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392098b2421204d7ae800fa7292f143a	How foreign cash is beneficial for a country?	[ { "docid": "fd24a245b63135a04525e1dadd98ca96", "text": "Let me ask you another question: if that person stayed at home and made a widget instead, would exporting that widget benefit his home country? There is no difference, economically, between the two situations. A foreign worker sending home remittances is no different from a local manufacturer exporting their products. Both are earning export dollars for themselves and their home countries. Is this a good thing or a bad thing? Clearly, the answer is yes - this is a good thing or a bad thing but we cannot know which in isolation. However, in general, foreign worker remittances are overwhelmingly beneficial for the host (which gets work done that otherwise would not be done) and the source (which gets export income. With reference to your particular question about local inflation, a rise in exports causes appreciation in the exchange rate i.e. local currency becomes more expensive with respect to (in this case) the Euro. Appreciation in the exchange rate actually puts downward pressure on inflation. However, the absence of our worker from the local economy puts upward pressure on local wages and and hence inflation. Both of these effects are small and other factors will dominate them.", "title": "" } ]	[ { "docid": "22782299d51d74e14dcc1a8511ee2749", "text": "So if a country forces their savings onto another country, say the U.S., the U.S. would have to absorb those savings somehow. If there were enough productive investments available, then this would be a good thing. But if there aren't enough productive investments available but the savings are still forced upon the U.S. it would seem that it would inevitably lead to some kind of a debt bubble for the U.S.", "title": "" }, { "docid": "fb8aa7a528971a6af0168fae78a3e9a4", "text": "I can see that dollars are more useful than Yuan (after all, in my example, Russia may wish to buy from countries other than China). What proportion of, say, international trade by Japan with countries other than the US is conducted in dollars?", "title": "" }, { "docid": "ca0fd39e8414dd94c6d787fd00e425f7", "text": "Taking into account your POV I would recommend mostly goods that will be harder to obtain, precious metals (not only gold) and forex (although the forex aproach depends on some other country not having troubles with it's own economy which in a world as interconnected as ours by internet and all the new technologies doesn't seem likely) i highly recommend silver which is cheaper than gold and is stable enough in the long term", "title": "" }, { "docid": "a563599240df32f6f33488f04190e1bb", "text": "Yes. When the currency of a country appreciates, it benefits some groups and disadvantages others. In particular, exporters suffer when a currency increases in value relative to other countries. In a country like the US, where exporters are small relative to the economy, this isn't a big deal. In germany, where exporters make up a big part of the economy, a currency increasing in value leads to large numbers of layoffs and other negative net effects to the economy.", "title": "" }, { "docid": "06347da072b82d84f07b4c9d441f3931", "text": "Assuming US,but the principles apply in many (not all) places: If the bills are legitimate and issued by the federal government, they're legal tender and you can spend or deposit them. Old bills, especially silver certificates, may be worth more than their face value to collectors (or may not). Bills issued by banks, by the confederate states, or something like that have only collector's value (which will vary depending on exactly what they are and their condition). The value of money from another country will depend on the issuing country and exchange rates, of course. There's nothing wrong with windfall cash. The IRS may ask some nosy questions about it to make sure you aren't trying to hide something, but if you aren't deliberately trying to cheat them or hide something illegal that's generally harmless at worst.", "title": "" }, { "docid": "65f64df82912de866c806551dee668fe", "text": "\"You are violating the Uncovered Interest Rate Parity. If Country A has interest rate of 4% and Country B has interest rate of 1%, Country B's expected exchange rate must appreciate by 3% compared to spot. The \"\"persistent pressure to further depreciate\"\" doesn't magically occur by decree of the supreme leader. If there is room for risk free profit, the entire Country B would deposit their money at Country A, since Country A has higher interest rate and \"\"appreciates\"\" as you said. The entire Country A will also borrow their money at Country B. The exception is Capital Control. Certain people are given the opportunity to get the risk free profit, and the others are prohibited from making those transactions, making UIP to not hold.\"", "title": "" }, { "docid": "bffafb1c110a47aebd15ce939c82941e", "text": "This is more of an economics question than personal finance. That said, I already started writing an answer before I noticed, so here are a few points. I'll leave it open for others to expand the list. Advantages Disadvantages Advantages Disadvantages The flip-side to the argument that more users means more stability is that the impact of a strong economy (on the value of the currency) is diluted somewhat by all the other users. Indeed, if adopted by another country with similar or greater GDP, that economy could end up becoming the primary driver of the currency's value. It may be harder to control counterfeiting. Perhaps not in the issuing country itself, but in foreign countries that do not adopt new bills as quickly.", "title": "" }, { "docid": "cc52b67a7168a4e37da8e29c52ab92cf", "text": "Assuming you are allowed to trade freely, you can use free labor to pull money into your economy from outside your borders. This net influx of money will increase your overall wealth. I has the double effect of allowing you to undercut any competitor and having none of your people spending their earnings outside your borders. Because of this, it would be a mistake for anyone to enter into trade with you.", "title": "" }, { "docid": "b6f43e10da2e90d65bc9494e1e120d6b", "text": "When I traveled to Germany, I found it was much better to get cash at ATMs and use credit cards. The exchange rate was better than exchanging dollars for Euros at an exchange center. Just make sure you have enough cash to get from the airport to whereever your are traveling. The airport exchange rates were terrible.", "title": "" }, { "docid": "4fdc05017bf72e9d071694448159aa6c", "text": "If you prefer the stock rather than cash, you might find it easier to take the cash, report it, and then buy the same stock from within your own country.", "title": "" }, { "docid": "674ad41569cab3cb71035f7bafdfd946", "text": "Apart from some of the excellent things others say, you could borrow money in AUD and invest that in another currency (that's risky but interesting) if the AUD interest rate is low and the other countries interest rate is higher, you'll eventually win. Also, look at what John Paulson did in 2007, 2008... I wish I'd thought of that when I was in your position (predicting a housing crisis)", "title": "" }, { "docid": "a854b7f1fb9a4c4cbd73fad4b1fced68", "text": "Essentially imported goods from the country (in this case the US) that is improving against your local currency will become more expensive. For the most part, that is the only practical effect on you on an individual financial level.", "title": "" }, { "docid": "12f117ba02a58310b9e6628c5a394b76", "text": "Well i'm not saying it will be terrible, i could have said this wrong but it might be terrible. Dollar is not the international currency just in oil but mostly everything. Different countries uses dollar to trade, this is one of the core reasons of US economy being the strongest. US should not be tolerant about this sort of stuff since if this trend continuous it could be disastrous.", "title": "" }, { "docid": "0b0479b36934e68400c8ef31edb2983f", "text": "Thank God. I mean, I like having some kind of spending power... But not at the expense of my taxes being used to bombs kids in countries who's leaders try to reject the dollar. Unfortunately, the international banking cartels are invested in Yen and Rubbles, so they win and we all lose no matter what. If only the people of all three nations were able to see past nationalism and devise a system that doesn't rely on competition for currency dominance....", "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": "" } ]	fiqa
36d2b24722e4fbec511e8a7e9a5b026d	How will Brexit affect house mortgages?	[ { "docid": "35d91a387845c71bad1e0be0ab7a2293", "text": "\"Only you can decide whether it's wise or not given your own personal circumstances. Brexit is certainly a big risk, and noone can really know what will happen yet. The specific worries you mention are certainly valid. Additionally you might find it hard to keep your job or get a new one if the economy turns bad, and in an extreme \"\"no deal\"\" scenario you might find yourself forced to leave - though I think that's very unlikely. House prices could also collapse leaving you in \"\"negative equity\"\". If you're planning on staying in the same location in the UK for a long time, a house tends to be a worthwhile investment, particularly as you always need somewhere to live, so owning it is a \"\"hedge\"\" against prices rising. Even if prices do fall, you do still have somewhere to live. If you're planning on going back to your home country at some point, that reduces the value of owning a house. If you want to reduce your risk, consider getting a mortgage with a long-term fixed rate. There are some available for 10 years, which I'd hope would be enough to get us over most of the Brexit volatility.\"", "title": "" }, { "docid": "9de7969b93bd5ae445b30f4b32d0c84d", "text": "Nobody can predict the affects of Brexit but it is wise to consider them. We saw the pound weaken after the vote to leave and it is possible the pound will weaken further after Brexit and this devaluation could be quite dramatic. If that happens it is likely to increase inflation, UK inflation has gone from under 1% around the time of the referendum to 3% today and it could well go higher. https://www.rateinflation.com/inflation-rate/uk-historical-inflation-rate If inflation continues to increase, the Bank of England is likely to put up interest rates, as it has historically done this to hedge against inflation. We have been living in a world of artificially low interest rates since the global crash of 2008 as the BoE has tried to stimulate recovery with lower rates. The rates cannot continue at this level if inflation starts to rise. http://www.thisismoney.co.uk/money/news/article-2387744/Base-rate-vs-inflation-chart-How-tell-things-really-got-better.html That in turn will put up mortgage rates. So for example if you have a £100k mortgage at 3.92% (currently this is a reasonable rate to have) your repayments will be £523 a month. If your mortgage rate goes up to say 7% then your repayments are £707 a month, if it goes up to 10% then it's £909 a month and so on. There is a mortgage calculator you can use to try playing with different amounts here: https://www.moneysavingexpert.com/mortgages/mortgage-rate-calculator My advice would therefore be try to get as small a mortgage as you can and make sure you can afford it quite comfortably, in case rates go up and you need to find a few hundred pounds a month extra. There are other risks from Brexit as well, house prices could fall as people decide not to buy properties due to excessive interest rates! Overall nobody knows what will happen but it is good to be planning ahead for all eventualities. ** I am not a financial advisor, this advice is given in good faith but with no financial qualification.", "title": "" } ]	[ { "docid": "c7a96cdfac72aa243a64d2ba596c51a3", "text": "Some of the factors that will act on house prices are: There will likely be a recession in that country, which will lower incomes and probably lower housing prices. It will likely be harder to get credit in that country so that too will increase demand and depress demand for housing (cf the USA in 2010.) If Greece leaves the Euro, that will possibly depress future economic growth, through decreased trade and investment, and possibly decreased transfer payments. Eventually the budget will need to come back into balanced which also is likely to push down house prices. In some European countries (most famously Spain) there's been a lot of speculative building which is likely to hang over the market. Both countries have governance and mandate problems, and who knows how long or how much turmoil it will take to sort that out. Some of these factors may already be priced in, and perhaps prices are already near what will turn out to be the low. In the Euro zone you have the nearly unprecedented situation of the countries being very strongly tied into another currency, so the typical exchange-rate movements that played out in Argentina cannot act here. A lot will depend on whether the countries are bailed out, or leave the Euro (and if so how), etc. Typically inflation has been a knock-on effect of the exchange rate moves so it's hard to see if that will happen in Greece. Looking back from 2031, buying in southern Europe in 2011 may turn out to be a good investment. But I don't think you could reasonably call it a safe defensive investment.", "title": "" }, { "docid": "914dcbba4ab9d561b1215bcf16e4db8c", "text": "\"This is the best tl;dr I could make, [original](http://www.bbc.co.uk/news/business-40934138) reduced by 61%. (I'm a bot) *** > The average price of a home in the UK went up by nearly &pound;2,000 to &pound;223,000 in June, according to official figures. > The Office for National Statistics figures show the wide variation in price movements across the UK. In the month of June, the average price of London home fell &pound;3,000 to &pound;482,000, while a house in the North East of England gained &pound;2,000 to &pound;130,000. > The biggest change was in Orkney where the average price is 28% higher than a year ago at &pound;148,000. * [Extended Summary*](http://np.reddit.com/r/autotldr/comments/6txyxk/house_price_growth_holding_steady/) \| [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~191667 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: price^#1 average^#2 while^#3 June^#4 London^#5\"", "title": "" }, { "docid": "8cc2389786fff79f3147cc8c27172e0e", "text": "Personal loans are typically more expensive (have higher interest) than mortgages, because they are not backed by an immovable asset. So you should reconsider the decision to not want a mortgage; it would be cheaper. Aside from that, once you get a personal loan, you are free to do with it whatever you want; this includes sending it to your parents, buying something, gambling it away in Vegas, or take out cash and burn it. So, yes, you can. Sending money from the UK to other EU countries should be easy and simple, once it is in your account, your bank can help you to make the transfer. I assume you understand that if your parents walk away with the money, you are left holding the bag. You are taking the full risk, and you will have to pay it back.", "title": "" }, { "docid": "b8bc5ac6fc7eafb3ec03c29d82e651ec", "text": "\"The London Stock Exchange offers a wealth of exchange traded products whose variety matches those offered in the US. Here is a link to a list of exchange traded products listed on the LSE. The link will take you to the list of Vanguard offerings. To view those offered by other managers, click on the letter choices at the top of the page. For example, to view the iShares offerings, click on \"\"I\"\". In the case of Vanguard, the LSE listed S&P500 ETF is traded under the code VUSA. Similarly, the Vanguard All World ETF trades under the code VWRL. You will need to be patient viewing iShares offerings since there are over ten pages of them, and their description is given by the abbreviation \"\"ISH name\"\". Almost all of these funds are traded in GBP. Some offer both currency hedged and currency unhedged versions. Obviously, with the unhedged version you are taking on additional currency risk, so if you wish to avoid currency risk then choose a currency hedged version. Vanguard does not appear to offer currency hedged products in London while iShares does. Here is a list of iShares currency hedged products. As you can see, the S&P500 currency hedged trades under the code IGUS while the unhedged version trades under the code IUSA. The effects of BREXIT on UK markets and currency are a matter of opinion and difficult to quantify currently. The doom and gloom warnings of some do not appear to have materialised, however the potential for near-term volatility remains so longs as the exit agreement is not formalised. In the long-term, I personally believe that BREXIT will, on balance, be a positive for the UK, but that is just my opinion.\"", "title": "" }, { "docid": "cf78976a18395e57a7dca605637a6e0c", "text": "\"Not sure why the downvote - seems like a fair question to me. Who owns a house and in what proportions can be totally separate from who is named on the mortgage. There are two ways to do this - one way would be for you loan them the money first under a separate contract, which you should have a solicitor draw up; then they buy the house themselves. The contract would state the terms for repayment of the loan, which could be e.g. no repayment due until the sale of the house at which point the original amount is returned plus interest equivalent to the growth in value of the house between purchase and sale (or whatever). You'd need to be clear about what happened if the house lost value or they ended up in a negative equity situation. The other option is where you are directly a party to the purchase of the house and are named as part owners on the deeds. Again the solicitor who is handling the house purchase for them would help with the paperwork. In either case you would need to clear this arrangement with the mortgage company to make sure they were OK with it. To answer your specific questions in order: - Yes, they would still be eligible for the Help To Buy ISAs (assuming that is what you are referring to) even though you would not be - I'm not sure what \"\"penalty\"\" you are referring to. You'd have to pay tax on any income or capital gain you made from the deal. - No-one can say whether this is a good deal for you without knowing a great deal more about your individual circumstances (and even then, any such advice you would get on here is worth as much as you pay for it.... if in doubt, consult an IFA.)\"", "title": "" }, { "docid": "c68d769428eb86677848174ed88fdd4a", "text": "\"I think the basic question you're asking is whether you'd be better off putting the $20K into an IRA or similar investment, or if your best bet is to pay down your mortgage. The answer is...that depends. What you didn't share is what your mortgage balance is so that we can understand how using that money to pay down the mortgage would affect you. The lower your remaining balance on the mortgage, the more impact paying it down will affect your long-term finances. For example, if your remaining principal balance is more than $200k, paying down $20k in principal will not have as significant an effect as if you only have $100k principal balance and were paying down $20k of that. To me, one option is to put the $20k toward mortgage principal, then perhaps do a refinance on your remaining mortgage with the goal of getting a better interest rate. This would double the benefit to you. First, your mortgage payment would be lower by virtue of a lower principal balance (assuming you keep the same term period in your refinanced mortgage as you have now. In other words, if you have a 15-year now, your new mortgage should be 15 years also to see the best effect on your payment). Further, if you can obtain a lower interest rate on the new loan, now you have the dual benefit of a lower principal balance to pay down plus the reduced interest cost on that principal balance. This would put money into your pocket immediately, which I think is part of your goal, although the question does hinge on what you'd pay in points and fees for a refinance. You can invest, but with that comes risk, and right now may not be the ideal time to enter the markets given all of the uncertainties with the \"\"Brexit\"\" issue. By paying down your mortgage principal, even if you do nothing else, you can save yourself considerable interest in the long term which might be more beneficial than the return you'd get from the markets or an IRA at this point. I hope this helps. Good luck!\"", "title": "" }, { "docid": "779300a60e57ff333c291551940b1bbd", "text": "\"Please clarify your question. What do you mean by \"\"..loan in Greece\"\"? If you are referring to taking a mortgage loan to purchase residential property in Greece, there are two factors to consider: If the loan originates from a Greek bank, then odds are likely that the bank will be nationalized by the government if Greece defaults. If the loan is external (i.e. from J.P. Morgan or some foreign bank), then the default will certainly affect any bank that trades/maintains Euros, but banks that are registered outside of Greece won't be nationalized. So what does nationalizing mean for your loan? You will still be expected to pay it according to the terms of the contract. I'd recommend against an adjustable rate contract since rates will certainly rise in a default situation. As for property, that's a different story. There have been reports of violence in Greece already, and if the country defaults, imposes austerity measures, etc, odds are there will be more violence that can harm your property. Furthermore, there is a remote possibility that the government can attempt to acquire your private property. Unlikely, but possible. You could sue in this scenario on property rights violations but things will be very messy from that point on. If Greece doesn't default but just exits the Euro Zone, the situation will be similar. The Drachma will be weak and confidence will be poor, and unrest is a likely outcome. These are not statements of facts but rather my opinion, because I cannot peek into the future. Nonetheless, I would advise against taking a mortgage for property in Greece at this point in time.\"", "title": "" }, { "docid": "5a86f8a46f42233c11e7ebf54dfaf9ac", "text": "Regarding the mortgage company, they will want to know where the down payment came from, and as long as you are honest about it, there is no fraud. It's possible that the mortgage company may have some reservations about the deal now that they know where the down payment came from, but that will depend on the size of the deal and other factors. If everyone involved has decent credit, and this is a fairly standard mortgage, it will probably have no impact at all.", "title": "" }, { "docid": "4756eab6ac2200618ce3994a7c1fc7a3", "text": "That really depends on the lender, and in the current climate this is extremely unlikely. In the past it was possible to get a loan which is higher than the value of the house (deposit considered), usually on the basis that the buyer is going to improve the property (extend, renovate, etc.) and this increase the value of the property. Responsible lenders required some evidence of the plans to do this, but less responsible ones simply seem to have given the money. Here in the UK this was often based on the assumption that property value tends to rise relatively quickly anyway so a seemingly-reasonable addition to the loan on top of the current value of the property will quickly be covered. That meant that indeed some people have been able to get a loan which is higher than the cost of the purchase, even without concrete plans to actively increase the value of the property. Today the situation is quite different, lenders are a lot more careful and I can't see this happening. All that aside - had it been possible, is it a good idea? I find it difficult to come up with a blanket rule, it really depends on many factors - On the one hand mortgage interest rates tend to be significantly lower than shorter term interest rates and from that point of view, it makes sense, right?! However - they are usually very long term, often with limited ability to overpay, which means the interest will be paid over a longer period of time.", "title": "" }, { "docid": "b6cbf93cdf03f9730462f5dd3d3dd2d7", "text": "\"Just to get the ball rolling, here's an answer: it won't affect you in the slightest. The pound happened to be tumbling anyway. (If you read \"\"in the papers\"\" that Brexit is \"\"making the pound fall\"\", that's as valuable as anything else you've ever read in the papers.) Currencies go up and down drastically all the time, and there's nothing you can do about it. We by fluke once bought a house in Australia when that currency was very low; over the next couple years the currency basically doubled (I mean per the USD) and we happened to sell it; we made a 1/2 million measured in USD. Just a fluke. I've had the opposite happen on other occasions over the decades. But... Currency changes mean absolutely nothing if you're in that country. The example from (2) was only relevant because we happened to be moving in and out of Aus. My various Australian friends didn't even notice that their dollar went from .5 to 1 in terms of USD (how could it matter to them?) All sorts of things drastically affect the general economy of a given country. (Indeed, note that a falling currency is often seen as a very good thing for a given nation's economy: conspiracy theorists in the states are forever complaining that ) Nobody has the slightest clue if \"\"Brexit\"\" will be good bad or indifferent for the UK. Anything could happen. It could be the beginning of an incredible period of growth for the UK (after all, why does Brussels not want your country to leave - goodwill?) and your house could triple in value in a year. Or, your house price could tumble to half in a year. Nobody has the slightest clue, whatsoever about the effects on the \"\"economy\"\" of a country going forward, of various inputs.\"", "title": "" }, { "docid": "d9a73b096209f7d1ca00be3848c15704", "text": "The City of London economy is entirely dependent on total, unhindered access to the EU. Any blockages and it's over. No deal, no matter how good is going to replicate the City of London being in the EU. It may be a substantial financial centre for a few years after Brexit but that will very quickly evaporate. Libor would have been something keeping banks there, but with that now gone there is nothing else.", "title": "" }, { "docid": "d48578895b425cd15eff32ed8cc1d594", "text": "\"This is a hard question to answer. Government debt and mortgages are loosely related. Banks typically use yields on government bonds to determine mortgage interest rates. The banks must be able to get higher rates from the mortgage otherwise they would buy government bonds. Your question mentions default so I'm assuming a country has reneged on its promise to pay either the principal or interest on government bonds. The main thing to consider is \"\"Who does not get their money?\"\". In other words, who does the government decide not to pay. This is the important part. The government will have some money so they could pay some bond holders. They must decide who to shaft. For example, let's look at who holds Greek government debt. Around 70% of Greek government debt is held outside Greece. See table below. The Greek government could decide to default only on the debt to foreign holders. In that case the banks in France and Switzerland would take the loss on their bonds. This could cause severe problems in France and Switzerland depending on the percentage of Greek bonds that make up the banks' assets. Greek banks would still face losses, however, since the price of their Greek bond holdings would drop sharply when the government defaults. Interestingly, the losses for the Greek banks may be smaller than the losses faced by the French and Swiss banks. This is usually the favored option chosen by government since the French and Swiss don't vote in Greece. Yields on Greek government bonds would rise dramatically. If your Greek mortgage is an adjustable rate mortgage then you could see some big adjustments upward. If you live in France or Switzerland then the bank that owns your mortgage may go under if Greece defaults. During liquidation the bank will sell their assets which includes mortgages and you will probably not notice any difference in your mortgage. As I stated earlier: this is a hard question to answer since the two financial instruments involved (bonds and mortgages) are similar but may or may not be related.\"", "title": "" }, { "docid": "9127b715c6be43e9ff0896058ac85785", "text": "\"Watching all the news about the Euro, I \"\"feel\"\" that maybe the British made the right choice about staying away. I would feel annoyed if I was in one of the other countries (e.g. Ireland) and the deal had been rammed through and imposed on me. The interesting thing for me - In Ireland's case they need to have a refurendum. I wonder if they will accept this? I am not an expert on european fiscal union or anything, but this new treaty has been a surprise to me - almost bolting the door after the horse has bolted\"", "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": "6f1551afd1abb120bab92dc358d48309", "text": "One thing I like to do every once in a while is look at the day's market movers. It's a list of symbols that had huge movement. There tend to be a couple of 50+% movers every time I look. In fact today I see ATV moved up 414.48%: So there it is—doubling your investment in one day and then some is technically possible. The problem is that the market movers chart also has an equal number of symbols that had major movements in the other direction. Today's winner is: SPCB lost 40% in one day, and thats the problem. If you invest in anything that can double your investment in one year, it can also halve your investment in one year. Or do better. Or do worse. You really don't know because the volatility is so high.", "title": "" } ]	fiqa
0e0c488c2492bacd13d83f0123d0e6e1	How would bonds fare if interest rates rose?	[ { "docid": "f1929e88f0214dc218452d12e55a4339", "text": "\"1. Interest rates What you should know is that the longer the \"\"term\"\" of a bond fund, the more it will be affected by interest rates. So a short-term bond fund will not be subject to large gains or losses due to rate changes, an intermediate-term bond fund will be subject to moderate gains or losses, and a long-term bond fund will be subject to the largest gains or losses. When a book or financial planner says to buy \"\"bonds\"\" with no other qualification, they almost always mean investment-grade intermediate-term bond funds (or for individual bonds, the equivalent would be a bond ladder averaging an intermediate term). If you want technical details, look at the \"\"average duration\"\" or \"\"average maturity\"\" of the bond fund; as a rough guide, if the duration is 10, then a 1% change in interest rates would be a 10% gain or loss on the fund. Another thing you can do is look at long-term (10 years or ideally longer) performance history on some short, intermediate, and long term bond index funds, and you can see how the long term funds bounced around more. Non-investment-grade bonds (aka junk bonds or high yield bonds) are more affected by factors other than interest rates, including some of the same factors (economic booms or recessions) that affect stocks. As a result, they aren't as good for diversifying a portfolio that otherwise consists of stocks. (Having stocks, investment grade bonds, and also a little bit in high-yield bonds can add diversification, though. Just don't replace your bond allocation with high-yield bonds.) A variety of \"\"complicated\"\" bonds exist (convertible bonds are an example) and these are tough to analyze. There are also \"\"floating rate\"\" bonds (bank loan funds), these have minimal interest rate sensitivity because the rate goes up to offset rate rises. These funds still have credit risks, in the credit crisis some of them lost a lot of money. 2. Diversification The purpose of diversification is risk control. Your non-bond funds will outperform in many years, but in other years (say the -37% S&P 500 drop in 2008) they may not. You will not know in advance which year you'll get. You get risk control in at least a few ways. There's also an academic Modern Portfolio Theory explanation for why you should diversify among risky assets (aka stocks), something like: for a given desired risk/return ratio, it's better to leverage up a diverse portfolio than to use a non-diverse portfolio, because risk that can be eliminated through diversification is not compensated by increased returns. The theory also goes that you should choose your diversification between risk assets and the risk-free asset according to your risk tolerance (i.e. select the highest return with tolerable risk). See http://en.wikipedia.org/wiki/Modern_portfolio_theory for excruciating detail. The translation of the MPT stuff to practical steps is typically, put as much in stock index funds as you can tolerate over your time horizon, and put the rest in (intermediate-term investment-grade) bond index funds. That's probably what your planner is asking you to do. My personal view, which is not the standard view, is that you should take as much risk as you need to take, not as much as you think you can tolerate: http://blog.ometer.com/2010/11/10/take-risks-in-life-for-savings-choose-a-balanced-fund/ But almost everyone else will say to do the 80/20 if you have decades to retirement and feel you can tolerate the risk, so my view that 60/40 is the max desirable allocation to stocks is not mainstream. Your planner's 80/20 advice is the standard advice. Before doing 100% stocks I'd give you at least a couple cautions: See also:\"", "title": "" }, { "docid": "7755f8c87469a7bce12e478865efa8ef", "text": "When interest rates rise, the price of bonds fall because bonds have a fixed coupon rate, and since the interest rate has risen, the bond's rate is now lower than what you can get on the market, so it's price falls because it's now less valuable. Bonds diversify your portfolio as they are considered safer than stocks and less volatile. However, they also provide less potential for gains. Although diversification is a good idea, for the individual investor it is far too complicated and incurs too much transaction costs, not to mention that rebalancing would have to be done on a regular basis. In your case where you have mutual funds already, it is probably a good idea to keep investing in mutual funds with a theme which you understand the industry's role in the economy today rather than investing in some special bonds which you cannot relate to. The benefit of having a mutual fund is to have a professional manage your money, and that includes diversification as well so that you don't have to do that.", "title": "" } ]	[ { "docid": "ba635a0e2132b69b629c4d6de7a2b27b", "text": "Bond prices move inversely to their yields. So when you sell bonds and create a supply side deluge, bond prices will fall. Since bond prices are falling, yields go up. (The dollar amount that the bond pays out is the same. It's simply that since the bond price has fallen, that dollar amount paid out expressed in percentage terms of the bond price has risen).", "title": "" }, { "docid": "96cec02c99cd390afdf4af6154c169c1", "text": "\"So after you've learned about bonds, you might find yourself learning about interest rates. You might, in fact, discover that there's no such thing as a \"\"correct\"\" interest rate, or even a true \"\"market\"\" interest rate. PS We already had the housing bubble. It has come, and gone. What new bubble are you referring to?\"", "title": "" }, { "docid": "732d7e94a01d2d9f4a5574b742e151da", "text": "Long term gov't bonds fluctuate in price with a seemingly small interest rate fluctuation because many years of cash inflows are discounted at low rates. This phenomenon is dulled in a high interest rate environment. For example, just the principal repayment is worth ~1/3, P * 1/(1+4%)^30, what it will be in 30 years at 4% while an overnight loan paying an unrealistic 4% is worth essentially the same as the principal, P * 1/(1+4%)^(1/365). This is more profound in low interest rate economies because, taking the countries undergoing the present misfortune, one can see that their overnight interest rates are double US long term rates while their long term rates are nearly 10x as large as US long term rates. If there were much supply at the longer maturities which have been restrained by interest rates only manageable by the highly skilled or highly risky, a 4% increase on a 30% bond is only about a 20% decline in bond price while a 4% increase on a 4% bond is a 50% decrease. The easiest long term bond to manipulate quantitatively is the perpetuity where p is the price of the bond, i is the interest payment per some arbitrary period usually 1 year, and r is the interest rate paid per some arbitrary period usually 1 year. Since they are expressly linked, a price can be implied for a given interest rate and vice versa if the interest payment is known or assumed. At a 4% interest rate, the price is At 4.04%, the price is , a 1% increase in interest rates and a 0.8% decrease in price . Longer term bonds such as a 30 year or 20 year bond will not see as extreme price movements. The constant maturity 30 year treasury has fluctuated between 5% and 2.5% to ~3.75% now from before the Great Recession til now, so prices will have more or less doubled and then reduced because bond prices are inversely proportional to interest rates as generally shown above. At shorter maturities, this phenomenon is negligible because future cash inflows are being discounted by such a low amount. The one month bill rarely moves in price beyond the bid/ask spread during expansion but can be expected to collapse before a recession and rebound during.", "title": "" }, { "docid": "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": "4c020f3c37abccf66e1d71bf9f09dc55", "text": "what will happen to the valuation of Tom's bond holdings after the equity crash? This is primarily opinion based. What will happen is generally hard to predict. Bond Price Bump due to Demand: Is a possible outcome; this depends on the assumption that the bonds in the said country are still deemed safe. Recent Greece example, this may not be true. So if the investors don't believe that Bonds are safe, the money may move into Real Estate, into Bullion [Gold etc], or to other markets. In such a scenario; the price may not bump up. Bond Price Decline due to Rising Interest Rates: On a rising interest rates, the long-term bonds may loose in value while the short term bonds may hold their value. Related question How would bonds fare if interest rates rose?", "title": "" }, { "docid": "b67743cb4e5d07b3227567e526be37de", "text": "\"The interest rate offered by a bond is called the nominal interest rate. The so-called real interest rate is the nominal interest rate minus the rate of inflation. If inflation is equal to or greater than the nominal rate at any given time, the REAL interest rate is zero or negative. We're talking about a ten year bond. It's possible for the real interest rate to be negative for one or two years of the bond's life, and positive for eight or nine. On the other hand, if we have a period of rising inflation, as in the 1970s, the inflation rate will exceed the (original) interest rate in most years, meaning that the real interest rate on the ten year bond will be negative over its whole life. People lost \"\"serious\"\" money on bonds (and loans) in the 1970s. In such situations, the BORROWERS make out. That is, they borrow money at low rates, earn inflation (plus a little more) pay back inflated dollars, and pocket the difference. For them, the money is \"\"free.\"\"\"", "title": "" }, { "docid": "6e4bbd3e7d72c51119d1690928f018d4", "text": "\"The federal funds rate is one of the risk-free short-term rates in the economy. We often think of fixed income securities as paying this rate plus some premia associated with risk. For a treasury security, we can think this way: (interest rate) = (fed funds rate) + (term premium) The term premium is a bit extra the bond pays because if you hold a long term bond, you are exposed to interest rate risk, which is the risk that rates will generally rise after you buy, making your bond worth less. The relation is more complex if people have expectations of future rate moves, but this is the general idea. Anyway, generally speaking, longer term bonds are exposed to more interest rate risk, so they pay more, on average. For a corporate bond, we think this way: (interest rate) = (fed funds rate) + (term premium) + (default premium) where the default premium is some extra that the bond must pay to compensate the holder for default risk, which is the risk that the bond defaults or loses value as the company's prospects fall. You can see that corporate and government bonds are affected the same way (approximately, this is all hand-waving) by changes in the fed funds rate. Now, that all refers to the rates on new bonds. After a bond is issued, its value falls if rates rise because new bonds are relatively more attractive. Its value rises if rates on new bonds falls. So if there is an unexpected rise in the fed funds rate and you are holding a bond, you will be sad, especially if it is a long term bond (doesn't matter if it's corporate or government). Ask yourself, though, whether an increase in fed funds will be unexpected at this point. If the increase was expected, it will already be priced in. Are you more of an expert than the folks on wall-street at predicting interest rate changes? If not, it might not make sense to make decisions based on your belief about where rates are going. Just saying. Brick points out that treasuries are tax advantaged. That is, you don't have to pay state income tax on them (but you do pay federal). If you live in a state where this is true, this may matter to you a little bit. They also pay unnaturally little because they are convenient for use as a cash substitute in transactions and margining (\"\"convenience yield\"\"). In general, treasuries just don't pay much. Young folk like you tend to buy corporate bonds instead, so they can make money on the default and term premia.\"", "title": "" }, { "docid": "1e538c046c14ab86ba88dc26048ac046", "text": "\"What could happen to bonds such as these because of Detroit filing for bankruptcy? Depending on how the courts process Detroit's situation, there could be that some bonds become worthless since they are so low and the city can't pay anything on those low priority debts. Others may get pennies on the dollar. There could also be the case that some bailout comes along that makes the bonds good though I'd say that is a long shot at this point. Are these bonds done for, or will bondholders receive interest payments and eventual payment? I wouldn't suspect that they are done for in the sense of being completely worthless though at the same time, I'd be very careful about buying any of them given that they are likely to be changed a great deal. Could these bonds tend to rise over time after the bankruptcy? Yes, it is possible. If there was some kind of federal or state bailout that is done, the bonds could rise. However, that is one heck of an \"\"if\"\" as you'd need to have someone come to guarantee the bonds in a sense. What similar situations from the past might support this idea? Not that many as this is the biggest municipal bankruptcy ever, but here are a few links that may be useful as a starting point, though keep in mind Detroit's scale is part of the story as it is such a big amount being defaulted:\"", "title": "" }, { "docid": "1cf9c7613a8b1d0fd44de8be4f8b61b0", "text": "Keep in mind there are a couple of points to ponder here: Rates are really low. With rates being so low, unless there is deflation, it is pretty easy to see even moderate inflation of 1-2% being enough to eat the yield completely which would be why the returns are negative. Inflation is still relatively contained. With inflation low, there is no reason for the central banks to raise rates which would give new bonds a better rate. Thus, this changes in CPI are still in the range where central banks want to be stimulative with their policy which means rates are low which if lower than inflation rates would give a negative real return which would be seen as a way to trigger more spending since putting the money into treasury debt will lose money to inflation in terms of purchasing power. A good question to ponder is has this happened before in the history of the world and what could we learn from that point in time. The idea for investors would be to find alternative holdings for their cash and bonds if they want to beat inflation though there are some inflation-indexed bonds that aren't likely appearing in the chart that could also be something to add to the picture here.", "title": "" }, { "docid": "3d5f5f1829782f7f48ca417c3f0e1b75", "text": "Is your question academic curiosity or are you thinking of buying bonds? Be aware that bond interest rates are near all-time lows, and if interest rates were to rise, the prices of bonds could fall. Those buying bonds today are taking unusually large risk of capital loss.", "title": "" }, { "docid": "ccaa2d226cb5adbec4f42d377dedfa7a", "text": "Yes, bond funds are marked to market, so they will decline as the composition of their holdings will. Households actually have unimpressive relative levels of credit to equity holdings. The reason why is because there is little return on credit, making it irrational to hold any amount greater than to fund future liquidity needs, risk adjusted and time discounted. The vast majority of credit is held by insurance companies. Pension funds have large stakes as well. Banks hold even fewer bonds since they try to sell them as soon as they've made them. Insurance companies are forced to hold a large percentage of their floats in credit then preferred equity. While this dulls their returns, it's not a large problem for them because they typically hold bonds until maturity. Only the ones who misprice the risk of insurance will have to sell at unfavorable prices. Being able to predict interest rates thus bond prices accurately would make one the best bond manager in the world. While it does look like inflation will rise again soon just as it has during every other US expansion, can it be assured when commodity prices are high in real terms and look like they may be in a collapse? The banking industry would have to produce credit at a much higher rate to counter the deflation of all physical goods. Households typically shun assets at low prices to pursue others at high prices, so their holdings of bonds ETFs should be expected to decline during a bond collapse. If insurance companies find it less costly to hold ETFs then they will contribute to an increase in bond ETF supply.", "title": "" }, { "docid": "099a0afe44a9775482bc038a44439a33", "text": "\"Beyond the yield/price relationship, a good intuitive way to understand it is just this: these people control a substantial amount of money that could be essentially loaned to governments. If they feel a particular policy is likely to lead to inflation or default, they may decide not to loan that country any more money. All else being equal, with a smaller supply of possible borrowers, the country will have to pay higher interest to fund a particular amount of debt. Furthermore they may loudly publicly announce that they will no longer lend to that country, in which case other participants may be persuaded that they too should no longer lend at the going rate. What's more, this is somewhat self-fulfilling: as rates go up, the country will spend more money servicing its debt, and will in fact become a worse risk. So I think the thing that gives them their \"\"vigilante\"\" nature is that governments worry they will round up a posse and things will run away. As far as actual incentives, I would welcome more information but I think the main bond vigilante case is that they are basically long on the country but want it to tighten up its policy so their existing holdings don't decline.\"", "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": "65ee8fe1e4d415e65ad72de915f56166", "text": "I would also like to have this discussed, alongside the issue that the US has gone into some type of [recession](https://upload.wikimedia.org/wikipedia/commons/c/c0/US_Treasuries_to_Federal_Funds_Rate.png) roughly every ten year. So with the prospect of a possible recession with a close to 0% cash rate looming, what tools will the FED employ to keep Banks borrowing while maintaining inflation rates?", "title": "" }, { "docid": "1b3288d5c52f3108024698a072fca939", "text": "Possibly but not necessarily, though that can happen if one looks at the US interest rates in the late 1970s which did end with really high rates in the early 1980s. Generally interest rates are raised when inflation picks up as a way to bring down inflation.", "title": "" } ]	fiqa
f305dbefec6375df3bda135987b19a08	I don't understand all this techincal jargon	[ { "docid": "c8c1bb111eb1852049ed03985633ccdb", "text": "Note: While I think the above is a reasonable interpretation, I'm not about to take legal responsibility for it since I'm not a lawyer, if you need serious advice get a professional opinion through appropriate channels.", "title": "" } ]	[ { "docid": "58f4c1710f413ef72f8f51b9bad358c2", "text": "\"Author seems bitter. A person who frequently talks in cliches while never or rarely offering any substantive is a problem; a person who knows his/her stuff and uses cliches as an efficient way to get their point across is not. Purposely trying to avoid common vernacular will do more to make a person sound like they're trying to compensate for a lack of understanding. The only way this article makes sense is if it's just the author venting, otherwise it serves to get supposed halfwits who talk in cliches to find a new way to \"\"fake it until they make it\"\".\"", "title": "" }, { "docid": "d419af8781f06ffe726da8dd53e5cc60", "text": "I've only got the equivalent of an associates (I think). It's a three year program at the Technologist level. It was not an easy program. We lost 1/3 of the remaining class each year it seemed. I think the money is due to the multidisciplinary nature of the work. Chemistry, electronics, mechanics, physics, programming, networking, all at a reasonable level on a daily basis. Plus there is an insane amount of responsibility right out of the gate and some people don't handle that well.", "title": "" }, { "docid": "9c9ec5df8e2be3c8bfb24550d898df4d", "text": "I went to school for something I was interested in. Also, if you looked at what pay rates some people I went to school with took jobs at, you would stick with what works for you just like me. I have no desire to start at $60000 or something. IT certifications can matter in some cases, and I have my share of them, but they again represent a synthetic benchmark. Lots of people are good test takers and can't do things in the real world. A recent project of one of my companies was to install a wired network for 12 users that would allow each user basically unrestricted internet access in a site with a connection with a single external IP address. It was required that the clients not be able to communicate with each other. If you saw the idiotic solution and ridiculous configuration using (that didn't work) using mac address filtering and detection and whatever that a CCNA who used to work for me tried, you would go crazy. Why not just have individual VLANs individually PATed to the external internet interface with no routing between them, and then broken out at the main switch? The config to do that is very very simple and works perfectly. I think it took me 5 minutes to pull out of my ear. To me, experience and prior work trump all.", "title": "" }, { "docid": "de87904e4a5d9a7d5b8186de4e5e1726", "text": "\"I speak from personal experience. Even now, as I type this, I've had very sleep so, I'm on the edge a little, but you don't see me blogging about how ridiculous it is for me to stay up to learn something new, and I'm in my thirties where I've had to do this several year already. That being said, I don't enjoy the long hours, but I do enjoy the problem-solving process, which can be time consuming. I tend to lose track of time when I'm immersed in learning or figuring a problem. Given the fact that tech is ever evolving, no one should ever be surprised to find out that there are long hours involved. It's not busy work. It's part of the learning process. If I figure it out, then it goes on my blog on how I resolved the issue instead of bitching how some VC (that was smart enough to become one) is going to benefit from my time. I'm paid for the work. That is the path I chose to be in. With that in mind, I've worked for seven well known tech firm (most startups) so far. One was my own shop, which I ran for nearly six years. Nowhere did I hear anyone glorify the long hours. If I stayed after hours, I was asked if the work could be delayed, or if I can do it from home. Most managers want their direct reports to be happy, happy equals productivity. I haven't seen what you've observed in the tech firms that I have worked for, but I suspect you might have had a difference experience. In my experience, the work-life balance was always preached in the interest of keeping people happy, despite work-life balance being nothing more than a term coined to get managers out of a sticky situation with HR-related events. Any how, I digress. Amy has applied some deep rationale to her blog post because she felt robbed of her time and possibly her youth. Sadly, her reputation with prospective employers might be influenced by her choice of words in the interest of \"\"fucking glory.\"\" I suppose in the arrogance of youth that's a way of saying fuck glory. There is a part of me that think this will work to her advantage at some point...\"", "title": "" }, { "docid": "99a559edf50ab621e96ad7d7a5f98e48", "text": "\"Lol master in computer science. I'm an idiot. K bro. I'm just calling it like it is. The problem with finance guys is they look at rich guys and accept their word as law. I don't care if this guy is a \"\"VP\"\" or whatever, I care if he has the technical chops to understand the technology. I'm willing to bet money he hasn't read a single paper on the technology, including the original Bitcoin paper, which by the way explicitly says do not speculate on cryptocurrencies (fun fact). I agree it's overvalued, but it's because traders with no idea of the real value of the tech are speculating. Everyone is speculating on crypto, but historically disruptive tech is far undervalued. Think Microsoft when the iPhone was coming out. People were literally saying Apps are stupid and will never take off. At the end of the day I have money in it and we'll see where it goes.\"", "title": "" }, { "docid": "55bd82392b9f03e4190e3d4436bb95c2", "text": "Thank you. Added to my list. This is very very helpful. I knew about the blockchain and the currency. Unfortunately, I'm not a pedant about differentiating between them with capitalising the first letter. I do not, however, understand Ethereum very well at all. So will read up.", "title": "" }, { "docid": "eb662d933c97a3aa5720cc19f72447d4", "text": ">The application will still function until December 15. After that date, users won’t be able to sign in and all data will be deleted, automatically but only people and users with an aim.com email address can access it. This sentence doesn't make any sense to me; am I crazy?", "title": "" }, { "docid": "573857d250c22ecd0a0f9a1a0cacee2e", "text": "Serious question - I don't work in finance, but I always hear how the big finance firms only hire the best and brightest and if they don't know anything, they'll pick it up quickly. How is it possible that those who work in derivatives find it that difficult to explain them. resistite's definition of derivatives is essentially what is taught to any beginner, so I don't quite understand how anyone with a finance background would find it difficult to explain (at least at a very general level).", "title": "" }, { "docid": "c2a9178cd5972a9357e5ffabdef9db61", "text": "I know bitcoin. I don't understand ethereum except that the smart contracts bit is an abstraction of the blockchain concept to expand it beyond a mere ledger to a crypto-enhanced trust system that could be the escrow of the financial world. I still need to read more about it and understand how ICOs are done. I had those sources open already. Some 10 tabs that I still haven't gotten to read in 4 months. Oh well, some incentive to get to it this weekend I guess.", "title": "" }, { "docid": "3ce9de4b86891c9cfe083f9ce0526ab0", "text": "Who wrote this? Just because some people -- and aparantly the author -- don't know the meaning of some of these doesn't mean they are useless phrases. But to close the loop on this… = Always the more theoretical Business Development/Strategy guys who say this, so they can sound thorough? Not. Try: put a process in place to make certain that the things we just decided to do actually get done, either by assigning a third party to or using an automated system to regularly check for failure to progress, and deliver that information to someone that can do something about it. This is low-hanging fruit = Get this done quickly? How about, this can be done quickly and brings disproportionate and important immediate benefits, so we should do it first.", "title": "" }, { "docid": "9b34ae522b52319b6eeb168d76920d13", "text": "\"It's not hard, but it requires effort, and understanding what one is looking at. The social networks aimed at geeks failed or are not exposed to failure (Google+ would be the poster boy) so I assume this network would appeal at general users. The assumption that the general user 1. detects what's happening 2. understands \"\" \"\" 3. cares about \"\" \"\" doesn't hold water. The pool of users with the three characteristics is small, and their attention span is also limited because it's not their own work and they want to be users.\"", "title": "" }, { "docid": "18f66dae6ed740c7b842bf4c81daeba5", "text": "\"I like stuff like this for perspective but I found the article lacking in mechanics as to how to unlearn, how to apply it, etc. I may have missed it though. This reminds me of my CEO challenging everyone at every level to \"\"innovate\"\". Need more of the \"\"how\"\" behind these kinds of objectives. It's great to shed preconceptions, think outside the box, etc but that's been managerial buzz speak for years, and yet we still find ourselves within the box. Focusing on how to get out of it seems like a worthy cause.\"", "title": "" }, { "docid": "2840d9ee82b4c6fb1f2cc39abdf0e4da", "text": ">1. A big project to automate the entry of 2 invoices per month from a supplier. Is would take an employee less than 10 minutes a month to enter those 2 invoices manually into the system. I am curious. Can't they apply the same solution for other suppliers?", "title": "" }, { "docid": "7ef5855ee4b9e0703abdf81e3e3cd16e", "text": ">The heat from the data center cannot be harnessed aside of providing some of this heating, or to help with the heating of domestic water. Overall, exceptionally little of it is useful. I'm admittedly dense, I'm still not clear on why this is.", "title": "" }, { "docid": "27492e780af199c4b68397052c0b660a", "text": "I don't want to be needlessly critical, but I think that you're being downvoted because of how unwieldy that source is. The writer struggles to communicate ideas and concepts clearly - his structures are needlessly verbose, to the extent that arriving at his conclusion in even a single sentence is like slogging through a certain legendary molasses flood. I've dealt with technical language before (graduate economics-type stuff), and there are definitively good and bad ways of addressing dry, technical materials. If your material isn't interesting, then it should at least be clear. That blog post is neither (which is moderately surprising [or maybe it isn't?] considering his seniority at Microsoft).", "title": "" } ]	fiqa
