prototype [banks](https://en.wikipedia.org/wiki/Bank) of [merchants](https://en.wikipedia.org/wiki/Merchant) of the ancient world, which made [grain loans](https://en.wikipedia.org/wiki/Loan) to farmers and traders who carried goods between cities. This began around 2000 BC in [Assyria](https://en.wikipedia.org/wiki/Assyria) and [Babylonia](https://en.wikipedia.org/wiki/Babylonia). Later, in [ancient Greece](https://en.wikipedia.org/wiki/Ancient_Greece) and during the [Roman Empire](https://en.wikipedia.org/wiki/Roman_Empire), lenders based in temples made loans and added two important innovations: they accepted [deposits](https://en.wikipedia.org/wiki/Deposit_account) and [changed money](https://en.wikipedia.org/wiki/Bureau_de_change). Archaeology from this period in [ancient China](https://en.wikipedia.org/wiki/History_of_China#Ancient_China) and [India](https://en.wikipedia.org/wiki/History_of_India) also shows evidence of [money lending](https://en.wikipedia.org/wiki/Loan) activity. >==== >[Image](https://i.imgur.com/IWCAqkG.jpg) [^(i)](https://commons.wikimedia.org/wiki/File:Balance_sheet_Mesopotamia_Louvre_AO6036.jpg) --- ^Interesting: [^Banking ^in ^India](https://en.wikipedia.org/wiki/Banking_in_India) ^\| [^History ^of ^banking ^in ^China](https://en.wikipedia.org/wiki/History_of_banking_in_China) ^\| [^History ^of ^banking ^in ^Bangladesh](https://en.wikipedia.org/wiki/History_of_banking_in_Bangladesh) ^\| [^Banking ^in ^the ^United ^States](https://en.wikipedia.org/wiki/Banking_in_the_United_States) ^Parent ^commenter ^can [^toggle ^NSFW](http://www.np.reddit.com/message/compose?to=autowikibot&subject=AutoWikibot NSFW toggle&message=%2Btoggle-nsfw+cjk5935) ^or[](#or) [^delete](http://www.np.reddit.com/message/compose?to=autowikibot&subject=AutoWikibot Deletion&message=%2Bdelete+cjk5935)^. ^Will ^also ^delete ^on ^comment ^score ^of ^-1 ^or ^less. ^\| [^(FAQs)](http://www.np.reddit.com/r/autowikibot/wiki/index) ^\| [^Mods](http://www.np.reddit.com/r/autowikibot/comments/1x013o/for_moderators_switches_commands_and_css/) ^\| [^Magic ^Words](http://www.np.reddit.com/r/autowikibot/comments/1ux484/ask_wikibot/)", "title": "" }, { "docid": "46946a59368066db3f4d564bde1450c0", "text": "When you borrow from a bank, there are secured loans, as with a mortgage, or unsecured lines of credit, usually a more reasonable amount of money, but also based on income. You just asked about a private loan. It depends on the person and your relationship. If you need money to pay the rent, you might not be the best person to lend money to. If you ask a friend or relative, they may lend you money without asking its purpose.", "title": "" }, { "docid": "1734b47658b6c0f6cfd1d294e434fef7", "text": "Your basic assumption is incorrect. You don't normally go to a bank to borrow money to invest, but brokerages do it all the time. It is called trading on margin.", "title": "" }, { "docid": "8fabd662cde5b0f83b0bc7e8c8080564", "text": "\"Aside of \"\"don't lend money to friends\"\" a good idea is to have a written contract that states the sum, the due date, the interest (if any). Having the loan on paper makes it more real and harder to \"\"forget\"\". The third party is not necessary - anyone can have a bank loan for more than $10K by signing a contract with a bank without any third party.\"", "title": "" }, { "docid": "a78fd2aca4643c9aea11ae2e930ab607", "text": "Banks are not your friends, they are not performing services for you because they like you. They are a business, and they make money by borrowing money from you at low interest and loaning it out at higher interest. They are trying to persuade you to deposit more money (however briefly) in their bank so they can loan out more money. They are probably also counting on the fact that most folks won't go to the trouble of setting up accounts at multiple banks with the interlocking automatic transfers, in order to meet the required deposit threshold. That lets them save on the interest payments to consumers that are individually tiny, but significant in the aggregate.", "title": "" }, { "docid": "6441b2846cb858fac0043e741626b0d1", "text": "You walk into the finance company with a written quote from the supplier for the equipment you want to buy. You then fill out forms and sign a promissory note. The finance company then writes out a check to the supplier for the amount of the quoted equipment. Usually you need to provide at least 3 things: They will require you to provide your social security number and sign a document allowing them to check your credit history which they will look up using the social security number. Note that banks will generally give better rates on a personal loan than a finance company. People usually only use finance companies when their credit is so bad that a bank will not loan them money. Heating and cooling companies that provide equipment will often loan the money to buy that equipment. As a point of advice, it is generally poor financial management to take out personal loans and may indicate a person that is wasting money or be in financial difficulties. For personal loan items (furniture, cars, clothing, jewelry, etc) you are far better off saving money to buy the item, not borrowing beyond your means. If you need a new furnace and it is an emergency, for example, if it were winter (which it is not) and your furnace could not be repaired, then that might justifiable. But borrowing money at a high rate to just upgrade a furnace or get a luxury like AC is unwise.", "title": "" }, { "docid": "587a65d963fc2a65049684b33ecee4f6", "text": "My doubt is whether Govt./Reserve Bank of India gives any explicit incentives to banks to offer cheaper home loans ? Currently NO. In the past Loan against GOLD was considered priority sector lending [Loans to poor and agriculture etc]. Every Bank need to lead around 25% to priority sector. Hence quite a few Banks gave loans relatively cheaper to todays rate rather than giving it as Farm loan that almost never get recovered. It is no longer the case now as Loan against GOLD is not considered priority lending. If it were just demand/supply, I feel that gold loans should have been cheaper It is demand and supply. There are quite a few reasons for this;", "title": "" }, { "docid": "932a6bb74f8c695d3afa4ff3e828ce46", "text": "In terms of operations, banks are indifferent to inflation. Short rates except right before a recession or near-recession are always lower than long rates, regardless of inflation level, assuming no quotas or price controls. Banks produce credit by borrowing short to lend long, so as long as short rates are lower than long rates, they can be expected to produce loans, again assuming no quotas or price controls. In short, from the banks' perspective, inflation does not affect their desire to produce credit.", "title": "" }, { "docid": "65032b616f32fb25201624afb6712c76", "text": "I think my main problem with this idea is that we'd be trading the boom bust lending cycle for the boom bust political cycle. The banks are pretty heavily regulated as it is, and putting all the power back in the hands of our government frightens me a little bit.", "title": "" }, { "docid": "5882323bf28393a37e36a1484db2f148", "text": "i think keensian is right. krudeman is wrong. why was it anybody could get a loan from a bank to buy a house then during the bubble boom? u telling me there were that much savings and reserve in the system? m2 credit lead m1. banks can create money out of nothing by writing loans.", "title": "" } ]	fiqa
050b74765bc7e7f01c9d8a58da7f1256	What's the best application, software or tool that can be used to track time?	[ { "docid": "7dadf218cc5c6276c4b761fce9cd5425", "text": "People rave about Basecamp by 37signals. The impressive part is all the add-ins you can get for it. There are add-ins for invoicing, billing, accounting, and time tracking.", "title": "" }, { "docid": "e3b0ad05f4f11839a6d6c45a0480be9f", "text": "Time Tracker I'm a software engineer and have been using this tool. It is free and has a good user interface. I believe it can very well be used by professional of other areas too. It does support the features that you're looking for regarding project and task tracking.", "title": "" }, { "docid": "2c77381fb773ed6ce8484d1c26dc4212", "text": "\"There are tonnes, and tonnes of things out there, but you have to be careful what you search for. Be specific about what you want. If you search for \"\"time sheet\"\" for example, you'll just get a bucket of stuff having to do with stylesheets, because there's more of that around. The most common type of small tool for tracking time is usually a timer-type thing that runs as a widget, gadget, or System Tray tool. You have to click it on, then off again, and the nice ones produce a usable output file. CSV, or XLS, or some such. There are tools that track what documents you have open, when you opened them, and when you closed them, and you can sort it out from there. They're a bit resource-heavy, so be careful if you have a low power system. Quickbooks has a little utility that will make file which can be imported into your accounting. Quickbooks is NOT for the average business person. You almost have to be a bookkeeper to get the most out of it. On the other hand, you can have a bookkeeper set it up for you, and at the end of the year your taxes are a one button affair. For Windows software I like to use the site snapfiles.com. It's always been reliable, the rating systems are pretty accurate, they mostly maintain their own copies of the software, they test for viruses, and the let you specify a \"\"freeware only\"\" search ;-) For Mac software I like versiontracker.com. If you're a massive freeware user, like me, sign up for an account, so you can receive alerts regarding updates, and such. Currently I do most of my computer-based organization on a Mac with piece of software by CircusPonies.com called NoteBook. There's a command to insert the time, date, or both, and I just use that when I have a need to record elapsed time. I have even run across (and I forget the name) a piece of software for tracking time on Windows, which had multiple timers which you could set so either they were allowed to run concurrently (lawyers), or only one would run at a time. Anyway… Personally I think freeware is fun, but be careful. It's still the wild frickin west out there. If you don't trust the site you're downloading from, scan it with your anti-virus software before you install it, create a Restore Point, do a full, offsite backup of all your hard drives, unplug your computer from the Internet, send your wife to her mother's, lock the kids in the basement, cross your fingers, and phone the local bishop for a dispensation (http://en.wikipedia.org/wiki/Dispensation_(Catholic_Church)).\"", "title": "" }, { "docid": "3ef65073c9374c7749b684ab42714f97", "text": "The best one I've found is TimeSnapper, I have the worst memory but this basically allows me to visually play back the day. It has a bunch of reporting functionality too.", "title": "" }, { "docid": "aa1546e0b1aefde733e09c07e36a6fc1", "text": "Surprised nobody has mentioned Freshbooks yet. It's lightweight, easy to use, and free for low-end use (scaling up price-wise as you scale up).", "title": "" }, { "docid": "846c78f9080674e5e638934be6f71849", "text": "\"A free solution that I've been using is Task Coach. It has tasks, subtasks, categories, and all the stuff you would expect from a time tracking program. It also counts each distinct period spent on a task as a separate \"\"effort\"\" that you can add comments, for example to remind you what that chunk of time was spent on.\"", "title": "" }, { "docid": "18a46954b6c722f81097bece479933c9", "text": "I've been using Tick at work now for several months and have really enjoyed it. It's got a nice, simple interface with good time-budgeting and multi-user/project features. It can be used on several platforms, too (website, desktop widgets, and phone apps).", "title": "" } ]	[ { "docid": "062d3910b9cadf511e962d948398fe9f", "text": "\"Probably people like me who thought they'd turned it all off. For the iphone: Settings -- Privacy -- Location Services -- System Services There you'll see a bunch of system services you probably don't need but (if my phone is any indication) are used pretty regularly to get location data on you. Some may be okay with you, but worth checking out. A few things I looked up: Cell Network Search - it's monitoring for Apple's benefit, having this on doesn't do anything for you; turning it off won't affect using your phone Compass Calibration - your maps will work fine without this, and you can still calibrate the compass while using it; having it on just lets them ... check location to calibrate a compass you're not using? Motion Calibration & Distance - for fitness stuff like tracking steps Setting Time Zone - if you don't travel between time zones often, you probably don't need Apple checking your location every day to constantly \"\"set time zone\"\"\"", "title": "" }, { "docid": "ccde069c7755ed62ee56a93b5a2fb5fd", "text": "I would suggest that you try ClearCheckbook. It is kind of like Mint, but you can add and remove things (graphs, features, modules) to make it as simple or diverse as you need it to be. It should be a workable solution for simply tracking both income and expenses, yet it will also provide extra features as needed. There is a free option as well as a paid option with added features. I have not used ClearCheckbook before, but according to their features page it looks like you may have to upgrade to the paid option if you want to have complete tagging/custom field flexibility.", "title": "" }, { "docid": "987be59025ba34d16ca1979d31c5d0a0", "text": "\"Unfortunately I don't think any of the online personal finance applications will do what you're asking. Most (if not all) online person finance software uses a combination of partnerships with the banks themselves and \"\"screen scraping\"\" to import your data. This simplifies things for the user but is typically limited to whenever the service was activated. Online personal finance software is still relatively young and doesn't offer the depth available in a desktop application (yet). If you are unwilling to part with historical data you spent years accumulating you are better off with a desktop application. Online Personal Finance Software Pros Cons Desktop Personal Finance Software Pros Cons In my humble opinion the personal finance software industry really needs a hybrid approach. A desktop application that is synchronized with a website. Offering the stability and tools of a desktop application with the availability of a web application.\"", "title": "" }, { "docid": "bdf902963e79c6b5e308997b48edab0a", "text": "I can think of a few simple and quick techniques for timing the market over the long term, and they can be used individually or in combination with each other. There are also some additional techniques to give early warning of possible turns in the market. The first is using a Moving Average (MA) as an indication of when to sell. Simply if the price closes below the MA it is time to sell. Obviously if the period you are looking at is long term you would probably use a weekly or even monthly chart and use a relatively large period MA such as a 50 week or 100 week moving average. The longer the period the more the MA will lag behind the price but the less false signals and whipsawing there will be. As we are looking long term (5 years +) I would use a weekly chart with a 100 week Exponential MA. The second technique is using a Rate Of Change (ROC) Indicator, which is a momentum indicator. The idea for timing the markets in the long term is to buy when the indicator crosses above the zero line and sell when it crosses below the zero line. For long term investing I would use a 13 week EMA of the 52 week ROC (the EMA smooths out the ROC indicator to reduce the chance of false signals). The beauty of these two indicators is they can be used effectively together. Below are examples of using these two indicators in combination on the S&P500 and the Australian S&P ASX200 over the past 20 years. S&P500 1995 to 2015 ASX200 1995 to 2015 If I was investing in an ETF tracking one of these indexes I would use these two indicators together by using the MA as an early warning system and maybe tighten any stop losses I have so that if the market takes a sudden turn downward the majority of my profits would be protected. I would then use the ROC Indicator to sell out completely out of the ETF when it crosses below zero or to buy back in when the ROC moves back above zero. As you can see in both charts the two indicators would have kept you out of the market during the worst of the downfalls in 2000 and 2008 for the S&P500 and 2008 for the ASX200. If there is a false signal that gets you out of the market you can quite easily get back in if the indicator goes back above zero. Using these indicators you would have gotten into the market 3 times and out of it twice for the S&P500 over a 20 year period. For the ASX200 you would have gone in 6 times and out 5 times, also over a 20 year period. For individual shares I would use the ROC indicator over the main index the shares belong to, to give an indication of when to be buying individual stocks and when to tighten stop losses and stay on the sidelines. My philosophy is to buy rising stocks in a rising market and sell falling stocks in a falling market. So if the ROC indicator is above zero I would be looking to buy fundamentally healthy stocks that are up-trending and place a 20% trailing stop loss on them. If I get stopped out of one stock then I would look to replace it with another as long as the ROC is still above zero. If the ROC indicator crosses below zero I would tighten my trailing stop losses to 5% and not buy any new stocks once I get stopped out. Some additional indicators I would use for individual stock would be trend lines and using the MACD as a momentum indicator. These two indicators can give you further early warning that the stock may be about to reverse from its current trend, so you can tighten your stop loss even if the ROC is still above zero. Here is an example chart to explain: GEM.AX 3 Year Weekly Chart Basically if the price closes below the trend line it may be time to close out the position or at the very least tighten up your trailing stop loss to 5%. If the price breaks below an established uptrend line it may well be the end of the uptrend. The definition of an uptrend is higher highs and higher lows. As GEM has broken below the uptrend line and has maid a lower low, all that is needed to confirm the uptrend is over is a lower high. But months before the price broke below the uptrend line, the MACD momentum indicator was showing bearish divergence between it and the price. In early September 2014 the price made a higher high but the MACD made a lower high. This is called a bearish divergence and is an early warning signal that the momentum in the uptrend is weakening and the trend could be reversing soon. Notice I said could and not would. In this situation I would reduce my trailing stop to 10% and keep a watchful eye on this stock over the coming months. There are many other indicators that could be used as signals or as early warnings, but I thought I would talk about some of my favourites and ones I use on a daily and weekly basis. If you were to employ any of these techniques into your investing or trading it may take a little while to learn about them properly and to implement them into your trading plan, but once you have done that you would only need to spend 1 to 2 hours per week managing your portfolio if trading long-term or about 1 hour per nigh (after market close) if trading more medium term.", "title": "" }, { "docid": "8e54f391924671d1e00e469749b7206a", "text": "Most businesses have some sort of software to manage their client data. Most of these various software and/or services are industry specific. Black Diamond seems to be a client management tool targeting investment advisers. From the black diamond site Reach an unparalleled level of productivity and transform your client conversations. You don't need one of these unless you're a professional investment adviser with so many clients you can't track them yourself or need more robust reporting or statement generation tools. For your purposes most regular brokers, Fidelity, Schwab, Vanguard, TD, etc, have more than enough tools for the retail level investor. They have news feeds, security analysis papers, historical data, stock screeners, etc. You, a regular retail investor doesn't need to buy special software, your broker will generally provide these things as part of the service.", "title": "" }, { "docid": "5f4c85a0ec524834a22e73607839809b", "text": "I wrote a small Excel-based bookkeeping system that handles three things: income, expenses, and tax (including VAT, which you Americans can rename GST). Download it here.", "title": "" }, { "docid": "1094d051d0888469d5c8772a8afb6621", "text": "Best Linux software is PostBooks. It is full double entry, but there is definitely a learning curve. For platform-agnostic, my favorite is Xero, which is web-based. It is full double entry balance sheet, the bank reconciliation is a pleasure to use, and they are coming out with a US version this summer. Easy to use and does everything I need.", "title": "" }, { "docid": "7f9221aa3d0a75d8bd967c04ee723e88", "text": "You could theoretically use any time period unit, but 1 minute and 30 minute seem to be the most common and useful. Especially for active traders. This also has the added advantage of giving you useful insight into the trade volumes throughout the day; assuming that is also included on the chart. I think most include that as a bar chart across the bottom. Here is a great example for crude oil on dailyfx: https://www.dailyfx.com/crude-oil Notice that the chart has time options at the top left which include 1 minute, 30 minutes, 1 hour, and 1 day.", "title": "" }, { "docid": "6c53bd5265f7c0ed92cdf121f7e630e2", "text": "I don't think there are any web based tools that would allow you to do this. The efforts required to build vs the perceived benefit to users is less. All the web providers want the data display as simple as possible; giving more features at times confuses the average user.", "title": "" }, { "docid": "46bc1213fb52a6c9ecdc1047f6d59daa", "text": "For double entry bookkeeping, personal or small business, GnuCash is very good. Exists for Mac Os.", "title": "" }, { "docid": "1ee3149b12c0eb37a8beb933962a0205", "text": "I recently made the switch to keeping track of my finance (Because I found an app that does almost everything for me). Before, my situation was fairly simple: I was unable to come up with a clear picture of how much I was spending vs saving (altho I had a rough idea). Now I here is what it changes: What I can do now: Is it useful ? Since I don't actually need to save more than I do (I am already saving 60-75% of my income), 1) isn't important. Since I don't have any visibility on my personal situation within a few years, 2) and 3) are not important. Conclusion: Since I don't actually spend any time building theses informations I am happy to use this app. It's kind of fun. If I did'nt had that tool... It would be a waste of time for me. Depends on your situation ? Nb: the app is Moneytree. Works only in Japan.", "title": "" }, { "docid": "3f129a8dcd34cdf2c186ad9c6ee0a7b3", "text": "I don't wear a watch because I don't need another single-function device in my life. I can tell the time on my smartphone. I will, however, (likely) get an iwatch, or android counterpart. It does more than just tell time - worth taking up a little physical real estate on my wrist.", "title": "" }, { "docid": "e05c685c62c30e55083a20b8a08571f7", "text": "\"My original answer contained a fundamental error: it turns out that it is not true that any exchange can create its own product to track any underlying index. If the underlying index is copyrighted (such as the S&P indices, Russell indices, Dow Jones indices, etc.) then the exchange must enter into a licensing agreement (usually exclusive) with the copyright holder in order to use the index's formula (and name). Without such a license the exchange would only be able to approximate the underlying index, and I don't think that happens very much (because how would you market such a product?). The CME offers several futures (and other derivatives) whose face value is equivalent to some multiple of the S&P500's value on the date when the product expires. When such a product is actively traded, it may serve as a reasonable indicator of the \"\"market\"\"'s expectation of the S&P500's future value. So, you could pay attention to the front month of the CME's S&P 500 Mini future, which trades from 17:00-16:00 Chicago time, Sunday night through Friday afternoon. But remember that the prices quoted there are As another example, if you care about the Russell 2000 index, until 2017 the ICE Exchange happened to hold the license for its derivatives. They traded from 20:00-17:30 New York time, Sunday night through Friday afternoon. But in mid-2017 CME bought that license as well, so now you'll want to track it here. Moral: There's almost always some \"\"after hours\"\" product out there tracking whatever index you care about, but you may have to do some digging to find it, and it might not be all that useful for your specific purpose.\"", "title": "" }, { "docid": "b32304b701b8d58dafd682346da54418", "text": "The short answer is that there are no great personal finance programs out there any more. In the past, I found Microsoft Money to be slick and feature rich but unfortunately it has been discontinued a few years ago. Your choices now are Quicken and Mint along with the several open-source programs that have been listed by others. In the past, I found the open source programs to be both clunky and not feature-complete for my every day use. It's possible they have improved significantly since I had last looked at them. The biggest limitation I saw with them is weakness of integration with financial service providers (banks, credit card companies, brokerage accounts, etc.) Let's start with Mint. Mint is a web-based tool (owned by the same company as Quicken) whose main feature is its ability to connect to nearly every financial institution you're likely to use. Mint aggregates that data for you and presents it on the homepage. This makes it very easy to see your net worth and changes to it over time, spending trends, track your progress on budgets and long-term goals, etc. Mint allows you to do all of this with little or no data entry. It has support for your investments but does not allow for deep analysis of them. Quicken is a desktop program. It is extremely feature rich in terms of supporting different types of accounts, transactions, reports, reconciliation, etc. One could use Quicken to do everything that I just described about Mint, but the power of Quicken is in its more manual features. For example, while Mint is centred on showing you your status, Quicken allows you to enter transactions in real-time (as you're writing a check, initiating a transfer, etc) and later reconciles them with data from your financial institutions. Link Mint, Quicken has good integration with financial companies so you can generally get away with as little or as much data entry as you want. For example, you can manually enter large checks and transfers (and later match to automatically-downloaded data) but allow small entries like credit card purchases to download automatically. Bottom line, if you're just looking to keep track of where you are at, try Mint. It's very simple and free. If you need more power and want to manage your finances on a more transactional level, try Quicken (though I believe they do not have a trial version, I don't understand why). The learning curve is steep although probably gentler than that of GnuCash. Last note on why Mint.com is free: it's the usual ad-supported model, plus Mint sells aggregated consumer behaviour reports to other institutions (since Mint has everyone's transactions, it can identify consumer trends). If you're not comfortable with that, or with the idea of giving a website passwords to all your financial accounts, you will find Quicken easier to accept. Hope this helps.", "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": "" } ]	fiqa
380cf40a9053550ac7d11c06ff14a3c0	How to account for Capital Gains (Losses) in double-entry accounting?	[ { "docid": "c69d058bbe81220a41eec046485970c1", "text": "\"First, the balance sheet is where assets, liabilities, & equity live. Balance Sheet Identity: Assets = Liabilities (+ Equity) The income statement is where income and expenses live. General Income Statement Identity: Income = Revenue - Expenses If you want to model yourself correctly (like a business), change your \"\"income\"\" account to \"\"revenue\"\". Recognized & Realized If you haven't yet closed the position, your gain/loss is \"\"recognized\"\". If you have closed the position, it's \"\"realized\"\". Recognized Capital Gains(Losses) Assuming no change in margin requirements: Margin interest should increase margin liabilities thus decrease equity and can be booked as an expense on the income statement. Margin requirements for shorts should not be booked under liabilities unless if you also book a contra-asset balancing out the equity. Ask a new question for details on this. Realized Capital Gains(Losses) Balance Sheet Identity Concepts One of the most fundamental things to remember when it comes to the balance sheet identity is that \"\"equity\"\" is derived. If your assets increase/decrease while liabilities remain constant, your equity increases/decreases. Double Entry Accounting The most fundamental concept of double entry accounting is that debits always equal credits. Here's the beauty: if things don't add up, make a new debit/credit account to account for the imbalance. This way, the imbalance is always accounted for and can help you chase it down later, the more specific the account label the better.\"", "title": "" }, { "docid": "8b15c9fd643cb2c2f0c419a99905e9ad", "text": "Capital is an Asset. Decreasing value of capital is the decreasing value of an asset. When you buy the forex asset * DR Forex Asset * CR Cash When you sell * DR Cash * CR Forex Asset The difference is now accounted for Here is how: Gains (and losses) are modifications to your financial position (Balance sheet). At the end of the period you take your financial performance (Profit and Loss) and put it into your balance sheet under equity. Meaning that afterwards your balance sheet is better or worse off (Because you made more money = more cash or lost it, whatever). You are wanting to make an income account to reflect the forex revaluation so at the end of the period it is reflected in profit then pushed into your balance sheet. Capital gains directly affect your balance sheet because they increase/decrease your cash and your asset in the journal entry itself (When you buy and sell it). If making money this way is actually how you make you make an income it is possible to make an account for it. If you do this you periodically revalue the asset and write off the changes to the revaluation account. You would do something like DR Asset CR Forex Revaluation account; depending on the method you take. Businesses mostly do this because if the capital gains are their line of business they will be taxed on it like it is income. For simplicity just account for it when you buy and sell the assets (Because you as an individual will only recognise a profit/loss when you enter and exit). Its easier to think about income and expenses are extensions of equity. Income increases your equity, expenses decrease it. This is how they relate to the accounting formula (Assets = Liabilities + Owners Equity)", "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": "d52ea9db44206476ac686502ec2c2d92", "text": "\"You have a sequence of questions here, so a sequence of answers: If you stopped at the point where you had multiple wins with a net profit of $72, then you would pay regular income tax on that $72. It's a short term capital gain, which does not get special tax treatment, and the fact that you made it on multiple transactions does not matter. When you enter your next transaction that takes the hypothetical loss the question gets more complicated. In either case, you are paying a percentage on net gains. If you took a two year view in the second case and you don't have anything to offset your loss in the second year, then I guess you could say that you paid more tax than you won in the total sequence of trades over the two years. Although you picked a sequence of trades where it does not appear to play, if you're going to pursue this type of strategy then you are likely at some point to run into a case where the \"\"wash sale\"\" rules apply, so you should be aware of that. You can find information on this elsewhere on this site and also, for example, here: http://www.marketwatch.com/story/understanding-the-wash-sale-rules-2015-03-02 Basically these rules require you to defer recording a loss under some circumstances where you have rapid wins and losses on \"\"substantially identical\"\" securities. EDIT A slight correction, you can take part of your losses in the second year even if you have no off-setting gain. From the IRS: If your capital losses exceed your capital gains, the amount of the excess loss that you can claim on line 13 of Form 1040 to lower your income is the lesser of $3,000, ($1,500 if you are married filing separately)\"", "title": "" }, { "docid": "a936d2048a9a5aaf00b15383d3040ce9", "text": "If you have made $33k from winning trades and lost $30k from loosing trades your net gain for the year would be $3k, so obviously you would pay taxes only on the net $3k gains.", "title": "" }, { "docid": "35ee4b7c4719cf7e46e5e2aee3ce8112", "text": "The thing is that you only need one entry, not two. That's the beauty of double entry - since you have double entry system, every transaction will create two entries. So you don't need to create two transactions, you only need one. So you got a $30 gift. You credit Income:Gifts and on the other side Assets:Checking. Your general ledger entry (Menu->Tools->General Ledger) will look like this: You end up with balances: Which represent your total income and your current balance. Similarly with expense for food: GL will look like this: Balances: And you keep track of totals properly.", "title": "" }, { "docid": "86d74c5991c11c86aa22cd43a0a6a4f4", "text": "\"Asset = Equity + (Income - Expense) + Liability Everything could be cancelled out in double entry accounting. By your logic, if the owner contributes capital as asset, Equity is \"\"very similar\"\" to Asset. You will end up cancelling everything, i.e. 0 = 0. You do not understate liability by cancelling them with asset. Say you have $10000 debtors and $10000 creditors. You do not say Net Debtors = $0 on the balance sheet. You are challenging the fundamental concepts of accounting. Certain accounts are contra accounts. For example, Accumulated Depreciation is Contra-Asset. Retained Loss and Unrealized Revaluation Loss is Contra-Equity.\"", "title": "" }, { "docid": "e52aff18a6f46e89b86f19eb3757f850", "text": "I had to implement a simplistic double-entry accounting system, and compiled a list of resources. Some of them are more helpful than others, but I'll share them all with you. Hope this helps! Simplifying accounting principles for computer scientists: http://martin.kleppmann.com/2011/03/07/accounting-for-computer-scientists.html See this excellent article on how Debits and Credits work: http://accountinginfo.com/study/je/je-01.htm See this article for an example Chart of Accounts with lots of helpful descriptions: http://www.netmba.com/accounting/fin/accounts/chart/ Excellent PDF by Martin Fowler on Accounting Patterns using an event-drive system: http://www.martinfowler.com/apsupp/accounting.pdf Additional useful resources by Martin Fowler: http://martinfowler.com/articles.html#ap Ideas on using Domain-Driven-Design (DDD): https://stackoverflow.com/questions/5482929/how-to-use-object-oriented-programming-with-hibernate Double Entry Accounting in Relational Databases: http://homepages.tcp.co.uk/~m-wigley/gc_wp_ded.html Double Entry Accounting in Rails: http://www.cuppadev.co.uk/dev/double-entry-accounting-in-rails/ Joda-Money: http://joda-money.sourceforge.net/ Joda-Money Notes: http://joda-money.svn.sourceforge.net/viewvc/joda-money/JodaMoney/trunk/Notes.txt?revision=75&view=markup Blog entry with good comments: http://www.jroller.com/scolebourne/entry/joda_money Related Blog Entry: http://www.jroller.com/scolebourne/entry/serialization_shared_delegates JMoney: http://jmoney.sourceforge.net/wiki/index.php/Main_Page JMoney QIF Plugin: http://jmoney.sourceforge.net/wiki/index.php/Qif_plug-in Ledger on GitHub: https://github.com/jwiegley/ledger/tree/master/src/ Implementing Money class in Java: http://www.objectivelogic.com/resources/Java%20and%20Monetary%20Data/Java%20and%20Monetary%20Data.pdf Martin Fowler's implementation in Patterns of Enterprise Application Architecture page 489, View partial content in Google Books: http://books.google.com/books?id=FyWZt5DdvFkC&printsec=frontcover&dq=Patterns+of+Enterprise+Application+Architecture&source=bl&ots=eEFp4xYydA&sig=96x5ER64m5ryiLnWOgGMKgAsDnw&hl=en&ei=Kr_wTP6UFJCynweEpajyCg&sa=X&oi=book_result&ct=result&resnum=7&ved=0CEQQ6AEwBg#v=onepage&q&f=false XML based API for an accounting service, might get some ideas from it: http://www.objacct.com/Platform.aspx", "title": "" }, { "docid": "be443f0165b1dd058028841d3e5487d1", "text": "The way the wash sale works is your loss is added to your cost basis of the buy. So suppose your original cost basis is $10,000. You then sell the stock for $9,000 which accounts for your $1,000 loss. You then buy the stock again, say for $8,500, and sell it for $9,000. Since your loss of $1,000 is added to your cost basis, you actually still have a net loss of $500. You then buy the stock again for say $10,500, then sell it for $9,500. Your $500 loss is added to your cost basis, and you have a net loss of $1,500. Since you never had a net gain, you will not owe any tax for these transactions.", "title": "" }, { "docid": "f31499789d7290c5909610351f06461a", "text": "I can't give you a specific answer because I'm not a tax accountant, so you should seek advice from a tax professional with experience relevant to your situation. This could be a complicated situation. That being said, one place you could start is the Canada Revenue Agency's statement on investment income, which contains this paragraph: Interest, foreign interest and dividend income, foreign income, foreign non-business income, and certain other income are all amounts you report on your return. They are usually shown on the following slips: T5, T3, T5013, T5013A To avoid double taxation, Canada and the US almost certainly have a foreign tax treaty that ensures you are only taxed in your country of residence. I'm assuming you're a resident of Canada. Also, this page states that: If you received foreign interest or dividend income, you have to report it in Canadian dollars. Use the Bank of Canada exchange rate that was in effect on the day you received the income. If you received the income at different times during the year, use the average annual exchange rate. You should consult a tax professional. I'm not a tax professional, let alone one who specializes in the Canadian tax system. A professional is the only one you should trust to answer your question with 100% accuracy.", "title": "" }, { "docid": "56f607bca64522b8754268ef2dbe932a", "text": "Once the business is shut down, you'll need to show that the corporation is in bankruptcy and the amounts are unrecoverable. You can then report it as investment loss. I suggest talking to a tax adviser (EA/CPA licensed in your State), and maybe an attorney, on what the specific technical details are.", "title": "" }, { "docid": "0ff87b4504eaa0cf33d2b696582f47ef", "text": "\"I think the \"\"right\"\" way to approach this is for your personal books and your business's books to be completely separate. You would need to really think of them as separate things, such that rather than being disappointed that there's no \"\"cross transactions\"\" between files, you think of it as \"\"In my personal account I invested in a new business like any other investment\"\" with a transfer from your personal account to a Stock or other investment account in your company, and \"\"This business received some additional capital\"\" which one handles with a transfer (probably from Equity) to its checking account or the like. Yes, you don't get the built-in checks that you entered the same dollar amount in each, but (1) you need to reconcile your books against reality anyway occasionally, so errors should get caught, and (2) the transactions really are separate things from each entity's perspective. The main way to \"\"hack it\"\" would be to have separate top-level placeholder accounts for the business's Equity, Income, Expenses, and Assets/Liabilities. That is, your top-level accounts would be \"\"Personal Equity\"\", \"\"Business Equity\"\", \"\"Personal Income\"\", \"\"Business Income\"\", and so on. You can combine Assets and Liabilities within a single top-level account if you want, which may help you with that \"\"outlook of my business value\"\" you're looking for. (In fact, in my personal books, I have in the \"\"Current Assets\"\" account both normal things like my Checking account, but also my credit cards, because once I spend the money on my credit card I want to think of the money as being gone, since it is. Obviously this isn't \"\"standard accounting\"\" in any way, but it works well for what I use it for.) You could also just have within each \"\"normal\"\" top-level placeholder account, a placeholder account for both \"\"Personal\"\" and \"\"My Business\"\", to at least have a consistent structure. Depending on how your business is getting taxed in your jurisdiction, this may even be closer to how your taxing authorities treat things (if, for instance, the business income all goes on your personal tax return, but on a separate form). Regardless of how you set up the accounts, you can then create reports and filter them to include just that set of business accounts. I can see how just looking at the account list and transaction registers can be useful for many things, but the reporting does let you look at everything you need and handles much better when you want to look through a filter to just part of your financial picture. Once you set up the reporting (and you can report on lists of account balances, as well as transaction lists, and lots of other things), you can save them as Custom Reports, and then open them up whenever you want. You can even just leave a report tab (or several) open, and switch to it (refreshing it if needed) just like you might switch to the main Account List tab. I suspect once you got it set up and tried it for a while you'd find it quite satisfactory.\"", "title": "" }, { "docid": "60e5e50342d8e0101f8d1103e5d885d2", "text": "\"Perhaps you can track your VAT amounts in a Liability account. Using a tax liability account is a common thing in accounting. To do this, when you receive money, split the transaction such that your actual revenue (which you will keep after VAT remittance) goes into an Asset account, and the amount you will eventually have to pay back to the state goes into a Liability account. Later, when you pay the VAT back to the state, your transaction will effectively \"\"pay back\"\" the liability, with one end of your double-entry decreasing the funds in your checking account, and the other end decreasing the funds in your tax liability account. Having said that, I've found that there are many shortcomings in the Cash Flow report, and I'm not sure that using a tax liability account (which I think is the Right Thing to do) will necessarily solve this problem for you...\"", "title": "" }, { "docid": "410f540b4ab654bf8bda42f5bd8443f1", "text": "If you make money in currency speculation (as in your example), that is a capital gain. A more complicated example is if you were to buy and then sell stocks on the mexican stock exchange. Your capital gain (or loss) would be the difference in value in US dollars of your stocks accounting for varying exchange rates. It's possible for the stocks to go down and for you to still have a capital gain, and vice versa.", "title": "" }, { "docid": "32eeaa85f8cf441c5a65496f8d88bf0d", "text": "On line 21 of Schedule D, you write the smaller of So, in your case, since your Line 16 shows a loss of more than $3000 on Line 21, you write 3000 on Line 21 (the parentheses indicating that is it a negative number are already included on the form). Also, you write (3000) on Form 1040 Line 13. The rest of the loss is a carryover to next year (be sure to fill out the Capital Loss Carryover Worksheet where the carryover to next year is computed). Summary: you cannot write 0 on Line 21 of Schedule D and carry over the entire loss to next year. You must deduct $3000 this year and carry over the rest of the loss to next year.", "title": "" }, { "docid": "b3bb25844cb10bfb674a0e794e241cf7", "text": "Capital gains taxes for a year are calculated on sales of assets that take place during that year. So if you sell some stock in 2016, you will report those gains/losses on your 2016 tax return.", "title": "" }, { "docid": "775a61411c922f49edf14fa0e32d21b6", "text": "how is it double taxation when you didn't start off with that extra $100? it's double taxation if they taxed you on the total amount you pulled out of the market, not the profit you made. explain the math on your last part, please.", "title": "" } ]	fiqa