fc892b5456ed438b2f181aefeb893798	Should I buy a house because Mortgage rates are low	[ { "docid": "167b251597ca2ddfdfb431069e0cb380", "text": "The simple answer is that you are correct. You should not purchase a house until you are financially stable enough to do so. A house is an asset that you must maintain, and it can be expensive to do so. Over the long term, you will generally save money by purchasing. However, in any given year you may spend much more money than a similar rental situation - even if the rent is higher than your mortgage payment. If you are financially stable with good cash savings or investments plus a 20% down payment, then anytime is a good time to buy if that is part of your financial plan. As of now in 2016, is is safe to assume that mortgage rates would/should not get back to 10%? Does this mean that one should always buy a house ONLy when mortgage rates are low? Is it worth the wait IF the rates are high right now? The mortgage rates are not the primary driver for your purchase decision. That might be like saying you should buy everything on sale at Target... because it's on sale. Don't speculate on future rates. Also, keep in mind that back when rates were high, banks were also giving much better savings/CD rates. That is all connected. Is refinancing an option on the table, if I made a deal at a bad time when rates are high? You need to make sure you get a loan that allows it. Always do a break-even analysis, looking at the money up-front you spend to refi vs the savings-per-year you will get. This should give you how many years until the refi pays for itself. If you don't plan on being in the house that long, don't do it. How can people afford 10% mortgage? Buying a house they can afford, taking into consideration the entire payment+interest. It should be a reasonable amount of your monthly income - generally 25% or less. Note that this is much less than you will be 'approved' for by most lenders. Don't let good rates suck you into a deal you will regret. Make sure you have the margin to purchase and maintain a home. Consider where you want to be living in 5 years. Don't leave so little financial breathing room that any bump will place you at risk of foreclosure. That said, home ownership is great! I highly recommend it.", "title": "" }, { "docid": "8ff81d9f59ff081e30dc8aab9c2e1e17", "text": "There is a significant tie between housing prices and mortgage rates. As such, don't assume low mortgage rates mean you will be financially better off if you buy now, since housing prices are inversely correlated with mortgage rates. This isn't a huge correlation - it's R-squared is a bit under 20%, at a 1.5-2 year lag - but there is a significant connection there. Particularly in that 10%+ era (see chart at end of post for details) in 1979-1982, there was a dramatic drop in housing price growth that corresponded with high interest rates. There is a second major factor here, though, one that is likely much more important: why the interest rates are at 10%. Interest rates are largely set to follow the Federal Funds rate (the rate at which the Federal Reserve loans to banks). That rate is set higher for essentially one purpose: to combat inflation. Higher interest rates means less borrowing, slower economic growth, and most importantly, a slower increase in the money supply - all of which come together to prevent inflation. Those 10% (and higher!) rates you heard about? Those were in the 70's and early 80's. Anyone remember the Jimmy Carter years? Inflation in the period from 1979 to 1981 averaged over 10%. Inflation in the 70s from 1973 to 1982 averaged nearly 9% annually. That meant your dollar this year was worth only $0.90 next year - which means inevitably a higher cost of borrowing. In addition to simply keeping pace with inflation, the Fed also uses the rate as a carrot/stick to control US inflation. They weren't as good at that in the 70s - they misread economic indicators in the late 1970s significantly, lowering rates dramatically in 1975-1977 (from ~12% to ~5%). This led to the dramatic double-digit inflation of the 1979-1981 period, requiring them to raise rates to astronomic levels - nearly 20% at one point. Yeah, I hope nobody bought a house on a fixed-rate mortgage from 1979-1981. The Fed has gotten a lot more careful over the years - Alan Greenspan largely was responsible for the shift in policy which seems to have been quite effective from the mid 1980s to the present (though he's long gone from his spot on the Fed board). Despite significant economic changes in both directions, inflation has been kept largely under control since then, and since 1991 have been keeping pretty steady around 6% or less. The current rate (around 0%) is unlikely to stay around forever - that would lead to massive inflation, eventually - but it's reasonable to say that prolonged periods over 10% are unlikely in the medium term. Further, if inflation did spike (and with it, your interest rates), salaries tend to spike also. Not quite as fast as inflation - in fact, that's a major reason a small positive inflation around 2-3% is important, to allow for wages to grow more slowly for poorer performers - but still, at 10% inflation the average wage will climb at a fairly similar pace. Thus, you'd be able to buy more house - or, perhaps a better idea, save more money for a house that you can then buy a few years down the road when rates drop. Ultimately, the advice here is to not worry too much about interest rates. Buy a house when you're ready, and buy the house you're ready for. Interest rates may rise, but if so it's likely due to an increase in inflation and thus wage growth; and it would take a major shift in the economy for rates to rise to the 10-11% level. If that did happen, housing prices (or at least growth in prices) would likely drop significantly. Some further references:", "title": "" }, { "docid": "1153b504f9692320397ae8e1bfa47417", "text": "How can people afford 10% mortgage? Part of the history of housing prices was the non-bubble component of the bubble. To be clear, there was a housing bubble and crash. Let me offer some simple math to illustrate my point - This is what happened on the way down. A middle class earner, $60K/yr couple, using 25% of their income, the normal percent for a qualified mortgage, was able to afford $142K for the mortgage payment. At 10% fixed rate. This meant that after down payment, they were buying a house at $175K or so, which was above median home pricing. Years later, obviously, this wasn't a step function, with a rate of 4%, and ignoring any potential rise of income, as in real term, income was pretty stagnant, the same $1250/mo could pay for a $260K mortgage. If you want to say that taxes and insurance would push that down a bit, sure, drop the loan to $240K, and the house price is $300K. My thesis ('my belief' or 'proposal', I haven't written a scholarly paper, yet) is that the relationship between median home price and median income is easily calculated based on current 30 year fixed rate loans. For all the talk of housing prices, this is the long term number. Housing cannot exceed income inflation long term as it would creep up as a percent of income and slow demand. I'm not talking McMansion here, only the median. By definition, the median house targets the median earners, the middle class. The price increase I illustrate was just over 70%. See the famous Shiller chart - The index move from 110 to 199 is an 81% rise. I maintain, 70 of that 81 can be accounted for by my math. Late 80's, 1987 to be exact, my wife got a mortgage for 9%, and we thought that was ok, as I had paid over 13% just 3 years earlier.", "title": "" }, { "docid": "a8ab10fa53729a333b3bbac5f5281fc0", "text": "As of now in 2016, is is safe to assume that mortgage rates would/should not get back to 10%? What would the rates be in future is speculation. It depends on quite a few things, overall economy, demand / supply, liquidity in market etc ... Chances are less that rates would show a dramatic rise in near future. Does this mean that one should always buy a house ONLy when mortgage rates are low? Is it worth the wait IF the rates are high right now? Nope. House purchase decision are not solely based on interest rates. There are quite a few other aspects to consider, the housing industry, your need, etc. Although interest rate do form one of the aspect to consider specially affordability of the EMI. Is refinancing an option on the table, if I made a deal at a bad time when rates are high? This depends on the terms of current mortgage. Most would allow refinance, there may be penal charges breaking the current mortgage. Note refinance does not always mean that you would get a better rate. Many mortgages these days are on variable interest rates, this means that they can go down or go up. How can people afford 10% mortgage? Well if you buy a small cheaper [Less expensive] house you can afford a higher interest rate.", "title": "" }, { "docid": "fac469245c0605d033cba9fca4684cc3", "text": "Reasons for no: In your first sentence you say something interesting: rates low - prices high. Actually those 2 are reversely correlated, imagine if rates would be 5% higher-very few people could buy at current prices so prices would drop. Also you need to keep in mind the rate of inflation that was much higher during some periods in the US history(for example over 10% in the 1980) so you can not make comparisons just based on the nominal interest rate. Putting all your eggs in one basket. If you think real estate is a good investment buy some REITs for 10k, do not spend 20% of your future income for 20 years. Maintenance - people who rent usually underestimate this or do not even count it when making rent vs mortgage comparisons. Reasons for yes: Lifestyle decision - you don't want to be kicked out of your house, you want to remodel... Speculation - I would recommend against this strongly, but housing prices go up and down, if they will go up you can make a lot of money. To answer one of questions directly: 1. My guess is that FED will try to keep rates well bellow 10% (even much lower, since government can not service debts if interest rates go much higher), but nobody can say if they will succeed.", "title": "" } ]	[ { "docid": "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": "23f08b5e85a46978c831a05245b1321d", "text": "It's worthwhile to try and find a better minimum down-payment. When I bought my home, I got an FHA loan, which drastically reduced the minimum down-payment required (I think the minimum is 3% under FHA). Be aware that any down-payment percentage under 20% means that you'll have to pay for private mortgage insurance (PMI) as part of your monthly mortgage. Here's a good definition of it. Part of the challenge you're experiencing may be that banks are only now exercising the due diligence with borrowers for mortgages that they should have been all along. I hope you're successful in finding the right payment. Getting a mortgage to reduce your spending on housing relative to rent is a wise move. In addition to fixing your monthly costs at a consistent level (unlike rent, which can rise for reasons you don't control), the mortgage interest deduction makes for a rather helpful tax benefit.", "title": "" }, { "docid": "feb21810230b9f43fca6b46a596cab28", "text": "\"I am lucky enough to have chosen a flexible mortgage that allows me to change payment amounts at certain, very lenient intervals (to a minimum amount). So when I was laid off, the first thing I did was call my bank to lower my payments to a level that allowed me some breathing room, at my new, lower income. If and when my family's income increases, I'll re-adjust my payments to a higher amount. But if you're concerned about the \"\"what if\"\"s in this economy, I'd definitely choose a mortgage that allows for flexibility so that you don't lose your house if you don't have to, particularly if your situation is temporary.\"", "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": "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": "460d9b7f54847c2d1d61cf029e7a866c", "text": "\"If this is an issue of opportunity cost then there is a benefit. Mortgage interest rates are extremely low, low enough that they can effectively be used to indirectly fund investments. If one stores equity in a house, ie \"\"pays it off\"\", then that wealth returns only the rate of growth of the house less expenditures. If one borrows against the house to fund investments, then the above stated returns which on average exceed the mortgage interest rate can be augmented by the investments, yielding a greater return. The tax benefit is more of a cherry on top. If one is using this as a justification to spend then it is frivolity.\"", "title": "" }, { "docid": "488a2e2da0765eb148803ded8cdeccfb", "text": "Like @littleadv, I don't consider a mortgage on a primary residence to be a low-risk investment. It is an asset, but one that can be rather illiquid, depending on the nature of the real estate market in your area. There are enough additional costs associated with home-ownership (down-payment, insurance, repairs) relative to more traditional investments to argue against a primary residence being an investment. Your question didn't indicate when and where you bought your home, the type of home (single-family, townhouse, or condo) the nature of your mortgage (fixed-rate or adjustable rate), or your interest rate, but since you're in your mid-20s, I'm guessing you bought after the crash. If that's the case, your odds of making a profit if/when you sell your home are higher than they would be if you bought in the 2006/2007 time-frame. This is no guarantee of course. Given the amount of housing stock still available, housing prices could still fall further. While it is possible to lose money in all sorts of investments, the illiquid nature of real estate makes it a lot more difficult to limit your losses by selling. If preserving principal is your objective, money market funds and treasury inflation protected securities are better choices than your home. The diversification your financial advisor is suggesting is a way to manage risk. Not all investments perform the same way in a given economic climate. When stocks increase in value, bonds tend to decrease (and vice versa). Too much money in a single investment means you could be wiped out in a downturn.", "title": "" }, { "docid": "31c83387a5c166a0bf0e8c3637a9e7db", "text": "I'll add this to what the other answers said: if you are a renter now, and the real estate you want to buy is a house to live in, then it may be worth it - in a currency devaluation, rent may increase faster than your income. If you pay cash for the home, you also have the added benefit of considerably reducing your monthly housing costs. This makes you more resilient to whatever the future may throw at you - a lower paying job, for instance, or high inflation that eats away at the value of your income. If you get a mortgage, then make sure to get a fixed interest rate. In this case, it protects you somewhat from high inflation because your mortgage payment stays the same, while what you would have had to pay in rent keeps going up an up. In both cases there is also taxes and insurance, of course. And those would go up with inflation. Finally, do make sure to purchase sensibly. A good rule of thumb on how much you can afford to pay for a home is 2.5x - 3.5x your annual income. I do realize that there are some areas where it's common for people to buy homes at a far greater multiple, but that doesn't mean it's a sensible thing to do. Also: I'll second what @sheegaon said; if you're really worried about the euro collapsing, it might give you some peace of mind to move some money into UK Gilts or US Treasuries. Just keep in mind that currencies do move against each other, so you'd see the euro value of those investments fluctuate all the time.", "title": "" }, { "docid": "f4337f65c2c443100a3f1bce1ce7805c", "text": "Your wealth will go up if your effective rate after taxes is less than the inflation rate. That is, if your interest rate is R and marginal tax rate is T, then you need R*(1-T) to be less than inflation to make a loan worth it. Lately inflation has been bouncing around between 1% and 1.8%. Let's assume a 25% tax rate. Is your interest rate lower than between 1.3% and 2.4%? If not, don't take out a loan. Another thing to consider: when you take out a loan you have to do a ton of extra stuff to make the lender happy (inspections, appraisals, origination charges, etc.). These really add up and are part of the closing costs as well as the time/trouble of buying a house. I recently bought my house using 100% cash. It was 2 weeks between when I agreed to a price to when the deal was sealed and my realtor said I probably saved about $10,000 in closing costs. I think she was exaggerating, but it was a lot of time and money I saved. My final closing costs were only a few hundred, not thousands, of dollars. TL;DR: Loans are for suckers. Avoid if possible.", "title": "" }, { "docid": "a93375dd629bb7b0f7fcb45086cbc5e3", "text": "You can't transfer mortgages when you purchase a new property. You can purchase a new property now, or you can refinance your current property now and leverage yourself as far as possible while rates are low. The higher rates you are worried about may not be as bad as you think. With higher interest rates, that may put downward pressure on housing prices, or when rates do rise, it may simply move from historic lows to relative lows. I had a mortgage at 4.25% that I never bothered refinancing even though rates went much lower because the savings in interest paid (minus my tax deduction for mortgage interest) didn't amount to more than the cost of refinancing. If rates go back up to 5%, that will still be very affordable.", "title": "" }, { "docid": "aac943752d99f999810f476a2afd3b00", "text": "If you need / want the car, I would get the car. Without car payments you can save your money again to get the house. Moreover, I wouldn't want to be saddled with payments to the mortgage and car loan at the same time. Lastly, a car is a more temporary possession (10 years) vs a house (30+) years so shopping around for the house longer while you save money is a good thing. I know you want to buy while prices are low, but I personally think it is more important to get a house that you want to live in later than settle for a cheap one you get a deal on now.", "title": "" }, { "docid": "0e11ca85524b85f798be8af25214f87d", "text": "Over the last ten years you have reaped the benefits of a good financial decision. (Presumably your low mortgage has freed up money for other financial priorities.) There would be no harm in making a clean break by selling as is. On the other hand, the resale value would probably be rather low considering the condition and the neighborhood. I don't want to assume too much here, but if a potential buyer is interested in the house by virtue of not being able to afford a house in a better neighborhood or better condition, their finances and credit history may make it difficult for them to be approved for a mortgage. That would reduce the potential buyer pool and further reduce the sale price. If you can pull more in rent than the mortgage, you definitely have an opportunity to come ahead. Maybe window A/C units and a repaired chimney are enough if you're renting. Your rental income would pay for that in less than a year even while paying your mortgage for you. (Of course you don't want to become a sleazy slumlord either.)", "title": "" }, { "docid": "fae978c812a104583716ba6b0d6ed86d", "text": "If you can't afford it don't buy it, the next perfect house is just around the corner. The more time you spend researching and looking at houses, the increased chance you will find the perfect house you can afford. Also, here in Australia, we (the banks as well) factor in an interest rate rise of 2% above current rates to see if repayments can still be afforded at this increased rate.", "title": "" }, { "docid": "3eff2d19c29b1c7d18c9fb810330fac4", "text": "\"Welcome to Money.SE, and thank you for your service. In general, buying a house is wise if (a) the overall cost of ownership is less than the ongoing cost to rent in the area, and (b) you plan to stay in that area for some time, usually 7+ years. The VA loan is a unique opportunity and I'd recommend you make the most of it. In my area, I've seen bank owned properties that had an \"\"owner occupied\"\" restriction. 3 family homes that were beautiful, and when the numbers were scrubbed, the owner would see enough rent on two units to pay the mortgage, taxes, and still have money for maintenance. Each situation is unique, but some \"\"too good to be true\"\" deals are still out there.\"", "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": "" } ]	fiqa
9bd3d229abdfdc6456fbc92bee120108	Paying tax for freelance work while travelling	[ { "docid": "5ffaa6dfe158bba9f5d5492710d8c72d", "text": "Having freelanced myself in South America I could give you a sound advice BUT you would first need to answer some questions. 1) How long do you plan on being in South America? At the end of 2017 will you be back in Ireland or still being in South America? In other words was is your country of residence for tax purposes on Dec. 31 2017 ? That is the key element to consider. Link 2) In latin America you can freelance with a legal working permit BUT in all these countries more than 50% of the economy is under the table. In all these countries expatriate work under the table. The question you need to answer is then: Who will be your employer, a company or the owner of this company? Working undeclared in Latin America is very common, what are the risks? The legal risks depend on the country and their laws. In which country will you travel? How long will you stay there? You will have a tourist visa or a working visa? 3) An important detail, your health. Check how long you can be out of Ireland without loosing your social health benefits in Ireland? In my country, if I am abroad for more than 180 days, I loose my national health coverage. Evaluate the amount of days you will be out of Ireland and where you want to be on Dec. 31th. That could change a lot of things in your life.", "title": "" } ]	[ { "docid": "d268171091dd171b468c547cc8453f33", "text": "You can receive funds from US Client as an individual. There is no legal requirement for you to have a company. If the transactions are large say more than 20 lacs in a year, its advisable to open a Private Ltd. Although its simple opening & Registering a company [A CA or a Laywer would get one at a nominal price of Rs 5000] you can do yourself. Whatever be the case, its advisable to have seperate accounts for this business / professional service transactions. Maintain proper records of the funds received. There are certain benefits you can claim, a CA can help you. Paying taxes in Advance is your responsibility and hence make sure you keep paying every quarter as advance tax. Related questions Indian citizen working from India as freelancer for U.S.-based company. How to report the income & pay tax in India? Freelancer in India working for Swiss Company Freelancing to UK company from India How do I account for money paid to colleagues out of my professional income?", "title": "" }, { "docid": "081f555c38ac6fb2c9bc41996fc7ad5a", "text": "\"Disclaimer: My answer is based on US tax law, but I assume Australian situation would be similar. The IRS would not be likely to believe your statement that \"\"I wouldn't have gone to the country if it wasn't for the conference.\"\" A two-week vacation, with a two-day conference in there, certainly looks like you threw in the conference in order to deduct vacation expenses. At the very least, you would need a good reason why this conference is necessary to your business. If you can give that reason, it would then depend on the specifics of Australian law. The vacation is clearly not just incidental to the trip. The registration for the conference is always claimable as a business expense.\"", "title": "" }, { "docid": "8faf102c4cceb0254f9731411e2413c0", "text": "If the firm treats you as an employee then they are treated as having a place of business in the UK and therefore are obliged to operate PAYE on your behalf - this rule has applied to EU States since 2010 and the non-EU EEA members, including Switzerland, since 2012. If you are not an employee then your main options are: An umbrella company would basically bill the client on your behalf and pay you net of taxes and NI. You potentially take home a bit less than you would being 100% independent but it's a lot less hassle and potentially makes sense for a small contract.", "title": "" }, { "docid": "b7c17ae0a48b1b0c0783dd5e5b0f8db8", "text": "\"You can report it as \"\"hobby\"\" income, and then you won't be paying self-employment taxes. You can also deduct the blog-related expenses from that income (subject to the 2% limit though). See this IRS pub on the \"\"hobby\"\" income.\"", "title": "" }, { "docid": "c1f72824ef2b3072f154a0d2fa565ef4", "text": "Depending on what software you use. It has to be reported as a foreign income and you can claim foreign tax paid as a foreign tax credit.", "title": "" }, { "docid": "be8d414a0fd1c029f1c9ad663a449c4d", "text": "I do NOT know the full answer but I know here are some important factors that you need to consider : Do you have a physical location in the United States? Are you working directly from Canada? With a office/business location in the United States your tax obligation to the US is much higher. Most likely you will owe some to the state in which your business is located in Payroll Tax : your employer will likely want to look into Payroll tax, because in most states the payroll tax threshold is very low, they will need to file payroll tax on their full-time, part-time employees, as well as contractor soon as the total amount in a fiscal year exceeds the threshold Related to No.1 do you have a social security number and are you legally entitled to working in the States as an individual. You will be receiving the appropriate forms and tax withholding info Related to No.3 if you don't have that already, you may want to look into how to obtain permissions to conduct business within the United States. Technically, you are a one person consulting service provider. You may need to register with a particular state to obtain the permit. The agency will also be able to provide you with ample tax documentations. Chances are you will really need to piece together multiple information from various sources to resolve this one as the situation is specific. To start, look into consulting service / contractor work permit and tax info for the state your client is located in. Work from state level up to kick start your research then research federal level, which can be more complex as it is technically international business service for Canada-US", "title": "" }, { "docid": "8fe6f7a9cad2f4520ed898b0c39b47ba", "text": "\"I assume your employer does standard withholding? Then what you need to do is figure what bracket that puts you in after you've done all your normal deductions. Let's say it's 25%. Then multiply your freelance income after business expenses, and that's your estimated tax, approximately. (Unless the income causes you to jump a bracket.) To that you have to add approximately 12-13% Social Security/Medicare for income between the $90K and $118,500. Filling out Form 1040SSE will give you a better estimate. But there is a \"\"safe harbor\"\" provision, in that if what you pay in estimated tax (and withholding) this year is at least as much as you owed last year, there's no penalty. I've always done mine this way, dividing last year's tax by 4, since my income is quite variable, and I've never been able to make sense of the worksheets on the 1040-ES.\"", "title": "" }, { "docid": "3829f2bd93fbc08fcf8d58ebe3c01c34", "text": "\"ITR1 or ITR2 needs to be filed. Declare the income through freelancing in the section \"\"income from other sources\"\"\"", "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": "96503ad0863d795ad2f0d81405f41c31", "text": "75k is short of the 'highly compensated' category. Most US citizens in that pay range would consider paying someone to do their taxes as an unnecessary expense. Tax shelters usually don't come into play for this level of income. However, there are certain things which provide deductions. Some things that make it better to pay someone: Use the free online tax forms to sandbox your returns. If all you're concerned about is ensuring you pay your taxes correctly, this is the most cost efficient route. If you want to minimize your tax burden, consult with a CPA. Be sure to get one who is familiar with resident aliens from your country and the relevant tax treaties. The estimate you're looking at may be the withholding, of which you may be eligible for a refund for some part of that withholding. Tax treaties likely make sure that you get credit on each side for the money paid in the other. For example, as a US citizen, if I go to Europe and work and pay taxes there, I can deduct the taxes paid in Europe from my tax burden in the US. If I've already paid more to the EU than I would have paid on the same amount earned in the US, then my tax burden in the US is zero. By the same token, if I have not paid up to my US burden, then I owe the balance to the US. But this is way better than paying taxes to your home country and to the host country where you earned the money.", "title": "" }, { "docid": "2b5c0f3ab5a837e85d550225adbb03c7", "text": "I would say you can file your taxes on your own, but you will probably want the advice of an accountant if you need any supplies or tools for the side business that might be tax deductible. IIRC you don't have to tell your current employer for tax reasons (just check that your contract doesn't state you can't have a side job or business), but I believe you'll have to tell HMRC. At the end of the year you'll have to file a tax return and at that point in time you'll have to pay the tax on the additional earnings. These will be taxed at your highest tax rate and you might end up in a higher tax bracket, too. I'd put about 40% away for tax, that will put you on the safe side in case you end up in the high tax bracket; if not, you'll have a bit of money going spare after paying your taxes.", "title": "" }, { "docid": "c11d1781a910fe53b160db6f0ac43cb5", "text": "The IRS Guidance pertaining to the subject. In general the best I can say is your business expense may be deductible. But it depends on the circumstances and what it is you want to deduct. Travel Taxpayers who travel away from home on business may deduct related expenses, including the cost of reaching their destination, the cost of lodging and meals and other ordinary and necessary expenses. Taxpayers are considered “traveling away from home” if their duties require them to be away from home substantially longer than an ordinary day’s work and they need to sleep or rest to meet the demands of their work. The actual cost of meals and incidental expenses may be deducted or the taxpayer may use a standard meal allowance and reduced record keeping requirements. Regardless of the method used, meal deductions are generally limited to 50 percent as stated earlier. Only actual costs for lodging may be claimed as an expense and receipts must be kept for documentation. Expenses must be reasonable and appropriate; deductions for extravagant expenses are not allowable. More information is available in Publication 463, Travel, Entertainment, Gift, and Car Expenses. Entertainment Expenses for entertaining clients, customers or employees may be deducted if they are both ordinary and necessary and meet one of the following tests: Directly-related test: The main purpose of the entertainment activity is the conduct of business, business was actually conducted during the activity and the taxpayer had more than a general expectation of getting income or some other specific business benefit at some future time. Associated test: The entertainment was associated with the active conduct of the taxpayer’s trade or business and occurred directly before or after a substantial business discussion. Publication 463 provides more extensive explanation of these tests as well as other limitations and requirements for deducting entertainment expenses. Gifts Taxpayers may deduct some or all of the cost of gifts given in the course of their trade or business. In general, the deduction is limited to $25 for gifts given directly or indirectly to any one person during the tax year. More discussion of the rules and limitations can be found in Publication 463. If your LLC reimburses you for expenses outside of this guidance it should be treated as Income for tax purposes. Edit for Meal Expenses: Amount of standard meal allowance. The standard meal allowance is the federal M&IE rate. For travel in 2010, the rate for most small localities in the United States is $46 a day. Source IRS P463 Alternately you could reimburse at a per diem rate", "title": "" }, { "docid": "f7dda4d298962e5676469e1351ccb15d", "text": "\"Some of the 45,000 might be taxable. The question is how was the stipend determined. Was it based on the days away? The mile driven? The cities you worked in? The IRS has guidelines regarding what is taxable in IRS Pub 15 Per diem or other fixed allowance. You may reimburse your employees by travel days, miles, or some other fixed allowance under the applicable revenue procedure. In these cases, your employee is considered to have accounted to you if your reimbursement doesn't exceed rates established by the Federal Government. The 2015 standard mileage rate for auto expenses was 57.5 cents per mile. The rate for 2016 is 54 cents per mile. The government per diem rates for meals and lodging in the continental United States can be found by visiting the U.S. General Services Administration website at www.GSA.gov and entering \"\"per diem rates\"\" in the search box. Other than the amount of these expenses, your employees' business expenses must be substantiated (for example, the business purpose of the travel or the number of business miles driven). For information on substantiation methods, see Pub. 463. If the per diem or allowance paid exceeds the amounts substantiated, you must report the excess amount as wages. This excess amount is subject to income tax with-holding and payment of social security, Medicare, and FUTA taxes. Show the amount equal to the substantiated amount (for example, the nontaxable portion) in box 12 of Form W-2 using code “L\"\"\"", "title": "" }, { "docid": "71bd8b7bb71148feb7f19174d08ae7fa", "text": "\"When I have a question about my income taxes, the first place I look is generally the Giant Book of Income Tax Information, Publication 17 (officially called \"\"Your Federal Income Tax\"\"). This looks to be covered in Chapter 26 on \"\"Car Expenses and Other Employee Business Expenses\"\". It's possible that there's something in there that applies to you if you need to temporarily commute to a place that isn't your normal workplace for a legitimate business reason or other business-related travel. But for your normal commute from your home to your normal workplace it has this to say: Commuting expenses. You cannot deduct the costs of taking a bus, trolley, subway, or taxi, or of driving a car between your home and your main or regular place of work. These costs are personal commuting expenses. You cannot deduct commuting expenses no matter how far your home is from your regular place of work. You cannot deduct commuting expenses even if you work during the commuting trip.\"", "title": "" }, { "docid": "62d4d02c96f3c835c9f5f8998ccd9e9d", "text": "Technically, if you earn in US (being paid there, which means you have a work visa) and live in other country, you must pay taxes in both countries. International treaties try to decrease the double-taxation, and in this case, you may pay in your country the difference of what you have paid in US. ie. your Country is 20% and USA is 15%, you will pay 5%, and vice-versa. This works only with certain areas. You must know the tax legislation of both countries, and I recommend you seek for advisory. This site have all the basic information you need: http://www.irs.gov/Individuals/International-Taxpayers/Foreign-Earned-Income-Exclusion Good luck.", "title": "" } ]	fiqa
79e1a2b3571e6c6943fce9ceae3cfe08	How is not paying off mortgage better in normal circumstances?	[ { "docid": "7aa140333d3f24b0bee604d7c5edc4e6", "text": "\"The reason is that although the American economy is functioning normally, mortgage rates are stupid-low, and are below a prudent expectation of long-term (30 year) rates of return in the market. I manage endowments, so I say \"\"prudent\"\" in the context of endowment investment, which is the picture of caution and subject to UPMIFA law (the P being prudent). What's more, there are tax benefits. Yes, you pay 15% long-term capital gains tax on investment income. But your mortgage interest is tax deductible at your \"\"tax bracket\"\" rate of 25, 28 or 33% - this being the tax you would pay on your next dollar of earned income. And in the early years of a mortgage, mortgage payments are nearly 100% interest. So even if it's a wash: you gain $10k in the market but pay $10k in mortgage interest -- you pay $1500 tax on the gains, but the interest deduction redudes tax by $2800. So you are still $1300 ahead. TLDR: the government pays us to do this.\"", "title": "" }, { "docid": "1021105f9b691a94f55193b46aa9d692", "text": "Lets do the math, using your numbers. We start off with $100K, a desire to buy a house and invest, and 30 years to do it. Scenario #1 We buy a house for $100K mortgage at 5% interest over 30 years. Monthly payment ends up being $536.82/month. We then take the $100K we still have and invest it in stocks, earning an average of 9% annually and paying 15% taxes. Scenario #2 We buy a house for our $100K cash, and then, every month, we invest the $536.82 we would have paid for the mortgage. Again, investments make 9% annually long term, and we pay 15% taxes. How would it look in 30 years? Scenario #1 Results: 30 years later we would have a paid off house and $912,895 in investments Scenario #2 Results: 30 years later we would have a paid off house and $712,745 in investments Conclusion: NOT paying off your mortgage early results in an additional $200,120 in networth after 30 years. That's 28% more. Therefore, not paying off your mortgage is the superior scenario. Caveats/Notes/Things to consider Play with the numbers yourself:", "title": "" }, { "docid": "748835fabfba5ebb60dae096b4a4f374", "text": "There are several reasons:", "title": "" }, { "docid": "04d940078dcec99600dfe5f9d54d4f39", "text": "\"In some respects the analysis for this question is similar to comparing a \"\"safe\"\" return on a government bond vs. holding the stock market. Typically, the stock market's expected return will be higher -- i.e., there's a positive equity risk premium -- vs. a government bond (assuming it's held to maturity). There's no guarantee that the stock market will outperform, although the probability of outperformance rises (some analysts argue) the longer the holding period for equities beyond, say, 10 years. That's why there's generally a positive equity risk premium, otherwise no one (or relatively few investors) would hold equities.\"", "title": "" }, { "docid": "f1387faafbfd01db56cf7af7a6187736", "text": "One way of looking at it is that your equity in your house is an investment in a particular class of asset, and investing further in that asset class may drive you away from, rather than towards, your preferred asset mix. It's pretty common here in New Zealand for people's only investments to be their homes and rental properties. I wish those people luck when our current property boom ends.", "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": "99c768a2572426fd23b4feda32756c24", "text": "It also reduces risk from the bank's eyes. Believe it or not, they do lose out when people don't pay on their mortgages. Take the big 3 (Wells, Chase and BoA). If they have 50 million mortgages between the 3 of them and 20% of people at one point won't be able to pay their mortgage due to loss of income or other factors, this presents a risk factor. Although interest payments are still good, reducing their principal and interest keeps them tied down for additional (or sometimes shorter) time, but now they are more likely to keep getting those payments. That's why credit cards back in 07 and 08 reduced limits for customers. The risk factor is huge now for these financial institutions. Do your research, sometimes a refi isn't the best option. Sometimes it is.", "title": "" }, { "docid": "3a8c68e2a137a8bc2208321265351b42", "text": "\"Because \"\"my accountant said I'm in the 28% bracket and need more write-offs.\"\" When I hear someone say this I tell them to get a new accountant/advisor/tax guy. The benefit, if any, is the fact that if, and only if, (a hat tip to @staticx) you are already itemizing your deductions. It means that for me, my 3.5% mortgage is really costing me 2.625%. The only effect of this is the when I line up my debts, the mortgage might fall to a lower priority for payback. This is where there's a balance between the choice of a robust emergency fund, earning close to 0% today, or using those funds to pay the mortgage at an accelerated rate. If the sentiment expressed by the question implies that one should carry a mortgage, needed or not, it really comes down the a question of risk over the long term. I don't suggest that people take a mortgage today to invest in the market. A zero return as we just saw in the '00s will show you that the 10% market return is an average over the very long term. FWIW, the '96-'05 period returned 9.08%, and '06-'13 (2 years short of the 10) 7.26%. Few have the discipline to patiently wait out the dips and see the returns I quoted. That said, the fact that the interest is deductible is a small factor given the low rates we are currently enjoying. Each of the points above can be expanded into its own answer. A great question with not-so-simple answers.\"", "title": "" }, { "docid": "4247fc4bd8436e1a1c0b69754b86c1ff", "text": "One big factor that no one has mentioned yet is whether you believe in a deflationary or inflationary future. Right now, we are leaning towards a deflationary environment so it makes sense to pay off more of the debt. (If you make just one extra payment a year, you will have paid off your house 7 years early). However, should this change (depending on government and central bank policy) you may be better off putting down the very minimum. In a year or three from now, you should have a clearer picture. In the meanwhile, here is a recent Business Week article discussing both sides of the argument. http://www.businessweek.com/magazine/content/10_28/b4186004424615.htm", "title": "" }, { "docid": "f595b1e50b0683b20aa07a69001c969c", "text": "\"One way to think of the typical fixed rate mortgage, is that you can calculate the balance at the end of the month. Add a month's interest (rate times balance, then divide by 12) then subtract your payment. The principal is now a bit less, and there's a snowball effect that continues to drop the principal more each month. Even though some might object to my use of the word \"\"compounding,\"\" a prepayment has that effect. e.g. you have a 5% mortgage, and pay $100 extra principal. If you did nothing else, 5% compounded over 28 years is about 4X. So, if you did this early on, it would reduce the last payment by about $400. Obviously, there are calculators and spreadsheets that can give the exact numbers. I don't know the rules for car loans, but one would actually expect them to work similarly, and no, you are not crazy to expect that. Just the opposite.\"", "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": "6933bbfd0b40ce34f74b37a9feceb427", "text": "The problem comes when the borrower cannot afford his home. If a borrower buys more home than they can afford, as long as he can sell the house for more than he owes, he's not in a disastrous situation. He can sell the house, pay off the mortgage, and choose more affordable housing instead. If he is upside-down on his home, he doesn't have that option. He's stuck in his home. If he sells it, he will have to come up with extra money to pay off the mortgage (which he doesn't have, because he is in a home he can't afford). It used to be commonplace for banks to issue mortgages for 100% of the value of the home. As long as the home keeps appreciating, everybody is happy. But if the house drops in value and the homeowner finds himself unable to make house payments, both the homeowner and the bank are at risk. Recent regulations in the U.S. have made no-down-payment mortgages less common.", "title": "" }, { "docid": "6767c66274c2315423cadd3711bfb23c", "text": "I would say generally, the answer is No. There might be some short term relief to people in certain situations, but generally speaking you sign a contract to borrow money and you are responsible to pay. This is why home loans offer better terms then auto loans, and auto loans better than credit cards or things like furniture. The better terms offer less risk to the lender because there are assets that can be repossessed. Homes retain values better than autos, autos better than furniture, and credit cards are not secured at all. People are not as helpless as your question suggests. Sure a person might lose their high paying job, but could they still make a mortgage payment if they worked really hard at it? This might mean taking several part time jobs. Now if a person buys a home that has a very large mortgage payment this might not be possible. However, wise people don't buy every bit of house they can afford. People should also be wise about the kinds of mortgages they use to buy a home. Many people lost their homes due to missing a payment on their interest only loan. Penalty rates and fees jacked up their payment, that was way beyond their means. If they had a fixed rate loan the chance to catch up would have not been impossible. Perhaps an injury might prevent a person from working. This is why long term disability insurance is a must for most people. You can buy quite a bit of coverage for not very much money. Typical US households have quite a bit of debt. Car payments, phone payments, and either a mortgage or rent, and of course credit cards. If income is drastically reduced making all of those payments becomes next to impossible. Which one gets paid first. Just this last week, I attempted to help a client in just this situation. They foolishly chose to pay the credit card first, and were going to pay the house payment last (if there was anything left over). There wasn't, and they are risking eviction (renters). People finding themselves in crisis, generally do a poor job of paying the most important things first. Basic food first, housing and utilities second, etc... Let the credit card slip if need be no matter how often one is threatened by creditors. They do this to maintain their credit score, how foolish. I feel like you have a sense of bondage associated with debt. It is there and real despite many people noticing it. There is also the fact that compounding interest is working against you and with your labor you are enriching the bank. This is a great reason to have the goal of living a debt free life. I can tell you it is quite liberating.", "title": "" }, { "docid": "0d6eaeb4ba54c786c2800de434892ca9", "text": "\"I'm going to give a simpler answer than some of the others, although somewhat more limited: the complicated loan parameters you describe benefit the lender. I'll focus on this part of your question: You should be able to pay back whenever; what's the point of an arbitrary timeline? Here \"\"you\"\" refers to the borrower. Sure, yes, it would be great for the borrower to be able to do whatever they want whenever they want, increasing or decreasing the loan balance by paying or not paying arbitrary amounts at their whim. But it doesn't benefit the lender to let the borrower do this. Adding various kinds of restrictions and extra conditions to the loan reduces the lender's uncertainty about when they'll be receiving money, and also gives them a greater range of legal recourse to get it sooner (since they can pursue the borrower right away if they violate any of the conditions, rather than having the wait until they die without having paid their debt). Then you say: And if you want, you can set a legal deadline. But the mere deadline in the contract doesn't affect how much interest is paid—the interest is only affected by how much money is borrowed and how long has passed. I think in many cases that is in fact how it works, or at least it is more how it works than you seem to think. For instance, you can take out a 30-year loan but pay it off in less than 30 years, and the amount you pay will be less if you pay it off sooner. However, in some cases the lender will charge you a penalty for doing so. The reason is the same as above: if you pay off the loan sooner, you are paying less interest, which is worse for the lender. Again, it would be nice for the borrower if they could just pay it off sooner with no penalty, but the lender has no reason to let them do so. I think there are in fact other explanations for these more complicated loan terms that do benefit the borrower. For instance, an amortization schedule with clearly defined monthly payments and proportions going to interest and principal also reduces the borrower's uncertainty, and makes them less likely to do risky things like skip lots of payments intending to make it up later. It gives them a clear number to budget from. But even aside from all that, I think the clearest answer to your question is what I said above: in general, it benefits the lender to attach conditions and parameters to loans in order to have many opportunities to penalize the borrower for making it hard for the lender to predict their cash flow.\"", "title": "" }, { "docid": "4d117fa1cc11e115832fee5e4fb4bbb1", "text": "\"Good debt and \"\"Bad debt\"\" are just judgement calls. Each person has their own opinion on when it is acceptable to borrow money for something, and when it is not. For some, it is never acceptable to borrow money for something; they won't even borrow money to buy a house. Others, of course, are in debt up to their eyeballs. All debt costs money in interest. So when evaluating whether to borrow or not, you need to ask yourself, \"\"Is the benefit I am getting by borrowing this money worth the cost?\"\" Home ownership has a lot of advantages: For many, these advantages, coupled with the facts that home mortgages are available at extremely low interest rates and that home mortgage interest is tax-deductible (in the U.S.), make home mortgages \"\"worth it\"\" in the eyes of many. Contrast that with car ownership: For these reasons, there are many people who consider the idea of borrowing money to purchase a car a bad idea. I have written an answer on another question which outlines a few reasons why it is better to pay cash for a car.\"", "title": "" }, { "docid": "08fb6d65d0231a99af8117233afd3ed3", "text": "As mentioned, the main advantage of a 15-year loan compared to a 30-year loan is that the 15-year loan should come at a discounted rate. All things equal, the main advantage of the 30-year loan is that the payment is lower. A completely different argument from what you are hearing is that if you can get a low interest rate, you should get the longest loan possible. It seem unlikely that interest rates are going to get much lower than they are and it's far more likely that they will get higher. In 15 years, if interest rates are back up around 6% or more (where they were when I bought my first home) and you are 15 years into a 30 year mortgage, you'll being enjoying an interest rate that no one can get. You need to keep in mind that as the loan is paid off, you will earn exactly 0% on the principal you've paid. If for some reason the value of the home drops, you lose that portion of the principal. The only way you can get access to that capital is to sell the house. You (generally) can't sell part of the house to send a kid to college. You can take out another mortgage but it is going to be at the current going rate which is likely higher than current rates. Another thing to consider that over the course of 30 years, inflation is going to make a fixed payment cheaper over time. Let's say you make $60K and you have a monthly payment of $1000 or 20% of your annual income. In 15 years at a 1% annualized wage growth rate, it will be 17% of your income. If you get a few raises or inflation jumps up, it will be a lot more than that. For example, at a 2% annualized growth rate, it's only 15% of your income after 15 years. In places where long-term fixed rates are not available, shorter mortgages are common because of the risk of higher rates later. It's also more common to pay them off early for the same reason. Taking on a higher payment to pay off the loan early only really only helps you if you can get through the entire payment and 15 years is still a long way off. Then if you lose your job then, you only have to worry about taxes and upkeep but that means you can still lose the home. If you instead take the extra money and keep a rainy day fund, you'll have access to that money if you hit a rough patch. If you put all of your extra cash in the house, you'll be forced to sell if you need that capital and it may not be at the best time. You might not even be able to pay off the loan at the current market value. My father took out a 30 year loan and followed the advice of an older coworker to 'buy as much house as possible because inflation will pay for it'. By the end of the loan, he was paying something like $250 a month and the house was worth upwards of $200K. That is, his mortgage payment was less than the payment on a cheap car. It was an insignificant cost compared to his income and he had been able to invest enough to retire in comfort. Of course when he bought it, inflation was above 10% so it's bit different today but the same concepts still apply, just different numbers. I personally would not take anything less than a 30 year loan at current rates unless I planned to retire in 15 years.", "title": "" }, { "docid": "e4ad5de991424ab48e01a72ac5cbd3ac", "text": "\"I'll assume you live in the US for the start of my answer - Do you maximize your retirement savings at work, at least getting your employer's match in full, if they do this. Do you have any other debt that's at a higher rate? Is your emergency account funded to your satisfaction? If you lost your job and tenant on the same day, how long before you were in trouble? The \"\"pay early\"\" question seems to hit an emotional nerve with most people. While I start with the above and then segue to \"\"would you be happy with a long term 5% return?\"\" there's one major point not to miss - money paid to either mortgage isn't liquid. The idea of owing out no money at all is great, but paying anything less than \"\"paid in full\"\" leaves you still owing that monthly payment. You can send $400K against your $500K mortgage, and still owe $3K per month until paid. And if you lose your job, you may not so easily refinance the remaining $100K to a lower payment so easily. If your goal is to continue with real estate, you don't prepay, you save cash for the next deal. Don't know if that was your intent at some point. Disclosure - my situation - Maxing out retirement accounts was my priority, then saving for college. Over the years, I had multiple refinances, each of which was a no-cost deal. The first refi saved with a lower rate. The second, was in early 2000s when back interest was so low I took a chunk of cash, paid principal down and went to a 20yr from the original 30. The kid starts college, and we target retirement in 6 years. I am paying the mortgage (now 2 years into a 10yr) to be done the month before the kid flies out. If I were younger, I'd be at the start of a new 30 yr at the recent 4.5% bottom. I think that a cost of near 3% after tax, and inflation soon to near/exceed 3% makes borrowing free, and I can invest conservatively in stocks that will have a dividend yield above this. Jane and I discussed the plan, and agree to retire mortgage free.\"", "title": "" }, { "docid": "42da4b05ea23c29486c6dcf00ec57ed6", "text": "\"Math says invest in the Market (But paying off your mortgage early is a valid option if you are very risk averse.) You are going to get a better return by investing in the stock market. In the US in 2015/2016, mortgages are 3%-4%, and give you a tax break. The rate of return on the stock market is ~10%, (closer to 6% after you subtract out inflation, taxes, fees, etc.) Since 10 > 3, (or 6% > 4%, to use the pessimistic numbers) investing in the market is the better deal. But... The market has risk, and your mortgage does not. If you are very risk averse paying off the mortgage may make sense. As an example: Family A has a single \"\"breadwinner\"\", who works a low skilled job. Family B has 2 working spouses, both in high skill white collar positions. These two families are going to have wildly different risk tolerances. It may make sense for family A to \"\"invest\"\" its extra money in paying off the mortgage, after they have tackled high interest debt, built an emergency fund, maxed the 401k, etc. Personally I would not: in the US you cannot recoup pre-payments if you lose your job. If I was very risk averse, I would keep my extra money as cash, so I could pay my mortgage after I lost my job. It is never going to make sense for family B to pay the mortgage early. At that point, any decision to pre-pay is going to be based on emotion and not logic.\"", "title": "" }, { "docid": "6da16e402bf9c3b83f7e5d828925194f", "text": "\"Pete and Noah addressed the math, showing how this is, in effect, converting a 30yr to a ~23yr mortgage, at a cost, plus payment about 8% higher (1 extra payment per year). No magic there. The real issue, as I see it, is whether this is the best use of the money. Keep in mind, once you pay extra principal, which in effect is exactly what this is, it's not easy to get it back. As long as you have any mortgage at all, you have the need for liquidity, enough to pay your mortgage, tax, utilities, etc, if you find yourself between jobs or to get through any short term crisis. I've seen people choose the \"\"sure thing\"\" prepayment VS the \"\"risky\"\" 401(k) deposit. Ignoring a match is passing up a 50% or 100% return in most cases. Too good to pass up. 2 points to add - I avoided the further tangent of the tax benefit of IRA/401(k) deposits. It's too long a discussion, today's rate for the money saved, vs the rate on withdrawal. Worth considering, but not part of my answer. The other discussion I avoid is Nicholas' thoughts on the long term market return of 10% vs today's ~4% mortgage rate. This has been debated elsewhere and morphs into a \"\"pre-pay vs invest\"\" question.\"", "title": "" }, { "docid": "f31da463ed6f2eab4dc16b96c69531c7", "text": "But now you have cash on hand that wasn't used to pay debt, no change in net worth. In fact, if you refuse to pay your mortgage for two years until you're kicked out of your underwater house, your net worth goes up.", "title": "" }, { "docid": "6787c5a4ece0bd9aca6d411366063770", "text": "While, from a money-saving standpoint, the obviously-right course of action is to make only the minimum payment on the 0% loan, there are potentially legal reasons to try to pay off a car loan early. With a mortgage, you are the legal owner of the property and any action by the lender beyond imposing fees (e.g. foreclosure) requires going through the proper legal channels. On the other hand, in most jurisdictions, you are not the legal owner of a car purchased on a loan, and a missed or even lost payment can result in repossession without the lender even having to go to court. So from a risk-aversion standpoint, there's something to be said for getting rid of car loans as soon as you can.", "title": "" } ]	fiqa
50a9380ea8fcf639305b6d468b046802	Teaching school kids about money - what are the real life examples of math, budgeting, finance?	[ { "docid": "0977c3b9eb3b8c0cd2266c36a40159c8", "text": "\"I am a numbers guy, the math is great. Instead of \"\"jane was twice her son's age when he married, and is now 1.5 times his age.....\"\" questions in math class, I think the math problems should mostly have dollar/pound signs in front of them. In general, I like the idea of relating to the kids' situations as much as possible. When my daughter (14) makes a purchase, I'd ask her to be aware of how many hours she had to work to make the money she plans to spend. Was it worth 4 hours babysitting to buy an iPad case? Was it worth 2 to buy lunch that we could have made you at home? (Note, the 'convert price to hours worked' is a concept that works great when teaching budgeting to anyone, not just kids.) The math of tax and discounts for comparison shopping works great as well so long as they understand value. A $400 sweatshirt at 50% off isn't really a bargain, in my opinion. Next, the math of balancing a checkbook should be high on the list. Accounting for the checks that didn't clear but are outstanding is beyond many people, amazing enough. For the sport fan, there are unlimited math problem one can create for game scores, stats for the season, etc. Young boys who will fall asleep during a stats class will pay attention if instead of abstract numbers, you add 'goals' 'home runs' etc, after the numbers. (Note - this question is probably outside the scope of the board, no right or wrong answer. But I love it as a question in general, and if not here, I hope it finds a good home.)\"", "title": "" }, { "docid": "ed0a834861a6e3accdc94feb5d815429", "text": "If these are children that may be employed, in a few years, it may well be worth walking them through some basics of the deductions around employment, some basic taxes, uses of banks, and give them enough of a basis in how the economy of the world works. For example, if you get a job and get paid $10/hour, that may sound good but how much do various things eat at that so your take-home pay may be much lower? While this does presume that the kids will get jobs somewhere along the way and have to deal with this, it is worth making this part of the education system on some level rather than shocking them otherwise. Rather than focusing on calculations, I'd be more tempted to consider various scenarios like how do you use a bank, what makes insurance worth having(Life, health, car, and any others may be worth teaching on some level), and how does the government and taxes fit into things. While I may be swinging more for the practical, it is worth considering if these kids will be away in college or university in a few years, how will they handle being away from the parents that may supply the money to meet all the financial needs?", "title": "" }, { "docid": "df4a0faa381737651673d571cb03dcf9", "text": "\"My education on this topic at this age range was a little more free-form. We were given a weeklong project in the 6th grade, which I remember pretty clearly: Fast forward 6 years (we were 12). You are about to be kicked out of your parents' house with the clothes on your back, $1,000 cash in your pocket, your high school diploma, and a \"\"best of luck\"\" from your parents. That's it. Your mission is to not be homeless, starving and still wearing only the clothes on your back in 3 months. To do this, you will find an apartment, a job (you must meet the qualifications fresh out of high school with only your diploma; no college, no experience), and a means of transportation. Then, you'll build a budget that includes your rent, estimated utilities, gasoline (calculated based on today's prices, best-guess fuel mileage of the car, and 250% of the best-guess one-way distance between home and job), food (complete nutrition is not a must, but 2000cal/day is), toiletries, clothing, and anything else you want or need to spend your paycheck or nest egg on. Remember that the laundromat isn't free, and neither is buying the washer/dryer yourself. Remember most apartments aren't furnished but do have kitchen appliances, and you can't say you found anything on the side of the road. The end product of your work will be a narrative report of the first month of your new life, a budget for the full 3 months, plus a \"\"continuing\"\" budget for a typical month thereafter to prove you're not just lasting out the 3 months, and all supporting evidence for your numbers, from newspaper clippings to in-store mailers (the Internet and e-commerce were just catching on at the time, Craigslist and eBay didn't exist yet, and not everyone had home Internet to begin with). Extra Credit: Make your budget work with all applicable income and sales taxes. Extra Extra Credit: Have more than your original $1000 in the bank at the end of the 3 months, after the taxes in the Extra Credit. This is a pretty serious project for a 12-year-old. Not only were we looking through the classified ads and deciphering all the common abbreviations, we were were taking trips to the grocery store with shopping lists, the local Wal-Mart or Target, the mall, even Goodwill. Some students had photos of their local gas station's prices, to which someone pointed out that their new apartment would be on the other side of town where gas was more expensive (smart kid). Some students just couldn't make it work (usually the mistakes were to be expected of middle-class middle-schoolers, like finding a job babysitting and stretching that out full-time, only working one job, buying everything new from clothes to furniture, thinking you absolutely need convenience items you can do without, and/or trying to buy the same upscale car your dad takes to work), though most students were able to provide at least a plausible before-tax budget. A few made the extra credit work, which was a lot of extra credit, because not only were you filling out a 1040EZ for your estimated income taxes, you were also figuring FICA and Social Security taxes which even some adults don't know the rates for, and remember, no Internet. Given that the extra-extra credit required you to come out ahead after taxes (good luck), I can't remember that anyone got that far. The meta-lesson that we all learned? Life without a college education is rough.\"", "title": "" } ]	[ { "docid": "a65efd5afe866ce7d2d86bb59793098c", "text": "\"In the UK there is a School Rewards System used in many schools to teach kids and teens about finance and economy. In the UK there is a framework for schools called \"\"Every Child Matters\"\" in which ‘achieving economic well-being’ is an important element. I think is important to offer to offer a real-life vehicle for financial learning beyond the theory.\"", "title": "" }, { "docid": "7f4270d67a6601b909ed315a269981d3", "text": "Hey thank you so much for the reply! So the interview is a late stage one - I've gotten past the concepts and honestly the role shouldn't be that heavy on the finance side ...what I'm looking at now is actually having to mock up a financial forecast in a real estate development scenario. I'm getting the case in advance and have to prepare a presentation. So right now, I really need the ABCs of forecasting specifically. But I'm definitely checking out your recommendations!", "title": "" }, { "docid": "1407a11a1bfd45195cc54d12195ad9d1", "text": "\"In that example, \"\"creating money\"\" could be used interchangeably with \"\"making promises\"\". There's no inflation, and no problem, so long as everyone keeps their promises. Which sounds like a horrifying thing to say about the foundations of the economy, but the remarkable thing is that people mostly do.\"", "title": "" }, { "docid": "e05f9fb1d45a1fba06e958b27c614ebd", "text": "As asked previous in the week, there is a big difference between budgeting and expense tracking. Using software, like GNUCash, allows one to track their spending. A budget is a plan, the tracking is what actually happened. I do not track expenses, although I do budget. For me, hitting financial goals is good enough of a track, without investing the time and energy into tracking every penny. One could easily criticize my method, as how can you have a good plan without continuous feedback? For me it is an example of the 80/20 principle. If I put in 20% effort into making and sticking to a budget, I will obtain 80% of the financial success that a person who devotes 100% effort into budgeting and tracking. A person with the same income and life events, who budgets and tracks, will likely be more successful that I, however, not overwhelmingly so. For me time is better spent on other endeavors. You seem to have this attitude as well, but those that do track have it as part of their path to financial success and probably view us as somewhat foolish. This is another example how personal finance is more about behavior than math.", "title": "" }, { "docid": "3b756983b590de33a66abf890947706d", "text": "As a 20 year old who has just started earning enough to save, I suggest showing them the different types of lifestyles they could live in the future if they started saving now versus what their life would be like if they didn't save at all. Try showing them actual dollar values as well so it's not just an arbitrary idea.", "title": "" }, { "docid": "b136684aff859e57a18347bea96e2291", "text": "Can anyone recommend a good textbook for a first course in finance? I'm not studying it, if it's relevant--I'm just a guy who wants a better understanding of the financial sector. I don't know anything anout finance outside a few basic concepts.", "title": "" }, { "docid": "ac326aca2189c78f3ed3457661c6f291", "text": "My daughter is two, and she has a piggy bank that regularly dines on my pocket change. When that bank is worth $100 or so I will make it a regular high yield savings account. Then I will either setup a regular $10/month transfer into it, or something depending on what we can afford. My plan is then to offer my kid an allowance when she can understand the concept of money. My clever idea is I will offer her a savings plan with the Bank of Daddy. If she lets me keep her allowance for the week, I will give her double the amount plus a percentage the next week. If she does it she will soon see the magic of saving money and how banks pay your for the privilege. I don't know when I will give her access to the savings account with actual cash. I will show it to her, and review it with her so she can track her money, but I need to know that she has some restraint before I open the gates to her.", "title": "" }, { "docid": "d9e7d3106f9e19ea20ac6488b0aab00f", "text": "Here's a very good series of classroom lectures by Robert Schiller, one of America's top economists and a prof at Yale: http://www.youtube.com/user/YaleCourses#g/c/8F7E2591EE283A2E This should give you some general insight into basic principles of finance and give you a framework to learn more later.", "title": "" }, { "docid": "9a43caccb4e26c98f5a98bd0ff63cf78", "text": "Until they're old enough to be legally responsible for their own credit, the only thing you can really do is show them by example how to manage money and credit in your own finances. Teach them budgeting, immerse them in understanding how credit and financing work, and teach them smart ways to make their money work for them. When they're teenagers, you could potentially approach small banks or credit unions about ways to perhaps co-sign loans for them and let them make payments to learn good habits for managing their responsibilities, but that's not always easy either. It won't do anything for their credit, but having the responsibility of coming in to make payments might instill good habits and help their self-esteem at the same time. You have great intentions, but as has been pointed out here already, from a legal standpoint there's not much you can do. All you can do is prepare them for the day when they are on their own and can enter into credit agreements. Kids going to college get into real trouble with credit because cards are handed out like candy to them by the banks, so teaching them money management skills is invaluable and something you can do now.", "title": "" }, { "docid": "17972f2341e3a49ab0ea1e28a96c6c01", "text": "I’d suggest going over to Khan Academy. It’s basically a free school with really helpful videos. There are quizzes you can do and forums for each subject. My advice would be to starts the personal finance section because most things build from there and it’ll help you more with real life finance. Good luck!", "title": "" }, { "docid": "b5eb73a9199fa4cc6976f6a504dabdcb", "text": "\"Anything by Frank Fabozzi - the de facto authority on financial education. Most of the stuff will be textbook ($$$) so get ready for sticker shock. Hopefully you can find a used copy of something. Quick search on Amazon yielded \"\"The Basics of Finance\"\" for about $150.\"", "title": "" }, { "docid": "4cda418d37f637ca634dd67e846e44ef", "text": "We are a pretty average (professional, used to be fully two-income) family. I have gone part-time (plus a total career change) to be more involved at home - that's minus 50K from our family budget a year. Montessori for the younger one is - 10K. Violin (-5K) and piano (-5K) lessons for each kid... summer science camps... summer golf/tennis plus equipment... dance/sports all year round are around 10K too. We are looking at an 80K hole in our budget (compared to what we could have had). Plus by now I would have been probably more advanced in my previous career had I stayed there, so the hole is potentially even greater.", "title": "" }, { "docid": "61dd0f7406c13e16a3b9da31c4672e53", "text": "Hi, I'm going to be a social studies teacher and will have to introduce students to economics. I am saving your post for the future because it is an amazingly well crafted and engaging lesson.. the village analogy can even be used for group enactment. Thanks so much for this!", "title": "" }, { "docid": "5f01d40e1a2a04d326b3dfd50a204d84", "text": "Frankly, I think all the higher maths in finance is mental masturbation. EDIT: wht all the down votes? I've made my money by trading against the PhDs in European investment banks who actually and innocently believe their models represent the real world. Their models work when they work. I love trading against the combination of arrogance and faux intellectualism. Folks, read Fooled by Randomness or Black Swan.", "title": "" }, { "docid": "0da09d5f659beffb49747422af4eb306", "text": "All value given to products is subjective and is different from person to person. It can also vary for the same person from year to year, month to month, day to day, or even hour to hour as a person analyzes different products and prices to determine which imparts the most value to him or her at a given point in time. In regards to losing money in your investment accounts. This reminds of a book I read on Jesse Livermore. Jesse was a famous stock broker who made millions (in the 1920's so he would be a billionaire in today's money) in the stock market multiple times. Jesse felt like you - he felt like after a while the losses on paper did not seem to concern him as much as he thought it should. He thought it was due to the investment accounts being simply being numbers on papers and not cold, hard cash. So what did Jesse do to remove the abstract nature of investment accounts? From here: Livermore always sold out all his positions at the end of every year and had the cash deposited in his account at the Chase Manhattan Bank. Then he would arrange with the bank to have the money, in cash, in the bank’s vault in chests. “There was a desk, a chair, a cot and an easy chair in the middle of the cash.” On the occasion described in 1923, there was $50 million in cash. In the corner was a fridge with food, enough for a few days. There was lighting installed. Then, like Scrooge McDuck, Livermore would have himself locked in the vault with his cash. He would stay a couple of days and “review his year from every aspect.” After his stay was over, he would fill his pockets with cash and go on a shopping spree. He would also take a vacation and not re-enter the market until February. But unlike Scrooge McDuck, this was not the act of a miser, explains Smitten. Livermore lived a world of paper transactions all year long. He believed that “by the end of the year he had lost his perception of what the paper slips really represented, cash money and ultimately power.” He “needed to touch the money and feel the power of cash.” It made him re-appraise his stock and commodity positions. Imagine the $60,000 from your investment account sitting on your kitchen table. Imagine seeing $1,000 dumped into the trash can one day. I know I would appreciate the money much more seeing that happen.", "title": "" } ]	fiqa
136e2e7743bf697a15c21f19cdc86a92	Are real estate prices memory-less?	[ { "docid": "30027b1c4f087c6113a9f335c856edd9", "text": "For various reasons, real estate prices exhibit far more memory than stock prices. The primary reason for this is that real estate is much less liquid. Transaction costs for stock trading are on the order of 10 basis points (0.1%), whereas a real estate transaction will typically have total costs (including title, lawyers, brokers, engineers, etc.) of around 5% of the amount of the transaction. A stock transaction can be executed in milliseconds, whereas real estate transactions typically take months. Thus today's behavior is a much better indicator of future price behavior for real estate than for stocks.", "title": "" }, { "docid": "bc1db48c13698bf5a7dc8eafdeb4a9a9", "text": "No, at least not with specific houses. When I bought my current house, our realtor looked at the previous selling price of this house, along with the prices at which it had been placed on the market. These values influenced the amount we offered for the house. I'm sure it also influenced the amount the house had been listed at.", "title": "" }, { "docid": "478a4f74037de66e9ee99150366f6030", "text": "Housing prices are set by different criteria. It can become memoryless the same as the stock if the criteria used to set its price in the past is no longer valid. For example, take Phoenix or Las Vegas - in the past these were considered attractive investments because of the economical growth and the climate of the area. While the climate hasn't changed, the economical growth stopped not only there but also in the places where people buying the houses lived (which is all over the world really). What happened to the housing market? Dropped sharply and stays flat for several years now at the bottom. So it doesn't really matter if the house was worth $300K in Phoenix 5 years ago, you can only sell it now for ~$50K, and that's about it. The prices have been flat low for several years and the house price was $50K, but does it mean its going to stay so? No, once economy gears up, the prices will go up as well. So its not exactly memory-less, but the stocks are not memory-less as well. There is correlation between the past and the future performance. If the environment conditions are similar - the performance is likely to be similar. For stocks however there's much more environment conditions than the housing market and its much harder to predict them. But even with the housing people were burnt a lot on the misconception that the past performance correlates to the future. It doesn't necessarily.", "title": "" }, { "docid": "7744375628735c954d11d694ce171bd8", "text": "I would argue no. It's easy to correlate home prices based on size, neighborhood, school district, condition and other factors, such as property taxes. In fact, real estate people and government assessors use those characteristics to assess property value. The demographics of a home will drive desirability/demand for the property. Combine that with the cost and availability of capital, and house prices are relatively predictable.", "title": "" } ]	[ { "docid": "e84a8b4c47e19de7bbbad138cef6c93c", "text": "\"This is the best tl;dr I could make, [original](https://www.project-syndicate.org/commentary/real-estate-prices-housing-inequality-by-robert-j--shiller-2017-07) reduced by 92%. (I'm a bot) *** > In some cities, higher-priced homes may tend to turn over more rapidly than in others. > Some cities may be inhabited by larger families, implying bigger houses than in other cities. > Using satellite data for major US cities, the economist Albert Saiz of MIT confirmed that tighter physical constraints - such as surrounding bodies of water or land gradients that make properties unsuitable for extensive building - tend to correlate with higher home prices. * [Extended Summary*](http://np.reddit.com/r/autotldr/comments/6os52x/shiller_on_housing_prices/) \| [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~172691 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: city^#1 home^#2 price^#3 housing^#4 income^#5\"", "title": "" }, { "docid": "58f3407bdf68475135618142761e77bd", "text": "What really matters is of course how it compares to future prices. Are we making the assumption that the future prices will be more like the average over the last 100 years (which, by looking at your diagram, we seem to be one standard deviation or so above)?", "title": "" }, { "docid": "53eba26870fc7db41c037231c4ffb043", "text": "Properties do in fact devaluate every year for several reasons. One of the reasons is that an old property is not the state of the art and cannot therefore compete with the newest properties, e.g. energy efficiency may be outdated. Second reason is that the property becomes older and thus it is more likely that it requires expensive repairs. I have read somewhere that the real value depreciation of properties if left practically unmaintained (i.e. only the repairs that have to absolutely be performed are made) is about 2% per year, but do not remember the source right now. However, Properties (or more accurately, the tenants) do pay you rent, and it is possible in some cases that rent more than pays for the possible depreciation in value. For example, you could ask whether car leasing is a poor business because cars depreciate in value. Obviously it is not, as the leasing payments more than make for the value depreciation. However, I would not recommend properties as an investment if you have only small sums of money. The reasons are manyfold: So, as a summary: for large investors property investments may be a good idea because large investors have the ability to diversify. However, large investors often use debt leverage so it is a very good question why they don't simply invest in stocks with no debt leverage. For small investors, property investments do not often make sense. If you nevertheless do property investments, remember the diversification, also in time. So, purchase different kinds of properties and purchase them in different times. Putting a million USD to properties at one point of time is very risky, because property prices can rise or fall as time goes on.", "title": "" }, { "docid": "3f97d35bd94c664205c2929914af3cc9", "text": "Stocks, gold, commodities, and physical real estate will not be affected by currency changes, regardless of whether those changes are fast or slow. All bonds except those that are indexed to inflation will be demolished by sudden, unexpected devaluation. Notice: The above is true if devaluation is the only thing going on but this will not be the case. Unfortunately, if the currency devalued rapidly it would be because something else is happening in the economy or government. How these asset values are affected by that other thing would depend on what the other thing is. In other words, you must tell us what you think will cause devaluation, then we can guess how it might affect stock, real estate, and commodity prices.", "title": "" }, { "docid": "0d5aab7d69f4d7dcc600f2e8dffe876e", "text": "\"House prices do not go up. Land prices in countries with growing economies tend to go up. The price of the house on the land generally depreciates as it wears out. Houses require money; they are called money pits for a reason. You have to replace HVAC periodically, roofs, repairs, rot, foundation problems, leaks, electrical repair; and all of that just reduces the rate at which the house (not the land) loses value. To maintain value (of the house proper), you need to regularly rebuild parts of the house. People expect different things in Kitchens, bathrooms, dining rooms, doors, bedrooms today than they do in the past, and wear on flooring and fixtures accumulate over time. The price of land and is going to be highly determined by the current interest rates. Interest rates are currently near zero; if they go up by even a few percent, we can expect land prices to stop growing and start shrinking, even if the economy continues to grow. So the assumption that land+house prices go up is predicated on the last 35 years of constant rigorous economic growth mixed with interest rate decreases. This is a common illusion, that people assume the recent economic past is somehow the way things are \"\"naturally\"\". But we cannot decrease interest rates further, and rigorous economic growth is far from guaranteed. This is because people price land based on their carrying cost; the cost you have to spend out of your income to have ownership of it. And that is a function of interest rates. Throw in no longer expecting land values to constantly grow and second-order effects that boost land value also go away. Depending on the juristiction, a mortgage is a hugely leveraged investment. It is akin to taking 10,000$, borrowing 40,000$ and buying stock. If the stock goes up, you make almost 5x as much money; if it goes down, you lose 5x as much. And you owe a constant stream of money to service the debt on top of that. If you want to be risk free, work out how you'd deal with the value of your house dropping by 50% together with losing your job, getting a job paying half as much after a period of 6 months unemployment. The new job requires a 1.5 hour commute from your house. Interest rates going up to 12% and your mortgage is up for renewal (in 15 years - they climbed gradually over the time, say), optionally. That is a medium-bad situation (not a great depression scale problem), but is a realistic \"\"bad luck\"\" event that could happen to you. Not likely, but possible. Can you weather it? If so, the risk is within your bounds. Note that going bankrupt may be a reasonable plan to such a bit of bad luck. However, note that had you not purchased the house, you wouldn't be bankrupt in that situation. It is reasonably likely that house prices will, after you spend ~3% of the construction cost of the house per year, pay the mortgage on the land+house, grow at a rate sufficient to offset the cost of renting and generate an economically reasonable level of profit. It is not a risk-free investment. If someone tries to sell you a risk-free investment, they are almost certainly wrong.\"", "title": "" }, { "docid": "1372eca98843f33d82d53e28b69a5f0b", "text": "\"No, it can really not. Look at Detroit, which has lost a million residents over the past few decades. There is plenty of real estate which will not go for anything like it was sold. Other markets are very risky, like Florida, where speculators drive too much of the price for it to be stable. You have to be sure to buy on the downturn. A lot of price drops in real estate are masked because sellers just don't sell, so you don't really know how low the price is if you absolutely had to sell. In general, in most of America, anyway, you can expect Real Estate to keep up with inflation, but not do much better than that. It is the rental income or the leverage (if you buy with a mortgage) that makes most of the returns. In urban markets that are getting an influx of people and industry, however, Real Estate can indeed outpace inflation, but the number of markets that do this are rare. Also, if you look at it strictly as an investment (as opposed to the question of \"\"Is it worth it to own my own home?\"\") there are a lot of additional costs that you have to recoup, from property taxes to bills, rental headaches etc. It's an investment like any other, and should be approached with the same due diligence.\"", "title": "" }, { "docid": "186632702891b096cb961029a47ca4d5", "text": "Of course, I know nothing about real estate or owning a home. I would love to hear people's thoughts on why this would or would not be a good idea. Are there any costs I am neglecting? I want the house to be primarily an investment. Is there any reason that it would be a poor investment? I live and work in a college town, but not your college town. You, like many students convinced to buy, are missing a great many costs. There are benefits of course. There's a healthy supply of renters, and you get to live right next to campus. But the stuff next to campus tends to be the oldest, and therefore most repair prone, property around, which is where the 'bad neighborhood' vibe comes from. Futhermore, a lot of the value of your property would be riding on government policy. Defunding unis could involve drastic cuts to their size in the near future, and student loan reform could backfire and become even less available. Even city politics comes into play: when property developers lobby city council to rezone your neighborhood for apartments, you could end up either surrounded with cheaper units or possibly eminent domain'd. I've seen both happen in my college town. If you refuse to sell you could find yourself facing an oddly high number of rental inspections, for example. So on to the general advice: Firstly, real estate in general doesn't reliably increase in value, at best it tends to track inflation. Most of the 'flipping' and such you saw over the past decade was a prolonged bubble, which is slowly and reliably tanking. Beyond that, property taxes, insurance, PMI and repairs need to be factored in, as well as income tax from your renters. And, if you leave the home and continue to rent it out, it's not a owner-occupied property anymore, which is part of the agreement you sign and determines your interest rate. There's also risks. If one of your buddies loses their job, wrecks their car, or loses financial aid, you may find yourself having to eat the loss or evict a good friend. Or if they injure themselves (just for an example: alcohol poisoning), it could land on your homeowners insurance. Or maybe the plumbing breaks and you're out an expensive repair. Finally, there are significant costs to transacting in real estate. You can expect to pay like 5-6 percent of the price of the home to the agents, and various fees to inspections. It will be exceedingly difficult to recoup the cost of that transaction before you graduate. You'll also be anchored into managing this asset when you could be pursuing career opportunities elsewhere in the nation. Take a quick look at three houses you would consider buying and see how long they've been on the market. That's months of your life dealing with this house in a bad neighborhood.", "title": "" }, { "docid": "aa118ec88d6ba97d72957cf867b37be7", "text": "If there's no inflation (or alternately there's deflation) people would tend to sit on money and wait for the prices to drop. This in pretty bad for pricier stuff like real estate/housing industry where a few percent can make a big difference. For a growing economy a small inflation is good as people would go out and buy new stuff when they want it knowing they will not get a better deal if they wait a year or so.", "title": "" }, { "docid": "e0b589d58e89dc2487eaf6e429674240", "text": "\"Americans are snapping, like crazy. And not only Americans, I know a lot of people from out of country are snapping as well, similarly to your Australian friend. The market is crazy hot. I'm not familiar with Cleveland, but I am familiar with Phoenix - the prices are up at least 20-30% from what they were a couple of years ago, and the trend is not changing. However, these are not something \"\"everyone\"\" can buy. It is very hard to get these properties financed. I found it impossible (as mentioned, I bought in Phoenix). That means you have to pay cash. Not everyone has tens or hundreds of thousands of dollars in cash available for a real estate investment. For many Americans, 30-60K needed to buy a property in these markets is an amount they cannot afford to invest, even if they have it at hand. Also, keep in mind that investing in rental property requires being able to support it - pay taxes and expenses even if it is not rented, pay to property managers, utility bills, gardeners and plumbers, insurance and property taxes - all these can amount to quite a lot. So its not just the initial investment. Many times \"\"advertised\"\" rents are not the actual rents paid. If he indeed has it rented at $900 - then its good. But if he was told \"\"hey, buy it and you'll be able to rent it out at $900\"\" - wouldn't count on that. I know many foreigners who fell in these traps. Do your market research and see what the costs are at these neighborhoods. Keep in mind, that these are distressed neighborhoods, with a lot of foreclosed houses and a lot of unemployment. It is likely that there are houses empty as people are moving out being out of job. It may be tough to find a renter, and the renters you find may not be able to pay the rent. But all that said - yes, those who can - are snapping.\"", "title": "" }, { "docid": "d74ce0acb761e346e6dfe3323d9ea77c", "text": "The article John cites says no correlation, but this chart from the article says otherwise; One sees the rate drop from 14% to 4% and housing rise from an index of 50 to near 190. (reaching over to my TI BA-35 calculator) I see that at 14%, $1000/mo will buy $84,400 worth of mortgage, but at 4%, it will buy $209,500. 2-1/2 times the borrowing power for the same payment. But wait, my friends at West Egg tell me that inflation means I can't compare $1000 in 1980 to the same $1000 in 2010. The $1,000 inflates to $2611 (i.e. an income rising only with inflation, no more) and that can fund a mortgage for $546,900. This is 6.5 times the original borrowing power, yet the housing index 'only' rose 3.8X. See that crazy chart? Housing actually got cheaper from 1980 to the peak. Statistics can say whatever you wish. Interest rate change drove all the change in housing prices, but not quite as much as it should have. To answer your question - I expect that when rates rise (and they will) housing prices will take a hit. In today's dollars, a current $1000 borrows (at 4%) nearly $210K, but at 6%, just $167K. If rates took a jump from these record lows, that's the nature of the risk you'd take.", "title": "" }, { "docid": "fac469245c0605d033cba9fca4684cc3", "text": "Reasons for no: In your first sentence you say something interesting: rates low - prices high. Actually those 2 are reversely correlated, imagine if rates would be 5% higher-very few people could buy at current prices so prices would drop. Also you need to keep in mind the rate of inflation that was much higher during some periods in the US history(for example over 10% in the 1980) so you can not make comparisons just based on the nominal interest rate. Putting all your eggs in one basket. If you think real estate is a good investment buy some REITs for 10k, do not spend 20% of your future income for 20 years. Maintenance - people who rent usually underestimate this or do not even count it when making rent vs mortgage comparisons. Reasons for yes: Lifestyle decision - you don't want to be kicked out of your house, you want to remodel... Speculation - I would recommend against this strongly, but housing prices go up and down, if they will go up you can make a lot of money. To answer one of questions directly: 1. My guess is that FED will try to keep rates well bellow 10% (even much lower, since government can not service debts if interest rates go much higher), but nobody can say if they will succeed.", "title": "" }, { "docid": "9cb8d2713786a67c691618f992ccd148", "text": "The assumption that house value appreciates 5% per year is unrealistic. Over the very long term, real house prices has stayed approximately constant. A house that is 10 years old today is 11 years old a year after, so this phenomenon of real house prices staying constant applies only to the market as a whole and not to an individual house, unless the individual house is maintained well. One house is an extremely poorly diversified investment. What if the house you buy turns out to have a mold problem? You can lose your investment almost overnight. In contrast to this, it is extremely unlikely that the same could happen on a well-diversified stock portfolio (although it can happen on an individual stock). Thus, if non-leveraged stock portfolio has a nominal return of 8% over the long term, I would demand higher return, say 10%, from a non-leveraged investment to an individual house because of the greater risks. If you have the ability to diversify your real estate investments, a portfolio of diversified real estate investments is safer than a diversified stock portfolio, so I would demand a nominal return of 6% over the long term from such a diversified portfolio. To decide if it's better to buy a house or to live in rental property, you need to gather all of the costs of both options (including the opportunity cost of the capital which you could otherwise invest elsewhere). The real return of buying a house instead of renting it comes from the fact that you do not need to pay rent, not from the fact that house prices tend to appreciate (which they won't do more than inflation over a very long term). For my case, I live in Finland in a special case of near-rental property where you pay 15% of the building cost when moving in (and get the 15% payment back when moving out) and then pay a monthly rent that is lower than the market rent. The property is subsidized by government-provided loans. I have calculated that for my case, living in this property makes more sense than purchasing a market-priced house, but your situation may be different.", "title": "" }, { "docid": "98095fce9f91dbb6362fac9280e52d8c", "text": "Real estate is always an interesting dynamic. In most cases prices have always gone up. Price is mainly a function of demand. Sometimes demand is artificially inflated over a short term period and can come down quickly due to corrections. During recessions the housing market will usually slow down. There are some rare instances where certain areas never recover (see Subprime Mortgage Crisis Savings & Loans Crisis where scores of unwanted properties exist). Things to consider:", "title": "" }, { "docid": "432f55ef513524ca36a935720a54e195", "text": "\"This is the best tl;dr I could make, [original](https://www.ecb.europa.eu/pub/pdf/scpwps/ecb.wp2073.en.pdf) reduced by 99%. (I'm a bot) *** > Inflation Housing Demand + 0 + + 0 0 Mon Pol + + 0 0 Loans Supply Lend Rates 0 + 0 + A. Supply A. Demand + + + The first column lists the endogenous variables of the VAR, which react to the shocks reported in the first row: housing demand shocks, monetary policy innovations, shocks to the credit supply, aggregate supply and demand shocks. > The patterns used to distinguish aggregate demand and supply shocks are commonly used in the literature, we are able to discriminate house prices shocks from loans supply and lending rates shocks on the ground of economic theory. > In Spain, in the absence of other shocks, if the growth rates of real consumption had been driven exclusively by housing demand shocks, they would have been largest around 1995 and 2004, and lowest in 2012.18 The cumulative effect of housing demand shocks is rather muted in the remaining countries. * [Extended Summary*](http://np.reddit.com/r/autotldr/comments/6gxbr4/ecb_house_prices_and_monetary_policy_in_the_euro/) \| [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~142717 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: shock^#1 price^#2 House^#3 housing^#4 policy^#5\"", "title": "" }, { "docid": "6194e70294709a000a67a8082c3515f1", "text": "\"I think anyone who is seriously contemplating a real estate purchase needs to sit down and read some history -- in particular the accounts of the 1930's and what happened to people who jumped into real estate in the midst of the depression. If you're not aware: by and large, what happened is they lost their asses: the property continues to fall in value, and then they're on the hooked for increasing taxes as local and state governments raise taxes in a desperate attempt to plug budget holes. And, of course, interest rates are headed nowhere but up. That will inversely impact your home's value, given that most people buy homes exactly like you're thinking about them: not how much the home is worth, but rather how much payment can you afford (as rates go up, you can afford less). A contemporary piece which has lots of accounts of this over multiple years is [The Great Depression - A Diary](http://www.amazon.com/The-Great-Depression-A-Diary/dp/1586489011). IMHO real estate is to be avoided until well after a bottom has been reached, and that's IMHO still some years away. Someone coming out of college now should ferret away as much money as possible, live as cheaply as possible, and stay far, far away from thoughts of \"\"gee, it sure would be a good idea to go drop half a million dollars on a house when I'm making $70K.\"\" While you're predicting raises and employment, neither is safe to take for granted. Indeed, many folks thought that in the late 00's and got absolutely destroyed financially as a result.\"", "title": "" } ]	fiqa
28c2d565ce53f132391ffb9d8ffee59d	Does a stay at home mom need term life insurance?	[ { "docid": "ece1010f6a16b8f0d8df6ae8138d3a7d", "text": "The way to think about this is: what would happen to the family if stay-at-home Mom were to die. You obviously can't do anything about the loss, grief and trauma, but think about the financial implications. Assuming that Dad continues to work, and that the child is young, you are going to have to find someone to take care of him/her. If you have relatives willing to step in, that may be fine. but if not you will have to pay for daycare - an expense you don't now have. That's going to get less as the child goes to school, but not go away until he/she is old enough to look after themselves. Bringing up a child, as well as working a full time job, is pretty demanding. You may find that you don't have as much time for cleaning the house, cooking or other chores. Having a sum of money which can be used to hire help or pay for a few meals out can be very useful in these cases. Here is an article which places a value on the work done by a stay-at-home Mom. You might not need to pay for all of those services, but it gives you an idea of what the extra expenses might be. Think about what extra money you might need to spend, and arrange for life insurance to cover it.", "title": "" }, { "docid": "b1eea7c8c7a4e954533912a071fb2bc8", "text": "Absolutely! Just because a spouse doesn't have a taxable income, doesn't mean they aren't providing real, tangible benefit to the family economy with an important job. As tragic as it is to consider losing your spouse, are you truly in a position to replace everything they do you for you? Knowing what they do for you and appreciating the effort your spouse gives is important, but don't sell short the dollar amount of what they provide. Your life insurance policy should be to keep you whole. Without your spouse, you will need childcare. You might need domestic services to the home. What about a nanny or similar service? Would $50K cover that until your child is an adult? There are a number of added expenses in the short and long term that would occur if a spouse died. How much for a funeral? Obviously you know the amount and term depends on the age of your kid. But I think you should really try to account for the number of daily hours you spouse puts in, and try to attach a cost to those hours. Then buy insurance for them just as you would for a wage earning. For example, buy a policy that is 10x the annual cost for services it would take to compensate for your spouse. Your tolerance for risk and cost can adjust it up and down from there.", "title": "" }, { "docid": "b7413b64dd84b48bcc6de3cb284dff30", "text": "We asked the same question earlier this year as my wife is a SAHM with 2 young boys (5 and under). If something happened to her I'd have to quit work or change careers to stay home to raise them or something. We ended up getting a decent 20 year level TERM policy that will cover the care of both boys for many of their younger years. The cost is negligible but the piece of mind is priceless.", "title": "" }, { "docid": "3ff7148e192db7fe47dfe1f25883aeec", "text": "Another source of insurance can be through the working spouses employment. Some companies do provide free or low cost coverage for spouses without a need for a physical exam. The risk is that it might not be available at the amount you want, and that if the main spouse switches companies it might not be available with the new employer. A plus is that if there is a cost it is only a one year commitment. Term insurance is the way to go. It is simple to purchase, and not complex to understand. Sizing is key. You may need to provide some level of coverage until the youngest child is in high school or college. Of course the youngest child might not have been born yet. The longer the term, the higher the cost to account for the inflation during the period of the insurance. If the term expires, but the need still exists, it is possible to get another policy but the cost of the new term policy will be higher because the insured is older. If there are special needs children involved the amount and length may need to be increased due to the increased costs and duration of need. Don't forget to periodically review the insurance situation to make sure your need haven't changed so much a new level of insurance would be needed.", "title": "" } ]	[ { "docid": "7610a43443e148a699c9b0643eb86a56", "text": "\"First, I'm really sorry to hear about your mother. My wife was recently diagnosed with Stage 4 cancer, so I know that there is a possibility that your mind is in \"\"survival\"\" mode, trying to preserve as much as you can in the way of things that you can effect (that's how I've been feeling recently). Having a loved one with cancer is really tough because there is absolutely, positively nothing tangible that you can do to change the fact that they have cancer. You will have to ask yourself some questions: How important is it that your mom can stay in her house? Moving could add some unneeded stress. How may years have you been contributing to your 401k? If you have 30 years left, you could have enough time to recover some of your losses from reducing the amount of money you have given up for your mom. Will your mom be able to pay you back for paying the taxes over time, or would this be a 'gift'? Have her doctors told her that she \"\"... has N months left...\"\"? What is the next step after you are able to pay her taxes and save the house? Someone close to me recently told me that \"\"There is no point in trying to save for someone for the future, if you can't sustain them until they get to that future. What will happen to your mom if she loses her house? Will it make it easier or harder for her to recover if she can stay? To paraphrase someone famous, \"\"you can't take a loan out for your retirement, but you could take a loan out for this event.\"\" At any rate, good luck. My thoughts are with you and your mother.\"", "title": "" }, { "docid": "b788b4cbe7182a402691ecdc663659b5", "text": "\"If I was in your shoes I would have some term insurance, and it is pretty darn cheap at your age. Your wife is dependent upon your income, and it will take sometime to transition from non-working to working. As she could probably get a job doing anything, it will probably take many years to build up to the lifestyle she is accustomed. She may never be able to obtain your salary. While she could spend down the amount you two have saved up for retirement, tax will have to be paid on any non-ROTH contributions. The decisions for this have to be made within a year of death and are not easy. I would not want to put my spouse through this. Plus some day she would have to retire. If she spends down a significant portion of the savings you have built, well that will need to be replenished and you probably know time is not on one's side when it comes to compounding. Do you have to have 10x-15x times your earnings in insurance? No. Do you need to do a 20 year level term, No. Perhaps a 10 year level term for like 5x your income. Just something to \"\"bridge the gap\"\". If you live, you will be much better off financially, and could probably drop the coverage. If you don't you will not leave her sad and with difficult financial decisions; just sad.\"", "title": "" }, { "docid": "730ad7c986ba008c4a3dfbaf3aed190d", "text": "At their age, the likely did not even need the coverage anymore unless they were doing some major estate planning. If that's the case then it sound like they purchased the wrong policy to begin with since OP's account of the information makes it sound like a term policy. If it is a term policy, the term was also probably about to end as well. In the end, this will likely not be a bog deal.", "title": "" }, { "docid": "1176912da74cf1b97a8f7dcf90586010", "text": "\"I have an answer and a few comments. Back to the basics: Insurance is purchased to provide protection in case of a loss. It sounds as though you are doing well, from a financial perspective. If you have $0 of financial obligations (loans, mortgages, credit cards, etc.) and you are comfortable with the amount that would be passed on to your heirs, then you DO NOT NEED LIFE INSURANCE. Life insurance is PROTECTION for your heirs so that they can pay off debts and pay for necessities, if you are the \"\"bread-winner\"\" and your assets won't be enough. That's all. Life insurance should never be viewed as an investment vehicle. Some policies allow you to invest in funds of your choosing, but the fees charged by the insurance company are usually high. Higher than you might find elsewhere. To answer your other question: I think NY Life is a great life insurance company. They are a mutual company, which is better in my opinion than a stock company because they are okay with holding extra capital. This means they are more likely to have the money to pay all of their claims in a specific period, which shows in their ratings: http://www.newyorklife.com/about/what-rating-agencies-say Whereas public companies will yield a lower return to their stock holders if they are just sitting on additional capital and not paying it back to their stock holders.\"", "title": "" }, { "docid": "53bdf838a2709ffdd535c342eae41bdc", "text": "Term life insurance makes sense if you will have a need for money if someone dies. If you (and your brothers) do not have enough money currently for a proper burial for your father, then you might consider term insurance to cover this. If you already have the money to cover this (or can save for it in a short amount of time), then you are better off financially to not purchase the insurance. Estimate what you think it will cost for a burial, then determine if you have this money available to you. If you already do, then don't purchase the insurance. If you do not have this money available to you, then you can look into a term life insurance policy on your father. You definitely do not want a whole life insurance policy. This will cost many more times what a term policy costs. A term policy is a policy with an expiration date. For example, let's say that you determine that you will need $10,000 when your father dies for the funeral and burial. You could get a 10-year policy on your father for $10,000. Over the next 10 years, besides paying your premiums, save up $10,000 ($1,000 each year) in some type of savings/investing account. Hopefully, your father will still be around 10 years from now, and you won't need the insurance policy anymore, because you will have saved enough to cover the costs when the time comes. Doing this will almost always cost you less than getting a whole life policy, which never expires, but has much higher premiums. There are also 20-year term policies, which will cost more, but will give you more time to save up your fund. The costs for these policies depend on your father's age, so get a quote for both and decide what will work for you.", "title": "" }, { "docid": "e7949ba4d3c415a4fd358bc2b44ce02d", "text": "I've had many home loans, and all have been sold to a big bank. They have certain rules about how much insurance you need to have, but I've never had one buy insurance on my behalf - they always send letters telling me I need to increase the insurance. They do say that if I don't get enough insurance, they will do it for me, but this has never been necessary.", "title": "" }, { "docid": "4d31afb23d1362c3d8ae5cbc15fb6ac4", "text": "As Mhoran stated, no dependents, no need. Even with dependants, insurance is to cover those who would otherwise have a hardship. Once the kids are off to college and house paid for, the need drops dramatically. There are some rather complex uses for insurance when estates are large but potentially illiquid. Clearly this doesn't apply to you.", "title": "" }, { "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": "78808e9dd52b33e6f3993f320dd9e810", "text": "Higher life insurance. Mortgage insurance is a very expensive decreasing term life insurance policy, that pays the Lender. You can likely increase your limits for less cost, AND, the payout doesn't depreciate every month, AND, your beneficiary can use the money any way they want - to buy food, or pay property taxes, or whatever.", "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": "53565154111376f435af2c4d8b50d458", "text": "As you say life insurance is about covering the loss of income, so unless your child is an actor or musical prodigy or similar and already earning money, there is no income to cover, and in fact you would have less of a financial commitment without a child to provide for. The other angle is that child life insurance is cheap and they'll have lower premiums than an adult. I'll quote the referenced article directly to address that: Another ploy is that children's life insurance is cheap. It is inexpensive compared to adult life insurance because, plain and simply, children rarely die. While the numbers that the sales agent puts together may make children's life insurance sound like a great deal, take the time to run what you'd have if you instead invested the exact same amount used on the insurance fees into a Roth IRA and you'll find the true cost of purchasing this type of life insurance.", "title": "" }, { "docid": "9b1e77a88b909b572416ca954b39460a", "text": "For most people Term is the way to go. I consider life insurance a necessity not an investment. See this article on SmartMoney.", "title": "" }, { "docid": "faf771838eccce369d94d11fa1701ebc", "text": "\"The problem above is actually a pretty good list of the concerns around life insurance. While there is no correct answer to the question as posed, this will vary among different WSCs, there is a simpler way to think about insurance in general that may make finding what is right answer for you easier. Buying life insurance, like almost all insurance, is on average a money losing purchase. This is simply because the companies selling wouldn't offer it if they couldn't expect to make money on it. Think about buying insurance (a warranty) on a new cell phone, maybe if you are particularly prone to damaging cell phones it can be in your favor, but for most of the people that buy it will lose money on average. People, of course, still buy insurance anyway to protect themselves from unlikely but very bad consequences. The big reason to make this trade off is if the loss will have big lasting consequences. To stay with our cell phone example having to replace a cell phone, at least for me, would be annoying but not a catastrophic event. For myself, the protection is not worth the warranty cost, but that is not true for everyone. Life insurance is a pretty extreme case of this, but I find the best question to ask is \"\"if you (you and your spouse) were to die will your dependents lives become so much worse that you really dislike the idea of not being insured?\"\" For some working seniors, they already have enough saved to bridge their kids/spouse to adulthood/old-age that insurance makes no sense. For some, their children/husband/wife would be destitute and insurance is an obvious choice and an easy price to pay even if it is very high. The example you suggest seems on the border and good questions to ask are: Thinking about those questions may help you understand if the protection offers is worth the cost.\"", "title": "" }, { "docid": "e7c606e17d41f33ef5ca789b461f6c8b", "text": "(Disclosure - I am a real estate agent, involved with houses to buy/sell, but much activity in rentals) I got a call from a man and his wife looking for an apartment. He introduced itself, described what they were looking for, and then suggested I google his name. He said I'd find that a few weeks back, his house burned to the ground and he had no insurance. He didn't have enough savings to rebuild, and besides needing an apartment, had a building lot to sell. Insurance against theft may not be at the top of your list. Don't keep any cash, and keep your possessions to a minimum. But a house needs insurance for a bank to give you a mortgage. Once paid off, you have no legal obligation, but are playing a dangerous game. You are right, it's an odds game. If the cost of insurance is .5% the house value and the chance of it burning down is 1 in 300 (I made this up) you are simply betting it won't be yours that burns down. Given that for most people, a paid off house is their largest asset, more value that all other savings combined, it's a risk most would prefer not to take. Life insurance is a different matter. A person with no dependents has no need for insurance. For those who are married (or have a loved one), or for parents, insurance is intended to help survivors bridge the gap for that lost income. The 10-20 times income value for insurance is just a recommendation, whose need fades away as one approaches independence. I don't believe in insurance as an investment vehicle, so this answer is talking strictly term.", "title": "" }, { "docid": "48c24049376a347959f8f744d9e66517", "text": "Bond ETFs are traded like normal stock. It just so happens to be that the underlying fund (for which you own shares) is invested in bonds. Such funds will typically own many bonds and have them laddered so that they are constantly maturing. Such funds may also trade bonds on the OTC market. Note that with bond ETFs you're able to lose money as well as gain depending on the situation with the bond market. The issuer of the bond does not need to default in order for this to happen. The value of a bond (and thus the value of the bond fund which holds the bonds) is, much like a stock, determined based on factors like supply/demand, interest rates, credit ratings, news, etc.", "title": "" } ]	fiqa
c304041b13e01ed79da2d46bb48cd8bd	Clarification of Inflation according to Forbes	[ { "docid": "2df67d91e2c1c9ae4457d083be5beb0c", "text": "I think you're missing Simon Moore's point. His point is that, due to low inflation, the returns on almost all asset classes should be less than they have been historically, so we shouldn't rebalance our portfolio or withdraw from the market and hold cash based on the assumption that stocks (or any other asset) seem to be underperforming relative to historical trends. His last paragraph is written in case someone might misunderstand him, he is not advocating to hold cash, just that investors should not expect as good returns as has happened historically, since those happened in higher inflation environments. To explain: If the inflation rate historically has been 5% and now it's 2%, and the risk-free-market return should be about 2%, then historically the return on a risk-free asset would be 7% (2%+5%), and now it should be expected to be 4% (2%+2%). So, if you have had a portfolio over some time you might be concerned that the rate of return is worsening, but Simon's point is that before you sell off your stocks / switch investment brokers, you should try to figure out if inflation is the cause of the performance loss. On the subject of cash: cash always loses value over time from inflation, since inflation is a measure of the increase in prices over time-- it's a part of the definition of what inflation is. That said, cash holdings lose value more slowly when inflation is lower, so they are relatively less worse than before. The future value of cash doesn't go up in low inflation (you'd need deflation for that), it just decreases at a lower rate, that is, it becomes less expensive to hold- but there still is a price. As an addendum, unless a completely new economic paradigm is adopted by world leaders, we will always see cash holdings decrease in value over time, since modern economics holds that deflation is one of the worst things that can happen to an economy.", "title": "" }, { "docid": "340b75b1e37eecd052b891c6d5bbe629", "text": "Inflation can be a misleading indicator. Partly because it is not measured as a function of the change in prices of everything in the economy, just the basket of goods deemed essential. The other problem is that several things operate on it, the supply of money, the total quantity of goods being exchanged, and the supply of credit. Because the supply of goods divides - as more stuff is available prices drop - it's not possible to know purely from the price level, if prices are rising because there's an actual shortage (say a crop failure), or simply monetary expansion. At this point it also helps to know that the total money supply of the USA (as measured by total quantity of money in bank deposits) doubles every 10 years, and has done that consistently since the 1970's. USA Total Bank Deposits So I would say Simon Moore manages to be right for the wrong reasons. Despite low inflation, cash holdings are being proportionally devalued as the money supply increases. Most of the increase, is going into the stock market. However, since shares aren't included in the measures of inflation, then it doesn't influence the inflation rate. Still, if you look at the quantity of shares your money will buy now, as opposed to 5 years ago, it's clear that the value of your money has dropped substantially. The joker in the pack is the influence of the credit supply on the price level.", "title": "" } ]	[ { "docid": "fbdea9ba5d1fc8a54ba6589926fb9783", "text": "Well, there are also cases where inflation actually helps you, individually, as a consumer. For example, if you have a mortgage or any other debt, debtors benefit from the value of a dollar today decreasing tomorrow. In a very general sense, psychologically you want to avoid deflationary periods as well as it tends to seize up an economy (why would I spend a dollar today if it will be worth more tomorrow?). Sure, the absolute value of a dollar decreases over time, but this is intentionally designed to diminish the value of hoarding cash today. Standard income should rise approximately with the rate of inflation, so from an absolute purchasing power standpoint you should remain approximately neutral.", "title": "" }, { "docid": "c8190e9108a05fa2ddb5fed8c8ec55ac", "text": "It's rather evident that, despite the nay-sayers, food prices will go down due to this deal. Amazon is laser-focused on two things: making things cheaper and getting things to you faster. They've developed/ are developing a strong base of knowledge and development in machine learning, robotics, and blockchain, which would greatly facilitate these two tasks. However, as stated in the article, this will not have a significant effect on inflation due to the fact that the economy makes up for it in other respects (cough rising tuition and oil prices cough). It's interesting to note that food inflation was warned against by several experts within the past two years but this deal might change that (see: https://www.ers.usda.gov/data-products/food-price-outlook/summary-findings.aspx ).", "title": "" }, { "docid": "bf829122e170703d3f940567433dc3fb", "text": "But has inflation went up ? The only reason jobs would be lost would be if the cities economy couldn't absorb the inflation . Since you are now increasing the incomes of every one at the bottom , the city will likely be able to absorb the inflation . The question really is have the people at the bottom increased there spending power over all and have there been winners and losers for example maybe servers are doing better but retirees and others on a fixed income worse .", "title": "" }, { "docid": "a3bc7cbd264efa6c43b887e57c5fbe64", "text": "\"Curious if anyone has any insight here, but isn't it too soon to tell if this will lead to inflation, and purely speculative that we could \"\"do the same\"\", given that we are in a very different set of circumstances?\"", "title": "" }, { "docid": "78749887079fab84bbbbd49b140d08da", "text": "I'm no expert, but this is my understanding. Not necessarily. For example, the Canadian dollar has jumped up recently because people are expecting a rate hike at the central bank this week some time. That is, the Canadian dollar is being traded for more because people expect that the currency will be harder to get later. This deflation (or decelerated inflation) is being priced in before it even happens. For inflation to propagate through an entire domestic supply chain of a good or service takes time. Raises aren't tied to inflation, nor the price of a Big Mac or price of a movie ticket or toaster that has been sitting on the shelf for a month. The price of the good in foreign currency will however hit the export as soon as it crosses the border.", "title": "" }, { "docid": "1b48c02108fbceb137c649caea9a0cc0", "text": "Yes, asset inflation is still inflation. Economy = consumption + investment + government - net exports. So you increase the money supply to the wealthy what happens? Not in increase in consumption, their basic needs are met so they invest it. Everyone invests their extra money, what happens? Price goes up for stock and real estate while the yield on those investments goes down. You have people buying really expensive assets with great leverage because their is no alternative. So inflation has increased, you are just to poor to notice it. We also live on a deflationary world. Production increases while demand remains constant. So what happens? Price goes down and marginal companies go out of business. Leading to more consolidation, lower prices due to greater market share, more companies cannot compete and the cycle continues. The only inflation comes from overseas, where you have growing economies. Here we have almost no population or wage growth, so that is deflationary .", "title": "" }, { "docid": "875ce063881a862e69df58e822d3e536", "text": "\"I knew before I clicked that this was going to refer to Saez. I don't mean to disparage his scholarship, but he's clearly a guy with an agenda. For example, the reason this number is so outrageous is because 2010 was a terrific year for the stock market, and a middling to bad year for employment and wage growth. Stocks tend to be a leading indicator, while job growth is a trailing one. In fact, Saez also tries to make hay by comparing the first two years of this \"\"recovery\"\" with the entirety of the (much longer) '90's and '00's booms. If you target your analysis at years when the market has recovered but jobs haven't, of course you'll see greater income gains for the investor class. But by that same token, Saez could have been putting out press releases for studies in 2008 showing how the rich were getting absolutely screwed by losing the lion's share of their income as the market tanked, while ordinary folks were perhaps losing only a little because the full force of job losses hadn't hit yet. But he didn't, AFAIK.\"", "title": "" }, { "docid": "f5cb701b6cfca2174077ccca271b9fb1", "text": "let's define inflation as an increase in m1 relative to the goods and services in the dollar economy. twist doesn't change m1 because it is sterilized. it does make tsys attractive since it supports their prices. that means de-risking flows are to the u.s. that means dollar goes up. that means gold goes down.", "title": "" }, { "docid": "f51352ee8542211f99b0f6241d0fffa5", "text": "\"Some people believe that inflation is caused by an increase in the money supply when the banks engage in fractional reserve lending. Is this correct? You are referring to the Austrian school of thought. The Austrians define inflation in terms of money supply. In other words, inflation is defined as an increase in the aggregate money supply, even if prices stay the same of fall. This is not the only definition of inflation. The mainstream defines inflation as a general increase in the prices of consumer goods. Based on the first definition, then your supposition is correct by definition. Based on the second definition, you can make a case that money supply affects prices. But keep in mind, it's just one factor affecting prices. Furthermore, economics is resistant to experimentation, so it is difficult to establish causality. Austrian economists tend to approach the problem of \"\"proof\"\" using a 2-pronged tactic: establish plausibility by explaining the mechanism, then look for historical evidence to back up that explanation. As I understand it, when there is more available money in the market, the price of goods will increase. But will a normal merchant acknowledge the increase of money supply and raise prices immediately? I posit that, in the short run, merchants won't increase prices in response to increased money supply. So, why does increased money supply lead to price inflation? The simple answer, in the Austrian school of thought, is that you have more money chasing the same amount of goods. In other words, printing money doesn't actually increase the number of widgets made. I believe the Austrian school is consistent with your supposition that prices don't increase in the short run. In other words, producers don't increase prices immediately after observing an increase in the money supply. Specifically, after the banks print more notes, where will the money be distributed first? The Austrian story goes as follows: Imagine that the first borrower is a home constructor, and he is borrowing freshly \"\"printed\"\" money to build new homes. This constructor will need to buy materials and hire labor to build homes, and in doing so he will bid against other home constructors. The increased demand for lumber, nails, tools, carpentry, etc. will ever so slightly increase the market prices for these goods and services. So the money goes first to the borrower, but then flows also to the people selling to the borrower, and the people selling to the sellers, etc. It has a ripple effect. Who will be the first one to have a need to rise their price? These producers won't need to increase their price, but they will choose to do so if the believe that demand outstrips supply. In other words if you have more orders than you can fill, then you may post higher prices because you think consumers will tolerate the higher price. You might object that competition deters any one producer from unilaterally raising prices, but in fact if all producers are failing to keep up with demand, then you can unilaterally raise prices because other producers don't have any excess inventory to undercut you with.\"", "title": "" }, { "docid": "78e3adf89767e6d8654774c49cb9b1f2", "text": "There are two things you need to keep in mind when you look at Inflation as an entity. Inflation is necessary to keep in check the value of goods. As per Moore's Law for example, a mobile phone that you buy for £100 today will be available for £50 in two years. With increased purchasing power, one needs to maintain balance between the purchasing power and its value. If you think about the 'loss' at a rate of 2% you would have £96.04 (in terms of today's value) in two years. But if you looked at the same cell phone as leverage for your business where it allowed you to do work and earn £1000 in two years - the investment would clearly offset the cost of inflation. Inflation is incentive for people to spend their money. If you for example spent all of your £100 today, it is £100 income for someone else. He has further incentive to spend it creating a chain of transactions. In theory while this is a true mathematical loss, the increasing purchasing power helps you leverage your financial asset to get a return on your investment.", "title": "" }, { "docid": "1407a11a1bfd45195cc54d12195ad9d1", "text": "\"In that example, \"\"creating money\"\" could be used interchangeably with \"\"making promises\"\". There's no inflation, and no problem, so long as everyone keeps their promises. Which sounds like a horrifying thing to say about the foundations of the economy, but the remarkable thing is that people mostly do.\"", "title": "" }, { "docid": "7a53c5f4ce1cf486607686d161248249", "text": "\"The official source is the most recent Form 13F that Berkshire Hathaway, which is filed with the Securities & Exchange Commission on a quarterly basis . You can find it through the SEC filing search engine, using BRKA as the ticker symbol. and then looking for the filings marked 13-FR or 13-FR/A (the \"\"/A\"\" indicates an amended filing). As you can see by looking at the 13-F filed for the quarter ending September 30 , the document isn't pretty or necessarily easy to read, hence the popularity of sites such as those that Chad linked to. It is, though, the truly official source from which websites tracking the Berkshire Hathaway portfolio derive their information.\"", "title": "" }, { "docid": "f791ea47391e980f4185fbb60046f1e9", "text": "Assuming constant velocity, inflation is caused by the difference between the growth in the money supply and growth in real output. In other words, this means that the money supply growing faster than output is expanding causes inflation to arise.", "title": "" }, { "docid": "dfafcc92da76fa7f7ae4390603830f17", "text": "There is inflation, but it's hidden through various mechanisms. What do you call housing price increases and wage declines? What do you call the fed essentially paying down the inflation with free money and prices still pressuring upwards? I get the sense there is a great underlying pressure for inflation to burst out from the fed's free money pressure chamber. For all our sake, I really hope the pressure chamber holds or I'm totally wrong in the first place.", "title": "" }, { "docid": "a70568de6258ac4ff20caf60647f630e", "text": "\"First, a clarification. No assets are immune to inflation, apart from inflation-indexed securities like TIPS or inflation-indexed gilts (well, if held to maturity, these are at least close). Inflation causes a decline in the future purchasing power of a given dollar1 amount, and it certainly doesn't just affect government bonds, either. Regardless of whether you hold equity, bonds, derivatives, etc., the real value of those assets is declining because of inflation, all else being equal. For example, if I invest $100 in an asset that pays a 10% rate of return over the next year, and I sell my entire position at the end of the year, I have $110 in nominal terms. Inflation affects the real value of this asset regardless of its asset class because those $110 aren't worth as much in a year as they are today, assuming inflation is positive. An easy way to incorporate inflation into your calculations of rate of return is to simply subtract the rate of inflation from your rate of return. Using the previous example with inflation of 3%, you could estimate that although the nominal value of your investment at the end of one year is $110, the real value is $100(1 + 10% - 3%) = $107. In other words, you only gained $7 of purchasing power, even though you gained $10 in nominal terms. This back-of-the-envelope calculation works for securities that don't pay fixed returns as well. Consider an example retirement portfolio. Say I make a one-time investment of $50,000 today in a portfolio that pays, on average, 8% annually. I plan to retire in 30 years, without making any further contributions (yes, this is an over-simplified example). I calculate that my portfolio will have a value of 50000 (1 + 0.08)^30, or $503,132. That looks like a nice amount, but how much is it really worth? I don't care how many dollars I have; I care about what I can buy with those dollars. If I use the same rough estimate of the effect of inflation and use a 8% - 3% = 5% rate of return instead, I get an estimate of what I'll have at retirement, in today's dollars. That allows me to make an easy comparison to my current standard of living, and see if my portfolio is up to scratch. Repeating the calculation with 5% instead of 8% yields 50000 * (1 + 0.05)^30, or $21,6097. As you can see, the amount is significantly different. If I'm accustomed to living off $50,000 a year now, my calculation that doesn't take inflation into account tells me that I'll have over 10 years of living expenses at retirement. The new calculation tells me I'll only have a little over 4 years. Now that I've clarified the basics of inflation, I'll respond to the rest of the answer. I want to know if I need to be making sure my investments span multiple currencies to protect against a single country's currency failing. As others have pointed out, currency doesn't inflate; prices denominated in that currency inflate. Also, a currency failing is significantly different from a prices denominated in a currency inflating. If you're worried about prices inflating and decreasing the purchasing power of your dollars (which usually occurs in modern economies) then it's a good idea to look for investments and asset allocations that, over time, have outpaced the rate of inflation and that even with the effects of inflation, still give you a high enough rate of return to meet your investment goals in real, inflation-adjusted terms. If you have legitimate reason to worry about your currency failing, perhaps because your country doesn't maintain stable monetary or fiscal policies, there are a few things you can do. First, define what you mean by \"\"failing.\"\" Do you mean ceasing to exist, or simply falling in unit purchasing power because of inflation? If it's the latter, see the previous paragraph. If the former, investing in other currencies abroad may be a good idea. Questions about currencies actually failing are quite general, however, and (in my opinion) require significant economic analysis before deciding on a course of action/hedging. I would ask the same question about my home's value against an inflated currency as well. Would it keep the same real value. Your home may or may not keep the same real value over time. In some time periods, average home prices have risen at rates significantly higher than the rate of inflation, in which case on paper, their real value has increased. However, if you need to make substantial investments in your home to keep its price rising at the same rate as inflation, you may actually be losing money because your total investment is higher than what you paid for the house initially. Of course, if you own your home and don't have plans to move, you may not be concerned if its value isn't keeping up with inflation at all times. You're deriving additional satisfaction/utility from it, mainly because it's a place for you to live, and you spend money maintaining it in order to maintain your physical standard of living, not just its price at some future sale date. 1) I use dollars as an example. This applies to all currencies.\"", "title": "" } ]	fiqa