66bec70028409049a7e2382842d08b4d	Could someone explain this scenario about Google's involvement in the wireless spectrum auction?	[ { "docid": "fcef97167c4fbde1ac4d54c4eb4c2528", "text": "\"If history is any guide, Page’s idealistic impulses could result in a vaster, more sprawling company. The following is an example of one of Page’s idealistic impulses (wanting people to share spectrum) which could result in a vaster, more sprawling company (if they hadn't been outbid, Google would have expanded by buying a business asset i.e. spectrum which they didn't need). I've no experience with bidding. I don't understand what's happening at all An 'auction' is a way to sell something. Instead of offering it for sale at a fixed price, you offer it 'to the highest bidder'. Someone (e.g. Google) says, \"\"I'll offer you [some amount: e.g. a million dollars] for it.\"\" If no-one else exceeds that bid, then you say 'sold' and Google has bought it. Alternatively someone else comes along with a higher bid, \"\"I'll offer you two million dollars for it,\"\" in which case they're the new high bidder, and you'll sell it to them unless the process repeats itself with anyone counter-offering an even higher bid. See also http://en.wikipedia.org/wiki/Auction and http://en.wikipedia.org/wiki/Spectrum_auction The \"\"Disadvantages\"\" section of this article alleges (currently without a citation) that: Despite the apparent success of spectrum auctions, an important disadvantage limiting both efficiency and revenues is demand reduction and collusive bidding. The information and flexibility in the process of auction can be used to reduce auction prices by tacit collusion. When bidder competition is weak and one bidder holds an apparent advantage to win the auction for specific licenses, other bidders will often choose not to the bid for higher prices, hence reducing the final revenue generated by the auction.[citation needed] In this case, the auction is best thought of as a negotiation among the bidders, who agree on who should win the auction for each discrete bit of spectrum. Google's bid made that impossible (or, at least, ensured that the winning bid would be at least as high as the minimum which was set by Google's bid).\"", "title": "" }, { "docid": "669a6c344487f05ee78ef7994a146ad3", "text": "At the time of the auction android was just vaporware but many companies were restricting the phones that they allowed on their networks so that they could control what the phones were being used for. The big guys (AT&T, Verison, and Sprint) feared that being forced to allow phones that could do things they did not have control over would cost them money(Especially since they charged for every little feature they added). They also wanted to prevent their phones (which they subsidize to their customers in to reap long term profits) from being taken to other networks. Goggle saw the potential for the largest chunk of bandwidth available to the telco's to be restricted to services of one company and their strangle hold over the phones and services that were allowed to use it. They manuvered the bidding to ensure that this did not happen. There are many who believe that Verison bought the spectrum more to prevent anyone from competeing with them than because they actually wanted to use it. But at least they are forced to allow other parties in to compete even if it is on their playground.", "title": "" } ]	[ { "docid": "babd3944822a05c4936d5b189fd90d10", "text": "\"Comment from the article: \"\"In effect, Google acquired the talent it needed, got the IPR it wanted, and did not have to purchase the whole company and bring in the baggage it did not want. What an Amazing deal for Google. I have no idea where this leaves HTC, though.\"\" Could not agree more. Not sure how HTC is winning in this aspect. I guess we will have to wait and see.\"", "title": "" }, { "docid": "eb033f40b43ab33a88d3d985cacee0bd", "text": "Hm. The largest ad network in the world, whom has a natural monopoly on the search market and the largest web browser by market share, is talking about blocking competitors' ads. That doesn't smell like an antitrust issue at all... /s", "title": "" }, { "docid": "8945d61dce7f439a98813a024cc285d3", "text": "Summarized article: Nationwide carrier T-Mobile and prepaid provider MetroPCS have agreed to merge in an effort to gain more wireless spectrum and build a faster, higher capacity LTE network. T-Mobile's parent company, Deutsche Telekom, will buy a majority stake in MetroPCS and combine it with T-Mobile to create a new publicly traded company on the New York Stock Exchange that will retain the T-Mobile name. Under the deal, MetroPCS shareholders will receive $1.5 billion in cash and 26% ownership in the combined company. The transaction is to be completed in early 2013. * For more summarized news, subscribe to the [/r/SkimThat](http://www.reddit.com/r/SkimThat) subreddit", "title": "" }, { "docid": "1191b085a69103a24611cadecff7bd21", "text": "\"I did a quick search, they have a $2B/5yr deal with google cloud. Downside is Google is a competitor potentially, especially in the ad market. Upside is SNAP revenue increased from $58M in 2015 to just over $404M in 2016. I think in today's market, everyone wants to hold the next \"\"Amazon\"\" or \"\"Google\"\" stocks at their conception. Sure would be nice if you had a few thousand in Amazon at their IPO. So I think pure speculation is why they were trading above IPO price for so long. It could be the next biggest thing, or it could fail in 5 years we never know these things lol\"", "title": "" }, { "docid": "11fe881f1444c8d3054e2db7e8266231", "text": "I thought Google (Alphabet) filed a suit against Uber for copyright infringement just a few months ago? If that's still going on, then I'd imagine this is Alphabet setting the table for a stranglehold on a business model that could take over an entire industry.", "title": "" }, { "docid": "2dac7c543745a6df99c7a8b83bdfdbbc", "text": "Google is about to get a kick in the ass. They're trying to compete against a company that fought with many industries on price and yet still won. This is a last effort from traditional retailer to save their business. Google hasn't really done anything great in the past few years, just relying on their ad revenue too much.", "title": "" }, { "docid": "7a90ec34d2a9d9f7ba57f23bafc9652e", "text": "I've always wondered why nobody has tried to use the broadcast spectrum for internet connectivity. Or at least tried to lobby for repurposing some of the spectrum for that purpose. I had always assumed there was some kind of technical limitation that kept it from being considered. Seems like a much better use of our broadcast spectrum than our antiquated TV networks. Especially after the Fairness Doctrine was rescinded.", "title": "" }, { "docid": "0d074304cdaf61aec4f068e0b7056212", "text": "> unlimited data plans on your phone This may work in some countries; in the US, oligopolic wireless carriers are doing their level best to ensure it doesn't become the norm, because they collectively see it as a threat to their business models. They may still lose; tho I consider it unlikely, as the best scenario for that would require increasing the number of players in the wireless market. Some sort of open-access rule for infrastructure built by companies granted spectrum licenses would be a good start, but seems unlikely given how much more sway corporations have over the state than consumers.", "title": "" }, { "docid": "4da02d924e832bf55fb51b1cee221f69", "text": "Competition is good. Google promoting its' own services and potentially endangering industries isn't. The purpose of the technology is to foster innovation and competition, not allow one megadon of a company abuse its' position to muscle in on every industry that exists.", "title": "" }, { "docid": "335a5f1156830a441af39286ee2b77fe", "text": "Feel free to link to any research that supports his claims, I'll read it. And since Google isn't unionized, he doesn't really have much legal recourse. He can sue, but it's unlikely he'll win. More likely is that Google could be successfully sued if they continued to employ him and he exposed them to any kind of harrassment claims.", "title": "" }, { "docid": "0c6d6d2236218d7e902c117c75ab9b60", "text": "The announcement comes seven weeks after Walmart inked a similar deal with Google to offer hundreds of thousands of products through the service. Other big-box retailers like Home Depot are also on board. Well I guess I have to choose who's side I'm on. and if Walmart is on Google's side then I chose Amazon.", "title": "" }, { "docid": "30ef38f1d03520d3ccbd03245497fbea", "text": "\"Disclaimer: Mozilla employee here. Not speaking for Mozilla, of course, all opinions are my own and my own alone. And I'm not in any way connected w/ the negotiations w/ Google (or anyone else, for that matter) so I don't have any inside information about either Google or Mozilla's stance on the matter. A lot of what you're saying here makes sense, fab13n, but there's one thing that isn't quite right in my mind. You say that Google \"\"subsidized\"\" Firefox. That's not at all how I'd describe the relationship. Yes, it's to Google's advantage to have the web as the platform, and before Chrome became such a player having FF around as a competitor to IE was a good move. But as I understand it this is a business deal, pure and simple. FF's market share may currently be on the decline, but there is still somewhere in the neighborhood of 500,000,000 (that's half a billion) Firefox users out there. That's a lot of eyeballs seeing Google as the default search engine and the default home page. Which means a lot of Google searches, which means a lot of Google revenue. I don't know how much they make from that, but I'd guess it's a whole lot more than the $100,000,000/yr they've been paying for that privilege. Now if FF no longer defaulted to Google, they wouldn't lose all of those users. Some people would still switch to Google as the default, and lots of people would just type \"\"google.com\"\" in the address bar, or make it their home page. But a lot more people just go w/ the default than you'd first guess. I think that if Google bailed on some renewal of the deal, they'd see a noticeable dip in their traffic, w/ a resulting dip in revenue. This relationship has never been about philanthropy, it's about the money, as usual. For this reason I'm not gonna stress out too much about an article that seems to be little more than speculation. Maybe I'm wrong, maybe a new deal will fall through. But I'm going to wait until I hear that from someone who actually has inside information before I start freaking out about it.\"", "title": "" }, { "docid": "554d97e4f7c8fa9d0590323f2d15ada7", "text": "Got it. I can definitely see how it can come across that way especially with all of these big tech companies lining up against the proposal. My understanding is that a lot of that is more driven by their size than anything else; the media focuses on the impacts to Amazon and Facebook because they're huge companies and it's easier to get information on them. But when it comes to who would get hurt the most by removing NN, it's actually small businesses and startups that would suffer the most. In a world without net neutrality, ISPs would be able to provide access to web services at different speeds. For example, if you are a Comcast customer, if Comcast has a deal with Amazon Prime, they can make it so that your access to competing services like Netflix and Hulu are throttled -- moving so slow that it will be hard to use anything other than Amazon Prime Video. Now, if that happens, it will be annoying for companies like Facebook, Netflix, Google, etc. to have to pay extra for internet users to be able to use them. But they could do it; they have the money. The people who would struggle are people who own smaller businesses and smaller websites; when they're just starting out, they won't have the money to pay the ISPs to let people access them, and as a result they could be essentially locked out of many marketplaces. This is the argument made by people who say that removing net neutrality will stifle small business; removing the regulation would create this built-in structural advantage for large, established businesses and leave smaller businesses locked out.", "title": "" }, { "docid": "dd936fe9d40f735dbda6b517e39cd34c", "text": "Just remember that LightSquared might bring real competition to wireless cell and broadband services and the big wireless vendors have every incentive to kill the wholesale network before it ever becomes real. The article even says the tests are are at a much higher power than LightSquared would use.", "title": "" }, { "docid": "191bdd877407e143a5e4e2ae516a95b3", "text": "Yes, as you are Indian resident for Tax purposes, you have to pay Tax in India for the amount you have earned in Singapore. So essentially add the income from 1st April to Mid 2014 with the eq SGD earned in Singapore till 31st March 2015. Apply the tax brackets like you normally do, claim the exemptions you would normally do 80 C etc. As India and Singapore has a Dual Tax Avoidance Treaty, you can claim the portion the tax already paid in Singapore and pay only the balance. For example if the tax works out to be Rs 30, you have already paid Rs 20 in Singapore, you would have to pay only Rs 10 in India and mention that you have already paid Rs 20 to Singapore IRS. It is irrelevant whether you transfer the funds to India or not, the tax is applicable in the financial year you have earned. More on DTAA", "title": "" } ]	fiqa
500fe766e9e6c66eb149a38862df150d	For young (lower-mid class) investors what percentage should be in individual stocks?	[ { "docid": "54932d70e3156a5d564a63e0bdc9a1f4", "text": "\"The short answer: zero. dg99's answer gives some good reasons why. You will basically never be able to achieve diversification with individual stocks that is anywhere close to what you can get with mutual funds. Owning individual stocks exposes you to much greater risk in that random one-off events that happen to affect one of the companies you own can have a disproportionate effect on your assets. (For instance, some sort of scandal involving a particular company can cause its stock to tank.) There are only two reasons I can see to invest in individual stocks: a. You have some unique opportunity to acquire stock that other people might not be able to get (or get at that price). This can be the case if you work for a privately-held company that allows you to buy stock (or options), or allows you to participate in its IPO. Even then, you should not go too crazy, since having too much stock in the company you work for can double your pain if the company falls on hard times (you may lose your job and your investment). b. For fun. If you like tracking stocks and trying to beat the market, you may want to test your skills at this by using a small proportion of your investable cash (no more than 10%). In this case you're not so much hoping to increase your returns as to just enjoy investing more. This can also have a psychological benefit in that it allows you to \"\"blow off steam\"\" and indulge your desire to make decisions, while allowing your passive investments (index funds) to shoulder the load of actually gaining value.\"", "title": "" }, { "docid": "3ae55bf06b5b29598b4932492d995608", "text": "\"You should only invest in individual stocks if you truly understand the company's business model and follow its financial reports closely. Even then, individual stocks should represent only the tiniest, most \"\"adventurous\"\" part of your portfolio, as they are a huge risk. A basic investing principle is diversification. If you invest in a variety of financial instruments, then: (a) when some components of your portfolio are doing poorly, others will be doing well. Even in the case of significant economic downturns, when it seems like everything is doing poorly, there will be some investment sectors that are doing relatively better (such as bonds, physical real estate, precious metals). (b) over time, some components of your portfolio will gain more money than others, so every 6 or 12 months you can \"\"rebalance\"\" such that all components once again have the same % of money invested in them as when you began. You can do this either by selling off some of your well-performing assets to purchase more of your poorly-performing assets or (if you don't want to incur a taxable event) by introducing additional money from outside your portfolio. This essentially forces you to \"\"buy (relatively) low, sell (relatively) high\"\". Now, if you accept the above argument for diversification, then you should recognize that owning a handful (or even several handfuls) of individual stocks will not help you achieve diversification. Even if you buy one stock in the energy sector, one in consumer discretionary, one in financials, etc., then you're still massively exposed to the day-to-day fates of those individual companies. And if you invest solely in the US stock market, then when the US has a decline, your whole portfolio will decline. And if you don't buy any bonds, then again when the world has a downturn, your portfolio will decline. And so on ... That's why index mutual funds are so helpful. Someone else has already gone to the trouble of grouping together all the stocks or bonds of a certain \"\"type\"\" (small-cap/large-cap, domestic/foreign, value/growth) so all you have to do is pick the types you want until you feel you have the diversity you need. No more worrying about whether you've picked the \"\"right\"\" company to represent a particular sector. The fewer knobs there are to turn in your portfolio, the less chance there is for mistakes!\"", "title": "" }, { "docid": "24bde5cc34ca02716339d0bb8a4accbc", "text": "I would not advise any stock-picking or other active management (even using mutual funds that are actively managed). There is a large body of knowledge that needs learning before you even attempt that. Stay passive with index funds (either ETFs or (even better) low-cost passive mutual funds (because these prevent you from buying/selling). But I have not problem saying you can invest 100% in equity as long as your stomach can handle the price swings. If you freek out after a 25% drop that does not recover within a year, so you sell at the market bottom, then you are better off staying with a lot less risk. It is personal. There are a lot of valid reasons for young people to accept more risk - and equally valid reason why not. See list at http://www.retailinvestor.org/saving.html#norisk", "title": "" }, { "docid": "7383dd763f68e1302c984a493b88e7fe", "text": "I don't believe the decision is decided by age or wealth. You only stock pick when a) you enjoy the process because it takes time and if you consider it 'work' then the cost will probably not be offset by higher returns. b) you must have the time to spend trading, monitoring, choosing, etc. c) you must have the skills/experience to 'bring something to the table' that you think gives you an edge over everyone else. If you don't then you will be the patsy that others make a profit off.", "title": "" } ]	[ { "docid": "d5e1bde29d805bce6086b8598a343c8b", "text": "This depends completely on your investing goals. Typically when saving for retirement younger investors aim for a more volatile and aggressive portfolio but diversify their portfolio with more cautious stocks/bonds as they near retirement. In other words, the volatility that owning a single stock brings may be in line with your goals if you can shoulder the risk.", "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": "19a399279fa3d682c76b0f1cb8422a2e", "text": "IMO almost any sensible decision is better than parking money in a retirement account, when you are young. Some better choices: 1) Invest in yourself, your skills, your education. Grad school is one option within that. 2) Start a small business, build a customer base. 3) Travel, adventure, see the world. Meet and talk to lots of different people. Note that all my advice revolves around investing in YOURSELF, growing your skills and/or your experiences. This is worth FAR more to you than a few percent a year. Take big risks when you are young. You will need maybe $1m+ (valued at today's money) to retire comfortably. How will you get there? Most people can only achieve that by taking bigger risks, and investing in themselves.", "title": "" }, { "docid": "32f8621bb2dbd2b0f0f4b28ba3bab59a", "text": "The only sensible reason to invest in individual stocks is if you have reason to think that they will perform better than the market as a whole. How are you to come to that conclusion other than by doing in-depth research into the stock and the company behind it? If you can't, or don't want to, reach that conclusion about particular stocks then you're better off putting your money into cheap index trackers.", "title": "" }, { "docid": "b6e009ec30f69b32a49996716bf36410", "text": "\"The psychology of investing is fascinating. I buy a stock that's out of favor at $10, and sell half at a 400% profit, $50/share. Then another half at $100, figuring you don't ever lose taking a profit. Now my Apple shares are over $500, but I only have 100. The $10 purchase was risky as Apple pre-iPod wasn't a company that was guaranteed to survive. The only intelligent advice I can offer is to look at your holdings frequently, and ask, \"\"would I buy this stock today given its fundamentals and price?\"\" If you wouldn't buy it, you shouldn't hold it. (This is in contrast to the company ratings you see of buy, hold, sell. If I should hold it, but you shouldn't buy it to hold, that makes no sense to me.) Disclaimer - I am old and have decided stock picking is tough. Most of our retirement accounts are indexed to the S&P. Maybe 10% is in individual stocks. The amount my stocks lag the index is less than my friends spend going to Vegas, so I'm happy with the results. Most people would be far better off indexing than picking stocks.\"", "title": "" }, { "docid": "0aa78e92743857ed9109abd1c871a63c", "text": "That is absolute rubbish. Warren Buffet follows simple value and GARP tenants that literally anyone could follow if they had the discipline to do so. I have never once heard of an investment made by Warren Buffet that wasn't rooted in fundamentals and easy to understand. The concept is fairly simple as is the math, buying great companies trading at discounts to what they are worth due to market fluctuations, emotionality, or overreactions to key sectors etc. If I buy ABC corp at $10 knowing it is worth $20, it could go down or trade sideways for FIVE YEARS doing seemingly nothing and then one day catch up with its worth due to any number of factors. In that case, my 100% return which took five years to actualize accounts for an average 20% return per year. Also (and this should be obvious), but diversification is a double edged sword. Every year, hundreds of stocks individually beat the market return. Owning any one of these stocks as your only holding would mean that YOU beat the market. As you buy more stocks and diversify your return will get closer and closer to that of an index or mutual fund. My advice is to stick to fundamentals like value and GARP investing, learn to separate when the market is being silly from when it is responding to a genuine concern, do your own homework and analysis on the stocks you buy, BE PATIENT after buying stock that your analysis gives you confidence in, and don't over diversify. If you do these things, congrats. YOU ARE Warren Buffet.", "title": "" }, { "docid": "3d58f98963f60b0132ca92e895b7293a", "text": "\"Wouldn't this be part of your investing strategy to know what price is considered a \"\"good\"\" price for the stock? If you are going to invest in company ABC, shouldn't you have some idea of whether the stock price of $30, $60, or $100 is the bargain price you want? I'd consider this part of the due diligence if you are picking individual stocks. Mutual funds can be a bit different in automatically doing fractional shares and not quite as easy to analyze as a company's financials in a sense. I'm more concerned with the fact that you don't seem to have a good idea of what the price is that you are willing to buy the stock so that you take advantage of the volatility of the market. ETFs would be similar to mutual funds in some ways though I'd probably consider the question that may be worth considering here is how much do you want to optimize the price you pay versus adding $x to your position each time. I'd probably consider estimating a ballpark and then setting the limit price somewhere within that. I wouldn't necessarily set it to the maximum price you'd be willing to pay unless you are trying to ride a \"\"hot\"\" ETF using some kind of momentum strategy. The downside of a momentum strategy is that it can take a while to work out the kinks and I don't use one though I do remember a columnist from MSN Money that did that kind of trading regularly.\"", "title": "" }, { "docid": "1b78580b88a1a29dd3ce954b9a6d999d", "text": "I'm in a remarkably similar situation as yourself. I keep roughly 80% of my portfolio in low-cost ETFs (16% bond, 16% commodities, 48% stock), with about 20% in 6-8 individual stocks. Individual stocks are often overlooked by investors. The benefits of individual stock ownership are that you can avoid paying any holding or management fee (unlike ETFs and mutual funds). As long as you assess the fundamentals (P/B, P/E, PEG etc.) of the company you are buying, and don't over-trade, you can do quite well. I recommend semi-annual re-balancing among asset classes, and an individual stock check up. I've found over the years that my individual stocks outperform the S&P500 the vast majority of the time, although it often accompanied by an increase in volatility. Since you're limiting your stake to only 20%, the volatility is not really an issue.", "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": "eee03650200f5d1f81afdedae2ae5dfb", "text": "At 22 years old, you can afford to be invested 100% in the stock market. Like many others, I recommend that you consider low cost index funds if those are available in your 401(k) plan. Since your 401(k) contributions are usually made with each paycheck this gives you the added benefit of dollar cost averaging throughout your career. There used to be a common rule that you should put 100 minus your age as the percentage invested in the stock market and the rest in bonds, but with interest rates being so low, bonds have underperformed, so many experts now recommend 110 or even 120 minus your age for stocks percentage. My recommendation is that you wait until you are 40 and then move 25% into bonds, then increase it to 40% at 55 years old. At 65 I would jump to a 50-50 stock/bonds mix and when you start taking distributions I would move to a stable-value income portfolio. I also recommend that you roll your funds into a Vanguard IRA when you change jobs so that you take advantage of their low management fee index mutual funds (that have no fees for trading). You can pick whatever mix feels best for you, but at your age I would suggest a 50-50 mix between the S&P 500 (large cap) and the Russell 2000 (small cap). Those with quarterly rebalancing will put you a little ahead of the market with very little effort.", "title": "" }, { "docid": "271b245c66784da2295c00234b95afee", "text": "Not knowing the US laws at all, you should worry more about having the best stock portfolio and less about taxes. My 0,02€", "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": "7e769761effd1d77533856624ea79940", "text": "If you have 100% of your money in one security that is inherently more risky than splitting your money 50/50 between two securities, regardless of the purported riskiness of the two securities. The calculations people use to justify their particular breed of diversification may carry some assumptions related risk/reward calculations. But these particular justifications don't change the fact that spreading your money across different assets protects your money from value variances of the individual assets. Splitting your $100 between Apple and Microsoft stock is probably less valuable (less well diversified) than splitting your money between Apple and Whole Foods stock but either way you're carrying less risk than putting all $100 in to Apple stock regardless of the assumed rates of return for any of these companies stock specifically. Edit: I'm sure the downvotes are because I didn't make a big deal about correlation and measuring correlation and standard deviations of returns and detailed portfolio theory. Measuring efficacy and justifying your particular allocations (that generally uses data from the past to project the future) is all well and good. Fact of the matter is, if you have 100% of your money in stock that's more stock risk than 25% in cash, 25% in bonds and 50% in stock would be because now you're in different asset classes. You can measure to your hearts delight the effects of splitting your money between different specific companies, or different industries, or different market capitalizations, or different countries or different fund managers or different whatever-metrics and doing any of those things will reduce your exposure to those specific allocations. It may be worth pointing out that currently the hot recommendation is a plain vanilla market tracking S&P 500 index fund (that just buys some of each of the 500 largest US companies without any consideration given to risk correlation) over standard deviation calculating actively managed funds. If you ask me that speaks volumes of the true efficacy of hyper analyzing the purported correlations of various securities.", "title": "" }, { "docid": "8cacfa26102b736a50d8bc1bed41ad7c", "text": "\"Curious, are you asking about average, or the good numbers? The median family doesn't have $2500 to address an emergency. We are a nation of debtors, and spenders. A young couple at .8 is doing well. It means they saved 20% for a down payment, and just bought a house. Not too tough to buy with 5% down, have no other savings, and a student loan to put the debt to equity over 100%. Older people should be shooting for zero. I semi-retired at 50, and my mortgage is at about 8% of my net worth. 50% would be too high. Others 50+ should have at least 50% equity in their home and nearly half their \"\"number,\"\" the amount needed to retire. So, a target is 25% maximum. These numbers shouldn't impact you at all. You should plan wisely, spend frugally, and prioritize your goals. There are 'zero debt' people out there who make me look reckless, and others who invest in rentals with a goal of keeping them highly leveraged. Neither group is wrong, what's right for you is what lets you sleep at night.\"", "title": "" }, { "docid": "d90fea8919eaee4e7a4053d3661257cb", "text": "You should have a separate business account. Mixing business and personal funds is a bad practice. Shop around, you should be able to find a bank that will let you open a free checking account, especially if you are going to have minimal activity (e.g. less than 20 of checks per month) and perhaps maintain a small balance (e.g. $100 or $500).", "title": "" } ]	fiqa
de54e6b1093070749f7fc9b60f693d16	Is 401k as good as it sounds given the way it is taxed?	[ { "docid": "a36d7b20f1a3fef181a86de307a3c5b5", "text": "Your analysis is not comparing apples to apples which is why it looks like investing money in a non-qualified account is better than a 401k (traditional or Roth). For the non-qual you are using post tax dollars (money that has already been taxed). Now on top of that original tax you are also going to pay capital gains tax for any growth plus dividend rates for any dividends it throws off. For the 401k, let's assume for the moment that $10,000 is invested in a traditional and that the marginal tax rate is always 20%. And for growth let's assume 10x. With a traditional your money will grow to $100,000 and then the IRS gets $20,000 as you pull the money out. The result is a net 80,000 for you. For a Roth 401k, it is taxed first so only $8,000 gets invested. This then grows by the same multiplier to $80,000. (Until you consider changing tax rates the Roth and traditional give the same growth of money). Considering the non-qual option, like with the Roth we only have $8,000 to invest. However in this case you will not realize the full 10x growth as you will have to pay taxes on $72,000. These are taxes that the 401ks (and also IRAs) do not pay. There are other reasons to consider non-qual over maxing out your 401k. Liquidity, quality of investments, and fees being some of those. But the capital gains rate vs. ordinary income rate is not one, as the money in the non-qual still has to go through that ordinary income tax first before it is available to even invest.", "title": "" }, { "docid": "30a055c3759abd566bb7d3845ec0a3f4", "text": "There are 3 options (option 2 may not be available to you) When you invest 18,000 in a Traditional 401k, you don't pay taxes on the 18k the year you invest, but you pay taxes as you withdraw. There's a Required Minimum Distribution required after age 70. If your income is low enough, you won't pay taxes on your withdrawals. Otherwise, you pay as if it is income. However, you don't pay payroll tax (Social Security / Medicare) on the withdrawals. You pay no tax until you withdraw. When you invest 18,000 in a Roth 401k, you pay income tax on the 18,000 in the year it's invested, but you pay nothing after that. When you invest 18,000 in a taxable investment account, you pay income tax on that 18,000 in the year it's invested, you pay tax on dividends (even if they're re-invested), and then you pay capital gains tax when you withdraw. But remember, tax rules and tax rates are only good so long as Congress doesn't change the applicable laws.", "title": "" }, { "docid": "e3187c81565c030bb4ce834c1add5895", "text": "\"Before anything, I see that no one mentioned the one thing about 401(k) accounts that's just shy of magic - The matching deposit. In 2015, 42% of companies offered a dollar for dollar match on deposits. Can't beat that. (Note - to respond to Xalorous' comment, the $18K OP deposits can be nearly any percent of his income. The typical match is 'up to' 6% of gross income. If that's the case, the 401(k) deposits are doubled. But say he makes $100K. The $18K deposit will see a $6K match. This adds a layer of complexity to the answer that I preferred to avoid, as I show with no match at all, and no change in tax brackets, the deferral alone shows value to the investor.) On to the main answer - Let's pull out a spreadsheet - We start with $10,000, and assume the 25% bracket. This gives a choice of $10,000 in the 401(k) or $7500 in the taxable account. Next, let 20 years pass, with 10% return each year. The 401(k) sees the full 10% and after 20 years, $67K. The taxable account owner waits to get the 15% cap gain rate and adjusts portfolio, thus seeing an 8.5% return each year and carrying no ongoing gains. After 20 years of 8.5% returns, he has $38K net. The 401(k) owner on withdrawal pays the 25% tax and has $50K, still more than 25% more money that the taxable account. Because transactions within the account were all tax deferred. EDIT - With respect to davmp's comment, I'll offer the other extreme - In his comment, he (rightly) objected that I chose to trade every year, although I did assign the long term 15% cap gain rate, he felt the annual trade was my attempt to game the analysis. Above, I offer his extreme case, a 10% return each year, no trade, no dividend. Just a cap gain at the end. The 401(k) still wins. I also left the tax (on the 401(k)) at withdrawal at 25%, when in fact, much, if not all will be taxed at 15% or lower, which would put the net at $57K or 30% above the taxable account final withdrawal. The next issue I'd bring up is that the 401(k) is taken out at the top (marginal) tax rate, e.g. a single filer with taxable income over $37,650 (in 2016) would save 25% on that 401(k) deduction. Of course if the deduction pulls you under that line, I'd go Roth or taxable. But, withdrawals start at zero. Today, a single retiree has a standard deduction ($4050) and exemption ($6300) for a total $10,350 \"\"zero bracket\"\" with the next $9275 taxed at 10%. This points to needing $500K in pre tax accounts before withdrawals each year would get you past the 10% bracket. (This comes from the suggestion of using 4% as an annual withdrawal rate). Last - the tax discussion has 2 major points in time, deposit and withdrawal, of course. But, the answers here all ignore all the time in between. In between, you see that for any number of reasons, you'll drop from the 25% bracket to 15% that year. That's the time to convert a bit of money to Roth and 'top off' the 15% bracket. It can happen due to job loss, marriage with new spouse either not working or having lower income, new baby, house purchase, etc. Or in-between, a disability put you out of work. That permits you to take money out with no penalty, and little chance of paying even the 25% that you paid going in. This, from personal experience with a family member, funded a 401(k) with 28% money. Then divorced and disabled, able to take the $10K/yr to supplement worker's comp (non taxed) income.\"", "title": "" }, { "docid": "027dbb6369f229a7e11d81f45da89d8e", "text": "When you are investing for 40 years, you will have taxable events before retirement. You'll need to pay tax along the way, which will eat away at your gains. For example, in your taxable account, any dividends and capital gain distributions will need taxes paid each year. In your 401(k) or IRA, these are not taxable until retirement. In addition, what happens if you want to change investments before retirement? In your taxable account, taxes on the capital gains will be due at that time, but in a retirement account, you can change investments anytime you like without having to pay taxes early. Finally, when you do pull money out of your 401(k) at retirement, it will be taxed at whatever your tax rate is at retirement. After you retire, your income will probably be lower than when you were working, so your tax rate might be less.", "title": "" }, { "docid": "f03a13fea8f0037151eb5edbd661c22d", "text": "\"when you contribute to a 401k, you get to invest pre-tax money. that means part of it (e.g. 25%) is money you would otherwise have to pay in taxes (deferred money) and the rest (e.g. 75%) is money you could otherwise invest (base money). growth in the 401k is essentially tax free because the taxes on the growth of the base money are paid for by the growth in the deferred portion. that is of course assuming the same marginal tax rate both now and when you withdraw the money. if your marginal tax rate is lower in retirement than it is now, you would save even more money using a traditional 401k or ira. an alternative is to invest in a roth account (401k or ira). in which case the money goes in after tax and the growth is untaxed. this would be advantageous if you expect to have a higher marginal tax rate during retirement. moreover, it reduces tax risk, which could give you peace of mind considering u.s. marginal tax rates were over 90% in the 1940's. a roth could also be advantageous if you hit the contribution limits since the contributions are after-tax and therefore more valuable. lastly, contributions to a roth account can be withdrawn at any time tax and penalty free. however, the growth in a roth account is basically stuck there until you turn 60. unlike a traditional ira/401k where you can take early retirement with a SEPP plan. another alternative is to invest the money in a normal taxed account. the advantage of this approach is that the money is available to you whenever you need it rather than waiting until you retire. also, investment losses can be deducted from earned income (e.g. 15-25%), while gains can be taxed at the long term capital gains rate (e.g. 0-15%). the upshot being that even if you make money over the course of several years, you can actually realize negative taxes by taking gains and losses in different tax years. finally, when you decide to retire you might end up paying 0% taxes on your long term capital gains if your income is low enough (currently ~50k$/yr for a single person). the biggest limitation of this strategy is that losses are limited to 3k$ per year. also, this strategy works best when you invest in individual stocks rather than mutual funds, increasing volatility (aka risk). lastly, this makes filing your taxes more complicated since you need to report every purchase and sale and watch out for the \"\"wash sale\"\" rules. side note: you should contribute enough to get all the 401k matching your employer offers. even if you cash out the whole account when you want the money, the matching (typically 50%-200%) should exceed the 10% early withdrawal penalty.\"", "title": "" }, { "docid": "6981bcc6a89b2446fc18d001b0427f02", "text": "If you put it in a normal account it is (1) taxed as ordinary income now and then (2) any growth is taxed again at the capital gains rate. Additionally, (3) any dividends will be taxed each year. If you put it in a 401(k), you will only be taxed once, at the ordinary income rate. Mathematically, if you start with X and have a regular tax rate of t and capital gains rate of g and your investments return r and there are n years to retirement, then your total wealth if you put it in a mutual fund (ignoring annual taxes on dividends) will be While if you used a 401(k) it would simply be The whole g term (along with any annual taxes on dividends) is gone in the second case and that's potentially a lot of taxes. The 401(k) is much better in terms of total wealth unless tax rates dramatically rise between now and when you retire so that the t in the second case is much higher than in the first. This is virtually never the case for people retiring now. Of course, what tax rates the future holds, we do not know.", "title": "" }, { "docid": "081215682c8e1eab69d3bbd7dddc7c1c", "text": "\"You raise a good point about the higher marginal rates for 401K but things will be different, in retirement, than they are for you now. First off you are going to have a \"\"boat load\"\" of money. Like probably a multi-millionaire. Also your ability to invest will (probably) increase greater than the maximum allowable to invest. For this money you might choose to invest in real estate, debt payoff, or non-qualified mutual funds. So fast forward to retirement time. You have a few million in your 401K, you own your house and car(s) outright and maybe a couple of rental properties. For one your expenses are much lower. You don't have to invest, pay social security taxes, or service debt. Clothing, gas, dry cleaning are all lower as well. You will draw some income off of non-qualified plans. This might include rental real estate, business income, or equity investments. You can also draw social security income. For most of us social security will provide sustenance living. Enough for food, medical, transportation, etc. Add in some non-qualified income and the fact that you are debt free, or nearly so, and you might not need to draw on your 401K. Plus if you do need to withdraw you can cherry pick when and what amount you withdraw. Compare that to now, your employer pays you your salary. Most of us do not have the ability to defer our compensation. With a 401K you can! For example lets say you want a new car where you need to withdraw from your 401K to pay for it. In retirement you can withdraw the full amount and pay cash. Part of this money will be taxed at the lowest rate, part at higher rates. (Car price dependent.) In retirement you can take a low interest or free loan and only withdraw enough to make the payments this year. Presumably this will be at the lowest rate. Now you only have one choice: Using your top marginal rate to pay for the car. It doesn't matter if you have a loan or not.\"", "title": "" }, { "docid": "9553b42e51e414b61ae185c8869cd22c", "text": "Don't forget inflation. With a Roth 401k (or IRA), you don't pay any taxes on inflationary or real gains. You pay taxes at the beginning and then no more taxes (unless you invest money after you distributed from it). With a regular, taxable investment account (not a 401k or IRA), you pay taxes on the initial amount. And then you pay taxes on the gains, both inflationary and real. So you effectively pay taxes on the inflated principal twice. Once at initial earning and once when it shows up as inflationary gains. I'll give an example later. With a traditional 401k (or IRA), you pay no taxes on the initial amount. You pay taxes on the distributed amount. That includes taxes on gains, but it only taxes them once, not twice. All the taxes are paid at distribution time. Here's a semirealistic example. This is not a real example with real numbers, but the numbers shouldn't be ridiculously off. They could happen. I'm going to ignore variation and pretend that all the numbers will be the same each year so as to simplify the math. So you pay a 25% marginal tax rate and want to invest $12,000 plus any tax savings. Roth: $12,000 principal Traditional IRA (Trad): $16,000 principal with $4000 in tax savings Taxable Investment Account (TIA): $12,000 principal Let's assume that you make an 8% rate of return and inflation is 3%. Both numbers are possible, although higher and lower numbers have occurred in the past. That gives you returns of $960 for the Roth and TIA cases and a return of $1280 for the Trad case. Pay no annual taxes on the Roth or Trad cases. Pay 25% marginal tax on the TIA case, that's $240. Balances after one year: Roth: $12,960 Trad: $17,280 TIA: $12,720 Inflation decreases the value of the Roth and TIA cases by $360 in the Roth and TIA cases. And by $480 in the Trad case. Ten years of inflationary gains (cumulative): Roth: $5354 Trad: $7138 TIA: $4872 Net buildup (including inflationary gains): Roth: $25,907 Trad: $34,543 TIA: $23,168 Real value (minus inflation to maintain spending power): Roth: $20,554 Trad: $27,405 TIA: $18,109 Now take out $3000 per year, after taxes. That's $3000 in the the Roth and TIA cases, as you already paid the taxes. In the Trad case, that's $4000 because you have to pay 25% tax which will cost $1000. Do that for five years and the new balances are Roth: $9931 Trad: $13,241 TIA: $5973 The TIA will run out in the 8th year. The Roth and Trad will both run out in the 9th year. So to summarize. The Traditional IRA initially grows the most. The TIA grows the least. The TIA is tax-advantaged over the Traditional IRA at that point, but it still runs out first. The Roth IRA grows about the same as the Traditional after taxes are included. Note that I left out the matching contribution from a 401k. That would help both those options. I assumed that the marginal tax rate would be 25% on the Traditional IRA distributions. It might be only 15%, which would increase the advantage of the Traditional IRA. I assumed that the 15% rate on capital returns would still be true for the entire period. If that is increased, the TIA option gets a lot worse. Inflation could be higher or lower. As stated earlier, the TIA account is hit the worst by inflation.", "title": "" }, { "docid": "5a5e0148b8dd3f79ea41dfe64c95dc07", "text": "Be sure to consider the difference between Roth 401K and standard 401K. The Roth 401K is taxed as income then put into your account. So the money you put into the Roth 401K is taxed as income for the current year, however, any interest you accumulate over the years is not taxed when you withdraw the money. So to break it down: You may also want to look into Self Directed 401K, which can be either standard or Roth. Check if your employer supports this type of account. But if you're self employed or 1099 it may be a good option.", "title": "" }, { "docid": "51ec965a4eec4d21850e5055c1062b74", "text": "\"This is an excellent topic as it impacts so many in so many different ways. Here are some thoughts on how the accounts are used which is almost as important as the as calculating the income or tax. The Roth is the best bang for the buck, once you have taken full advantage of employer matched 401K. Yes, you pay taxes upfront. All income earned isn't taxed (under current tax rules). This money can be passed on to family and can continue forever. Contributions can be funded past age 70.5. Once account is active for over 5 years, contributions can be withdrawn and used (ie: house down payment, college, medical bills), without any penalties. All income earned must be left in the account to avoid penalties. For younger workers, without an employer match this is idea given the income tax savings over the longer term and they are most likely in the lowest tax bracket. The 401k is great for retirement, which is made better if employer matches contributions. This is like getting paid for retirement saving. These funds are \"\"locked\"\" up until age 59.5, with exceptions. All contributed funds and all earnings are \"\"untaxed\"\" until withdrawn. The idea here is that at the time contributions are added, you are at a higher tax rate then when you expect to withdrawn funds. Trade Accounts, investments, as stated before are the used of taxed dollars. The biggest advantage of these are the liquidity.\"", "title": "" }, { "docid": "33fdd5c601c5be789b5be3d68eff1b62", "text": "\"If you pay 20% tax now and none later or if you pay no tax now and 20% later, it doesn't make a difference. Mathematically, it's the same. You have to guess about which tax rate (now vs later) will be higher for you in order for you to make the best choice. Predicting tax rates 40 years in advance is hard. Everybody pretends like they can do this accurately. I would suggest going half and half. If you have 20k and put half in pre-tax (10k in) and half in post-tax (only 8k in) you end up with 18k total in which is right in the middle of where you would be if you went with the whole 20k in either extreme. It would also leave you owing 2k in tax rather than the possible 4k in tax if you had gone with all pre-tax. When you split down the middle, you are guaranteed to have 50% in the \"\"right\"\" side, the side with the best outcome. Being guaranteed to be 50% on the right side is pretty good compared to maybe being 100% on the wrong side.