8eb07199780c492d2e9edf71d6396f39	Buying a foreclosed property	[ { "docid": "c3c977ec4a6f2ce7f1d3adc224bc472f", "text": "\"Usually... I think that's overstating the case. You CAN get a bargain (especially if the place is in not-so-great condition), but not every foreclosure will be a good deal even if it is priced well below its most recently appraised value. As the buyer it's your responsibility to determine whether it's priced well or not, and to decide whether you're willing and able to repair its deficiencies after you buy it. The same's true when purchasing any house; foreclosures just make it more likely that there are problems and (hopefully) wind up being priced to allow for them. I don't know of a single website which lists all foreclosures. Some of the home listing websites do have a \"\"show me foreclosure listings\"\" filter, and I'm sure that the better tools available to real estate agents can select these. But if that's the direction you're interested in going, you should be looking at distressed properties generally, NOT just foreclosures; you may get a better deal, in the long run, by going for the one that has been mechanically maintained but is just plain ugly rather than the one with a pretty skin whose heating system hasn't been serviced for the last decade. Do your homework, shop around, don't fall in love with any one house... all the same rules apply at this end of the spectrum just as strongly as they do in the mid or upper ranges. Perhaps more so. Happy hunting!\"", "title": "" }, { "docid": "f2e9f2153e4460445c24cf7830f14c08", "text": "No, it is not true. It depends on the market, the banks' inventory, the original debt that was owed, etc etc. The banks generally want to recover their money, so in case of underwater properties they may end up hold a property for years until prices bounce back (as it happened during the last crisis when many houses were boarded for months/years until banks put them back on the market hoping to sell at a price that would allow them to recover their losses).", "title": "" }, { "docid": "51b60654625f24fcfb67d8f662cabb41", "text": "That may depend largely in which country you are in, the legislation in that country and the state of the economy and property market (more specifically) at the time of the foreclosure. In Australia, where we do not have non-recourse loans (except in SMSFs) the banks are obliged to recoup as much as possible for the mortgagee, however they would not hold on to the property indefinitely, as that could cause other problems and they have to return the mortgagee portion of the funds back to them (if there is any funds left after the bank takes their portion). In 2008, when the property market here was weak we had bought some foreclosure houses and were able to get them 20% to 25% below what they were selling at the year before. If there was a forclosure in today's strong market in Australia (and especially in Sydney), I dought you would get much of a discount at all. So it may largly depend on the demand and supply at the time of the forclosure.", "title": "" }, { "docid": "47b97f141baea0df9f1827f55502835c", "text": "\"Like most other things, this is \"\"sometimes,\"\" but not always true. Sometimes banks will be willing to sell at a discount, sometimes they will hold out for \"\"full price.\"\" But if you want a discount, this is a good place to \"\"look.\"\"\"", "title": "" } ]	[ { "docid": "4af29a241248699704bf23cf1c31c9ea", "text": "The core competency of banks is to lend money from depositors and re-lend that money to borrowers. They do not have the expertise to develop real estate. They have trouble evening managing foreclosed real estate, such that they have to sell them at a discount.", "title": "" }, { "docid": "bdfc3e853580c00d5da19e51a2631af0", "text": "\"Based on what you asked and your various comments on other answers, this is the first time that you will be making an offer to buy a house, and it seems that the seller is not using a real-estate agent to sell the house, that is, it is what is called a FSBO (for sale by owner) property (and you can learn a lot of about the seller's perspective by visiting fsbo.com). On the other hand, you are a FTB (first-time buyer) and I strongly recommend that you find out about the purchase process by Googling for \"\"first-time home buyer\"\" and reading some of the articles there. But most important, I urge you DO NOT make a written offer to purchase the property until you understand a lot more than you currently do, and a lot more than all the answers here are telling you about making an offer to buy this property. Even when you feel absolutely confident that you understand everything, hire a real-estate lawyer or a real-estate agent to write the actual offer itself (the agent might well use a standard purchase offer form that his company uses, or the State mandates, and just fill in the blanks). Yes, you will need to pay a fee to these people but it is very important for your own protection, and so don't just wing it when making an offer to purchase. As to how much you should offer, it depends on how much you can afford to pay. I will ignore the possibility that you are rich enough that you can pay cash for the purchase and assume that you will, like most people, be needing to get a mortgage loan to buy the house. Most banks prefer not to lend more than 80% of the appraised value of the house, with the balance of the purchase price coming from your personal funds. They will in some cases, loan more than 80% but will usually charge higher interest rate on the loan, require you to pay mortgage insurance, etc. Now, the appraised value is not determined until the bank sends its own appraiser to look at the property, and this does not happen until your bid has been accepted by the seller. What if your bid (say $500K) is much larger than the appraised value $400K on which the bank is willing to lend you only $320K ? Well, you can still proceed with the deal if you have $180K available to make the pay the rest. Or, you can let the deal fall apart if you have made a properly written offer that contains the usual contingency clause that you will be applying for a mortgage of $400K at rate not to exceed x% and that if you can't get a mortgage commitment within y days, the deal is off. Absent such a clause, you will lose the earnest money that you put into escrow for failure to follow through with the contract to purchase for $500K. Making an offer in the same ballpark as the market value lessens the chances of having the deal fall through. Note also that even if the appraised value is $500K, the bank might refuse to lend you $400K if your loan application and credit report suggest that you will have difficulty making the payments on a $400K mortgage. It is a good idea to get a pre-approval from a lender saying that based on the financial information that you have provided, you will likely be approved for a mortgage of $Z (that is, the bank thinks that you can afford the payments on a mortgage of as much as $Z). That way, you have some feel for how much house you can afford, and that should affect what kinds of property you should be bidding on.\"", "title": "" }, { "docid": "de7a838250aa1b7ab38cc453fbfb6214", "text": "\"But look at the bright side. The Home Owners Association is telling your neighbor (for the low low fee of $200 every 4 months) to put his garbage can into his garage after every garbage pickup. Your house is worth a fortune, even if nobody is willing to buy the 12 houses for sale on your block (never mind the fact that they have been for sale for the past 2 years or the fact that nobody is willing to \"\"rent\"\" a place in butt fuck Egypt for $1500 a month).\"", "title": "" }, { "docid": "83c106b9454403695d381986d1c497d6", "text": "Aside from everyone else's explanation about bundling them with other mortgages, a buddy of mine who worked at a boutique lending group basically said that they KNOW these people can't pay the loans back and thus the bank will be able to take over ownership of the home. Since housing prices are guaranteed to go up, they'll be able to make money once they re-sell the property.", "title": "" }, { "docid": "f5ed620bbf35fad3ba097a75207ecd10", "text": "\"There's truth to that, although I'm not sure if the ratio is quite 6 to 1. It IS true that they are processing foreclosures much slower now after the robo-signing fiasco, and also that there is some justification for letting a house stay occupied rather than sit empty. I disagree with your assertion that \"\"smart banks\"\" would dump massive amounts of property at a loss. Selling their inventory quickly would slim their balance sheet (which they been trying to do) and let huge losses flow through their income statement. That's a bad way to achieve a good end, even though the changes are purely accounting and not economic. That's not smart for any business, operating in a vacuum and independent of competition, whether a bank or a retailer. Should GM and Ford sell their backlogs of cars at a massive loss now, just to get rid of the property? There's underlying, economic, intrinsic value. Properties in the biggest bust markets, like LV and Phoenix, are down 2/3rds from the prices around 05/06; one would argue that the prices are so low they fail to make economic sense. Florida was a huge bust market, but today's NY Times (http://www.nytimes.com/2011/12/28/us/miami-courts-free-spending-brazilians.html?_r=1&scp=2&sq=brazil&st=cse) talks about a recovery in property values, fueled by Brazilians. Given that cities like Vancouver and throughout the SF Bay Area have seen property prices recover, in part fueled by foreign purchasers (mostly China, etc) why would a bank not want to hold onto the property until it gets a good price?\"", "title": "" }, { "docid": "e19c9cf8d26bc4722076e8306f5b4ae5", "text": "\"I'm in a similar situation, but I live in a state that doesn't allow mortgagees to \"\"walk away\"\" without recourse. I would consider a short sale or otherwise abandoning the property if: At the end of the day, real estate is an investment, and you don't realize gains or losses until you close the position. The \"\"ra, ra\"\" crowd that thought that real estate was going to boom forever in 2006 was just as wrong as the \"\"bad news bears\"\" crowd that thinks that real estate will never recover either. Investments rise and fall. Many people who bought houses in the 1980's boom (recall the S&L crisis) were underwater for years until prices started rising in the mid-90's. You haven't lost money until you realize that loss.\"", "title": "" }, { "docid": "d35a275785ad334b43d00e02d8ea4291", "text": "\"Just like foreclosing is less than optimal for the banks, a tax sale has drawbacks for the county. At a minimum, there the manpower needed to process the foreclosure and sale, and in many cases the value for which the property can be sold is probably less than the taxes due. The problem is this flies in the face of the \"\"personal responsibility\"\" talking point that many bankers have been spreading since the beginning of the financial crisis. It's a moral failing for a homeowner to walk away from an upside-down mortgage, but when the bank does the same thing for a tax bill it's a simple business decision.\"", "title": "" }, { "docid": "69680bbfebdbbdb0d36fc00477a04d01", "text": "Nearly every state in the US is full-recourse. If one doesn't seek bankruptcy protection, creditors can seek judgement, and collect assets. Foreclosures frequently sell for approximately half the market price. Considering unemployment risk, homes can be risky. A far better way to accumulate wealth is with equities (stocks). However, the risk converts from insolvency to liquidation since during times of high unemployment, equities are also cheap, causing any liquidation used to fund current expenses to be potentially ruinous.", "title": "" }, { "docid": "e0b589d58e89dc2487eaf6e429674240", "text": "\"Americans are snapping, like crazy. And not only Americans, I know a lot of people from out of country are snapping as well, similarly to your Australian friend. The market is crazy hot. I'm not familiar with Cleveland, but I am familiar with Phoenix - the prices are up at least 20-30% from what they were a couple of years ago, and the trend is not changing. However, these are not something \"\"everyone\"\" can buy. It is very hard to get these properties financed. I found it impossible (as mentioned, I bought in Phoenix). That means you have to pay cash. Not everyone has tens or hundreds of thousands of dollars in cash available for a real estate investment. For many Americans, 30-60K needed to buy a property in these markets is an amount they cannot afford to invest, even if they have it at hand. Also, keep in mind that investing in rental property requires being able to support it - pay taxes and expenses even if it is not rented, pay to property managers, utility bills, gardeners and plumbers, insurance and property taxes - all these can amount to quite a lot. So its not just the initial investment. Many times \"\"advertised\"\" rents are not the actual rents paid. If he indeed has it rented at $900 - then its good. But if he was told \"\"hey, buy it and you'll be able to rent it out at $900\"\" - wouldn't count on that. I know many foreigners who fell in these traps. Do your market research and see what the costs are at these neighborhoods. Keep in mind, that these are distressed neighborhoods, with a lot of foreclosed houses and a lot of unemployment. It is likely that there are houses empty as people are moving out being out of job. It may be tough to find a renter, and the renters you find may not be able to pay the rent. But all that said - yes, those who can - are snapping.\"", "title": "" }, { "docid": "79ee7e90db2f1e6040e314f243def684", "text": "Not a good idea, the bank is a lean holder unless you deduct the remainder of the loan from the purchase price you will end up paying much more. Tell the seller to pay off the loan and provide you a clean title. Btw unless you're getting the deal of the century I'd walk away until I saw a clean title", "title": "" }, { "docid": "ed2c6d6b02ce66f39164f5b8fba20730", "text": "Somebody will have to file all the required paperwork and fees with the local government, state government and even the federal government. This paperwork is used by these governments to record who owns the property and how it is owned. Prior to the settlement date they also will need to verify how the property is described and owned so that you are sure that you are being sold the exact property you expect, and that it is delivered to you free and clear of all other debts. If this is done wrong you might discover years later that you paid money for something that you don't really own. In some jurisdictions this has to be done via a law office, in others there is no requirement for a lawyer. Because a mortgage company, bank, or credit union is giving you money for the loan, they may require you to use a settlement attorney. They don't want to discover in 5 years that a simple mistake will cost them hundreds of thousands to fix. The mortgage company is required to give you a more detailed estimate of all the closing costs before you are committed to the loan. The quoted paragraph is not good enough. Even if you can avoid the use of a lawyer these functions still need to be done by somebody, and that will still cost money.", "title": "" }, { "docid": "6664eacc798c5f29b3db5551f12efa3c", "text": "I've done this in AZ. It's important to know which lender is foreclosing, because if it's not the most senior one, then your purchase can later be foreclosed. A foreclosure extinguishes all junior interests, but can itself be extinguished by a more senior interest. I may not have the correct terms here but you get the idea. You should also check to be sure property taxes are current. They are probably being paid by the original lender, but it wouldn't hurt to check. Make sure you understand the requirements for participation in the auction. In my case they required that I bring a $10K cashier's check made out to myself. On winning the auction I endorsed the check over to the auction company and had 24hours to come up with the remaining funds in cash. The property I bought had been previously sold at a Sheriff's sale to satisfy a judgment in favor of the Homeowner's Association for delinquent dues. The HOA bought the property at the auction and received a Sheriff's deed. At this point the original owner's possessory interest in the property was extinguished. Nevertheless, the original mortgage and deed of trust were still in place, being senior to the HOA's interest. About a year later the lender foreclosed on the property and I bought it at auction at the courthouse. This had the effect of extinguishing the HOA's interest, a fact that took some explaining to the water utility to get the account in my name :-)", "title": "" }, { "docid": "98f34a740b842b03229ba27120912486", "text": "Both of you sit down with a lawyer who practices in real estate and foreclosures, and hash out every single possibility of what could conceivably go wrong, with nothing out of bounds. Come up with a reasonable and fair plan for resolving each situation, that you are willing to commit to, life and breath, for real, no exit. Put all of it into a legal commitment between you two. However this is a fearless, searching and even ruthless contemplation, requiring a level of intimacy and personal responsibility you may not be comfortable with. and there's absolutely no room for dancing around unspoken questions. So in essence, it puts the hardest stuff up-front. If you put that much thought and honesty into it, you'll probably be OK. But you probably won't want to be that honest, or won't want to do the deal after you do.", "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": "b3d0df6a5c0e03d978175ab3b73b0c5a", "text": "You can be a co-borrower on the property that your father owns. Some Banks require that you also be part owner of the property, some banks do not require this. You can take a home loan for a new property, normally Banks will ask you of all your current loans [auto/other home/personal/ etc] to determine the amount they will be ready to lend. Edit: The first loan I believe your father already has a property in his name ... your father can apply for Loan against property ... if he does not have sufficient income, then you can guarantee the loan [ie co-sign on the loan, some banks allow this ... however there is no tax benefit on this loan] . The second is the Home Loan for the balance amount that you would get it … Both the loans can be taken from the same Bank, there would be a overall cap as to the amount of loan a Bank would give depending on your income, further the finance for this house will only be to the extent of 80% of the value.", "title": "" } ]	fiqa
393d5329a36b4fdd26ef2e86b4cc176f	For a mortgage down-payment, what percentage is sensible?	[ { "docid": "b33d90ed50b9465c8401b318e3e86ff2", "text": "\"The typical down-payment was expected to be 20%. The idea being that if one could not save 1/5 of the cost of a house, they were not responsible enough to ensure repayment of the loan. It is hard to say whether this is truly a relevant measure. However, in the absence of other data points, it is pretty decent. It typically requires a fair amount of time to amass that much money and it does demonstrate some restraint. (e.g. it is easily the cost of a decent new car or some other shiny \"\"toy.\"\") Income is not necessarily a good measure, on its own. I am certainly more responsible with my spending when I have less money to spend. (Lately, I have been feeling like my father, scrutinizing every single purchase down to the penny.)\"", "title": "" }, { "docid": "3e67ad87b1c3891b0e9a587976822f66", "text": "In Australia, you will typically be required to pay for mortgage insurance if you borrow more than 80% of the value of the property. Basically this means another ~1% on top of the regular interest rate. So it's in your interests to save until you can at least reach that point. If you can't rent and save at the same time, it suggests your finances may be too stretched for buying now to be a good idea.", "title": "" }, { "docid": "ad9c8354dd526a1f94c6ca1f2ff3a52c", "text": "A bigger down payment is good, because it insulates you from the swings in the real estate market. If you get FHA loan with 3% down and end up being forced to move during a down market, you'll be in a real bind, as you'll need to scrape up some cash or borrow funds to get out of your mortgage.", "title": "" }, { "docid": "a77ce45759fedc4b9142759f19d2ed37", "text": "\"Well hindsight tells us now that by and large, doing 100% borrowing was not the best policy we could have taken. It gets nitpicky, but in the US the traditional 20% is the answer I presently feel comfortable with. It could be a reactionary judgement I am making to the current mess (in which I have formed the opinion that all parties are responsible) and arm-chair quarterbacking \"\"if we had only stuck with the 20% rule, we wouldn't be here right now. The truth is probably much more gray than that, but like all things personal finance it is really up to you. If the law allows 100% financing ask yourself if it really makes sense that a bank would just loan you hundreds of thousands of dollars to live somewhere.\"", "title": "" }, { "docid": "bd4f93a1d7ad2601e1dd0ef443ae9d42", "text": "I think anything from 10% on demonstrates a reasonable ability to save. I would consider ongoing debt level a better indicator than the size of the down payment. It's been my experience that, without exception, there is a direct correlation between a persons use of revolving credit and their ability to manage their money & control their spending. Living in Seattle, I only put 10% down on my first house, but not only have we never missed a payment we have always paid extra and now have about 50% equity after 10 years with a family. Yet it would have taken me another year to save the other 10% during which time I would have burned that amount and 1/2 again in useless rent.", "title": "" }, { "docid": "9bd0f3fe069b9d41b6a0d7cbd12c89bf", "text": "I am currently in the process of purchasing a house. I am only putting 5% down. I see that some are saying that the traditional 20% down is the way to go. I am a first time homebuyer, and unfortunately we no longer live in the world where 20% down is mandatory, which is part of the reason why housing prices are so high. I feel it is more important that you are comfortable with what your monthly payments are as well as being informed on how interest rates can change how much you owe each month. Right now interest rates are pretty low, and it would almost be silly to put 20% down on your home. It might make more sense to put money in different vehicle right now, if you have extra, as the global economy will likely pick up and until it does, interest rates will likely stay low. Just my 2 cents worth. EDIT: I thought it would not be responsible of me not to mention that you should always have extra's saved for closing costs. They can be pricey, and if you are not informed of what they are, they can creep up on you.", "title": "" } ]	[ { "docid": "7a16e7a60d19912d82df48675bb490c6", "text": "\"I second DJClayworth's suggestion to wait and save a larger down-payment. I'll also add: It looks like you neglected to consider CMHC insurance in your calculation. When you buy your first home with less than 20% down, the bank will require you to insure the mortgage. CMHC insurance protects the bank if you default – it does not protect you. But such insurance does make a bank feel better about lending money to people it otherwise wouldn't take a chance on. The kicker is you would be responsible for paying the CMHC insurance that's protecting the bank. The premium is usually added on to the amount borrowed, since a buyer requiring CMHC insurance doesn't, by definition, have enough money up front. The standard CMHC premium for a mortgage with 5% down, or as they would say a \"\"95% Loan-to-Value ratio\"\" is 2.75%. Refer to CMHC's table of premiums here. So, if you had a down-payment of $17,000 to borrow a remaining $323,000 from the bank to buy a $340,000 property, the money you owe the bank would be $331,883 due to the added 2.75% CMHC insurance premium. This added $8883, plus interest, obviously makes the case for buying less compelling. Then, are there other closing costs that haven't been fully considered? One more thing I ought to mention: Have you considered saving a larger down-payment by using an RRSP? There's a significant advantage doing it that way: You can save pre-tax dollars for your down-payment. When it comes time to buy, you'd take advantage of the Home Buyer's Plan (HBP) and get a tax-free loan of your own money from your RRSP. You'd have 15 years to put the money back into your RRSP. Last, after saving a larger downpayment, if you're lucky you may find houses not as expensive when you're ready to buy. I acknowledge this is a speculative statement, and there's a chance houses may actually be more expensive, but there is mounting evidence and opinion that real estate is currently over-valued in Canada. Read here, here, and here.\"", "title": "" }, { "docid": "0f91a9b488625fc14dbb4fe82bc2da20", "text": "\"The optimal down payment is 100%. The only way you would do anything else when you have the cash to buy it outright is to invest the remaining money to get a better return. When you compare investments, you need to take risk into account as well. When you make loan payments, you are getting a risk free return. You can't find a risk-free investment that pays as much as your car loan will be. If you think you can \"\"game the system\"\" by taking a 0% loan, then you will end up paying more for the car, since the financing is baked into the sales [price in those cases (there is no such thing as free money). If you pay cash, you have much more bargaining power. Buy the car outright (negotiating as hard as you can), start saving what you would have been making as a car payment as an emergency fund, and you'll be ahead of the game. For the inflation hedge - you need to find investments that act as an inflation hedge - taking a loan does not \"\"hedge\"\" against inflation since you'll still be paying interest regardless of the inflation rate. The fact that you'll be paying slightly less interest (in \"\"real\"\" terms) does not make it a hedge. To answer the actual question, if your \"\"reinvestment rate\"\" (the return you can get from investing the \"\"borrowed\"\" cash) is less than the interest rate, then the more you put down, the greater your present value (PV). If your reinvestment rate is less than the interest rate, then the less you put down the better (not including risk). When you incorporate risk, though, the additional return is probably not worth the risk. So there is no \"\"optimal\"\" down payment in between those mathematically - it will depend on how much liquid cash you need (knowing that every dollar that you borrow is costing you interest).\"", "title": "" }, { "docid": "d3c9b2dd4b3aa31b34090a78696fb1c8", "text": "Given that you have your emergency fund, and no other high interest rate debts (credit cards, etc.) you will want to put down at least enough to not have to pay Private Mortgage Insurance (PMI). PMI is solely to protect the lender if you default. It has no benefit to you. It generally means that you will need at least 20% down. After that, its a personal decision, depending on what else you are going to do with the money. If you are the type to spend money frivolously if you have it, it might make sense to put as much down as you can. If you think that you can invest the money and over the long-term make more than the historically low mortgage interest rates, it might make sense to invest. One thing to keep in mind is that money that you put into the down-payment is relatively illiquid, meaning that it is hard to turn back into cash. If you have large expenses in the future, like health problems or college for the kids, it might be better to have the money in something easier to turn into cash.", "title": "" }, { "docid": "e0f3195d0e9409f2aa92e1fb02bc0eef", "text": "\"There are actually a few questions you are asking here. I will try and address each individually. Down Payment What you put down can't really be quantified in a dollar amount here. $5k-$10k means nothing. If the house costs $20k then you're putting 50% down. What is relevant is the percent of the purchase price you're putting down. That being said, if you go to purchase a property as an investment property (something you wont be moving into) then you are much more likely to be putting a down payment much closer to 20-25% of the purchase price. However, if you are capable of living in the property for a year (usually the limitation on federal loans) then you can pay much less. Around 3.5% has been my experience. The Process Your plan is sound but I would HIGHLY suggest looking into what it means to be a landlord. This is not a decision to be taken lightly. You need to know the tenant landlord laws in your city AND state. You need to call a tax consultant and speak to them about what you will be charging for rent, and how much you should withhold for taxes. You also should talk to them about what write offs are available for rental properties. \"\"Breaking Even\"\" with rent and a mortgage can also mean loss when tax time comes if you don't account for repairs made. Financing Your first rental property is the hardest to get going (if you don't have experience as a landlord). Most lenders will allow you to use the potential income of a property to qualify for a loan once you have established yourself as a landlord. Prior to that though you need to have enough income to afford the mortgage on your own. So, what that means is that qualifying for a loan is highly related to your debt to income ratio. If your properties are self sustaining and you still work 40 hours a week then your ability to qualify in the future shouldn't be all that impacted. If anything it shows that you are a responsible credit manager. Conclusion I can't stress enough to do YOUR OWN research. Don't go off of what your friends are telling you. People exaggerate to make them seem like they are higher on the socioeconomic ladder then they really are. They also might have chicken little syndrome and try to discourage you from making a really great choice. I run into this all the time. People feel like they can't do something or they're to afraid so you shouldn't be able to either. If you need advice go to a professional or read a book. Good luck!\"", "title": "" }, { "docid": "2c49bd9fd655065c73ebf814a7429ebf", "text": "As I've crunched numbers towards what my family could afford for a down payment (in an area with similar housing costs - don't you hate that high cost of living?), I've come up with the following numbers: We may be missing some area of expenses, but in general I think we are being fairly conservative. You should consider making a similar list to determine your comfort level. Spend some time with an interest calculator to know the serious pain of each dollar you are paying interest on to a lender. Also know that the bigger your down payment, the more likely the seller is to accept your offer. It shows you are serious.", "title": "" }, { "docid": "d0a8dfb3b7af002ee8840658871d052e", "text": "I suggest that you first decide on what %'s of the home value you each have a legal claim to. Then split the mortgage using the same %'s. Then, if someone feels their % is slightly higher, they are compensated because they 'own' a correspondingly higher share of the house. Use the same %'s for downpayments (which may mean that an 'adjustment' payment might be required to bring your initial cash outlay from 70/30 into the %'s that you agree to). Tenant income gets split the same way. Utilities are a bit more difficult - as heating depends more on square feet, but water and hydro depend more on how many people are there. You can try to be really precise about working out the %'s, or just keep it simple by using the same %'s as the mortgage.", "title": "" }, { "docid": "0f260d60e042c1bb1e0774d8db9cbbf1", "text": "I'm not saying it's great, but I have a 705... I think we'll get a second opinion to lower that rate. Also, logically, with a higher down payment, we should be able to reduce the amount we need to borrow. Is that how that would work? For example, if we scrounged up a $7,000 for a down payment and came down on the price say $3,000", "title": "" }, { "docid": "1eb13c9666e53791ca4cf6f61715f852", "text": "\"The (interest bearing) mortgage of £300,000 would be SIX times your salary. That's a ratio that was found in Japan, and (I believe) was a main reason for their depressed economy of the past two decades. Even with an interest free loan of nearly £150,000, it would be a huge gamble for someone of your income. Essentially, you are gambling that 1) your income will \"\"grow\"\" into your mortgage, (and that's counting income from renting part of the property) or 2) the house will rise in value, thereby bailing you out. That was a gamble that many Americans took, and lost, in the past ten years. If you do this, you may be one of the \"\"lucky\"\" ones, you may not, but you are really taking your future in your hands. The American rule of thumb is that your mortgage should be no more than 2.5-3 times income, that is maybe up to £150,000. Perhaps £200,000 if £50,000 or so of that is interest free. But not to the numbers you're talking about.\"", "title": "" }, { "docid": "b1d662b8c52df021205c3ee3346a9c52", "text": "\"I'm going to answer your questions out of order. Emergency fund: Depending on how conservative you are and how much insurance you have, you may want anywhere from 3-12 months of your expenses on hand. I like to keep 6 months worth liquid in a \"\"high-yield\"\" savings account. For your current expenses that would be $24k, but when this transaction completes, you will have a mortgage payment (which usually includes home-owners insurance and property taxes in addition to your other expenses) so a conservative guess might be an additional $3k/month, or a total of $42k for six months of expenses. So $40-$100k for an emergency fund depending on how conservative you are personally. Down payment: You should pay no less than 20% down ($150k) on a loan that size, particularly since you can afford it. My own philosophy is to pay as much as I can and pay the loan off as soon as possible, but there are valid reasons not to do that. If you can get a higher rate of return from that money invested elsewhere you may wish to keep a mortgage longer and invest the other money elsewhere. Mortgage term: A 15-year loan will generally get you the best interest rate available. If you paid $400k down, financing $350k at a 3.5% rate, your payment would be about $2500 on a 15-year loan. That doesn't include property taxes and home-owners insurance, but without knowing precisely where you live, I have no idea whether those would keep you inside the $3000 of additional monthly home expenses I mentioned above when discussing the emergency fund. That's how I would divide it up. I'd also pay more than the $2500 toward the mortgage if I could afford to, though I've always made that decision on a monthly basis when drawing up the budget for the next month.\"", "title": "" }, { "docid": "06fb3d1da7a348d784d4b3b0bf146096", "text": "Risk. That's it. No guarantees on the fund performance, while the mortgage has a guaranteed return of -3%. I'm doing this very thing. Money is cheap, I think it's wise to take advantage of it, assuming your exercise proper risk management.", "title": "" }, { "docid": "a5711d12602cfcbaf9d52c641416cb4d", "text": "\"Fundamentals: Then remember that you want to put 20% or more down in cash, to avoid PMI, and recalculate with thatmajor chunk taken out of your savings. Many banks offer calculators on their websites that can help you run these numbers and figure out how much house a given mortgage can pay for. Remember that the old advice that you should buy the largest house you can afford, or the newer advice about \"\"starter homes\"\", are both questionable in the current market. =========================== Added: If you're willing to settle for a rule-of-thumb first-approximation ballpark estimate: Maximum mortgage payment: Rule of 28. Your monthly mortgage payment should not exceed 28 percent of your gross monthly income (your income before taxes are taken out). Maximum housing cost: Rule of 32. Your total housing payments (including the mortgage, homeowner’s insurance, and private mortgage insurance [PMI], association fees, and property taxes) should not exceed 32 percent of your gross monthly income. Maximum Total Debt Service: Rule of 40. Your total debt payments, including your housing payment, your auto loan or student loan payments, and minimum credit card payments should not exceed 40 percent of your gross monthly income. As I said, many banks offer web-based tools that will run these numbers for you. These are rules that the lending industy uses for a quick initial screen of an application. They do not guarantee that you in particular can afford that large a loan, just that it isn't so bad that they won't even look at it. Note that this is all in terms of mortgage paymennts, which means it's also affected by what interest rate you can get, how long a mortgage you're willing to take, and how much you can afford to pull out of your savings. Also, as noted, if you can't put 20% down from savings the bank will hit you for PMI. Standard reminder: Unless you explect to live in the same place for five years or more, buying a house is questionable financially. There is nothing wrong with renting; depending on local housing stock it may be cheaper. Houses come with ongoung costs and hassles rental -- even renting a house -- doesn't. Buy a house only when it makes sense both financially and in terms of what you actually need to make your life pleasant. Do not buy a house only because you think it's an investment; real estate can be a profitable business, but thinking of a house as simultaneously both your home and an investment is a good way to get yourself into trouble.\"", "title": "" }, { "docid": "a92073afad23a27fb936bf7bdc9d0f55", "text": "Whenever you put less than 20% down, you are usually required to pay private mortgage insurance (PMI) to protect the lender in case you default on your loan. You pay this until you reach 20% equity in your home. Check out an amortization calculator to see how long that would take you. Most schedules have you paying more interest at the start of your loan and less principal. PMI gets you nothing - no interest or principal paid - it's throwing money away in a very real sense (more in this answer). Still, if you want to do it, make sure to add PMI to the cost per month. It is also possible to get two mortgages, one for your 20% down payment and one for the 80%, and avoid PMI. Lenders are fairly cautious about doing that right now given the housing crash, but you may be able to find one who will let you do the two mortgages. This will raise your monthly payment in its own way, of course. Also remember to factor in the costs of home ownership into your calculations. Check the county or city website to figure out the property tax on that home, divide by twelve, and add that number to your payment. Estimate your homeowners insurance (of course you get to drop renters insurance, so make sure to calculate that on the renting side of the costs) and divide the yearly cost by 12 and add that in. Most importantly, add 1-2% of the value of the house yearly for maintenance and repair costs to your budget. All those costs are going to eat away at your 3-400 a little bit. So you've got to save about $70 a month towards repairs, etc. for the case of every 10-50 years when you need a new roof and so on. Many experts suggest having the maintenance money in savings on top of your emergency fund from day one of ownership in case your water heater suddenly dies or your roof starts leaking. Make sure you've also estimated closing costs on this house, or that the seller will pay your costs. Otherwise you loose part of that from your down payment or other savings. Once you add up all those numbers you can figure out if buying is a good proposition. With the plan to stay put for five years, it sounds like it truly might be. I'm not arguing against it, just laying out all the factors for you. The NYT Rent Versus Buy calculator lays out most of these items in terms of renting or buying, and might help you make that decision. EDIT: As Tim noted in the comments below, real monthly cost should take into account deductions from mortgage interest and property tax paid. This calculator can help you figure that out. This question will be one to watch for answers on how to calculate cost and return on home buying, with the answer by mbhunter being an important qualification", "title": "" }, { "docid": "c47f234affebd290a287b5aa59f0de7f", "text": "How much should my down payment be? Ideally 20% of the purchase price because with 20% of the purchase price, you don't have to pay a costly private mortgage insurance (PMI). If you don't have 20% down and come across a good property to purchase, it is still a good idea to go forward with purchasing with what you are comfortable with, because renting long term is generally never a good idea if you want to build wealth and become financially independent. How much should I keep in my emergency fund? People say 3-12 months of living expenses. Keep in mind though, in most cases, if you lose your job, you are entitled to unemployment benefits from the government. How long should my mortgage be? 30 year amortization is the best. You can always opt to pay more each month. But having that leverage with a 30 year loan can allow you to invest your savings in other opportunities, which can yield more than mortgage interest. Best of luck!", "title": "" }, { "docid": "0afe1f4ed3ca647fba82bf18a7ce93ad", "text": "In regards to your 1st question, if you are a US resident (according to IRS rules) and you have any foreign bank accounts, then you need to file a FBAR form for every year in which any of these accounts has more than $10,000. This is the way that IRS keeps track of substantial amounts of money kept by US residents in foreign accounts.", "title": "" }, { "docid": "4015a67ac8479112a93c6116fbb474bf", "text": "However, we would also like to include on our budget the actual cost of the furniture when we buy it. That would be double-counting. When it's time to buy the new kit, just pay for it directly from savings and then deduct that amount from the Furniture Cash asset that you'd been adding to every month.", "title": "" } ]	fiqa
e347cf0b35befea83602cd7e810684bb	Events that cause major movement in forex?	[ { "docid": "4648dfc15b0c956e6a3a09c8f7728c39", "text": "Anything related to the central bank will have a large impact, as they are the ones who determine interest rates, and interest rates have a big effect on currency flows. GDP is also important, as when there is an economic slowdown it may result in the central bank reducing rates to boost economic activity. The opposite is also true, large increases in GDP may mean that an interest rate hike might be needed. Inflation data is also very important. Again, large changes in inflation either way may push the central bank towards changing rates. This data typically is in the form of CPI Note that each central bank is different. They all have specific mandates and specific pieces of economic data that they place emphasis on. The Federal Reserve as of late has closely been watching inflation data, especially wage inflation data, and employment. Significant deviations in these data points from whats expected by investors can greatly move the market. However, these specific factors are a little less important for, say, Mexico, which is mostly concerned with headline inflation. Read the statements issued by the central banks to find out whats important to them. Central banks also issue expectations for things like growth, CPI, etc. If these expectations are not met, it may result in a policy change, or at least talk of a policy change, at the next meeting of the central bank. Anticipating these policy changes and trading accordingly is one strategy to be a profitable forex trader Also, there are several forex news calendars online that indicate what is likely to be high impact news. These can be helpful starting out.", "title": "" }, { "docid": "a829b0cd8b0cae7deedf77c992b58af3", "text": "It's impossible to determine which event will cause a major shift for a certain currency pair. However, this does not mean that it's not possible to identify events that are important to the overall market sentiment and direction. There are numerous sites that provide a calendar for upcoming and past events and their impact which is most of the time indicated as low, medium and high. Such sites are: Edit: I would like to add to that, that while these are major market movers, you cannot forget that they mainly provide a certain direction for the market but that it's not always clear in which direction the market will go. A recent and prime example of a major event that triggered opposite effects of what you would expect, is the ECB meeting that took place the 3rd of December. Due to the fact that the market already priced in further easing by the ECB the euro strengthened instead of weakening compared to the dollar. This strengthening happened even though the ECB did in fact adjust the deposit by 10 base points to -0.30 % and increased the duration of the QE. Taking above example into consideration it's important to always remember that fundamentals are hard to grasp and that it will take a while to make it a second nature and become truly successful in this line of trading. Lastly, fundamentals are only a part of the complete picture. Don't lose sight of support and resistance levels as well as price action to determine when and how to enter a trade.", "title": "" }, { "docid": "04d3f10147795efaba835bb24ae83636", "text": "Trading Speeches can be difficult, 1 comment can be bullish then next phrase bearish. However language algorithms can process the tone of the entire message before you can read the first word or have even finished downloading the text of the statement. The biggest news is the 1st Friday of the month, the non-farm payrolls out of the USA. You used to be able to get the news before the price moved, but high-frequency algos changed all that, essentially the exchanges get quote stuffed, so good luck unless you are using a bucketshop. Better to wait for a pull back from the initial reaction if the numbers are good, otherwise you will get a fill at the peak. If the numbers are a big deviation from expectations then you can just jump in. Back in 2006 the Bank of England raised interest rates when it wasn't expected and the GBPUSD flew 500 pips. This Forex calendar has charts of every news release, so you can see what to expected based on what has happened in the past with a certain bit of economic news. http://www.fasteconomicnews.com/fx_calendar.aspx", "title": "" }, { "docid": "45724a41c9c9b9b669681753c6a5cf5e", "text": "Look for unsustainable policies and actions by policy makers, both before and possibly during, when looking at the ForEx markets. Consider some examples: Each of those events could be seen in the growing unsustainability of local policies. ForEx markets and local policies can appear to stay on an unsustainable path for a long time, but equilibrium will force itself on everything in the long run. In two of the above cases, the initial response wasn't enough to offset the mess, and more and more intervention had to be done, only making matters worse. When you know how unsustainable policies are and how big the corrections need to be, you can quickly ascertain whether an action by policy makers will be enough.", "title": "" }, { "docid": "20c32a3cf62ace7633294b14aec72f97", "text": "Sometimes the market has to be left alone. Too much interference of the policy makers to stabilize the falling market can actually result in a major crisis. Every change stabilises after sometime and it is also applicable in the Forex trading market. So, the eager investors should learn to have some patience and wait for the market to stabilise itself rather than make random predictions on the policies released by policy makers", "title": "" }, { "docid": "2ca7c24dc646716a903295d51bf7fa16", "text": "currency's central bank or treasury/finance department speeches that can announce a significant change in policy. That includes: Particularly when it is a high level figure within the department such as the President or Prime Minister making the announcement. Macroeconomic stats: GeoPolitical considerations, such as: Economic calendars, such as ForexFactory and MyFxBook track planned economic news releases. Obviously, a coup d'etat or war declaration may not be well known in advance.", "title": "" } ]	[ { "docid": "3f97d35bd94c664205c2929914af3cc9", "text": "Stocks, gold, commodities, and physical real estate will not be affected by currency changes, regardless of whether those changes are fast or slow. All bonds except those that are indexed to inflation will be demolished by sudden, unexpected devaluation. Notice: The above is true if devaluation is the only thing going on but this will not be the case. Unfortunately, if the currency devalued rapidly it would be because something else is happening in the economy or government. How these asset values are affected by that other thing would depend on what the other thing is. In other words, you must tell us what you think will cause devaluation, then we can guess how it might affect stock, real estate, and commodity prices.", "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": "b1e6e328ddefd77d0000e46e8212a7af", "text": "To answer your original question: There is proof out there. Here is a paper from the Federal Reserve Bank of St. Louis that might be worth a read. It has a lot of references to other publications that might help answer your question(s) about TA. You can probably read the whole article then research some of the other ones listed there to come up with a conclusion. Below are some excerpts: Abstract: This article introduces the subject of technical analysis in the foreign exchange market, with emphasis on its importance for questions of market efficiency. “Technicians” view their craft, the study of price patterns, as exploiting traders’ psychological regularities. The literature on technical analysis has established that simple technical trading rules on dollar exchange rates provided 15 years of positive, risk-adjusted returns during the 1970s and 80s before those returns were extinguished. More recently, more complex and less studied rules have produced more modest returns for a similar length of time. Conventional explanations that rely on risk adjustment and/or central bank intervention do not plausibly justify the observed excess returns from following simple technical trading rules. Psychological biases, however, could contribute to the profitability of these rules. We view the observed pattern of excess returns to technical trading rules as being consistent with an adaptive markets view of the world. and The widespread use of technical analysis in foreign exchange (and other) markets is puzzling because it implies that either traders are irrationally making decisions on useless information or that past prices contain useful information for trading. The latter possibility would contradict the “efficient markets hypothesis,” which holds that no trading strategy should be able to generate unusual profits on publicly available information—such as past prices—except by bearing unusual risk. And the observed level of risk-adjusted profitability measures market (in)efficiency. Therefore much research effort has been directed toward determining whether technical analysis is indeed profitable or not. One of the earliest studies, by Fama and Blume (1966), found no evidence that a particular class of TTRs could earn abnormal profits in the stock market. However, more recent research by Brock, Lakonishok and LeBaron (1992) and Sullivan, Timmermann an d White (1999) has provided contrary evidence. And many studies of the foreign exchange market have found evidence that TTRs can generate persistent profits (Poole 6 (1967), Dooley and Shafer (1984), Sweeney (1986), Levich and Thomas (1993), Neely, Weller and Dittmar (1997), Gençay (1999), Lee, Gleason and Mathur (2001) and Martin (2001)).", "title": "" }, { "docid": "8290de06be4d6255f61a606db30404dd", "text": "\"Both explanations are partly true. There are many investors who do not want to sell an asset at a loss. This causes \"\"resistance\"\" at prices where large amounts of the asset were previously traded by such investors. It also explains why a \"\"break-through\"\" of such a \"\"resistance\"\" is often associated with a substantial \"\"move\"\" in price. There are also many investors who have \"\"stop-loss\"\" or \"\"trailing stop-loss\"\" \"\"limit orders\"\" in effect. These investors will automatically sell out of a long position (or buy out of a short position) if the price drops (or rises) by a certain percentage (typically 8% - 10%). There are periods of time when money is flowing into an asset or asset class. This could be due to a large investor trying to quietly purchase the asset in a way that avoids raising the price earlier than necessary. Or perhaps a large investor is dollar-cost-averaging. Or perhaps a legal mandate for a category of investors has changed, and they need to rebalance their portfolios. This rebalancing is likely to take place over time. Or perhaps there is a fad where many small investors (at various times) decide to increase (or decrease) their stake in an asset class. Or perhaps (for demographic reasons) the number of investors in a particular situation is increasing, so there are more investors who want to make particular investments. All of these phenomena can be summarized by the word \"\"momentum\"\". Traders who use technical analysis (including most day traders and algorithmic speculators) are aware of these phenomena. They are therefore more likely to purchase (or sell, or short) an asset shortly after one of their \"\"buy signals\"\" or \"\"sell signals\"\" is triggered. This reinforces the phenomena. There are also poorly-understood long-term cycles that affect business fundamentals and/or the politics that constrain business activity. For example: Note that even if the markets really were a random walk, it would still be profitable (and risk-reducing) to perform dollar-cost-averaging when buying into a position, and also perform averaging when selling out of a position. But this means that recent investor behavior can be used to predict the near-future behavior of investors, which justifies technical analysis.\"", "title": "" }, { "docid": "dc21709e61f35e1dabf585879d691d0b", "text": "Contrary to Muro's answer which strangely shows a graph of the Fed's balance sheet and not the money supply, the supply of US dollars has never doubled in a few days. This graph from Wikipedia shows M2, which is the wider measure of money supply, to have doubled over approximately 10 years, http://en.wikipedia.org/wiki/File:Components_of_US_Money_supply.svg The answer to whether gold has a higher chance of experiencing big devaluation has to do with forces outside anyone's control, if a big new mine of gold is discovered that could affect prices, but also if the economy turns around it could lead investors to pull out of gold and back into the stock markets. The USD, on the other hand, is under control of the policy makers at the Fed who have a dual mandate to keep inflation and unemployment low. The Fed seems to have gotten better over the last 30 years at controlling inflation and the dollar has not experienced big inflation since the 70s. Inflation, as measured by Core CPI, has been maintained at less than 4% for the last 20 years and is currently coming off record low levels below 1%.", "title": "" }, { "docid": "84dc6e6ef5dad182fafdbc6f7c910579", "text": "\"According to Soros in \"\"The Alchemy of Finance\"\", exchange rates fluctuations are mostly influenced by: (sorry I do not have the quote here, and I am paraphrasing from the top of my head what I read about a week ago). I mention his point of view as he is one of the most successful hedge fund manager ever, proved his skills, and dealt a lot with currencies. This is not just theory as he actively used the above points when managing his fund (as explained in the book). What I find interesting is that, according to him, the fundamental reason (the balance of trade) is not the most influential. Speculation on future value of currencies is the most influential, and these can set trends that can last years. Also it is key to notice that Soros thought foreign exchange markets are \"\"wrong\"\" most of the time, just like he thought stock markets are \"\"wrong\"\" most of the time (a point on which Warren Buffet and Jim Rogers also agree from my understanding).\"", "title": "" }, { "docid": "0021fa4d97554c8c2732a3a0c6e053a8", "text": "very interesting.. I deal with speculation all day every day, I wish there was a dependable method to determine what actually happens in these possibly nefarious and possibly innocent events. I believe that Sadam Hussain and Momar Quadafi were deposed/eliminated because they both traded oil for currencies other than dollars.", "title": "" }, { "docid": "53a33eed609d2c59d67a43cc281aea4f", "text": "There are various indexes on the stock market that track the currencies. Though it is different than Forex (probably less leverage), you may be able to get the effects you're looking for. I don't have a lot of knowledge in this area, but looked some into FXE, to trade the Euro debt crisis. Here's an article on Forex, putting FXE down (obviously a biased view, but perhaps will give you a starting point for comparison, should you want to trade something specific, like the current euro/dollar situation).", "title": "" }, { "docid": "a27a2131386bb326d295d3241415a143", "text": "If I knew a surefire way to make money in FOREX (or any market for that matter) I would not be sharing it with you. If you find an indicator that makes sense to you and you think you can make money, use it. For what it's worth, I think technical analysis is nonsense. If you're just now wading in to the FOREX markets because of the Brexit vote I suggest you set up a play-money account first. The contracts and trades can be complicated, losses can be very large and you can lose big -- quickly. I suspect FOREX brokers have been laughing to the bank the last couple weeks with all the guppies jumping in to play with the sharks.", "title": "" }, { "docid": "f24297fb61becba24d76ac71c8ec800e", "text": "\"This is an old post I feel requires some more love for completeness. Though several responses have mentioned the inherent risks that currency speculation, leverage, and frequent trading of stocks or currencies bring about, more information, and possibly a combination of answers, is necessary to fully answer this question. My answer should probably not be the answer, just some additional information to help aid your (and others') decision(s). Firstly, as a retail investor, don't trade forex. Period. Major currency pairs arguably make up the most efficient market in the world, and as a layman, that puts you at a severe disadvantage. You mentioned you were a student—since you have something else to do other than trade currencies, implicitly you cannot spend all of your time researching, monitoring, and investigating the various (infinite) drivers of currency return. Since major financial institutions such as banks, broker-dealers, hedge-funds, brokerages, inter-dealer-brokers, mutual funds, ETF companies, etc..., do have highly intelligent people researching, monitoring, and investigating the various drivers of currency return at all times, you're unlikely to win against the opposing trader. Not impossible to win, just improbable; over time, that probability will rob you clean. Secondly, investing in individual businesses can be a worthwhile endeavor and, especially as a young student, one that could pay dividends (pun intended!) for a very long time. That being said, what I mentioned above also holds true for many large-capitalization equities—there are thousands, maybe millions, of very intelligent people who do nothing other than research a few individual stocks and are often paid quite handsomely to do so. As with forex, you will often be at a severe informational disadvantage when trading. So, view any purchase of a stock as a very long-term commitment—at least five years. And if you're going to invest in a stock, you must review the company's financial history—that means poring through 10-K/Q for several years (I typically examine a minimum ten years of financial statements) and reading the notes to the financial statements. Read the yearly MD&A (quarterly is usually too volatile to be useful for long term investors) – management discussion and analysis – but remember, management pays themselves with your money. I assure you: management will always place a cherry on top, even if that cherry does not exist. If you are a shareholder, any expense the company pays is partially an expense of yours—never forget that no matter how small a position, you have partial ownership of the business in which you're invested. Thirdly, I need to address the stark contrast and often (but not always!) deep conflict between the concepts of investment and speculation. According to Seth Klarman, written on page 21 in his famous Margin of Safety, \"\"both investments and speculations can be bought and sold. Both typically fluctuate in price and can thus appear to generate investment returns. But there is one critical difference: investments throw off cash flow for the benefit of the owners; speculations do not. The return to the owners of speculations depends exclusively on the vagaries of the resale market.\"\" This seems simple and it is; but do not underestimate the profound distinction Mr. Klarman makes here. (and ask yourself—will forex pay you cash flows while you have a position on?) A simple litmus test prior to purchasing a stock might help to differentiate between investment and speculation: at what price are you willing to sell, and why? I typically require the answer to be at least 50% higher than the current salable price (so that I have a margin of safety) and that I will never sell unless there is a material operating change, accounting fraud, or more generally, regime change within the industry in which my company operates. Furthermore, I then research what types of operating changes will alter my opinion and how severe they need to be prior to a liquidation. I then write this in a journal to keep myself honest. This is the personal aspect to investing, the kind of thing you learn only by doing yourself—and it takes a lifetime to master. You can try various methodologies (there are tons of books) but overall just be cautious. Money lost does not return on its own. I've just scratched the surface of a 200,000 page investing book you need to read if you'd like to do this professionally or as a hobbyist. If this seems like too much or you want to wait until you've more time to research, consider index investing strategies (I won't delve into these here). And because I'm an investment professional: please do not interpret anything you've read here as personal advice or as a solicitation to buy or sell any securities or types of securities, whatsoever. This has been provided for general informational purposes only. Contact a financial advisor to review your personal circumstances such as time horizon, risk tolerance, liquidity needs, and asset allocation strategies. Again, nothing written herein should be construed as individual advice.\"", "title": "" }, { "docid": "2d122ee87f06c9c0fb33698d8369750f", "text": "\"Relative changes in rates are significant. Why? Exchange rates encourage cross-border trade. For example, I live in an area that is now popular with Canadian tourists, mostly due to the favorable exchange rates. Changes in exchange rates between trading partners can affect trade balance as well. The US \"\"strong dollar\"\" policy made US exports expensive and imports cheaper, which encouraged more imports.\"", "title": "" }, { "docid": "af6fc06890c6a15e9c4c5206ac646982", "text": "Since 2007 the world has seen a period of striking economic and financial volatility featuring the deepest recession since the 1930s despite this gold has performed strongly with its price roughly doubling since the global financial crisis began in mid-2007. 1. Gold and real interest rates: One of the factor that influences gold prices is real interest rate which is to some extent related to inflation. Since gold lacks a yield of its own, the opportunity cost of holding gold increases with a real interest rate increase and decreases with a fall in real interest rates. 2. Gold and the US dollar: The external value of the US dollar has been a significant influence on short-term gold price movements. The IMF estimated6 in 2008 that 40-50% of the moves in the gold price since 2002 were dollar-related, with a 1% change in the effective external value of the dollar leading to a more than 1% change in the gold price (Source). 3. Gold and financial stress: It is a significant and commonly observed influence on the short-term price of gold. In periods of financial stress gold demand may rise for a number of reasons: 4. Gold and political instability: It is another factor that can boost gold prices. Investor concerns about wars, civil conflicts and international tensions can boost demand for gold for similar reasons to those noted above for periods of financial stress. Gold‟s potential function as a „currency of last resort‟ in case of serious system collapse provides a particular incentive to hold it in case the political situation is especially severe. (Source) 5. Gold and official sector activity: The behaviour of central banks and other parts of the official sector can have an important impact on gold prices. One reason for this is that central banks are big holders of gold, possessing some 30,500 metric tons in 2010, which is approximately 15% of all above-ground gold stocks. As a result, central bank policies on gold sales and purchases can have significant effects, and these policies have been subject to considerable shifts over the decades. (Source) (Source of above graphs)", "title": "" }, { "docid": "f91f4a2c1fefc9609804c9797e792abd", "text": "The British didn't choose to stay away, they were forced out (as was Sweden) by their fucked up policies and being unable to defend their peg against the (trading only at the time) euro currency. They lost a fuckload in the process and when it became apparent that those that understand market arbitrage wouldn't let up (what killed Mexico/Argentia Peso as well), they backed out.", "title": "" }, { "docid": "e28f9eea5648bd04f0d3a9cd12740871", "text": "I don't think the two are particularly linked. While Brick is right in that the price of oil is denominated in dollars, I don't think that's responsible for most of the movement here. Oil has been weak for intrinsic reasons related to oil: supply/demand imbalance, largely. (Oil also was way over-priced back when it was > $100 a barrel; a lot of that was due to worries about instability in the Middle East.) The dollar has been strong for other, separate intrinsic reasons. The American economy has had a stronger rebound than Europe or Asia; while we were hit hard in the 2008 recession, we rebounded pretty quickly from a whole-economy point of view (we still have a lot of weaknesses in terms of long-term unemployment, but that doesn't seem to be hurting our productivity much). Pick another time period, and you won't necessarily see the same matching path (and I would even say that those paths don't match particularly well). Marketwatch covered this for example; other sites show similar things. There is a weak correlation, but only in the short term, or for specific reasons.", "title": "" }, { "docid": "80acffb45c8498b0f661c11609063965", "text": "\"Paying the mortgage down is no different than investing in a long term taxable fixed instrument. In this economy, 4.7% isn't bad, but longer term, the stock market should return higher. When you have the kid(s), is your wife planing to work? If not, I'd first suggest going pre-tax on the IRAs, and when she's not working, convert to Roth. I'd advise against starting the 529 accounts until your child(ren) is actually born. As far as managed funds are concerned, I hear \"\"expenses.\"\" Why not learn about lower cost funds, index mutual funds or ETFs? I'd not do too much different aside from this, until the kids are born.\"", "title": "" } ]	fiqa
4b7acbc8f73626424b15bb31e914cce7	Salary equivalency: London vs Berlin	[ { "docid": "f93a84958857c9807a590468efe06a74", "text": "Coming to London at this point of time is not a wise decision, not that I mean to discourage you. The job market is quite competitive because loads of developers are in the markets, because of the layoffs. So be ready to wait for some time to land a role. Banks aren't recruiting that heavily, but that might change if the economy picks up. Regarding salaries, the contract rates you quote are primarily for banking sector jobs, some outside banking also pay those rates, but they are few. You can quote what you want to a recruiter, most contracts are through them as most managers have a fincancial get go between recruiters and themselves. Recruiters take their cut what they bill, 400+200(just a guess). So the more they take from the 400, better is their margin. So they try to decrease the 400 portion. But the important point is be ready to keep your chair warm for some time. I am not sure why you have to move to London. Keep your current job. Get a Skype number or something and get the calls diverted to your phone in Germany. You can come down to London for interviews and schedule them so you come in a week and give all your interviews. London is a costly place, you can find cheap places to stay too. But without a job and searching for one will get you depressed(been there and experienced it)", "title": "" }, { "docid": "4b034e64e0008f5c0806f96636a3afee", "text": "Germany is substantially cheaper than the London . You would need at least double your current income to maintain the same lifestyle in London. Even then, you will likely have to settle for a cramped housing or a long commute. Java developers are largely contractors in the UK. Typical wages and rates can be found at www.itjobswatch.co.UK Wages go up and down depending on supply and demand. Don't quit till you have another offer.", "title": "" } ]	[ { "docid": "4d9f05f39288a85e40d0d2571f7e15c5", "text": "\"You are in your mid 30's and have 250,000 to put aside for investments- that is a fantastic position to be in. First, let's evaluate all the options you listed. Option 1 I could buy two studio apartments in the center of a European capital city and rent out one apartment on short-term rental and live in the other. Occasionally I could Airbnb the apartment I live in to allow me to travel more (one of my life goals). To say \"\"European capital city\"\" is such a massive generalization, I would disregard this point based on that alone. Athens is a European capital city and so is Berlin but they have very different economies at this point. Let's put that aside for now. You have to beware of the following costs when using property as an investment (this list is non-exhaustive): The positive: you have someone paying the mortgage or allowing you to recoup what you paid for the apartment. But can you guarantee an ROI of 10-15% ? Far from it. If investing in real estate yielded guaranteed results, everyone would do it. This is where we go back to my initial point about \"\"European capital city\"\" being a massive generalization. Option 2 Take a loan at very low interest rate (probably 2-2.5% fixed for 15 years) and buy something a little nicer and bigger. This would be incase I decide to have a family in say, 5 years time. I would need to service the loan at up to EUR 800 / USD 1100 per month. If your life plan is taking you down the path of having a family and needed the larger space for your family, then you need the space to live in and you shouldn't be looking at it as an investment that will give you at least 10% returns. Buying property you intend to live in is as much a life choice as it is an investment. You will treat the property much different from the way something you rent out gets treated. It means you'll be in a better position when you decide to sell but don't go in to this because you think a return is guaranteed. Do it if you think it is what you need to achieve your life goals. Option 3 Buy bonds and shares. But I haven't the faintest idea about how to do that and/or manage a portfolio. If I was to go down that route how do I proceed with some confidence I won't lose all the money? Let's say you are 35 years old. The general rule is that 100 minus your age is what you should put in to equities and the rest in something more conservative. Consider this: This strategy is long term and the finer details are beyond the scope of an answer like this. You have quite some money to invest so you would get preferential treatment at many financial institutions. I want to address your point of having a goal of 10-15% return. Since you mentioned Europe, take a look at this chart for FTSE 100 (one of the more prominent indexes in Europe). You can do the math- the return is no where close to your goals. My objective in mentioning this: your goals might warrant going to much riskier markets (emerging markets). Again, it is beyond the scope of this answer.\"", "title": "" }, { "docid": "4ff04025b2e518098d73c9128376b2f8", "text": "This is amazing. Pretty standard in the EU but as an Americanizing in London it took multiple Brit friends to get me to take a few days as my marriage ended. Ultimately helped me save a few deals I was working on that began to fall apart as I struggled.", "title": "" }, { "docid": "c974fce2e0de21ef5938bef66aad614f", "text": "\"Using your example link, I found the corresponding chart for a stock that trades on London Stock Exchange: https://ca.finance.yahoo.com/echarts?s=RIO.L#symbol=RIO.L;range=1d As you can see there, the chart runs from ~8:00am to ~4:30pm, and as I write this post it is only 2:14pm Eastern Time. So clearly this foreign chart is using a foreign time zone. And as you can see from this Wikipedia page, those hours are exactly the London Stock Exchange's hours. Additionally, the closing price listed above the graph has a timestamp of \"\"11:35AM EST\"\", meaning that the rightmost timestamp in the graph (~4:30pm) is equal to 11:35AM EST. 16:30 - 11:30 = 5 hours = difference between London and New York at this time of year. So those are two data points showing that Yahoo uses the exchange's native time zone when displaying these charts.\"", "title": "" }, { "docid": "ee4ba03a116f6912d54f8297f674feb3", "text": "This More or Less podcast has a fantastic section on executive pay in the US and UK. With some economists whose research determined that there is basically no relation between remuneration and performance. In Germany, Switzerland etc where there are different rules and factors there is less overall executive pay and it is far more tied to performance. http://downloads.bbc.co.uk/podcasts/radio4/moreorless/moreorless_20120511-1640a.mp3", "title": "" }, { "docid": "4d71ed4a3c2a4630d8ee5190254fae36", "text": "\"Background: I live and work in a small city (250k) and want to work somewhere much larger (New York, London, Chicago, Sydney). Ideal job is something quantitative and related to programming/analytics in finance, though I have passed the CFA Level III Exam to show my interest in the field and currently work as a systems and database analyst (job title is \"\"Senior financial analyst\"\".) I have a Master's in mathematical finance but my work mostly relates to personal side projects. Questions: Short of packing up and moving, what is an effective way to network with people from these larger cities? Is there demand for quants and junior quants, or is there too much supply? Will I need to get a PhD to be relevant? Can I transfer my background or skills into another area of finance first to get the networking contacts?\"", "title": "" }, { "docid": "cbd421769c61e70ca57735bade197f0b", "text": "I understand how it works very well - as Europes financial centre. I understand that without UKs EU membership those days are gone. I understand that rents in Frankfurt are skyrocketing because banks are fleeing a sinking ship. Without financial passporting rights to the worlds second largest economy London as a financial centre is finished. New York does well because it's part of Americas economy, Hong Kong does well because it's part of China's economy.", "title": "" }, { "docid": "a792f5a527c4e21925256003a4983c39", "text": "Literally the same drivers in the same cars (since it's the same licence to be able to drive for them) and Cabify quotes you a fixed price and I like the interface better. It's just far less useful when traveling as it tends to be only really useful in Spain.", "title": "" }, { "docid": "fcd600a5b867728f4fcfb1cc46a3da9a", "text": "\"Did you see that Kaiser pays their average nurse $110K? Nurse in the sense of \"\"works full time at a major hospital\"\". As for the police: the $75K doesn't include time in rank bonus....which even in NYC goes from $45K to $90K in five years. Time in rank bonus is a very big deal.\"", "title": "" }, { "docid": "48a6bf9cf171d813361886f74c92a6f9", "text": "I think you're on the right track. Keep it up. You are still relatively young, and it wont have an impact. You have experience and you have a lot of education, both will be assets. I can't comment on the region question because I have only ever worked in one region. Are you asking from a purely economics/getting paid perspective? One approach you can take is making a little spreadsheet with average trader salary divided by cost of living in that region. The issue is that trader salaries and bonuses vary SO MUCH in every region, that you can't make any generalizations.", "title": "" }, { "docid": "b17143b20fa74af51346bcb7004179a0", "text": "Singapore does well because? Zurich does well because? London is already a much larger and more versatile financial centre than anywhere you have cited (bar New York) or the above. Not all financial services require passporting and, as I mentioned,'it remains to be seen whether some arrangement can be reached that allows firms UK firms similar passport privileges within the EU that they currently enjoy. Finance is very different from trade and the City is far less vulnerable to this political divorce than British importers and exporters. Never mind that London is a much greater cultural hub than any would be pretenders. I work in finance, no one I know has the slightest inclination to move to Frankfurt. It'll take a generation for any city to build up the institutional knowledge, infrastructure and talent pool that exists in Greater London.", "title": "" }, { "docid": "94d2490c97d88ed2dc63b9efb26711fb", "text": "\"You are right, if by \"\"a lot of time\"\" you mean a lot of occasions lasting a few milliseconds each. This is one of the oldest arbitrages in the book, and there's plenty of people constantly on the lookout for such situations, hence they are rare and don't last very long. Most of the time the relationship is satisfied to within the accuracy set by the bid-ask spread. What you write as an equality should actually be a set of inequalities. Continuing with your example, suppose 1 GBP ~ 2 USD, where the market price to buy GBP (the offer) is $2.01 and to sell GBP (the bid) is $1.99. Suppose further that 1 USD ~ 2 EUR, and the market price to buy USD is EUR2.01 and to sell USD is EUR1.99. Then converting your GBP to EUR in this way requires selling for USD (receive $1.99), then sell the USD for EUR (receive EUR3.9601). Going the other way, converting EUR to GBP, it will cost you EUR4.0401 to buy 1 GBP. Hence, so long as the posted prices for direct conversion are within these bounds, there is no arbitrage.\"", "title": "" }, { "docid": "6a90b539c710657db704926895802556", "text": "Just like Switzerland lost its banking privileges by not being in the EU, huh? The truth is none of us really know what's going to happen so we all need to stop throwing out opinions as fact. London has an already established stable banking climate and the cost and effort of relocating to other places might prove to be too high as opposed to just working something out between the Brits and the Europeans. We just don't know yet.", "title": "" }, { "docid": "e47e8944b1e90294d8c46480e0a63278", "text": "\"Since a lot of the companies in your source are public accounting firms, I'm interested in if these salaries are similar to what they (PwC, EY, Deloitte, etc...) pay their entry level accountants? How about entry level advisory accountants? Do their accountant salaries ever approach the level of their \"\"consultants\"\"?\"", "title": "" }, { "docid": "a814ac98bac8c51668dca9901eb22879", "text": "From my understanding: Original Holding: Siemens - 10,000 units at 80 Euros/unit Cost = 800,000 euros Spin-off: Every 10 Siemens get 1 OSRAM On July 5th, 2013: Siemens closing - 78 Euros On Monday, July 8th: Ex-date (opening) - 75 Euros Hence: Market value for:- 1. Siemens: 75 * 10,000 = 750,000 euros 2. OSRAM: (10,000 / 10) * (78 - 75) = 3,000 euros Total Market value = 780,000 + 3,000 = 753,000 euros Ratio for: 1. Siemens = 750,000 / 753,000 = 0.996015936 2. OSRAM = 3,000 / 753,000 = 0.003984063 Cost for: 1. Siemens = 800,000 * 0.996015936 = 796,812.75 2. OSRAM = 3,187.25", "title": "" }, { "docid": "a01d5a46e30910926be7fd70e8e07b7f", "text": "From Seattle. So a local minimum wage law is not pushing out as many jobs as naysayers projected. Not that surprising, really. The switch to capital takes time, so data within the first year or two isn't going to show you much.", "title": "" } ]	fiqa
1e4be5625fb00a9be587cb4ed32155e9	Is it worth buying real estate just to safely invest money?	[ { "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": "0d5aab7d69f4d7dcc600f2e8dffe876e", "text": "\"House prices do not go up. Land prices in countries with growing economies tend to go up. The price of the house on the land generally depreciates as it wears out. Houses require money; they are called money pits for a reason. You have to replace HVAC periodically, roofs, repairs, rot, foundation problems, leaks, electrical repair; and all of that just reduces the rate at which the house (not the land) loses value. To maintain value (of the house proper), you need to regularly rebuild parts of the house. People expect different things in Kitchens, bathrooms, dining rooms, doors, bedrooms today than they do in the past, and wear on flooring and fixtures accumulate over time. The price of land and is going to be highly determined by the current interest rates. Interest rates are currently near zero; if they go up by even a few percent, we can expect land prices to stop growing and start shrinking, even if the economy continues to grow. So the assumption that land+house prices go up is predicated on the last 35 years of constant rigorous economic growth mixed with interest rate decreases. This is a common illusion, that people assume the recent economic past is somehow the way things are \"\"naturally\"\". But we cannot decrease interest rates further, and rigorous economic growth is far from guaranteed. This is because people price land based on their carrying cost; the cost you have to spend out of your income to have ownership of it. And that is a function of interest rates. Throw in no longer expecting land values to constantly grow and second-order effects that boost land value also go away. Depending on the juristiction, a mortgage is a hugely leveraged investment. It is akin to taking 10,000$, borrowing 40,000$ and buying stock. If the stock goes up, you make almost 5x as much money; if it goes down, you lose 5x as much. And you owe a constant stream of money to service the debt on top of that. If you want to be risk free, work out how you'd deal with the value of your house dropping by 50% together with losing your job, getting a job paying half as much after a period of 6 months unemployment. The new job requires a 1.5 hour commute from your house. Interest rates going up to 12% and your mortgage is up for renewal (in 15 years - they climbed gradually over the time, say), optionally. That is a medium-bad situation (not a great depression scale problem), but is a realistic \"\"bad luck\"\" event that could happen to you. Not likely, but possible. Can you weather it? If so, the risk is within your bounds. Note that going bankrupt may be a reasonable plan to such a bit of bad luck. However, note that had you not purchased the house, you wouldn't be bankrupt in that situation. It is reasonably likely that house prices will, after you spend ~3% of the construction cost of the house per year, pay the mortgage on the land+house, grow at a rate sufficient to offset the cost of renting and generate an economically reasonable level of profit. It is not a risk-free investment. If someone tries to sell you a risk-free investment, they are almost certainly wrong.\"", "title": "" }, { "docid": "73714a6fd3ad30dd3f5a834177aeddde", "text": "People in the United States in the mid-2000's thought that real estate was safe. Then they discovered that when the bubble burst the value of their house dropped 10 to 50%. Then they realized that they couldn't sell, even if they had the cash to make the lender whole. Some lost their houses to foreclosure, others walked away and took massive hits to their wealth and credit scores. When it is hard or impossible to sell, that means you can't move to where the jobs are. While it is possible to make money in real estate, treating your house as an investment vehicle means that you are putting not only all your eggs into one basket; you are also living in the basket. In general you should assume that all investment involves risk. So if you are trying to avoid all chances of losing money then the safest form of investment is via your bank account and government bonds. Your national government has a program to insure bank accounts, you need to understand the rules for that program, including types of accounts and amounts. You should also look into your national programs for retirement accounts, to make sure you are investing for the long term. Many people invest via the stock market or the bond market. These investments are not guaranteed, though there may be some protection for fraud. The more specific your investments (individual companies) the more time you need to invest in research and tracking. Many investors do so via mutual funds or Exchange Traded Funds, this involves less of a time investment because you are paying the management comp nay for the fund to do that research for all their investors.", "title": "" }, { "docid": "a47c65b0a06c138ef8250846a5a28aba", "text": "There are two parts to this. Firstly, if you are also living in the property you have bought, then you should not consider it to be an investment. You need it to provide shelter, and the market value is irrelevant unless/until you decide to move. Of course, if your move is forced at a time not of your choosing then if the market value has dropped, you might lose out. No-one can accurately predict the housing market any more than they can predict interest rates on normal savings accounts, the movement of the stock market, etc. Secondly, if you just have a lump sum and you want to invest it safely, the bank is one of the safest places to keep it. It is protected / underwritten by EU law (assuming you are in the EU) up to €100,000. See for example here which is about the UK and Brexit in particular but mentions the EU blanket protection. The other things you could do with it - buy property, gold, art works, stocks and shares, whatever thing you think will be least likely to lose value over time - would not be protected in the same way.", "title": "" }, { "docid": "df91c47eafc6397732ede7d8f2fe2602", "text": "\"You are mixing issues here. And it's tough for members to answer without more detail, the current mortgage rate in your country, for one. It's also interesting to parse out your question. \"\"I wish to safely invest money. Should I invest in real estate.\"\" But then the text offers that it's not an investment, it's a home to live in. This is where the trouble is. And it effectively creates 2 questions to address. The real question - Buy vs Rent. I know you mentioned Euros. Fortunately, mortgages aren't going to be too different, lower/higher, and tax consequence, but all can be adjusted. The New York Times offered a beautiful infographing calculator Is It Better to Rent or Buy? For those not interested in viewing it, they run the math, and the simple punchline is this - The home/rent ratio can have an incredibly wide range. I've read real estate blogs that say the rent should be 2% of the home value. That's a 4 to 1 home/rent (per year). A neighbor rented his higher end home, and the ratio was over 25 to 1. i.e. the rent for the year was about 4% the value of the home. It's this range that makes the choice less than obvious. The second part of your question is how to stay safely invested if you fear your own currency will collapse. That quickly morphs into too speculative a question. Some will quickly say \"\"gold\"\" and others would point out that a stockpile of weapons, ammo, and food would be the best choice to survive that.\"", "title": "" }, { "docid": "7238e6a38329958a49bf7b9e30ce6e74", "text": "\"Neither you nor others have mentioned the costs of being a homeowner. First, there are monetary costs. If you own a house, you have to pay taxes. They will vary by jurisdiction, but are usually not zero. You also need insurance, which again comes with monthly rates. Then, once in a while, you'll be hit with unpleasant lump sum payments. In 30 years, the mortgage is over and you own the house - but by that time, it will probably need a new roof. That's in the price range of a new car. And over that time, you'll rack up several other repairs which your landlord covers when you rent. Another thing which feels less like an expense emotionally but ends up thinning your wallet is the cosmetic changes you make just because it's your own home. You wouldn't put marble floors in the bathroom if you rent, but you might be tempted to if you live in the house. It might be even worth it from a life satisfaction point of view, but we are talking finance right now, and that's a minus. And then there are the opportunity costs. A house binds you geographically. You may pass up on a nice job offer because your house is too far away, for example. Or you might experience liquidity problems, because a house is difficult to turn into money in a hurry. If you are able to do so, it is usually a much larger sum than you need, and you are paying the costs inherent in that large transaction. These are just examples, you can probably come up with more costs. Then, it is not sure how much money you can get of the house if you change your mind. Say you take this job at the other end of the country, or you become a parent of four and need more space. At the time you decide to sell, the market may have gone down due to the overall state of the economy, or to the house location's popularity, or your own house may have turned undesirable (what if you get a mold infestation which would only go away if you strip it to the concrete and rebuild?) You could let it to renters, but that's a hassle of its own. It takes time to find renters, it may be expensive (income tax, regulations like Energieausweis in Germany), it is risky (if they don't pay, you might not see money even if you sue them). Then there is the problem that prices reflect not some kind of \"\"true\"\" value, but the intersection of supply and demand. And the home market is not as efficient as in a first semester microeconomics textbook. The buyers of private homes deal in small volumes, have little knowledge in the market, pay intermediaries' cuts, and are emotionally attached to the idea of \"\"owning my own house\"\". This drives demand up and creates higher prices than if you had perfectly rational actors on both sides. People pay money for the feeling of being home owners, so those who forego spending on that feeling have more money to invest in something else. Owning something always causes expenses. You have to calculate the savings of having the house vs. the expenses of having it, before you can decide if it is a good deal or not. If you only calculate one side of the equation, you'll be badly mistaken.\"", "title": "" }, { "docid": "adf501f484179c36384e962cf72178e6", "text": "Investment is very uncertain, so I believe that unless you have loads of money, you should not play around with houses for the sole purpose of investing. Here are the questions which I would consider to judge the situation. Note that this is based on the current situation in The Netherlands Income: Your income is 1800 a month nett, which means your gross annual income should be somewhere below 28500. Allowed mortgage amount: Your maximum morgage amount is then roughly 135000 Is it expensive?: Given your maximum morgage, buying a 200k appartment would consume pretty much all your cash. There is some cost of buying the appartment, so basically if you buy it, you will not have much cash to decorate or deal with unforseen maintenance. If you are conservative, I would say that buying a 175k appartment is financially much more relaxing in your situation. What will be the monthly expense?: Monthly mortgage payments will be about 450~500. So your cashflow will suffer a bit. The amount you actually 'burn' on interest in the early months is about 180 nett (assuming an interest rate just below 2% and tax deductions). There will be additional costs (more heating, long term maintenance etc.) so overall the amount of money you burn will be close to the amount of money you burn on rent. Of course over time there will be less interest, so this should go down. Value change: The value may go up or down, in the very long term I would bet on it going up, but on the short or medium term it is quite uncertain. If you may live there for less than a decade, value change is more of a risk than a benefit. Break even point: As you mention that you will buy a house for 200k, I will assume it is not in the heart of a major city, and that renting it out may not be very attractive. However, I will also assume that it is not the middle of nowhere, and that it will only take a reasonable amount of time to sell the house. So if you want to move out, you will probably sell it at a reasonable price. In this case a rule of thumb is that living in an affordable house is usually a good idea when you live there for more than 5 years. (Is it likely that you will find a partner in this period of time, and will you live at your place then, or somewhere else?) Buying a 200k appartment would leave you completely cashless after you move in, something I would not recommend unless you can depend on your parents for instance to 'bridge the gap' when your cashflow dries up. From a monthly expense point of view you are probably going to be OK, as long as you survive the short run. And financially it only makes sense if you are going to live there for a while, and are fairly confident in your position in the labour market. I would personally recommend you to think hard on your family situation, and only buy a house if it leaves you with some cash in your pocket.", "title": "" }, { "docid": "9e16929c4729303de3778f395776620d", "text": "Consider looking into real estate investment trusts (REITs). Assuming that they are available for the area that you are considering they simplify the process of investing in this sector. Your money pooled with other investors and then invested in a broad range of properties. If you go this route make sure to only by REITs that are traded in the open market (liquidity and an honest current valuation). Even better I would consider a index fund of REITs for more diversification. Personally I do use a US based REIT index as a small part of my portfolio so as to get better diversification.", "title": "" }, { "docid": "64d3ed9bdd8bc785d306c43ab39bcb18", "text": "\"No one has addressed the fact that your loan interest and property taxes are \"\"deductible\"\" on your taxes? So, for the first 2/3 years of your loan, you will should be able to deduct each year's mortgage payment off your gross income. This in turn reduces the income bracket for your tax calculation.... I have saved 1000's a year this way, while seeing my home value climb, and have never lost a down payment. I would consider trying to use 1/2 your savings to buy a property that is desirable to live in and being able to take the yearly deduction off your taxes. As far as home insurance, most people I know have renter's insurance, and homeowner's insurance is not that steep. Chances are a year from now if you change your mind and wish to sell, unless you're in a severely deflated area, you will reclaim at minimum your down payment.\"", "title": "" } ]	[ { "docid": "562c42a443fff22c390f5e45bb7d2402", "text": "\"Maybe a bit off topic, but I suggest reading \"\"Rich Dad Poor Dad\"\" by Robert Kiyosaki. An investment is something that puts money to your pocket. If your properties don't put money to your pocket (and this seems to be the case), then they're not an investment. Instead, they drain money from you pocket. Therefore you should instead turn these \"\"investments\"\" into real investments. Make everything to earn some money using them, not to earn money somewhere else to cover the loses they create. If that's not possible, get rid of them and find something that \"\"puts money into your pocket\"\".\"", "title": "" }, { "docid": "8c986bdc7bd14f116c542f34eb2db587", "text": "Real estate is never a low-risk investment. I'd keep your money in the bank, and make sure that you don't have more in any one bank than is guaranteed in the event of bank failure. If your bank account is in Greece, Italy, Spain, Portugal or Ireland, I'd consider moving it to Eurozone country that's in better shape, as there's just a slight possibility of one or more of those countries exiting the Eurozone in a disorderly fashion and forcibly converting bank accounts to a new and weak currency.", "title": "" }, { "docid": "5dee09c7bcf1ccfe6b8a68518b9eddb0", "text": "Being able to make small investments in very valuable real estate could make this a game changer. I want to invest in a skyscraper in the UAE, but I only have $10k. I can just use REAL tokens to buy a percentage of that property. At least, that's the way I understand this to work.", "title": "" }, { "docid": "1780c956b6e79156a96d46a6b5e1ce97", "text": "\"Remind him that, over the long-term, investing in safe-only assets may actually be more risky than investing in stocks. Over the long-term, stocks have always outperformed almost every other asset class, and they are a rather inflation-proof investment. Dollars are not \"\"safe\"\"; due to inflation, currency exchange, etc., they have some volatility just like everything else.\"", "title": "" }, { "docid": "6f663ad4ec7451b19430e6e659f58d06", "text": "\"So here are some of the risks of renting a property: Plus the \"\"normal\"\" risk of losing your job, health, etc., but those are going to be bad whether you had the rental or not, so those aren't really a factor. Can you beat the average gain of the S&P 500 over 10 years? Probably, but there's significant risk that something bad will happen that could cause the whole thing to come crashing down. How many months can you go without the rental income before you can't pay all three mortgages? Is that a risk you're willing to take for $5,000 per year or less? If the second home was paid for with cash, AND you could pay the first mortgage with your income, then you'd be in a much better situation to have a rental property. The fact that the property is significantly leveraged means that any unfortunate event could put you in a serious financial bind, and makes me say that you should sell the rental, get your first mortgage paid down as soon as possible, and start saving cash to buy rental property if that's what you want to invest in. I think we could go at least 24 months with no rental income Well that means that you have about $36k in an emergency fund, which makes me a little more comfortable with a rental, but that's still a LOT of debt spread across two houses. Another way to think about it: If you just had your main house with a $600k mortgage (and no HELOC), would you take out a $76k HELOC and buy the second house with a $200k mortgage?\"", "title": "" }, { "docid": "61e08f0d238c2474a7eb648aac96c339", "text": "\"TL;DR - go with something like Barry Ritholtz's All Century Portfolio: 20 percent total U.S stock market 5 percent U.S. REITs 5 percent U.S. small cap value 15 percent Pacific equities 15 percent European equities 10 percent U.S. TIPs 10 percent U.S. high yield corp bonds 20 percent U.S. total bond UK property market are absurdly high and will be crashing a lot very soon The price to rent ratio is certainly very high in the UK. According to this article, it takes 48 years of rent to pay for the same apartment in London. That sounds like a terrible deal to me. I have no idea about where prices will go in the future, but I wouldn't voluntarily buy in that market. I'm hesitant to invest in stocks for the fear of losing everything A stock index fund is a collection of stocks. For example the S&P 500 index fund is a collection of the largest 500 US public companies (Apple, Google, Shell, Ford, etc.). If you buy the S&P 500 index, the 500 largest US companies would have to go bankrupt for you to \"\"lose everything\"\" - there would have to be a zombie apocalypse. He's trying to get me to invest in Gold and Silver (but mostly silver), but I neither know anything about gold or silver, nor know anyone who takes this approach. This is what Jeremy Siegel said about gold in late 2013: \"\"I’m not enthusiastic about gold because I think gold is priced for either hyperinflation or the end of the world.\"\" Barry Ritholtz also speaks much wisdom about gold. In short, don't buy it and stop listening to your friend. Is buying a property now with the intention of selling it in a couple of years for profit (and repeat until I have substantial amount to invest in something big) a bad idea? If the home price does not appreciate, will this approach save you or lose you money? In other words, would it be profitable to substitute your rent payment for a mortgage payment? If not, you will be speculating, not investing. Here's an articles that discusses the difference between speculating and investing. I don't recommend speculating.\"", "title": "" }, { "docid": "488a2e2da0765eb148803ded8cdeccfb", "text": "Like @littleadv, I don't consider a mortgage on a primary residence to be a low-risk investment. It is an asset, but one that can be rather illiquid, depending on the nature of the real estate market in your area. There are enough additional costs associated with home-ownership (down-payment, insurance, repairs) relative to more traditional investments to argue against a primary residence being an investment. Your question didn't indicate when and where you bought your home, the type of home (single-family, townhouse, or condo) the nature of your mortgage (fixed-rate or adjustable rate), or your interest rate, but since you're in your mid-20s, I'm guessing you bought after the crash. If that's the case, your odds of making a profit if/when you sell your home are higher than they would be if you bought in the 2006/2007 time-frame. This is no guarantee of course. Given the amount of housing stock still available, housing prices could still fall further. While it is possible to lose money in all sorts of investments, the illiquid nature of real estate makes it a lot more difficult to limit your losses by selling. If preserving principal is your objective, money market funds and treasury inflation protected securities are better choices than your home. The diversification your financial advisor is suggesting is a way to manage risk. Not all investments perform the same way in a given economic climate. When stocks increase in value, bonds tend to decrease (and vice versa). Too much money in a single investment means you could be wiped out in a downturn.", "title": "" }, { "docid": "cbc8773cb5a67bbf55cba1b513b1816b", "text": "\"Due to the zero percent interest rate on the Euro right now you won't find any investment giving you 5% which isn't equivalent to gambling. One of the few investment forms which still promises gains without unreasonable risks right now seems to be real estate, because real estate prices in German urban areas (not so in rural areas!) are growing a lot recently. One reason for that is in fact the low interest rate, because it makes it very cheap right now to take a loan and buy a home. This increased demand is driving up the prices. Note that you don't need to buy a property yourself to invest in real estate (20k in one of the larger cities of Germany will get you... maybe a cardboard box below a bridge?). You can invest your money in a real estate fund (\"\"Immobilienfond\"\"). You then don't own a specific property, you own a tiny fraction of a whole bunch of different properties. This spreads out the risk and allows you to invest exactly as much money as you want. However, most real estate funds do not allow you to sell in the first two years and require that you announce your sale one year in advance, so it's not a very liquid asset. Also, it is still a risky investment. Raising real estate prices might hint to a bubble which might burst eventually. Financial analysts have different opinions about this. But fact is, when the European Central Bank starts to take interest again, then the demand for real estate property will drop and so will the prices. When you are not sure what to do, ask your bank for investment advise. German banks are usually trustworthy in this regard.\"", "title": "" }, { "docid": "dd8e5ca4888ff871a3b76ce481bb3bd5", "text": "\"First of all, bear in mind that there's no such thing as a risk-free investment. If you keep your money in the bank, you'll struggle to get a return that keeps up with inflation. The same is true for other \"\"safe\"\" investments like government bonds. Gold and silver are essentially completely speculative investments; over the years their price tends to vary quite wildly, so unless you really understand how those markets work you should steer well clear. They're certainly not low risk. Repeatedly buying a property to sell in a couple of years time is almost certainly a bad idea; you'll end up paying substantial transaction fees each time that would wipe out a lot of the possible profit, and of course there's always the risk that prices would go down not up. Buying a property to keep - and preferably live in - might be a decent option once you have a good deposit saved up. It's very hard to say where prices will go in future, on the one hand London prices are very high by historical standards, but on the other hand supply is likely to remain severely constrained for years to come. I tend to think of a house as something that I need one of for the rest of my life, and so in one sense not owning a house to live in is a gamble that house prices and rents won't go up substantially. If you own a house, you're insulated from changes in rent etc and even if prices crash at least you still have somewhere to live. However that argument only works really well if you expect to keep living in the same area under most circumstances - house prices might crash in your area but not elsewhere.\"", "title": "" }, { "docid": "dc3d31cae4876d633c5f8674b48d8b89", "text": "\"Is it safe? No in general. Are there any other safe \"\"paper\"\" ways to invest money let's say for 30 years and be sure nothing will happen to them and you will end your life without relying on pension? No. In these times only real properly gives you some sort of warranty in 5-30 years term. Land, buildings, production lines. Not necessary in US - lots of countries have 0 or fairly low property tax. Some gold, platinum, silver and other rare elements to diversify. - This is the only way you can be sure you will not suddenly loose everything.\"", "title": "" }, { "docid": "3da4efe6540dfd85d329d83f22974972", "text": "\"With no numbers offered, it's not like we can tell you if it's a wise purchase. -- JoeTaxpayer We can, however, talk about the qualitative tradeoffs of renting vs owning. The major drawback which you won't hear enough about is risk. You will be putting a very large portion of your net worth in what is effectively a single asset. This is somewhat risky. What happens if the regional economy takes a hit, and you get laid off? Chances are you won't be the only one, and the value of your house will take a hit at the same time, a double-whammy. If you need to sell and move away for a job in another town, you will be taking a financial hit - that is, if you can sell and still cover your mortgage. You will definitely not be able to walk away and find a new cheap apartment to scrimp on expenses for a little while. Buying a house is putting down roots. On the other hand, you will be free from the opposite risk: rising rents. Once you've purchased the house, and as long as you're living in it, you don't ever need to worry about a local economic boom and a bunch of people moving into town and making more money than you, pushing up rents. (The San Francisco Bay Area is an example of where that has happened. Gentrification has its malcontents.) Most of the rest is a numbers game. Don't get fooled into thinking that you're \"\"throwing away\"\" money on renting - if you really want to, you can save money yourself, and invest a sum approximately equal to your down payment in the stock market, in some diversified mutual funds, and you will earn returns on that at a rate similar to what you would get by building equity in your home. (You won't earn outsized housing-bubble-of-2007 returns, but you shouldn't expect those in the housing market of today anyway.) Also, if you own, you have broad discretion over what you can do with the property. But you have to take care of the maintenance and stuff too.\"", "title": "" }, { "docid": "5757acae7e1624d29020368571f4543e", "text": "I would suggest, both as an investor and as someone who has some experience with a family-run trust (not my own), that this is probably not something you should get involved with, unless the money is money you're not worried about - money that otherwise would turn into trips to the movies or something like that. If you're willing to treat it as such, then I'd say go for it. First off, this is not a short or medium term investment. This sort of thing will not be profitable right away, and it will take quite a few years to become profitable to the point that you could take money out of it - if ever. Your money will be effectively, if not actually, locked up for years, and be nearly entirely illiquid. Second, it's not necessarily a good investment even considering that. Real estate is something people tend to feel like it should be an amazing investment that just makes you money, and is better than risky things like the stock market; except it's really not. It's quite risky, vulnerable to things like the 2008 crash, but also to things like a local market being a bit down, or having several months with no renter. The amount your fund will have in it (at most $100x15/month) won't be enough to buy even one property for years ($1500/month means you're looking at what, 100-150 months before you have enough?), and as such won't have enough to buy multiple properties for even longer, which is where you reach some stability. Having a washing machine break down or a roof leak is a big deal when you only have one property to manage; having five or six properties spreads out the risk significantly. You won't get tax breaks from this, of course, and that's where the real issue is for you. You would be far better off putting your money in a Roth IRA (or a regular IRA, but based on your career choice and current income, I'd strongly consider a Roth). You'll get tax free growth, less risky than this fund AND probably faster growing - but regardless of both of those, tax free. That 15-25% that Uncle Sam is giving you back is a huge, huge deal, greater than any return a fund is going to give you (and if they promise that high, run far and fast). Finally, as someone who's watched a family trust work at managing itself - it's a huge, huge headache, and not something I'd recommend at least (unless it comes with money, in which case it's of course a different story). You won't agree on investments, inevitably, and you'll end up spending huge amounts of time trying to convince each other to go with your idea - and it will likely end up being fairly stagnant and conservative, because that's what everyone will be able to at least not object to. It might be something you all enjoy doing, in which case good luck - but definitely not my cup of tea.", "title": "" }, { "docid": "31c83387a5c166a0bf0e8c3637a9e7db", "text": "I'll add this to what the other answers said: if you are a renter now, and the real estate you want to buy is a house to live in, then it may be worth it - in a currency devaluation, rent may increase faster than your income. If you pay cash for the home, you also have the added benefit of considerably reducing your monthly housing costs. This makes you more resilient to whatever the future may throw at you - a lower paying job, for instance, or high inflation that eats away at the value of your income. If you get a mortgage, then make sure to get a fixed interest rate. In this case, it protects you somewhat from high inflation because your mortgage payment stays the same, while what you would have had to pay in rent keeps going up an up. In both cases there is also taxes and insurance, of course. And those would go up with inflation. Finally, do make sure to purchase sensibly. A good rule of thumb on how much you can afford to pay for a home is 2.5x - 3.5x your annual income. I do realize that there are some areas where it's common for people to buy homes at a far greater multiple, but that doesn't mean it's a sensible thing to do. Also: I'll second what @sheegaon said; if you're really worried about the euro collapsing, it might give you some peace of mind to move some money into UK Gilts or US Treasuries. Just keep in mind that currencies do move against each other, so you'd see the euro value of those investments fluctuate all the time.", "title": "" }, { "docid": "8a01424e83595065e20e56380b974ff5", "text": "\"I don't know much about New Zealand, but here are just some general thoughts on things to consider. The big difference between buying a house and investing in stocks or the like is that it is fairly easy to invest in a diversified array of stocks (via a mutual fund), but if you buy a house, you are investing in a single piece of property, so everything depends on what happens with that specific property. This in itself is a reason many people don't invest in real estate. Shares of a given company or mutual fund are fungible: if you buy into a mutual fund, you know you're getting the same thing everyone else in the fund is getting. But every piece of real estate is unique, so figuring out how much a property is worth is less of an exact science. Also, buying real estate means you have to maintain it and manage it (or pay someone else to do so). It's a lot more work to accurately assess the income potential of a property, and then maintain and manage the property over years, than it is to just buy some stocks and hold them. Another difficulty is, if and when you do decide to sell the property, doing so again involves work. With stocks you can pretty much sell them whenever you want (although you may take a loss). With a house you have to find someone willing to buy it, which can take time. So a big factor to consider is the amount of effort you're prepared to put into your investment. You mention that your parents could manage the property for you, but presumably you will still have to pay for maintenance and do some managing work yourself (at least discussing things with them and making decisions). Also, if you own the property for a long time your parents will eventually become too old to take care of it, at which point you'll have to rethink the management aspect. So that's sort of the psychological side of things. As for the financial, you don't mention selling the house at any point. If you never sell it, the only gain you get from it is the rent it brings in. So the main factor to consider when deciding whether to buy it as a rental is how much you can rent it for. This is going to be largely determined by where it is located. So from the perspective of making an investment the big question --- which you don't address in the info you provided --- is: how much can you rent this house for, and how much will you be able to rent it for in the future? There is no way to know this for sure, and the only way to get even a rough sense of it is to talk with someone who knows the local real estate market well (e.g., a broker, appraiser, or landlord). If the property is in an \"\"up-and-coming\"\" area (i.e., more people are going to move there in the future), rents could skyrocket; if it's in a backwater, rents could remain stagnant indefinitely. Basically, if you're going to buy a piece of real estate as a long-term investment, you need to know a lot about that property in order to make any kind of comparison with another investment vehicle like a mutual fund. If you already live in the area you may know some things already (like how much you might be able to rent it for). Even so, though, you should try to get some advice from trustworthy people who know the local real estate situation.\"", "title": "" }, { "docid": "9183b4c1428a12698926e2e6ad9e4e91", "text": "A possibility could be real estate brokerage firms such as Realogy or Prudential. Although a brokerage commission is linked to the sale prices it is more directly impacted by sales volume. If volume is maintained or goes up a real estate brokerage firm can actually profit rather handsomely in an up market or a down market. If sales volume does go up another option would be other service markets for real estate such as real estate information and marketing websites and sources i.e. http://www.trulia.com. Furthermore one can go and make a broad generalization such as since real estate no longer requires the same quantity of construction material other industries sensitive to the price of those commodities should technically have a lower cost of doing business. But be careful in the US much of the wealth an average american has is in their home. In this case this means that the economy as a whole takes a dive due to consumer uncertainty. In which case safe havens could benefit, may be things like Proctor & Gamble, gold, or treasuries. Side Note: You can always short builders or someone who loses if the housing market declines, this will make your investment higher as a result of the security going lower.", "title": "" } ]	fiqa
ab5990a009587f9fd8a6b06a71342c74	Why are the administrative fees for the three biggest donor-advised funds identical?	[ { "docid": "44fa918fa226a914a48c0e624bff32a8", "text": "The commenters who referred you to the prisoner's dilemma are exactly correct, but I wanted to give a more detailed explanation because I find game theory quite interesting. The prisoner's dilemma is a classic scenario in game theory where even though it's in the best interests of two or more players to cooperate, they fail to do so. Wikipedia has a simple example using prisoners, but I'll use a simple example using Fidel and Charles, who are fund managers at Fidelity and Charles Schwab, respectively. To make the table shorter, I abbreviated a bit: INC = increase fees, KEEP=keep fees the same, DEC=decrease fees. Here is the dilemma itself, in the table that shows the resulting market shares if each fund manager follows the course of action in question. While this example isn't mathematically rigorous because I completely fabricated the numbers, it makes a good example. The most profitable course of action would be both fund managers agreeing to increase their fees, which would keep their market shares the same but increase their profits as they earn more fees. However, this won't happen for several reasons. Because economies of scale exist in the market for investment funds, it's reasonable to assume in a simple example that as funds grow larger, their costs decrease, so even though a fund manager decreases his fees (betraying the other players), this decrease won't be enough to reduce their profits. In fact, the increased market share resulting from such a decrease may well dominate the decreased fees and lead to higher profits. The prisoner's dilemma is highly applicable to markets such as these because they exist as oligopolies, i.e. markets where a relatively small number of established sellers possess considerable market power. If you actually wanted to model the market for donor-advised funds using game theory, you need to take a few more things into account. Obviously there are more than two firms. It's probably a valid assumption that the market is an oligopoly with significant economies of scale, but I haven't researched this extensively. There is more than one time period, so some form of the iterated prisoner's dilemma is needed. The market for donor-advised funds is also complicated by the fact that these are philanthropic funds. This may introduce tax implications or the problem of goodwill and institutional opinion of these funds. Although both funds increasing their fees may increase their profits in theory, institutional investors may look on this as a pure profit-seeking and take their funds elsewhere. For example, they may choose to invest in smaller funds with higher fees but better reputations. While reputation is important for any company, it might make more of a difference when the fund/investment vehicle is philanthropic in nature. I am by no means an expert on game theory, so I'm sure there are other nuances to the situation that I'm unaware of.", "title": "" } ]	[ { "docid": "a9f1d97d08857ec75a4dae304f17d6bd", "text": "\"This was an article meant for mass consumption, written by a Yale law professor and an individual who has a PhD in economics (in addition to his practical, on the job experience managing the Yale endowment). I'm having a hard time believing that it was \"\"poorly argued.\"\" As for proof, that's the sort of thing you find in financial and economic journals (for example, [The Effect of Maker-Taker Fees on Investor Order Choice and Execution Quality in U.S. Stock Markets](http://people.stern.nyu.edu/jhasbrou/SternMicroMtg/SternMicroMtg2015/Papers/MakerTakerODonoghue.pdf)). One of the direct takeaways from the above paper states: \"\"I find that total trading cost to investors increases, when the taker fee and maker rebate increase, even if the net fee is held fixed. The total trading cost represents the net-of-fees bid-ask spread and the brokerage commission to an investor wanting to buy and then sell the same stock.\"\" I'm not here to argue for the paper. I'm really here to tell you that these guys have far more of a clue than you realize. ~~A dash of humility on your part may be in order, given the fact that you've already admitted to the reality that you aren't sure of any of this yourself.~~ Edit: Thought I was responding to a different thread.\"", "title": "" }, { "docid": "d1eee4f33571648fb95733b26e6f5736", "text": "\"Here's an example that I'm trying to figure out. ETF firm has an agreement with GS for blocks of IBM. They have agreed on daily VWAP + 1% for execution price. Further, there is a commission schedule for 5 mils with GS. Come month end, ETF firm has to do a monthly rebalance. As such must buy 100,000 shares at IBM which goes for about $100 The commission for the trade is 100,000 * 5 mils = $500 in commission for that trade. I assume all of this is covered in the expense ratio. Such that if VWAP for the day was 100, then each share got executed to the ETF at 101 (VWAP+ %1) + .0005 (5 mils per share) = for a resultant 101.0005 cost basis The ETF then turns around and takes out (let's say) 1% as the expense ratio ($1.01005 per share) I think everything so far is pretty straight forward. Let me know if I missed something to this point. Now, this is what I'm trying to get my head around. ETF firm has a revenue sharing agreement as well as other \"\"relations\"\" with GS. One of which is 50% back on commissions as soft dollars. On top of that GS has a program where if you do a set amount of \"\"VWAP +\"\" trades you are eligible for their corporate well-being programs and other \"\"sponsorship\"\" of ETF's interests including helping to pay for marketing, rent, computers, etc. Does that happen? Do these disclosures exist somewhere?\"", "title": "" }, { "docid": "5d354ffcba653ace3f0d5f2d49614d2d", "text": "First and foremost you need to be aware of what you are comparing. In this case, HSBC as traded on the NYSE exchange is not common shares, but an ADR (American Depository Receipt) with a 5:1 ratio from the actual shares. So for most intents and purposes owning one ADR is like owning five common shares. But for special events like dividends, there may be other considerations, such as the depository bank (the institution that created the ADR) may take a percentage. Further, given that some people, accounts or institutions may be required to invest in a given country or not, there may be some permanent price dislocation between the shares and the ADR, which can further lead to discrepancies which are then highlighted by the seeming difference in dividends.", "title": "" }, { "docid": "b7c8115416ff9f0bb1c0fe23627ab8ab", "text": "The creation mechanism for ETF's ensures that the value of the underlying stocks do not diverge significantly from the Fund's value. Authorized participants have a strong incentive to arbitrage any pricing differences and create/redeem blocks of stock/etf until the prices are back inline. Contrary to what was stated in a previous answer, this mechanism lowers the cost of management of ETF's when compared to mutual funds that must access the market on a regular basis when any investors enter/exit the fund. The ETF only needs to create/redeem in a wholesale basis, this allows them to operate with management fees that are much lower than those of a mutual fund. Expenses Due to the passive nature of indexed strategies, the internal expenses of most ETFs are considerably lower than those of many mutual funds. Of the more than 900 available ETFs listed on Morningstar in 2010, those with the lowest expense ratios charged about .10%, while those with the highest expenses ran about 1.25%. By comparison, the lowest fund fees range from .01% to more than 10% per year for other funds. (For more on mutual fund feeds, read Stop Paying High Fees.)", "title": "" }, { "docid": "7a31634080d21cd160fd160fc41d54b5", "text": "\"That's an example of the Act applying to an adviser to a fund, not a fund being exempt from the Act. An adviser to a 3(c)7 fund in this case is taking advantage of a safe harbor pertaining to performance-based compensation set forth in the Act. The reasoning is that a 3(c)7 fund will by definition most likely be comprised of \"\"qualified clients.\"\" The prohibition does apply to other private funds - such as 3(c)1 funds. To the extent that their investors are not \"\"qualified clients,\"\" they are unable to charge a performance-based fee.\"", "title": "" }, { "docid": "75e2b29099a8c4fa0c12049ef7f73594", "text": "What you may be looking for are multi-manager ETFs; these invest in a basket of diversified funds to get the best out of all of the funds. The problem with multi-manager funds is, of course, that you pay fees twice; once to the fund itself and once to each of the funds in the fund. The low fees on ETFs mean that it is not very profitable to actively maintain one so there are not many around (Googling returns very few). Noting that historic success doesn't guarantee future success and that fees are being applied to fees these funds only really benefit from diversification of manager performance risk. partial source of information and an example of a (non-outperforming) Multi-manager ETF: http://www.etfstrategy.co.uk/advisorshares-sets-date-for-multi-manager-etf-with-charitable-twist-give-53126/", "title": "" }, { "docid": "30b42818168e9bacd7e46e29baf37382", "text": "Excellent summary. I'd add a minor point that it's cheaper to setup and run a hedge fund. The legal fees associated with starting a 40 Act mutual fund are about $750,000. A hedge fund cane be setup for about $80,000. It's also cheaper to keep the hedge fund going as the reporting requirements are much less. source: Have setup hedge funds and mutual funds. edit: A word and source. Edi", "title": "" }, { "docid": "0f25b9fbec9ffacf7aed54f24f4be5ec", "text": "In the absence of a country designation where the mutual fund is registered, the question cannot be fully answered. For US mutual funds, the N.A.V per share is calculated each day after the close of the stock exchanges and all purchase and redemption requests received that day are transacted at this share price. So, the price of the mutual fund shares for April 2016 is not enough information: you need to specify the date more accurately. Your calculation of what you get from the mutual fund is incorrect because in the US, declared mutual fund dividends are net of the expense ratio. If the declared dividend is US$ 0.0451 per share, you get a cash payout of US$ 0.0451 for each share that you own: the expense ratio has already been subtracted before the declared dividend is calculated. The N.A.V. price of the mutual fund also falls by the amount of the per-share dividend (assuming that the price of all the fund assets (e.g. shares of stocks, bonds etc) does not change that day). Thus. if you have opted to re-invest your dividend in the same fund, your holding has the same value as before, but you own more shares of the mutual fund (which have a lower price per share). For exchange-traded funds, the rules are slightly different. In other jurisdictions, the rules might be different too.", "title": "" }, { "docid": "bdc088e3c947f07ccdf31e5b845889e8", "text": "\"I just looked at a fund for my client, the fund is T Rowe Price Retirement 2015 (TRRGX). As stated in the prospectus, it has an annual expense ratio of 0.63%. In the fine print below the funds expenses, it says \"\"While the fund itself charges no management fee, it will indirectly bear its pro-rata share of the expenses of the underlying T. Rowe Price funds in which it invests (acquired funds). The acquired funds are expected to bear the operating expenses of the fund.\"\" One of it's acquired funds is TROSX which has an expense ratio of 0.86%. So the total cost of the fund is the weighted average of the \"\"acquired funds\"\" expense ratio's plus the listed expense ratio of the fund. You can see this at http://doc.morningstar.com/docdetail.aspx?clientid=schwab&key=84b36f1bf3830e07&cusip=74149P796 and its all listed in \"\"Fees and Expenses of the Fund\"\"\"", "title": "" }, { "docid": "d3741d5862564553029f431e8570eb66", "text": "\"The mutual fund is legally its own company that you're investing in, with its own expenses. Mutual fund expense ratios are a calculated value, not a promise that you'll pay a certain percentage on a particular day. That is to say, at the end of their fiscal year, a fund will total up how much it spent on administration and divide it by the total assets under management to calculate what the expense ratio is for that year, and publish it in the annual report. But you can't just \"\"pay the fee\"\" for any given year. In a \"\"regular\"\" account, you certainly could look at what expenses were paid for each fund by multiplying the expense ratio by your investment, and use it in some way to figure out how much additional you want to contribute to \"\"make it whole\"\" again. But it makes about as much sense as trying to pay the commission for buying a single stock out of one checking account while paying for the share price out of another. It may help you in some sort of mental accounting of expenses, but since it's all your money, and the expenses are all part of what you're paying to be able to invest, it's not really doing much good since money is fungible. In a retirement account with contribution limits, it still doesn't really make sense, since any contribution from outside funds to try to pay for expense ratios would be counted as contributions like any other. Again, I guess it could somehow help you account for how much money you wanted to contribute in a year, but I'm not really sure it would help you much. Some funds or brokerages do have non-expense-ratio-based fees, and in some cases you can pay for those from outside the account. And there are a couple cases where for a retirement account this lets you keep your contributions invested while paying for fees from outside funds. This may be the kind of thing that your coworker was referring to, though it's hard to tell exactly from your description. Usually it's best just to have investments with as low fees as possible regardless, since they're one of the biggest drags on returns, and I'd be very wary of any brokerage-based fees when there are very cheap and free mutual fund brokerages out there.\"", "title": "" }, { "docid": "819946382517061214fcfcea1453525c", "text": "You're right. That's a large part of what I talked about in my post, I just didn't call it that. The other provision of Title III (aka CROWDFUND Act) is that all the equity has to be purchased through a brokerage or funding portal. I mentioned those in another post in this thread.", "title": "" }, { "docid": "61f292c177b78daa76fd032500f0bff7", "text": "This is a Vanguard-specific difference in the sense that in the US, Vanguard is a leader in lowering management fees for the mutual funds that they offer. Of course, several US mutual fund companies have also been lowering the expense ratio of their mutual funds in recent years because more and more investors have been paying attention to this particular performance parameter, and opting for funds that have low expense ratios. But many US funds have not reduced their expense ratios very much and continue to have expense ratios of 1% or even higher. For example, American Funds Developing World Growth and Income Fund (DWGAX) charges a 1.39% expense ratio while their 2060 Retirement Fund (AANTX) charges 1.12% (the funds also have a 5.75% sales charge); Putnam Capital Opportunities Fund charges 1.91% for their Class C shares, and so on. Many funds with high expense ratios (and sometimes sales charges as well) show up as options in far too many 401(k) plans, especially 401(k) plans of small companies, because small companies do not enjoy economies of scale and do not have much negotiating power when dealing with 401(k) custodians and administrators.", "title": "" }, { "docid": "aa5888916091d16a9b14403dc22f162d", "text": "They do. The $260 already accounts for fees, I just left that out as I didn't believe it necessary info for the question of how to solve for group B. Edit : Oh, you mean accounting for the 1.5% interchange for group A? Yeah, I didn't do that. For group A we weren't given a number for monthly spend but we were told that they carry an average monthly balance of $3000.", "title": "" }, { "docid": "19f06ae3fb5539ce2720a61d47286e51", "text": "\"Funds which track the same index may have different nominal prices. From an investors point of view, this is not important. What is important is that when the underlying index moves by a given percentage, the price of the tracking funds also move by an equal percentage. In other words, if the S&P500 rises by 5%, then the price of those funds tracking the S&P500 will also rise by 5%. Therefore, investing a given amount in any of the tracking funds will produce the same profit or loss, regardless of the nominal prices at which the individual funds are trading. To see this, use the \"\"compare\"\" function available on the popular online charting services. For example, in Google finance call up a chart of the S&P500 index, then use the compare textbox to enter the codes for the various ETFs tracking the S&P500. You will see that they all track the S&P500 equally so that your relative returns will be equal from each of the tracking funds. Any small difference in total returns will be attributable to management fees and expenses, which is why low fees are so important in passive investing.\"", "title": "" }, { "docid": "11d9f20c10870a59cfb7994066ecf4c1", "text": "\"The IRS has been particularly vague about the \"\"substantially identical\"\" investment part of the wash rule. Many brokers, Schwab for instance, say that only identical CUSIPs (exactly the same ETF) matter for the wash rule in their internal calculations, but warn that the IRS might consider two ETFs over the same index to be substantially identical. In your case, the broker has chosen to call these a wash despite even having different underlying indices. Talking to the broker is the first step as they will report it to the IRS. Though technically you have the final say in your taxes about the cost basis, discussing this with the IRS could be rather painful. First though it is probably worth checking with your broker about exactly what happened. There are other wash sale triggers that frequently trip people up that may have been in play here.\"", "title": "" } ]	fiqa
032beeb7f29743a75cad1645a4f0eafc	Why do some people say a house “not an investment”?	[ { "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": "2ca3122b4ea0f4b65e23a55d740ddd19", "text": "When I purchased my house I struggled with this same idea. I felt sick to my stomach signing a contract stating how much money I now owe a bank. However, the lawyer I was using put it in terms that eased the nausea a little (I still hate owing that much money - but it's a little more palatable). His words, paraphrased: At the end of the day, you have to have a place to stay. Your mortgage payment is replacing your rent except in this case, you're paying yourself instead of someone else. You lose a little flexibility in being able to up and move with relative ease. However, you've lived in apartments, you know that rent almost only goes up. Your mortgage will not. He wrote out some numbers and basically showed that everything evened out except mortgage payments will give you property as opposed to paying for someone else's property. To answer your question though - others have already stated - you'll get a better return in the stock market (usually). But unless you're really really bad at real estate evaluation - you should make some money off your house when you decide to sell.", "title": "" }, { "docid": "e9f76816678c0a267f047910b324fe99", "text": "With an investment, you tend to buy it for a very specific purpose, namely to make you some money. Either via appreciation (ie, it hopefully increases value after you take all the fees and associated costs into account, you sell the investment, realise the gains) or via a steady cashflow that, after you subtracted your costs, leaves you with a profit. Your primary residence is a roof over your head and first and foremost has the function of providing shelter for yourself and your family. It might go up in value, which is somewhat nice, but that's not its main purpose and for as long as you live in the house, you cannot realise the increase in value as you probably don't want to sell it. Of course the remortgage crowd would suggest that you can increase the size of the mortgage (aka the 'home atm') but (a) we all know how that movie ended and (b) you'd have to factor in the additional interest in your P&L calculation. You can also buy real estate as a pure investment, ie with the only objective being that you plan to make money on this. Normally you'd buy a house or an apartment with a view of renting it out and try to increase your wealth both due to the asset's appreciation (hopefully) and the rent, which in this scenario should cover the mortgage, all expenses and still leave you with a bit of profit. All that said, I've never heard someone use the reasoning you describe as a reason not to buy a house and stay in an apartment - if you need a bigger place for your family and can afford to buy something bigger, that falls under the shelter provision and not under the investment.", "title": "" }, { "docid": "53fbb1f6938c4ea8cf0b4f2102e33a4b", "text": "\"A house is a funny kind of investment. Normally when you invest, you do it to make money. The return on a house, though, isn't principally real money, it's the imputed rent - money that you would have needed to pay to rent the house. The thing about this imputed rent is that you consume it right away. Getting a bigger house and putting more money into it doesn't save you any money, it's just a way to consume more \"\"house\"\" - so, unlike regular investing, it's not really responsible and doesn't contribute to your financial well-being.\"", "title": "" }, { "docid": "51629c9b32f96cee6e2c56d472ad35b0", "text": "Your house is not an asset, it is a liability. Assets feed you. Liabilites eat you. Robert Kiyosaki From a cash flow perspective your primary residence (ie your house) is an investment but it is not an asset. If you add up all the income your primary residence generates and subtract all the expenses it incurs, you will see why investment gurus claim this. Perform the same calculations for a rental property and you're more likely to find it has a positive cash flow. If it has a negative cash flow, it's not an asset either; it's a liability. A rental property with a negative cash flow is still an investment, but cash flow gurus will tell you it's a bad investment. While it is possible that your house may increase in value and you may be able to sell it for more than you paid, will you be able to sell it for more than all of the expenses incurred while living there? If so, you have an asset. Some people will purchase a home in need of repair, live in it and upgrade it, sell it for profit exceeding all expenses, and repeat. These people are flipping houses and generating capital gains based on their own hard work. In this instance a person's primary residence can be an asset. How much of an asset is calculated when the renovated house is sold.", "title": "" }, { "docid": "57d66880aced300bb4bcaf0bfbcd4e8d", "text": "\"I think the claim is that you shouldn't buy a house expecting it to increase in value as you would a stock portfolio. OTOH if you are looking at it from the stand point of \"\"I need housing, mortgage payments and rent are comparable and I build equity if I buy a house rather then rent\"\" that's potentiality a very different situation (that I'm not qualified to judge).\"", "title": "" }, { "docid": "49a980478d54768a73d86779c42b737e", "text": "\"One reason I have heard (beside to keep you paying rent) is the cost of maintenance and improvements. If you hire someone else to do all the work for you, then it may very well be the case, though it is not as bad as a car. Many factors come into play: If you are lucky, you may end up with a lot that is worth more than the house on it in a few decades' time. Personally, I feel that renting is sometimes better than owning depending on the local market. That said, when you own a home, it is yours. You do have to weigh in such factors as being tied down to a certain location to some extent. However, only the police can barge in -- under certain circumstances -- where as a landlord can come in whenever they feel like, given proper notice or an \"\"emergency.\"\" Not to mention that if someone slams a door so hard that it reverberates through the entire place, you can actually deal with it. The point of this last bit is the question of home ownership vs renting is rather subjective. Objectively, the costs associated with home ownership are the drags that may make it a bad investment. However, it is not like car ownership, which is quite honestly rarely an invesment.\"", "title": "" }, { "docid": "e5a340536168fd77a61d7277e52ad74f", "text": "\"You're hearing alot of talk about housing (and by implication property) not being an investment today because on the downside of a market, the conventional wisdom is to be negative about buying things that have lost value. Just as it was dumb to listen to your coworker about hot .Com IPOs in 1999, it's dumb to listen to the real estate naysayers now. Here's another question along a similar vein: Were stocks a good investment in the spring of 2009? The conventional wisdom said: \"\"No, stocks are scary! Buy T-Bills or Gold Bullion!\"\". The people who made money said: \"\"Wait a second, Goldman Sachs is down like 75%? IBM is down like 30%, are they going anywhere? Time to buy.\"\" The wrong house is a poor investment in any economy. Buying a house in Detriot in 1970 was not a good move. Buying a house that needs $50k in work, not a good move. Buying a condo with a bankrupt HOA in Florida is not a good idea. But a good house that is well cared for is a great investment. I'm living in a house right now that is 80 years old, well maintained and affordable on a single income. A similar home a few blocks away sold in May for the same price as we paid in 2006. I'm paying about 20% less than I would for an apartment, and we'll think about moving in 2016 or 2017, by which time I'll probably have put $30-50k into the house. (Roof, kitchen, exterior painting, minor renovation)\"", "title": "" }, { "docid": "9af2b9eb9a52388362c67d7d73f4a9ce", "text": "\"I invested in single family homes and made ok. Houses can be an investment. (though the OP seems to equate \"\"house\"\" with primary residence) Just like any other investment buying houses has risks. I would not treat your primary residence or a vacation home as an investment. That is asking for trouble, but for many many years it was safe to assume that you would make a good return on it, and many people did. If you evaluate the numbers for purchase price, rental market, etc and find that rentals or flipping is worth your exposure then by all means, do it. But treating your primary residence as an investment apparently is what that comment means. Just like the stock market, many people have gotten wealthy on homes and there are lots of people who lost their shirts.\"", "title": "" }, { "docid": "5fe8deec27a0ed2312c70246cbca7f76", "text": "\"There's an old saying: \"\"Never invest in anything that eats or needs maintenance.\"\" This doesn't mean that a house or a racehorse or private ownership of your own company is not an investment. It just points out that constant effort is needed on your part, or on the part of somebody you pay, just to keep it from losing value. Common stock, gold, and money in the bank are three things you can buy and leave alone. They may gain or lose market value, but not because of neglect on your part. Buying a house is a complex decision. There are many benefits and many risks. Other investments have benefits and risks too.\"", "title": "" } ]	[ { "docid": "7360b35a07963916bbe09aa2a6d83bae", "text": "Buying a starter home is not a bad idea if you have a stable job and plan to stay in the area for a long time. Owning a house that you can afford is a very good idea. Purchasing a home that you do not want to live in long term is not a good idea. People who move frequently pay a lot in real estate commissions, as you've mentioned, but they also pay loan origination and title fees. Mortgage interest is tax-deductible, and many people consider home ownership to better than renting because of that fact alone. What they do not consider are costs of property taxes, HOA fees (common in condos and townhouses, but also possible in single family homes), and being tied to piece of real estate if the job market changes and they need to move. The easy rule of thumb is to consider the ratio of total price to one year of rent. If you could purchase for $200k, but you would rent for $800 per month then the price to rent ratio is 20.83. Depending on the market most homes fall between 10 and 20. When the ratio is less than 10, then you would be at a great disadvantage renting instead of purchasing, when the ratio is greater than 20, you would be foolish to buy instead of rent unless there was some other compelling factor motivating the purchase.", "title": "" }, { "docid": "1f175d50b874cfd98fd91db1fb224437", "text": "\"I am reminded of a dozen year old dialog. I asked my 6 year old, \"\"If we call a tail a leg, how many legs does a dog have?\"\" She replied, \"\"Four, you can call it anything you want, but the dog still has four legs.