\"", "title": "" } ]	[ { "docid": "5e7474ca387cdf47d9c57a7c165ff9a1", "text": "The alternative isn't too bad. Invest in a regular account. The dividends and cap gains will see favorable tax treatment. In my opinion, much of the magic of the retirement account is with 401(k) matched deposits. The benefit you'll miss is the long term opportunity to skim income off the top, at say, 25%, have it grow, and then withdraw it at a much lower average tax rate. If that benefit doesn't outweigh the fear of the 10%, stick with my first thought above.", "title": "" }, { "docid": "88be7bb052f84e4f31196aba623c8a15", "text": "I agree, but that's only a small fraction. You could even argue that the money that is not being paid in taxes isn't necessarily a bad thing as it's funneled back to investors, which also includes the common person that is saving for their retirement, which will also get taxed. Of course that's only for public companies.", "title": "" }, { "docid": "d1f1d37b45d53d66203be41d788dcd70", "text": "\"Your employer sends the money that you choose to contribute, plus employer match if any, to the administrator of the 401k plan who invests the money as you have directed, choosing between the alternatives offered by the administrator. Typically, the alternatives are several different mutual funds with different investment styles, e.g. a S&P 500 index fund, a bond fund, a money-market fund, etc. Now, a statement such as \"\"I see my 401k is up 10%\"\" is meaningless unless you tell us how you are making the comparison. For example, if you have just started employment and $200 goes into your 401k each month and is invested in a money-market fund (these are paying close to 0% interest these days), then your 11th contribution increases your 401k from $2000 to $2200 and your 401k is \"\"up 10%\"\". More generally, suppose for simplicity that all the 401k investment is in just one (stock) mutual fund and that you own 100 shares of the fund as of right now. Suppose also that your next contribution will not occur for three weeks when you get your next paycheck, at which time additional shares of the mutual fund will be purchased Now, the value of the mutual fund shares (often referred to as net asset value or NAV) fluctuates as stock prices rise and fall, and so the 401k balance = number of shares times NAV changes in accordance with these fluctuations. So, if the NAV increases by 10% in the next two weeks, your 401k balance will have increased by 10%. But you still own only 100 shares of the mutual fund. You cannot use the 10% increase in value to buy more shares in the mutual fund because there is no money to pay for the additional shares you wish to purchase. Notice that there is no point selling some of the shares (at the 10% higher NAV) to get cash because you will be purchasing shares at the higher NAV too. You could, of course, sell shares of the stock mutual fund at the higher NAV and buy shares of some other fund available to you in the 401k plan. One advantage of doing this inside the 401k plan is that you don't have to pay taxes (now) on the 10% gain that you have made on the sale. Outside tax-deferred plans such as 401k and IRA plans, such gains would be taxable in the year of the sale. But note that selling the shares of the stock fund and buying something else indicates that you believe that the NAV of your stock mutual fund is unlikely to increase any further in the near future. A third possibility for your 401k being up by 10% is that the mutual fund paid a dividend or made a capital gains distribution in the two week period that we are discussing. The NAV falls when such events occur, but if you have chosen to reinvest the dividends and capital gains, then the number of shares that you own goes up. With the same example as before, the NAV goes up 10% in two weeks at which time a capital gains distribution occurs, and so the NAV falls back to where it was before. So, before the capital gains distribution, you owned 100 shares at $10 NAV which went up to $11 NAV (10% increase in NAV) for a net increase in 401k balance from $1000 to $1100. The mutual fund distributes capital gains in the amount of $1 per share sending the NAV back to $10, but you take the $100 distribution and plow it back into the mutual fund, purchasing 10 shares at the new $10 NAV. So now you own 110 shares at $10 NAV (no net change in price in two weeks) but your 401k balance is $1100, same as it was before the capital gains distribution and you are up 10%. Or, you could have chosen to invest the distributions into, say, a bond fund available in your 401k plan and still be up 10%, with no change in your stock fund holding, but a new investment of $100 in a bond fund. So, being up 10% can mean different things and does not necessarily mean that the \"\"return\"\" can be used to buy more shares.\"", "title": "" }, { "docid": "0443274c12206bfb63207309d55bb569", "text": "As far as broad principles, I think that you are on track. The only suggestion I would have is to look into HSAs. They are another great tax-advantaged account, accessible to those with high incomes.", "title": "" }, { "docid": "3a4d4a1b2146a202c55a6995119675bd", "text": "\"Technically, this doesn't seem like a scam, but I don't think the system is beneficial. They use a lot of half-truths to convince you that their product is right for you. Some of the arguments presented and my thoughts. Don't buy term and invest the rest because you can't predict how much you'll earn from the \"\"rest\"\" Also Don't invest in a 401k because you can't predict how much you'll earn They are correct that you won't know exactly how much you'll have due to stock market, but that doesn't mean the stock market is a bad place to put your money. Investing in a 401k is risky because of the harsh 401k withdrawal rules Yes, 401ks have withdrawal rules (can't typically start before 59.5, must start by 70.5) but those rules don't hamper my investing style in any way. Most Term Life Insurance policies don't pay out They are correct again, but their conclusions are wrong. Yes, most people don't die while you have a term insurance policy which is why Term life insurance is relatively cheap. But they aren't arguing you don't need insurance, just that you need their insurance which is \"\"better\"\" You need the Guaranteed growth they offer The chart used to illustrate their guaranteed growth includes non-guaranteed dividends. They invest $10,000 per year for 36 years and end up with $1,000,000. That's a 5% return! I use 10% for my estimate of stock market performance, but let's say it's only 8%. The same $10,000 per year results in over $2 Million dollars. Using 10.5% (average return of the S&P 500 over it's lifetime) the result is a staggering $3.7 MILLION. So if I'm looking at $3.7M vs. $1M, It costs me $2.7 Million dollars to give me the same coverage as my term life policy. That's one expensive Term Life Insurance policy. My personal favorite: Blindly following the advice of Wall Street and financial “gurus” such as Dave Ramsey and Suze Orman got you where you are. Are you happy with the state of your finances? Do you still believe their fairytale, “Buy Term (insurance) and Invest the Difference”? Yes, I sure do believe that fairytale and I'm prospering quite well thank you. :) While I don't think this is a scam, it's outrageously expensive and not a good financial choice.\"", "title": "" }, { "docid": "030a0714c9b60c9f7f3d8a5bf0dc6cd0", "text": "On the statement it now tracks how much is contributed to the account pre and post tax. This is the key. Your withdrawals will be proportional. Assuming you have contributed 90% in regular contributions (pre-tax) and 10% in Roth (post tax), when you withdraw $1000, it will be $900 from the regular (taxed fully) and $100 from the Roth (not taxed, assuming its a qualified distribution). Earnings attributed proportionally to the contributions. I agree with you that it is not the best option, and would also prefer separate accounts, but with 401k - the account is per employee. Instead of doing 401k Roth/Non-Roth consider switching to Regular 401k and Roth IRA - then you can separate the funds easily as you wish.", "title": "" }, { "docid": "794ea32bcc14adc5586eceeeb639c9ee", "text": "The $250K and up are not one homogeneous group. The lower end of this group benefits from normal Schedule A itemized deductions, e.g. mortgage interest, property tax, state income tax, and charitable donations. As you mention, 401(k) ($17k employee contribution limit this year), but also things like the dependent care account ($5k limit) and flexible spending account, limited usually up to $2500 in '14. The 529 deposits are limited to the gifting limit, $14K in 2014, but one can gift up to five years' deposits up front. This isn't a tax deduction, but does pull money out of one's estate and lets it grow tax free similar to a Roth IRA. The savings from such accounts is probably in the $15k - $20K range given the 20 or so year lifetime of the account and limited deposits. At the higher end, the folks making the news are those whose income is all considered capital gains. This applies both to hedge fund managers as well as CEOs whose compensation included large blocks of stock. This isn't a tax deduction, but it's how our system works, the taxation of capital gains vs. ordinary income.", "title": "" }, { "docid": "dfaa645c7651c8f7438718e0321ef707", "text": "For various reasons, if you can defer tax payment, it's good for you [when you can give uncle sam $x tomorrow, why give it today?]. Some reasons are, you may plan to return back to your country after x years and then you can pay tax at a lower bracket [e.g. convert 401k to Rollover-IRA then do Roth-conversion and pay lower tax bracket]. Paying now versus later is purely based on your anticipated future tax bracket. [if future bracket is same.. say 25% today and after say 20 years, 25%.. there is absolutely no difference between today payment or future payment of tax -- you can mathematically prove the returns are the same for Roth-IRA (or Roth-401k) versus IRA (or 401k)]. Having a bigger balance (in case of 401k compared to roth-401k) can also give you a sense of more security -- since there are provisions for hardship withdrawal (tax may be due)", "title": "" }, { "docid": "1a583f8aa944dd9185528d222d199839", "text": "\"As Mhoran answered, typical match, but some have no match at all, so not bad. The loan provision means you can borrow up to $50k or 50% of your balance, whichever is less. 5 year payback for any loan, but a 10 year payback for a home purchase. I am on the side of \"\"don't do it\"\" but finance is personal, and in some situations it does make sense. The elephant in this room is the expenses within the 401(k). Simply put, a high enough expense will wipe out any benefit from tax deferral. If you are in this situation, I recommend depositing to the match, but not a cent more. Last, do they offer a Roth 401(k) option? There's a high probability you will never be in as low a tax bracket as the next few years, now's the time to focus on the Roth deposits, if not in the 401(k), then in an IRA.\"", "title": "" }, { "docid": "6913c3128a087e10f462defd06dd3ae5", "text": "\"Great. 10% of the pre-tax 450 you'd make in a week of 40 hours' work means you could buy about 2 shares a month. I assume they pay bi-weekly, so you can qualify to buy a share. 25% 401k contribution off less than 30k annual salary is peanuts to the company, and peanuts to the employee by retirement. Competitively speaking, thats actually a rather bare-bones retirement package, isn't it? I hope that health care waves covers deductables 100% - otherwise a yearly checkup will be 10% of your takehome that week in addition to the hours you take off work and get \"\"points\"\" under their draconian \"\"no days off ever\"\" policy.\"", "title": "" }, { "docid": "e381aeb1110d8b207c75ddc922101ea8", "text": "Interesting. The answer can be as convoluted/complex as one wishes to make it, or back-of-envelope. My claim is that if one starts at 21, and deposits 10% of their income each year, they will likely hit a good retirement nest egg. At an 8% return each year (Keep in mind, the last 40 years produced 10%, even with the lost decade) the 10% saver has just over 15X their final income as a retirement account. At 4% withdrawal, this replaces 60% of their income, with social security the rest, to get to nearly 100% or so replacement. Note - I wrote an article about Social Security Benefits, showing the benefit as a percent of final income. At $50K it's 42%, it's a higher replacement rate for lower income, but the replacement rate drops as income rises. So, the $5000 question. For an individual earning $50K or less, this amount is enough to fund their retirement. For those earning more, it will be one of the components, but not the full savings needed. (By the way, a single person has a standard deduction and exemption totaling $10150 in 2014. I refer to this as the 'zero bracket.' The next $8800 is taxed at 10%. Why go 100% Roth and miss the opportunity to fund these low or no tax withdrawals?)", "title": "" }, { "docid": "b1cdcfa7fc903dec38f2a372500111eb", "text": "\"As JoeTaxpayer says, \"\"It's a very rare circumstance where an early 401(k) withdrawal actually makes any real economic sense.\"\" Your statements that one year's salary for you is $60K and the combination of your spouse's income and yours puts you into the highest income tax bracket together lead to the conclusion that your spouse's income is considerably higher than yours. If this income will continue past your death (e.g. you two are not in a joint venture that will collapse when you pass away because she cannot do the work by herself), then it is very definitely to your joint advantage to leave your money in a tax-deferred account for as long as possible. Her income should be enough to cover the mortgage payments. Also, rather than take the money out and paying taxes at a high rate right now, your spouse can roll over the 401k money into an IRA and withdraw only small amounts per year, paying taxes spread over the years rather than in a lump sum.\"", "title": "" }, { "docid": "bd8d505bbe47d1a16680b5ed19bc6230", "text": "Craig touched on it, but let me expand on the point. Deposits, by definition, are withheld at your marginal rate. And since you can choose Roth vs Traditional right till filing time, you know with certainty the rate you are at each year. Absent any other retirement income, i.e. no pension, and absent an incredibly major change to our tax code, I know your starting rate, zero. The first $10K or so per person is part of their standard deduction and exemption. For a couple, the next $18k is taxed at 10%, and so on. Let me stop here to expand this important point. This is $38,000 for the couple, and the tax on it is less than $1900. 5%. There is no 5% bracket of course. It's the first $20K with zero tax, and that first $18,000 taxed at 10%. That $38,000 takes nearly $1M in pretax accounts to offer as an annual withdrawal. The 15% bracket starts after this, and applies to the next $57K of withdrawals each year. Over $95K in gross withdrawals of pretax money, and you still aren't in the 25% bracket. This is why 100% in traditional, or 100% in Roth aren't either ideal. I continue to offer the example I consider more optimizing - using Roth for income that would otherwise be taxed at 15%, but going pretax when you hit 25%. Then at retirement, you withdraw enough traditional to just stay at 10 or 15% and Roth for the rest. It would be a shame to retire 100% Roth and realize you paid 25% but now have no income to use up those lower brackets. Oddly, time value of money isn't part of my analysis. It makes no difference. And note, the exact numbers do change a bit each year for inflation. There's a also a good chance the exemptions goes away in favor of a huge increased standard deduction.", "title": "" }, { "docid": "76fdec82f23aeb8c14fab73c29211526", "text": "\"Your employer could consider procuring benefits via a third party administrator, which provides benefits to and bargains collectively on behalf of multiple small companies. I used to work for a small start-up that did exactly that to improve their benefits across the board, including the 401k. The fees were still higher than buying a Vanguard index or ETF directly, but much better than the 1% you're talking about. In the meantime, here's my non-professional advice from personal experience and hindsight: If you're in a low/medium tax bracket and your 401k sucks, you might be better off to pay the tax up front and invest in a taxable account for the flexibility (assuming you're disciplined enough that you don't need the 401k to protect you from yourself). If you max out a crappy 401k today, you might miss a better opportunity to contribute to a 401k in the future. Big expenses could pop up at exactly the same time you get better investment options. Side note: if not enough employees participate in the 401k, the principals won't be able to take full advantage of it themselves. I think it's called a \"\"nondiscrimination test\"\" to ensure that the plan benefits all employees, not just the owners and management. So voting with your feet might be the best way to spark improvement with your employer. Good luck!\"", "title": "" }, { "docid": "ae781ef3c03cfe23f54867fc42a17c79", "text": "That goodness here in Australia we don't annualise GDP figures rrom just on individual quarter. That is such a stupid practice. We state the quarterly figure and then add the previous three quarters to calculate the rolling 12 month figure. Makes so much more sense.", "title": "" } ]	fiqa
061b45ae405b62beb30d719565fcdcd9	How can banks afford to offer credit card rewards?	[ { "docid": "5c91a24a3ecb00578f4227c5cd7809b4", "text": "There are 3 entities in a credit card transaction; Typically when you swipe for 100, the merchant only gets around 97.5. The 2.5 is divided amongst the 3 entities, roughly around 0.5 for the Merchant Bank, around 0.5 for the Card Network and a lions share to Issuing Bank of around 1.5 The reason Issuing Bank gets large share is because they take the risk and provide the credit to customer. Typically the Issuing Bank would pay the Merchant bank via the Card Network the money in couple of days. So the Merchant Bank is not out of funds. The Issuing Bank on the other hand would have given you a credit of say 10 to 50 days depending on when you made the transaction and when the payment is due. On an average 30 days of credit. So roughly the Acquiring Bank is lending money at the rate of 18%. It is from this money the Issuing Bank would give out rewards, which is typically less than 1%. Also in cases where say Merchant Bank and the Issuing Bank are same, Bank would make money on both the legs of transaction and hence launch co-branded cards with better rewards. The above numbers are illustrative and actual practices vary from Bank to Bank to card Network to Country Related question at How do credit card companies make profit?", "title": "" }, { "docid": "842d702d0a16587e75274be26c6e911e", "text": "One reason why some merchants in the US don't accept Discover is that the fee the store is charged is higher than the average. Generally a portion of transaction fee for the network and the issuing bank goes to the rewards program. In some cases a portion of the interest can also be used to fund these programs. Some cards will give you more points when you carry a balance from one month to the next. Therefore encouraging consumers to have interest charges. This portion of the program will be funded from the interest charges. Profits: Rewards: Some rewards are almost always redeemed: cash once the amount of charges gets above a minimum threshold. Some are almost never redeemed: miles with high requirements and tough blackout periods. Credit cards that don't understand how their customers will use their cards can run into problems. If they offer a great rewards program that encourages use, but pays too high a percentage of points earned can lead to problems. This is especially true when a great percentage of users pay in full each month. This hurt Citibank in the 1990's. They had a card with no annual fee forever, and a very high percentage never had to pay interest. People flocked to the card, and kept it as an emergency card, because they knew it would never have a annual fee.", "title": "" }, { "docid": "620a5771bda356a45fa859b57aeae7f0", "text": "The banks don't have to pay for credit card rewards. The merchants end up footing the bill. The merchants that accept credit cards pay from 2-4% in fees on the credit card purchase. Those fees go to support the rewards programs. The merchants also take on most of the risk during a credit card transaction (although the credit card companies would have you believe otherwise). If a thief uses a stolen card to purchase a camera from Mike's Camera Shop for instance, any funds the merchant received will be taken away from the merchant. In addition, the merchant will be hit with a chargeback fee (usually around $20-$60). Finally, since the card was stolen, the merchant will never get their merchandise returned, so Mike's Camera is out the camera as well. No camera, no funds, and a $60 fee to boot. The credit card issuers make $60 on the chargeback fees and have no liability.", "title": "" }, { "docid": "ac18f121ae9ec8c4697b03740588d5c8", "text": "Michael Pryor's answer is accurate to the actual question asked. The current accepted answer from Dheer is not entirely true but roughly provides an overview of the different entities involved in a typical transaction, with some wrong terminologies, corrected and improved below. The issuing bank, the one that issues the credit card to the customer. When it comes to the service fee split, the issuer bank takes on the majority of the cut in the service fee paid by the merchant to the different entities. For example, on a 2.5% overall fee paid by merchant, roughly 1.5% goes to the issuer, 0.3% goes to the card network (visa, master card, etc) and the remaining 0.7% goes to the acquiring bank. Reward programs have a partnership with participating merchants, where merchants are charged a higher service fee, for the likelihood of driving a higher volume of transactions to the merchant. A portion of the rewards also comes from the issuer, who shares a percentage of their fee back to the customer, in exchange for the same likelihood of making more profit through increased volume in total transactions. For example, a reward program may charge merchants 4.5% fee, with 3.5% of it going to the issuer. Upto 3% of this can be given back to the customer for their loyalty in using the card service. The banks can afford to take as little as 0.5% instead of their regular 1.5% due to the increased volume of transactions and the fixed fee they collect as membership fee. Note that costco has a similar business plan, but they make money entirely of membership fee. So with enough clients, banks can theoretically afford to run their program entirely on membership fees, costing no additional service fee to merchants. The service fee depicted above is arbitrary, and it can be lowered if the merchant is also a client of the issuing bank, that is, both the issuing bank and acquiring bank are the same. So it is kind of a win-win-win situation. And as usual, the banks can afford to make a larger income, if the customer ends up paying interest for their credit - although the rewards program is not designed accounting on this.", "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": "19bde1702c8c2197120ccd74d527b835", "text": "While you're asking about a particular bank, I'll give my opinion of this in general. I think a $12,000 household income is pretty low to be given credit. The risk to the bank is certainly higher than if the income were at that $35,000 level. They can use this to differentiate what they offer for perks, and if they ever collateralize the debt of these cards, it's a clearly defined demographic.", "title": "" }, { "docid": "a2877406bf0777a29e86442ade57fcb8", "text": "Here's one reason that's being overlooked in answers so far. (@ChrisInEdmonton, this is for your comment on @Chad's answer.) How do credit card companies make money? Sure, there's interest charges, but those are offset significantly by the cost of borrowing money, and by people defaulting on their debt / entering bankruptcy. The other way they make money is by processing transactions. They get a cut of whatever you buy. If you're a high-income person, and you're going to process a lot of expenditures with this credit card, your business is worth more. They will be willing to bribe you with things like cash-back, frequent flier miles, and insurance on your auto rentals, so that they can be your #1 go-to card. (This works in concert with the way that some credit card vendors with richer clientele overall - American Express - get to charge higher merchant fees for access to these customers' wallets. But that was mentioned in other answers.) If you're not a high-income person, your business is worth less. If you go somewhere asking for credit, they're going to try and give you a card which will earn them the most money - which probably isn't the one where they give you back 50% of their transaction fee in rewards. It's a calculated risk, since they still have to compete against cash, debit cards, and all the other credit card companies, so they don't have you totally over a barrel, but you shouldn't expect as many freebies, either.", "title": "" }, { "docid": "44af6e62a7fd75f9cf9513658df55b90", "text": "Trick question dude. Can't be done. Sorry to tell you. I've been hit with this. Credit card companies do not make money on these customers. Why does Amex have an annual fee on all cards and an abnormally large transaction fee for merchants? Because they don't allow you to carry a balance (On traditional cards). Meaning they don't make money on interest, like the customers in question here.", "title": "" }, { "docid": "70be767cf8054746efe00c029e2349f2", "text": "\"The bottom line is that you are kind of a terrible customer for them. Granted you are far better than one that does not pay his bills, but you are (probably) in the tier right above that. Rewards cards are used to lure the unorganized into out of control interest rates and late payments. These people are Capital One's, and others, best customers. They have traded hundreds of dollars in interest payments for a couple of dollars in rewards. The CC company says: \"\"YUMMY\"\"! You, on the other hand, cut into their \"\"meager\"\" profits from fees collected from your transactions. Why should they help you make more money? Why should they further cut into your profits? Response to comment: Given your comment I think the bottom line is a matter of perspective. You seem like a logical, altruistic type person who probably seeks a win-win situation in business dealings. This differs from CC companies they operate to seek one thing: enslavement. BTW the \"\"terrible customer\"\" remark should be taken as a compliment. After you get past the marketing lies you begin to see what reward programs and zero percent financing is all about. How do most people end up with 21%+ interest rates? They started with a zero percent balance loan, and was late for a payment. Reward cards work a bit differently. Studies show that people tend to spend about 17% more when they use a reward card. I've caught myself ordering an extra appetizer or beer and have subsequently stopped using a reward card for things I can make a decision at the time of purchase. For people with tight budgets this leads to debt. My \"\"meager\"\" profits paragraph makes sense when you understand the onerous nature of CC companies. They are not interested in earning 2% on purchases (charge 3% and give back 1%) for basically free money. You rightly see this as what should be a win-win for all parties involved. Thus the meager in quotation marks. CC companies are willing to give back 1% and charge 3% if you then pay 15% or more on your balance. Some may disagree with me on the extracting nature of CC companies, but they are wrong. I like him as an actor, but I don't believe Samuel Jackson's lines.\"", "title": "" }, { "docid": "5b770fe5e597b3e19d2a254d0222386c", "text": "Not for normal banking. You can open as many accounts as you want. I did this recently with some Amazon gift card churning for a Chase cash bonus. Staying a long time may have their credit department reach out and offer you a long time customer discount. But no one is saying you have to close one account to open another.", "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": "a02953d7276dc71ac04d14269d15ff1c", "text": "Much money is made by creditors on the transaction value of a client in addition to interest value. Knowing that, I pay off all my cards every month, have never made a late payment, and get a number of offers every year for reward type cards. Don't ever be worried about paying off your card in full, just be sure you're using your card and that you pay on time, every time.", "title": "" }, { "docid": "e98a39641e112d9ac6b9f797f28319c9", "text": "\"Banks are in it to make money. But they're expected to provide a social good which powers our economy: secure money storage (bank accounts) and cashless transactions (credit/debit cards). And the government does not subsidize this. In fact, banks are being squeezed. Prudent customers dislike paying the proper cost of their account's maintenance (say, a $50/year fee for a credit card, or $9/month for a checking account) - they want it free. Meanwhile government is pretty aggressive about preventing \"\"fine print\"\" trickery that would let them recover costs other ways. However there isn't much sympathy for consumers who make trivial mistakes - whether they be technical (overdraft, late fee) or money-management mistakes (like doing balance transfers or getting fooled by promotional interest rates). So that's where banks are able to make their money: when people are imprudent. The upshot is that it's hard for a bank to make money on a prudent careful customer; those end up getting \"\"subsidized\"\" by the less-careful customers who pay fees and buy high-margin products like balance transfers. And this has created a perverse incentive: banks make more money when they actively encourage customers to be imprudent. Here, the 0% interest is to make you cocky about running up a balance, or doing balance transfers at a barely-mentioned fee of 3-5%. They know most Americans don't have $500 in the bank and you won't be able to promptly pay it off right before the 0% rate ends. (or you'll forget). And this works - that's why they do it. By law, you already get 0% interest on purchases when you pay the card in full every month. So if that's your goal, you already have it. In theory, the banks collect about 1.5% from every transaction you do, and certainly in your mind's eye, you'd think that would be enough to get by without charging interest. That doesn't work, though. The problem is, such a no-interest card would attract people who carry large balances. That would have two negative impacts: First the bank would have to spend money reborrowing, and second, the bank would have huge exposure to credit card defaults. The thing to remember is the banks are not nice guys and are not here to serve you. They're here to use you to make money, and they're not beneath encouraging you to do things that are actually bad for you. Caveat Emptor.\"", "title": "" }, { "docid": "031ea471c476d8aad37a82d300a16ce9", "text": "Some accounts, such as my electric, and payments to the tax collector charge a significant enough fee that is counter productive to use a rewards card. One example of this is Alligent Air. They give you a $6 discount if you pay with a debit card which was about 5% of the ticket price. Anytime you borrow money, even as well intentioned and thought out as you plan to do so, you are increasing risk. By managing it carefully you can certainly mitigate it. The question becomes, does that time spent in management worth the $600/year? I did the costco amex deal for about 12 years earning about $300-$400 per year and only once getting hit with a late/finance charge. Despite the success, I opted to end this for a few different reasons. First off people using credit tend to spend more. Secondly, I felt it was not worth my time in management. Thirdly, I did not want the risk. Despite the boasts of many, the reality is that few people actually pay off their card each month. By your post, it seems to me that you will be one of the rare few. However, if you are expending 5K per month, your income must be above the US national average. Is $600 really worth it? Perhaps budgeting for Christmas would be a better option.", "title": "" }, { "docid": "fad9d64626f90023c966ca639615a523", "text": "Every reward program has to have a funding source. If the card gives you x percent back on all purchases. That means that their business is structured to entice you to pump more transactions through the system. Either their other costs are lower, or the increased business allows them to make more money off of late fees, and interest. If the card has you earn extra points for buying a type of item or from a type of store (home stores improvement in the Spring), they are trying to make sure you use their card for what can be a significant amount of business during a small window of time. Sometimes they cap it by saying 5% cash back at home improvement stores during the spring but only on the first $1500 of purchases. That limits it to $75 maximum. Adding more business for them, makes more money for them. Groceries and gas are a good year round purchase categories. Yes there is some variation depending on the season, and the weather, but overall there is not an annual cliff once the season ends. Gas and groceries account for thousands of dollars a year these are not insignificant categories, for many families are recession proof. If they perceive a value from this type of offer they will change their buying behavior. My local grocery store has a deal with a specific gas station. This means that they made a monetary deal. Because you earn points at the grocery store and spend points at the gas station, the grocery store is paying some compensation to the gas station every time you use points. The gas station must be seeing an increase in business so theoretically they don't get 100% compensation from the grocery store. In cases where credit cards give airline miles, the credit card company buys the miles from the airline at a discount because they know that a significant number of miles will never be used.", "title": "" }, { "docid": "890b0d4599ec10abf87cae7906c16e78", "text": "Cash back from credit cards is handled separately than the rest of the purchase, i.e. interest begins accumulating on that day, and likely at a higher rate, and usually comes out of a lower limit than the credit allotted to that card. Given all these differences, and the obvious revenue-generation situation for the lender, it makes sense for them to give the store an incentive, rather than penalize them further, for the use of such a feature. Note: I am not privy to the inner-workings or agreements between large stores and credit lenders, so I cannot guarantee any of this.", "title": "" }, { "docid": "0d0741eee12de03a7beb55b8a9fe3b40", "text": "Set up a meeting with the bank that handles your business checking account. Go there in person and bring your business statements: profit and loss, balance sheet, and a spreadsheet showing your historical cash flow. The goal is to get your banker to understand your business and your needs and also for you to be on a first-name basis with your banker for an ongoing business relationship. Tell them you want to establish credit and you want a credit card account with $x as the limit. Your banker might be able to help push your application through even with your credit history. Even if you can't get the limit you want, you'll be on your way and can meet again with your banker in 6 or 12 months. Once your credit is re-established you'll be able to shop around and apply for other rewards cards. One day you might want a line of credit or a business loan. Establishing a relationship with your banker ahead of time will make that process easier if and when the time comes. Continue to meet with him or her at least annually, and bring updated financial statements each time. If nothing else, this process will help you analyze your business, so the process itself is useful even if nothing comes of it immediately.", "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": "7d9579caffe876adaaec0604f08c7549", "text": "Currency exchange is rather the norm than the exception in international wire transfers, so the fact that the amount needs to be exchanged should have no impact at all. The processing time depends on the number of participating banks and their speeds. Typically, between Europe and the US, one or two business days are the norm. Sending from Other countries might involve more steps (banks) which each takes a bit of time. However, anything beyond 5 business days is not normal. Consider if there are external delays - how did you initiate the sending? Was it in person with an agent of the bank, who might have put it on a stack, and they type it in only a day later (or worse)? Or was it online, so it is in the system right away? On the receiver side, how did you/your friend check? Could there be a delay by waiting for an account statement? Finally, and that is the most common reason, were all the numbers, names, and codes absolutely correct? Even a small mismatch in name spelling might trigger the receiving bank to not allocate the money into the account. Either way, if you contact the sender bank, you will be able to make them follow up on it. They must be able to trace where they money went, and where it currently is. If it is stuck, they will be able to get it ‘unstuck’.", "title": "" } ]	fiqa
c83a1d4bb6f842ba22a9a83964c4b907	Will a credit card company close my account if I stop using it?	[ { "docid": "2c9c75c629be6d5071b24dbc148034f2", "text": "Please realize that your issuer can close the account for any number of reasons. Inactivity is one, as having a credit line open costs them money and if you never charge anything, the company doesn't get any transaction fees from vendors nor does the company get to charge you any interest. An occasional charge is likely to keep your card from being closed automatically, but it is not a guarantee. Another reason they may close the account is that you have other bad marks show up on your credit score, or their criteria for offering you the card change so you no longer match their target demographic. I have a credit card issued by my credit union that I have not used for a couple of years. They will not close the card account because my other accounts are still very profitable for them. If I were not an otherwise profitable customer, I wouldn't be surprised if they closed my credit card account. If you are serious about keeping the account open, you should probably have more than a trivial amount of usage.", "title": "" }, { "docid": "f2247122968b09670d2cec77d633d95f", "text": "\"There is no universal answer here. Some card issuers will. Some that will close the account will warn you first. For my \"\"sock drawer\"\" cards I'll try to take each out semi-annually to make a single transaction, then put it back in the drawer. I've heard you should charge something quarterly, I've never had one closed with semi-annual charges.\"", "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": "9ceccbac66e27f4e8dd3aa3bd00de91a", "text": "\"Assuming the question is \"\"will they close it for inactivity (alone)\"\".. the answer is \"\"Nope\"\" ... unequivocally. Update: < My answer is geared to credit Cards issues by companies that deal in credit, not merchandise (i.e. store cards, retailer cards, etc). Retailers (like Amazon, etc), want to sell goods and are in the credit card business to generate sales. Banks and credit companies (about whom I am referring) make their money primarily on interest and secondarily on service charges (either point of use charged to the vendor that accepts payment, or fees charged to the user).> The only major issuer I will say that it might be possible is Discover, because I never kept a Discover card. I also don't keep department store cards, which might possibly do this; but I do doubt it in either of those cases too. My answer is based on Having 2 AMEX cards (Optima and Blue) and multiple other Visa/MC's that I NEVER use... and most of these I have not for over 10+ years. Since I am also presuming that you are also not talking about an account that charges a yearly or other maintenance fee.. Why would they keep the account open with the overhead (statements and other mailings,etc)? Because you MIGHT use it. You MIGHT not be able to pay it off each month. Because you MIGHT end up paying thousands in interest over many years. The pennies they pay for maintaining your account and sending you new cards with chip technology, etc.. are all worth the gamble of getting recouped from you! This is why sales people waste their time with lots of people who will not buy their product, even though it costs them time and money to prospect.. because they MIGHT buy. Naturally, there are a multitude of reasons for canceling a card; but inactivity is not one. I have no less than 10+ \"\"inactive\"\" cards, one that has a balance, and two I use \"\"infrequently\"\". I really would not mind if they closed all those accounts.. but they won't ;) So enjoy your AMEX knowing that your Visa will be there when you need/want it.. The bank that issues your Visa is banking on it! (presuming you don't foul up financially) Cheers!\"", "title": "" }, { "docid": "21247d238d7a1c233e9f5a6dc582682c", "text": "The workaround solution is to simply avoid having an exactly zero balance on your account. Thus for inactive credit cards that I want to keep around for emergency use, I always leave a small positive balance on the card. The credit card company reserves the right to cancel my card at any time, but a positive balance would force them to send me a check for the privilege of doing so. A positive balance avoids making the account appear inactive and makes it cheaper for them to simply leave the account open.", "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": "6eeebb604046b2dd9274a55dbadbaf4f", "text": "Your credit score is definitely affected by the age of your credit accounts, so if you frequently close one card and open another new one, you're adversely affecting the overall average age of accounts. This is something to consider and whether it is worth what you're trying to achieve. Sometimes, if you're a good customer and are insistent enough, you can simply call your credit card company and use the threat of closing your account in favor of another card that offers something attractive to get your current bank to sweeten its incentives to keep your business. I know many people who've done this with real success, and they spare themselves the hassle of obtaining a new card and suffering the short term consequences on their credit report. This might be an avenue worth trying before you just close the account and move on. I hope this helps. Good luck!", "title": "" }, { "docid": "3f6ad89054cedd1e9a346afac2308349", "text": "The Fair Credit Reporting Act (FCRA) says that account history will stay on your credit report as a closed account for 7 years, and then it will drop off, just like any other bad or good mark on your credit (aside from bankruptcies which stay on reports for 10 years, and can be asked about for the rest of your life). The presence of a new credit card will do more to lower your score in the short term than closing an old credit card. On a related note, reporting a card as lost or stolen can also show up as a different, closed account, even if you keep the same account open with the creditor.", "title": "" }, { "docid": "3333d869722843e63a4782d30d9e231f", "text": "Some years ago a call center operator told me a bit more than they probably should have. They like to see a lot of money go through the card, but very little staying on the card. Yes, they make money on the interest but one card defaulting blows away the profit on a lot of other cards. The 3% take from the merchants is both reliable and up-front, not 6 months down the line when (and if) you pay the interest. So if you want to make your credit card company happy, pay your bills in full every month. I have credit far beyond my actual means because I run work expenses on my personal card, I was told they didn't care (and had already guessed) that it wasn't my money. The point was I was handling things in a way they liked. Not quite at Palladium status, but cards with $200 annual fees are mine for the asking, and I haven't paid interest since the early 1990's.", "title": "" }, { "docid": "004045a3f04f04b4337bbbe4ccc90771", "text": "Check out /r/personalfinance for more detailed advice. Not sure your question. Yes, cancelling it will cause it to disappear from your credit report. Apply for your own card right now (a free rewards one ideally) if your credit it good enough and you have a job. Never pay interest and keep that card and your credit will naturally head to 720+ with no negative marks over time.", "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": "63d342f0ad89564e38df7ece1bc661f8", "text": "First off, congratulations on taking care of your finances and paying off your cards! Takes a lot of discipline. If your next oldest card is just a year apart, you can safely close this card.", "title": "" }, { "docid": "ce8df3b5edca7c3e7cf625537995bd2f", "text": "Credit card companies are businesses. Businesses will make any decision that makes them money. So does it make them money to cancel your account? It's a simple cost-benefit analysis: you having an account with them will probably give them some benefit for very little cost to them. The only real cost associated with an open account is someone who uses the card but doesn't pay, but they're pretty sure you won't be doing that.", "title": "" }, { "docid": "b4596827bd6ac7951cd9af1fd78ba478", "text": "The card-holder agreement does not explicitly specify a minimum spending requirement. It does though, have the following catch-all clause for closing the account: We may: • cancel your Account, • suspend the ability to make charges, • cancel or suspend any feature on your Account, and • notify merchants that your Account has been cancelled or suspended. If we do any of these, you must still pay us for all charges under the terms of this Agreement. We may do any of these things at our discretion, even if you pay on time and your Account is not in default. If your Account is cancelled, you must destroy your cards. We may agree to reinstate your Account after a cancellation. If we do this, we may: • reinstate any additional cards issued on your Account, • charge you any applicable annual fees, and • charge you a fee for reinstating the Account. One would suspect that American Express would happily collect the fee from anyone who holds the card, but is not using it (in any way). Someone, though, that isn't spending the expected amount of money, but is availing themselves of the 24 hour concierge service, etc., would probably find their privileges revoked and/or their card canceled.", "title": "" }, { "docid": "c39644834b92aa943e87d1ec90e0826b", "text": "You don't need to use an open line of credit to help your credit score. You didn't ask this, but another option is to not cut up the card and keep the account open, even if you don't use it. I mention this because sometimes when you are calling in or setting up an online account to service the card, you may need to have the expiration date and CVV code on hand. This has burned me a few times as I had to hunt around for a card I rarely ever use. That being said, if you are worried that you might use the card if you know it's there, then sure, cut it up.", "title": "" }, { "docid": "3c0e577710a6a0c468ead87e343577e1", "text": "Assuming you don't plan on continuing to use the card frequently, the best advice I've heard is to leave them open unless they have an annual fee. Also, leaving it open with a zero balance doesn't help your credit score as much as using it a few times a year (even for small amounts) because it will eventually shift to an inactive state that is less positive for your credit score.", "title": "" }, { "docid": "68783a5b04d0137e5486a0089d3501a1", "text": "The two factors that will hurt you the most is the age of the credit account, and your available credit to debt ratio. Removing an older account takes that account out of the equation of calculating your overall credit score, which can hurt significantly, especially if that is the only, or one of just a couple, of open credit lines you have available. Reducing your available credit will make your current debt look bigger than what it was before you closed your account. Going over a certain percentage for your debt to available credit can make you look less favorable to lenders. [As stated above, closing a credit card does remove it from the credit utilization calculation which can raise your debt/credit ratio. It does not, however; affect the average age of credit cards. Even closed accounts stay on your credit report for ten years and are credited toward average age of cards. When the closed credit card falls off your report, only then, will the average age of credit cards be recalculated.] And may I suggest getting your free credit report from https://www.annualcreditreport.com . It's the only place considered 'official' to receive your free annual credit report as told by the FTC. Going to other 3rd party sites to pull your credit report can risk your information being traded or sold. EDIT: To answer your second point, there are numerous factors that banks and creditors will consider depending on the type of card you're applying for. The heavier the personal rewards (cash back, flyer miles, discounts, etc.) the bigger the stipulation. Some factors to consider are your income to debt ratio, income to available credit ratio, number of revolving lines of credit, debt to available credit ratio, available credit to debt ratio, and whether or not you have sufficient equity and/or assets to cover both your debt and available credit. They want to make sure that if you go crazy and max out all of your lines of credit, that you are capable of paying it all back in a sufficient amount of time. In other words, your volatility as a debt-consumer.", "title": "" }, { "docid": "70cbde4e59f8d13443d6583130e5122e", "text": "\"Speaking from personal experience: I have had a credit card canceled for exactly this reason. It's happened to me three times, with two different providers (NatWest and Nationwide). After the third instance I stopped bothering to even carry a credit card. It's worth noting that all three were \"\"free\"\" cards in the sense that I paid no flat fee or subscription to get the cards. The only way the issuer could make a profit on them was through interest. I was also not a frequent user, carrying the card for convenience more than anything else, although I did make purchases on all three. So it's certainly a possibility. But I live in the UK and I'm guessing most of your other respondents do not. It may be a practice that's more common here than in the US. That might even explain the origin of the rumour.\"", "title": "" }, { "docid": "b6e87baff7f70673898d614e256331f5", "text": "Quant has been an interesting part of finance, but I always thought they missed something really important. The standard methods of statistical analysis can’t explain what’s going on with economy and firms. Otherwise, quant hedge funds would have been making money all the time. The conventional quants find patterns in data, test them then go live. These models work until some fundamental (or not so fundamental) shifts in the market. Then they find themselves back in the drawing board looking for their next model. This kind of analysis seems like a lot of grind for fairly unpredictable returns. There are more and more companies that don’t lend themselves well to fundamental analysis as we know it. Financial data and some poor flawed human analysts insights alone can no longer explain much. This is a unique set of challenges that Data Science, more specifically AI could solve. The speed at which AI can learn and process information is just mind boggling. AI can learn the entire financial history of decision making in minutes. It can recognize patterns, make sophisticated analysis and constantly update its probability tables as the new information comes in. This is something no human can compete with. Imagine a quantitative engine that adapts as the economy changes. It could draw heaps of unstructured data about a company, learn from it in real time, make course corrections and spit out its recommendations. To the degree that human decision making is involved in the strategic decision making of companies, we will need the depth of context that can be provided by humans, but I see the field moving away from excel spreadsheets with fairly poor predicting capacity to AI models with strong predictive capacity.", "title": "" }, { "docid": "235844a2d25fb6628b055a1f80b77c6c", "text": "\"Because this question seems like it will stick around, I will flesh out my comments into an actual answer. I apologize if this does not answer your question as-asked, but I believe these are the real issues at stake. For the actual questions you have asked, I have paraphrased and bolded below: Firstly, don't do a real estate transaction without talking to a lawyer at some stage [note: a real estate broker is not a lawyer]. Secondly, as with all transactions with family, get everything in writing. Feelings get hurt when someone mis-remembers a deal and wants the terms to change in the future. Being cold and calculated now, by detailing all money in and out, will save you from losing a brother in the future. \"\"Should my brother give me money as a down payment, and I finance the remainder with the bank?\"\" If the bank is not aware that this is what is happening, this is fraud. Calling something a 'gift' when really it's a payment for part ownership of 'your' house is fraud. There does not seem to be any debate here (though I am not a lawyer). If the bank is aware that this is what is happening, then you might be able to do this. However, it is unlikely that the bank will allow you to take out a mortgage on a house which you will not fully own. By given your brother a share in the future value in the house, the bank might not be able to foreclose on the whole house without fighting the brother on it. Therefore they would want him on the mortgage. The fact that he can't get another mortgage means (a) The banks may be unwilling to allow him to be involved at all, and (b) it becomes even more critical to not commit fraud! You are effectively tricking the bank into thinking that you have the money for a down payment, and also that your brother is not involved! Now, to the actual question at hand - which I answer only for use on other transactions that do not meet the pitfalls listed above: This is an incredibly difficult question - What happens to your relationship with your brother when the value of the house goes down, and he wants to sell, but you want to stay living there? What about when the market changes and one of you feels that you're getting a raw deal? You don't know where the housing market will go. As an investment that's maybe acceptable (because risk forms some of the basis of returns). But with you getting to live there and with him taking only the risk, that risk is maybe unfairly on him. He may not think so today while he's optimistic, but what about tomorrow if the market crashes? Whatever the terms of the agreement are, get them in writing, and preferably get them looked at by a lawyer. Consider all scenarios, like what if one of you wants to sell, does the other have the right to delay, or buy you out. Or what if one if you wants to buy the other out? etc etc etc. There are too many clauses to enumerate here, which is why you need to get a lawyer.\"", "title": "" } ]	fiqa