\"\" Early on in my marriage, my wife was heading out to the mall, and remarked that she was \"\"going to invest in a new pair of shoes.\"\" I explained to her that while I was happy she would have new shoes to wear, words have meaning, and unless she was going to buy the ruby red slippers Dorothy wore in the Wizard of Oz, or Elvis' Blue Suede Shoes, her's were not expected to rise in value and weren't an investment. Some discussion followed, and we agreed even the treadmill, which is now 20 years old, was not an 'investment' despite the fact that it saved us more than its cost in a combined 40 years of gym memberships we did not buy. In the end, no one who is financially savvy calls a lottery ticket an investment, and few who buy them acknowledge that it's simply throwing money away.\"", "title": "" }, { "docid": "8641fa0027d91b5f587af15502da9f77", "text": "> and investors would have stopped wanting to buy them, which would cause interest rates on homes to go up Unless you're lumping the MIP into the interest rate (which I assume you're not, given you mentioned it in the first sentence), the logic here doesn't follow.", "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": "c6e72211a67fc00a86f662a936cb55a2", "text": "For an investment to appreciate in value, one of two things needs to happen: 1) Demand for that particular item needs to increase. 2) The supply of that item needs to decrease. Houses are good because everyone needs a place to live, but there is a finite amount of land. No matter how much you invest in Manhatten real estate, Manhatten ain't growin'. The trick there is to find an area that people are going to want to live in when you're ready to sell. Specific vintages of wines and spirits are another good example, because it's literally impossible to create more of that vintage. Cars, and most consumer goods, usually don't appreciate because they don't last long enough. Most cars are resold within three to five years after the initial purchase. This is also why jewelry is a good investment; properly cared for, it can last centuries without wearing out. So, look for something durable that has a limited supply.", "title": "" }, { "docid": "0fd7661065006d5e4dc30e8d0620ff1f", "text": "> These people have no hope of ever making a return on their investment in their homes. That's... not really the point of a house. Thinking like this is how we got into the housing crisis. At the literal end of the day, it's somewhere to keep your stuff while you sleep.", "title": "" }, { "docid": "9df8d0c8d093cd3767f3871e8c58682e", "text": "Real Estate potentially has two components of profit, the increase in value, and the ongoing returns, similar to a stock appreciating and its dividends. It's possible to buy both badly, and in the case of stocks, there are studies that show the typical investor lags the market by many percent. Real estate is not a homogeneous asset class. A $200K house renting for $1,000 is a far different investment than a $100K 3 family renting for $2,000 total rents. Both exist depending on the part of the country you are in. If you simply divide the price to the rent you get either 16.7X or 4.2X. This is an oversimplification, and of course, interest rates will push these numbers in one direction or another. It's safe to say that at any given time, the ratio can help determine if home prices are too high, a bargain, or somewhere in between. As one article suggests, the median price tracks inflation pretty closely. And I'd add, that median home prices would track median income long term. To circle back, yes, real estate can be a good investment if you buy right, find good tenants, and are willing to put in the time. Note: Buying to rent and buying to live in are not always the same economic decision. The home buyer will very often buy a larger house than they should, and turn their own 'profit' into a loss. e.g. A buyer who would otherwise be advised to buy the $150K house instead of renting is talked into a bigger house by the real estate agent, the bank, the spouse. The extra cost of the $225K house is the 1/3 more cost of repair, utilities, interest, etc. It's identical to needing a 1000 sq ft apartment, but grabbing one that's 1500 sq ft for the view.", "title": "" }, { "docid": "5c5082a109e56963e97d599c10110ab2", "text": "Real estate is a lousy investment because: Renting a home and buying a home, all else being equal, are pretty similar in costs in the long term (if you can force yourself to invest the would-be down payment). So, buy a home if you want to enjoy the benefits of home ownership. Buy a home if you need to hedge against rising housing prices (e.g. you're on a fixed income and couldn't cope if rent increased a bunch when the economy heated up). Maybe buy a home if you're in a high tax bracket to save yourself from being taxed on your imputed rent, if it works out that way (consult your financial advisor). But don't consider it a really great investment vehicle. Returns are average and the risk profile isn't that attractive.", "title": "" }, { "docid": "23b07eb1266ecd2d2c588e753e85a00b", "text": "\"Your agent doesn't understand what \"\"willing to sell\"\" means in the housing big market. Willing to sell doesn't mean they can wait forever to sell. It used to be these people were moving so they had to sell their house. Now the people who own houses don't need to sell it because they can just sit around and rent it to someone. If people are unwilling to list the house they are unwilling to sell the house.\"", "title": "" }, { "docid": "924b595836b4404f4be44823643bf657", "text": "In general people make a few key mistakes with property: 1) Not factoring in depreciation properly. Houses are perpetually falling down, and if you are renting them perpetually being trashed by the tenants as well - particularly in bad areas. Accurate depreciation costs can often run in the 5-20% range per year depending on the property/area. Add insurance to this as well. 2) Related to 1), they take the index price of house price rises as something they can achieve, when in reality a lot of the house price 'rise' is just everyone having to spend a lot of money keeping them standing up. No investor can actually track a house price graph due to 1) so be careful to make reasonable assumptions about actual achievable future growth. 3) Failure to price in the huge transaction costs (often 5%+ per sale) and capital gains/other taxes (depends on the exact tax structure where you are). These add up very fast if you are buying and selling at all frequently. 4) Costs in either time or fees to real estate rental agents. Having to fill, check, evict, fix and maintain rental properties is a lot more work than most people realise, and you either have to pay this in your own time or someone else’s. Again, has to be factored in. 5) Liquidity issues. Selling houses in down markets is very, very hard. They are not like stocks where they can be moved quickly. Houses can often sit on the market for years before sale if you are not prepared to take low prices. As the bank owns your house if you fail to pay the mortgage (rents collapse, loss of job etc) they can force you to fire sale it leaving you in a whole world of pain depending on the exact legal system (negative equity etc). These factors are generally correlated if you work in the same cities you are buying in so quite a lot of potential long tail risk if the regional economy collapses. 6) Finally, if you’re young they can tie you to areas where your earnings potential is limited. Renting can be immensely beneficial early on in a career as it gives you huge freedom to up sticks and leave fast when new opportunities arise. Locking yourself into 20yr+ contracts/activities when young can be hugely inhibiting to your earnings potential – particularly in fast moving jobs like software development. Without more details on the exact legal framework, area, house type etc it’s hard to give more specific advise, but in general you need a very large margin of safety with property due to all of the above, so if the numbers you’re running are coming out close, it’s probably not worth it, and you’re better of sticking with more hands off investments like stocks and bonds.", "title": "" }, { "docid": "ea3ea3129f15b84ea28c22db042b4d55", "text": "\"It very much comes down to question of semantics and your particular situation. Some people do not view a house (and most upgrades) as an investment, but rather an expense. I certainly agree that this is probably the case if you pay someone else to make the repairs and upgrades. However, if you are a serious DIYer, that may not be the case. Of course, if the house is a money pit and/or you were unfortunate to buy when prices where ridiculously high, you'll have a hard time making any money on this \"\"investment.\"\" To continue this game of semantics, you may also consider the value you extract from your home while you are living in it. On to the mortgage itself. Chances are that it is a long term, relatively low rate loan and that the interest is deductible. So, there are some disadvantages to paying it down early, even without early payment penalties. Paying down early on the principal is a disadvantage from a tax perspective. How much of a disadvantage hinges on the rate. Now, a debt is a liability on your personal balance sheet. It drags down any returns you may have from investing. However, a home lone is not generally subject to the cardinal rule of paying off your high interest debt before investing. It should not be relatively high and it pays for something necessary. It may be that any credit card debt you have may have paid for something considered necessary. However, with the relatively high interest rates, you have to question just how necessary any credit card debt really is. Not to mention that there is no tax advantage. So, it comes down to the fact that a home loan should be relatively low interest, paying for something you must have and that you hopefully have some tax advantage from the interest you pay on it.\"", "title": "" }, { "docid": "c517ef7ba52c41d23492de2239036a19", "text": "Investing in property hoping that it will gain value is usually foolish; real estate increases about 3% a year in the long run. Investing in property to rent is labor-intensive; you have to deal with tenants, and also have to take care of repairs. It's essentially getting a second job. I don't know what the word pension implies in Europe; in America, it's an employer-funded retirement plan separate from personally funded retirement. I'd invest in personally funded retirement well before buying real estate to rent, and diversify my money in that retirement plan widely if I was within 10-20 years of retirement.", "title": "" }, { "docid": "b2f64b01661f14f9e1080f97219715e8", "text": "I think it is just semantics, but this example demonstrates what they mean by that: If you put $100 in a CD today, it will grow and you will be able to take out a greater amount plus the original principal at a later time. If you put $100 extra on your house payment today, you may save some money in the long run, but you won't have an asset that you wouldn't otherwise have at the end of the term that you can draw on without selling the property. But of course, you can't live on the street, so you need another house. So ultimately you can't easily realize the investment. If you get super technical, you could probably rationalize it as an investment, just like you could call clipping coupons investing, but it all comes down to what your financial goals are. What the advisers are trying to tell you is that you shouldn't consider paying down your mortgage early as an acceptable substitute for socking away some money for retirement or other future expenses. House payments for a house you live in should be considered expenses, in my opinion. So my view is that paying off a note early is just a way of cutting expenses.", "title": "" }, { "docid": "0d53db2a6359730602809c28aeb5b3eb", "text": "Your friends are overlooking a couple of problems with house prices and salaries being out of whack: Home 'equity' is a paper gain unless you realize it by selling the house. If you don't, but use the 'home ATM', all you're doing is piling up more debt that's secured on an asset that has downside risk. Ask anybody who's refinanced their house to buy a new boat or SUV in 2006/2007. In other words you're remortgaging the chickens before the eggs hatched. Of course they're also forgetting that all this debt will have to be paid back at some point, and that usually takes income, not equity. In a certain sense the housing market is a pyramid scheme that requires an influx of new buyers to maintain prices. Very simply, if you can't sell your house to buy a bigger one because the first time buyer you're trying to sell it to can't afford the down payment or the payment on the mortgage, then you can't sell your house to buy a bigger/better/nicer one and the next person in the chain can't sell his/hers. Cue the domino effect. House prices are only sustainable if people actually can afford to buy houses and if there's a massive disconnect between house prices and salaries, then house prices will fall eventually. It might just take a little longer depending on the amount of creative financing options that will eventually dry up.", "title": "" }, { "docid": "1d0d5a349ea3ab744085df42a4a35759", "text": "It might be a good idea, because later in life if a large expense shows up or an income source disappears, you will only have the mortgage payment, rather than a mortgage AND a student loan payment.", "title": "" } ]	fiqa
a4dcbd112d3f2d6f4c6330a7cf8dec8d	Latest China devaluation (24/08/2015) and the affect on house prices in UK	[ { "docid": "29f1a0668a3ff47e25354278cfa0aed8", "text": "No. There is no indication that the recent decline will have an impact on the house market in the UK. The reason(s) for the downward move these last few weeks are mainly due to: The last two points caused the Chinese government to decide to devaluate the Yuan. This in turn triggered an unforeseen panic attack among investors and speculators around the globe starting with the Chinese that are trading on borrowed money (not only on margin but also by using loans). The UK house prices are not influenced by the above factors, not even indirectly. The most important factors for house prices are in general: If you keep the above points in mind you should be able to decide whether now is the right time to buy a house in your area. Given that a lot of central banks (incl. BoE) are maintaining a low interest rate policy (except fed soon), now is a good time to take a mortgage. Sources used: I know interest rates are determined by the BoE which looks at the global picture to determine these rates but the main directive of a central bank is to maintain an inflation close to but not exactly 2 % as to spur on economic growth. As such, the value of a company as valuated on the stock market is not or barely taken into account. The negligible impact is the reason why I stated that the crash in the summer of 2015 doesn't even have an indirect impact. Also such a crash is very short lived. It's more the underlying reason for the fears that could cause issues if they drag on.", "title": "" } ]	[ { "docid": "4f913c933d7b38b26098bb3834a4bcb3", "text": "Yes I kow my questions are broad and debatable, I was looking to spark the interest of multiple perspectives/opinions. Regarding the strength of western economic fundamentals, I think a lot of it has to do with simply better performance by companies, especially in Western Europe. I think both this performance (companies' broad EPS growth) as well as less anxiety over the future of the Eurozone/PIIG debt crisis has engendered a broad feeling of positive animal spirits. Imo this has become a recursive self fulfilling prophesy in the markets as people's optimistic expectations of the future leads to higher investment, lending and risk taking, which results in growth, which then rewards and spurs further spending/investment. The other argument (especially in EU) is that the ECB's sustained accommodative monetary policy policy is finally trickling down into European asset prices just like they did for US equities from 2011-2015. Regarding your series of questions about China/NK, I was genuinely hoping for answers/opinions on those questions you proposed. I think China is playing Trump and the State Dept like a fiddle - stringing us along with this Kim debacle while they quietly consolidate sea territory (man-made military islands) & drilling rights in the South China Sea.", "title": "" }, { "docid": "c548c8f369622eaa6e0093a5f0b5d4ea", "text": "\"There has been almost no inflation during 2014-2015. do you mean rental price inflation or overall inflation? Housing price and by extension rental price inflation is usually much higher than the \"\"basket of goods\"\" CPI or RPI numbers. The low levels of these two indicators are mostly caused by technology, oil and food price deflation (at least in the US, UK, and Europe) outweighing other inflation. My slightly biased (I've just moved to a new rental property) and entirely London-centric empirical evidence suggests that 5% is quite a low figure for house price inflation and therefore also rental inflation. Your landlord will also try to get as much for the property as he can so look around for similar properties and work out what a market rate might be (within tolerances of course) and negotiate based on that. For the new asked price I could get a similar apartment in similar condos with gym and pool (this one doesn't have anything) or in a way better area (closer to supermarkets, restaurants, etc). suggests that you have already started on this and that the landlord is trying to artificially inflate rents. If you can afford the extra 5% and these similar but better appointed places are at that price why not move? It sounds like the reason that you are looking to stay on in this apartment is either familiarity or loyalty to the landlord so it may be time to benefit from a move.\"", "title": "" }, { "docid": "6b3edd3c63a7e3d6d2ba708edf2a95f8", "text": "\"This is the best tl;dr I could make, [original](http://cep.lse.ac.uk/pubs/download/brexit10.pdf) reduced by 98%. (I'm a bot) *** > Correlations with Brexit Vote and Area Initial Conditions Brexit Vote Correlations One obvious question arising from the overall patterns discussed above is how predicted impacts relate to vote shares in the referendum. > Figure 3: Brexit GVA Impact and Referendum Vote Share: Soft Brexit Hard Brexit Area Initial Conditions While the results so far imply a somewhat different narrative in terms of who is likely to lose most from Brexit, and how this relates to voting behaviour in the referendum, it is important to remember that the differences in expected impacts are swamped by existing disparities. > 10 \fFigure 4: Correlation of Brexit GVA Impact with Pre-Referendum Median Wage: Soft Brexit Hard Brexit Finally, it is also important to note that the places experiencing the biggest initial shock are not necessarily those that will experience the most negative effects once the economy has adjusted. * [Extended Summary*](http://np.reddit.com/r/autotldr/comments/6pshdw/new_lse_study_the_areas_that_were_most_likely_to/) \| [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~176491 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: Brexit^#1 trade^#2 impact^#3 Area^#4 under^#5\"", "title": "" }, { "docid": "a51983803160439f6066f0ef2c496667", "text": "The Hong Kong Dollar has been pegged to the USD for nearly 30 years and the Hong Kong authorities have fairly strong means to defend the peg. So at first glance it would appear that there is really no difference as long as you are getting 7.75 HKD for each USD that you used to receive. However, the peg is arbitrary and could be lifted at any time like the removal of the CHF peg to EUR surprised a lot of people in early 2015. As mainland China becomes more integrated it is unclear what will happen to the HKD in the long run. Whether this matters really depends on your contracts. if your contracts are short dated you may only take a discount relative to USD for a few payments before you can try to renegotiate. It's also worth noting trading HKD for your local INR can be more expensive. Check your local rates.", "title": "" }, { "docid": "f19cf16d9f0b11974c57af4cb5fb7ada", "text": "It is likely a bit of both. Cooking the books AND an economic miracle. There will definitely be a downturn eventually, and it will be interesting what shakes out. At this stage, the Chinese model appears to be stronger than any alternatives.", "title": "" }, { "docid": "fc41920a42710dffa8387e0de43b0ec2", "text": "GBP has already lost part of his value just because of the fear of Brexit. An actual Brexit may not change GBP as much as expected, but a no-Brexit could rise GBP really a lot.", "title": "" }, { "docid": "2036f85326acff63a28e09147404b52d", "text": "\"Have to do a presentation for an International Business and Cultures class in about a month and the assigned WSJ article isn't quite clicking with me and looking for a kind soul here to put it into layman's terms I guess. If I am violating any policy or breaking a rule by posting the text from the article, please delete. Thank you for any reply! WASHINGTON--Finance officials trying to avert the next global economic crisis found time at a summit here to worry about something besides Brexit and European banks: China's mounting debts and its flagging economic overhauls. The country's surging credit growth, overcapacity in its steel and metals industries and its bloated housing market drew widespread complaints from finance officials and central bankers attending semiannual meetings of the International Monetary Fund and World Bank. Officials congratulated China for its efforts to get the yuan included in the IMF's international basket of currencies, known as special drawing rights, starting Oct. 1. And despite a couple of scares in the past year or so, the country's markets and economic growth have appeared to stabilize in recent months. But in a sign of how important the world's second-biggest economy is to global growth, China is increasingly being called out. U.S. Treasury Secretary Jacob Lew warned Beijing in unusually candid language about China's overproduction and overbuilding, which he suggested could become the biggest U.S. complaint about the country, as their earlier disputes over the country's exchange rate become less divisive. \"\"I'm talking about steel, I'm talking about aluminum, I'm talking about real estate--when you don't have market forces driving investment, when you don't have bad investments allowed to fail, you end up with resources allocated in a way that ultimately chokes the future of economic growth,\"\" Mr. Lew said at the Peterson Institute for International Economics on Thursday. The IMF zeroed in on a measure called current credit overhang, a widely followed international indicator of potential crises. The deviation of China's credit growth from its long-term trend has surged from zero during the financial crisis to up to 27%. Last year, banks' balance sheets grew to 286% of gross domestic product. \"\"More is needed, especially to curb excess credit growth, reduce the opacity of credit products, and ensure sound interbank funding structures,\"\" said Peter Dattels, deputy director of the fund's monetary and capital-markets department. China's policy makers are caught in a deepening trap, economists say. Dealing with the debt problem would require the country to start deleveraging. But slower credit growth is bound to hamper the overall economy. That could backfire by making it harder for companies to repay existing debt. Clamping down on credit would also raise the prospect of political unrest in a country that has grown accustomed to very rapid growth. Faced with such unappetizing prospects, the country's leaders have largely eschewed credit restraint in the hope that they will be able to deal with its economic problems over time. Part of the problem is the complicated and poorly disclosed structure of the country's swollen banking system, economists say. \"\"The increasing complexity, opaqueness of the shadow banking, both on the asset side, but even more on the funding side where a lot of the funding is short term, is not stable,\"\" Markus Rodlauer, the IMF's Asia-Pacific deputy director, told reporters on Thursday. \"\"It's still of a size that is manageable, but the trajectory is dangerous, and needs to be contained.\"\" China's appetite for steel and aluminum, which shrank abruptly in the past year or so, is of vital interest to commodity-exporting economies such as Russia and Brazil. For now, exporters appear to be confident that demand won't drop off again in the short term. \"\"China's growth is stabilized at a lower level,\"\" Brazilian Finance Minister Henrique Meirelles said in an interview. \"\"I don't see a further collapse coming.\"\" Still, much will depend on China's economic transition. \"\"They are trying to alter their priority from manufacturing to services, from export-oriented to domestic consumption,\"\" said Indian Finance Minister Arun Jaitley in an interview. \"\"In the transformational stage, there will be ripples.\"\" Chinese officials in Washington touted the country's annual GDP of between 6% and 7% and said growth has remained stable as economy transitions. \"\"If that transformation is successful, China will continue to have a stable share of global growth,\"\" People's Bank of China Deputy Governor Yi Gang said on Thursday. Ian Talley and Bob Davis contributed to this article. Credit: By William Mauldin\"", "title": "" }, { "docid": "031f7677868338ead3397e82547dabd7", "text": "\"This is the best tl;dr I could make, [original](http://www.reuters.com/article/uk-britain-sterling-idUSKBN1AR0M9) reduced by 75%. (I'm a bot) *** > LONDON - Sterling fell to a fresh 10-month low against the euro on Friday as investors added bearish bets against the British currency on concerns the economy may be struggling to gain momentum. > Sterling fell 0.2 percent to 90.92 pence against the euro, its lowest level since October 2016. > It has fallen for two consecutive weeks and has weakened nearly 9 percent against the euro since early May. Morgan Stanley strategists are predicting euro parity with the pound in the first quarter of 2018. * [Extended Summary*](http://np.reddit.com/r/autotldr/comments/6thf3f/british_pound_further_down/) \| [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~190040 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: against^#1 since^#2 Sterling^#3 week^#4 euro^#5\"", "title": "" }, { "docid": "ee42ef375ffa65f018756fa459957830", "text": "December, 1, 2011 (03:00pm) :- China's manufacturing data's are slides to 49 below 50, a signal of contraction by which whole Chinese economy affected. Due to the European crisis, the global demand is weak which Chinese affected the most because china is the only market which manufactures the product an unbelievable cost. Global demand still weak this may be continues by next 2 - 3 months. Base metal prices are higher composed to 2010 levels, the profit levels also drooped by 5% to the manufactures. Base metals trends looking down in December. Cooper may be range Rs 370 - Rs 440 Zinc mzy be range Rs 97 - Rs 113. Nickel may be range Rs 870 - Rs 960. Lead may be range Rs 98 - Rs 112.", "title": "" }, { "docid": "20f3dfd40cb1bb4f27f925cc604f4f6d", "text": "Summarized article: The London-based investment bank Barclays Bank has agreed to pay penalties of $450 million to settle charges it attempted to manipulate key benchmark interest rates. The settlement is with the US Department of Justice, the U.S. Commodities Futures Trading Commission and the British Financial Services Authority (FSA). Investigators found that Barclays manipulated the London Interbank Offered Rate (Libor) and the Euro Interbank Offered Rate (Euribor) which measures how much banks will charge each other for loans, and in turn, affects the cost of loans and mortgages to consumers. Between 2005 and 2009, Barclays staff would base its estimates for the Libor on the requests of its derivatives traders, who wanted to manipulate the rate to benefit their trading positions. The traders would ask their Barclays colleagues to adjust their rate estimates up or down to post a profit for the bank. The FSA said that Barclays appeared to have a wide acceptance of its derivatives traders lobbying its colleagues and found evidence through a trail of emails and instant messages. Barclays has admitted its actions fell short of industry standards but it is unclear if there was any impact to consumers. The FSA is investigating several major banks for similar violations. * For more summarized news, subscribe to the [/r/SkimThat](http://www.reddit.com/r/SkimThat) subreddit", "title": "" }, { "docid": "907eb18cce27c549d8d2eb9b8c2cc46e", "text": "\"This is the best tl;dr I could make, [original](https://www.bloomberg.com/news/articles/2017-05-31/australia-home-prices-fall-in-may-as-lending-curbs-start-to-bite) reduced by 70%. (I'm a bot) *** > The monthly decline comes after regulators tightened lending curbs amid fears of a housing bubble, and the nation&#039;s banks raised interest rates - especially for interest-only loans which are popular with property investors seeking to take advantage of tax breaks. > The monthly drop was led by declines of 1.3 percent in Sydney and 1.7 percent in Melbourne, the two cities where prices have risen the fastest. > In Sydney, prices have gained 75 percent in the past five years, ranking it behind only Hong Kong as the world&#039;s least affordable housing market. * [Extended Summary*](http://np.reddit.com/r/autotldr/comments/6ele2v/australian_house_prices_fell_in_may_for_the_first/) \| [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~133825 tl;drs so far.\"\") \| [Theory](http://np.reddit.com/r/autotldr/comments/31bfht/theory_autotldr_concept/) \| [Feedback](http://np.reddit.com/message/compose?to=%23autotldr \"\"PM's and comments are monitored, constructive feedback is welcome.\"\") \| Top* keywords: housing^#1 percent^#2 prices^#3 demand^#4 property^#5\"", "title": "" }, { "docid": "914dcbba4ab9d561b1215bcf16e4db8c", "text": "\"This is the best tl;dr I could make, [original](http://www.bbc.co.uk/news/business-40934138) reduced by 61%. (I'm a bot) *** > The average price of a home in the UK went up by nearly &pound;2,000 to &pound;223,000 in June, according to official figures. > The Office for National Statistics figures show the wide variation in price movements across the UK. In the month of June, the average price of London home fell &pound;3,000 to &pound;482,000, while a house in the North East of England gained &pound;2,000 to &pound;130,000. > The biggest change was in Orkney where the average price is 28% higher than a year ago at &pound;148,000. * [Extended Summary*](http://np.reddit.com/r/autotldr/comments/6txyxk/house_price_growth_holding_steady/) \| [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~191667 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: price^#1 average^#2 while^#3 June^#4 London^#5\"", "title": "" }, { "docid": "59d1a34109ae14597a3015d1f5164e06", "text": "It actually has already started. People were protesting outside offices that sold defaulted WMPs across China. The government forced landlords to cut the leases of those wealth managers so that they wouldn't have a premises for investors to protest at. Lol. This news isn't new but it shouldn't be ignored either. China does have a problem.", "title": "" }, { "docid": "1b3ab468bd841ecc00e694259ed01d66", "text": "\"I am not an expert in this stuff, but my understanding is that the debt is in the form of US treasury securities, which mature at set rates and are paid at maturation. So technically, the US Treasury \"\"pays off\"\" a portion of its debt whenever the debt securities mature. Thus, if China (or any country) buys new Treasury securities at a slower rate than its currently held Treasury securities are maturing, the amount of US debt held by China will decrease. This is what I hear China has been doing recently.\"", "title": "" }, { "docid": "05fe48493991c5b36b90932e2b37f540", "text": "Some highly pessimistic things worth noting to go alongside all the stability and tax break upside that homes generally provide: Negative equity is no joke and basically the only thing that bankrupts the middle classes consistently en masse. The UK is at the end of a huge housing bull run where rents are extremely cheap relative to buying (often in the 1% range within the M25), Brexit is looming and interest rates could well sky rocket with inflation. Borrowing ~500k to buy a highly illiquid asset you might have to fire sale in case of emergency/job loss etc for 300k in a few years when lots of (relatively) cheap rental housing is available to rent risk free, could be argued to be a highly lopsided and dangerous bet vs the alternatives. Locking in 'preferential' mortgage rates can be a huge trap: low interest rates generally increase asset values. If/when they rise, assets fall in value as the demand shrinks, making you highly exposed to huge losses if you need to sell before it is paid off. In the case of housing this can be exceptionally vicious as the liquidity dramatically dries up during falls, meaning fire sales become much more severe than they are for more liquid assets like stock. Weirdly and unlike most products, people tend to buy the very best house they can get leverage for, rather than work out what they need/want and finding the best value equivalent. If a bank will lend you £20 a day to buy lunch, and you can just afford to pay it, do you hunt out the very best £20 lunch you can every day, or do you make some solid compromises so you can save money for other things etc? You seem to be hunting very close to the absolute peak amount you can spend on these numbers. Related to above, at that level of mortgage/salary you have very little margin for error if either of you lose jobs etc. Houses are much more expensive to maintain/trade than most people think. You spend ~2-5% every time you buy and sell, and you can easily spend 2-20k+ a year depending what happens just keeping the thing watertight, paid for, liveable and staying up. You need to factor this in and be pessimistic when you do. Most people don't factor in these costs to the apparent 'index' rise in house values and what they expect to sell for in x years. In reality no buy and hold investor can ever realise even close to the quoted house price returns as they are basically stocks you have to pay 5% each time you buy or sell and then 1-20% percent a year to own - they have to rise dramatically over time for you to even break even after all the costs. In general you should buy homes to make memories, not money, and to buy them at prices that don't cause you sleepless nights in case of disasters.", "title": "" } ]	fiqa
aa6a88394da635c4f05bf02f3b73d726	Saving $1,000+ per month…what should I do with it?	[ { "docid": "556d779950d628f3bdb98b63bbbf4757", "text": "If you can get a rate of savings that is higher than your debt, you save. If you can't then you pay off your debt. That makes the most of the money you have. Also to think about: what are you goals? Do you want to own a home, start a family, further your education, move to a new town? All of these you would need to save up for. If you can do these large transactions in cash you will be better off. If it were me I would do what I think is a parroting of Dave Ramsay's advice Congratulations by the way. It isn't easy to do what you have accomplished and you will lead a simpler life if you don't have to worry about money everyday.", "title": "" }, { "docid": "55d0352e77cbf9feac3c222d54381206", "text": "Daniel, first of all, I'm jealous of your predicament. That said, I think you've gotten some good advice already, so I won't repeat what's been said. But I will throw out a few ideas that haven't come up. My first thought is that you may be underestimating upcoming expenses. It sounds like your current expenses are low, and that's great! I'm impressed that you're living below your means, and looking for the best way to use your extra cash. But you may not be thinking of a few things. You have a girlfriend, and maybe your relationship isn't such that you are planning a wedding quite yet. But, regardless of whether your current girlfriend is your future life partner or not, if you think marriage may be in your future at all, you'll save yourself a lot of stress if you've got some savings for a wedding in place before you're ready to commit. Next, what are you driving? If it's a good car that you expect to last you another 10 years, you're probably ok right now. But if you may need to replace your vehicle in the next few years, start saving now and you may be able to buy it outright. (I expect your interest rate on financing a car would be higher than your current student loan rates, so I would save for a car before paying down loans with such beautiful rates.) A house has already been discussed, and there was also mention of additional education, and both of those require a solid financial plan that begins far in advance. In summary, I think you need a lot more than $5K in savings. Sure, have some fun, and take advantage of opportunities to travel, etc, as they come along, but if you're able to bump your savings by $500 to $1000/month, I think you'll really be glad you did. When it comes time for a new car, or you find you're ready to settle down, it will be nice to have somewhere to draw from, and if there's only $5K in your savings, you may come to regret choices you made when you were 22.", "title": "" }, { "docid": "c7d3435a4e39ea6bed75f49d8497f61b", "text": "I like the other answers. But, here's one thing that concerns me that hasn't specifically been addressed yet: You mentioned your student loans are at low rates of interest. Are those rates fixed or variable? If those interest rates are variable, I would not count on rates remaining low indefinitely. If you could imagine those rates going up by say 2% or 4% or more over time, would such rates make you change your mind about the debt and the pace at which you're paying it off? I would suggest that as the economy recovers over the next couple of years, the spectre of inflation will force the Fed to raise interest rates. You don't want to be holding variable-rate debt when rates are rising. For that reason, if your loan rate is variable, I would increase your payment amount so you can eliminate your debt sooner than later. Also – You mention in one of your comments that buying a home is 4+ years away. That's not a long time, so I wouldn't commit the bulk of your savings to investing in the stock market, which can be temperamental over short periods of time. You don't want to be in a large loss position just when it's time to buy your first home. However, it may be worth having some of your skin in the game, so to speak. Personally, I would take a balanced approach: 1/3 debt repayment, 1/3 high interest cash savings, and 1/3 in some broad diversified index funds – and not all in the U.S. Although, I also like the idea of getting some travel in while young, so perhaps 1/4 allocations to the money stuff, and 1/4 towards travel? :-) Good luck.", "title": "" }, { "docid": "af3cf921fb277e45c7332b18aee7786e", "text": "In your situation I suggest: In terms of what to spend it on, one tax preparer I knew said he would ask his wealthy clients (ones with real net worth) what they spent their money on, and it was almost always travel. We agree, memories from our trips are ones that last a lifetime. I can't say much else you buy gives you the same long term payback in your personal life.", "title": "" }, { "docid": "22c8e351ddc1a5b4035a08fa02187530", "text": "Excellent responses so far. Because I am a math guy, I wanted to stress the power of compounding. It's great that you are thinking about saving and your future when you are so young. Definitely be displined about your saving and investing. You would be surprised how just a small amount can compound over the years. For example, if you were to start with $5000 and contribute $100 per month. Assuming that you can get 5% ROR (hard in today's world but shouldn't be down the road), your final principal after 28 years (when you are 50 years old) will be over $90,000, which of only $38,000 is what you contributed yourself. The rest is interest. You can play with the numbers here: http://www.math.com/students/calculators/source/compound.htm", "title": "" }, { "docid": "67c1d21cd147964789c000d38ef3992b", "text": "\"Since you already have an emergency fund in place, focus your extra funds on paying off debts like student loans. While some have advised you to play the stock market, not one person has mentioned the word \"\"risk\"\". You are gambling (\"\"investing\"\") your money in the hopes your money will grow. Your student loan is real liability. The longer you keep the loan, the more interest you will pay. You can pay off your student loan in 21 months if you pay $1,100 each month. After the 21 months, you can almost fully fund a 401(k) each year. That will be amazing at your age. Our company gives us the Vanguard Retirement Fund with a low expense ratio of 0.19%. It is passive automated investing where you don't have to think about it. Just add money and just let it ride.\"", "title": "" } ]	[ { "docid": "8a8a67ea7ce494e435405a0f4a50e3b6", "text": "Yes, and there are several ways, the safest is a high-yield savings account which will return about 1% yearly, so $35 per month. That's not extremely much, but better than nothing (you probably get almost zero interest on a regular checking account).", "title": "" }, { "docid": "7edfda479cd3187bb936a5557781d157", "text": "I think it's great idea. Many large brokerages give customers access to a pretty sizable list of zero commission, zero load funds. In this list of funds will certainly be an S&P 500 index. So you can open your account for free, deposit your $1,000 for free and invest it in an S&P index for no cost. You'll pay a very negligible amount in annual expense fees and you'll owe taxes on your gain if you have to use the money. I don't follow the school of thought that all investment money should be in retirement account jail. But I think if you have your spending under control, you have your other finances in order and just want to place money somewhere, you're on the right track with this idea.", "title": "" }, { "docid": "be1457dce52fb089a066c59174891798", "text": "\"First, I'd like to congratulate you on your financial discipline in paying off your loans and living well within your means. I have friends who make more than twice your salary with similar debt obligations, and they barely scrape by month to month. If we combine your student loan debt and unallocated income each month, we get about $1,350. You say that $378 per month is the minimum payment for your loans, which have an average interest rate of about 3.5%. Thus, you have about $1,350 a month to \"\"invest.\"\" Making your loan payments is basically the same as investing with the same return as the loan interest rate, when it comes down to it. An interest rate of 3.5% is...not great, all things considered, and barely above inflation. However, that's a guaranteed return of 3.5%, more or less like a bond. As noted previously, the stock market historically averages 10% before inflation over the long run. The US stock market is right around its historic high at this point (DJIA is at 20,700 today, April 6th, 2017 - historic high hit just over 21,000 on March 1, 2017). Obviously, no one can predict the future, but I get the feeling that a market correction may be in order, especially depending on how things go in Washington in the next weeks or months. If that's the case (again, we have no way of knowing if it is), you'd be foolish to invest heavily in any stocks at this point. What I would do, given your situation, is invest the $1,350/month in a \"\"portfolio\"\" that's 50/50 stocks and \"\"bonds,\"\" where the bonds here are your student loans. Here, you have a guaranteed return of ~3.5% on the bond portion, and you can still hedge the other 50% on stocks continuing their run (and also benefiting from dividends, capital gains, etc. over time). I would apply the extra loan payments to the highest-interest loan first, paying only the minimum to the others. Once the highest-interest loan is paid off, move onto the next one. Once you have all your loans paid off, your portfolio will be pretty much 100% stocks, at which point you may want to add in some actual bonds (say a 90/10 or 80/20 split, depending on what you want). I'm assuming you're pretty young, so you still have plenty of time to let the magic of compounding interest do its work, even if you happen to get into the market right before it drops (well, that, and the fact that you won't really have much invested anyway). Again, let me stress that neither I nor anyone else has any way of knowing what will happen with the market - I'm just stating my opinion and what my course of action would be if I were in your shoes.\"", "title": "" }, { "docid": "0ab2a8a407c36954c932ed6f3b091b88", "text": "I think the answer depends on whether you're trying to get out of debt and stay out, or if you just want this card paid off. That is, are you changing the way you deal with money and debt for good? If you just want this card paid off, and you're OK with going back into debt later, then @Mike Scott's advice is one way to go. I'd personally be nervous about leaving myself with no cash reserves at all. If you are planning to get out of debt and stay out, then you don't want to put yourself in a position where you're tempted to go back into debt as soon as you hit a speed bump. So, you need some cushion so that an emergency doesn't push you right back to the credit cards. If you've got a budget that you can live on, and that covers your usual expenses, and your job is relatively stable, then $1000 is probably enough of a cushion for most things. You can then pay off most of the credit card using the rest of your savings. If you're in an unstable job situation, then you'll want to keep more, if not all, of your savings as protection against the instability. Once the situation stabilizes, then throw the surplus savings at the debt. $1000 doesn't cover all possible emergencies, but it's generally a good tradeoff between prudence and paranoia.", "title": "" }, { "docid": "cc13c4bd1503bbb1b62c7955bea94d58", "text": "\"An alternative to a savings account is a money market account. Not a bank \"\"Money Market\"\" account which pays effectively the same silly rate as a savings account, but an actual Money Market investment account. You can even write checks against some Money Market investment accounts. I have several accounts worth about 13,000 each. Originally, my \"\"emergency fund\"\" was in a CD ladder. I started experimenting with two different Money market investment accounts recently. Here's my latest results: August returns on various accounts worth about $13k: - Discover Bank CD: $13.22 - Discover Bank CD: $13.27 - Discover Bank CD: $13.20 - Discover Savings: $13.18 - Credit Union \"\"Money Market\"\" Savings account: $1.80 - Fidelity Money Market Account (SPAXX): $7.35 - Vanguard Money market Account (VMFXX): $10.86 The actual account values are approximate. The Fidelity Money Market Account holds the least value, and the Credit Union account by far the most. The result of the experiment is that as the CDs mature, I'll be moving out of Discover Bank into the Vanguard Money Market account. You can put your money into more traditional equities mutual fund. The danger with them is the stock market may drop big the day before you want to make your withdrawl... and then you don't have the down payment for your house anymore. But a well chosen mutual fund will yield better. There are 3 ways a mutual fund increase in value: Here's how three of my mutual funds did in the past month... adjusted as if the accounts had started off to be worth about $13,000: Those must vary wildly month-to-month. By the way, if you look up the ticker symbols, VASGX is a Vanguard \"\"Fund of Funds\"\" -- it invests not 100% in the stock market, but 80% in the stock market and 20% in bonds. VSMGX is a 60/40 split. Interesting that VASGX grew less than VSMGX...but that assumes my spreadsheet is correct. Most of my mutual funds pay dividends and capital gains once or twice a year. I don't think any pay in August.\"", "title": "" }, { "docid": "f77161ebc75b3cf13e4813498cc4d564", "text": "There isn't any place you can put $300 and turn it into significant passive income. What you need to do instead is manage the active (work) income that you have so that your money goes farther, freeing income up for reducing debt and investing. Investing $300 one time won't add up to much, but investing $100 a month will turn into wealth over time. Making a monthly budget is the key to managing your income. In the process, you'll find out where your income is going, and you can be intentional about how much you want to spend on different things in your life. You can allocate some of your income to paying down debt and investing, which is what you need to do to get ahead. For some general guidelines on what to do with your money first, read this question: Oversimplify it for me: the correct order of investing. For more specifics on creating a budget, eliminating debt, and building wealth, I recommend the book The Total Money Makeover by Dave Ramsey.", "title": "" }, { "docid": "32e71fb321d39a1fceb84c0481f32a5c", "text": "Put £50 away as often as possible, and once it's built up to £500, invest in a stockmarket ETF. Repeat until you retire.", "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": "22ba2c6a256d23ebdf731deccab54e55", "text": "\"I wish I was in your shoes with the knowledge I have in my head. financial goal setting is a great plan at your age. In my humble opinion you don't want to save for anything... you want to invest as much as you can, create a corporation and have the corporation invest as much as possible. When there is enough monthly cash flow coming from your investments... have the corporation buy you a house, a car, take out an insurance policy on you as key employee... etc. As for the $11,000 laying around in cash as an emergency fund, no way! With returns as high as 1-3% per month invested properly keep it invested. Getting to your emergency cash reserve you have in a trading account is only a couple key strokes away. As for the 401k... If it is not making at least 25% yearly for the last 10 years (excluding your Contributions) do it yourself in a self directed IRA. Oh... I forgot to mention When your corporation buys your stuff... if set up correctly you can take them as a loss in the corporate ledger and you know any loss from one entity can offset profits from another, thus reducing any taxes you may have. My friend you are at the point of great beginnings, hard choices and an open door to what ever you want your future to look like. Decide what you want out of your money and don't take \"\"NO YOU CAN'T DO THAT\"\" as an answer. Find someone that will tell you these secrets, they are out there. Good luck.\"", "title": "" }, { "docid": "caa58a3c723ea171bbb174a6b013af7c", "text": "\"Probably not what you want to hear, but: Open a savings account. Deposit a pre-determined amount every month. Write down what you are saving for in specific detail. Emergencies are injury, sickness, auto breakdowns, bail money, eviction, nasty stuff like that. If you are saving up for something fun, trip to Europe, car, etc. write that down. Do not take from the account for any other purpose. Avoid taking it out even in lesser emergencies if you can do so without incurring debt. Don't daydream about what you could do with it. It is not for that. It's purpose should be singular. Keep an extra, smaller amount for frivolous stuff in your main checking or a different savings. Use that for impulse buys, and if the impusle can't be afforded by that amount, train yourself to know \"\"can't\"\". I can't buy that, it's not in the budget. Not I shouldn't. I can't. Good luck!\"", "title": "" }, { "docid": "9a98fba0c27c7f053d2da01a8f1a8a7a", "text": "I would put this money to a high-interest savings account. It will not earn you too much, but it will save it from inflation.", "title": "" }, { "docid": "0d1e91dd9b70da76f6ad1b4bb1a86ab0", "text": "Personally I solve this by saving enough liquid capital (aka checking and savings) to cover pretty much everything for six months. But this is a bad habit. A better approach is to use budget tracking software to make virtual savings accounts and place payments every paycheck into them, in step with your budget. The biggest challenge you'll likely face is the initial implementation; if you're saving up for a semi-annual car insurance premium and you've got two months left, that's gonna make things difficult. In the best case scenario you already have a savings account, which you reapportion among your various lumpy expenses. This does mean you need to plan when it is you will actually buy that shiny new Macbook Pro, and stick to it for a number of months. Much more difficult than buying on credit. Especially since these retailers hate dealing in cash.", "title": "" }, { "docid": "fa00b34cb37c39234a063ce5118d2230", "text": "Sure, you'd make an $8.33 during that first month with little extra risk. Sounds like free money, right? (Assuming no hidden fees in the fine print.) I don't know that the extra money is worth the time you will spend monitoring the account, especially after inflation claims its share of your pie. If you're going to use leverage to invest, you should probably pick an investment that will return at a much higher rate. If you can get an unsecured line of credit at 1%, there aren't a lot of downsides. Hopefully interest rates don't rise high enough to eat your earnings, but if they do, you can always liquidate your investments and pay the remainder of the loan.", "title": "" }, { "docid": "996646b3a3c87bc269fd93c685c9e848", "text": "You can earn significantly more than 0.99% in the stock market. I'd pay the $450/month and invest the rest in a (relatively conservative) stock market fund, making monthly withdrawals for the car note.", "title": "" }, { "docid": "d1cb69170f7e03a21020382812c5b1ed", "text": "Based on your question details, I doubt you'll like this answer...but first things first, you need to focus on rebuilding your credit and your savings. $1K isn't a huge loan amount, so I'm going to assume you've made some poor decisions in the past to get to this point. I'm a small business owner, and I make it a goal to have 3-6 months of expected expenses in an account, should my circumstances ever drastically change or something happen that would keep me from working. Without knowing your living situation and daily expenses, here's some general advice on building a small business without a loan: 1) Find steady, gainful employment anywhere you can. 2) Pay off outstanding debts and rebuild a savings account to rebuild your credit score. 3) If you need fast cash, sell some stuff you don't need (gaming systems, home electronics, etc.). Also, minimize your unnecessary expenses (dining out, etc.). 4) Once your debts are paid off, create a business startup savings plan (put away as much as you can afford every week, until you reach your goal. 5) Once your goal is reached, you can begin your flipping business. Open a bank account, and separate your profits into buckets for operations, self-pay, and taxes (if you declare this income, which I hope you do). For myself, I put away 35% for income taxes, which I do not touch until my taxes are paid. I put 40% away for daily operations -- this keeps my business running, allowing me to pay for the equipment I need, the products I deliver, and advertising to keep my business running. I pay myself 25%. This is a simple method, but it works well for me.", "title": "" } ]	fiqa
c9e51e891fa0d912b52234cc5ef31954	Why is being “upside down” on a mortgage so bad?	[ { "docid": "1cf25b396336b8d45239902015ca96f3", "text": "I can think of a few reasons why they seem like a bigger deal to people than similar situations with other loans. As you point out, though, being underwater on your home loan is a less serious condition than having large student loans and a poor paying job, for example. If the student loan situation ever comes to a head, we may have people talking about student loans in hushed tones.", "title": "" }, { "docid": "6933bbfd0b40ce34f74b37a9feceb427", "text": "The problem comes when the borrower cannot afford his home. If a borrower buys more home than they can afford, as long as he can sell the house for more than he owes, he's not in a disastrous situation. He can sell the house, pay off the mortgage, and choose more affordable housing instead. If he is upside-down on his home, he doesn't have that option. He's stuck in his home. If he sells it, he will have to come up with extra money to pay off the mortgage (which he doesn't have, because he is in a home he can't afford). It used to be commonplace for banks to issue mortgages for 100% of the value of the home. As long as the home keeps appreciating, everybody is happy. But if the house drops in value and the homeowner finds himself unable to make house payments, both the homeowner and the bank are at risk. Recent regulations in the U.S. have made no-down-payment mortgages less common.", "title": "" }, { "docid": "67950a909e2aa75f79dd6aabe0117043", "text": "Here's a real-life example of why being underwater can be a tad annoying: Your options are: You must choose one.", "title": "" }, { "docid": "318b176230b8586dd9fc2cab38336566", "text": "tl;dr: when everything is going great, it's not really a problem. It's when things change that it's a problem. Finally, home loans are extended over extremely long periods (i.e. 15 or 30 years), making any fluctuations in their value short-lived - even less reason to be obsessed over their current value relative to the loan. Your post is based on the assumption that you never move. In that case, you are correct - being underwater on a mortgage is not a problem. The market value of your house matters little, except if you sell it or it gets reassessed. The primary problem arises if you want to sell. There are a variety of reasons you might be required to move: In all of these scenarios it is a major problem if you cannot sell. Your options generally are: In the first option, you will destroy your credit. This may or may not be a problem. The second is a major inconvenience. The third is ideal, but often people in this situation have money related problems. Student loans can deferred if needed. Mortgages cannot. A car is more likely to be a lower payment as well as a lower amount underwater. Generally, the problem comes when people buy a mortgage assuming certain things - whether that's appreciation, income stability/growth, etc. When these change they run into these problems and that is exactly a moment where being underwater is a problem.", "title": "" }, { "docid": "e82749a12bb0dc7acbcdae7eb3ee76e6", "text": "\"For most people \"\"home ownership\"\" is a long term lifestyle strategy (i.e. the intention is to own a home for several decades, regardless of how many times one particular house might be \"\"swapped\"\" for a different one. In an economic environment with steady monetary inflation, taking out a long-term loan backed by a tangible non-depreciating \"\"permanent\"\" asset (e.g. real estate) is in practice a form of investing not borrowing, because over time the monetary value of the asset will increase in line with inflation, but the size of the loan remains constant in money terms. That strategy was always at risk in the short term because of temporary falls in house prices, but long-term inflation running at say 5% per year would cancel out even a 20% fall in house prices in 4 years. Downturns in the economy were often correlated with rises in the inflation rate, which fixed the short-term problem even faster. Car and student loans are an essentially different financial proposition, because you know from the start that the asset will not retain its value (unless you are \"\"investing in a vintage car\"\" rather than \"\"buying a means of personal transportation\"\", a new car will lose most of its monetary value within say 5 years) or there is no tangible asset at all (e.g. taking out a student loan, paying for a vacation trip by credit card, etc). The \"\"scariness\"\" over home loans was the widespread realization that the rules of the game had been changed permanently, by the combination of an economic downturn plus national (or even international) financial policies designed to enforce low inflation rates - with the consequence that \"\"being underwater\"\" had been changed from a short term problem to a long-term one.\"", "title": "" }, { "docid": "31f3543c8e405cbb50b673e8d7e143fa", "text": "The largest problem and source of anxiety / ruin for homeowners during the housing market collapse was caused by the inability to refinance. Many people had bought homes which they were stretched to afford, by using variable-rate mortgages. These would typically offer a very attractive initial rate, with an annual cap on the potential increase of rate. Many of these people intended to refinance their variable-rate to a fixed rate once terms were more favorable. If their house won't appraise for the value needed to obtain a new loan, they are stuck in their current contract with potentially unfavorable rates in the later years (9.9% above prime was not unheard of.) Also, many people, especially those in areas of high inflation in the housing market, used a financial device known as a Balloon Mortgage, which essentially forced you to get a new loan after some number of years (2, 5, 10) when the entire note became due. Some of those loans offered payments less than Principal + Interest! So, say you move near Los Angeles and can't afford the $1.2M for the 3-bedroom ranch in which you wish to live. You might work out a deal with your mortgage broker/banker in which you agree contractually to only pay $500/month, with a balloon payment of $1.4M due in 5 years, which seemed like a good deal since you (and everyone else,) actually expect the house to be 'worth' $1.5M in 5 years. This type of thing was done all the time back in the day. Now, imagine the housing bubble bursts and your $1.2M home is suddenly only valued at, perhaps, $750k. You still owe $1.4M sometime in the next several years (maybe very soon, depending on timing,) and can only get approved financing for the current $750k value -- so you're basically anticipating becoming homeless and bankrupt within the same year. That is a source of much anxiety about being upside-down on a loan. See this question for an unfortunate example.", "title": "" }, { "docid": "c16feacf5f4d1e6d957730d1bd4acfe6", "text": "Sample Numbers: Owe $100k on house. House (after 'crash') valued at: $50K. Reason for consternation: What rational person pays $100k for property that is only worth half that amount? True Story: My neighbor paid almost $250K (a quarter-of-a-million dollars - think about that..) for a house that when he walked (ran!) away from it was sold by the bank for $88K. Unless he declares bankruptcy (and forgoes all his other assets, including retirement savings) he still owes the bank the difference. And even with bankruptcy, he may still owe the bank - this should cause anyone to be a bit concerned about being up-side down in a mortgage loan.", "title": "" }, { "docid": "1316b83e689b972455fb64b38ce31903", "text": "Being underwater a little is not all that scary, but those who talk of being underwater are typically underwater by quite a lot. The amount of money they owe is large compared to their yearly income. Consider a metaphor. I put you in a hole. Its only 1 foot deep. You're not too concerned. If you want to leave, you can step out of it. Now we look at a deeper hole, 3 feet. Now you're still not too concerned. You can't just walk out, but if you need to get out you can wiggle your way up. 6 feet. Now you start getting nervous. Climbing out is getting trickier and trickier. You may not be able to move in response to a changing enviornment around you, because you're stuck in a hole. Now make the hole 10 feet. Now you can't reach the edges. Now you're in trouble. You have lost all mobility. You can't get out under your own power. Now if something bad happens (such as losing your job or a sudden health issue), you can't move around to solve the problem. This is the issue that arise from underwater mortgages. Say you lose your job because the job market in your area dried up (think Detroit in the big auto manufacturer crash). You need to move. You are legally endebted to a lender for your existing underwater house by more than you can sell it for. You need to pay for the privilege to sell it. You still owe payments on it, so if you just buy a new house (or rent) in the new state, you're paying for twice as much property. You can't just shuffle the underwaterness from your old house to your new house because the new lender has no interest in giving a loan for more than the value of the new home. The only options you have to play with is renting the old house, which many underwater families did, or bankrupcy. If the area you were in is depressed, you may not be able to rent the house for enough to cover your mortgage. This is the fear of being underwater. You have a piece of paper which claims some lender can take money from you that you may or may not have, and that the US government will allow them to take your assets, if need be, to settle the score. If you're underwater by a few thousand, it's typically not a big deal. If you're underwater by 80 or 90 thousand dollars, which some people were, that's a lot of money to be endebted for without the assets to recover them. If you subscribe to the realtor story that the market will recover, all you have to do is scrape by, holding on, until the market rises again. However, those who are underwater recognize that the reason much of this occurred is that we entered a bubble because realtors kept saying the market could only go up. Fool me once....", "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": "a59570049a42e56497a59511e25abb8e", "text": "I think part of why it is perceived is so bad is because the fluctuations in housing prices are relatively large, especially compared to the amount needed to put a down payment. This is not an uncommon scenario: And this is not even being underwater, just being even. Imagine how much worse it feels if your dream of home ownership has turned into just a pile of debt.", "title": "" } ]	[ { "docid": "95eb20ad4d8b177f6dcec3183a702b99", "text": "There's nothing wrong with it. Living in a two-family house and renting the downstairs was a fairly standard path to the middle class and home ownership in the 20th century. Basically, if market conditions are good, you'll have someone else paying your mortgage. The disadvantage of the situation is that you're a landlord. So you have to deal with your tenant, who is also a neighbor. Most tenants are fine, but the occasional difficult person may come out of the woodwork. That model of achieving home ownership became less popular in the late 60's-early 70's when the law allowed two incomes to be used for mortgage underwriting. Also, as suburbanization became a national trend, absentee landlords became more common Sounds like you are in the right place at the right time, and have stumbled into a good deal.", "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": "623dfa0df8931700ed0fa255c994972d", "text": "\"This seems to be a very emotional thing for people and there are a lot of conflicting answers. I agree with JoeTaxpayer in general but I think it's worth coming at it from a slightly different angle. You are in Canada and you don't get to deduct anything for your mortgage interest like in the US, so that simplifies things a bit. The next thing to consider is that in an amortized mortgage, the later payments include increasingly more principal. This matters because the extra payments you make earlier in the loan have much more impact on reducing your interest than those made at the end of the loan. Why does that matter? Let's say for example, your loan was for $100K and you will end up getting $150K for the sale after all the transaction costs. Consider two scenarios: If you do the math, you'll see that the total is the same in both scenarios. Nominally, $50K of equity is worth the same as $50K in the bank. \"\"But wait!\"\" you protest, \"\"what about the interest on the loan?\"\" For sure, you likely won't get 2.89% on money in a bank account in this environment. But there's a big difference between money in the bank and equity in your house: you can't withdraw part of your equity. You either have to sell the house (which takes time) or you have to take out a loan against your equity which is likely going to be more expensive than your current loan. This is the basic reasoning behind the advice to have a certain period of time covered. 4 months isn't terrible but you could have more of a cushion. Consider things like upcoming maintenance or improvements on the house. Are you going to need a new roof before you move? New driveway or landscape improvements? Having enough cash to make a down-payment on your next home can be a huge advantage because you can make a non-contingent offer which will often be accepted at a lower value than a contingent offer. By putting this money into your home equity, you essentially make it inaccessible and there's an opportunity cost to that. You will also earn exact 0% on that equity. The only benefit you get is to reduce a loan which is charging you a tiny rate that you are unlikely to get again any time soon. I would take that extra cash and build more cushion. I would also put as much money into any tax sheltered investments as you can. You should expect to earn more than 2.89% on your long-term investments. You really aren't in debt as far as the house goes as long as you are not underwater on the loan: the net value of that asset is positive on your balance sheet. Yes you need to keep making payments but a big account balance covers that. In fact if you hit on hard times and you've put all your extra cash into equity, you might ironically not being able to make your payments and lose the home. One thing I just realized is that since you are in Canada, you probably don't have a fixed-rate on your mortgage. A variable-rate loan does make the calculation different. If you are concerned that rates may spike significantly, I think you still want to increase your cushion but whether you want to increase long-term investments depends on your risk tolerance.\"", "title": "" }, { "docid": "042f8e55c75b6d2ffa8b5a61201fb7ec", "text": "Well typically you're borrowing a shit ton of money for 30 years so yeah you're paying a lot in interest over that period. But your situation sounds especially bad, that's over a 10% constant assuming 80% LTV. What are you being quoted, like >9% interest?", "title": "" }, { "docid": "a822a0aff7439e7c5b0ded019cb7eb34", "text": "\"They're not all \"\"bad at math borrowers\"\". How would you like it if you applied for a mortgage, very carefully reviewed all the paperwork, and then the mortgage broker simply transposes your signature to another set of documents with different rates? People got screwed because the companies often screwed them. For every person with zero income who got a home, who's no worse off now than before, there's dozens who got refinanced and later thrown out on the street when their rates magically reset.\"", "title": "" }, { "docid": "0c5a2cc4c919a57f3865f7c4dea5f03b", "text": "Many mortgages penalize early payment, and I assume it's possible to disallow it altogether. It makes sense why they don't want early payment. If you pay off the loan early, it is usually because you re-financed it to a loan with a lower rate. You would do this when the interest rate is low (lower than when you got your original loan). If you pay it off early, that means they will have to re-invest the money again, or they will lose money if they just have it sitting around. However, recall above that people pay it off early when the interest rate is low; that is the worst time for them to re-invest this into another mortgage, because the rate will not be as good for them as the one you were originally going to keep paying.", "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": "f9ad0656b5ebff9bb89342abd2b89beb", "text": "Wrong way round. Transitional arrangements are non-binding guidelines that the lenders can observe if they choose to. The borrower - like your friend - doesn't get to choose whether to use them or not. Your friend obviously can't afford the property, so if you do this, all I can say is congratulations on buying your new house, and I hope you got a deal on the mortgage.", "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": "7dcc878a79104a3e26c4ed3ba82668fb", "text": "In a process called collateralization, your mortgage is combined with others to form a security that other can invest in. When done right, this process provides liquidity, more money to be lent for more loans. When done wrong, bad things happen. My mortgage happens to be held by the issuing bank. Yours was sold into such a pool of mortgages. One effect of this is the reselling of the servicing of the loan. I've had other mortgages that were sold every year, but I never paid ahead. With this bank, I'm on my fifth refinance, but the bank keeps the loan in house no matter what. I don't know if there's any correlation, it depends on the originating bank, in my opinion.", "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": "b668b8d50603669e02d8e710687f881b", "text": "I'm not an expert on reverse mortgages but from my understanding the closing costs are much higher than traditional mortgages and the LTV is generally pretty low. So the bank makes money by not loaning out all that much compared to the value of the property and by charging high fees on the front end.", "title": "" }, { "docid": "c01e8d7d9223450cb7fbed67e81d0f26", "text": "So am I to understand that giving AAA ratings to financial instruments backed by toxic mortgages had nothing to do with this problem? That selling mortgages with one hand and betting on those mortgages to fail with other is a reasonable business practice? No doubt the push to give more poor people government backed loans exacerbated the problem, but making that claim that that was the only problem seems about as valid as claiming that Goldman Sachs was responsible for everything.", "title": "" }, { "docid": "d5afca16ee485c9157d01ff29ff09333", "text": "Hey OP, Don't listen to the negative comments, they don't know what they're talking about. I just got hired as an associate i-banker at the top investment bank in my country , which is roughly at the level of American bulge bracket banks. I'm an introvert. Yes, I like to drink and socialize, and part of the interview process involved cocktails and dinner with other candidates and several ibankers at all levels . But I-bankers are just geeks in suits. As long as you are comfortable in social settings , you don't need to be an alpha male or frat jock. I recommend meeting as many ibankers as possible. Have coffee chats and learn about the people that work in the industry. Good luck.", "title": "" }, { "docid": "ff7f5e3e13a45c7f27610ba45e5bad81", "text": "Stock is a part ownership of a business. First there has to be a business that people want to own part of because they expect to make a profit from that ownership. Nobody is going to be interested if the business isn't worth anything. In other words: sure, you could try to start a movie production house to make this film and others... But unless you are already a major player AND already have a lot of money invested in the studio, forget it. This isn't GoFundMe or Kickstarter. Nobody is going to buy stock because they want a copy of the DVD that you promise will be available in two years' time.", "title": "" } ]	fiqa
9c62aadb71d5256fed4bcee1640ccce8	What is the pitfall of using the Smith maneuver	[ { "docid": "661faa4d48f96d63ec1a4467fefc9842", "text": "The catch is that you're doing a form of leveraged investing. In other words, you're gambling on the stock market using money that you've borrowed. While it's not as dangerous as say, getting money from a loan shark to play blackjack in Vegas, there is always the chance that markets can collapse and your investment's value will drop rapidly. The amount of risk really depends on what specific investments you choose and how diversified they are - if you buy only Canadian stocks then you're at risk of losing a lot if something happened to our economy. But if your Canadian equities only amount to 3.6% of your total (which is Canada's share of the world market), and you're holding stocks in many different countries then the diversification will reduce your overall risk. The reason I mention that is because many people using the Smith Maneuver are only buying Canadian high-yield dividend stocks, so that they can use the dividends to accelerate the Smith Maneuver process (use the dividends to pay down the mortgage, then borrow more and invest it). They prefer Canadian equities because of preferential tax treatment of the dividend income (in non-registered accounts). But if something happened to those Canadian companies, they stand to lose much of the investment value and suddenly they have the extra debt (the amount borrowed from a HELOC, or from a re-advanceable mortgage) without enough value in the investments to offset it. This could mean that they will not be able to pay off the mortgage by the time they retire!", "title": "" } ]	[ { "docid": "b7f83a97dfce677a8cbbe76aa56d822a", "text": "> Smith earned $15 million in total compensation in 2016, including a $1.5-million base salary and $7.3 million in stock awards, according to the company’s securities filings. > As of Dec. 31, his pension was valued at $18.4 million, the filings showed. Smith is entitled to that pension “under any circumstances,” Gutzmer said.", "title": "" }, { "docid": "d331a7d58dd50ed1858f361b6e640d57", "text": "I will expand this to 401K's, 403B's, and the federal retirement program. There are 3 things to worry about when trading: The tax friendly retirement programs will remove the worry about taxes. Most will reduce or eliminate the concern about transaction fees. But some programs will limit the number of transactions per month. In the past few years the federal program has cracked down on people who were executing trades every day. While employees are able to execute trades without a fee, the costs related to each transaction were being absorbed into the cost of running the program. To keep the costs down they limited the number of transactions per month. Some private programs have limited the movement of money between some of the investment options.", "title": "" }, { "docid": "64a0080a7faeef7c5d3b8afb1106f8f2", "text": "\"If i do this, I would assume I have an equal probability to make a profit or a loss. The \"\"random walk\"\"/EMH theory that you are assuming is debatable. Among many arguments against EMH, one of the more relevant ones is that there are actually winning trading strategies (e.g. momentum models in trending markets) which invalidates EMH. Can I also assume that probabilistically speaking, a trader cannot do worst than random? Say, if I had to guess the roll of a dice, my chance of being correct can't be less than 16.667%. It's only true if the market is truly an independent stochastic process. As mentioned above, there are empirical evidences suggesting that it's not. is it right to say then that it's equally difficult to purposely make a loss then it is to purposely make a profit? The ability to profit is more than just being able to make a right call on which direction the market will be going. Even beginners can have a >50% chance of getting on the right side of the trades. It's the position management that kills most of the PnL.\"", "title": "" }, { "docid": "23a1942c7b909c8c0a16d1cbf824842e", "text": "If you plan to take profit at $1.00 then your profit will be $40. Then, if you set your stop at $0.88 then your loss if you get stopped will be $20. So your Reward : Risk = 2:1. Note, that this does not take into account brokerage in and out and any slippage from the price gapping past your stop loss.", "title": "" }, { "docid": "96347bc9f864460e64c7d4b3f9adb866", "text": "My understanding is that all ETF options are American style, meaning they can be exercised before expiration, and so you could do the staggered exercises as you described.", "title": "" }, { "docid": "90cf653a01b6f9a034dc013a6e16605f", "text": "\"value slip below vs \"\"equal a bank savings account’s safety\"\" There is no conflict. The first author states that money market funds may lose value, precisely due to duration risk. The second author states that money market funds is as safe as a bank account. Safety (in the sense of a bond/loan/credit) mostly about default risk. For example, people can say that \"\"a 30-year U.S. Treasury Bond is safe\"\" because the United States \"\"cannot default\"\" (as said in the Constitution/Amendments) and the S&P/Moody's credit rating is the top/special. Safety is about whether it can default, ex. experience a -100% return. Safety does not directly imply Riskiness. In the example of T-Bond, it is ultra safe, but it is also ultra risky. The volatility of 30-year T-Bond could be higher than S&P 500. Back to Money Market Funds. A Money Market Fund could hold deposits with a dozen of banks, or hold short term investment grade debt. Those instruments are safe as in there is minimal risk of default. But they do carry duration risk, because the average duration of the instrument the fund holds is not 0. A money market fund must maintain a weighted average maturity (WAM) of 60 days or less and not invest more than 5% in any one issuer, except for government securities and repurchase agreements. If you have $10,000,000, a Money Market Fund is definitely safer than a savings account. 1 Savings Account at one institution with amount exceeding CDIC/FDIC terms is less safe than a Money Market Fund (which holds instruments issued by 20 different Banks). Duration Risk Your Savings account doesn't lose money as a result of interest rate change because the rate is set by the bank daily and accumulated daily (though paid monthly). The pricing of short term bond is based on market expectation of the interest rates in the future. The most likely cause of Money Market Funds losing money is unexpected change in expectation of future interest rates. The drawdown (max loss) is usually limited in terms of percentage and time through examining historical returns. The rule of thumb is that if your hold a fund for 6 months, and that fund has a weighted average time to maturity of 6 months, you might lose money during the 6 months, but you are unlikely to lose money at the end of 6 months. This is not a definitive fact. Using GSY, MINT, and SHV as an example or short duration funds, the maximum loss in the past 3 years is 0.4%, and they always recover to the previous peak within 3 months. GSY had 1.3% per year return, somewhat similar to Savings accounts in the US.\"", "title": "" }, { "docid": "32d1ae25d45bff448b385f3f172f87f3", "text": "caveat: remember that complex derivatives can be very bad for your wealth (even if you FULLY understand them).", "title": "" }, { "docid": "cab8a85705f3c03341cab69c7efa553e", "text": "If you look at history, it shows that the more people predict corrections the less was the chance they came. That doesn't prove it stays so, though. 2017 is not any different than other years in the future: Independent of this, with less than ten years remaining until you need to draw from your money, it is a good idea to move away from high risk (and high gain); you will not have enough time to recover if it goes awry. There are different approaches, but you should slowly and continuously migrate your capital to less risky investments. Pick some good days and move 10% or 20% each time to low-risk, so that towards the end of the remaining time 90 or 100% are low or zero risk investments. Many investment banks and retirement funds offer dedicated funds for that, they are called 'Retirement 2020' or 'Retirement 2030'; they do exactly this 'slow and continuous moving over' for you; just pick the right one.", "title": "" }, { "docid": "dbd6058d06909749851d84b6f20389a9", "text": "You've asked for risks but neglected straight up costs. CD laddering will have some explicit and implicit costs:", "title": "" }, { "docid": "388f355419ddadce6e0fac4adf5e8be1", "text": "First I would be very careful using a short ETF. There could be some serious tracking error, especially if its levered. Second, when it comes to forex you are in the world of PIPS and high leverage. You would need to have significant capital to be able to hold out the swings as banks do their interventions. Plenty of people have been short waiting, and waiting, and waiting, unless you think you know something the market doesn't this seems like a pretty high risk strategy. I'd suggest buying options instead, but they will be expensive given the volatility.", "title": "" }, { "docid": "9b4a5fff5ef3a98fcf333a137464c7af", "text": "Deliberately breaking transactions into smaller units to avoid reporting requirements is called structuring and may attract the attention of the IRS and/or law enforcement agencies. I'm not sure what the specific laws are on structuring with respect to FBAR reporting requirements and/or electronic transfers (as opposed to cash transactions). However, there's been substantial recent publicity about cases where people had their assets seized simply because federal agents suspected they were trying to avoid reporting requirements (even if there was no hard evidence of this). It is safer not to risk it. Don't try to structure your transactions to avoid the reporting requirements.", "title": "" }, { "docid": "69c794fa0948f77a425d8f76ed1e36ca", "text": "This serves as very crucial for the new business manager who is not adept in prospecting the outcomes and for whom, the passages are new! A minor mistake on his part could plunge the whole new venture into the backlash mode which could be potentially dangerous!For More Info:- http://www.startupmentor.co.in/", "title": "" }, { "docid": "e4a0495fedb4a5edad9a887d78543dc5", "text": "\"Came across this very nice video which explains the \"\"Long Straddle\"\". Thought will share the link here: http://www.khanacademy.org/finance-economics/core-finance/v/long-straddle\"", "title": "" }, { "docid": "22ae57c52676b06d852420a2c9538018", "text": "There are several reasons it is not recommended to trade stocks pre- or post-market, meaning outside of RTH (regular trading hours). Since your question is not very detailed I have to assume you trade with a time horizon of at least more than a day, meaning you do not trade intra-day. If this is true, all of the above points are a non-issue for you and a different set of points becomes important. As a general rule, using (3) is the safest regardless of what and how you trade because you get price guarantee in trade for execution guarantee. In the case of mid to longer term trading (1 week+) any of those points is viable, depending on how you want to do things, what your style is and what is the most comfortable for you. A few remarks though: (2) are market orders, so if the open is quite the ride and you are in the back of the execution queue, you can get significant slippage. (1) may require (live) data of the post-market session, which is often not easy to come by for the entire US stock universe. Depending on your physical execution method (phone, fax, online), you may lack accurate information of the post-market. If you want to execute orders based on RTH and only want to do that after hours because of personal schedule constraints, this is not really important. Personally I would always recommend (3), independent of the use case because it allows you more control over your orders and their fills. TL;DR: If you are trading long-term it does not really matter. If you go down to the intra-day level of holding time, it becomes relevant.", "title": "" }, { "docid": "e4623e9f341a2fa3d253b34079c687a3", "text": "In common with many companies, Microsoft has been engaging in share buyback programmes, where it buys its own shares in the market and then cancels them. It's often a more tax-efficient way to distribute profits to the shareholders than paying a dividend. So there were more Microsoft shares in circulation in 1999 than there are now. See here for information.", "title": "" } ]	fiqa
dcd2ac3b3cbfeff27b7b60249c3eb145	strategy for the out of favour mining sector	[ { "docid": "5cc436c8a115dcb100a2e11d74384478", "text": "At this particular time, I would strongly suggest holding on and not bailing. I've been following this sector pretty closely for 10+ years now. It has taken an absolute beating since 2011 (up to 90% down in many areas), and has been in a slow downward grind all year. Given the cyclical nature of the markets, you're far far closer to a long term bottom, and have a much better risk/reward outlook now vs say, four, or even two years ago. Personally, I'm planning on jumping into the sector heavily as soon as I see signs of a wash-out, desperation low, where people like yourself start selling in panic and frustration. I may very likely start cost-averaging into it even now, although I personally feel we may get one more major bottom around the spring 2016 time-frame, coupled with a general market deflation scare, which might surprise many by its severity. But at the same time, the sector might turn up from here and not look back, since I think many share my view and are just patiently waiting, and with so many buyers waiting in support, it may never crash hard. In any case, I personally feel that we're approaching the cheap buying opportunity of a lifetime in this sector within the next year (precious metals miners that is, base metals may still falter if the economy is still iffy, and just look at the baltic dry index as an indicator of world trade and productivity... not looking so hot). If you've suffered this long already, and it is just a small portfolio portion, just keep hanging in there. And by next summer, if we get a confirmed panic low, and a subsequent strong, high-volume, consistent bounce pattern up past summer 2015 levels, then I'd start adding even more on dips and enjoy the ride.", "title": "" }, { "docid": "18db0e4ca9c70f63f9dfd4813596faf3", "text": "\"I'll take a stab at this question and offer a disclosure: I recently got in RING (5.1), NEM (16.4), ASX:RIO (46.3), and FCX (8.2). While I won't add to my positions at current prices, I may add other positions, or more to them if they fall further. This is called catching a falling dagger and it's a high risk move. Cons (let's scare everyone away) Pros The ECB didn't engage in as much QE as the market hoped and look at how it reacted, especially commodities. Consider that the ECB's actions were \"\"tighter\"\" than expected and the Fed plans to raise rates, or claims so. Commodities should be falling off a cliff on that news. While most American/Western attention is on the latest news or entertainment, China has been seizing commodities around the globe like crazy, and the media have failed to mention that even with its market failing, China is still seizing commodities. If China was truly panicked about its market, it would stop investing in other countries and commodities and just bail out its own country. Yet, it's not doing that. The whole \"\"China crisis\"\" is completely oversold in the West; China is saying one thing (\"\"oh no\"\"), but doing another (using its money to snap up cheap commodities). Capitalism works because hard times strengthen good companies. You know how many bailouts ExxonMobil has received compared to Goldman Sachs? You know who owns more real wealth? Oil doesn't get bailed out, banks do, and banks can't innovate to save their lives, while oil innovates. Hard times strengthen good companies. This means that this harsh bust in commodities will separate the winners from the losers and history shows the winners do very well in the long run. Related to the above point: how many bailouts from tax payers do you think mining companies will get? Zero. At least you're investing in companies that don't steal your money through government confiscation. If you're like me, you can probably find at least 9 people out of 10 who think \"\"investing in miners is a VERY BAD idea.\"\" What do they think is a good idea? \"\"Duh, Snapchat and Twitter, bruh!\"\" Then there's the old saying, \"\"Be greedy when everyone's fearful and fearful when everyone's greedy.\"\" Finally, miners own hard assets. Benjamin Graham used to point this out with the \"\"dead company\"\" strategy like finding a used cigarette with one more smoke. You're getting assets cheap, while other investors are overpaying for stocks, hoping that the Fed unleashes moar QE! Think strategy here: seize cheap assets, begin limiting the supply of these assets (if you're the saver and not borrowing), then watch as the price begins to rise for them because of low supply. Remember, investors are part owners in companies - take more control to limit the supply. Using Graham's analogy, stock pile those one-puff cigarettes for a day when there's a low supply of cigarettes. Many miners are in trouble now because they've borrowed too much and must sell at a low profit, or in some cases, must lose. When you own assets debt free, you can cut the supply. This will also help the Federal Reserve, who's been desperately trying to figure out how to raise inflation. The new patriotic thing to do is stimulate the economy by sending inflation up, and limiting the supply here is key.\"", "title": "" } ]	[ { "docid": "a5c24dda372ef6aacc271ce6f77061ca", "text": "I would recommend that go through some forums where commodities topics be discussed so that if you have some issues related any point in commodities investment you will easily get your question sort out.", "title": "" }, { "docid": "f3b46a3bcf094f4b1063d750d505eb04", "text": "From Vanguard's Best practices for portfolio rebalancing:", "title": "" }, { "docid": "8fd26276e78483ab169d223d20198f1b", "text": "Employment, output and inflation are your feedback. Too little spending manifests as a an output gap with elevated unemployment and low inflation. Too much spending shows up as full employment, full capacity and rising inflation as additional dollars just bid up prices. Get it right and you have full employment with price stability. So are we there yet? Well, it's not a static point we reach and cross but a dynamic balance in every period based on what's going on in the non-government sectors. Lately we've been leaning towards too little and the result is a tepid, stagnant recovery dragging on for years with elevated unemployment, weak growth and a persistant [output gap](http://lostoutputclock.com/).", "title": "" }, { "docid": "cb4539d14a460c05bbedaebb6a7be667", "text": "Trying to engage in arbitrage with the metal in nickels (which was actually worth more than a nickel already, last I checked) is cute but illegal, and would be more effective at an industrial scale anyway (I don't think you could make it cost-effective at an individual level). There are more effective inflation hedges than nickels and booze. Some of them even earn you interest. You could at least consider a more traditional commodities play - it's certainly a popular strategy these days. A lot of people shoot for gold, as it's a traditional hedge in a crisis, but there are concerns that particular market is overheated, so you might consider alternatives to that. Normal equities (i.e. the stock market) usually work out okay in an inflationary environment, and can earn you a return as they're doing so.... and it's not like commodities aren't volatile and subject to the whims of the world economy too. TIPs (inflation-indexed Treasury bonds) are another option with less risk, but also a weaker return (and still have interest rate risks involved, since those aren't directly tied to inflation either).", "title": "" }, { "docid": "ee7673f671ed5a34d53c823b8f4fd189", "text": "For an investor , I understand its a higher return on investment; but I was wondering if an investor is actually investing in the minerals, or the means of delivery such as ports, rail, trucks, roads, etc; or is that abstracted away", "title": "" }, { "docid": "e57000db4a48e0c6eb6ebb6c74266973", "text": "a) Nothing would support this company going back to $.50 per share b) Fundamentally the market for this sectors has been obliterated and the fundamentals don't look like they will improve. Similar companies experience what this one is and will be going through, they borrow the hilt and hope they can pump enough oil and sell the oil at a high price. Oil goes below, WAYYY below the price they can sell it at and even break even, so they are burning cash until they declare bankruptcy. This company is not an exception. So here is what to look at on their balance sheet: assets and liabilities. Liabilities are debt. Their debt is over 50% of their assets, that debt has interest and there is NO WAY they are making a profit. Their website's last financial statement is from September 30th.. LOL, so they haven't even released a quarterly financial statement in two quarters straight, so have they released anything? Given what we know about the dire state of the entire oil drilling industry, lets see if these guys are the exception to the rule (spoiler; they aren't) February 15th, 2015 http://www.marketwatch.com/story/strategic-oil-gas-ltd-provides-operations-update-2015-02-19-16173591 The Company prudently elected to stop the winter Muskeg drilling program in order to preserve capital. So now they aren't even getting new assets to resale, they aren't making any money from that operation, their debt still has interest payments though. Approximately 700 Boe/d of production has been shut-in by suspending operations at Bistcho, Cameron Hills and Larne, which are not economic at current commodity prices. Predictable. Also, you should notice from their actual financial statements (from 6 months ago, lol) (when the price of oil was over 100% higher than it is today, lol), this company already wasn't a good performer. They have been financing themselves by doing private placements, by issuing shares to investors that are not you, and diluting the share value of ALL OTHER SHAREHOLDERS. Dead in the water. I got this from skimming their financial report, without even being familiar with how canadian companies report. Its just bad news. You shouldn't be married to this investment.", "title": "" }, { "docid": "7e1b72a5a28d65b5d87e882185f51eca", "text": "The solution is spending restraint during the growth periods and prudent application of counter-cyclical fiscal policy, especially during the slow periods. The USA embarked on a strange experiment lead be Greenspan of excessively low interest rates for a prolonged period of time. Periods of strong economic growth should feature high interest rates, periods of reduced economic growth can then be countered somewhat through monetary policy. The government should also endeavour to run surplus budgets during the good times and not be afraid of turning those into deficit budgets in the downturns. If you run a deficit budget during a period of strong economic growth, together with low cash rates you have nowhere to move when the cycle reverses. The solution now? That is difficult. I would say that the solution now would be to raise revenues through corporate taxes and similarly increase government spending on investments aimed at stimulating the economy. Use this time to invest in the much needed infrastructure maintenance and upgrades that the USA needs. These need to be fast-tracked into action and I would therefore consider fixing infrastructure as more important than installing new infrastructure. There are probably long-term structural adjustments that need to be looked at too, but I am not intimately familiar with the USA as I am Australian. It is clear however that Austerity during economic downturns does not help end the recession (or benign growth). It is clear to me as an observer however that employment appears to be the big issue in the USA right now, so cutting jobs is not a smart move. Edit: I'll point out that my opinion comes from the Australian experience, our government ran surplus budgets during our period of recent growth and our reserve bank kept interest rates high. When the GFC hit us in 2008 the government almost instantly reversed its fiscal policy, going so far as mailing $900 cheques to every Australian just to get cash flowing in the economy, they then embarked upon infrastructure spending programs. Similarly the reserve bank were able to quickly and dramatically reduce interest rates. The result was that we saw 1 quarter of mildly negative growth, and positive growth ever since (hence no recession). We ran a textbook example of counter-cyclical fiscal and monetary policy which is today lauded by economists over. We now have 5% unemployment, low government debt (relative to the OECD) and high economic growth (relative to the OECD).", "title": "" }, { "docid": "7075e33c922159b54d3a00ce2738b205", "text": "Early stage investors by their nature prefer opportunities which are disruptive to existing technologies. They look for a ‘big idea’ in a relatively small but rapidly expanding market. They don’t tend to be attracted to marginal improvements which yield marginal returns. They’re in the business of betting on the nature of the next new world.", "title": "" }, { "docid": "449486b08cb08ed650a7895ee6fe80d7", "text": "\"One cannot apply a \"\"one size fits all\"\" approach to any and all economic situations. We are currently in a recession/depression/whatever due to a lack of demand. Please tell me what would be the best way to get out of this particular scenario.\"", "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": "e5a8e535668584f0c0edc1e3564513d8", "text": "Capital circulation doesn't work in the model of everyone producing products they can all already produce independently, and the money going to raw material and 3D printer inputs are a fixed cost to all construction, which outside of asteroid mining has limitations. The Economy needs a stable cycle for capital, the challenge with this automation is that the requirement for capital circulation appears vulnerable to instability.", "title": "" }, { "docid": "eddf10b9b6dae95cbbd0441684ab2b0a", "text": "Diversification is an important aspect of precious metals investing. Therefore I would suggest diversifying in a number of different ways:", "title": "" }, { "docid": "5af803ad1057bd5c372ba42af3916233", "text": "\"I think the last sentence sums up what needs to be done: \"\"The answer is a rebooted capitalism for a new economic era, using the power of the state where it is necessary to fix market failures and to break up vested interests, but also recognising the unique power of entrepreneurs to produce abundance out of scarcity and dynamism out of stagnation.\"\" Capitalism is far from dead and is still by far the best economic policy available, it's just changing a bit specifically on a few minor points.\"", "title": "" }, { "docid": "7c81dbb5bcf9de91c3000669d11ebe0d", "text": "As BobbyScon said in the comments, invest in a company that is developing in that field. Or invest in a company which supplies that field. The people who got rich in the California gold rush were those selling shovels and other miners' supplies. Or bet against whatever you think this will displace. If automobiles are the hot new thing, it might be a bad time to invest in harness leather. Or ... figure out how else it might impact the economy and invest appropriately. But you have to do that evaluation yourself. Or ignore it and stick with your existing strategy, which should have been diversified enough to deliver reasonable results whether this sector takes off or not. Remember that if someone gives you a free tip, they are probably just hoping to pump up the value of their own stock rather than help you.", "title": "" }, { "docid": "b528f29ebaead09e2665fc7058ec1a55", "text": "Institute of Supply Management, specifically their Report on Business. Good forward looking indicator. As far as the weekly report, I'd probably read it, maybe even contribute, but I more of a lurker on this sub. I saw your question and have had some similar experiences so I thought I could help you out.", "title": "" } ]	fiqa
83d8c3c8578c14fa405f5c77efab72ba	UK student loans, early repayment/avoiding further debt	[ { "docid": "9ab7a895569eedf19577c89144cf4853", "text": "\"I think you're right that from a pure \"\"expected future value\"\" perspective, it makes sense to pay this loan off as quickly as possible (including not taking the next year's loan). The new student loans with the higher interest rates have changed the balance enough that it's no longer automatically better to keep it going as long as possible. The crucial point in your case, which isn't true for many people, is that you will likely have to pay it off eventually anyway and so in terms of net costs over your lifetime you will do best by paying it off quickly. A few points to set against that, that you might want to consider: Not paying it off is a good hedge against your career not going as well as you expect, e.g. if the economy does badly, you have health problems, you take a career break for any reason. If that happens, you would end up not being forced to pay it off, so will end up gaining from not having done so voluntarily. The money you save in that case could be more valuable to you that the money you would lose if your career does go well. Not paying it off will increase your net cash earlier in life when you are more likely to need it, e.g. for a house deposit. Having more free cash could increase your options, making it possible to buy a house earlier in life. Or it could mean you have a higher deposit when you do buy, reducing the interest rate on the entire mortgage balance. The savings from that could end up being more than the 6% interest on the loan even though when you look at the loan in isolation it seems like a very bad rate.\"", "title": "" } ]	[ { "docid": "64bf683b2cb764773bfa0664236dc782", "text": "Others have suggested paying off the student loan, mostly for the satisfaction of one less payment, but I suggest you do the math on how much interest you would save by paying early on each of the loans: When you do the calculations I think you'll see why paying toward the debt with the highest interest rate is almost always the best advice. Whether you can refinance the mortgage to a lower rate is a separate question, but the above calculation would still apply, just with different amortization schedules.", "title": "" }, { "docid": "4e5fd662a672e4645120d38ef17e20f9", "text": "The main benefit of paying off the loan early is that it's not on your mind, you don't have to worry about missing a payment and incurring the full interest due at that point. Your loan may not be set up that way, but most 0% interest loans are set up so that there is interest that's accruing, but you don't pay it so long as all your payments are on time, oftentimes they're structured so that one late payment causes all of that deferred interest to be due. If you put the money in the bank you'd make a small amount of interest and also not have to worry about funds availability for your car payment. If you use the money for some other purpose, you're at greater risk of something going wrong in the next 21 months that causes you to miss a payment and being hit with a lot of interest (if applicable to your loan). If you already have an emergency fund (at least 3-6 months of expenses) then I would pay the loan off now so you don't have to think about it. If you don't have an emergency fund, then I'd bank the money and keep making payments, and pay it off entirely when you have funds in excess of your emergency fund to do so.", "title": "" }, { "docid": "159a621b71425fbbf701fb689de69bd5", "text": "\"You may have misunderstood some parts of the system. If you make a pension contribution in any given year, the tax relief is based on your income for that year - the gross pension contribution is subtracted from your gross income and you only end up paying tax based on the reduced gross income. So if the higher rate threshold is £40K, you have income for the year of £65K, and you make a gross contribution of £25K, then you'll get tax relief at 40% on the whole contribution, i.e. £10K. If your income for the year is less, e.g. £50K, then you'll get tax relief at 40% on £10K and at 20% on the other £15K, i.e. £7K. So if you're significantly into the higher-rate band, it's usually not worth making a contribution large enough to reduce you to basic-rate tax - better to wait till the next tax year for the rest. Overall, while you probably could do what you suggest subject to the caveats below, why not just spread the pension contribution over the three years, rather than making it all up front? If you are confident you can invest the money at better than the 3.4% interest on the loan, then it might make sense to borrow, but you should be pretty clear that you're deliberately borrowing to invest (otherwise known as investing with leverage). Or you might know that your income is going to drop next year. Another clarification, as your comment on another answer mentions: basic-rate tax relief is claimed directly by your pension provider (\"\"relief at source\"\"), whereas the higher-rate part of the relief comes straight to you via your tax return. So for the above £25K gross contribution example, you'd hand over £20K initially and then get £5K back at the end of the tax year, leaving you with £15K less in your pocket. If you did want to make a £20K net contribution and had enough higher-rate salary to cover it, the gross contribution you'd end up with would be £33,333, and you'd need to find £6,666 more temporarily. Note that there are also limits on the annual contribution you can make of £40K (the \"\"annual allowance\"\"), but you can carry forward allowances from three previous years so it's very unlikely to be relevant.\"", "title": "" }, { "docid": "16ee117db6c744f258caf872585d7bbc", "text": "\"Also, since I'm guessing OP isn't flush with cash, not having to come up with additional money to pay the student loans for some time will provide some short-term \"\"debt relief\"\"... possibly reducing the possibility of racking up more CC debt.\"", "title": "" }, { "docid": "855d8ad77cb3a8fe38f6b938f1cb5f12", "text": "\"The more I think about this the more I think you are actually better off letting it go to collections. At least then you would be able to agree an affordable repayment schedule based on your real budget, and having a big dent in your credit score because it's gone to collections doesn't actually put you in any worse position (in terms of acquiring credit in the future) than you are now. Whoever is the creditor on your original loan is (IMO) quite unreasonable demanding a payment in full on a given date, especially given that you say you've only been made aware of this debt recently. The courts are usually much more reasonable about this sort of thing and recognise that a payment plan over several years with an affordable monthly payment is MUCH more likely to actually get the creditor their money back than any other strategy. They will also recognise and appreciate that you have made significant efforts to obtain the money. I'm also worried about your statement about how panicked and \"\"ready to give up\"\" you are. Is there someone you can talk to? Around here (UK) we have debt counselling bureaus - they can't help with money for the actual debt itself, but they can help you with strategies for dealing with debt and will explain all parts of the process to you, what your rights and responsibilities are if it does go to court, etc. If you have something similar I suggest you contact them, even just to speak to someone and find out that this isn't the end of the world. It's a sucky situation but in a few years you'll be able to look back and at least laugh wryly at it.\"", "title": "" }, { "docid": "8c97110c32f226e776d5bfe11a4844d3", "text": "I would strongly encourage you to either find specifically where in your written contract the handling of early/over payments are defined and post it for us to help you, or that you go and visit a licensed real estate attorney. Even at a ridiculously high price of 850 pounds per hour for a top UK law firm (and I suspect you can find a competent lawyer for 10-20% of that amount), it would cost you less than a year of prepayment penalty to get professional advice on what to do with your mortgage. A certified public accountant (CPA) might be able to advise you, as well, if that's any easier for you to find. I have the sneaking suspicion that the company representatives are not being entirely forthcoming with you, thus the need for outside advice. Generally speaking, loans are given an interest rate per period (such as yearly APR), and you pay a percentage (the interest) of the total amount of money you owe (the principle). So if you owe 100,000 at 5% APR, you accrue 5,000 in interest that year. If you pay only the interest each year, you'll pay 50,000 in interest over 10 years - but if you pay everything off in year 8, at a minimum you'd have paid 10,000 less in interest (assuming no prepayment penalties, which you have some of those). So paying off early does not change your APR or your principle amount paid, but it should drastically reduce the interest you pay. Amortization schedules don't change that - they just keep the payments even over the scheduled full life of the loan. Even with prepayment penalties, these are customarily billed at less than 6 months of interest (at the rate you would have payed if you kept the loan), so if you are supposedly on the hook for more than that again I highly suspect something fishy is going on - in which case you'd probably want legal representation to help you put a stop to it. In short, something is definitely and most certainly wrong if paying off a loan years in advance - even after taking into account pre-payment penalties - costs you the same or more than paying the loan off over the full term, on schedule. This is highly abnormal, and frankly even in the US I'd consider it scandalous if it were the case. So please, do look deeper into this - something isn't right!", "title": "" }, { "docid": "bf547c64f68826493b6f0b0ba432373d", "text": "Simple rule for UK student loans. Never repay early. (http://www.moneysavingexpert.com/students/student-loans-repay) They are not real debt: only payable over threshold and wiped after 30 years (ish). They do not appear as debt with Credit Agencies. If you have other debt, it is almost certainly at a higher rate or worse terms and should be paid off first If you don't have debt, then you can put the cash to better use: whether saving, mortgage deposit or avoiding worse debt in the future.", "title": "" }, { "docid": "82177fa2a3f39219cfffa3912a10a53f", "text": "A loan from a bank with no real purpose could be a bad idea and end up costing you more money than it needs to. As someone with a loan and credit card debts accrued over university, I would say avoid it if at all possible. Certainly don't sign up to a large loan if you have no current plans for the money (car, house repair, etc). It sounds as though you're fairly careful with your money, but just want a bit of extra security in case a purchase you didn't account for slips by. If this is the case and you're set on obtaining a source of credit, I'd suggest getting an overdraft if you haven't already. Overdrafts are a lot more flexible, and are better for short term debt that you plan to pay off immediately, such as unexpected charges coming in at the end of the month. It's worth mentioning that this is from the perspective of a UK banking customer. Overdraft conditions will vary depending on the country.", "title": "" }, { "docid": "e3ee988439f40ec0a196798f8437c0e5", "text": "a) Talk to the financial aid counselors at your school. There's a very good chance they have at least a partial solution for you. Let them know your dependency status has changed (if it has). I declared myself to be financially independent from my parents (I really was) and qualified for more aide. b) How much austerity are you willing to endure? I once spent two years eating beans & rice twice a day (lots of protein and other nutrients) while I worked full-time and went back to school to pursue a second degree part-time. I also shunned all forms of recreation (not even a movie) to save money (and so I could focus on staying current with assignments). During another period in my life, I gave up cable, cell-phone, land-line (and used Skype only), and avoided unnecessary use of my car, so I could clear a debt. You'd be amazed at how much you can squeeze from a budget if you're willing to endure austerity temporarily. c) Consider going to school part-time, taking as few as one course at a time if allowed. It's a lot easier to pay for one or two courses than to pay for 4 or 5. It may take longer, but at least you won't lose your credits and it won't take forever.", "title": "" }, { "docid": "21563ae3c38cc0680bd7c7e79b7cac5c", "text": "The second choice is a normal payment, just made early. This guards you against forgetting to make the payment later and incurring late payment fees -- which in this kind of loan are added to the balance and themselves accrue compounded interest. The first option is an extra payment, applied entirely to the principal. That lets you avoid years of accrued interest on that portion of the loan, and reduces the loan's actual cost. I think the extra payment is a better investment.", "title": "" }, { "docid": "b35b8287eb0a1f8cad71238509d3ee0c", "text": "One extremely important aspect that must be taken into consideration is the state of the housing market. If prices are rising it will probably be a false economy to delay your house purchase. Say you pay off a £5,000 student loan, thus delaying your house purchase another year you could well end up forking out an extra £10,000 on the mortgage due to the rise in house prices. Of course, if the housing market is falling then, without a doubt, pay off the student debt.", "title": "" }, { "docid": "ad0028567b8dc2822bbcb30238ef587a", "text": "\"Concise answers to your questions: Depends on the loan and the bank; when you \"\"accelerate\"\" repayment of a loan by applying a pre-payment balance to the principal, your monthly payment may be reduced. However, standard practice for most loan types is that the repayment schedule will be accelerated; you'll pay no less each month, but you'll pay it off sooner. I can neither confirm nor deny that an internship counts as job experience in the field for the purpose of mortgage lending. It sounds logical, especially if it were a paid internship (in which case you'd just call it a \"\"job\"\"), but I can't be sure as I don't know of anyone who got a mortgage without accruing the necessary job experience post-graduation. A loan officer will be happy to talk to you and answer specific questions, but if you go in today, with no credit history (the student loan probably hasn't even entered repayment) and a lot of unknowns (an offer can be rescinded, for instance), you are virtually certain to be denied a mortgage. The bank is going to want evidence that you will make good on the debt you have over time. One $10,000 payment on the loan, though significant, is just one payment as far as your credit history (and credit score) is concerned. Now, a few more reality checks: $70k/yr is not what you'll be bringing home. As a single person without dependents, you'll be taxed at the highest possible withholdings rate. Your effective tax rate on $70k, depending on the state in which you live, can be as high as 30% (including all payroll/SS taxes, for a 1099 earner and/or an employee in a state with an income tax), so you're actually only bringing home 42k/yr, or about $1,600/paycheck if you're paid biweekly. To that, add a decent chunk for your group healthcare plan (which, as of 2014, you will be required to buy, or else pay another $2500 - effectively another 3% of gross earnings - in taxes). And even now with your first job, you should be at least trying to save up a decent chunk o' change in a 401k or IRA as a retirement nest egg. That student loan, beginning about 6 months after you leave school, will cost you about $555/mo in monthly payments for the next 10 years (if it's all Stafford loans with a 50/50 split between sub/unsub; that could be as much as $600/mo for all-unsub Stafford, or $700 or more for private loans). If you were going to pay all that back in two years, you're looking at paying a ballpark of $2500/mo leaving just $700 to pay all your bills and expenses each month. With a 3-year payoff plan, you're turning around one of your two paychecks every month to the student loan servicer, which for a bachelor is doable but still rather tight. Your mortgage payment isn't the only payment you will make on your house. If you get an FHA loan with 3.5% down, the lender will demand PMI. The city/county will likely levy a property tax on the assessed value of land and building. The lender may require that you purchase home insurance with minimum acceptable coverage limits and deductibles. All of these will be paid into escrow accounts, managed by your lending bank, from a single check you send them monthly. I pay all of these, in a state (Texas) that gets its primary income from sales and property tax instead of income, and my monthly payment isn't quite double the simple P&I. Once you have the house, you'll want to fill the house. Nice bed: probably $1500 between mattress and frame for a nice big queen you can stretch out on (and have lady friends over). Nice couch: $1000. TV: call it $500. That's probably the bare minimum you'll want to buy to replace what you lived through college with (you'll have somewhere to eat and sleep other than the floor of your new home), and we're already talking almost a month's salary, or payments of up to 10% of your monthly take-home pay over a year on a couple of store credit cards. Plates, cookware, etc just keeps bumping this up. Yes, they're (theoretically) all one-time costs, but they're things you need, and things you may not have if you've been living in dorms and eating in dining halls all through college. The house you buy now is likely to be a \"\"starter\"\", maybe 3bed/2bath and 1600 sqft at the upper end (they sell em as small as 2bd/1bt 1100sqft). It will support a spouse and 2 kids, but by that point you'll be bursting at the seams. What happens if your future spouse had the same idea of buying a house early while rates were low? The cost of buying a house may be as little as 3.5% down and a few hundred more in advance escrow and a couple other fees the seller can't pay for you. The cost of selling the same house is likely to include all the costs you made the seller pay when you bought it, because you'll be selling to someone in the same position you're in now. I didn't know it at the time I bought my house, but I paid about $5,000 to get into it (3.5% down and 6 months' escrow up front), while the sellers paid over $10,000 to get out (the owner got married to another homeowner, and they ended up selling both houses to move out of town; I don't even know what kind of bath they took on the house we weren't involved with). I graduated in 2005. I didn't buy my first house until I was married and pretty much well-settled, in 2011 (and yes, we were looking because mortgage rates were at rock bottom). We really lucked out in terms of a home that, if we want to or have to, we can live in for the rest of our lives (only 1700sqft, but it's officially a 4/2 with a spare room, and a downstairs master suite and nursery/office, so when we're old and decrepit we can pretty much live downstairs). I would seriously recommend that you do the same, even if by doing so you miss out on the absolute best interest rates. Last example: let's say, hypothetically, that you bite at current interest rates, and lock in a rate just above prime at 4%, 3.5% down, seller pays closing, but then in two years you get married, change jobs and have to move. Let's further suppose an alternate reality in which, after two years of living in an apartment, all the same life changes happen and you are now shopping for your first house having been pre-approved at 5%. That one percentage point savings by buying now, on a house in the $200k range, is worth about $120/mo or about $1440/yr off of your P&I payment ($921.42 on a $200,000 home with a 30-year term). Not chump change (over 30 years if you had been that lucky, it's $43000), but it's less than 5% of your take-home pay (month-to-month or annually). However, when you move in two years, the buyer's probably going to want the same deal you got - seller pays closing - because that's the market level you bought in to (low-priced starters for first-time homebuyers). That's a 3% commission for both agents, 1% origination, 0.5%-1% guarantor, and various fixed fees (title etc). Assuming the value of the house hasn't changed, let's call total selling costs 8% of the house value of $200k (which is probably low); that's $16,000 in seller's costs. Again, assuming home value didn't change and that you got an FHA loan requiring only 3.5% down, your down payment ($7k) plus principal paid (about another $7k; 6936.27 to be exact) only covers $14k of those costs. You're now in the hole $2,000, and you still have to come up with your next home's down payment. With all other things being equal, in order to get back to where you were in net worth terms before you bought the house (meaning $7,000 cash in the bank after selling it), you would need to stay in the house for 4 and a half years to accumulate the $16,000 in equity through principal payments. That leaves you with your original $7,000 down payment returned to you in cash, and you're even in accounting terms (which means in finance terms you're behind; that $7,000 invested at 3% historical average rate of inflation would have earned you about $800 in those four years, meaning you need to stick around about 5.5 years before you \"\"break even\"\" in TVM terms). For this reason, I would say that you should be very cautious when buying your first home; it may very well be the last one you'll ever buy. Whether that's because you made good choices or bad is up to you.\"", "title": "" }, { "docid": "3d34c21a2d3c48e716c0f7c03fbe1e8d", "text": "\"There are several ways you can get out of paying your student loans back in the USA: You become disabled and the loan is dismissed once verified by treating doctor or the Social Security Administration. You become a peace officer. You become a teacher; generally K-12, but I have heard from the DOE that teachers at state schools qualify as well. So the \"\"malicious\"\" friend B is prescribing to the theory that if one of those conditions becomes true, friend A will not have to pay back the loan. The longer you drag it out, the more chance you have to fulfill a condition. Given that 2 of these methods require a commitment, my guess is that they are thinking more along the lines of the first one, which is horrible. Financially, it makes no sense to delay paying back your loans because deferred loans are only interest-free until you graduate and are past your grace period, after which they will begin accruing interest. Unsubsidized loans accrue interest from the day you get them, only their payback is deferred until you graduate and exhaust your grace period. Anytime you ask for forbearance, you are still accruing interest and it is capitalizing into your principal — you are just given a chance to delay payback due to financial hardship, bad health, or loss of job. Therefore, at no point are you benefiting beyond the time you are in school and getting an education, still looking for a job, or dealing with health issues. In the current market, no CD, no savings account, and no investment will give you substantially more return that will offset the loss of the interest you are accruing. Even those of us in the old days getting 4.X % rates would not do this. There was a conditional consolidation offer the DOE allowed which could bring all your loans under one roof for a competitive 5.x-6.x % rate allowing you a single payment, but even then you would benefit if you had rates that were substantially higher. From a credit worthiness aspect, you are hurt by the outstanding obligation and any default along the way, so you really want to avoid that — paying off or down your loans are a good way to ensure you don't shoot yourself in the foot.\"", "title": "" }, { "docid": "9182607a4ada87e464e537e88a5480b0", "text": "Forgive me as I do not know much about your fine country, but I do know one thing. You can make 5% risk free guaranteed. How, from your link: If you make a voluntary repayment of $500 or more, you will receive a bonus of 5 per cent. This means your account will be credited with an additional 5 per cent of the value of your payment. I'd take 20.900 of that amount saved and pay off her loan tomorrow and increase my net worth by 22.000. I'd also do the same thing for your loan. In fact in someways it is more important to pay off your loan first. As I understand it, you will eventually have to pay your loan back once your income rises above a threshold. Psychologically you make attempt to retard your future income in order to avoid payback. Those decisions may not be made overtly but it is likely they will be made. So by the end of the day (or as soon as possible), I'd have a bank balance of 113,900 and no student loan debt. This amounts to a net increase in net worth of 1900. It is a great, safe, first investment.", "title": "" }, { "docid": "73f46ebcfc2e50b94d835095573d2fd9", "text": "You should definitely pay the remaining loan amount as quickly as possible. A loan in bad debts means that Bank has written it off books as its a education loan and there is no collateral. The defaults do get report to CIBIL [Credit Information Bureau India] and as such you will have difficulties getting credit card / new loans in future. Talk to the Bank Manager and ask can you regularize the loan? There are multiple options you would need to talk and find out; 1. You can negotiate and arrive at a number. Typically more than the principal outstanding and less than interest and penalties charged. 2. You can request to re-do the monthly payments with new duration, this will give you more time. 3. May one time large payment and subsequent amount in monthly payments. At the end its Bank's discretion whether to accept your terms or not.", "title": "" } ]	fiqa
91099ce550e53afcc6e3e80d6e621038	When to buy and sell bonds	[ { "docid": "f4dfadeeefad1c3988f5f9ae9342142f", "text": "Why does selling a bond drive up the yield? The bond will pay back a fixed amount when it comes due. The yield is a comparison of what you pay for the bond and what will be repaid when it matures (assuming no default). Why does the yield go up if the country is economically unstable? If the country's economy is unstable, that increases the chance that they will default and not pay the full value of the bonds when they mature. People are selling them now at a loss instead of waiting for a default later for a greater loss. So if you think Greece is not going to default as it's highly likely a country would completely default, wouldn't it make sense to hold onto the bonds? Only if you also think that they will pay back the full value at maturity. It's possible that they pay some, but not all. It's also possible that they will default. It's also possible that they will get kicked out of the Euro and start printing Drachmas again, and try to pay the bonds back with those which could devalue the bonds through inflation. The market is made of lots of smart people. If they think there are reasons to worry, there probably are. That doesn't mean they can predict the future, it just means that they are pricing the risk with good information. If you are smarter than the herd, by all means, bet against them and buy the bonds now. It can indeed be lucrative if you are right, and they are wrong.", "title": "" }, { "docid": "76387521a38442fc0b802325612e1599", "text": "\"Why does the yield go up if the country is economically unstable? The yield will rise when instability increases because the risk of default increases. If the case of Greece, the instability of government finances resulted in a 50% \"\"haircut\"\" for bond holders in 2011. In other words, bond holders suffered a 50% write down in the nominal value of their bonds. This means that holding these bonds until maturity will mean they will only receive half of the original nominal value of the bond, and that is assuming no further write downs occur. Why does selling a bond drive up the yield? Significant selling of bonds means that sellers are worried about future prospects. Sellers will outnumber buyers, so sellers will have to reduce their offer price in order to attract new buyers. So if you think Greece is not going to default as it's highly likely a country would completely default, wouldn't it make sense to hold onto the bonds? If you think that it is highly unlikely that Greece will default and the prices and yields are attractive, then Greek bonds may look like an attractive investment. However, keep in mind the fate of bond holders in 2011. They were attracted to Greek bonds by the price and yield, but they suffered a 50% haircut.\"", "title": "" } ]	[ { "docid": "46985454ed5256255c157beed1491d00", "text": "\"At the most fundamental level, every market is comprised of buyers and selling trading securities. These buyers and sellers decide what and how to trade based on the probability of future events, as they see it. That's a simple statement, but an example demonstrates how complicated it can be. Picture a company that's about to announce earnings. Some investors/traders (from here on, \"\"agents\"\") will have purchased the company's stock a while ago, with the expectation that the company will have strong earnings and grow going forward. Other agents will have sold the stock short, bought put options, etc. with the expectation that the company won't do as well in the future. Still others may be unsure about the future of the company, but still expecting a lot of volatility around the earnings announcement, so they'll have bought/sold the stock, options, futures, etc. to take advantage of that volatility. All of these various predictions, expectations, etc. factor into what agents are bidding and asking for the stock, its associated derivatives, and other securities, which in turn determines its price (along with overall economic factors, like the sector's performance, interest rates, etc.) It can be very difficult to determine exactly how markets are factoring in information about an event, though. Take the example in your question. The article states that if market expectations of higher interest rates tightened credit conditions... In this case, lenders could expect higher interest rates in the future, so they may be less willing to lend money now because they expect to earn a higher interest rate in the future. You could also see this reflected in bond prices, because since interest rates are inversely related to bond prices, higher interest rates could decrease the value of bond portfolios. This could lead agents to sell bonds now in order to lock in their profits, while other agents could wait to buy bonds because they expect to be able to purchase bonds with a higher rate in the future. Furthermore, higher interest rates make taking out loans more expensive for individuals and businesses. This potential decline in investment could lead to decreased revenue/profits for businesses, which could in turn cause declines in the stock market. Agents expecting these declines could sell now in order to lock in their profits, buy derivatives to hedge against or ride out possible declines, etc. However, the current low interest rate environment makes it cheaper for businesses to obtain loans, which can in turn drive investment and lead to increases in the stock market. This is one criticism of the easy money/quantitative easing policies of the US Federal Reserve, i.e. the low interest rates are driving a bubble in the stock market. One quick example of how tricky this can be. The usual assumption is that positive economic news, e.g. low unemployment numbers, strong business/residential investment, etc. will lead to price increases in the stock market as more agents see growth in the future and buy accordingly. However, in the US, positive economic news has recently led to declines in the market because agents are worried that positive news will lead the Federal Reserve to taper/stop quantitative easing sooner rather than later, thus ending the low interest rate environment and possibly tampering growth. Summary: In short, markets incorporate information about an event because the buyers and sellers trade securities based on the likelihood of that event, its possible effects, and the behavior of other buyers and sellers as they react to the same information. Information may lead agents to buy and sell in multiple markets, e.g. equity and fixed-income, different types of derivatives, etc. which can in turn affect prices and yields throughout numerous markets.\"", "title": "" }, { "docid": "1d061afb0577cd1166e1f687175edde2", "text": "I let someone else pick and chose which junk bonds to buy and which to sell. So instead of holding individual bonds in my portfolio I hold an ETF that is managed by a man with a PHD and which buys junk bonds. I get a yearly 15.5% ROI, paid monthly. Buy and hold and you can get a good return for the rest of your life. It is only speculation when you sell.", "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": "2b49a84cc6307004df52a8092a033866", "text": "\"You are asking multiple questions here, pieces of which may have been addressed in other questions. A bond (I'm using US Government bonds in this example, and making the 'zero risk of default' assumption) will be priced based on today's interest rate. This is true whether it's a 10% bond with 10 years left (say rates were 10% on the 30 yr bond 20 years ago) a 2% bond with 10 years, or a new 3% 10 year bond. The rate I use above is the 'coupon' rate, i.e. the amount the bond will pay each year in interest. What's the same for each bond is called the \"\"Yield to Maturity.\"\" The price adjusts, by the market, so the return over the next ten years is the same. A bond fund simply contains a mix of bonds, but in aggregate, has a yield as well as a duration, the time-and-interest-weighted maturity. When rates rise, the bond fund will drop in value based on this factor (duration). Does this begin to answer your question?\"", "title": "" }, { "docid": "e2174f138c71e1504c17ffbbe56eb991", "text": "\"If I don't need this money for decades, meaning I can ride out periodical market crashes, why would I invest in bonds instead of funds that track broad stock market indexes? You wouldn't. But you can never be 100% sure that you really won't need the money for decades. Also, even if you don't need it for decades, you can never be 100% certain that the market will not be way down at the time, decades in the future, when you do need the money. The amount of your portfolio you allocate to bonds (relative to stocks) can be seen as a measure of your desire to guard against that uncertainty. I don't think it's accurate to say that \"\"the general consensus is that your portfolio should at least be 25% in bonds\"\". For a young investor with high risk tolerance, many would recommend less than that. For instance, this page from T. Rowe Price suggests no more than 10% bonds for those in their 20s or 30s. Basically you would put money into bonds rather than stocks to reduce the volatility of your portfolio. If you care only about maximizing return and don't care about volatility, then you don't have to invest in bonds. But you probably actually do care about volatility, even if you don't think you do. You might not care enough to put 25% in bonds, but you might care enough to put 10% in bonds.\"", "title": "" }, { "docid": "80d84c637b2391c22cd0374fda950391", "text": "\"Investment strategies abound. Bonds can be part of useful passive investment strategy but more active investors may develop a good number of reasons why buying and selling bonds on the short term. A few examples: Also, note that there is no guarantee in bonds as you imply by likening it to a \"\"guaranteed stock dividend\"\". Bond issuers can default, causing bond investors to lose part of all of their original investment. As such, if one believes the bond issuer may suffer financial distress, it would be ideal to sell-off the investment.\"", "title": "" }, { "docid": "9b06e7307088dc7210864a5d44d88371", "text": "I am understanding the OP to mean that this is for an emergency fund savings account meant to cover 3 to 6 months of living expenses, not a 3-6 month investment horizon. Assuming this is the case, I would recommend keeping these funds in a Money Market account and not in an investment-grade bond fund for three reasons:", "title": "" }, { "docid": "62f3d7b741fce8fcb3f608bb101fc0c5", "text": "\"All of the other answers here are accurate, but (I think) are missing the point as to the question, which rests on how Bonds work in the first place. The bond specifies a payback AMOUNT and DATE. Let's say it is $10,000 and one year from today. If you buy that today for $9900, your yield will be 1%. If you buy it today for $11,000, your yield will be less than 0% (please don't make me do the math - it's just under negative 1%). You might be willing to pay that 1% (rather than receive 1%) for the certainty that you will definitely get your money back. The combined actions of all the people who may be willing to pay a little more or a little less for the safety of a US Treasury Bond is what people call \"\"the Market.\"\" Market forces (generally, investor confidence) will drive the price up and down, which affects the yield. All the other stuff - coupons and inflation and whatnot - all of that only makes sense if you understand that you aren't buying a rate of return, you are buying a payback amount and date.\"", "title": "" }, { "docid": "94f4b3bad0673cfc2d66983ab898f89d", "text": "What you said is technically correct. But the implication OP might get from that statement is wrong. If the Fed buys bonds and nominal yields go down (Sometimes they might even go up if it meant the market expected the Fed's actions to cause more inflation), inflation expectations don't go down unless real yields as measured by TIPs stay still.", "title": "" }, { "docid": "e431c2f9d469ccc33da64dbcf88180e7", "text": "Short-term to intermediate-term corporate bond funds are available. The bond fund vehicle helps manage the credit risk, while the short terms help manage inflation and interest rate risk. Corporate bond funds will have fewer Treasuries bonds than a general-purpose short-term bond fund: it sounds like you're interested in things further out along the risk curve than a 0.48% return on a 5-year bond, and thus don't care for the Treasuries. Corporate bonds are generally safer than stocks because, in bankruptcy, all your bondholders have to be paid in full before any equity-holders get a penny. Stocks are much more volatile, since they're essentially worth the value of their profits after paying all their debt, taxes, and other expenses. As far as stocks are concerned, they're not very good for the short term at all. One of the stabler stock funds would be something like the Vanguard Equity Income Fund, and it cautions: This fund is designed to provide investors with an above-average level of current income while offering exposure to the stock market. Since the fund typically invests in companies that are dedicated to consistently paying dividends, it may have a higher yield than other Vanguard stock mutual funds. The fund’s emphasis on slower-growing, higher-yielding companies can also mean that its total return may not be as strong in a significant bull market. This income-focused fund may be appropriate for investors who have a long-term investment goal and a tolerance for stock market volatility. Even the large-cap stable companies can have their value fall dramatically in the short term. Look at its price chart; 2008 was brutal. Avoid stocks if you need to spend your money within a couple of years. Whatever you choose, read the prospectus to understand the risks.", "title": "" }, { "docid": "0dbc624215009d4ce02125d8bbff2fad", "text": "\"Bonds are priced \"\"very high\"\" because their price is compared to their yields. With the current interest rates, which are very low, the bond yields will be low. However, bond issuers still need the money, so there still will be high par value, and investors will not sell bonds at a loss unless there's a better investment (=bonds with better yields). Once the rates start going up, you'll see bonds with current rates dropping in value significantly. Once alternatives appear, people holding them will start dumping them to move the money somewhere more profitable. Similarly the stocks - since there's no other investment alternatives (yields on the bonds are low, interests are low), people invest more in the stocks. Once the rates go up, the investors will start rebalancing portfolios and cashing out.\"", "title": "" }, { "docid": "c3f5aa8893ae0fea90232779fcb22b47", "text": "Yes, if you want income and are willing to commit to hold a bond to maturity, you can hold the bond, get the scheduled payments, and get your principal returned at the end. US Savings Bonds are non-marketable (you cannot trade them, but can redeem early) bonds designed for this purpose. The value of a marketable bond will vary over its lifetime as interest rates change and the bond matures. If you buy a 30 year US Treasury bond at par value (100) on September 1, 2011, it yielded 3.51%. If rates fall, the value of your bond will increase over 100. If rates rise, the value will decrease below 100. How much the value changes depends on the type of bond and the demand for it. But if your goal is to buy and hold, you don't need to worry about it.", "title": "" }, { "docid": "d1f834db0aa4222f7fcf6262e15b5ace", "text": "If it had immediate purchase power of $525, can I use that to buy more $500 bonds over and over again? Your idea is flawed. You can't just make money out of thin air, unless you are running a Ponzi scheme.", "title": "" }, { "docid": "91ac0fed77d4e280fa2c49c0ad065fa6", "text": "\"'Buy and Hold' Is Still a Winner: An investor who used index funds and stayed the course could have earned satisfactory returns even during the first decade of the 21st century. by By Burton G. Malkiel in The Wall Street Journal on November 18, 2010: \"\"The other useful technique is \"\"rebalancing,\"\" keeping the portfolio asset allocation consistent with the investor's risk tolerance. For example, suppose an investor was most comfortable choosing an initial allocation of 60% equities, 40% bonds. As stock and bond prices change, these proportions will change as well. Rebalancing involves selling some of the asset class whose share is above the desired allocation and putting the money into the other asset class. From 1996 through 1999, annually rebalancing such a portfolio improved its return by 1 and 1/3 percentage points per year versus a strategy of making no changes.\"\" Mr. Malkiel is a professor of economics at Princeton University. This op-ed was adapted from the upcoming 10th edition of his book \"\"A Random Walk Down Wall Street,\"\" out in December by W.W. Norton. http://online.wsj.com/article/SB10001424052748703848204575608623469465624.html\"", "title": "" }, { "docid": "d156356356a6817ede7064657b1d9b6d", "text": "Keep in mind that the bond market is dominated by US Treasury securities... if there were an S&P 500 for bonds, the US would take positions 1-400. Be careful that you understand what's in your bond funds -- you may not be as diversified as you think.", "title": "" } ]	fiqa