5b3e6089a3b2725ee5bf6c8717c97453	How to determine contractor hourly rate and employee salary equivalents?	[ { "docid": "57bf2196d8e9d5f568780851408f9248", "text": "Here are a few points to consider: Taxes: As a consultant, you will be responsible for the employer portion of the Social Security and Medicare taxes, and you might have to pay for state unemployment insurance and state disability insurance, as well. Office expenses: As a consultant, you may be required to buy your own laptop, pay for your own software licenses and buy other office-related supplies. For higher-end services, you may be setting up a complete office and even hire your own secretary and other support staff. Benefits: As a consultant, you will be responsible for your own health insurance, retirement plan and other benefits that an employer would ordinarily provide. Education: Your employer will likely pay for books and magazine subscriptions and send you to seminars, in order to keep your skills current; your client won't. Liability: Consultants face certain liabilities that employees don't, and have to factor the cost of insuring against those risks into their rate. Let's say you're a software developer, and your faulty code causes a nuclear plant's reactor core to overheat and melt down. As an employee, you'll get fired. As a consultant, you will get sued. Even consultants in low-risk fields can easily shell out thousands of dollars per year for a basic general liability policy. Sales & marketing: Don't forget that when your contract ends, you will have expenses associated with finding your next client, including the opportunity cost of not getting paid for your services during that time. All these factors contribute to your overhead, which you have to roll into your consulting rate. You should also add a margin of profit -- after all, as you're in business for yourself, you should be compensated for taking this entrepreneurial risk. If you're looking for a quick over-the-thumb rule, you can figure that your equivalent consulting rate should be about twice what you would be paid hourly as an employee. Assuming you work 2,000 hours a year, if you would receive a $100,000 salary, your hourly rate should be $100. Of course, this is only a very rough guideline. Ultimately, your rate will mostly be influenced by how established you are and how much your services are in demand.", "title": "" }, { "docid": "24eb3e483f2345ef2008c1dcd038a5f0", "text": "Take $100,000 base salary, x 1.5 = $150,000 contractor salary, divide by 1,872 hours = $80/hr", "title": "" } ]	[ { "docid": "39111f34d9ea66aec5d967ac0e8e8f75", "text": "Nice attempt at trying to obfuscate the math by suggesting your wage was half of what you actually got paid. You were paid $9/hr, not $4.50. Was your CEO spending billions of other people's money playing martian when he could have been paying his employees instead?", "title": "" }, { "docid": "eea277229a31bb3a52cb07a41ce3bd35", "text": "\"If you're really a part-time worker, then there are some simple considerations.... The remote working environment, choice of own hours, and non-guarantee of work availability point to your \"\"part-time\"\" situation being more like a consultancy, and that would normally double or triple the gross hourly rate. But if they're already offering or paying you a low hourly figure, they are unlikely to give you consultant rates.\"", "title": "" }, { "docid": "5597c924fe5b5e96210502d7d8756eba", "text": "\"Why would you just look at salary and not total comp for a first year? It's pretty misleading to say \"\"$60k to work 100 hours a week\"\" when you do in fact get paid well above that. Also, in my 2 years of consulting, I've never come anywhere close to 100 hour work weeks. It usually fluctuates between 45-60 hours. Not to mention Fridays are usually pretty casual/relaxed days since you're working from home or in your home office doing random firm activities/networking.\"", "title": "" }, { "docid": "c16909161420015cfe515d752c82b07b", "text": "Okay but still three people at $12/hr is $16 more per hour than one person at $20/hr. And if anything paying taxes and benefits for one employee is cheaper than doing so for three. I still don't see how u/NEVERDOUBTED asserts that the three at $12/hr cost less. Where's the math, man???", "title": "" }, { "docid": "c4f182954cbea0e8f5df43839a121238", "text": "I'm trying to get the numbers to work. I built a quick spreadsheet that allocated the lost time as stated against the overall pay increase, assuming 1.5x for more than 40 hours. I can't find a reasonable number of hours worked where a 9% cut in hours outweighs the near 20% increase in wages.", "title": "" }, { "docid": "c9b219180d9e2d78b21e5d2f6787fe61", "text": "\"The answer depends on this: If you had to hire someone to do what you are doing in the S-corp, what would you pay them? If you are doing semi-unskilled work part-time, then $20k might be reasonable. If you are a professional working full time, it's too low. Don't forget that, in addition to \"\"billable\"\" work, you are also doing office tasks, such as invoicing and bookkeeping, that the IRS will also want to see you getting paid for. There was an important court ruling on this subject recently: Watson v. Commissioner. Watson owned an S-Corp where he was the sole employee. The S-Corp itself was a 25% owner in a very successful accounting firm that Watson worked through. All of the revenue that Watson generated at the accounting firm was paid to the S-Corp, which then paid Watson through salary and distributions. Watson was paying himself $24k a year in salary and taking over $175k a year in distributions. For comparison, even first-year accountants at the firm were making more than $24k a year in salary. The IRS determined that this salary amount was too low. To determine an appropriate amount for Watson's salary, the IRS did a study of the salaries of peers in firms of the same size as the firm Watson was working with, taking into account that owners of firms earn a higher salary than non-owners. The number that the IRS arrived at was $93k. Watson was allowed to take the rest ($80k+ each year) as distributions. Again, this number was based on a study of the salaries of peers. It was far short of the $200k+ that the S-Corp was pulling in from the accounting firm. Clearly, Watson was paying himself far too low of a salary. But even at this extreme example, where Watson's S-Corp was directly getting all of its revenue from one accounting firm in which Watson was an owner, the IRS still did not conclude that all of the revenue should have been salary and subject to payroll taxes. You should ask an accountant or attorney for advice. They can help you determine an appropriate amount for your salary. Don't be afraid of an audit, but make sure that you can defend your choices if you do get audited. If your choices are based on professional advice, that will help your case. See these articles for more information:\"", "title": "" }, { "docid": "7f48d2497330bc421990b575863046a8", "text": "In accrual accounting, you account for items on the income statement when the service has been delivered - in this case, the service that your employees are providing your company. Because of this, you incur the expense in the fiscal year that your employees work for you. So, you incur the expense, and net income decreases by (1-t)*wage expense. Net income decreases, so owners' equity decreases; to balance you credit wages payable. Once the wages are paid, you decrease the liabilities side (wages payable) and offset it with a Cash change on the assets side.", "title": "" }, { "docid": "730bf896fd9945161b247899375340c3", "text": "I'm a freelance programmer, reverse-engineer, and network engineer. I do quarterly 1099 filings using a cheap local accounting firm. I did them on my own at first; not that hard.. You deduct from sum the percentage for that earning-tier issued by the IRS.. $500.00 for writing algorithms on a timer? Yikes.. I did topcoder once but it didn't pay much then it was only good for portfolio.. No way I would race to do algorithms for third-world-rate capital..", "title": "" }, { "docid": "6944f9c0b50e5048b10f8ec9bfc045df", "text": "Software Contractors are not employees of the company that is procuring the software. Software Contractors necessarily work for another legal business entity. There is a business to business relationship between the procurer of the software and the entity producing the software. Therefore, the company procuring the software is not required to pay a minimum wage, or adhere to any other employment law. When any individual or company orders a software product and agrees to pay for it, that is a fixed priced contract. This happens millions of times a day. The amount of time taken to produce the software has no direct bearing on price. For instance, there is no minimum price for Microsoft Word based on the number of hours taken to produce it. Generally a Software Contractor will be a director and shareholder of a limited liability corporation. Directors are exempt from the standard protection offered under employment law. If the company producing the software was employing non-directors to produce the software, rather than sub-contracting to another business then employment law would apply.", "title": "" }, { "docid": "3cd06f09541ff85e29fb9bb2fa1596e7", "text": "This sounds very like disguised employment. You act like an employee of the company, but your official relationship with them is as a contractor. You gain none of the protection you get from being an employee, and this may make you cheaper, less risky and more desirable for the company who is hiring you. Depending on your country you may also pay corporation tax rather than income tax, which may represent a very significant saving. Also, the company hiring you may not have to pay PAYE, national insurance, stakeholder pension, etc. This arrangement is normal and legal providing you genuinely are acting as a subcontractor. However if you are behaving as an employee (desk at the company, company email, have to work specific hours in a specific location, no ability to subcontract, etc.) you may be classified as a disguised employee. In the UK it used to be common practice for highly paid employees to set up shell companies to avoid tax. This will now get you into hot water. Google IR35 It sounds like your relationship in this case is directly with the recruiter. You will have to consider if the recruiter is acting as your employer, or if you remain a genuinely independent agent. The duration of your contract with the recruiter will have a bearing on this. In the UK there are a whole series of tests for disguised employment. This is a good arrangement provided you go in with your eyes open and an awareness of the legislation. However you should absolutely check the rules that apply in your country before entering into this agreement. You could potentially be stung very badly indeed.", "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": "5cbb996244fc60be4ce51aa99ccabc02", "text": "The short Answer is NO, HMRC do not like disguised employment which is what this is as you fall under IR35 you can bill them via an umbrella company and you should be charging the contractor rate not a permie rate. http://www.contractoruk.com/", "title": "" }, { "docid": "5630e94014578741255ef17b238ba8fe", "text": "There's a lot more cost in wages than just the hourly wage itself. As you got taxes that is split between the employer and employee. You also have general overhead costs (ie paperwork). If they are full time employees you then have the costs of benefits as well in there.", "title": "" }, { "docid": "d0d32795fb708850657d5f006b8a351b", "text": "\"We used an internal billing system where we have Project numbers, overheads, and proposal numbers. Projects may or may not have a client backing them, Overheads are strictly that, overhead costs. In the chargeback system we utilize (written by yours truly) we devised an SLO (Service Level Offering) which is the default, PC and Default software such as Office, Adobe Reader, Windows etc... and the hardware itself plus depreciation. This, when analyzed with total Business Unit working manhours, can devise an hourly rate that we apply to all Projects/Overheads/Proposals through time booked to these account through the Timecard system. A rate of 3.00 per manhour worked is applied accross the business Unit. Additional costs are divied by percentage based on Timecards. If Employee A charges 50% time to Project 1, 40% to Project 2 and 10% to project C, then those percentages will be applied to divy out the additional IT costs to the various projects, and thus making these items billable back to the client. This lowers our Overhead costs, transfers cost from Cost Centre to Profit Centre and lowers our GMAF. As for external to IT, it often prevents shit from getting done. \"\"Hey man, can you help me for a second?\"\" \"\"RAAAAAAWWW GIMME CHARGE NUMBER!!!!!!!!\"\" and creates internal animosity between project managers.\"", "title": "" }, { "docid": "881d9743c9290902d46440ea7dadc826", "text": "This is a snapshot of the Jan '17 puts for XBI, the biotech index. The current price is $65.73. You can see that even the puts far out of the money are costly. The $40 put, if you get a fill at $3, means a 10X return if the index drops to $10. A 70X return for a mild, cyclic, drop isn't likely to happen. Sharing youtube links is an awful way to ask a question. The first was far too long to waste my time. The second was a reasonable 5 minutes, but with no example, only vague references to using puts to protect you in bad years. Proper asset allocation is more appropriate for the typical investor than any intricate option-based hedging strategy. I've successfully used option strategies on the up side, multiplying the returns on rising stocks, but have never been comfortable creating a series of puts to hit the jackpot in an awful year.", "title": "" } ]	fiqa
df78900b973f6200ecdf60893095db41	Has anyone heard of Peerstreet?	[ { "docid": "13579414bd19097f500ef210e2dfd057", "text": "\"(Disclosure - PeerStreet was at FinCon, a financial blogger conference I attended last month. I had the chance to briefly meet a couple people from this company. Also, I recognize a number of the names of their financial backers. This doesn't guarantee anything, of course, except the people behind the scenes are no slackers.) The same way Prosper and Lending Club have created a market for personal loans, this is a company that offers real estate loans. The \"\"too good to be true\"\" aspect is what I'll try to address. I've disclosed in other answers that I have my Real Estate license. Earlier this year, I sold a house that was financed with a \"\"Hard Money\"\" loan. Not a bank, but a group of investors. They charged the buyer 10%. Let me state - I represented the seller, and when I found out the terms of the loan, it would have been a breach of my own moral and legal responsibility to her to do anything to kill the deal. I felt sick for days after that sale. There are many people with little credit history who are hard workers and have saved their 20% down. For PeerStreet, 25%. The same way there's a business, local to my area, that offered a 10% loan, PeerStreet is doing something similar but in a 'crowd sourced' way. It seems to me that since they show the duration as only 6-24 months, the buyer typically manages to refinance during that time. I'm guessing that these may be people who are selling their house, but have bad timing, i.e. they need to first close on the sale to qualify to buy the new home. Or simply need the time to get their regular loan approved. (As a final side note - I recalled the 10% story in a social setting, and more than one person responded they'd have been happy to invest their money at 6%. I could have saved the buyer 4% and gotten someone else nearly 6% more than they get on their cash.)\"", "title": "" } ]	[ { "docid": "8586796e8d64cc6ebeb5ef6bc6cc0f27", "text": "Yes and no, P2P Capital Markets is similar concept but is more geared towards business loans. Community Lend used to offer this service but has stopped.", "title": "" }, { "docid": "acd5d4f44adefb80da6debcf6de03ed1", "text": "I don't have a business relationship with Hire.Bid, I just use it to get extra money whenever I am free, so I thought I could share it in the case someone else is interested. If you know any other app like this, feel free to share it, maybe I can use it too. For GiftBac, I wanted to find out if anyone used it before and let me know if it is trustable. About PinkApp, I wanted to know people's thoughts about it to see if it was worth investing in. For now, I am looking for more ways to make money.", "title": "" }, { "docid": "6e5ab272109b1379ea16fea75b9a8be9", "text": "\"I feel like he's just doing this for the kicks and doesn't really believe in it. But then I see the numerous talks, the book etc and I can't decide. His entire basis for a \"\"idea meritocracy\"\" is that everyone should be truthful or \"\"radical transparency\"\". I do not see the connection at all. You cannot build an idea meritocracy because it inherently means you can judge if an idea succeeds or fails before implementing it. If you want to bias yourself toward successful ideas, it requires nothing more than allowing people to implement what they think and then rewarding the ones who succeed. Basically, I cannot see the point of this \"\"radical transparency\"\" etc. Except for one possibility - his computer algorithm. I feel like that is his grasp at immortality and the algorithm requires stupid tons of data to function. So why not give it to the best source for such data? Top ivy league graduates and brilliant people hired by the one of the biggest hedge funds on the planet. And then sell them on this idea that \"\"radical transparency\"\" is the basis for all success in the firm, and ask them to start inputting data on it.\"", "title": "" }, { "docid": "81a0892a695ba40344a68db23cb8c3a6", "text": "moneydashboard.com claims to be the UK's Mint but I have problem using it with my HSBC account right now. I have contacted their helpdesk.", "title": "" }, { "docid": "47d2401e8c9dcd835a24ea517a73bda6", "text": "I've seen this tool. I'm just having a hard time finding where I can just get a list of all the companies. For example, you can get up to 100 results at a time, if I just search latest filings for 10-K. This isn't really an efficient way to go about what I want.", "title": "" }, { "docid": "2b86ec02925e05de918f7e9ac205d3e0", "text": "Money Dashboard and Love Money look like two best options out there now that Kublax closed their doors. Mint were making noises last year about spreading to UK/Canada, but I've not heard anything new about that.", "title": "" }, { "docid": "6d31fd6f177f82e14d0a3c53b84ec20f", "text": "I like the aggregation a lot, but it seems like the site's purpose is designed for lead gen for those tools? Why are there not reviews or profiles of those tools on that site and instead just push their traffic to those platform's websites to download?", "title": "" }, { "docid": "b2ada2333b9bb048c83e8b2fc8db2e65", "text": "\"just for shits, i'll give you the excerpts from Liar's Poker: \"\"I was living in London in the winter of 1984, finishing a master's degree in economics at the London School of Economics, when I received an invitation to dine with the Queen Mother. It came through a distant cousin of mine who, years before, and somewhat improbably, had married a German baron... What had been advertised as a close encounter with British royalty proved to be a fundraiser with seven or eight hundred insurance salesmen...Somewhere in the Great Hall, as luck would have it, were two managing directors from Salomon Brothers. I knew this only because, as luck would further have it, I was seated between their wives. The wife of the more senior Salomon Brothers managing director, an American, took our table firmly in hand, once we'd finished craning our necks to snatch a glimpse of British royalty. When she learned that I was preparing to enter the job market and was considering investment banking, she turned the evening into an interview... Having examined what good had come from my twenty-four years on earth, the asked why I didn't come and work on the Salomon Brothers' trading floor.\"\" It's a great book, I highly recommend it.\"", "title": "" }, { "docid": "af426b3152adaeec95d13e56a086a9df", "text": "I go there and all I see is an overhyped get rich quick conference that you sold tickets in groups to artificially inflate demand. I see no substance. Are you connected to grasshopper labs, where (and I quote) : > the first organization devoted to empowering entrepreneurs through technological innovation and real-world expertise Really? Youre the first? See, hype. Also, youre trying to sell internet phone for $10 a month? You must depend on some pretty NON-tech-savvy customers. I bet youre a people person. Youre probably even nice. But you present yourself as very naive, and your 'goods' dont pass the smell test. Pro tip 1 : dont brag about income. Its non-pro.", "title": "" }, { "docid": "c8d5564a970929110c227022086015bc", "text": "Is there any truth to this, or is this another niche scam that's been brewing the last few years? While it may not be an outright scam, such schemes do tend to be on borderline of scams. Technically most of what is being said claimed can be true, however in reality such windfall gains never happen to the investors. Whatever gains are there will be cornered by the growers, trades, other entities in supply chain leaving very little to the investors. It is best to stay away from such investments.", "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": "99d61bda3e6310ae960085c1f7f8eb4e", "text": "\"I've had a MF Stock Advisor for 7 or 8 years now, and I've belong to Supernova for a couple of years. I also have money in one of their mutual funds. \"\"The Fool\"\" has a lot of very good educational information available, especially for people who are new to investing. Many people do not understand that Wall Street is in the business of making money for Wall Street, not making money for investors. I have stayed with the Fool because their philosophy aligns with my personal investment philosophy. I look at the Stock Advisor picks; sometimes I buy them, sometimes I don't, but the analysis is very good. They also have been good at tracking their picks over time, and writing updates when specific stocks drop a certain amount. With their help, I've assembled a portfolio that I don't have to spend too much time managing, and have done pretty well from a return perspective. Stock Advisor also has a good set of forums where you can interact with other investors. In summary, the view from the inside has been pretty good. From the outside, I think their marketing is a reflection of the fact that most people aren't very interested in a rational & conservative approach to investing in the stock market, so MF chooses to go for an approach that gets more traffic. I'm not particularly excited about it, but I'm sure they've done AB testing and have figured out what way works the best. I think that they have had money-back guarantees on some of their programs in the past, so you could try them out risk free. Not sure if those are still around.\"", "title": "" }, { "docid": "e02f04f2eec2d7d35162e66091e90a64", "text": "Let me begin with very interesting article that was published in Charlotte Business Journal on August 17, 2012. According to the news - Bridgetree wins $4.2 million jury award against Red F Marketing of Charlotte and others, including its founder, Dan Roselli, in a software trade-secrets case.", "title": "" }, { "docid": "896ff60c02a11b0c3a5a277a91fca460", "text": "Putting aside whether that characterization is reasonable, it doesn't follow from what Speckles said. He is suggesting that PayPal shutting people out of its own service would make alternatives to that service more of a fringe thing. I don't see how.", "title": "" }, { "docid": "c774fc5dd8a3e7e9a5d3ceaeacb1520a", "text": "I honestly can't believe two million people care enough to pay 12.95 per month and is that a recurring charge? Wouldn't you just get your family tree and then never visit the site again? I'll be honest and say I don't know their business model well and I can't see myself ever being interested enough in investing in it to bother to figure it out.", "title": "" } ]	fiqa
1768318f42c7d057d404947bff7ae710	How is Los Angeles property tax calculated if a 50% owner later buys out the other 50%?	[ { "docid": "d0e6b701520402660bc8962f6c5066a2", "text": "\"Can't vouch for LA, but property typically is taxed at either the appraised value, the most recent purchase price (\"\"if it wasn't worth that much, you wouldn't have paid that much\"\"), or some combination of the two (usually highest of the two, to prevent \"\"$1 and other goods and services\"\" from lowering the tax to zero). You have now explicitly paid a total of $125k for the property; the fact that you bought it in two stages shouldn't be relevant. But \"\"should\"\" and law are only tangentially connected. I'd recommend asking a tax accountant who know your local practices, unless someone here can give you an authoritative answer.\"", "title": "" }, { "docid": "758e9f0bd55421d57f89a77664517fac", "text": "When property changes hands the sale prices may or may not be used to determine the appraised value of the property, and they may or may not be used to determine the appraised value of other properties. Because of the nature of the transaction: you already have an existing business relationship, the local government is likely to ignore the data point provided by your transaction when determining values of similar properties. They have no idea if there was some other factor used to determine the price. They will also not include in the calculation transactions that are a result of foreclosure becasue the target price is the loan value not the true value. California and some other jurisdictions do add another wrinkle. You will need to determine if the transaction will trigger a reevaluation of the property value. In some states the existing laws of the state limited the annual growth of the assessment, but that could now be recaptured if the jurisdiction rules that this is a new ownership: California Board of Equalization - Change in Ownership - Frequently Asked Questions How does a change in ownership affect property taxes? Each county assessor's office reviews all recorded deeds for that county to determine which properties require reappraisal under the law. The county assessors may also discover changes in ownership through other means, such as taxpayer self-reporting, field inspections, review of building permits and newspapers. Once the county assessor has determined that a change in ownership has occurred, Proposition 13 requires the county assessor to reassess the property to its current fair market value as of the date ownership changed. Since property taxes are based on the assessed value of a property at the time of acquisition, a current market value that is higher than the previously assessed Proposition 13 adjusted base year value will increase the property taxes. Conversely, if the current market value is lower than the previously assessed Proposition 13 adjusted base year value, then the property taxes on that property will decrease. Only that portion of the property that changes ownership, however, is subject to reappraisal. For example, if 50 percent of the property is transferred, the assessor will reassess only 50 percent of the property at its current fair market value as of the date of the transfer, and deduct 50 percent from any existing Proposition 13 base year value. In most cases, when a person buys a residence, the entire property undergoes a change in ownership and 100 percent of the property is reassessed to its current market value.", "title": "" } ]	[ { "docid": "98b07a3bada1706a14716f012eaff827", "text": "\"Accounting for this properly is not a trivial matter, and you would be wise to pay a little extra to talk with a lawyer and/or CPA to ensure the precise wording. How best to structure such an arrangement will depend upon your particular jurisdiction, as this is not a federal matter - you need someone licensed to advise in your particular state at least. The law of real estate co-ownership (as defined on a deed) is not sufficient for the task you are asking of it - you need something more sophisticated. Family Partnership (we'll call it FP) is created (LLC, LLP, whatever). We'll say April + A-Husband gets 50%, and Sister gets 50% equity (how you should handle ownership with your husband is outside the scope of this answer, but you should probably talk it over with a lawyer and this will depend on your state!). A loan is taken out to buy the property, in this case with all partners personally guaranteeing the loan equally, but the loan is really being taken out by FP. The mortgage should probably show 100% ownership by FP, not by any of you individually - you will only be guaranteeing the loan, and your ownership is purely through the partnership. You and your husband put $20,000 into the partnership. The FP now lists a $20,000 liability to you, and a $20,000 asset in cash. FP buys the $320,000 house (increase assets) with a $300,000 mortgage (liability) and $20,000 cash (decrease assets). Equity in the partnership is $0 right now. The ownership at present is clear. You own 50% of $0, and your sister owns 50% of $0. Where'd your money go?! Simple - it's a liability of the partnership, so you and your husband are together owed $20,000 by the partnership before any equity exists. Everything balances nicely at this point. Note that you should account for paying closing costs the same as you considered the down payment - that money should be paid back to you before any is doled out as investment profit! Now, how do you handle mortgage payments? This actually isn't as hard as it sounds, thanks to the nature of a partnership and proper business accounting. With a good foundation the rest of the building proceeds quite cleanly. On month 1 your sister pays $1400 into the partnership, while you pay $645 into the partnership. FP will record an increase in assets (cash) of $1800, an increase in liability to your sister of $1400, and an increase in liability to you of $645. FP will then record a decrease in cash assets of $1800 to pay the mortgage, with a matching increase in cost account for the mortgage. No net change in equity, but your individual contributions are still preserved. Let's say that now after only 1 month you decide to sell the property - someone makes an offer you just can't refuse of $350,000 dollars (we'll pretend all the closing costs disappeared in buying and selling, but it should be clear how to account for those as I mention earlier). Now what happens? FP gets an increase in cash assets of $350,000, decreases the house asset ($320,000 - original purchase price), and pays off the mortgage - for simplicity let's pretend it's still $300,000 somehow. Now there's $50,000 in cash left in the partnership - who's money is it? By accounting for the house this way, the answer is easily determined. First all investments are paid back - so you get back $20,000 for the down payment, $645 for your mortgage payments so far, and your sister gets back $1400 for her mortgage payment. There is now $27,995 left, and by being equal partners you get to split it - 13,977 to you and your husband and the same amount to your sister (I'm keeping the extra dollar for my advice to talk to a lawyer/CPA). What About Getting To Live There? The fact is that your sister is getting a little something extra out of the deal - she get's the live there! How do you account for that? Well, you might just be calling it a gift. The problem is you aren't in any way, shape, or form putting that in writing, assigning it a value, nothing. Also, what do you do if you want to sell/cash out or at least get rid of the mortgage, as it will be showing up as a debt on your credit report and will effect your ability to secure financing of your own in the future if you decide to buy a house for your husband and yourself? Now this is the kind of stuff where families get in trouble. You are mixing personal lives and business arrangements, and some things are not written down (like the right to occupy the property) and this can really get messy. Would evicting your sister to sell the house before you all go bankrupt on a bad deal make future family gatherings tense? I'm betting it might. There should be a carefully worded lease probably from the partnership to your sister. That would help protect you from extra court costs in trying to determine who has the rights to occupy the property, especially if it's also written up as part of the partnership agreement...but now you are building the potential for eviction proceedings against your sister right into an investment deal? Ugh, what a potential nightmare! And done right, there should probably be some dollar value assigned to the right to live there and use the property. Unless you just want to really gift that to your sister, but this can be a kind of invisible and poorly quantified gift - and those don't usually work very well psychologically. And it also means she's going to be getting an awfully larger benefit from this \"\"investment\"\" than you and your husband - do you think that might cause animosity over dozens and dozens of writing out the check to pay for the property while not realizing any direct benefit while you pay to keep up your own living circumstances too? In short, you need a legal structure that can properly account for the fact that you are starting out in-equal contributors to your scheme, and ongoing contributions will be different over time too. What if she falls on hard times and you make a few of the mortgage payments? What if she wants to redo the bathroom and insists on paying for the whole thing herself or with her own loan, etc? With a properly documented partnership - or equivalent such business entity - these questions are easily resolved. They can be equitably handled by a court in event of family squabble, divorce, death, bankruptcy, emergency liquidation, early sale, refinance - you name it. No percentage of simple co-ownership recorded on a deed can do any of this for you. No math can provide you the proper protection that a properly organized business entity can. I would thus strongly advise you, your husband, and your sister to spend the comparatively tiny amount of extra money to get advice from a real estate/investment lawyer/CPA to get you set up right. Keep all receipts and you can pay a book keeper or the accountant to do end of the year taxes, and answer questions that will come up like how to properly account for things like depreciation on taxes. Your intuition that you should make sure things are formally written up in times when everyone is on good terms is extremely wise, so please follow it up with in-person paid consultation from an expert. And no matter what, this deal as presently structured has a really large built-in potential for heartache as you have three partners AND one of the partners is also renting the property partially from themselves while putting no money down? This has a great potential to be a train wreck, so please do look into what would happen if these went wrong into some more detail and write up in advance - in a legally binding way - what all parties rights and responsibilities are.\"", "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": "b17e88382f97661d723cef5bbbb871a6", "text": "First of all, I've been out of college for over a decade, so good job on the assumptions. /s Secondly, when calculating capital gains, you have to take into account the depreciation of the asset. As you would have it, a house owned for 20 years would be fully depreciated, and so no capital gains would apply to such a case. But don't let facts or knowledge get in the way of your trolling, please.", "title": "" }, { "docid": "37fc06a986a153ff45385b6d78c39786", "text": "There's an odd anomaly that often occurs with shares acquired through company plans via ESPP or option purchase. The general situation is that the share value above strike price or grant price may become ordinary income, but a sale below the price at day the shares are valued is a capital loss. e.g. in an ESPP offering, I have a $10 purchase price, but at the end of the offering, the shares are valued at $100. Unless I hold the shares for an additional year, the sale price contains ordinary W2 income. So, if I see the shares falling and sell for $50, I have a tax bill for $90 of W2 income, but a $50 capital loss. Tax is due on $90 (and for 1K shares, $90,000 which can be a $30K hit) but that $50K loss can only be applied to cap gains, or $3K/yr of income. In the dotcom bubble, there were many people who had million dollar tax bills and the value of the money netted from the sale couldn't even cover the taxes. And $1M in losses would take 300 years at $3K/yr. The above is one reason the lockup date expiration is why shares get sold. And one can probably profit on the bigger companies stock. Edit - see Yelp down 3% following expiration of 180 day IPO lock-up period, for similar situation.", "title": "" }, { "docid": "274e7e8e774901f2561452edd25f8aca", "text": "\"In Orange County (southern California), one agent has blogged pretty extensively about using rental parity to determine when it is time to rent or buy. Rental parity is achieved when the cost of renting is equal to the cost of owning; in theory, if you buy when a home is selling above rental parity, you're overpaying, and you'd be better off renting. He has many posts on the subject; a few you might care to read would be this one, and this other one. You might get a better sense of how to calculate rental parity by looking at an example or two. There is also the NY Times calculator mentioned in other responses, and the Patrick.net calculator. Be aware, the calculators are garbage in, garbage out. In other words, you have to consider the input carefully. In particular, I found the defaults on the Patrick.net calculator were not realistic. So far as I am aware, the agent at OCHousingNews does not make his calculations public (though I have never actually asked). He's using a spreadsheet which I have never seen. That is another option, if you care to do this kind of analysis yourself. Search around, you can find a spreadsheet that someone has posted here and there. But keeping something like that updated is not trivial. In my experience, in practice, it's difficult to be totally rational and mathematical when it comes to many decisions, and as other respondents have noted, where you live is one of those decisions. Too, saying \"\"buy when rental parity is achieved\"\" is sort of like saying \"\"buy low, sell high,\"\" as though it were perfectly clear when stocks are at a bottom and/or a peak. In our case, we bought a house about 12 years ago, before rental parity was being discussed in the blogsphere. Looking back, we supposedly bought at the wrong time, according to that agent's rating system, but it turned out fine for us. Our house has appreciated, whereas the S&P 500 is basically where it was 12 years ago. Had we been thinking in terms of rental parity, we might not have bought at that time. Of course, your mileage may vary, and hindsight is always 20/20. I think the most helpful advice I can offer was something I got from a real estate agent around the time we were looking. He told me \"\"when you're looking at houses, be sure you like the floor plan and the location, because those two things are not easily changed.\"\" That advice really helped us to see things more clearly.\"", "title": "" }, { "docid": "8fc999cb123d1fab5d8a6d8bcfd798b5", "text": "I believe you can easily make tresholds for what constitute a partial owner. If I work for GE and buy a share, I'm not exactly a partial owner. Anything under 10% for companies making, I don't know, less than 50 Mil in revenue, you're an employee. Larger companies, 5%. That's just an idea, could be refined but, yeah...", "title": "" }, { "docid": "a72b8ee7500071318e9efa571dbdc2d0", "text": "No. You're entitled to 1% of votes at the shareholders' meeting (unless there's class division between shareholders, that is). If more than 50% of the shareholders vote to close the company, sell off its assets and distribute the proceeds to the owners - you'll get 1% share of the distributions.", "title": "" }, { "docid": "23f2a228c3c25affe0b9da5c43a3fc75", "text": "\"BigCo is selling new shares and receives the money from Venturo. If Venturo is offering $250k for 25% of the company, then the valuation that they are agreeing on is a value of $1m for the company after the new investment is made. If Jack is the sole owner of one million shares before the new investment, then BigCo sells 333,333 shares to Venturo for $250k. The new total number of shares of BigCo is 1,333,333; Venturo holds 25%, and Jack holds 75%. The amount that Jack originally invested in the company is irrelevant. At the moment of the sale, the Venturo and Jack agree that Jack's stake is worth $750k. The value of Jack's stake may have gone up, but he owes no capital gains tax, because he hasn't realized any of his gains yet. Jack hasn't sold any of his stake. You might think that he has, because he used to hold 100% and now he holds 75%. However, the difference is that the company is worth more than was before the sale. So the value of his stake was unchanged immediately before and after the sale. Jack agrees to this because the company needs this additional capital in order to meet its potential. (See \"\"Why is stock dilution legal?\"\") For further explanation and another example of this, see the question \"\"If a startup receives investment money, does the startup founder/owner actually gain anything?\"\" Your other scenario, where Venturo purchases existing shares directly from Jack, is not practical in this situation. If Jack sells his existing shares, you are correct that the company does not gain any additional capital. An investor would not want to invest in the company this way, because the company is struggling and needs new capital.\"", "title": "" }, { "docid": "49b7553d244543856932b6f64b282728", "text": "This question is really a variation of rent vs buy. Try looking at it this way - If you bought it 50/50 and rented it out, what would you both get? Now, moved in, you are effectively collecting that rent, but half is your own money, half is from the partner. Is the half you are getting the from the partner equal to 1/4 of the mortgage. This sounds convoluted, but once you spell all the numbers out, it would be clear. Without the deal as you present it, you'd be paying the partner to 'live in his half.'", "title": "" }, { "docid": "fff2035f2cc2849e6eba49a486a61c8c", "text": "\"Not sure what you are talking about. The house isn't part of a business so neither of you can deduct half of normal maintenance and repairs. It is just the cost of having a house. The only time this would be untrue is if the thing that you are buying for the house is part of a special deduction or rebate for that tax year. For instance the US has been running rebates and deductions on certain household items that reduce energy - namely insulation, windows, doors, and heating/cooling systems (much more but those are the normal things). And in actuality if your brother is using the entire house as a living quarters you should be charging him some sort of rent. The rent could be up to the current monthly market price of the home minus 50%. If it were my family I would probably charge them what I would pay for a 3% loan on the house minus 50%. Going back to the repairs... Really if these repairs are upgrades and not things caused by using the house and \"\"breaking\"\" or \"\"wearing\"\" things you should be paying half of this, as anything that contributes to the increased property value should be paid for equally if you both are expecting to take home 50% a piece once you sell it.\"", "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": "8d2aec1de811964e2da70276232ae2eb", "text": "Interesting. How would they account for it? Monthly? And if so do they modify the cost basis for each lot for the month and then restate? It's hard to imagine they do that. I have a million questions regarding this topic do you know where in the regs it is covered?", "title": "" }, { "docid": "498799c329f332ed740cce7d09b70ba6", "text": "Your question has already been answered, you divide the amount of shares you own * 100% by the total amount of shares. However, I feel it is somewhat misleading to talk about owning a percentage of the company by owning shares. Strictly speaking, shares do not entitle you to a part of the company but instead give you a proportional amount of votes at shareholder meetings (assuming no funky share classes). What this means is that someone who owns 30% of a company's shares can't just grab 30% of the company's assets (factories, offices and whatever) and say that they are entitled to own this. What they actually own is 30% of the voting rights in this company, this means that they control 30% of all available votes when the company calls a vote on corporate actions, choosing a new director etc. which is how shareholders exert their influence on a company.", "title": "" }, { "docid": "8458e6ebcc66911b291d37d15bc50a86", "text": "To start, I hope you are aware that the properties' basis gets stepped up to market value on inheritance. The new basis is the start for the depreciation that must be applied each year after being placed in service as rental units. This is not optional. Upon selling the units, depreciation is recaptured whether it's taken each year or not. There is no rule of thumb for such matters. Some owners would simply collect the rent, keep a reserve for expenses or empty units, and pocket the difference. Others would refinance to take cash out and leverage to buy more property. The banker is not your friend, by the way. He is a salesman looking to get his cut. The market has had a good recent run, doubling from its lows. Right now, I'm not rushing to prepay my 3.5% mortgage sooner than it's due, nor am I looking to pull out $500K to throw into the market. Your proposal may very well work if the market sees a return higher than the mortgage rate. On the flip side I'm compelled to ask - if the market drops 40% right after you buy in, will you lose sleep? And a fellow poster (@littleadv) is whispering to me - ask a pro if the tax on a rental mortgage is still deductible when used for other purposes, e.g. a stock purchase unrelated to the properties. Last, there are those who suggest that if you want to keep investing in real estate, leverage is fine as long as the numbers work. From the scenario you described, you plan to leverage into an already pretty high (in terms of PE10) and simply magnifying your risk.", "title": "" }, { "docid": "1bf921ce7872ac844b4b36aba18cec4d", "text": "From my memory of CFA Level 2 accounting: * If Company A buys 50% or more of company B, they must consolidate 100% of Company B on their financial statements. The % of the business they don't own is multiplied by net income every year, and the resulting number is added to minority interest on the balance sheet. * If Company A buys more than 20% but less than 50%, use the equity method of accounting. This involves creating an asset for the purchase price paid for the stake in Company B. The asset increases in value by dividends received, that's it. * If Company A buys 20% or less, the investment is held in Marketable securities or something similar on the balance, and is marked-to-market.", "title": "" } ]	fiqa
4fea86b3fede75d037678d03ad968a66	Are stocks only listed with one exchange in one place?	[ { "docid": "0bfe5f2d434119bfe551f072cfae1166", "text": "\"Depends. The short answer is yes; HSBC, for instance, based in New York, is listed on both the LSE and NYSE. Toyota's listed on the TSE and NYSE. There are many ways to do this; both of the above examples are the result of a corporation owning a subsidiary in a foreign country by the same name (a holding company), which sells its own stock on the local market. The home corporation owns the majority holdings of the subsidiary, and issues its own stock on its \"\"home country's\"\" exchange. It is also possible for the same company to list shares of the same \"\"pool\"\" of stock on two different exchanges (the foreign exchange usually lists the stock in the corporation's home currency and the share prices are near-identical), or for a company to sell different portions of itself on different exchanges. However, these are much rarer; for tax liability and other cost purposes it's usually easier to keep American monies in America and Japanese monies in Japan by setting up two \"\"copies\"\" of yourself with one owning the other, and move money around between companies as necessary. Shares of one issue of one company's stock, on one exchange, are the same price regardless of where in the world you place a buy order from. However, that doesn't necessarily mean you'll pay the same actual value of currency for the stock. First off, you buy the stock in the listed currency, which means buying dollars (or Yen or Euros or GBP) with both a fluctuating exchange rate between currencies and a broker's fee (one of those cost savings that make it a good idea to charter subsidiaries; could you imagine millions a day in car sales moving from American dealers to Toyota of Japan, converted from USD to Yen, with a FOREX commission to be paid?). Second, you'll pay the stock broker a commission, and he may charge different rates for different exchanges that are cheaper or more costly for him to do business in (he might need a trader on the floor at each exchange or contract with a foreign broker for a cut of the commission).\"", "title": "" } ]	[ { "docid": "520d48b13de1a346dc48497d0fcefbd6", "text": "Which is what [flash trading](http://www.investopedia.com/financial-edge/0809/flash-trading-wall-streets-latest-scam.aspx) is for. edit: I promise you, you could. You would just need a faster line. I promise that's why the NYSE banned it. However, that still doesn't mitigate the problem of creating your own exchange.", "title": "" }, { "docid": "0a047aaa5d65764f7aab0f630f8b0167", "text": "\"There is more than one exchange where stock can be traded. For example, there is the New York Stock Exchange and the London Stock Exchange. In fact, if you look at all the exchanges, there is essentially continuous trading 24/7 for many financial instruments (eg US government bonds). The closing price quoted in papers is usually the price at the close on the NYSE. However, options close after that and so there is after-the-close trading in many stocks with active options, so the price at the close of options trading at CBOE is often used. The \"\"real\"\" price is always changing. But for the purpose of discussion, using the closing price in NYSE (for NYSE listed stocks) is pretty standard and unlikely to be questioned. Likewise, using Bloomberg's price makes sense. Using some after-hours or small market quote could lead to differences with commonly accepted numbers - until tomorrow :)\"", "title": "" }, { "docid": "f22e40edd6be3fb6f5e338904500d122", "text": "It depends on what site you're looking on and what exchange they're pulling the data from. Even though funds and stocks are called the same thing, they have different ticker symbols in each country's exchange or could be traded as pink sheet stocks in the US. If a company or fund is based in another country (like Canada or the UK) they probably also trade on that country's exchange (Toronto or London) under a different symbol. This can cause a lot of confusion when researching these tickers.", "title": "" }, { "docid": "917d74fe632f5f5fbffbde1ab7354b89", "text": "\"The case you are looking at is rather special, because the Chinese government for the longest time did not allow foreigners to invest in Chinese stocks. The ADRs explained in @DStanley's answer are a way around that restriction; recently there are some limited official ways, In general, it is perfectly normal for a stock to appear on different exchanges, in different currencies, and it's all the \"\"real\"\" stock. Because remember: a stock exchange is really nothing more than a fancy place for people to buy and sell stocks. There is absolutely no reason why a specific stock should only be traded in one place. Companies that have decided to be publically tradeable generally want to be traded in as many exchanges as possible, because it makes the stock more liquid, which helps their shareholders. Individual exchanges have different requirements for a stock to be listed for trading there, some may even do it without the company's explicit approval.\"", "title": "" }, { "docid": "495399b295f2a543d63c1288582a78bb", "text": "\"A \"\"stock price\"\" is nothing but the price at which some shares of that stock were sold on an exchange from someone willing to sell those shares at that price (or more) to someone willing to buy them at that price (or less). Pretty much every question about how stock prices work is answered by the paragraph above, which an astonishingly large number of people don't seem to be aware of. So there is no explicit \"\"tracking\"\" mechanism at all. Just people buying and selling, and if the current going price on two exchanges differ, then that is an opportunity for someone to make money by buying on one exchange and selling on the other - until the prices are close enough that the fees and overhead make that activity unprofitable. This is called \"\"arbitrage\"\" and a common activity of investment banks or (more recently) hedge funds and specialized trading firms spun off by said banks due to regulation.\"", "title": "" }, { "docid": "3294cc3ac110d2d7324b53bdd16c05e7", "text": "Wikipedia is your friend: http://en.wikipedia.org/wiki/List_of_stock_exchanges", "title": "" }, { "docid": "99d8dbc7258bcc02dbd72eb71e62cbbe", "text": "There isn't a single universal way to reference a stock, there are 4 major identifiers with many different flavours of exchange ticker (see xkcd:Standards) I believe CUSIPs and ISINs represent a specific security rather than a specific listed instrument. This means you can have two listed instruments with one ISIN but different SEDOLs because they are listed in different places. The difference is subtle but causes problems with settlement Specifically on your question (sorry I got sidetracked) take a look at CQS Symbol convention to see what everything means", "title": "" }, { "docid": "fe41bd844ccdd880ae9b1f59abe82487", "text": "\"Google Finance certainly has data for Tokyo Stock Exchange (called TYO on Google) listings. You could create a \"\"portfolio\"\" consisting of the stocks you care about and then visit it once per day (or write a script to do so).\"", "title": "" }, { "docid": "2878ec0d7cae7c79c35bb2ea7c3d6c0a", "text": "Companies need to go public before you can buy their shares on a public stock exchange, but all companies have shares, even if there's only one share. And anyone who owns those shares can give them to whoever they like (there are generally restrictions on selling shares in unlisted companies to unsophisticated investors, but not on giving them away).", "title": "" }, { "docid": "244082b525c3e0b52022e26c339e7810", "text": "\"In the US, stocks are listed on one exchange but can be traded on multiple venues. You need to confirm exactly what your data is showing: a) trades on the primary-listed exchange; or b) trades made at any venue. Also, the trade condition codes are important. Only certain trade condition codes contribute towards the day's open/high/low/close and some others only contribute towards the volume data. The Consolidated Tape Association is very clear on which trades should contribute towards each value - but some vendors have their own interpretation (or just simply an erroneous interpretation of the specifications). It may surprise you to find that the majority of trading volume for many stocks is not on their primary-listed exchange. For example, on 2 Mar 2015, NASDAQ:AAPL traded a total volume across all venues was 48096663 shares but trading on NASDAQ itself was 12050277 shares. Trades can be cancelled. Some data vendors do not modify their data to reflect these busted trades. Some data vendors also \"\"snapshot\"\" their feed at a particular point in time of the data. Some exchanges can provide data (mainly corrections) 4-5 hours after the closing bell. By snapshotting the data too early and throwing away any subsequent data is a typical cause of data discrepancies. Some data vendors also round prices/volumes - but stocks don't just trade to two decimal places. So you may well be comparing two different sets of trades (with their own specific inclusion rules) against the same stock. You need to confirm with your data sources exactly how they do things. Disclosure: Premium Data is an end-of-day daily data vendor.\"", "title": "" }, { "docid": "ff877f1b75ec383bd26eeb7c552b25cd", "text": "Yes, this can and does certainly happen. When two companies each own stock in each other, it's called a cross holding. I learned about cross holdings in reference to Japanese companies (see Wikipedia - Keiretsu) but the phenomenon is certainly not exclusive to that jurisdiction. Here are a few additional references:", "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": "a296326b2f83db170024fd7c587c7326", "text": "Just because it gets delisted from one of the big boards doesn't mean it can't trade over the counter. For example GM went OTC under the ticker MTLQQ for a while. That being said, just because the stock is trading over the counter doesn't mean it has any real long term value.", "title": "" }, { "docid": "cd3f9ab3bf9a8147897ad81cbba8d6d5", "text": "\"Really arbitrage means that, currency risk aside, it shouldn't matter which exchange you buy on in price terms alone. Arbitrage will always make sure that the prices are equivalent otherwise high frequency traders can make free money off the difference. In practical terms liquidity and brokerage costs usually make trading on the \"\"home\"\" exchange more worthwhile as any limit orders etc will be filled at a better price as you will more easily find a counterparty to your trade. Obviously that will only be an issue where your quantity is significant enough to move the market on a given exchange. The volume needed to move a market is dependent upon the liquidity of the particular stock.\"", "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": "" } ]	fiqa
be861f0b16fbfe61eb118e98fdb3e9fd	What is a “convertible note”?	[ { "docid": "f0656add052a98a8db4a16389833068c", "text": "Source, see if you have access to it Convertible notes are often used by angel investors who wish to fund businesses without establishing an explicit valuation of the company in which they are investing. When an investor purchases equity in a startup, the purchase price of the equity implies a company valuation. For example, if an investor purchases a 10 per cent ownership stake in a company, and pay $1m for that stake, this implies that the company is worth $10m. Some early stage investors may wish to avoid placing a value on the company in this way, because this in turn will affect the terms under which later-stage investors will invest in the company. Convertible notes are structured as loans at the time the investment is made. The outstanding balance of the loan is automatically converted to equity when a later equity investor appears, under terms that are governed by the terms set by the later-stage equity investor. An equity investor is someone who purchases equity in a company. Example:- Suppose an angel investor invests $100,000 using a convertible note. Later, an equity investor invests $1m and receives 10% of the company's shares. In the simplest possible case, the initial angel investor's convertible note would convert to 1/10th of the equity investor's claim. Depending on the exact structure of the convertible note, however, the angel investor may also receive extra shares to compensate them for the additional risk associated with being an earlier investor The worst-case scenario would be if the issuing company initially performed well, meaning that the debt would be converted into shares, and subsequently went bankrupt. The converted shares would become worthless, but the holder of the note would no longer have any recourse. Will twitter have to sell their offices and liquidate staff to close this debt? This depends on the seniority(priority) of the debt. Debt is serviced according to seniority. The higher seniority debts will be paid off first and then only the lower seniority debts be serviced. This will all be in the agreements when you enter into a transaction. When you say liquidate staff you mean sell off their assets and not sell their staff into slavery.", "title": "" } ]	[ { "docid": "d3fcc98a23ecf60d847d502cb52a0209", "text": "In this type of strategy profit is made when the shares go down as your main position is the short trade of the common stock. The convertible instruments will tend to move in about the same direction as the underlying (what it can be converted to) but less violently as they are traded less (lower volatility and lower volume in the market on both sides), however, they are not being used to make a profit so much as to hedge against the stock going up. Since both the bonds and the preference shares are higher on the list to be repaid if the company declares bankruptcy and the bonds pay out a fixed amount of interest as well, both also help protect against problems that may occur with a long position in the common stock. Essentially the plan with this strategy is to earn fixed income on the bonds whilst the stock price drops and then to sell both the bonds and buy the stock back on the market to cover the short position. If the prediction that the stock will fall is wrong then you are still earning fixed income on the debt and are able to convert it into stock at the higher price to cover the short sale eliminating, or reducing, the loss made on the short sale. Effectively the profit here is made on the spread between the price of the bond, accounting for the conversion price, and the price of the stock and that fixed income is less volatile (except usually in the junk market) than stock.", "title": "" }, { "docid": "181fcdb8c771ba8b96ff97a4673d3219", "text": "Sounds to me like this restriction is limited to banks as issuers of convertible debt, which may affect their compliance with capital requirements, but is unlikely to affect the overall market for convertible debt. Also the restriction is limited to retail investors, and I think most convertible debt offerings are not aimed at retail investors, so this restriction seems pretty limited to me.", "title": "" }, { "docid": "07807c7d9d6a1b20798c2c6096b99d17", "text": "Yep. You know, for banks to use against your deposits which are now legally interpreted as unsecured loans or some such. I don't think we can print big again. Happened in [Cyprus](http://rt.com/business/cyprus-crisis-bailout-deposit-631/). Tinfoil hat is optional.", "title": "" }, { "docid": "6aabd62574e0e4c620672a13de2a796d", "text": "Its participating preferred with a 1x liquidation preference. Very unfriendly for the company owner. Most startups these days are seeded with convertible notes because there's less thinking about the valuation of the company; that question is booted to the series A. its also easier to draw up the legal docs; pretty much a standard loan agreement. Finally, it can be far friendlier for the owner depending on if the note is an uncapped note. This is expensive financing and your friend can definitely find cheaper money if he looks for it.", "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": "cfbb547b620fea17de7b1d8d8b42af06", "text": "it means that 20% of my closing balance each day will be added up over the course of a month and then given once the month is over. Yes apart from the typo 0.20% of every day balance. The rate itself is quoted for a year, so for a day it will be (Px0.20)/(100x365). Where P = The principal amount of every day. The credits will be every month-end. For leap year will be 366. Check with your Bank quite a few Banks still use the old convention of 360 days in year.", "title": "" }, { "docid": "15f11c4326b15fa7637a697314e30e43", "text": "And the fact that if notes trade up high enough they tend to get taken out with lower yielding notes (pending the call schedule), so in theory there is more limited upside in high-yield, whereas equity could theoretically trade to infinity. The positives for high-yield is that they generate monthly cash flow via coupon payments and have less down-side relative to equities. Naturally this lower down-side comes at the expense of lower up-side as well.", "title": "" }, { "docid": "031daa43ef28ab8f0178cc542cea1d56", "text": "\"Since you want to know exactly what \"\"yield\"\" means, let's get all the details of the security down first. Treasury Bills are 0-1 year and do not pay interest/coupons. The yield comes from buying the T-Bill at a discount. For example, you buy a T-Bill for $99 and it pays $100 when it matures, and the yield over that holding period is 1/99. When people talk about \"\"yield\"\" they are generally talking about annualized yield unless stated otherwise. Treasury Notes are 2-10 years. They pay interest semi-annually. Treasury Bonds are 20-30 years and they also pay interest semi-annually. Again, \"\"yield\"\" is typically the annualized yield, or the two semi-annual interest payments added together (without compounding). These have interest payments so they are typically sold at par. They may trade a premium/discount afterwards. TIPS pay a constant coupon rate, but the principal is adjusted up and down with inflation.\"", "title": "" }, { "docid": "9bdaaccecc7a6d0050c1aae306971a78", "text": "\"By protected you mean what exactly? In the US, generally you'd get a promissory note signed by B saying \"\"B promises to repay A such and such amount on such and such terms\"\". In case of default you can sue in a court of law, and the promissory note will be the evidence for your case. In case of B declaring bankruptcy, you'd submit the promissory note to the bankruptcy court to get in line with all the other creditors. Similarly in all the rest of the world, you make a contract, you enforce the contract in courts.\"", "title": "" }, { "docid": "b33cbf727f004a084bf7f74b3a932a74", "text": "\"Bingo, great question. I'm not the original poster, \"\"otherwiseyep\"\", but I am in the economics field (I'm a currency analyst for a Forex broker). I also happen to strongly disagree with his posts on the origin of money. To answer your question: the villagers are forced to use the new notes by their government, which demands that their income taxes be paid with the new currency. This is glossed over by otherwiseyep, which is unfortunate because it misleads people who are new to economics into believing the system of fiat money we have now is natural/emergent (created from the bottom-up) and not enforced from the top-down. Legal tender laws enforced in each nation's courts mean that all contracts can be settled in the local fiat currency, regardless of whether the receiver of the money wants a different currency. These laws (and the income tax) create an artificial \"\"root demand\"\" for the fiat currency, which is what gives it its value. We don't just decide that green paper has value. We are forced to accumulate it by the government. Fiat currencies are not money. We call them money, but in fact they are credit derivatives. Let me explain: A currency's value is inextricably tied to the nation's bond market. When investors buy a nation's bonds, they are loaning that nation money. The investor expects to receive interest payments on the bonds. The interest rate naturally rises as the bonds are perceived to be more-risky, and naturally falls as the bonds are perceived to be less-risky. The risk comes from the fact that governments sometimes get really close to not being able to pay their interest payments. They get into so much debt, and their tax-revenue shrinks as their economy worsens. That drives up the interest rate they must pay when they issue new bonds (ie add debt). So the value of a currency comes from tax revenue (interest payments). If a government misses an interest payment, or doesn't fully pay it, the market considers this a \"\"credit event\"\" and investors sell their bonds and freak out. Selling bonds has the effect of driving interest rates even higher, so it's a vicious cycle. If the government defaults, there's massive deflation because all debt denominated in that currency suddenly skyrockets due to the higher interest rates. This creates a chain of cascading defaults - one person defaults, which leads another person, and another, and so on. Everyone was in debt to everyone else, somewhere along the chain. In order to counteract this deflation (which ultimately leads to the kind of depression you saw in 1930's US), governments will print print print, expanding the credit supply via the banks. So this is what you see happening today - banks are constantly being bailed out all over the Western world, governments are cutting programs to be able to meet their interest payments, and central banks are expanding credit supplies and bailing out their buddies. Real money has ZERO counterparty risk. What is counterparty risk? It's just the risk that the guy who owes you something won't honor his debt. Gold and silver and salt and oil aren't IOU's. So they can be real money.\"", "title": "" }, { "docid": "29aa93d3c3af81a6236d2e1905ada5a1", "text": "This site has the best information I could find, other than a Bloomberg terminal: Quantumonline.com QUANTUMONLINE.COM SECURITY DESCRIPTION: SCANA Corp., 2009 Series A, 7.70% Enhanced Junior Subordinated Notes, issued in $25 denominations, redeemable at the issuer's option on or after 1/30/2015 at $25 per share plus accrued and unpaid interest, and maturing 1/30/2065 which may be extended to 1/30/2080. Interest distributions of 7.70% ($1.925) per annum are paid quarterly on 1/30, 4/30, 7/30 & 10/30 to holders of record on the record date which is the business day prior to the payment date (NOTE: the ex-dividend date is at least 2 business days prior to the record date). Distributions paid by these debt securities are interest and as such are NOT eligible for the preferential 15% to 20% tax rate on dividends and are also NOT eligible for the dividend received deduction for corporate holders. Units are expected to trade flat, which means accrued interest will be reflected in the trading price and the purchasers will not pay and the sellers will not receive any accrued and unpaid interest. The Notes are unsecured and subordinated obligations of the company and will rank equally with all existing and future unsecured and subordinated indebtedness of the company. See the IPO prospectus for further information on the debt securities by clicking on the ‘Link to IPO Prospectus’ provided below.", "title": "" }, { "docid": "4c05196cadb750e8859fb1537cd59459", "text": "I don't know much about the convertible debt space, but it seems like this regulation may be a positive sign that the government is being proactive in preventing financial institutions from developing overly complex debt structures (at least on an on-going basis) that get the global economy back into trouble. Does anyone with a more informed opinion than my own have something to share?", "title": "" }, { "docid": "6e1d5d0f243389e114a65d8c5ecb0d2b", "text": "Risk is reduced but isn't zero The default risk is still there, the issuer can go bankrupt, and you can still loose all or some of your money if restructuring happens. If the bond has a callable option, the issuer can retire them if conditions are favourable for the issuer, you can still loose some of your investment. Callable schedule should be in the bond issuer's prospectus while issuing the bond. If the issuer is in a different country, that brings along a lot of headaches of recovering your money if something goes bad i.e. forex rates can go up and down. YTM, when the bond was bought was greater than risk free rate(govt deposit rates) Has to be greater than the risk free rate, because of the extra risk you are taking. Reinvestment risk is less because of the short term involved(I am assuming 2-3 years at max), but you should also look at the coupon rate of your bond, if it isn't a zero-coupon bond, and how you invest that. would it be ideal to hold the bond till maturity irrespective of price change It always depends on the current conditions. You cannot be sure that everything is fine, so it pays to be vigilant. Check the health of the issuer, any adverse circumstances, and the overall economy as a whole. As you intend to hold till maturity you should be more concerned about the serviceability of the bond by the issuer on maturity and till then.", "title": "" }, { "docid": "50293691274cf7b2b3f290670006f50a", "text": "Chinese currency is not freely convertible. Its exchange rate is not determined by the market but rather by the Chinese government. Thus the counter-intuitive result. In essence, the Chinese government is subsidizing exports (which is reasonable since exports is what drives the Chinese economy).", "title": "" }, { "docid": "db66fcbc02aaeae3f5d45af4edbf187c", "text": "\"MBS is a fairly general term \"\"Mortgage Backed Securities\"\" which simply means that the bond is collateralized with mortgages. Pass throughs are a type of MBS that is untranched: all bond holders of the deal are receiving the same interest and principal payments, there is no senior or subordinate class of bonds. Agency passthroughs bond holders receive any principal and interest payments paid by the loans in the pool, minus a slice of the interest payment that pays billing and insurance fees (servicing and guarantee fees, usually a .5% slice of the mortgage interest rate). On agency product (including Ginnies), if a loan defaults it will be bought out of the pool, with the bondholder receiving all of the expected principal and any interest due on the loan. Agency deals with different classes of bonds are usually called REMICs. Passthrough may also be split into principal-only (PO) and interest-only (IO) pieces. There is also a huge forward market in soon-to-be-issued passthroughs called the TBA market. Ginnie Mae has two slightly different programs referred to as Ginnie I and Ginnie II. Ginnie also has commercial and construction loan financial products. Freddie and Fannie have the same type of financial products as Ginnie, but there are differences in the sort of loans that Ginnie has vs the other agencies, as well as subtle minor differences between the contract terms of the securities. Ginnie is also more explicitly guaranteed by the federal government. You may want to look at: http://www.ginniemae.gov/index.asp (especially the \"\"For Investors\"\" and \"\"For Issuers\"\" sections.) Wikipedia's MBS may be more clear than my description: http://en.wikipedia.org/wiki/Mortgage-backed_security#Types\"", "title": "" } ]	fiqa
17fd2106b80dc8049a68899a15b81369	Why was my Credit Limit Increase Denied?	[ { "docid": "9cca679a295a5864a66e8217c08eff7b", "text": "\"I think they gave you the answer: You haven't previously shown that you can run that particular card up to (near) its existing maximum and then pay it off, so they don't have a strong indication that you can handle that large an unsecured loan. Generally, requests to have the limits raised when there isn't evidence that the customer is finding the current limit inconvenient are going to be considered suspicious. Remember, a great credit rating does not require that they consider you a good risk -- it's just one of the things they consider. Why do you need the limit raised? Have you tried contacting the bank's credit department directly and discussing what they will or won't let you do? Re paying off the card every month: Remember, they do get a processing fee from the vendor. They'd prefer that we paid interest (I'm told the term of art for those of us who don't is \"\"deadbeats\"\"), but they certainly don't lose money when we don't. And they'd generally rather have us be loyal customers who MIGHT someday pay interest, and who are bringing in fees, than have us go elsewhere.\"", "title": "" }, { "docid": "70be767cf8054746efe00c029e2349f2", "text": "\"The bottom line is that you are kind of a terrible customer for them. Granted you are far better than one that does not pay his bills, but you are (probably) in the tier right above that. Rewards cards are used to lure the unorganized into out of control interest rates and late payments. These people are Capital One's, and others, best customers. They have traded hundreds of dollars in interest payments for a couple of dollars in rewards. The CC company says: \"\"YUMMY\"\"! You, on the other hand, cut into their \"\"meager\"\" profits from fees collected from your transactions. Why should they help you make more money? Why should they further cut into your profits? Response to comment: Given your comment I think the bottom line is a matter of perspective. You seem like a logical, altruistic type person who probably seeks a win-win situation in business dealings. This differs from CC companies they operate to seek one thing: enslavement. BTW the \"\"terrible customer\"\" remark should be taken as a compliment. After you get past the marketing lies you begin to see what reward programs and zero percent financing is all about. How do most people end up with 21%+ interest rates? They started with a zero percent balance loan, and was late for a payment. Reward cards work a bit differently. Studies show that people tend to spend about 17% more when they use a reward card. I've caught myself ordering an extra appetizer or beer and have subsequently stopped using a reward card for things I can make a decision at the time of purchase. For people with tight budgets this leads to debt. My \"\"meager\"\" profits paragraph makes sense when you understand the onerous nature of CC companies. They are not interested in earning 2% on purchases (charge 3% and give back 1%) for basically free money. You rightly see this as what should be a win-win for all parties involved. Thus the meager in quotation marks. CC companies are willing to give back 1% and charge 3% if you then pay 15% or more on your balance. Some may disagree with me on the extracting nature of CC companies, but they are wrong. I like him as an actor, but I don't believe Samuel Jackson's lines.\"", "title": "" } ]	[ { "docid": "efc61f4ca2cbf4747a962aacb18f1111", "text": "There are two separate cases here that people are not separating. Any card will allow you to pay an amount not exceeding the actually posted charges. Some cards will allow you to pay more than this, some will not. My parents have deliberately overpaid as a means of having a higher credit limit, I've been denied (different card) when trying to do the same thing and the website wouldn't even allow me to pay temporary charges that hadn't yet become real. (A human operator would allow paying those, though.)", "title": "" }, { "docid": "18127088510ed511e14029a376fff64e", "text": "A) The Credit Rating Agencies only look at the month-end totals that are on your credit card, as this is all they ever get from the issuing bank. So a higher usage frequency as described would not make any direct difference to your credit rating. B) The issuing bank will know if you use the credit with the higher frequency, but it probably has little effect on your limit. Typically, after two to three month, they reevaluate your credit limit, and it could go up considerably if you never overdrew (and at this time, it could indirectly positively affect your credit rating). You could consider calling the issuing bank after two month and try to explain the history a bit and get them to increase the limit, but that only makes sense if your credit score has recovered. Your business paperwork could go a long way to convince someone, if you do so well now. C) If your credit rating is still bad, you need to find out why. It should have normalized to a medium range with the bad historic issues dropped.", "title": "" }, { "docid": "52feda2bfa5b003fa24d3ee131ed0895", "text": "Because people are going deeper into debt and filing for bankruptcy more often, there is more risk on behalf of the credit company. Therefore, they limit their risk by lower limits and increasing interest. For every person that goes bankrupt, there might be 10 that pay that new higher interest rate, thereby netting a profit even though they lost out completely on the one customer. The recent legislation limited how and under what circumstance rate are adjusted and raised, but not forbidden. As for the fact that these banks took tax money under the idea (we all thought) I see two points of view. We never should have had the credit we did, so they are correcting and you (like me and millions of others) are suffering for their prior mistakes. It is an honest attempt to correct the system for long term stability even if we suffer in the short term. We gave them tax money, they need to not screw us over. In response to the still frozen credit markets I would suggest penalty taxes to companies that do not lend. Penalties to companies that do not modify mortgages. The second you take government money is the last second a you are entitled to a profit of anything. Furthermore, we the people bought you and we the people get to decide your salary. The bottom line is there is truth in both statements. Things are totally screwed up right now because we ALL made mistakes in the past trying to get a bigger profit or own a bigger house. There are those among us who didn't make a mistake, and those among us who made nothing but mistakes. As a society, we have to pay the piper either way. The best thing you can do now is pay down your debts, live simply and spend your money wisely.", "title": "" }, { "docid": "351b8a1e9fb4e0c37cd26d326b02f834", "text": "One reason why they limit it is to protect you. If I hack your account, I get your entire financial history. I can see a copy of every check you ever wrote. I can see the account number with every doctor, utility, and credit card. I can also see the account information on the back of those checks for all your relatives who you sent $10 for their birthday. I can use the information in those accounts to see where you used to live, this allows me to spoof you when applying for new credit. If they ask if I ever lived on Main street in Anytown USA. I can confidently say yes. If I only let you download a window of time, the responsibility is on you to protect that data that is before the window. They protect it in file isolated from the internet, and finally only in archive locations. Some of the information doesn't exists in electronic form. Data from the 1990's and earlier may not exist in the form you want. They have been expanding the windows over time. I can see/download a pdf of my monthly statement going back 7 years. Of course that data can't go directly into quicken. Some places do let you get a file that goes back farther, but they charge you for it, and it can only be done by them sending you the file. That prevents you from downloading your entire history everyday. That times 70 Million customers would overwhelm their server and other infrastructure. Regarding the amount of data:", "title": "" }, { "docid": "238acb579177dbbd1370975042f0620f", "text": "Usually Bonds are used to raised capital when a lender doesn't want to take on sole risk of lending. If you are looking at raising anything below 10m bonds are not a option because the bank will just extend you a line of credit.", "title": "" }, { "docid": "3d546b6e4bd4a4a825ca9009cdc7b12a", "text": "Another reason is that the amount of unused credit you have is a positive factor on your credit score. It's generally easier to open several different accounts for $X dollars each with different banks than to get your current bank to raise your limit severalfold in a single go. Your current bank has to worry about why you suddenly are asking for a large additional amount of credit; while other banks will be willing to offer you smaller amounts of credit in the hope that you transfer your business from your current bank to them.", "title": "" }, { "docid": "01264d3bf1b37ab9fb671b8d57b01293", "text": "I've read multiple times that the way to rebuild the credit score is to get a credit card and then have some minor charges on it every month and have them paid in full every month. Old negative events age and this disciplined activity rebuild the score to some not to horrible levels. Now it's true that it's hard to get reasonably good credit cards when your credit score is poor. Yet it's not necessary to have a good credit card for this case - such things as large credit limit are not needed. All that's needed is a long grace period so that there's no interest between the moment a charge is done and a moment the bill is paid in full at the end of the month. Yes, the card may have rather high interest and rather low credit limit, but it doesn't really matter. I've read once on MSN Money that people are offered credit even while they're in the middle of bankruptcy, so it's not impossible to get a credit card in the described situation. Goes without saying that a lot of discipline will be needed to have all this implemented.", "title": "" }, { "docid": "07b529c7d2395c26971e103a1982d34f", "text": "While I agree with keshlam@ that the gym had no reason (or right) to ask for your SSN, giving false SSN to obtain credit or services (including gym membership) may be considered a crime. While courts disagree on whether you can be charged with identity theft in this scenario, you may very well be charged with fraud, and if State lines are crossed (which in case of store cards is likely the case) - it would be a Federal felony charge. Other than criminal persecution, obviously not paying your debt will affect your credit report. Since you provided false identity information, the negative report may not be matched to you right away, but it may eventually. In the case the lender discovers later that you materially misrepresented information on your mortgage application - they may call on your loan and either demand repayment in full at once or foreclose on you. Also, material misrepresentation of facts on loan application is also a criminal fraud. Again, if State lines are crossed (which in most cases, with mortgages they are), it becomes a Federal wire fraud case. On mortgage application you're required to disclose your debts, and that includes lines of credits (store cards and credit cards are the same thing) and unpaid debts (like your gym membership, if its in collection).", "title": "" }, { "docid": "e3c326b2ea3f1b5e375bbd90af5d2132", "text": "\"I don't know of a situation where rejecting a raise would make sense. Often, one can be in a phaseout of some benefit, so that even though you're in a certain tax bracket, the impact of the next $100 is greater than the bracket rate alone. Taxation of social security benefits is one such anomaly. It can be high, but never over 100%. Update - The Affordable Care Act contains such an anomaly - go to the Kaiser Foundation site, and see the benefit a family of three might receive. A credit for up to $4631 toward their health care insurance cost. But, increase the income to above $78120 Modified Adjusted Gross Income (MAGI) and the benefit drops to zero. The fact that the next dollar of income will cost you $4631 in the lost credit is an example of a step-function in the tax code. I'd still not turn down the raise, but I'd ask that it be deposited to my 401(k). And when reconciling my taxes each April, I'd use an IRA in case I still went over a bit. Consider, it's April, and your MAGI is $80,120. Even if you don't have to cash to deposit to the IRA, you borrow it, from a 24% credit card if need be. Because the $2000 IRA will trigger not just $300 less Federal tax, but a $4631 health care credit. Note - the above example will apply to a limited, specific group who are funding their own health care expense and paying above a certain percent of income. It's not a criticism of ACA, just a mathematical observation appropriate to this question. For those in this situation, a close look at their projected MAGI is in order. Another example - the deduction for college tuition and fees. This is another \"\"step function.\"\" Go a dollar over the threshold, $130K joint, and the deduction drops from $4000 to $2000. You can claim that a $2000 deduction is a difference of 'only' $500 in tax due, but the result is a quick spike in the marginal rate. For those right at this number, it would be worth it to increase their 401(k) deduction to get back under this limit.\"", "title": "" }, { "docid": "4144fdafb5464a6c4ad0a0a2b5c90ec5", "text": "Why do you want to improve your credit score? Did you want to buy something? If not, I don't see the point in improving it. If you want to buy something, you can work towards long-term solutions like others have mentioned. In the short term, you can dispute the accuracy of all the negative line items in your report. This will give you a short boost in your credit report while the line items are being investigated as they will be taken off your credit report in the mean time. If you're looking to get a car or mortgage a home, you could time your dispute with purchasing the high dollar assets. This is a trick that does work, but you have to make your move while your credit score is the best it can be.", "title": "" }, { "docid": "ffd92d990a6b96092871ac822eef4a57", "text": "\"This is not a normal occurrence, and you have every right to be annoyed, but the technical way it usually happens goes like this: What can happen is when the merchant incorrectly completes the transaction without referencing the pre-authorization transaction. The bank effectively doesn't \"\"know\"\" this is the same transaction, so they process it the same way they process any other purchase, and it has no effect on the pre-authorization and related held/pending transaction. As far as the bank knows, you purchased a second set of blinds in the store for $200 and are still waiting on the first order to come in, they have no idea the store screwed up. The reason this is possible is the purpose of the pre-auth in the first place is that it is a contractual agreement between the bank (credit card) and the merchant that the funds are available, will be available except under rare special circumstances, and thus they can go ahead and process the order. This lets the merchant be secure in the knowledge that they can collect their payment, but you aren't paying interest or monthly payments on something you haven't even gotten yet! This system works reasonably well for everyone - right up until someone screws up and fails to properly release a hold, makes a second transaction instead of properly referencing the first one, or the bank screws up their system and fails to correctly match referenced pre-authorization codes to purchases. The problem is that this should not be a normal occurrence, and the people you are speaking with to try to sort out the issue often do not have the authority or knowledge necessary to properly fix the issue, or its such a hassle for them that they hope you just go away and time fixes the issue on its own. The only sure-fire solution to this is: make sure you have so much extra credit line that this doesn't effect you and you can safely let it time out on its own, or stop doing business with this combination of merchant/payment that creates the problem. Back when my credit limits were being pushed, I would never pay at gas pumps because their hold polices were so weird and unpredictable, and I would only pre-pay inside or with cash to avoid the holds.\"", "title": "" }, { "docid": "7dcbbcc78bd1561999720f4fd276ad02", "text": "Yeah I have credit cards now but his credit line got me jumped up from maybe a 200 to a 650 in a few months or a year or so. My bad I figured I posted it in the wrong sub! So if he cancels it, will this cause me to lose points? Considering the credit line is about 20K?", "title": "" }, { "docid": "345ebba66a67476e6b9e1fb4bdd33b3d", "text": "I had a macys card which only had $75.00 credit limit... I accidently paid over the limit so the card had $100.00 in it. I left it that way for a month.. My credit limit turned into 100.. So I do think its possible to increase your credit limit that way.. I've tried many times requesting for a credit limit increase.. I was denied many times.. The only thing I have is to add money but the tricky thing is that you'll have to add money and spend the whole amount and then pay it off at once for the credit limit to stick. But since you have great credit assuming because your limit is 1000, you should request for an increase of your credit limit.", "title": "" }, { "docid": "7cfb64bbf0a388ad9bda6cea06cdc2ce", "text": "\"There's many concrete answers, but there's something circular about your question. The only thing I can think of is that phone service providers ask for credit report when you want to start a new account but I am sure that could be worked around if you just put down a cash deposit in some cases. So now the situation is flipped - you are relying on your phone company's credit! Who is to say they don't just walk away from their end of the deal now that you have paid in full? The amount of credit in this situation is conserved. You just have to eat the risk and rely on their credit, because you have no credit. It doesn't matter how much money you have - $10 or $10000 can be extorted out of you equally well if you must always pay for future goods up front. You also can't use that money month-by-month now, even in low-risk investments. Although, they will do exactly that and keep the interest. And I challenge your assumption that you will never default. You are not a seraphic being. You live on planet earth. Ever had to pay $125,000 for a chemo treatment because you got a rare form of cancer? Well, you won't be able to default on your phone plan and pay for your drug (or food, if you bankrupt yourself on the drug) because your money is already gone. I know you asked a simpler question but I can't write a good answer without pointing out that \"\"no default\"\" is a bad model, it's like doing math without a zero element. By the way, this is realistic. It applies to renting in, say, New York City. It's better to be a tenant with credit who can withhold rent in issue of neglected maintenance or gross unfair treatment, than a tenant who has already paid full rent and has left the landlord with little market incentive to do their part.\"", "title": "" }, { "docid": "6a82a58202ec394a50a1b5aa8ce2f7f3", "text": "This is normal with the dealer's financing. To add more details to littleadv's answer, what happens is when you get the financing through the dealer, at first, they will try to do the loan on your behalf with local banks in your area. This is why you see several hard inquiries; one from each back. If none of these banks wants to take the loan, then dealer's financing entity will take the loan. This was my exact experience with Hyundai. In addition, don't get surprise if you start receiving letters saying that your loan was rejected. The dealer will send the loan requests simultaneously, and some of the banks might deny the loan. This also happened to me, and I have been owning my car for around a year. Still, make sure that the letters matches with the credit inquiries.", "title": "" } ]	fiqa
ac79f20cff9c2f60ecbe283de3d824eb	Pay or not pay charged-off accounts for mortgage qualification	[ { "docid": "9d44726d840266dfc13a6eef5828b1e4", "text": "\"Your post has some assumptions that are not, or may not be true. For one the assumption is that you have to wait 7 years after you settle your debts to buy a home. That is not the case. For some people (me included) settling an charged off debt was part of my mortgage application process. It was a small debt that a doctor's office claimed I owed, but I didn't. The mortgage company told me, settling the debt was \"\"the cost of doing business\"\". Settling your debts can be looked as favorable. Option 1, in my opinion is akin to stealing. You borrowed the money and you are seeking to game the system by not paying your debts. Would you want someone to do that to you? IIRC the debt can be sold to another company, and the time period is refreshed and can stay on your credit report for beyond the 7 years. I could be wrong, but I feel like there is a way for potential lenders to see unresolved accounts well beyond specified time periods. After all, the lenders are the credit reporting agencies customers and they seek to provide the most accurate view of a potential lender. With 20K of unresolved CC debt they should point that out to their customers. Option 2: Do you have 20K? I'd still seek to settle, you do not have to wait 7 years. Your home may not appreciate in 2 years. In my own case my home has appricated very little in the 11 years that I have owned it. Many people have learned the hard way that homes do not necessarily increase in value. It is very possible that you may have a net loss in equity in two years. Repairs or improvements can evaporate the small amount of equity that is achieved over two years with a 30 year mortgage. I would hope that you pause a bit at the fact that you defaulted on 20K in debt. That is a lot of money. Although it is a lot, it is a small amount in comparison to the cost and maintenance of a home. Are you prepared to handle such a responsibility? What has changed in your personality since the 20K default? The tone of your posts suggests you are headed for the same sort of calamity. This is far more than a numbers game it is behavioral.\"", "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": "8500623441de74685beaa0c4c6b26782", "text": "Yes, for a credit card, payments in excess of the minimum will go toward principal. This is not always the case with a mortgage, where prepayments of extra principal need to be explicitly stated.", "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": "8f92ce53db50ec532e8395af9da6f0bb", "text": "I think you are running into multiple problems here: All these together look like a high risk to a bank, especially right now with companies being reluctant to hire full-time employees. Looking at it from their perspective, the last thing they need right now is another potential foreclosure on their books. BTW, if it is a consolation, I had to prove 2 years of continuous employment (used to be a freelancer) before the local credit union would consider giving me a mortgage. We missed out on a couple of good deals because of that, too.", "title": "" }, { "docid": "ade1a70a1ee0761e9bad174726ff779e", "text": "\"I've heard that the bank may agree to a \"\"one time adjustment\"\" to lower the payments on Mortgage #2 because of paying a very large payment. Is this something that really happens? It's to the banks advantage to reduce the payments in that situation. If they were willing to loan you money previously, they should still be willing. If they keep the payments the same, then you'll pay off the loan faster. Just playing with a spreadsheet, paying off a third of the mortgage amount would eliminate the back half of the payments or reduces payments by around two fifths (leaving off any escrow or insurance). If you can afford the payments, I'd lean towards leaving them at the current level and paying off the loan early. But you know your circumstances better than we do. If you are underfunded elsewhere, shore things up. Fully fund your 401k and IRA. Fill out your emergency fund. Buy that new appliance that you don't quite need yet but will soon. If you are paying PMI, you should reduce the principal down to the point where you no longer have to do so. That's usually more than 20% equity (or less than an 80% loan). There is an argument for investing the remainder in securities (stocks and bonds). If you itemize, you can deduct the interest on your mortgage. And then you can deduct other things, like local and state taxes. If you're getting a higher return from securities than you'd pay on the mortgage, it can be a good investment. Five or ten years from now, when your interest drops closer to the itemization threshold, you can cash out and pay off more of the mortgage than you could now. The problem is that this might not be the best time for that. The Buffett Indicator is currently higher than it was before the 2007-9 market crash. That suggests that stocks aren't the best place for a medium term investment right now. I'd pay down the mortgage. You know the return on that. No matter what happens with the market, it will save you on interest. I'd keep the payments where they are now unless they are straining your budget unduly. Pay off your thirty year mortgage in fifteen years.\"", "title": "" }, { "docid": "f4b75a63bf6184e218d2b55c6d84ddc6", "text": "Certainly there are people who do pay off their homes. Others do not. It's a question of risk tolerance and preference. Some considerations relevant to this question: Taxes - Interest on a mortgage is tax deductible. Particularly for high earners, this is a significant incentive to maintain a mortgage balance and place extra money in the market instead. Liquidity - If you lose your job, you can sell stocks to pay the mortgage. But if you have made principle payments on your mortgage but still owe some outstanding balance, you are still required to make monthly payments without any source of income. Rates - In recent years it is been common to get a mortgage for 3.2% to 3.5%. The difference between those rates and 9% rate of return for the market is substantial. There are other considerations but the answer in the end is that for many people the risk / reward calculus says the ~5% difference in rate of return is worth the potential risks.", "title": "" }, { "docid": "47fb00c8ef165134dc0c437bddc54ebf", "text": "Ditto to Victor. The simple rule is: Pay the minimums on all so you don't get any late fees, etc, then pay off the highest interest rate loan first. A couple of special cases do come to mind: If one or more of these are credit cards, then, here in the U.S. at least, credit cards charge you interest on the average daily balance, unless you pay off the balance entirely, in which case you pay zero interest. So for example say you had two credit cards, both with 1% per month interest, with debt of $2000 and $1000. You have $1500 available. Ignoring minimum payments for the moment, if you put that $1500 against the larger balance, you would still pay interest on the full amount for the current month, or $30. But if you paid off the smaller and put the difference against the larger, then your interest for the current month would be only $15. (Either way, your interest for NEXT month would be the same -- 1% of the $1500 remaining balance or $15 -- assuming you couldn't pay off the other card.) If one or more of the loans are mortgage loans on which you are paying mortgage insurance, then when you get the balance below a certain point -- usually 80% of the original loan amount -- you no longer have to pay mortgage insurance premiums. Thus the amount you are paying on such premiums needs to be factored into the calculation. There may be other special cases. Those are the ones that I've run into.", "title": "" }, { "docid": "e18a6ca79cdbe05daed214257d18350c", "text": "\"This is somewhat unbelievable. I mean if you had a business of collecting debts, wouldn't you want to collect said debts? Rather than attempting to browbeat people with these delinquent debts into paying, you have someone volunteering to pay. Would you want to service that client? This would not happen in just about any other industry, but such is the lunacy of debt collecting. The big question is why do you need this cleared off your credit? If it is just for a credit score, it probably is not as important as your more recent entries. I would just wait it out, until 7 years has passed, and you can then write the reporting agencies to remove it from your credit. If you are attempting to buy a home or similarly large purpose and the mortgage company is insisting that you deal with this, then I would do the following: Write the company to address the issue. This has to be certified/return receipt requested. If they respond, pay it and insist that it be marked as paid in full on your credit. I would do this with a money order or cashiers check. Done. Dispute the charge with the credit reporting agencies, providing the documentation of no response. This should remove the item from your credit. Provide this documentation to the mortgage broker. This should remove any hangup they might have. Optional: Sue the company in small claims court. This will take a bit of time and money, but it should yield a profit. There was a post on here a few days ago about how to do this. Make part of any settlement to have your name cleared of the debt. It is counterproductive to fall into the trap of the pursuit of a perfect credit score. A person with a 750 often receives the same rate options as a person with 850. Also your relationship with a particular lender could trump your credit score. Currently I am \"\"enjoying\"\" the highest credit score of my life, over 820. Do you know how I did it? I got out of debt (including paying off the mortgage) and I have no intentions of ever going into debt for anything. So why does it matter? It is a bit ridiculous.\"", "title": "" }, { "docid": "642b2e4f9c3ead1b07d1a182c3669717", "text": "You would need to check the original mortgage papers you signed with the originators. Chances are you agreed to allow the mortgage to be sold and serviced by other parties. Refinancing would also put you in the same boat unless you got them to take that clause out of the mortgage/refinance papers. Also, chances are most small banks and originators simply can not keep mortgages on their books. There are also third parties that service loans too that do not actually own the mortgages as well. This is another party that could be involved out of many in your mortgage. I would also not worry about 127/139 complaints out of 1,100,000 loans. Most probably were underwater on their mortgage but I am sure a few are legitimate complaints. Banks make mistakes (I know right!). Anyway, good luck and let me know if you find out anything different.", "title": "" }, { "docid": "1bea3d52dd8f05cf5b4cfdeeec0e3641", "text": "\"We payed off our Mortgage early...at first in small extra payments to principal, and finally a lump sum. Each extra payment to principal reduced the balance, and reduced every payment going forward. I have, somewhere, an excel spreadsheet where I tracked this... - =CUMIPMT((interestRate/12),term,pymtNumber,balance,balance,0) computed the interest payment due - =currentPrincipal + CUMIPRINTresultAbove computed the monthly principal payment Occasionally I would update the month-ending Principal balance against what the mortgage company told me. It was usually off by a little. My mortgage company required me to specifically contact them for a payoff amount before I wrote the final check. I've never heard of a mortgage where prepayment of all expected interest following the original schedule is required. I would guess it is against federal (US) law. Lets think about that for a moment... out of \"\"interest\"\", I recently computed that for our 30 year loan at 6-5/8% on about 145, we payed a total of 106000 in interest. That include a refi to 4-7/8 10-years in to a 15-year loan, and paying it off 20 years after the original loan was granted. As far as not paying all the theoretical interest due... - If they get a fixed dollar amount of service interest back, there's no incentive to me to pay on-time. I owe the same amount if I pay it today or if I pay it 6 months late, after I gambled the mortgage money and finally won. (yea, I know they could write the mortgage to penalize me for paying late, but I'm ignoring that) - if you were requried to pay off all the interest that might accrue, how could you ever sell your home, or refinance, for that matter? When I refi'd, the new holder payed the old holder 98,000. If the original holder had required prepayment of all the interest that would be accrued to the original schedule, the new mortgage would've been 200k. It would just never be a good deal to buy a home if mortgages worked under that term. I have had a car loan that worked differently -- they pre-computed the total interest due and then divided it over the term of the loan equally. I could pay off early and they stopped collecting interest.\"", "title": "" }, { "docid": "7c3c640216beeb00bd08cb60a0865847", "text": "It will not hurt your score to pay off your debt. It will allow your score to start healing as you plug the holes in your report. What is CRUCIAL is how you pay off the debt. Make sure you get, in writing, that paying $X amount will fully satisfy the debt and will close the matter as in Pay-To-Delete. If you try to do a settlement, this is very important. Also, the moral brigade will not like my answer, but if you are close to seven years out on your debts, you might as well not pay them since they will fall off of your report after 7 years. If you pay any part of the debt however, it will often reset the clock on those 7 years, so tread carefully.", "title": "" }, { "docid": "cc25e96f48d7cae8fce97f43e91fc0cf", "text": "Your son is completely free to pay off your mortgage if he wants. However in most jurisdictions it counts as a gift to you, and will be subject to gift tax, or its equivalent. This is why the bank doesn't want to receive payments directly from your son, so that they are not caught up in the reporting of this. If you are in the US, this is a good page about Gift Tax.", "title": "" }, { "docid": "04b413cc5f63dcc003d781aea221c5de", "text": "NO, you pay off the Highest interest charging accounts first. The zero interest loan should be the Last one you pay off. Basically payoff your student loan and put the extra money to the car loan", "title": "" }, { "docid": "500c95eb8f7bbe0ace7c49351a3a4d1d", "text": "\"When I left the UK four years ago, free banking is still an option and I'm pretty sure it still is. Therefore, you have chosen to have a bank account with a 5.00/month charge. In return for this charge, you will be eligible to receive certain benefits. For example; reduced borrowing costs, discounted mortgage rates, free overdraft on small amounts, \"\"rewards\"\" for paying household bills by direct debit, and things of this sort. Amongst these benefits may be preferential savings rates. However, from HMRC's point of view it will be the extra perks you are paying for with your monthly charge. You have chosen to pay for the account and HMRC is not interested in how you choose to spend your money, only in the money you earn. While I agree with you that it does have an element of unfairness, the problem is how would you divide the cost amongst the various benefits.\"", "title": "" }, { "docid": "c9331a3c65771f1e4731b192eb5ed521", "text": "Pay the the smallest balance first. The sooner you pay that off, the sooner you can pay more on the mortgage.", "title": "" } ]	fiqa
0a4c837a7d75663a22b10e332f72e1bd	Filing Taxes for Two Separate Jobs Being Worked at the Same Time?	[ { "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": "7631499e373cae1204e353f7b36277e8", "text": "Welcome to the wonderful but oft confusing world of self-employment. Your regular job will withhold income for you and give you a W2, which tells you and the government how much is withheld. At the end of the year uber will give you and the government a 1099-misc, which will tell you how much they paid you, but nothing will be withheld, which means you will owe the government some taxes. When it comes to taxes, you will file a 1040 (the big one, not a 1040EZ nor 1040A). In addition you will file a schedule C (self-employed income), where you will report the gross paid to you, deduct your expenses, and come up with your profit, which will be taxable. That profit goes into a line in the 1040. You need to file schedule SE. This says how much self-employment tax you will pay on your 1099 income, and it will be more than you expect. Self employment tax is SS/Medicare. There's a line for this on the 1040 as well. You can also deduct half of your self-employment tax on the 1040, there's a line for it. Now, you can pay quarterly taxes on your 1099 income by filing 1040-ES. That avoids a penalty (which usually isn't that large) for not withholding enough. As an alternative, you can have your regular W2 job withhold extra. As long as you don't owe a bunch at tax time, you won't be a fined. When you are self-employed your taxes aren't as simple. Sorry. You can either spend some time becoming an expert by studying the instructions for the 1040, pay for the expensive version of tax programs, or hire someone to do it for you. Self-employed taxes are painful, but take advantage of the upsides as well. You can start a solo 401(k) or SEP IRA, for example. Make sure you are careful to deduct every relevant business expense and keep good records in case you get audited.", "title": "" } ]	[ { "docid": "9fd632a34c4689f4fcdbfb85bb386537", "text": "You have to file and issue each one of them a 1099 if you are paying them $600 or more for the year. Because you need to issue a 1099 to them (so they can file their own taxes), I don't think there's a way that you could just combine all of them. Additionally, you may want to make sure that you are properly classifying these people as contractors in case they should be employees.", "title": "" }, { "docid": "e9724203d4f5b5c13be3e4ffa92717c5", "text": "I would think that the real teeth here would be the IRS, should they look into it (and they should). Splitting paychecks to avoid overtime also reduces taxes paid, which is large scale tax fraud, which generally leads to a sentence in gently-caress-my-bum-Federal-Penitentiary.", "title": "" }, { "docid": "563440e7c3bd9c4100cc7605236340c8", "text": "\"I agree that you should have received both a 1099 and a W2 from your employer. They may be reluctant to do that because some people believe that could trigger an IRS audit. The reason is that independent contractor vs employee is supposed to be defined by your job function, not by your choice. If you were a contractor and then switched to be an employee without changing your job description, then the IRS could claim that you should have always been an employee the entire time, and so should every one of the other contractors that work for that company with a similar job function. It's a hornet's nest that the employer may not want to poke. But that's not your problem; what should you do about it? When you say \"\"he added my Federal and FICA W/H together\"\", do you mean that total appears in box 4 of your 1099? If so, it sounds like the employer is expecting you to re-pay the employer portion of FICA. Can you ask them if they actually paid it? If they did, then I don't see them having a choice but to issue a W2, since the IRS would be expecting one. If they didn't pay your FICA, then the amount this will cost you is 7.65% of what would have been your W2 wages. IMHO it would be reasonable for you to request that they send you a check for that extra amount. Note: even though that amount will be less than $600 and you won't receive a 1099 in 2017 for it, legally you'll still have to pay tax on that amount so I think a good estimate would be to call it 10% instead. Depending on your personality and your relationship with the employer, if they choose not to \"\"make you whole\"\", you could threaten to fill out form SS-8. Additional Info: (Thank you Bobson for bringing this up.) The situation you find yourself in is similar to the concept of \"\"Contract-to-Hire\"\". You start off as a contractor, and later convert to an employee. In order to avoid issuing a 1099 and W2 to the same person in a single tax year, companies typically utilize one of the following strategies: Your particular situation is closest to situation 2, but the reverse. Instead of retroactively calling you a W2 employee the entire time, your employer is cheating and attempting to classify you as a 1099 contractor the entire time. This is frowned upon by the IRS, as well as the employee since as you discovered it costs you more money in the form of employer FICA. From your description it sounds like your employer was trying to do you a favor and didn't quite follow through with it. What they should have done was never switch you to W2 in the first place (if you really should have been a contractor), or they should have done the conversion properly without stringing you along.\"", "title": "" }, { "docid": "c414ddf19d92a996247a16664983c33f", "text": "With a limited company, you'll have to pay yourself a salary through PAYE. With income from your other job taking you over the higher-rate threshold, you should inform HMRC of this and get a tax code of DO for the second job, meaning 40% tax (and also both employer's and employee's National Insurance) will be deducted from the whole amount of the salary. See here. Dividends should be like any other dividend -- you won't pay extra tax when you receive them, but will have to declare them on your tax return and pay the tax later. See the official information here. You'll get a £5,000 tax allowance for dividends, but they'll still count as income for purposes of hitting the higher-rate threshold. I think in practice this means the first £5,000 will be tax-free, and the rest will be taxed at 32.5%. But note that you have to pay yourself at least the minimum wage as salary, not as dividend. I can't see IR35 being an issue. However, I'm not a professional, and this situation is complicated enough to need professional advice. Talk to an accountant or a tax advisor.", "title": "" }, { "docid": "2226740c96f085d39471c7c914edee3f", "text": "If you are paid by foreigners then it is quite possible they don't file anything with the IRS. All of this income you are required to report as business income on schedule C. There are opportunities on schedule C to deduct expenses like your health insurance, travel, telephone calls, capital expenses like a new computer, etc... You will be charged both the employees and employers share of social security/medicare, around ~17% or so, and that will be added onto your 1040. You may still need a local business license to do the work locally, and may require a home business permit in some cities. In some places, cities subscribe to data services based on your IRS tax return.... and will find out a year or two later that someone is running an unlicensed business. This could result in a fine, or perhaps just a nice letter from the city attorneys office that it would be a good time to get the right licenses. Generally, tax treaties exist to avoid or limit double taxation. For instance, if you travel to Norway to give a report and are paid during this time, the treaty would explain whether that is taxable in Norway. You can usually get a credit for taxes paid to foreign countries against your US taxes, which helps avoid paying double taxes in the USA. If you were to go live in Norway for more than a year, the first $80,000/year or so is completely wiped off your US income. This does NOT apply if you live in the USA and are paid from Norway. If you have a bank account overseas with more than $10,000 of value in it at any time during the year, you owe the US Government a FinCEN Form 114 (FBAR). This is pretty important, there are some large fines for not doing it. It could occur if you needed an account to get paid in Norway and then send the money here... If the Norwegian company wires the money to you from their account or sends a check in US$, and you don't have a foreign bank account, then this would not apply.", "title": "" }, { "docid": "001777fad85611bd1aebbaf3796d70df", "text": "To clarify that legality of this (for those that question it), this is directly from IRS Publication 926 (2014) (for household employees): If you prefer to pay your employee's social security and Medicare taxes from your own funds, do not withhold them from your employee's wages. The social security and Medicare taxes you pay to cover your employee's share must be included in the employee's wages for income tax purposes. However, they are not counted as social security and Medicare wages or as federal unemployment (FUTA) wages. I am sorry this does not answer your question entirely, but it does verify that you can do this. UPDATE: I have finally found a direct answer to your question! I found it here: http://www.irs.gov/instructions/i1040sh/ar01.html Form W-2 and Form W-3 If you file one or more Forms W-2, you must also file Form W-3. You must report both cash and noncash wages in box 1, as well as tips and other compensation. The completed Forms W-2 and W-3 in the example (in these instructions) show how the entries are made. For detailed information on preparing these forms, see the General Instructions for Forms W-2 and W-3. Employee's portion of taxes paid by employer. If you paid all of your employee's share of social security and Medicare taxes, without deducting the amounts from the employee's pay, the employee's wages are increased by the amount of that tax for income tax withholding purposes. Follow steps 1 through 3 below. (See the example in these instructions.) Enter the amounts you paid on your employee's behalf in boxes 4 and 6 (do not include your share of these taxes). Add the amounts in boxes 3, 4, and 6. (However, if box 5 is greater than box 3, then add the amounts in boxes 4, 5, and 6.) Enter the total in box 1.", "title": "" }, { "docid": "90605b0a6f67febcdf781d210077a575", "text": "I'm not sure I am fully understanding the nuance of your question, but based on your answer in the comments you and your business are not separate legal entities. So your income is the full $70K, there is no distinct business to have income. If you clarify your question to include why you want to know this I might be able to give a more meaningful answer for your situation.", "title": "" }, { "docid": "9379f5ad0e097a21cb007559a3207893", "text": "It looks like you can. Take a look at these articles: http://www.googobits.com/articles/1747-taking-an-itemized-deduction-for-job-expenses.html http://www.bankrate.com/finance/money-guides/business-expenses-that-benefit-you.aspx http://www.hrblock.com/taxes/tax_tips/tax_planning/employment.html But of course, go to the source: http://www.irs.gov/publications/p529/ar02.html#en_US_publink100026912 From publication 529: You can deduct certain expenses as miscellaneous itemized deductions on Schedule A (Form 1040 or Form 1040NR). You can claim the amount of expenses that is more than 2% of your adjusted gross income. You figure your deduction on Schedule A by subtracting 2% of your adjusted gross income from the total amount of these expenses. Your adjusted gross income is the amount on Form 1040, line 38, or Form 1040NR, line 36. I hope that helps. Happy deducting!", "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": "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": "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": "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": "e3cd89c0d64142d65db6089237dac981", "text": "How do I account for this in the bookkeeping? Here is an example below: This is how you would accurately depict contributions made by an owner for a business. If you would want to remove money from your company, or pay yourself back, this would be called withdrawals. It would be the inverse of the first journal entry with cash on the credit side and withdrawals on the debited side (as it is an expense). You and your business are not the same thing. You are two different entities. This is why you are taxed as two different entities. When you (the owner) make contributions, it is considered to be the cash of the business. From here you will make these expenses against the business and not yourself. Good luck,", "title": "" }, { "docid": "56366def285b890e0e187764b2691abf", "text": "\"After doing a little research, I was actually surprised to find many internet resources on this topic (including sites from Intuit) gave entirely incorrect information. The information that follows is quoted directly from IRS Publication 929, rules for dependents First, I will assume that you are not living on your own, and are claimed as a \"\"dependent\"\" on someone else's tax return (such as a parent or guardian). If you were an \"\"emancipated minor\"\", that would be a completely different question and I will ignore this less-common case. So, how much money can you make, as a minor who is someone else's dependent? Well, the most commonly quoted number is $6,300 - but despite this numbers popularity, this is not true. This is how much you can earn in wages from regular employment without filing your own tax return, but this does not apply to your scenario. Selling your products online as an independent game developer would generally be considered self-employment income, and according to the IRS: A dependent must also file a tax return if he or she: Had wages of $108.28 or more from a church or qualified church-controlled organization that is exempt from employer social security and Medicare taxes, or Had net earnings from self-employment of at least $400. So, your first $400 in earnings triggers absolutely no requirement to file a tax return - blast away, and good luck! After that, you do not necessarily owe much in taxes, however you will need to file a tax return even if you owe $0, as this was self-employment income. If you had, for instance, a job at a grocery store, you could earn up to $6,300 without filing a return, because the store would be informing the IRS about your employment anyway - as well as deducting Medicare and Social Security payments, etc. How much tax will you pay as your income grows beyond $400? Based upon the IRS pages for Self-Employment Tax and Family Businesses, while you will not likely have to pay income tax until you make $6,300 in a year, you will still have to pay Social Security and Medicare taxes after the first $400. Roughly this should be right about 16% of your income, so if you make $6000 you'll owe just under $1000 (and be keeping the other $5000). If your income grows even more, you may want to learn about business expense deductions. This would allow you to pay for things like advertisement, software, a new computer for development purposes, etc, and deduct the expenses out of your income so you pay less in taxes. But don't worry - having such things to wonder about would mean you were raking in thousands of dollars, and that's an awfully good problem to have as a young entrepreneur! So, should you keep your games free or try to make some money? Well, first of all realize that $400 can be a lot harder to make when you are first starting in business than it probably sounds. Second, don't be afraid of making too much money! Tax filing software - even totally free versions - make filing taxes much, much easier, and at your income level you would still be keeping the vast majority of the money you earn even without taking advantage of special business deductions. I'd recommend you not be a afraid of trying to make some money! I'd bet money it will help you learn a lot about game development, business, and finances, and will be a really valuable experience for you - whether you make money or not. Having made so much money you have to pay taxes is not something to be afraid of - it's just something adults like to complain about :) Good luck on your adventures, and you can always come back and ask questions about how to file taxes, what to do with any new found wealth, etc!\"", "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
2ebed0ca7af93b27963c92cb0186999b	When will the 2017 US Federal Tax forms be released?	[ { "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": "cd95509e847580c275bb372e84f35c71", "text": "An amended return is required for situations that impact tax owed, or your tax refund. 8606 purpose is to track non-deducted IRA deposits. I'd recommend you gather all your returns to form a paper trail, and when filing your 2016 return, show a proper 8606 as if you'd tracked it all along.", "title": "" }, { "docid": "78619ef0b9c3bb98ba6bd974ee9cb02e", "text": "The purpose of the W-4 form is to allow you to adjust the withholding to meet your tax obligations. If you have outside non-wage income (money from tutoring) you will have to fill out the W-4 to have extra taxes withheld. If you have deductions (kids, mortgages, student loan interest) then you need to adjust the form to have less tax taken out. Now if yo go so far that you owe too much in April, then you can get hit with penalties and a requirement to file your taxes quarterly the next year. Most years I adjust my W-4 to reflect changes to my situation. The idea is to use it to manage your withholding so that you minimize your refund without triggering the penalties. The HR department has advised you well. How to adjust: If you want to decrease withholding (making the refund smaller) add one to the number on the worksheet. In 2014 a change by 1 exemption is equal to a salary adjustment of $3,950. If this was spread over 26 paychecks that would be the same as lowering your salary by ~$152. If you are in the 15% tax bracket that increases your take home pay by ~10 a check.", "title": "" }, { "docid": "8cfbf35be74e0c9661608793f6144579", "text": "In November '14, I wrote TurboTax 2014 Marketing Mistake Shortly after writing it, a TurboTax agent wrote (on Amazon) to counter the complaints by saying that Deluxe has these forms but did not offer Interview help for them. As Ben notes in his comment on LittleAdv's answer. TurboTax issued an apology letter, which, in my opinion, didn't really set things straight, factually. The forms are there, the interview and data import for stock transactions is gone.", "title": "" }, { "docid": "51f303003ef67ef10636697db9026a39", "text": "\"This is the best tl;dr I could make, [original](http://www.businessinsider.com/trump-tax-plan-details-corporate-rate-individual-brackets-deductions-cuts-2017-9) reduced by 87%. (I'm a bot) *** > &quot;After years of work, we are moving forward with a unified framework that paves the way for bold, transformational tax reform - tax reform that will bring more jobs, fairer taxes, and bigger paychecks,&quot; Brady said in a statement. > While there is no precise number in the plan, officials have indicated the rate could end up somewhere around 10%. Personal tax changes: A bottom individual tax rate of 12%. The plan specifies three tax brackets, with the lowest rate being 12%. That would represent a slight bump in the bottom bracket, which is now 10%. People currently in the 15% marginal tax bracket would most likely be included here. > &quot;An additional top rate may apply to the highest-income taxpayers to ensure that the reformed tax code is at least as progressive as the existing tax code and does not shift the tax burden from high-income to lower- and middle-income taxpayers,&quot; the plan reads. * [Extended Summary*](http://np.reddit.com/r/autotldr/comments/72ves8/gop_tax_plan_overview/) \| [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~217749 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: tax^#1 rate^#2 plan^#3 bracket^#4 deduction^#5\"", "title": "" }, { "docid": "b15d163a90235fed85ed81ab71d178ac", "text": "\"Do I understand correctly, that we still can file as \"\"Married filing jointly\"\", just add Schedule C and Schedule SE for her? Yes. Business registration information letter she got once registered mentions that her due date for filing tax return is January 31, 2016. Does this prevent us from filing jointly (as far as I understand, I can't file my income before that date)? IRS sends no such letters. IRS also doesn't require any registration. Be careful, you might be a victim to a phishing attack here. In any case, sole proprietor files a regular individual tax return with the regular April 15th deadline. Do I understand correctly that we do not qualify as \"\"Family partnership\"\" (I do not participate in her business in any way other than giving her money for initial tools/materials purchase)? Yes. Do I understand correctly that she did not have to do regular estimated tax payments as business was not expected to generate income this year? You're asking or saying? How would we know what she expected? In any case, you can use your withholding (adjust the W4) to compensate.\"", "title": "" }, { "docid": "bc4a1b2cc14db985ebf879d270c24d48", "text": "If you have previously made a contribution during that tax year, you can pull it out and re-add it as often as you need until the deadline for that tax year (April 15 of the following year.) This assumes your gross income isn't high enough to exclude you from eligibility for new contributions--in 2017 the phase-out starts at $118,000 and it is completely phased out at $133,000. Within 60 days of distribution, you can re-contribute up to that amount, but you are only allowed one such 60 day rollover per year.", "title": "" }, { "docid": "26b9ef47787676d25e91b11143e4b3ec", "text": "The 2012 return was due 4/15/2013 (I'm assuming it didn't fall on a weekend). No late filing penalty if there was no tax due, but he has until 4/15/2016 to file for a refund or to document anything that should have carried forward.", "title": "" }, { "docid": "20d029ee79bf663c0ef296cbf536a153", "text": "Whether you're self-employed or not, knowing exactly how much tax you will pay is not always an easy task. Various actions you can take (e.g., charitable donations, IRA contributions, selling stocks) may increase or reduce your tax liability. One tool I've found useful for estimating federal taxes is the Excel 1040 spreadsheet. This is a spreadsheet version of the income tax return form. It is not official and is not created by the IRS, but is maintained as a labor of love by a private individual. In practice, however, it is pretty much an accurate implementation of the tax calculation algorithms encoded in the tax forms and instructions. The nice thing about it is that it's a spreadsheet. You can plug numbers into various slots in the spreadsheet and see how they affect your federal tax liability. (You may also owe state taxes depending on what state you live in.) Of course, the estimates you get by doing this are only (at most) as accurate as your estimates of the various numbers you plug in. Still, I think it's a free and useful way to get a ballpark estimate of your tax liability based on numbers that you can more easily estimate (e.g., how much money you expect to earn).", "title": "" }, { "docid": "034e29cd4e755643f5e95ac6daae8337", "text": "I got notice from Charles Schwab that the forms weren't being mailed out until the middle of February because, for some reason, the forms were likely to change and rather than mail them out twice, they mailed them out once. Perhaps some state tax laws took effect (such as two Oregon bills regarding tax rates for higher incomes) and they waited on that. While I haven't gotten my forms mailed to me yet, I did go online and get the electronic copies that allowed me to finish my taxes already.", "title": "" }, { "docid": "ccbc20034b475506fd64d7f07b3989cf", "text": "There are a few methods you can use to estimate your taxes. On the results screen, the app will show you your estimated tax burden, your estimated withholding for the year, and your estimated overpayment/refund or shortfall/tax due. It may also have recommendations for you on how to adjust your W-4 (although, this late in the year, I think it only tells you to come back next year to reevaluate). Your state might also have income tax, and if you are curious about that, you can find the state tax form and estimate your state income tax as well. My guess is that you will be getting a refund this year, as you have only worked half of the year. But that is only a guess.", "title": "" }, { "docid": "a6c958f80703d863eece8776a95b0b4a", "text": "I don't like keeping my tax information online. Personally, I buy TaxCut from Amazon for $25-30. I store my info securely on resources under my control. Call me a luddite or a weirdo, but I also file using paper, because I don't see the advantage of paying for the privilege of saving the government time and money.", "title": "" }, { "docid": "3f591963899eb4a32562e19cb18bcc65", "text": "\"Why do stock markets allow these differences in reporting? The IRS allows businesses to use fiscal calendars that differ from the calendar year. There are a number of reasons a company would choose do this, from preferring to avoid an accounting rush at end of year during holiday season, to aligning with seasonality for their profits (some like to have Q4 as the strongest quarter). Smaller businesses may prefer to keep the extra stress of year end closeout to a traditionally slower time for the business, and some just start their fiscal calendar when the company starts up. You'll notice the report dates are a couple weeks after fiscal quarter end, you would read it as \"\"three months ended...,\"\" so for Agilent, three months ended October 31, 2017, so August, September, October are their Q4 months.\"", "title": "" }, { "docid": "85794d485be3d23157e21a9378a3e00f", "text": "To start with, I should mention that many tax preparation companies will give you any number of free consultations on tax issues — they will only charge you if you use their services to file a tax form, such as an amended return. I know that H&R Block has international tax specialists who are familiar with the issues facing F-1 students, so they might be the right people to talk about your specific situation. According to TurboTax support, you should prepare a completely new 1040NR, then submit that with a 1040X. GWU’s tax department says you can submit late 8843, so you should probably do that if you need to claim non-resident status for tax purposes.", "title": "" }, { "docid": "2ccd5eb1d0b5465caec02197574beaf4", "text": "This all comes down to time: You can spend the maximum on taxes and penalties and have your money now. Or you can wait about a decade and not pay a cent in taxes or penalties. Consider (assuming no other us income and 2017 tax brackets which we know will change): Option 1 (1 year): Take all the money next year and pay the taxes and penalty: Option 2 (2 years): Spread it out to barely exceed the 10% bracket: Option 3 (6 years): Spread it out to cover your Standard Deduction each year: Option 4 (6-11 years): Same as Option 3 but via a Roth Conversion Ladder:", "title": "" }, { "docid": "6a79b608ac23033932aa652e440fc33b", "text": "Your tax return will be due on April 18th of 2017 for the amounts made in 2016. Based on the figures that you have provided, assuming you are 18, and assuming you are a single taxpayer your total tax will be around $2600.00 ($2611.25 to be exact, without additional credits or deductions to AGI accounted for). The $1,234 in fed. inc. tax that you have already paid is considered to be a prepaid by the government. If at year-end you have provided more than you have made the government will refund you the excess (federal tax return).", "title": "" } ]	fiqa
013a7544de8353168b923f827bf4597f	Clothing Store Credit Card Account closed but not deleted	[ { "docid": "0eeb5183d169e66dbe014066095e48da", "text": "You have little chance of getting it deleted. I have the same situation, I closed mine in 2006, and the login still works. Keep the paperwork that you closed it (or print a PDF of the site showing so), and forget about it. If someone is trying to cheat, re-opening it should be the same difficulty as making a new one in your name, so it is not really an additional risk. You could also set the username and password both to a long random string, and not keep them. That soft-forces you to never login again. Note that it will also stay on your credit record for some years (but that's not a bad thing, as it is not in default; in the contrary). The only negative is that if you apply for credit, you might be ashamed of people seeing you ever having had a Sears or Macy's card or so.", "title": "" }, { "docid": "2fe5739bea1df0c4b5309e27ba46262f", "text": "\"They close accounts to render them inoperative. They never delete accounts because they want to retain the data to inform any future decision to give you credit. Also, 99% of the time, if a customer demands their account be deleted, it's because of adverse credit marks and the angry customer wants this accurate information to stop burning their credit report. The answer in this case absolutely must be \"\"heck, no!\"\" That pretty much precludes any valid reason to delete an account. As such, their business systems are not built in a way to make account deletion really possible. Even if you got a job with the company's data-processing department and had direct query/write accesses to the databases, you would find it technically inachievable to surgically remove the specific data (without risking serious damage to the entire DB). And it would still be in transaction logs, so not gone forever. Another reason to keep your account alive is to give you online access to statements. After all, the IRS can audit you 5 years after the fact, so it's real nice to be able to go back that far. Most places the statue of limitations is 6-7 years, so again, defending yourself in a lawsuit, here's raw data from an independent third party that you couldn't have faked. Strictly from a customer service POV, that means you can self-serve on requests like that, instead of having to involve expensive staff time. I totally get the annoyance of having yet another login/password you don't want to have flapping out there in the breeze potentially exposed to a cracker... but given that the account is closed, it's probably not going to cause you much trouble. If anything, change the password to one outside your normal choices, perhaps even one you don't know (retain). As long as you retain the email you have tied to the account, you can always reset the password on the off chance you ever need to get back in. Speaking of that, don't rely on your ISP's (me@rr.net or me@att.net or me@xfinity.com), get a Gmail account. I have a dedicated gmail account just for stuff like that.\"", "title": "" }, { "docid": "43e888025ed583febf021612ceb59427", "text": "If it is closed, you should be able to trust that it is closed permanently. What you still have is the online account. Imagine this would be removed and then the account would be re-activated? That should not happen, but the way you see it, you must be afraid of that as well. What I mean to say: See these two things as completely separate.", "title": "" }, { "docid": "f7a54ca9b45f248ad3c03b5eb173e2a2", "text": "There are three parties involved here: there's the store that issued you the card, then they have some bank that's actually handling the account, and there is some network (VISA, MasterCard, etc.) that the transactions go through. So one avenue to consider is seeing whether all three are aware of you canceling the card.", "title": "" } ]	[ { "docid": "c6b6c0b21e83c57a3b62918af7f3f1bf", "text": "\"* Don't underestimate the power of facial recognition wizardry. * No, you don't have to show ID to activate the cards. But keep in mind that they know which cards were activated. There is a paper trail. I'm sure Amex, Visa, MC would happily deactivate the cards for them. Target just has to report that the cards were activated using fraud/theft. * If you took advantage of this \"\"deal\"\" your best bet is to get the prepaid credit cards and spend the money asap at another store (walmart) before they are deactivated. * If indeed this legally is considered fraud, and they go after you for it, you could end up in a giant heap of trouble as many laws have been broken. And, if you use any of the \"\"fraudulent\"\" CC's to make online purchases from a company in another state you could face even more federal charges.\"", "title": "" }, { "docid": "8630f5c40a3b7606a87642027ce64970", "text": "In your specific case, I would leave them open unless you have a specific reason for wanting to close them - particularly, unless you feel closing them is necessary for you to not misuse them. The impact on the credit score is not why I say this, though. Much more important are the two competing real factors: My suggestion would be to take the cards and put them in your file cabinet, or whatever would cause you to not use them. In fact, you could even cut them up but not close the accounts - I had an account open that I didn't possess a physical card for several years for and didn't use at all, and it stayed open (though it's not guaranteed they'll keep it open for you if you never use it). In an emergency you could then ask them to send you a new copy of the card very easily. But, keep them, just in case you need them. Once you have paid off your balances on your balance-carrying cards, then you should consider closing some of them. Keep enough to be able to live for ~4-6 months (a similar amount to the ideal rainy day fund in savings, basically) and then close others, particularly if you can do so in a way that keeps your average account age reasonably stable.", "title": "" }, { "docid": "df92b37b680f3e6b31e7f3a3039562c0", "text": "You also might want to see what sort of documentation the credit card company has. Companies can get pretty lazy sometimes about recordkeeping; there have been cases where banks tried to foreclose on a property but weren't able to produce documents establishing the mortgage. With your father dead, is there anything other than the credit card company's word that the debt is valid?", "title": "" }, { "docid": "964d07be2a94d7b563c58ec7b7db7184", "text": "I closed an account with them for an unrelated reason (down payment brought account below minimum and I didn't want to switch types of accounts or pay a fee) and it was super easy. I was surprised at how quick the whole process was. That said, I didn't have a brokerage or even any CDs - just checking and savings and my automatic payments were tied to other bank acccounts.", "title": "" }, { "docid": "35eb4630e4d5a9c221eae7a051c04be1", "text": "\"I don't know why you shut it down from a C&D letter. If anything you should have seen it as them asking you to remove his name and any trademarks from your site. They don't own \"\"fuck you\"\" being printed on clothes. Sounds like you pulled the trigger too quick. Bet there was plenty of money to still be made with that site. Maybe someone more resilient will pick up the torch.\"", "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": "ce8df3b5edca7c3e7cf625537995bd2f", "text": "Credit card companies are businesses. Businesses will make any decision that makes them money. So does it make them money to cancel your account? It's a simple cost-benefit analysis: you having an account with them will probably give them some benefit for very little cost to them. The only real cost associated with an open account is someone who uses the card but doesn't pay, but they're pretty sure you won't be doing that.", "title": "" }, { "docid": "d9ad3bad94c76aa6ab2e013dcbfa0c3e", "text": "Close the account. The age doesn't outweigh the fact that you have to pay for the card. It would be one thing if the credit line was a couple thousand but showing the credit bureaus that you are staying away from the $425.00 doesn't really make them think you are any more trustworthy with your available credit. Utilization matters when you are staying away from much larger chunks of your available credit (across all cards).", "title": "" }, { "docid": "a7bd00d1f83db36a4c2a96aa335a7a9c", "text": "\"Thanks for the reply man. Yeah it literally says \"\"closed\"\" next to the accou t name. But we finally got ahold of someone, I guess they close your account whenever you have $0 in it and the account should open again 1-2 business days after the direct deposit tries to go into her account. At least that's what the lady said. She hates this bank but we live in a small town and there's just not many options in terms of banking here. Thanks for the help though man I appreciate it!\"", "title": "" }, { "docid": "4e39f2aa66c02a22a9eb53c52ff636bd", "text": "A credit balance can happen any time you have a store return, but paid the bill in full. It's no big deal. Why not just charge the next gas purchase or small grocery store purchase, to cycle it through? Yes - unused cards can get canceled by the bank, and that can hurt your credit score. In the US anyway. I'm guessing it's the same system or similar in Canada.", "title": "" }, { "docid": "2c9c75c629be6d5071b24dbc148034f2", "text": "Please realize that your issuer can close the account for any number of reasons. Inactivity is one, as having a credit line open costs them money and if you never charge anything, the company doesn't get any transaction fees from vendors nor does the company get to charge you any interest. An occasional charge is likely to keep your card from being closed automatically, but it is not a guarantee. Another reason they may close the account is that you have other bad marks show up on your credit score, or their criteria for offering you the card change so you no longer match their target demographic. I have a credit card issued by my credit union that I have not used for a couple of years. They will not close the card account because my other accounts are still very profitable for them. If I were not an otherwise profitable customer, I wouldn't be surprised if they closed my credit card account. If you are serious about keeping the account open, you should probably have more than a trivial amount of usage.", "title": "" }, { "docid": "9602e16151bf709cfb818f3eed2690dc", "text": "I used square in the past for personal yard sale and they did not transfer balance to my bank acct because they told me it was against their policy and I had to have a business license that they could either refund the credit cards i process or keep the money. So they kept it I never got it back. I don't recommend anybody to use square.", "title": "" }, { "docid": "bc28dfa716f66d5aff573a4d995cbf1a", "text": "\"Executive summary: It sounds like the merchant just did an authorization then cancelled that authorization when you cancelled the order, so there was never an actual charge so you'll never see an actual refund and there's no money to \"\"claim\"\". More detail: From your second paragraph, it sounds like they just did an authorization but never posted the transaction. A credit card authorization is basically the merchant asking your credit card company \"\"Does sandi have enough credit to pay this amount and if so please reserve that amount for a bit.\"\" The authorization will decrease the total credit you have available on the card, but it's not actually a charge, so if your billing cycle ends, it won't show up on your statement. Depending on which company issued your credit card, you may be able to see the authorization online, usually labelled something like \"\"Pending transactions\"\". Even if your credit card company doesn't show pending transactions, you'll see a decrease in your available credit, however you shouldn't see an increase in your balance. The next step, and the only way the original merchant gets paid, is for the merchant to actually post a transaction to your card. Then it becomes a real charge that will show up on your next credit card statement and you'll be expected to pay it (unless you dispute the charge, but that's a different issue). If the charge is for the same amount as the authorization, the authorization will go away (it's now been converted to an actual charge). If the amounts are different, or the merchant never posts a transaction, the authorization will be removed by your credit card company automatically after a certain amount of time. So it sounds like you placed the order, the merchant did an authorization to make sure you could pay for it and to reserve the money, but then you cancelled the order before the merchant could post the transaction, so you were never really charged for it. The merchant then cancelled the authorization (going by the start of your third paragraph). So there was never an actual transaction posted, you were never charged, and you never really owed any money. Your available credit went down for a bit, but now should be restored to what it was before you placed the order. You'll never see an actual refund reflected on your credit card statement because there was no actual transaction.\"", "title": "" }, { "docid": "18e1af1027d619f2518b7ce53d45abf1", "text": "Check with your bank, usually a statement is either at the same day of month (e.g.: every 15th of the month), or every 30 days (e.g: March 15th, April 14th, May 14th, so forth). From my experience, most credit cards use the same day of month strategy. Keep in mind that if the day is not a business day (e.g.: weekend), the statement is closed either the previous or the next business day.", "title": "" }, { "docid": "a03156df5f0b04b4961d56ac075f92a1", "text": "I think you are overcomplicating the scenario by assuming a benefit that doesn't exist. Assume an employee earns 50k, before considering the MSP. The corporation wants to cover the MSP. They have two options: increase the salary to $50,900, or keep the salary the same and pay for the MSP directly. Both options increase the employee's taxable income by $900. Both options decrease the corporation's income by $900. Net tax for each is unchanged. *Note - I couldn't find any specific reference to the MSP in income tax documentation on either BC Finance's or CRA's website. I am assuming that it is treated as a regular cash benefit, though I am not 100% convinced this is the case. If I am wrong in this please provide a comment below.", "title": "" } ]	fiqa
fb214ce803a5eaadadd2c0f1ba191858	Cashing a cheque on behalf of someone else	[ { "docid": "91c1e5a7cf791b995eb94817024b8a20", "text": "\"It's possible to cash cheques by post. When I did this, it involved filling out a \"\"paying-in slip\"\" (I had a book of these provided by the bank) and posting the cheque together with the slip to an address provided by the bank. You could also bring the paying-in slip and the cheque to a branch and deposit them there, and it wasn't necessary that you were the account holder, just that the details on the slip matched the account you were paying into. I Googled \"\"paying-in slip\"\" and found the instructions for HSBC as an example: Paying-In Slips. It explicitly mentions that you don't need to be the account holder to do this, and moreover there are even blank slips in the branch, which you just need to fill in with the correct account details. I think the procedure is much the same for other banks, but presumably you could check the relevant bank's website for specific guidance.\"", "title": "" }, { "docid": "8802d77ad261cc781967b521c631be38", "text": "\"If the cheque is crossed (as almost all are these days), it can only be paid into an account in the name of the person it was written out to: it cannot be paid into another's account, nor can it be \"\"cashed\"\"1 – see the rules on \"\"Crossed\"\" cheques. Note: that while the recipient of the cheque cannot (legally) alter this state of afairs, the writer of a cheque that was printed pre-crossed can – at least technically – cancel the crossing (see above link). Probably the best the OP can do is pay in the cheque on the friend's behalf (as described in Ben Millwood's answer) and then either lend the friend some money until they are mobile and can get some cash to repay the OP (or have the friend write one of their own cheques which the OP can pay into their bank account). 1 As mentioned in the last section of the rules on crossed cheques, the only exception is that designated \"\"Cheque cashing shops\"\" have special arrangements to deposit cheques which they have cashed (after deducting a fee). However, they would (should?) require proof of identity (of the original payee) and so are unlikely to be of any help (and probably not worth the cost for £35). Having said that, I've never used one, so have no idea how strict they are in practice.\"", "title": "" }, { "docid": "e50f6d3b54844133f771525f6a664b3b", "text": "\"Anyone can walk into a bank, say \"\"Hi, I'm a messenger, I have an endorsed check and a filled out deposit slip for Joe Blow who has an account here, please deposit this check for him, as he is incapacitated. Straight deposit.\"\" They'll fiddle on their computer, to see if they can identify the deposit account definitively, and if they can, and the check looks legit, \"\"thanks for taking care of our customer sir.\"\" Of course, getting a balance or cashback is out of the question since you are not authenticated as the customer. I have done the same with balance transfer paperwork, in that case the bank knew the customer and the balance transfer was his usual. If the friend does not have an account there, then s/he should maybe open an account at an \"\"online bank\"\" that allows deposit by snapping photos on a phone, or phone up a branch, describe her/his situation and see if they have any options. Alternately, s/he could get a PayPal account. Or get one of those \"\"credit card swipe on your phone\"\" deals like Square or PayPal Here, which have fees very close to nil, normally cards are swiped but you can hand-enter the numbers. Those are fairly easy to get even if you have troubles with creditworthiness. S/he would need to return the check to the payer and ask the payer to pay her/him one of those ways. The payer may not be able to, e.g. if they are a large corporation. A last possibility is if the check is from a large corporation with whom s/he continues to do business with. For instance, the electric company cashiers out your account after you terminate service at your old location. But then you provision service at a new location and get a new bill, you can send their check right back to them and say \"\"Please apply this to my new account\"\". If s/he is unable to get any of those because of more serious problems like being in the country illegally, then, lawful behavior has its privileges, sorry. There are lots of unbanked people, and they pay through the nose for banking services at those ghastly check-cashing places, at least in America. I don't have a good answer for how to get a check cashed in that situation.\"", "title": "" }, { "docid": "e80c85c54bf5110be10450e4d57c23db", "text": "\"If the cheque is not crossed, then your friend can write \"\"payable to [your name]\"\" above his signature when he endorses it. If it is crossed, you'll have to deposit it into his account. Given that one can deposit cheques at ATMs, this shouldn't require his presence. Just make sure he endorses it before you leave! It also might take a few more days to clear.\"", "title": "" } ]	[ { "docid": "1619a2901c8114a352d54227320b8370", "text": "\"It is not allowed to pay refunds to anyone other than the taxpayer. This is due to various tax return fraud schemes that were running around. Banks are required to enforce this. If the direct deposit is denied, a check will be issued. In her name, obviously. What she does with it when she gets it is her business - but I believe that tax refund checks may not be just \"\"endorsed\"\", the bank will likely want to see her when you deposit it to your account, even if it is endorsed. For the same reason.\"", "title": "" }, { "docid": "b3f7ca9a1cecf9f2c6afd951935cb3eb", "text": "I would recommend wire transfer. I was in your position some years ago, and the US$ cheque took 6 weeks to clear. Wire transfer fees are generally a few tens of pounds, depending on the banks involved.", "title": "" }, { "docid": "50d8baa527dda7e3d14ef76cae41eb8f", "text": "As long as someone is willing to take it, you can write it! I personally wrote a check for a new car. The dealership didn't bat an eye.", "title": "" }, { "docid": "27f203d4fad8c85d70ab23f49029d03c", "text": "This is either laundering money or laundering non-money. All the other answers point out how a cheque or bank transfer will take days to actually clear. That is a red herring! There are lots of ways to illegally transfer real money out of existing accounts. Stolen cheque books, stolen banking details (partly in connection with stolen smartphones and credit cards) and cards, money transfers from other people duped in a similar manner as you are: it is much easier to steal money than invent it, and it takes quite longer until stolen rather than invented money will blow up at the banks. All of those payments will likely properly clear but not leave you in actual legal possession of money. People will notice the missing money and notify police and banks and you will be on the hook for paying back all of it. Cheques and transfers from non-existing accounts, in contrast, tend to blow up very fast and thus are less viable for this kind of scam as the time window for operating the scam is rather small. Whether or not the cheque actually clears is about as relevant of whether or not the Rolls Royce you are buying for $500 because the owner has an ingrown toe nail and cannot press down the accelerator any more has four wheels. Better hope for the Rolls to be imaginary because then you'll only be out of $500 and that's the end of it. If it is real, your trouble is only starting.", "title": "" }, { "docid": "429864cad3865aba48afac33c191a0e8", "text": "\"A check is simply an order to the bank to pay money to someone. The payor's signature on the front of the check is all that's needed to make that order binding. If you read the check carefully, you'll see that it says \"\"Pay to the order of ...\"\"; that's the payor's instruction to the bank, and as payee you can make a further order, to pay the money to someone else, in which case you'd have to endorse the check to make your order binding. But nobody does that any more; instead, people always just deposit checks into their accounts. When you deposit a check, the payor's signature is all that's needed to tell the payor's bank that it should pay the money. If your bank insists on a signature as well, that's just to pretend that they're paying attention in case it turns out that you stole the check. In reality, banks don't pay attention to signatures, nor to the name of the payee. I once put the wrong check into an envelope, and the phone company got a check for something over $700 on a bill of less than $50, payable to some completely different company; they deposited it and gave me a credit for the balance; none of the banks in the transition chain questioned it.\"", "title": "" }, { "docid": "cb123ade4ccc7cfac85eccb067143e41", "text": "Assuming it's your business, endorse the check as yourself and your DBA name, payable to your personal account", "title": "" }, { "docid": "58654a927a52b3436e6c0ccfaf535765", "text": "Avoid talking to a person: Just use an automated system, such as an ATM or a cellphone app. Automated systems will ONLY scan for the RTN # and Account number at the bottom of the check (the funny looking blocky numbers). The automated system will not care who the check is made out to, or who is present, so long as you have an account to credit the money into, and the account number on the check can get the money debited properly.", "title": "" }, { "docid": "d75dff954aeb4f366304acd2900b66ae", "text": "How would I go about this so that I can start using this money? You would open the LLC. The checks were not written out to you, they were written out to the LLC. Only the LLC can endorse them.", "title": "" }, { "docid": "6956d2e0cb5ed915ef5a29e8e802643e", "text": "This is dangerous as it is a typical a scam. Trudy convinces Bob to help her avoid an ATM free or some other pretense. She writes Bob a check for $100, but is willing to take only $80 to return the favor. Bob agrees. Bob deposits the check, gives Trudy the $80 and then later finds out the check is bad. In most cases Bob will not be able to find or contact Trudy. However, in some rare cases if Trudy feels Bob is very gullible, she will do the same thing again and again as long as Bob allows. Sometimes the amounts will increase to surprisingly high levels.", "title": "" }, { "docid": "3d585003ac8bc7e31dd82558e215bafb", "text": "There is no bank that I know of offering such a feature and I'm not sure what the point of it would be (other than to annoy their customers). If you've been subjected to a fraudulent check your best bet is to either choose to write checks only to trusted parties and/or use your banks BillPay service (they usually issue checks on another account while transferring the money from your account). The drawbacks of your current plan, bounced legitimate checks and high maintenance nature, outweigh the potential benefits of catching a fraudulent check since you're not legally obligated to pay checks you haven't written.", "title": "" }, { "docid": "f11642ee9a141532e6f6837656985f1b", "text": "\"How does this get any business? You'd be surprised on how much profit these type of businesses can bring in and the number of people who cash their checks this way. They make profit off people who want their checks cashed ASAP. Usually cheques written to \"\"cash\"\" or something can just be cashed for free at the bank right? Yes, most banks cash your check for free. Some may not cash it right away and may require a few days to process. Some charge a small fee if the check is not from the same bank. Some personal checks may not even be processed the same day as well. Wouldn't the only cheques that people would cash at these places be bad cheques? Yes and no. Yes because it may be \"\"easier\"\" to try to cash a fraudulent check at these type of check cashing places. However, some places may only cash business checks and require your ID in which they write down the information in order to possibly track you down in the future. Also some places only cash a check to a certain amount. And wouldn't this mean that the business will lose a lot of money since it pays out cash but then has the cheque bounce? Of course the business loses money if the check bounces or is fake. That is why they try to minimize their losses with certain requirements that needs to met before the check can be cashed. Who uses these services exactly? Just about anyone who needs their check cashed ASAP or like ChrisW stated in his answer is trying to keep their money on the low. There is a demand for this service even though it may seem shady to you.\"", "title": "" }, { "docid": "7c970e9e4752025f14c6a88559265046", "text": "\"The store owners don't know what your intentions are. All they know is they gave you good cash for a bad check. Part of this is that you're paying for the bad acts of others in the past, and these people aren't in the business of trying to understand your intentions. If you show good faith by going in and paying whatever you can, it will go a long way toward getting them to work with you on the balance. I don't know if they'd have much of a criminal case if the check you gave them was clearly marked as \"\"void\"\" and you've shown a willingness to resolve the situation. Of course you can't blame them for not wanting to accept another check from you. Good old hard cash, even if it isn't the full amount, will be a better sign of your intent to repay the debt.\"", "title": "" }, { "docid": "042f3105060491ad0d34cfcd506c6e69", "text": "\"Can you get a cashier's check from your bank, made out in the charity's name, and mail it to the charity? From what I recall of the last few times I've gotten a cashier's check from the bank, it didn't have anything on it that identified me. A determined person could probably trace it back to you, but you're not really looking for strong anonymity. Another possibility would be a postal money order, but I'm not sure whether you can leave the \"\"From\"\" section blank. The money order would have a fee, but the cashier's check should be free. (It is at both my local bank and my CU.)\"", "title": "" }, { "docid": "06eb0254bd4b3aea26db481f691fa063", "text": "I believe so (that you can, not that you are greedy) I run my own business and, generally speaking, am 'charging' my company 40p per mile as per the quote above. I did not know about the ability to claim the shortfall, as it is not relevant to me, but it makes perfect sense and I'm sure that a phone call to HMRC will help you understand how to claim. As for the greedy question - personally I think that laws are there for a reason (both ways) so if there's money to be claimed - there's no reason not to do so, unless of course the hassle is greater than the potential gain. One last note - not sure exactly what the rules around this are, but I know that the allowance is not applicable for one's general commute and so if you're travelling to the same place over 40% of the time for more than two years you are no longer allowed to claim these miles.", "title": "" }, { "docid": "f930e2acd54e77a50bd76e526a3cad35", "text": "\"Question: Does a billion dollars make you 1,000 times more happy than a million dollars? Answer: It doesn't. What counts is not the amount of money, but the subjective improvement that it makes to your life. And that improvement isn't linear, which is way the expected value of the inrease in your happiness / welfare / wellbeing is negative. The picture changes if you consider that by buying a ticket you can tell yourself for one week \"\"next week I might be a billionaire\"\". What you actually pay for is not the expected value of the win, but one week of hope of becoming rich.\"", "title": "" } ]	fiqa
de3de2595d7b9c4829b95e67552460ee	Can i have NRE accounts without OCI card?	[ { "docid": "c71de3557af182684fc2d18fdef9250a", "text": "\"No, you do not need an OCI card to continue to have an NRE or NRO account. You are now classified as a PIO -- Person of Indian Origin -- (and you don't need to have a PIO card issued by the Government of India to prove it) and are entitled to use NRE and NRO accounts just as you were when you were a NRI (NonResident Indian). But, you should inform the banks where you have NRE and NRO accounts that you have changed citizenship, and they may need to go through their KYC (Know Your Customer) process with you all over again. If you don't get an OCI Card, you will need to have an Indian visa stamped into your new US passport to visit India, and please do remember to send your Indian passport to the nearest Indian Consulate for cancellation. Keep the surrender certificate and cancelled passport in your safe deposit box forever; your grandchildren will need it to get visas to visit India. (My granddaughter just did). If you do get an OCI Card, you will need to have an OCI stamp put into your new US passport, and when you renew your US passport, you will need to get the new one stamped too (and pay the fee for that, of course). You cannot enter India with just an OCI Card and a US passport without the OCI stamp in it; that stamp is vital. If you move from one residential address in the US to another, you will need to get a new OCI Card issued because, unlike the US \"\"green card\"\", the OCI card has your residential address on it. Once again, a fee is involved. All these processes take many weeks because the whole paperwork has to go to the Ministry of External Affairs in New Delhi, and meanwhile, your passport is not available to you for a trip to Europe or Japan or Taiwan or China if you need to go there on business (or for pleasure).\"", "title": "" } ]	[ { "docid": "6f0f38a1e602eb0fac9930004d35f15a", "text": "According to the government website, the answer appears to be no in terms of personal income. However you may want to anyway to start creating RRSP contribution room as well as possibly qualify for GST/HST credit. If your business is registered you are going to be required to file a tax return for it (and if it is a sole proprietorship then you would be required to file a T1 regardless). When all is said and done, it seems that it's probably better to file rather than not file; even if you pay no income tax at least you are sure you won't receive a nasty letter from Revenue Canada in the future :)", "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": "1399f2e6614b36a0dda352caa0ebf2f2", "text": "I have not opened any NRE/NRO account before coming to Finland. This is in violation of Foreign Exchange Management Act. Please get this regularized ASAP. All your savings account need to be converted to NRO. Shall I transfer funds from abroad to both NRE and NRO account or I can transfer only to NRE account in India? You can transfer to NRE or NRO. It is advisable to transfer into NRE as funds from here can be repatriated out of India without any paperwork. Funds from NRO account need paperwork to move out of India. I am a regular tax payer in abroad. The Funds which i'll transfer in future will attract any additional tax in India? As your status is Non Resident and the income is during that period, there is no tax applicable in India on this. Few Mutual Fund SIPs (monthly basis) are linked with my existing saving account in india. Do these SIPs will stop when the savings account will turn into NRO account? Shall I need to submit any documents for KYC compliance? If yes, to whom I should submit these? is there any possibility to submit it Online? Check your Bank / Mutual Fund company. Couple of FDs are also opened online and linked with this existing saving account. Do the maturity amount(s) subject to TDS or any tax implication such as 30.9% as this account will be turned into NRO account till that time and NRO account attracts this higher tax percentage. These are subject to taxes in India. This will be as per standard tax brackets. Which account (NRE/NRO) is better for paying EMIs for Home Loan, SIPs of Mutual Funds, utility bills in India, transfer money to relative's account etc Home Loan would be better from NRE account as if you sell the house, the EMI paid can be credited into NRE account and you can transfer this out of India without much paperwork. Same for SIP's. For other it doesn't really matter as it is an expense. Is there any charge to transfer fund from NRE to NRO account if both account maintain in same Bank same branch. Generally No. Check with your bank. Which Bank account's (NRE/NRO) debit/ATM card should be used in Abroad in case of emergency. Check with your bank. NRE funds are more easy. NRO there will be limits and reporting. Do my other savings accounts, maintained in different Banks, also need to be converted into NRO account? If yes, how can it be done from Abroad? Yes. ASAP. Quite a few leading banks allow you to do this if you are not present. Check you bank for guidance.", "title": "" }, { "docid": "9f7c7476cb54a2419f6dbec086f8dc10", "text": "In general, deposits into an NRE account must be the proceeds of remittances from outside India. If you send your friend a cheque, denominated in Indian Rupees, drawn on your NRE account (which is an account held in a bank in India), that cheque will most likely be refused by your friend's bank for deposit into your friend's NRE account. Your friend could deposit it into an NRO account, though, but that deposit would likely draw the attention of the income tax people.", "title": "" }, { "docid": "46075a828d1727de85ef25c10211b410", "text": "I don't think Xero Personal does. I have my bank account in there, but since there's no automatic feed for the bank I use I imported it manually. I entered the bank by hand, so I think you could use it without listing a bank account at all.", "title": "" }, { "docid": "188569fa7a14ebec46d276bda30793a8", "text": "If you are looking to open an NRE Account, the banks have now made the process very simple and quick.Here, we will have a detailed look at what NRE Account is and how to open one such account.For more details, visit https://www.icicibank.com/nri-banking/nri-banking.page?", "title": "" }, { "docid": "a12d4c02b46a38be2eacbfee2b24c239", "text": "The OP might have obtained his credit card by now but I'm answering now as there is one more easy way to get a credit card. All major Indian banks like SBI, ICICI, HDFC and Axis issue instant credit cards on opening a FD (Fixed Deposit). For instance ICICI offers one for FD amount of as less as ₹20000. The credit limit on such cards will be 85% of the deposit amount. Another advantage of these kind of cards is customer won't be charged any annual fees and at the same time interest will be paid on original FD.", "title": "" }, { "docid": "340a297273a7820bf1162c9bf4dd3fdf", "text": "Caveat: I have never owned an Indian card but the items below are true for at least three different countries where I have lived in", "title": "" }, { "docid": "4fc4c11640af8db441ea8a5b46d91749", "text": "am I allowed to transfer into NRE account from paypal? Credits into NRE accounts are restricted. It has to be established that the funds being credited are income outside of India. In case of paypal, paypal uses local clearing to credit funds into Bank Accounts. So essentially one cannot credit NRE account by domestic clearing network like NEFT. It is best that you withdraw the funds into Bank Account outside India and use SWIFT or remittance service to credit your NRE account. I do not want to transfer to an NRO account since the money credited into it will become taxable. This is not the right assumption. Credits into NRO are not taxable by default; if you establish that the funds are from outside India, there is no tax on the income money transferred from abroad into the NRO account. However, the interest that will be paid by the bank on the balance of the NRO account is taxable income in India and is subject to TDS. In contrast, interest paid on the balance in an NRE account is not taxable in India and is not subject to TDS as long as you maintain NRI status. However it does make sense to keep accounts segregated, i.e. income generated in India, credit the NRO account and income generated outside India credit to NRE.", "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": "007ae90ae22f4b3fdc02e55709c5873c", "text": "You might what to check out Interactive Brokers. If your India stock is NSE listed they might be able to do it since they support trading on that exchange. I would talk to a customer service rep there first. https://www.interactivebrokers.com/en/index.php?f=exchanges&p=asia", "title": "" }, { "docid": "5717dc64a0a7d6b53568555d1bbece24", "text": "Citizens of India who are not residents to India (have NRI status) are not entitled to have ordinary savings accounts in India. If you have such accounts (e.g. left them behind to support your family while you are abroad), they need to be converted to NRO (NonResident Ordinary) accounts as soon as possible. Your bank will have forms for completion of this process. Any interest that these accounts earn will be taxable income to you in India, and possibly in the U.K. too, though tax treaties (or Double Taxation Avoidance Agreements) generally allow you to claim credit for taxes paid to other countries. Now, with regard to your question, NRIs are entitled to make deposits into NRO accounts as well as NRE (NonResident External) accounts. The differences are that money deposited into an NRE account, though converted to Indian Rupees, can be converted back very easily to foreign currency if need be. However, the re-conversion is at the exchange rate then in effect, and you may well lose that 10% interest earned because of a change in exchange rate. Devaluation of the Indian Rupee as occurred several times in the past 70 years. Once upon a time, it was essentially impossible to take money in an NRO account and convert it to foreign currency, but under the new recently introduced schemes, money in an NRO account can also be converted to foreign currencies, but it needs certification by a CA, and various forms to be filled out, and thus is more hassle. interest earned by the money in an NRE account is not taxable income in India, but is taxable income in the U.K. There is no taxable event (neither in U.K. nor in India) when you change an ordinary savings account held in India into an NRO account, or when you deposit money from abroad into an NRE or NRO account in an Indian bank. What is taxable is the interest that you receive from the Indian bank. In the case of an NRO account, what is deposited into your NRO account is the interest earned less the (Indian) income tax (usually 20%) deducted at the source (TDS) and sent to the Income Tax Authority on your behalf. In the case of an NRE account, the full amount of interest earned is deposited into the NRE account -- no TDS whatsoever. It is your responsibility to declare these amounts to the U.K. income tax authority (HM Revenue?) and pay any taxes due. Finally, you say that you recently moved to the U.K. for a job. If this is a temporary job and you might be back in India very soon, all the above might not be applicable to you since you would not be classified as an NRI at all.", "title": "" }, { "docid": "ca3869dabd29a013aa9458ceadfec2c0", "text": "My answer is with respect to the United States. I have no idea about India's regulatory environment. You are opening yourself up to massive liabilities and problems if you deposit their money in your account. I managed investment accounts as a private investment advisor for years (those with less than 15 clients were not required to register) until Dodd-Frank changed the rules. Thus you would have to register as an advisor, probably needing to take the series 65 exam (or qualifying some other way, e.g. getting your CFP/CFA/etc...). I used a discount broker/dealer (Scottrade) as the custodian. Here's how it works: Each client's account was their own account, and I had a master account that allowed me to bill their accounts and manage them. They signed paperwork making me the advisor on their account. I had very little accounting to handle (aside from tracking basis for taxed accounts). If you take custody of the money, you'll have regulatory obligations. There are always lots of stories in the financial advisor trade publications about advisors who go to jail for screwing their clients. The most common factor: they took custody of the assets. I understand why you want a single account - you want to ensure that each client gets the same results, right? Does each client want the same results? Certainly the tax situation for each is different, yes? Perhaps one has gains and wants to take losses in one year, and the other doesn't. If their accounts are managed separately, one can take losses while the other realizes gains to offset other losses. Financial advisors offer these kinds of accounts as Separately Managed Accounts (SMAs). The advisors on these kinds of accounts are mutual funds managers, and they try to match a target portfolio, but they can do things like realize gains or losses for clients if their tax situation would prefer it. You certainly can't let them put retirement accounts into your single account unless the IRS has you on their list of acceptable custodians. I suggest that you familiarize yourself thoroughly with the regulatory environment that you want to operate under. Then, after examining the pros and cons, you should decide which route you want to take. I think the most direct and feasible route is to pass the Series 65, register as an investment advisor, and find a custodian who will let you manage the assets as the advisor on the account. Real estate is another matter, you should talk to an attorney, not some random guy on the internet (even if he has an MBA and a BS in Real Estate, which I do). This is very much a state law thing.", "title": "" }, { "docid": "1dfdc404c22a79e7c6e79d474694d9a3", "text": "Current account offers a lot of benefits for sole proprietors. Think of it like bank account for a company. The bank provides a host of facilities for the company. A sole proprietor does not have enough value as that of a company for a bank but needs similar services. Thus Indian banks offer a toned down version of the account offered to a company. Current account offer very good overdraft ( withdrawing money even if balance is zero). This feature is very useful as business cycles and payment schedules can be different for each supplier/customer the sole proprietor does business with. Imagine the sole proprietor account has balance of zero on day 0. customer X made payment by cheque on day 1. Cheques will get credited only on Day 3 (Assume Day 2 is a national holiday or weekend). Sole proprietor gave a cheque to his supplier on day 0. The supplier deposited the cheque on Day 0 and the sole proprietor's bank will debit the the proprietor's account on day 1. As customer's cheque will get credited only day 3, the overdraft facility will let the proprietor borrow from the bank Interestingly, current accounts were offered long before Indian banks started offering customized accounts to corporate customers. The payment schedule mentioned in my example is based on a clearing system > 10 years ago. Systems have become much simpler now but banks have always managed to offer something significantly extra on lines similar to my example above to proprietor over a savings bank account", "title": "" }, { "docid": "2da701703d4434e4476dda2c8679d3f5", "text": "Most likely, yes. AD&D is insurance against a specific type of peril. Life insurance is, too, but there are fewer exceptions to payout. I'd imagine that you'd have to die by accident, or be dismembered but not die, for it to pay out. The exceptions in the policy are what you need to be concerned about. If loss of you (and your income) would be of financial hardship to your wife and your goals for your family, then you should consider life insurance. (If you do, consider having your wife buy the policy on you, and make sure it's clear that her funds were paying for it. It may be possible to avoid having the payout go into your estate that way.)", "title": "" } ]	fiqa
3fedc92faba0d0eafd6f49b387f11d99	How should I go about creating an estate plan?	[ { "docid": "4cb78ac6a605733c56f114b6fa4c3ec8", "text": "\"Yes, an estate plan can be very important. Estate planning - typically attempts to eliminate uncertainties over the administration of a probate and maximize the value of the estate by reducing taxes and other expenses. Guardians are often designated for minor children and beneficiaries in incapacity. In general, your \"\"estate\"\" includes all of your assets, less all debt, plus death benefits from all life insurance policies not held in an irrevocable trust. The biggest reason to have an estate plan is to make sure that your personal values about both medical and personal finance financial matters are honored in the event that death or incapacity prevents you from acting for yourself. In addition, tax minimization is a further and very important goal of estate planning for persons with taxable estates. To create an estate plan for yourself or update an existing plan, you will most likely need the services of an estate planning attorney. When you consult with an estate planning attorney, the attorney considers how you want assets distributed to heirs, what taxes might your estate be liable for and whether there are tax-minimization strategies that would be appropriate and appealing; what your preferences and values are with respect to the management of medical and financial affairs in the event of incapacity; and any complicating family issues. To deal with these issues, your attorney will need full and accurate information about you, including: When an estate plan is created, be sure you understand what the attorney is saying. Estate planning ideas can be confusing. It is also appropriate and expected for you to ask about the attorney's fee for any legal service. Some articles and resources: Get ahead of your estate planning Estate Planning by CBA\"", "title": "" } ]	[ { "docid": "57287b1883e7c6b41e47eb1e7699abab", "text": "What happens to a minor if the parents are missing, or incapacitated, or deceased should be planned now, and not end up a matter for the courts to decide. You might need to sit down with a family lawyer as well as a fee based financial planner, to make sure you have addressed all the relevant details. These details would include where they would live, money, and what the money should be used for.", "title": "" }, { "docid": "e15a5b72f9e1e52242505a6f3cc09a2c", "text": "I'll start by saying that if this is being explored to scratch a specific itch you have then great, if this was a cold call it's probably safe to ignore it. Certain whole life products (they vary in quality by carrier) can make sense for very high earners who are looking for additional tax preferred places to store money. So after you IRA, 401(k), etc options are maxed out but you still have income you'd like to hide from taxes whole life can be a potential vehicle because gains and death benefit are generally exempt from income taxes. Be on the look out for loads charged to your money as it comes in to the policy. Life insurance in general is meant to keep your dependents going without having to sell off assets in the event of your death. People may plan for things like school tuition, mortgage/property tax for your spouse. If you own a business with a couple of partners it's somewhat common for the partners to buy policies on each other to buyout a spouse to avoid potential operating conflicts. Sometimes there can be estate planning issues, if you're looking to transfer assets when you ultimately pass it can make sense to form a trust and load cash in to a whole life policy because death benefits can be shielded from income tax and the estate tax calculation; the current estate tax exemption is about $5.5 million today (judging from your numbers you might actually be close to that including the net value of the homes). Obviously, though, the tax rules are subject to change and you need to be deliberate in your formation of the trust in order to effectively navigate estate tax issues. You seem to have a very solid financial position from this perspective it looks like your spouse would be in good shape. If you are specifically attempting to manage potential estate tax liability you should probably involve an financial planner with experience forming and managing trusts; and you should be very involved with the process because it will absolutely make your finances more complicated.", "title": "" }, { "docid": "15403ed7ab7fbb0b95f83fa531977291", "text": "I've done this, but on the other side. I purchased a commercial property from someone I had a previous relationship with. A traditional bank wouldn't loan me the money, but the owner was willing to finance it. All of the payments went through a professional escrow company. In our case it was a company called Westar, but I'm sure there are plenty out here. They basically serve as the middle-man, for a fee (something like $5 a payment, plus something to set it up). They have the terms of the loan, and keep track of balances, can handle extra principle payments and what that does to the term of the loan, etc. You want to have a typical mortgage note that is recorded with the local clerk's office. If you look around, you should be able to find a real estate lawyer who can set all this up for you. It will cost you a bit up front, but it is worth it to do this right. As far as taxes, my understanding is that the property itself is taxed the same as any other property transfer. You would owe taxes on the difference between the value of the property when you inherited it and when you sold it. The interest you get from the loan would be taxed as regular income. The escrow company should send you tax forms every year listing the amount of interest that you received. There are also deductions you can take for expenses in the process.", "title": "" }, { "docid": "6fe166820882e28b4e16839301760103", "text": "You can buy DIY will kits from office supply shopes like Staples or specialized publishers like Nolo or Quicken. The most important factor for you to consider will be the witness rules in your state to ensure the validity of your will later. Nolo has a lot of good information in this regard. Hopefully this is helpful :)", "title": "" }, { "docid": "1112b5f5bd959c156ff76598295e31ec", "text": "Debt will ruin any plans. I guess that the interest on the credit cards is about $450 a month or about $5,500 per year and the school loans is about $6,000 a year. Get a an Excel spread sheet going and start tracking your expensed. Learn to make a amortization spread sheet for all debts, and any future debts that you are thinking about. If you want a family soon plan on one income for a period of time. If you buy a house plan on paying it off while you are working. Then the house payment becomes spendable money during retirement. A cheaper house can be upgraded in the right neighborhood with an excellent appreciation in value. Money put into excellent collectibles and kept for 20 years or more is private and off the radar income no taxes when sold. STUDY STUDY LEARN LEARN", "title": "" }, { "docid": "9083d2926ec17fd096fa7a82cf7bebac", "text": "Keep a list of your accounts, banks, life insurance policies, location of your will, etc, and make sure two people you trust know where you keep that list. Review and update the list at least once a year. This way if something happens to you, your next of kin will have an easier time locating your financial details and final wishes. And having a list also means you won't forget about any of your accounts.", "title": "" }, { "docid": "9105dcc20943be4843f28a0b20417d63", "text": "You really should consider sitting down with an independent financial advisor to run the numbers for the various options and discuss what risks you're comfortable with and what your requirements/goals are. This isn't a simple decision, unfortunately. Advice I've seen suggested that some portion of the money should stay in the market, earning market rate of return. Exactly how much, and invested in what, is complicated. An annuity is essentially an insurance policy. The company assumes the risks and promises you specific payments in exchange for keeping the money. They wouldn't do so if they didn't think that on average they'll pay out less than the combination of your purchase price plus earnings, so you really are paying a fee for this service. Whether it's worth that cost -- and for how much of your money -- depends on how much you have saved and how risk-tolerant you are. I'm going to steal a moment here to point out that many charities offer annuities. These may or may not pay out less than commercial annuities, but the profits go to a better cause either way. If you plan to leave part of your estate as donation to a charity anyway, this basically lets them have the money earlier while you continue to receive income from it.", "title": "" }, { "docid": "c02e759961fc1045b5c3846be9ea8436", "text": "The process would look something like: 1. Register your investment company with the SEC 2. Get the ETF approved by the SEC 3. Get a custodian bank (likely requires min assets of a few million) 4. Get listed on an exchange like NYSEARCA by meeting requirements and have an IPO 1 and 2 probably require a lot of time and fees and would be wise to have a lawyer advising, 3 is obviously difficult due to asset requirements and 4 would probably involve an investment bank plus more fees", "title": "" }, { "docid": "6d822c5af2aa236f2611b473d8506e45", "text": "You will want to focus on how much is needed for retirement, and what types of investments within the current 401K offerings will get you there. Also will need to discuss non-401K investments such as an IRA, college savings, savings for a house, and an emergency fund. The 401K should be a part of your overall financial picture, how much you invest in the 401K depends on the options you have (Roth 401K available), how much matching (some a little or a lot), and your family plans. You have a few choices: Your company through the 401K provider may provide this service. They may have limited knowledge in what non-401K funds you should invest in, but should be able to discuss types of investment. Fee only planner. They will be able to discus types of investments, and give you some suggestions. Because they don't work on a commission they will not make the investment for you. You need to be able to make the actual selection of investments, so make sure you get criteria to focus on as part of the package. Commission based planner. Will make money off your investment choices. May steer you towards investments that their company offers or ones that offer them the best commissions in that investment type. If the 401K doesn't use funds that the planner can research you will need to provide a copy of the prospectus provided by the 401K. My suggestion is the fee only planner. They balance the limited focus of the 401K company without limiting themselves to the funds their company sells. Before sitting down with the planner get in writing how they fee structure works. A flat fee or hourly fee planner will be expecting you to do all the investment work. This is what you want. Let the fee only planner help you define your plan. But also reanalyze the plan every few years as your needs change.", "title": "" }, { "docid": "da495692088232caf4109462278745e8", "text": "\"This is not intended as legal advice, and only covers general knowledge I have on the subject of wills as a result of handling my own finances. Each state of the USA has its own laws on wills and trusts. You can find these online. For example, in Kentucky I found state laws here: http://www.lrc.ky.gov/krs/titles.htm and Title XXXIV is about wills and trusts. I would recommend reading this, and then talking to a lawyer if it is not crystal clear. Generally, if a lawyer does not draft your will, then either (1) you have no will, or (2) you use a form or computer program to make a will, that must then be properly witnessed before it is valid. If you don't have it witnessed properly, then you have no will. In some states you can have a holographic will, which means a will in your own handwriting. That's when you have that 3am heart attack, and you get out a pad of paper and write \"\"I rescind all former wills hereby bequeathing everything to my mistress Samantha, and as to the rest of you go rot in hell. \"\" One issue with these is that they have to get to court somehow, and someone has to verify the handwriting, and there are often state laws about excluding a current spouse, so you can guess for yourself whether that one might disappear in the fireplace when another family member finds it next to the body or if a court would give it validity. And there can be logic or grammar problems with do it yourself wills, made in your own handwriting, without experience or good references on how to write things out. Lawyers who have done a bunch of these know what is clear and makes sense. (1) In Tennessee, where I live, an intestate's property, someone who died with no will, is divided according to the law. The law looks to find a spouse or relatives to divide the property, before considering giving it to the state. That might be fine for some people. It happened once in my family, and was resolved in court with minimal red tape. But it really depends on the person. Someone in the middle of an unfinalized divorce, for instance, probably needs a will help to sort out who gets what. (2) A form will is valid in Tennessee if it is witnessed properly. That means two witnesses, who sign in yours' and each others' presence. In theory they can be called to testify that the signature is valid. In practice, I don't know if this happens as I am not a lawyer. I have found it difficult to find witnesses who will sign a form will, and it is disconcerting to have to ask friends or coworkers for this sort of favor as most people learn never to sign anything without reading it. But a lawyer often has secretaries that do it... There is a procedure and a treaty for international wills, which I know about from living overseas. To streamline things, you can get the witnesses to each sign an affidavit after they signed the will. The affidavit is sworn written testimony of what happened, that they saw the person sign their will and sign in each others' presence, when, where, no duress, etc. If done correctly, this can be sufficient to prove the will without calling on witnesses. There is another option (3) you arrange your affairs so that most of your funds are disbursed by banks or brokers holding your accounts. Option (3) is really cheap, most stock brokers and banks will create a Transfer-On-Death notice on your account for free. The problem with this is that you also need to write out a letter that explains to your heirs how to get this money, and you need to make sure that they will get the letter if you are dead. Also, you can't deal with physical goods or appoint a guardian for children this way. The advantage of a lawyer is that you know the document is correct and according to local law and custom, and also the lawyer might provide additional services like storing the will in his safe. You can get personalized help that you can not get with a form or computer program.\"", "title": "" }, { "docid": "92812525244dd89b668832ef75619a77", "text": "I second all of this. It’s worth noting that not all estates require wealth advice. Unless it’s in the millions of dollars and you have no prior experience, I wouldn’t waste time with wealth advisors. ML is a broker dealer, not a fiduciary.", "title": "" }, { "docid": "a8abcd8bc5d619cea08ed565859364f6", "text": "\"Former financial analyst here, happy to help you. First off, you are right to not be entirely trusting of advisors and attorneys. They are usually trustworthy, but not always. And when you are new to this, the untrustworthy ones have a habit of reaching you first - you're their target market. I'll give you a little breakdown of how to plan, and a starting investment. First, figure out your future expenses. A LOT of that money may go to medical bills or associated care - don't forget the costs of modifications and customizations to items so you can have a better quality of life. Cars can be retrofit to assist you with a wheelchair, you can build a chair lift into a staircase, things like that which will be important for mobility - all depending on the lingering medical conditions. Mobility and independence will be critically important for you. Your past expenses are the best predictor of future expenses, so filter out the one-time legal and medical costs and use those to predict. Second, for investing there is a simple route to get into the stock market, and hopefully you will hear it a lot: Exchange Traded Funds (ETFs). You'll hear \"\"The S&P 500 increased by 80 points today...\"\" on the news; the S&P is a combination of 500 different stocks and is used to gauge the market overall. You can buy an exchange traded fund as a stock, and it's an investment in all those components. There's an ETF for almost anything, but the most popular ones are for those big indexes. I would suggest putting a few hundred thousand into an S&P 500 indexed ETF (do it at maybe $10,000 per month, so you spread the money out and ensure you don't buy at a market peak), and then let it sit there for many years. You can buy stocks through online brokerages like Scottrade or ETrade, and they make it fairly easy - they even have local offices that you can visit for help. Stocks are the easiest way to invest. Once you've done this, you can also open a IRA (a type of retirement account with special tax benefits) and contribute several thousand dollars to it per year. I'll be happy to give more advice if/when you need it, but there are a number of good books for beginning investors that can explain it better than I. I would suggest that you avoid real estate, especially if you expect to move overseas, as it is significantly more complicated and has maintenance costs and taxes.\"", "title": "" }, { "docid": "d64fccb218aa1e292f71b6e3c843f606", "text": "\"Debts do not inherit to the children. You are absolutely not liable for your parent's debt, in any way whatsoever. Collection agents will lie about this; tricking you is their job, and your job is to tell them Heck no, do I look like an idiot? When a person dies, all their personal assets (and debts) go to a fictitious entity called the Estate. This is a holder for the person's assets until they can be dispositioned finally. The estate is managed by a living person, sometimes a company (law firm), called an Executor. Similar to a corporation which is shutting down business, the Executor's job is to act on behalf of the Estate, and in the Estate's best interest (not his own). For instance he can't decide, in his capacity as executor, to give all the estate's money to himself. He has to loyally and selflessly follow state law and any living-trust or wills that may be in place. This role is not for everyone. You can't just decide \"\"la la la, I'm going to live in their house now\"\", that is squatting. The house is an asset and someone inherited that, as dictated by will, trust or state law. That has to be worked out legally. Once they inherit the house, you have to negotiate with them about living there. If you want to live there now, negotiate to rent the house from the estate. This is an efficient way to funnel money into the estate for what I discuss later. The Estate has assets, and it has debts. Some debts extinguish on the death of the natural person, e.g. student loans, depending on the contract and state law. Did you know corporations are considered a \"\"person\"\"? (that's what Citizens United was all about.) So are estates - both are fictitious persons. The executor can act like a person in that sense. If you have unsecured debt, how can a creditor motivate you to pay? They can annoy and harass you. They can burn your credit rating. Or they can sue you and try to take your assets - but suing is also expensive for them. This is not widely understood, but anyone at any time can go to their creditors and say \"\"Hey creditor, I'm not gonna pay you $10,000. Tough buffaloes. You can sue me, good luck with that. Or, I'll make you a deal. I'll offer you $2000 to settle this debt. What say you? And you'll get one of two answers. Either \"\"OK\"\" or \"\"Nice try, let's try $7000.\"\" If the latter, you start into the cycle of haggling, \"\"3000.\"\" \"\"6000.\"\" \"\"4000.\"\" \"\"5000. \"\"Split the difference, $4500.\"\" \"\"OK.\"\" This is always a one-time, lump sum, one-shot payoff, never partial payments. Creditors will try to convince you to make partial payments. Don't do it. Anyone can do that at any time. Why don't living people do this every day? How about an Estate? Estates are fictitious persons, they don't have a \"\"morality\"\", they have a fiduciary duty. Do they plan on borrowing any more money? Nope. Their credit rating is already 0. They owe no loyalty to USBank. Actually, the executor's fiduciary duty is to get the most possible money for the assets, and settle the debts for the least. So I argue it's unethical to fail to haggle down this debt. If an executor is \"\"not a haggler\"\" or has a moral issue with shortchanging creditors, he is shortchanging the heirs, and he can be sued for that personally - because he has a fiduciary duty to the heirs, not Chase Bank. Like I say, the job is not for everyone. The estate should also make sure to check the paperwork for any other way to escape the debt: does it extinguish on death? Is the debt time-barred? Can they really prove it's valid? Etc. It's not personal, it's business. The estate should not make monthly payments (no credit rating to protect) and should not pay one dime to a creditor except for a one-shot final settlement. Is it secured debt? Let them take the asset. (unless an heir really wants it). When a person dies with a lot of unsecured debt, it's often the case that they don't have a lot of cash lying around. The estate must sell off assets to raise the cash to settle with the creditors. Now here's where things get ugly with the house. ** The estate should try to raise money any other way, but it may have to sell the house to pay the creditors. For the people who would otherwise inherit the house, it may be in their best interest to pay off that debt. Check with lawyers in your area, but it may also be possible for the estate to take a mortgage on the house, use the mortgage cash to pay off the estate's debts (still haggle!), and then bequeath the house-and-mortgage to the heirs. The mortgage lender would have to be on-board with all of this. Then, the heirs would owe the mortgage. Good chance it would be a small mortgage on a big equity, e.g. a $20,000 mortgage on a $100,000 house. Banks love those.\"", "title": "" }, { "docid": "0e1e527e43b03ce3729675479ed7ba0b", "text": "Hire a lawyer familiar with transactional law and they will have a examples in house. Any debt that large will have nuances that Google or Reddit can't help you with. A term sheet is a term sheet but you will want it to be substantial and air tight.", "title": "" }, { "docid": "5474673d5aa76b4f48ff13ccc540e477", "text": "\"Is option trading permitted in the account? Most 401(k) do not permit this. 1 - it means none traded today. 2 - there are 50 outstanding contracts. Each one has a guy who is long and a guy who is short. 3 - not really, it might depend on the stock. 4 - no. With commissions so low, and the inherent leverage of options, one contract reflecting 100 shares of the underlying stock, the minimum is what you can sleep soundly with. 5 - because GLD does not reflect precisely 1/10 oz of gold's price. If you look at the prospectus, it reads \"\"The investment objective of the Trust is for the Shares to reflect the performance of the price of gold bullion, less the Trust’s expenses.\"\" Since there are no dividends to take expenses from, the GLD price will erode by .4% each year compared to the price of 1/10oz gold.\"", "title": "" } ]	fiqa
17ef18945b6492a72fb22db5610cb2a3	What things are important to consider when investing in one's company stock?	[ { "docid": "6f01eeea150ed6a5edaa8031d9c0b963", "text": "I would pass on their deal if they will only match if you invest in their stock. Think about when/if the company falls on bad times. What happens to the stock of a company when bad times come? The board of directors will reduce or eliminate the dividend payout. Current and potential investors will take notice. Current owners of the stock will sell. Potential investors will avoid buying. The price of the stock with go down. And, quite likely, the company will lay off workers. If/when that happens you would find yourself without a job and holding (almost) worthless stock as your savings. That would be quite a bad situation to be in.", "title": "" }, { "docid": "72f8406a31741459ff9869a0c5d52123", "text": "\"Does your job give you access to \"\"confidential information\"\", such that you can only buy or sell shares in the company during certain windows? Employees with access to company financial data, resource planning databases, or customer databases are often only allowed to trade in company securities (or derivatives thereof) during certain \"\"windows\"\" a few days after the company releases its quarterly earnings reports. Even those windows can be cancelled if a major event is about to be announced. These windows are designed to prevent the appearance of insider trading, which is a serious crime in the United States. Is there a minimum time that you would need to hold the stock, before you are allowed to sell it? Do you have confidence that the stock would retain most of its value, long enough that your profits are long-term capital gains instead of short-term capital gains? What happens to your stock if you lose your job, retire, or go to another company? Does your company's stock price seem to be inflated by any of these factors: If any of these nine warning flags are the case, I would think carefully before investing. If I had a basic emergency fund set aside and none of the nine warning flags are present, or if I had a solid emergency fund and the company seemed likely to continue to justify its stock price for several years, I would seriously consider taking full advantage of the stock purchase plan. I would not invest more money than I could afford to lose. At first, I would cash out my profits quickly (either as quickly as allowed, or as quickly as lets me minimize my capital gains taxes). I would reinvest in more shares, until I could afford to buy as many shares as the company would allow me to buy at the discount. In the long-run, I would avoid having more than one-third of my net worth in any single investment. (E.g., company stock, home equity, bonds in general, et cetera.)\"", "title": "" }, { "docid": "f0e9b6eb1bb4818486d9d4637a157a6c", "text": "It appears your company is offering roughly a 25% discount on its shares. I start there as a basis to give you a perspective on what the 30% matching offer means to you in terms of value. Since you are asking for things to consider not whether to do it, below are a few considerations (there may be others) in general you should think about your sources of income. if this company is your only source of income, it is more prudent to make your investment in their shares a smaller portion of your overall investment/savings strategy. what is the holding period for the shares you purchase. some companies institute a holding period or hold duration which restricts when you can sell the shares. Generally, the shorter the duration period the less risk there is for you. So if you can buy the shares and immediately sell the shares that represents the least amount of relative risk. what are the tax implications for shares offered at such a discount. this may be something you will need to consult a tax adviser to get a better understanding. your company should also be able to provide a reasonable interpretation of the tax consequences for the offering as well. is the stock you are buying liquid. liquid, in this case, is just a fancy term for asking how many shares trade in a public market daily. if it is a very liquid stock you can have some confidence that you may be able to sell out of your shares when you need. personally, i would review the company's financial statements and public statements to investors to get a better understanding of their competitive positioning, market size and prospects for profitability and growth. given you are a novice at this it may be good idea to solicit the opinion of your colleagues at work and others who have insight on the financial performance of the company. you should consider other investment options as well. since this seems to be your first foray into investing you should consider diversifying your savings into a few investments areas (such as big market indices which typically should be less volatile). last, there is always the chance that your company could fail. Companies like Enron, Lehman Brothers and many others that were much smaller than those two examples have failed in the past. only you can gauge your tolerance for risk. As a young investor, the best place to start is to use index funds which track a broader universe of stocks or bonds as the first step in building an investment portfolio. once you own a good set of index funds you can diversify with smaller investments.", "title": "" }, { "docid": "a90aba0d9207276fd2fe9e3902a3e306", "text": "\"Check how long you have to hold the stock after buying it. If you can sell reasonably soon and your company is reasonably stable, you're unlikely to lose and/or be taxed and/or pay enough in fees to lose more than the 30% \"\"free money\"\" they're giving you. Whether you hold it longer than the minimum time depends partly on whether you think you can better invest the money elsewhere, and partly on how you feel about having both your salary and (part of) your investments tied to the company's success? The company would like you to \"\"double down\"\" that way, in the theory that it may make you mors motivated... but some investment councelors would advise keeping that a relatively small part of your total investments, basically for the same reasons you are always advised to diversify.\"", "title": "" }, { "docid": "a1dda3980b8a649a668891403f564f85", "text": "You really have asked two different questions here: I'm interested in putting away some money for my family Then I urge you to read up on investing. Improving your knowledge in investing is an investment that will very likely pay off in the long-term - this can't be answered here in full length, pointers to where to start are asset allocation and low-cost index funds. Read serious books, read stackexchange posts, and try avoid the Wall Street marketing machine. Also, before considering any long term investments, build an emergency fund (e.g. 6 months worth of your expenses) in case you need some liquid money (loss of job etc.), and also helps you sleep better at night. What things are important to consider before making this kind of investment? Mainly the risk (other answers already elaborate on the details). Investing in a single stock is quite risky, even more so when your income also depends on that company. Framed another way: which percentage of your portfolio should you put into a single stock? (which has been answered in this post). If after considering all things you think it's a good deal, take the offer, but don't put a too great percentage of you overall savings into it, limit it to say 10% (maybe even less).", "title": "" } ]	[ { "docid": "55007fd29e85f7c0371128de9781b4b8", "text": "\"Think about the implications if the world worked as your question implies that it \"\"should\"\": A $15 share of stock would return you (at least) $15 after 3 months, plus another $15 after 6 months, plus another after 9 and 12 months. This would have returned to you $60 over the year that you owned it (plus you still own the share). Only then would the stock be worth buying? Anything less than $60 would be too little to be worth bothering about for $15? Such a thing would indeed be worth buying, but you won't find golden-egg laying stocks like that on the stock market. Why? Because other people would outbid your measly $15 in order to get this $60-a-year producing stock (in fact, they would bid many hundreds of dollars). Since other people bid more, you can't find such a deal available. (Of course, there are the points others have brought up: the earnings per share are yearly, not quarterly, unless otherwise noted. The earnings may not be sent to you at all, or only a small part, but you would gain much of their value because the company should be worth about that much more by keeping the earnings.)\"", "title": "" }, { "docid": "3d58f98963f60b0132ca92e895b7293a", "text": "\"Wouldn't this be part of your investing strategy to know what price is considered a \"\"good\"\" price for the stock? If you are going to invest in company ABC, shouldn't you have some idea of whether the stock price of $30, $60, or $100 is the bargain price you want? I'd consider this part of the due diligence if you are picking individual stocks. Mutual funds can be a bit different in automatically doing fractional shares and not quite as easy to analyze as a company's financials in a sense. I'm more concerned with the fact that you don't seem to have a good idea of what the price is that you are willing to buy the stock so that you take advantage of the volatility of the market. ETFs would be similar to mutual funds in some ways though I'd probably consider the question that may be worth considering here is how much do you want to optimize the price you pay versus adding $x to your position each time. I'd probably consider estimating a ballpark and then setting the limit price somewhere within that. I wouldn't necessarily set it to the maximum price you'd be willing to pay unless you are trying to ride a \"\"hot\"\" ETF using some kind of momentum strategy. The downside of a momentum strategy is that it can take a while to work out the kinks and I don't use one though I do remember a columnist from MSN Money that did that kind of trading regularly.\"", "title": "" }, { "docid": "953d5b75857bdbe44165bbc1c5c11381", "text": "Each situation is different, but it has to do with assessing what the Company is trying to do. People always talk about WACC, but in reality, WACC is less important than figuring how how much debt a Company can support (determined by leverage and solvency statistics). Here are a few things to think about: -How stable are the Company's cash flows? (big difference between a Company that has multi-year contracts locked in place vs. variable/cyclical revenue streams; what type of Capex requirement is there?) -What is the purpose of raising the capital? (growth vs. recapitalization; where are the proceeds going?) -What collateral is available for creditors? -What does working capital look like? (is there seasonality?)", "title": "" }, { "docid": "165c8721276816e9d3741cd78e343015", "text": "Pick one stock (probably within Utilities) and know it well. Understand what it trades on (EV / EBITDA, P / E, P / Rev) and why. What are the typical margins for the industry? What are rev growth trends? What isn't priced in? I think studying one company deeply would be helpful Other things to look at would be how your fund is structured, what it's benchmark is, voting structure, and how ideas are sourced Good luck!", "title": "" }, { "docid": "c214d560ed54ea4495c8526b2894adf6", "text": "The worth of a share of stocks may be defined as the present cash value of all future dividends and liquidations associated therewith. Without a crystal ball, such worth may generally only be determined retrospectively, but even though it's generally not possible to know the precise worth of a stock in time for such information to be useful, it has a level of worth which is absolute and not--unlikely market price--is generally unaffected by people buying and selling the stock (except insofar as activities in company stock affect a company's ability to do business). If a particular share of stock is worth $10 by the above measure, but Joe sells it to Larry for $8, that means Joe gives Larry $2. If Larry sells it to Fred $12, Fred gives Larry $2. The only way Fred can come out ahead is if he finds someone else to give him $2 or more. If Fred can sell it to Adam for $13, then Adam will give Fred $3, leaving Fred $1 better off than he would be if he hadn't bought the stock, but Adam will be $3 worse off. The key point is that if you sell something for less than it's worth, or buy something for more that it's worth, you give money away. You might be able to convince other people to give you money in the same way you gave someone else money, but fundamentally the money has been given away, and it's not coming back.", "title": "" }, { "docid": "47693cc23fde88c8eed203721d2aebe5", "text": "\"I primarily intend to add on to WBT's answer, which is good. It has been shown that \"\"momentum\"\" is a very real, tangible factor in stock returns. Stocks that have done well tend to keep doing well; stocks that are doing poorly tend to keep doing poorly. For a long-term value investor, of course fundamental valuation should be your first thing to look at - but as long as you're comfortable with the company's price as compared to its value, you should absolutely hang onto it if it's been going up. The old saying on Wall Street is \"\"Cut your losses, and let your winners ride.\"\" As WBT said, there may be some tangible emotional benefit to marking your win while you're ahead and not risking that it tanks, but I'd say the odds are in your favor. If an undervalued company starts rising in stock price, maybe that means the market is starting to recognize it for the deal it is. Hang onto it and enjoy the fruits of your research.\"", "title": "" }, { "docid": "52d826b925842aa604e0b295fcd54608", "text": "\"No, the stock market is not there for speculation on corporate memorabilia. At its base, it is there for investing in a business, the point of the investment being, of course, to make money. A (successful) business earns money, and that makes it valuable to its owners since that money can be distributed to them. Shares of stock are pieces of business ownership, and so are valuable. If you knew that the business would have profit of $10,000,000 every year, and would distribute that to the owners of each of its 10,000,000 shares each year, you would know to that each share would receive $1 each year. How much would such a share be worth to you? If you could instead put money in a bank and get 5% a year back, to get $1 a year back you would have to put $20 into the bank. So maybe that share of stock is worth about $20 to you. If somebody offers to sell you such a share for $18, you might buy it; for $23, maybe you pass up the offer. But business is uncertain, and how much profit the business will make is uncertain and will vary through time. So how much is a share of a real business worth? This is a much harder call, and people use many different ways to come up with how much they should pay for a share. Some people probably just think something like \"\"Apple is a good company making money, I'll buy a share at whatever price it is being offered at right now.\"\" Others look at every number available, build models of the company and the economy and the risks, all to estimate what a share might be worth, more or less. There is no indisputable value for a share of a successful business. So, what effect does a company's earnings have on the price of its stock? You can only say that for some of the people who might buy or sell shares, higher earnings will, all other thing being equal, have them be willing to spend more to buy it or demand more when selling it. But how much more is not quantifiable but depends on each person's approach to the problem. Higher earnings would tend to raise the price of the stock. Yet there are other factors, such as people who had expected even higher earnings, whose actions would tend to lower the price, and people who are OK with the earnings now, but suspect trouble for the business is appearing on the horizon, whose actions would also tend to lower the price. This is why people say that a stock's price is determined by supply and demand.\"", "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": "915e6ec3c328a2e4c2e8506fe7bc97cb", "text": "\"This is several questions wrapped together: How can I diplomatically see the company's financial information? How strong a claim does a stockholder or warrantholder have to see the company's financials? What information do I need to know about the company financials before deciding to buy in? I'll start with the easier second question (which is quasi implicit). Stockholders typically have inspection rights. For example, Delaware General Corporate Law § 220 gives stockholders the right to inspect and copy company financial information, subject to certain restrictions. Check the laws and corporate code of your company's state of incorporation to find the specific inspection right. If it is an LLC or partnership, then the operating agreement usually controls and there may be no inspection rights. If you have no corporate stock, then of course you have no statutory inspection rights. My (admittedly incomplete) understanding is that warrantholders generally have no inspection rights unless somehow contracted for. So if you vest as a corporate stockholder, it'll be your right to see the financials—which may make even a small purchase valuable to you as a continuing employee with the right to see the financials. Until then, this is probably a courtesy and not their obligation. The first question is not easy to answer, except to say that it's variable and highly personal for small companies. Some people interpret it as prying or accusatory, the implication being that the founders are either hiding something or that you need to examine really closely the mouth of their beautiful gift horse. Other people may be much cooler about the question, understanding that small companies are risky and you're being methodical. And in some smaller companies, they may believe giving you the expenses could make office life awkward. If you approach it professionally, directly, and briefly (do not over-explain yourself) with the responsible accountant or HR person (if any), then I imagine it should not be a problem for them to give some information. Conversely, you may feel comfortable enough to review a high-level summary sheet with a founder, or to find some other way of tactfully reviewing the right information. In any case, I would keep the request vague, simple, and direct, and see what information they show you. If your request is too specific, then you risk pushing them to show information A, which they refuse to do, but a vague request would've prompted them to show you information B. A too-specific request might get you information X when a vague request could have garnered XYZ. Vague requests are also less aggressive and may raise fewer objections. The third question is difficult to say. My personal understanding is some perspective of how venture capitalists look at the investment opportunity (you didn't say how new this startup is or what series/stage they are on, so I'll try to stay vague). The actual financials are less relevant for startups than they are for other investments because the situation will definitely change. Most venture capital firms like to look at the burn rate or amount of cash spent, usually at a monthly rate. A high burn rate relative to infusions of cash suggests the company is growing rapidly but may have a risk of toppling (i.e. failing before exit). Burn rate can change drastically during the early life of the startup. Of course burn rate needs the context of revenues and reserves (and latest valuation is helpful as a benchmark, but you may be able to calculate that from the restricted share offer made to you). High burn rate might not be bad, if the company is booming along towards a successful exit. You might also want to look at some sort of business plan or info sheet, rather than financials alone. You want to gauge the size of the market (most startups like to claim 9- or 10-figure markets, so even a few percentage points of market share will hit revenue into the 8-figures). You'll also have to have a sense for the business plan and model and whether it's a good investment or a ridiculous rehash (\"\"it's Twitter for dogs meets Match.com for Russian Orthodox singles!\"\"). In other words, appraise it like an investor or VC and figure out whether it's a prospect for decent return. Typical things like competition, customer acquisition costs, manufacturing costs are relevant depending on the type of business activity. Of course, I wouldn't ignore psychology (note that economists and finance people don't generally condone the following sort of emotional thinking). If you don't invest in the company and it goes big, you'll kick yourself. If it goes really big, other people will either assume you are rich or feel sad for you if you say you didn't get rich. If you invest but lose money, it may not be so painful as not investing and losing out the opportunity. So if you consider the emotional aspect of personal finance, it may be wise to invest at least a little, and hedge against \"\"woulda-shoulda\"\" syndrome. That's more like emotional advice than hard-nosed financial advice. So much of the answer really depends on your particular circumstances. Obviously you have other considerations like whether you can afford the investment, which will be on you to decide. And of course, the § 83(b) election is almost always recommended in these situations (which seems to be what you are saying) to convert ordinary income into capital gain. You may also need cash to pay any up-front taxes on the § 83(b) equity, depending on your circumstances.\"", "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": "b4ae38af3242ec23e15bb3730a65c228", "text": "\"I think you've got basics, but you may have the order / emphasis a bit wrong. I've changed the order of the things you've learned in to what I think is the most important to understand: Owning a stock is like owning a tiny chunk of the business Owning stock is owning a tiny chunk of the business, it's not just \"\"like\"\" it. The \"\"tiny chunks\"\" are called shares, because that is literally what they are, a share of the business. Sometimes shares are also called stocks. The words stock and share are mostly interchangeable, but a single stock normally means your holding of many shares in a business, so if you have 100 shares in 1 company, that's a stock in that company, if you then buy 100 shares in another company, you now own 2 stocks. An investor seeks to buy stocks at a low price, and sell when the price is high. Not necessarily. An investor will buy shares in a company that they believe will make them a profit. In general, a company will make a profit and distribute some or all of it to shareholders in the form of dividends. They will also keep back a portion of the profit to invest in growing the company. If the company does grow, it will grow in value and your shares will get more valuable. Price (of a stock) is affected by supply/demand, volume, and possibly company profits The price of a share that you see on a stock ticker is the price that people on the market have exchanged the share for recently, not the price you or I can buy a share for, although usually if people on the market are buying and selling at that price, someone will buy or sell from you at a similar sort of price. In theory, the price will be the companies total value, if you were to own the whole thing (it's market capitalisation) divided by the total number of shares that exist in that company. The problem is that it's very difficult to work out the total value of a company. You can start by counting the different things that it owns (including things like intellectual property and the knowledge and experience of people who work there), subtract all the money it owes in loans etc., and then make an allowance for how much profit you expect the company to make in the future. The problem is that these numbers are all going to be estimates, and different peoples estimates will disagree. Some people don't bother to estimate at all. The market makers will just follow supply and demand. They will hold a few shares in each of many companies that they are interested in. They will advertise a lower price that they are willing to buy at and a higher price that they will sell at all the time. When they hold a lot of a share, they will price it lower so that people buy it from them. When they start to run out, they will price it higher. You will never need to spend more than the market makers price to buy a share, or get less than the market makers price when you come to sell it (unless you want to buy or sell more shares than they are willing to). This is why stock price depends on supply and demand. The other category of people who don't care about the companies they are trading are the high speed traders. They just look at information like the past price, the volume (total amount of shares being exchanged on the market) and many other statistics both from the market and elsewhere and look for patterns. You cannot compete with these people - they do things like physically locate their servers nearer to the stock exchanges buildings to get a few milliseconds time advantage over their competitors to buy shares quicker than them.\"", "title": "" }, { "docid": "b81f264b75ed4b2f443dd090e38ece66", "text": "Every listed company needs to maintain book of accounts, when you are investing in companies you would have to look at what is stated in the books and along with other info decide to invest in it.", "title": "" }, { "docid": "4edced1ac9a8249708dd0ee8f3852303", "text": "While on the surface it might not make sense to pay more than one dollar to get just one dollar back, the key thing is that a good company's earnings are recurring each year. So, you wouldn't just be paying for the $1 dollar of earnings per share this year, but for the entire future stream of earnings per share, every year, in perpetuity -- and the earnings may grow over time too (if it remains a good company.) Your stock is a claim on a portion of the company's future. The brighter and/or more certain that future, the more investors are willing to pay for each recurring dollar of earnings. And the P/E ratio tells you, in effect, how many years it might take for your investment to earn back what you paid – assuming earnings remain the same. But you would hope the earnings would grow, too. When a company's earnings are widely expected to grow, the P/E for the stock is often higher than average. Bear in mind you don't actually receive the company's earnings, since management often decides to reinvest all or a portion of it to grow the company. Yet, many companies do pay a portion of earnings out as dividends. Dividends are money in your pocket each year.", "title": "" }, { "docid": "b1fd26ee58a9ba5d07e635ce82827285", "text": "Good questions. I can only add that it may be valuable if the company is bought, they may buy the options. Happened to me in previous company.", "title": "" }, { "docid": "cbb2f50c03a1c5041c58a7725a59c60d", "text": "Patrick, This article points out three likely effects (direct and indirect) sovereign default can have on the individual: http://tutor2u.net/blog/index.php/economics/comments/the-sovereign-default-option-is-costly/ This looks at how a default may not look like a default - even if it is. But again, how defaults can impact the man in the street: http://online.wsj.com/article/SB10001424052748703323704574602030789251824.html The fascinating Argentine default is described in a blow-by-blow format here, including brief references to things like unemployment and personal savings: http://theinflationist.com/sovereign-default/argentine-sovereign-default-2002-argentina-financial-crisis Remember, though. Not all defaults are the same. And a modern-European country's default may look very different to what has occurred elsewhere.", "title": "" } ]	fiqa

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