5877570c7f5c29d407ca98b2ed9477d7	Why are currency forwards needed?	[ { "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": "9c7b4c73d0cfa05f6db8ec14315332e2", "text": "Suppose you're a European Company, selling say a software product to a US company. As much as you might want the US company to pay you in Euros they might insist (or you'll lose the contract) that you agree pricing in USD. The software is licensed on a yearly recurring amount, say 100K USD per year payable on the 1st January every year. In this example, you know that on the 1st Jan that 100K USD will arrive in your USD bank account. You will want to convert that to Euros and to remove uncertainty from your business you might take out an FX Forward today to remove your currency risk. If in the next 9 months the dollar strengthens against the Euro then notionally you'll have lost out by taking out the forward. Similarly, you've notionally gained if the USD weakens against the EURO. The forward gives you the certainty you need to plan your business.", "title": "" }, { "docid": "b9584a6f6554b2d2367ec417532961f0", "text": "e.g. a European company has to pay 1 million USD exactly one year from now While that is theoretically possible, that is not a very common case. Mostly likely if they had to make a 1 million USD payment a year from now and they had the cash on hand they would be able to just make the payment today. A more common scenario for currency forwards is for investment hedging. Say that European company wants to buy into a mutual fund of some sort, say FUSEX. That is a USD based mutual fund. You can't buy into it directly with Euros. So if the company wants to buy into the fund they would need to convert their Euros to to USD. But now they have an extra risk parameter. They are not just exposed to the fluctuations of the fund, they are also exposed to the fluctuations of the currency market. Perhaps that fund will make a killing, but the exchange rate will tank and they will lose all their gains. By creating a forward to hedge their currency exposure risk they do not face this risk (flip side: if the exchange rate rises in a favorable rate they also don't get that benefit, unless they use an FX Option, but that is generally more expensive and complicated).", "title": "" }, { "docid": "4bebec0aa0906edd17ddf97af3fa375b", "text": "What is the point of this? 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? This is for companies, not individuals. Companies usually take loans, because they think they can make more money (e.g. 10%) than the interest on the loan (e.g. 5%). Putting money on a bank account to earn interest there would give them even less (e.g. 1%). So with your option, instead of earning 10% interest, they'd earn 1%* interest. If the cost of the currency forward is less than these 9%* difference, the forward saves them money. If they have excess cash and they don't know how to invest that money, your option may be preferable *Simple numbers chosen for simplicity, not accuracy.", "title": "" }, { "docid": "61613f9d8b9dd2efa33ee36ade8f02a6", "text": "\"To speak to this a little more broadly: apart from groups like hedge funds and other investors investing for purely speculative purposes, one of the major purposes of forwards (and, for that matter, futures) for companies in the \"\"real economy\"\" is to \"\"lock in\"\" a particular price in advance (or to reduce the risk of some kind of investment or transaction). Investopedia defines a currency forward as follows (with a few key points emphasized): [A currency forward is] a binding contract in the foreign exchange market that locks in the exchange rate for the purchase or sale of a currency on a future date. A currency forward is essentially a hedging tool that does not involve any upfront payment. The other major benefit of a currency forward is that it can be tailored to a particular amount and delivery period, unlike standardized currency futures. This can be a major advantage for planning and risk management purposes. For example, if I know I'm going to have to pay $1 million USD in the future and most of my revenue is in Euros, the actual amount I'll have to pay will vary based on the exchange rate between Euros and dollars. Thus, it's very worthwhile for me to be able to \"\"lock in\"\" a particular exchange rate so that I know exactly how much I'm going to pay relative to my projected revenue. The goal isn't necessarily to make money off the transaction (maybe they do, maybe they don't) as much as to reduce risk and improve planning ability. The fact that it doesn't involve an up-front payment is also a major advantage. It's usually a bad practice to \"\"sit on\"\" cash for a year if you can avoid it. Another key point: savings accounts pay less interest than inflation. If inflation is 3% and your savings account pays 1%, that looks remarkably like a guaranteed 2% loss to me.\"", "title": "" } ]	[ { "docid": "aaf385e8e4cec04116c0701d991180b7", "text": "I think your approach of looking exclusively at USD deposits is a prudent one. Here are my responses to your questions. 1) It is highly unlikely that a USD deposit abroad be converted to local currency upon withdrawal. The reason for offering a deposit in a particular currency in the first place is that the bank wants to attract funds in this currency. 2) Interest rate is a function of various risks mostly supply and demand, central bank policy, perceived risk etc. In recent years low-interest rate policy as led by U.S., European and Japanese central banks has led particularly low yields in certain countries disregarding their level of risk, which can vary substantially (thus e.g. Eastern Europe has very low yields at the moment in spite of its perceived higher risk). Some countries offer depository insurance. 3) I would focus on banks which are among the largest in the country and boast good corporate governance i.e. their ownership is clean and transparent and they are true to their business purpose. Thus, ownership is key, then come financials. Country depository insurance, low external threat (low war risk) is also important. Most banks require a personal visit in order to open the account, thus I wouldn't split much further than 2-3 banks, assuming these are good quality.", "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": "149c4682dfbc9647724e92e4509ee2da", "text": "Think of it this way: C + (-P) = forward contract. Work it out from there. Anyways, this stack is meant for professionals, not students, I think.", "title": "" }, { "docid": "0ad570b519c3229f5443070b43fbbf39", "text": "You need a blog, or a thread of your own. I want to learn about this, and you appear to be quite knowledgeable and thorough in your explanations. Would it be possible for you to make a thread, or reply, or pm explaining some of the pro's and cons of fiat money?", "title": "" }, { "docid": "96e19b1eecb7bdc0b59c5bc4571733ce", "text": "I guess other than tradition and inflation, probably because the merchants want them. In the US, what currently costs $2.00 used to cost $0.10. So 75 years ago, those individual cents made a pretty bid difference. Inflation causes prices to go up, but doesn't get us to just change our currencies patterns. In your example, you are assuming that in an average day, the rounding errors you are willing to accept happen a couple of times. 2 or 3 cents here and there mean nothing to you. However to the merchant, doing hundreds or thousands of transactions per day, those few cents up and down mean quite a bit in terms of profit. To an individual, looking at a time frame more than a single day (because who only participates in economies for a single day) there are potentially millions of transactions in a lifetime, mean potentially giving away millions of dollars because they didn't want to wait. And as for the comment that people working each 3 cents every 10 seconds, I would assume at least some of the time when they are waiting for rounding errors, they are not at work getting paid. That concept is assuming that somebody is always willing to pay them for their time regardless of where that person is in the world; I have no facts and wild assumptions, but surely that can't be true for even a majority of workers. Finally, you should be happy if you happy to have an income high enough that you don't care about individual cents. But there are those business people who see opportunity in folks like you and profit greatly from it. I personally worry very much about who has my money; gov't gets paid to the penny and I expect returns to the penny. A super polite service employee who smiled a lot serving me a beer is getting all the rounding errors I have.", "title": "" }, { "docid": "769fedc5864efb06a210234aa369d097", "text": "Borrowing money from the Federal Reserve (or other central banks) requires full collateral, generally in terms of treasury bonds. In that sense it is only a source of liquidity - getting short term money by pledging guaranteed future cash flows, not random commercial loans. To get a dollar from FR today requires freezing a dollar that you already had. Private deposits, on the other hand, require only a keeping a fraction of them as reserves, so you can use the rest of the money for new loans.", "title": "" }, { "docid": "d8d1a7ed650bccb30e84e1f254b57628", "text": "\"Currencies that are pegged or fixed require that foreign currencies are held by the central issuer at a proportional amount. This is analogous to having a portfolio of currencies that the central bank issues shares from - in the form of its own currency. We will continue with this analogy, if the central bank says these \"\"shares\"\" are worth $1, but the underlying components of the portfolio are worth $0.80 and decreasing, then it is expensive for the central bank to maintain its peg, and eventually they will have to disregard the peg as people start questioning the central bank's solvency. (People will know the $1 they hold is not really worth what the central bank says it is, because of the price changes people experience in buying goods and services, especially when it comes to imports. Shadow economies will also trade using a currency more reflective of labor, which happens no matter what the government's punishments are for doing so). Swiss National Bank (central bank) did this in early 2015, as it experienced volatility in the Euro which it had previously been trying to keep it's currency pegged to. It became too expensive for it to keep this peg on its own. The central bank can devalue its currency by adjusting the proportions of the reserve, such as selling a lot of foreign currency X, buying more of currency Y. They can and do take losses doing this. (Swiss National Bank is maintaining a large loss) They can also flood their economy with more of their currency, diluting the value of each individual 1 dollar equivalent. This is done by issuing bonds or monetizing goods and services from the private sector in exchange for bonds. People colloquially call this \"\"printing money\"\" but it is a misnomer in this day and age where printers are not relevant tools. The good and service goes onto the central bank's balance book, and the company/entity that provided the service now has a bond on its book which can be immediately sold to someone else for cash (another reading is that the bond is as good as cash). The bond didn't previously exist until the central bank said it did, and central banks can infinitely exchange goods and services for bonds. Bond monetization (also called Quantitative Easing) is practiced by the Federal Reserve in the United States, Bank of Japan, European Central Bank and now the Central Bank of the Republic of China\"", "title": "" }, { "docid": "306f3a6fe8fd8857a8f456e4e684ea13", "text": "\"To expand a bit on @MSalters's answer ... When I read your question title I assumed that by \"\"retirement funds\"\" you meant target-date funds that are close to their target dates (say, the 2015 target fund). When I saw that you were referring to all target-date funds, it occurred to me that examining how such funds modify their portfolios over time would actually help answer your question. If you look at a near-term target fund you can see that a smaller percent is invested internationally, the same way a smaller percent is invested in stocks. It's because of risk. Since it's more likely that you will need some of the money soon, and since you'll be cashing out said money in US Dollars, it's risky to have too much invested in foreign currencies. If you need money that's currently invested in a foreign currency and that currency happens to be doing poorly against USD at the moment, then you'll lose money simply because you need it now. This is the same rationale that goes into target-date funds' moving from stocks to bonds over time. Since the value of a stock portfolio has a lot more natural volatility than the value of a bond portfolio, if you're heavily invested in stocks when you need to withdraw money, there's a higher probability that you'll need to cash out just when stocks happen to be doing relatively poorly. Being invested more in bonds around when you'll need your money is less risky. Similarly, being more invested in US dollars than in foreign currencies around when you'll need your money is also less risky.\"", "title": "" }, { "docid": "2237029210f2414fe0ef52b4b015cee7", "text": "\"It's simply supply and demand. First, demand: If you're an importer trying to buy from overseas, you'll need foreign currency, maybe Euros. Or if you want to make a trip to Europe you'll need to buy Euros. Or if you're a speculator and think the USD will fall in value, you'll probably buy Euros. Unless there's someone willing to sell you Euros for dollars, you can't get any. There are millions of people trying to exchange currency all over the world. If more want to buy USD, than that demand will positively influence the price of the USD (as measured in Euros). If more people want to buy Euros, well, vice versa. There are so many of these transactions globally, and the number of people and the nature of these transactions change so continuously, that the prices (exchange rates) for these currencies fluctuate continuously and smoothly. Demand is also impacted by what people want to buy and how much they want to buy it. If people generally want to invest their savings in stocks instead of dollars, i.e., if lots of people are attempting to buy stocks (by exchanging their dollars for stock), then the demand for the dollar is lower and the demand for stocks is higher. When the stock market crashes, you'll often see a spike in the exchange rate for the dollar, because people are trying to exchange stocks for dollars (this represents a lot of demand for dollars). Then there's \"\"Supply:\"\" It may seem like there are a fixed number of bills out there, or that supply only changes when Bernanke prints money, but there's actually a lot more to it than that. If you're coming from Europe and want to buy some USD from the bank, well, how much USD does the bank \"\"have\"\" and what does it mean for them to have money? The bank gets money from depositors, or from lenders. If one person puts money in a deposit account, and then the bank borrows that money from the account and lends it to a home buyer in the form of a mortgage, the same dollar is being used by two people. The home buyer might use that money to hire a carpenter, and the carpenter might put the dollar back into a bank account, and the same dollar might get lent out again. In economics this is called the \"\"multiplier effect.\"\" The full supply of money being used ends up becoming harder to calculate with this kind of debt and re-lending. Since money is something used and needed for conducting of transactions, the number of transactions being conducted (sometimes on credit) affects the \"\"supply\"\" of money. Demand and supply blur a bit when you consider people who hoard cash. If I fear the stock market, I might keep all my money in dollars. This takes cash away from companies who could invest it, takes the cash out of the pool of money being used for transactions, and leaves it waiting under my mattress. You could think of my hoarding as a type of demand for currency, or you could think of it as a reduction in the supply of currency available to conduct transactions. The full picture can be a bit more complicated, if you look at every way currencies are used globally, with swaps and various exchange contracts and futures, but this gives the basic story of where prices come from, that they are not set by some price fixer but are driven by market forces. The bank just facilitates transactions. If the last price (exchange rate) is 1.2 Dollars per Euro, and the bank gets more requests to buy USD for Euros than Euros for USD, it adjusts the rate downwards until the buying pressure is even. If the USD gets more expensive, at some point fewer people will want to buy it (or want to buy products from the US that cost USD). The bank maintains a spread (like buy for 1.19 and sell for 1.21) so it can take a profit. You should think of currency like any other commodity, and consider purchases for currency as a form of barter. The value of currency is merely a convention, but it works. The currency is needed in transactions, so it maintains value in this global market of bartering goods/services and other currencies. As supply and demand for this and other commodities/goods/services fluctuate, so does the quantity of any particular currency necessary to conduct any of these transactions. A official \"\"basket of goods\"\" and the price of those goods is used to determine consumer price indexes / inflation etc. The official price of this particular basket of goods is not a fundamental driver of exchange rates on a day to day basis.\"", "title": "" }, { "docid": "9440f6a0c8c21dafac732d0fc850d408", "text": "It depends on the currency pair since it is much harder to move a liquid market like Fiber (EURUSD) or Cable (GBPUSD) than it is to move illiquid markets such as USDTRY, however, it will mostly be big banks and big hedge funds adjusting their positions or speculating (not just on the currency or market making but also speculating in foreign instruments). I once was involved in a one-off USD 56 million FX trade without which the hedge fund could not trade as its subscriptions were in a different currency to the fund currency. Although it was big by their standards it was small compared with the volumes we expected from other clients. Governments and big companies who need to pay costs in a foreign currency or receive income in one will also do this but less frequently and will almost always do this through a nominated bank (in the case of large firms). Because they need the foreign currency immediately; if you've ever tried to pay a bill in the US denominated in Dollars using Euros you'll know that they aren't widely accepted. So if I need to pay a large bill to a supplier in Dollars and all I have is Euros I may move the market. Similarly if I am trying to buy a large number of shares in a US company and all I have is Euros I'll lose the opportunity.", "title": "" }, { "docid": "58da3db7d725927a0b0ee7ec22639054", "text": "I think you answered yourself. The rate difference is because of the base rates differences, and it's not worth moving money around because the rate conversions (even if the currency rates don't fluctuate) will eat up the difference.", "title": "" }, { "docid": "209158c83940631e2c9f741f0da36157", "text": "As mentioned in several other answers, the main reason for high rates is to maximize profit. However, here is another, smaller effect: The typical flow of getting money from an ATM: Suppose you have a minute to consider the offer, then in that time the currency may drop or rise (which you can see from an external source of information). Therefore this opens a window for abuse. For real major currencies these huge switches are rare, but they do happen. And when 1 or 2 minor currencies are involved these switches are more common. Just looking at a random pair for today (Botswana Pula to Haitian Gourde) I immediately spotted a moment where the exchange rate jumped by more than 2 %. This may not be the best example, but it shows why a large margin is desirable. Note that this argument only holds for when the customer knows in advance what the exchange rate would be, for cases where it is calculated afterwards I have not found any valid excuse for such large margins (except that it allows them to offer other services at a lower price because these transaction).", "title": "" }, { "docid": "e5edb2b7684003ea4f01ab69a4c02e39", "text": "why should I have any bias in favour of my local economy? The main reason is because your expenses are in the local currency. If you are planning on spending most of your money on foreign travel, that's one thing. But for most of us, the bulk of our expenses are incurred locally. So it makes sense for us to invest in things where the investment return is local. You might argue that you can always exchange foreign results into local currency, and that's true. But then you have two risks. One risk you'll have anywhere: your investments may go down. The other risk with a foreign investment is that the currency may lose value relative to your currency. If that happens, even a good performing investment can go down in terms of what it can return to you. That fund denominated in your currency is really doing these conversions behind the scenes. Unless the bulk of your purchases are from imports and have prices that fluctuate with your currency, you will probably be better off in local investments. As a rough rule of thumb, your country's import percentage is a good estimate of how much you should invest globally. That looks to be about 20% for Australia. So consider something like 50% local stocks, 20% local bonds, 15% foreign stocks, 5% foreign bonds, and 10% local cash. That will insulate you a bit from a weak local currency while not leaving you out to dry with a strong local currency. It's possible that your particular expenses might be more (or less) vulnerable to foreign price fluctuations than the typical. But hopefully this gives you a starting point until you can come up with a way of estimating your personal vulnerability.", "title": "" }, { "docid": "c8331b83bbbd50d34c1de1b1590da0a5", "text": "The currency market, more often referred as Forex or FX, is the decentralized market through which the currencies are exchanged. To trade currencies, you have to go through a broker or an ECN. There are a lot's of them, you can find a (small) list of brokers here on Forex Factory. They will allow you to take very simple position on currencies. For example, you can buy EUR/USD. By doing so, you will make money if the EUR/USD rate goes up (ie: Euro getting stronger against the US dollar) and lose money if the EUR/USD rate goes down (ie: US dollar getting stronger against the Euro). In reality, when you are doing such transaction the broker: borrows USD, sell it to buy EUR, and place it into an Euro account. They will charge you the interest rate on the borrowed currency (USD) and gives you the interest and the bought currency (EUR). So, if you bought a currency with high interest rate against one with low interest rate, you will gain the interest rate differential. But if you sold, you will lose the differential. The fees from the brokers are likely to be included in the prices at which you buy and sell currencies and in the interest rates that they will charge/give you. They are also likely to gives you big leverage to invest far more than the money that you deposited in their accounts. Now, about how to make money out of this market... that's speculation, there are no sure gains about it. And telling you what you should do is purely subjective. But, the Forex market, as any market, is directed by the law of supply and demand. Amongst what impacts supply and demands there are: Also, and I don't want to judge your friends, but from experience, peoples are likely to tell you about their winning transaction and not about their loosing ones.", "title": "" }, { "docid": "479c8b6628202b3947d4a2c9b7c84bbf", "text": "\"Buying now with a mortgage gets you: Waiting to buy with all cash gets you: These are also some of the pros or cons for the rent or buy dilemma that Paul mentioned in comments to the OP. This is a very complex, multi-faceted question, that would not respond well to being put into any equation or financial model. Most people answer the question with \"\"buy the home now with a mortgage\"\" if they can pay for the down payment. This is why the mortgage industry exists. The people who would want to finance now rather than buy with all cash later would not only be analyzing the question in terms of financial health but also in terms of general well being. They might consider the tremendous pride that comes with home ownership and living under a roof of one's own. Who can say that those people are wrong?\"", "title": "" } ]	fiqa
1795478b449d7ea6cee0d754edac5efd	How do euro hedged index funds work?	[ { "docid": "90b990119812669ab920916a9ac08514", "text": "\"When you invest in an S&P500 index fund that is priced in USD, the only major risk you bear is the risk associated with the equity that comprises the index, since both the equities and the index fund are priced in USD. The fund in your question, however, is priced in EUR. For a fund like this to match the performance of the S&P500, which is priced in USD, as closely as possible, it needs to hedge against fluctuations in the EUR/USD exchange rate. If the fund simply converted EUR to USD then invested in an S&P500 index fund priced in USD, the EUR-priced fund may fail to match the USD-priced fund because of exchange rate fluctuations. Here is a simple example demonstrating why hedging is necessary. I assumed the current value of the USD-priced S&P500 index fund is 1,600 USD/share. The exchange rate is 1.3 USD/EUR. If you purchase one share of this index using EUR, you would pay 1230.77 EUR/share: If the S&P500 increases 10% to 1760 USD/share and the exchange rate remains unchanged, the value of the your investment in the EUR fund also increases by 10% (both sides of the equation are multiplied by 1.1): However, the currency risk comes into play when the EUR/USD exchange rate changes. Take the 10% increase in the price of the USD index occurring in tandem with an appreciation of the EUR to 1.4 USD/EUR: Although the USD-priced index gained 10%, the appreciation of the EUR means that the EUR value of your investment is almost unchanged from the first equation. For investments priced in EUR that invest in securities priced in USD, the presence of this additional currency risk mandates the use of a hedge if the indexes are going to track. The fund you linked to uses swap contracts, which I discuss in detail below, to hedge against fluctuations in the EUR/USD exchange rate. Since these derivatives aren't free, the cost of the hedge is included in the expenses of the fund and may result in differences between the S&P500 Index and the S&P 500 Euro Hedged Index. Also, it's important to realize that any time you invest in securities that are priced in a different currency than your own, you take on currency risk whether or not the investments aim to track indexes. This holds true even for securities that trade on an exchange in your local currency, like ADR's or GDR's. I wrote an answer that goes through a simple example in a similar fashion to the one above in that context, so you can read that for more information on currency risk in that context. There are several ways to investors, be they institutional or individual, can hedge against currency risk. iShares offers an ETF that tracks the S&P500 Euro Hedged Index and uses a over-the-counter currency swap contract called a month forward FX contract to hedge against the associated currency risk. In these contracts, two parties agree to swap some amount of one currency for another amount of another currency, at some time in the future. This allows both parties to effectively lock in an exchange rate for a given time period (a month in the case of the iShares ETF) and therefore protect themselves against exchange rate fluctuations in that period. There are other forms of currency swaps, equity swaps, etc. that could be used to hedge against currency risk. In general, two parties agree to swap one quantity, like a EUR cash flow, payments of a fixed interest rate, etc. for another quantity, like a USD cash flow, payments based on a floating interest rate, etc. In many cases these are over-the-counter transactions, there isn't necessarily a standardized definition. For example, if the European manager of a fund that tracks the S&P500 Euro Hedged Index is holding euros and wants to lock in an effective exchange rate of 1.4 USD/EUR (above the current exchange rate), he may find another party that is holding USD and wants to lock in the respective exchange rate of 0.71 EUR/USD. The other party could be an American fund manager that manages a USD-price fund that tracks the FTSE. By swapping USD and EUR, both parties can, at a price, lock in their desired exchange rates. I want to clear up something else in your question too. It's not correct that the \"\"S&P 500 is completely unrelated to the Euro.\"\" Far from it. There are many cases in which the EUR/USD exchange rate and the level of the S&P500 index could be related. For example: Troublesome economic news in Europe could cause the euro to depreciate against the dollar as European investors flee to safety, e.g. invest in Treasury bills. However, this economic news could also cause US investors to feel that the global economy won't recover as soon as hoped, which could affect the S&P500. If the euro appreciated against the dollar, for whatever reason, this could increase profits for US businesses that earn part of their profits in Europe. If a US company earns 1 million EUR and the exchange rate is 1.3 USD/EUR, the company earns 1.3 million USD. If the euro appreciates against the dollar to 1.4 USD/EUR in the next quarter and the company still earns 1 million EUR, they now earn 1.4 million USD. Even without additional sales, the US company earned a higher USD profit, which is reflected on their financial statements and could increase their share price (thus affecting the S&P500). Combining examples 1 and 2, if a US company earns some of its profits in Europe and a recession hits in the EU, two things could happen simultaneously. A) The company's sales decline as European consumers scale back their spending, and B) the euro depreciates against the dollar as European investors sell euros and invest in safer securities denominated in other currencies (USD or not). The company suffers a loss in profits both from decreased sales and the depreciation of the EUR. There are many more factors that could lead to correlation between the euro and the S&P500, or more generally, the European and American economies. The balance of trade, investor and consumer confidence, exposure of banks in one region to sovereign debt in another, the spread of asset/mortgage-backed securities from US financial firms to European banks, companies, municipalities, etc. all play a role. One example of this last point comes from this article, which includes an interesting line: Among the victims of America’s subprime crisis are eight municipalities in Norway, which lost a total of $125 million through subprime mortgage-related investments. Long story short, these municipalities had mortgage-backed securities in their investment portfolios that were derived from, far down the line, subprime mortgages on US homes. I don't know the specific cities, but it really demonstrates how interconnected the world's economies are when an American family's payment on their subprime mortgage in, say, Chicago, can end up backing a derivative investment in the investment portfolio of, say, Hammerfest, Norway.\"", "title": "" } ]	[ { "docid": "dee286912eecf7642f76c9459dad14e7", "text": "The market is efficient, but it is not perfectly efficient. There are entities out there that consistently, legitimately, and significantly outperform the market because of asymmetric information (not necessarily insider trading) and their competitive advantage (access to data and proprietary, highly sophisticated models). I say this despite most hedge funds performing worse than their respective benchmarks. For most people (even very smart people) it makes a lot of sense to invest in index funds with a reasonable asset allocation (based on desired volatility, tax situation, rebalancing methods etc.). The usual example that is cited is RT's Medallion Fund because it has enjoyed quite dramatic returns. Other groups that have been successful include Citadel and Soros Fund Management.", "title": "" }, { "docid": "3f766ea6c521a6a09ca1ba818400d965", "text": "An index fund is just copying the definition of an index. The group that defines the index determines how to weight the different parts of the index. The index fund just makes sure they invest the same way the index creator wants. Think of a non-investment scenario. A teacher can grade tests, quizzes, homework, in-class assignments, research papers. They decide how much weight to give each category and how much weight to give each part of each category. when a student wants to see how they are doing they take the information in the syllabus, and generate a few formulas in a spreadsheet to calculate their current grade. They can also calculate what they need to get on the final exam to get the grade they want.", "title": "" }, { "docid": "a34530bf8080f6caa6d2ebd0f47428c2", "text": "\"Yes, I'm a big picture guy. Like when the central banks opened unlimited short term lines recently the first thing I thought was \"\"now hedge funds can short the euro with impunity!\"\" So, short bets on the euro became a no brainer even as the market was perversely celebrating the announcement with a euro rally. Almost as if they have no idea how the bigger picture works. As if all liquidity is created equally. All it meant to me was that European banks would not have to call in the lines of credit they extend to hedge funds for THREE YEARS. That is enough time to crash the euro, hold a funeral and dance on the grave. It is just musical chairs over there. All the banks know the EU is coming for them an they all want to be in the right capital position to survive the banhammer. They'll sell out the euro to get there. I think I'm a bit too jaded for Graham style fundamental analysis. Then again I do use strong companies as my preferred trading vehicles. So, maybe I do a hybrid.\"", "title": "" }, { "docid": "4fb7f63577c30378b44879d1bd601330", "text": "You will have to rebalance every time your Boolean Buy flag is true. You buy 20% of each fund then next week you have to sell down to 10% of your first 5 funds and buy 10% of the second 5.", "title": "" }, { "docid": "f299af237d1d4dab58344bd5567b7576", "text": "Hedge funds are typically just funds structured and operated in a way that make them exempt from various securities regulations, most notably the Investment Company Act of 1940 and the Investment Advisers Act of 1940. This allows them to operate freely of restrictions on traditional fund such as those related to management compensation, public disclosures, investor liquidity, and portfolio concentration and use of leverage. In order to achieve this, hedge funds are typically open only to a limited number of wealthy or sophisticated investors and are restricted in how and to whom they can advertise.", "title": "" }, { "docid": "7f41528167b11270066075f83661d86c", "text": "\"The amount, reliability and frequency of dividends paid by an ETF other than a stock, such as an index or mutual fund, is a function of the agreement under which the ETF was established by the managing or issuing company (or companies), and the \"\"basket\"\" of investments that a share in the fund represents. Let's say you invest in a DJIA-based index fund, for instance Dow Diamonds (DIA), which is traded on several exchanges including NASDAQ and AMEX. One share of this fund is currently worth $163.45 (Jan 22 2014 14:11 CDT) while the DJIA itself is $16,381.38 as of the same time, so one share of the ETF represents approximately 1% of the index it tracks. The ETF tracks the index by buying and selling shares of the blue chips proportional to total invested value of the fund, to maintain the same weighted percentages of the same stocks that make up the index. McDonald's, for instance, has an applied weight that makes the share price of MCD stock roughly 5% of the total DJIA value, and therefore roughly 5% of the price of 100 shares of DIA. Now, let's say MCD issued a dividend to shareholders of, say, $.20 per share. By buying 100 shares of DIA, you own, through the fund, approximately five MCD shares, and would theoretically be entitled to $1 in dividends. However, keep in mind that you do not own these shares directly, as you would if you spent $16k buying the correct percentage of all the shares directly off the exchange. You instead own shares in the DIA fund, basically giving you an interest in some investment bank that maintains a pool of blue-chips to back the fund shares. Whether the fund pays dividends or not depends on the rules under which that fund was set up. The investment bank may keep all the dividends itself, to cover the expenses inherent in managing the fund (paying fund management personnel and floor traders, covering losses versus the listed price based on bid-ask parity, etc), or it may pay some percentage of total dividends received from stock holdings. However, it will virtually never transparently cut you a check in the amount of your proportional holding of an indexed investment as if you held those stocks directly. In the case of the DIA, the fund pays dividends monthly, at a yield of 2.08%, virtually identical to the actual weighted DJIA yield (2.09%) but lower than the per-share mean yield of the \"\"DJI 30\"\" (2.78%). Differences between index yields and ETF yields can be reflected in the share price of the ETF versus the actual index; 100 shares of DIA would cost $16,345 versus the actual index price of 16,381.38, a delta of $(36.38) or -0.2% from the actual index price. That difference can be attributed to many things, but fundamentally it's because owning the DIA is not the exact same thing as owning the correct proportion of shares making up the DJIA. However, because of what index funds represent, this difference is very small because investors expect to get the price for the ETF that is inherent in the real-time index.\"", "title": "" }, { "docid": "1e640c432f9c2f8e44e602ec3db6e3b1", "text": "Currency hedge means that you are somewhat protected from movements in currency as your investment is in gold not currency. So this then becomes less speculative and concentrates more on your intended investment. EDIT The purpose of the GBSE ETF is aimed for investors living in Europe wanting to invest in USD Gold and not be effected by movements in the EUR/USD. The GBSE ETF aims to hedge against the effects of the currency movements in the EUR/USD and more closely track the USD Gold price. The 3 charts below demonstrate this over the past 5 years. So as is demonstrated the performance of the GBSE ETF closely matches the performance of the USD Gold price rather than the EUR Gold price, meaning someone in Europe can invest in the fund and get the appropriate similar performance as investing directly into the USD Gold without being affected by currency exchange when changing back to EUR. This is by no way speculative as the OP suggests but is in fact serving the purpose as per the ETF details.", "title": "" }, { "docid": "454b5f61b51d0fce1c2ce6ac104530b8", "text": "The biggest hedge funds seem to be copying the large mutual fund company strategy. Launch many funds. Take positions with high beta to the sector or asset class that is the focus of the fund. Wait and see which asset classes outperform. (For Och-Ziff: Their massive bullish bet on credit!) Promote the outperforming funds and their portfolio manager to gullible investors.", "title": "" }, { "docid": "8a5ec08ff4502d32945ad123e3b86821", "text": "There is no evidence that QE had a negative effect on hedge fund alpha. If you claim, that hedge funds are not able to deliver positive risk adjusted return in up markets - this is wrong assumption. It's been proven, that with the leverage they get, hedge funds can perform better in bullish markets. We recently investigated the performance of 180 Danish funds in the past two decades. We found no evidence that they could outperform their relative benchmarks. Not even that, but we also assumed zero costs for investor, where in reality costs can range from 2 to 5%. Danish funds not only fail in term of positive risk adjusted return, but they also struggle to cover their costs. TL:DR The lover the cost - the higher the return. Evidence says - Go passive!", "title": "" }, { "docid": "c8331b83bbbd50d34c1de1b1590da0a5", "text": "The currency market, more often referred as Forex or FX, is the decentralized market through which the currencies are exchanged. To trade currencies, you have to go through a broker or an ECN. There are a lot's of them, you can find a (small) list of brokers here on Forex Factory. They will allow you to take very simple position on currencies. For example, you can buy EUR/USD. By doing so, you will make money if the EUR/USD rate goes up (ie: Euro getting stronger against the US dollar) and lose money if the EUR/USD rate goes down (ie: US dollar getting stronger against the Euro). In reality, when you are doing such transaction the broker: borrows USD, sell it to buy EUR, and place it into an Euro account. They will charge you the interest rate on the borrowed currency (USD) and gives you the interest and the bought currency (EUR). So, if you bought a currency with high interest rate against one with low interest rate, you will gain the interest rate differential. But if you sold, you will lose the differential. The fees from the brokers are likely to be included in the prices at which you buy and sell currencies and in the interest rates that they will charge/give you. They are also likely to gives you big leverage to invest far more than the money that you deposited in their accounts. Now, about how to make money out of this market... that's speculation, there are no sure gains about it. And telling you what you should do is purely subjective. But, the Forex market, as any market, is directed by the law of supply and demand. Amongst what impacts supply and demands there are: Also, and I don't want to judge your friends, but from experience, peoples are likely to tell you about their winning transaction and not about their loosing ones.", "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": "4716c4aba4846bb7b7f17bbdd83f777e", "text": "I will just try to come up with a totally made up example, that should explain the dynamics of the hedge. Consider this (completely made up) relationship between USD, EUR and Gold: Now lets say you are a european wanting to by 20 grams of Gold with EUR. Equally lets say some american by 20 grams of Gold with USD. Their investment will have the following values: See how the europeans return is -15.0% while the american only has a -9.4% return? Now lets consider that the european are aware that his currency may be against him with this investment, so he decides to hedge his currency. He now enters a currency-swap contract with another person who has the opposite view, locking in his EUR/USD at t2 to be the same as at t0. He now goes ahead and buys gold in USD, knowing that he needs to convert it to EUR in the end - but he has fixed his interestrate, so that doesn't worry him. Now let's take a look at the investment: See how the european now suddenly has the same return as the American of -9.4% instead of -15.0% ? It is hard in real life to create a perfect hedge, therefore you will most often see that the are not totally the same, as per Victors answer - but they do come rather close.", "title": "" }, { "docid": "b3a1c1a22b4ef798a3315cc961bded21", "text": "In your other question about these funds you quoted two very different yields for them. That pretty clearly says they are NOT tracking the same index.", "title": "" }, { "docid": "8cd20273e0629c4575627b1c7bed9f18", "text": "\"i know that hedge funds shouldn't be compared with index funds. they do different things. they serve different functions. but when the headline is they are reporting big gains, and then they report that \"\"Ken Griffin’s main Wellington and Kensington funds at Citadel rose almost 7 percent.\"\" YTD, and \"\"Andreas Halvorsen’s Viking and an equity-focused quantitative fund at Renaissance are up more than 9 percent this year through July\"\" as reporting \"\"Big Gains\"\" it's a little silly when an index fund like SCHB is up 10.7% YTD with an ER of 0.03.\"", "title": "" }, { "docid": "80923207a6f183be4e8cc88ae83b06f9", "text": "Here is a simple example of how daily leverage fails, when applied over periods longer than a day. It is specifically adjusted to be more extreme than the actual market so you can see the effects more readily. You buy a daily leveraged fund and the index is at 1000. Suddenly the market goes crazy, and goes up to 2000 - a 100% gain! Because you have a 2x ETF, you will find your return to be somewhere near 200% (if the ETF did its job). Then tomorrow it goes back to normal and falls back down to 1000. This is a fall of 50%. If your ETF did its job, you should find your loss is somewhere near twice that: 100%. You have wiped out all your money. Forever. You lose. :) The stock market does not, in practice, make jumps that huge in a single day. But it does go up and down, not just up, and if you're doing a daily leveraged ETF, your money will be gradually eroded. It doesn't matter whether it's 2x leveraged or 8x leveraged or inverse (-1x) or anything else. Do the math, get some historical data, run some simulations. You're right that it is possible to beat the market using a 2x ETF, in the short run. But the longer you hold the stock, the more ups and downs you experience along the way, and the more opportunity your money has to decay. If you really want to double your exposure to the market over the intermediate term, borrow the money yourself. This is why they invented the margin account: Your broker will essentially give you a loan using your existing portfolio as collateral. You can then invest the borrowed money, increasing your exposure even more. Alternatively, if you have existing assets like, say, a house, you can take out a mortgage on it and invest the proceeds. (This isn't necessarily a good idea, but it's not really worse than a margin account; investing with borrowed money is investing with borrowed money, and you might get a better interest rate. Actually, a lot of rich people who could pay off their mortgages don't, and invest the money instead, and keep the tax deduction for mortgage interest. But I digress.) Remember that assets shrink; liabilities (loans) never shrink. If you really want to double your return over the long term, invest twice as much money.", "title": "" } ]	fiqa
88ab72425836181240dbca0559640727	Is Cost of Living overstated?	[ { "docid": "8fdeaaf29db0432b2ef85b3665e61326", "text": "New York City is high cost-of-living, and I have absolutely no clue why people live there. It's a tough place, and the taxes are oppressive. People buy a studio apartment for $150,000 that has 175 square feet (that's not a typo) plus a $700/month maintenance fee that continues after the mortgage is paid off. And that's just what the fee is now. Our rental house (which used to be our primary residence) at 1,300 square feet has a (15-year) mortgage payment of about $800, and $1,000 per year in property taxes. And my area isn't particularly low cost-of-living. High cost-of-living is just that. More money flies out the door just for the privilege of living there. You make good investments with real estate by buying property at a good price in a good location. Those deals are everywhere, but in high CoL locations you're probably more susceptible to price fluctuations which will trap you in your property if your mortgage goes underwater. Anyway, that's a long way of saying that I don't buy your recommendation to get property in high CoL areas. There are desirable low CoL places to live, too.", "title": "" }, { "docid": "2ff23e2d2bb06bd8523ff154e314517d", "text": "\"I do not believe there is a strong correlation between CPI (Consumer Price Index) and housing value appreciation. Take, for example, New York City which has the highest CPI in the US. A great deal of the CPI number is skewed by Manhattan. One can live in Brooklyn or Queens and avoid some of NYC's high CPI. I would say that housing appreciation occurs because of the human activity in the area. That same human activity is what drives the CPI. There are other contributing factors, like limits on economies of scale. You simply cannot set down a Super Walmart in much of NYC, so goods are distributed over a larger number of stores. (Sure, NYC is a port city, but the goods are distributed within the city by trucks.) The San Francisco Bay Area is another high CPI area in the US. Here, as well, it is the location that draws people. While NYC is mostly about economic activity, the SF Bay Area is a mix of the draw of a great location and the economic activity that occurs due to the large number of people living there. I know of a house in Oakland that sold for approximately $350k, in 2004/05. It was located not too far from the \"\"Killing Fields,\"\" as they were known locally. It was not the worst neighborhood in Oakland, but it was not very far from it. This was for a shabby, single-story unit which I believe had 5 (maybe 6) rooms. That is a lot of money for a house that required a lot of attention and was in a bad neighborhood. I have no idea how the housing market is after the housing bubble, but the higher value areas had the most room to fall and many of them fell hard. Ultimately, it is supply and demand that determines the CPI and housing values. This supply and demand is determined by the human activity in the area and some practical considerations regarding the area. A final note: If we are talking about a primary residence, it should not necessarily be looked at as an investment. First and foremost, it is a necessity. Second, if you need to hire people for the maintenance and/or upgrades, that will eat into your gains. Contractors are not cheap, especially where they are in high demand. Finally, the tax incentive is actually not that great. Sure, you take what you can get, but its impact is relatively marginal.\"", "title": "" }, { "docid": "5579ea39c42b4f75f3772c3d06dffd75", "text": "I live in Upstate NY. It's a great, reasonable cost place to live -- provided that you have a job. In NYC, there are probably a few hundred jobs with duties similar to mine in a 45-minute radius. Upstate, there may be 5-6.", "title": "" }, { "docid": "bdaad658b80ae1ec0572bf80e2448973", "text": "\"after 30 years, you'd have a million dollar house vs a quarter million dollar house. You've captured three quarters of a million dollars in rent, given my napkin math hypothetical. As I figure the math, a 250,000 house appreciating to a million dollar house in 30 years requires a sustained ~4.9% appreciation every year--seems unrealistic. The historical rate of inflation, on average, has been closer to 3-3.5%; a 3% appreciation would give a final value of $589k. This also doesn't taken into account the idea that you may have bought a property during a housing bubble, and so then you wouldn't get 3% year-over-year returns. But also, in terms of \"\"capturing rent\"\", you are not factoring in necessary or possible costs that renting doesn't have: mortgage interest and insurance, maintenance, property tax, insurance, buying and selling associated fees, and, importantly, opportunity costs (in that the money not tied up in the house could be invested elsewhere). So it is not such a slam dunk as you make it out. Many use the NY Times buy/rent calculator to compare renting vs. buying.\"", "title": "" }, { "docid": "a328fd0364358971e61164699dc0c2d5", "text": "I'm not convinced that cost of living is related to ensuring greater appreciation of assets over time, especially over a 30 year window. The importance of regional differences in cost of living to anyone's decision-making should be weighted by the percentage of their income spent on indexed items. That is, for people who spend 35%, or even 50% of their salary on indexed items, regional variances in cost of living are far more important than for people who spend 10% of their salaries on these items. Essentially, as income goes up, the significance of cost of living goes down. See http://macromon.wordpress.com/2011/02/02/how-u-s-income-groups-get-squeezed-by-food-prices/ for a pretty picture of the relevance of cost of living across income groups (for food & gas, which are often not included in indexes due to volatility). So, if you are wondering whether cost of living is overstated, perhaps it's because you are in an income group that doesn't need to worry about it as much. Whether it's overstated or not will depend on how much one makes and spends.", "title": "" }, { "docid": "6568d63e1e16bc385ef85b971d630528", "text": "\"You mention: High rent places are usually also high property value places. Given the tax incentives, it seems like a good long term idea to grab a house, so if we assume you have the option of working and buying a house in a high CoL or a low CoL city, I think you'd prefer the high cost. Because essentially, after 30 years, you'd have a million dollar house vs a quarter million dollar house. You've captured three quarters of a million dollars in rent, given my napkin math hypothetical. I think you're forgetting about some of the associated costs with \"\"owning\"\" a home, including:\"", "title": "" } ]	[ { "docid": "73f9842bbef1bfb5be3e22a0539ca8c9", "text": "\"I have a client who is a janitor, makes over 100k. This is a fact. NYC not being \"\"typical\"\" is the whole point. Cost of living is much higher but still get lumped in with everyone else when they make these arbitrary income cutoffs for things.\"", "title": "" }, { "docid": "f0b65fb782bd8bac5c0cd845a5edde63", "text": "\"Without factoring in cost of living that's a pretty ignorant statement. 100k a year in SF really isn't that much. Similar situation in NYC. Most other places in the country that statement might be true but when your average 1200 sq ft 3 bedroom house costs north of 800,000. 100,000 a year stops feeling like a \"\"fuckton\"\"\"", "title": "" }, { "docid": "6ab85fd6f741cf68b186595808edbb84", "text": "\"The actual increase in the cost of living for one month over the previous month cannot be calculated from the annualized increase in cost over the entire previous year. Consider the hypothetical case of a very stable economy, where prices stay constant for decades. Nevertheless, the authorities issue monthly statements, reporting that the change in the cost of living, for the last month, year over year, is 0.00%. Then they go back to sleep for another month. Then, something happens, say in August, 2001. It causes a permanent large increase in the cost of many parts of the cost of living components. So, in September, the authorities announce that the cost of living for the end of August, 2001, compared to August a year ago, was up 10%. Great consternation results. Politicians pontificate, unions agitate on behalf of their members, etc... The economy returns to its customary behavior, except for that one-time permanent increase from August, 2001. So for the next eleven months, each month, the authorities compare the previous months prices to the prices from exactly a year ago, and announce that inflation, year over year, is still 10%. Finally, we reach September, 2002. The authorities look at prices for the end of August, 2002, and compare them to the prices from the end of August, 2001 (post \"\"event\"\"). Wonder of wonders, the inflation rate is back to 0.00%!! Absolutely nothing happened in August 2002, yet the rate of inflation dropped from 10% to 0%.\"", "title": "" }, { "docid": "eec182bb21347815259ce0c5d7b463a9", "text": "\"This is the best tl;dr I could make, [original](https://www.aier.org/blog/social-security-cost-living-adjustment-likely-largest-2011) reduced by 81%. (I'm a bot) *** > With inflation ticking upward in 2017, retirees are likely to see the largest cost-of-living adjustment in their Social Security benefits since 2011. > Our forecasted increase for the cost-of-living adjustment would add between $23 and $29 to the average Social Security beneficiary&#039;s monthly check, higher than any adjustment since 2011 but still below the average annual adjustment since 2011 of 2.3 percent. > The Social Security Administration calculates the cost-of-living adjustment using the Consumer Price Index for Urban Wage Earners and Clerical Workers. * [Extended Summary*](http://np.reddit.com/r/autotldr/comments/75k0hx/social_security_cost_of_living_adjustment_likely/) \| [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~225800 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: adjustment^#1 percent^#2 year^#3 CPI-W^#4 average^#5\"", "title": "" }, { "docid": "55e17e5d9fdaa33a53ba1eb5fc047d16", "text": "See thats just plain wrong. Minimum wage increases will not increase the total costs of living that puts it on par with the minimum wage. So many studies have been done on this exact question. This mentality is like saying in china that people should only make cents an hour because if they make anymore the cost of living will go up as well. Here are some good reads for you :) http://letjusticeroll.org/news/001185-raising-minimum-wage-does-not-increase-unemployment http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=5650&updaterx=2010-10-08+11:40:17 http://www.dadychery.org/fr/2012/01/03/eight-states-raise-minimum-wage/ So many studies prove your statement wrong.", "title": "" }, { "docid": "07c4b462447a984829ccd4f74b9b84a2", "text": "\"Everyone buys different kinds of goods. For example I don't smoke tobacco so I'm not affected by increased tobacco prices. I also don't have a car so I'm not affected by the reduced oil prices either. But my landlord increased the monthly fee of the apartment so my cost of living per month suddenly increased more than 10% relative to the same month a year before. This is well known, also by the statistical offices. As you say, the niveau of the rent is not only time- but also location specific, so there are separate rent indices (German: Mietspiegel). But also for the general consumer price indices at least in my country (Germany) statistics are kept for different categories of things as well. So, the German Federal Statistical Office (Statistisches Bundesamt) not only publishes \"\"the\"\" consumer price index for the standard consumer basket, but also consumer price indices for oil, gas, rents, food, public transport, ... Nowadays, they even have a web site where you can put in your personal weighting for these topics and look at \"\"your\"\" inflation: https://www.destatis.de/DE/Service/InteraktiveAnwendungen/InflationsrechnerSVG.svg Maybe something similar is available for your country?\"", "title": "" }, { "docid": "c68ee828cbea05fa9263ae42d7312bf9", "text": "All my computers have come through bartering in some form or another. I now own 2, and the only thing ever purchased was certain limited parts. It's not very appropriate to the cost of electronics as a proxy for the affordability of the cost of living. If that proxy was even mildly valid you could rent a decent apartment for $200 bucks or less, and furniture, food, etc., would be nearly free. The electronics cost proxy is absurd. Basically, 35 years ago almost nobody owned a computer. While the cost of living has skyrocketed what sense does it make to claim that the cost of something that people didn't even own then is a valid proxy of the cost of the things they require to live?", "title": "" }, { "docid": "ebd3895854370b28209a6e70773545b9", "text": "No, it actually is very real. You pay $340 for a single room and are talking about 2-bedroom rents. At Nebraska's minimum wage of $9/hr or $18k/year, $700 for two bedrooms is just barely affordable if you take a standard rule of keeping monthly rent less than 1/40th of your annual gross salary. It is unaffordable at the Federal minimum wage which was the point of the article.", "title": "" }, { "docid": "27a8d3cc5991bb7e125d0e970957bff9", "text": "\"I wasn't on minimum wage. I was finding that housing in the Boston area was increasing in price faster than my $80k/year salary. And yes, it is a fallacy because your statement is essentially tautological: \"\"if you want a lower price for housing, go to where prices on housing are lower (and don't mind the additional costs of time or money spent commuting).\"\"\"", "title": "" }, { "docid": "0aec920a2ac09cda16c87d87b70717c5", "text": "\"http://www.nytimes.com/2010/09/12/jobs/12search.html \"\"Where you live and the cost of living there has only a small influence on that number, he added. (That may be a revelation to some Manhattanites.)\"\" I can't find the source I was talking about, but that's close. There's also what kewidogg said, people gravitate to places that make them happy.\"", "title": "" }, { "docid": "0cfb85f4f409dad6f7a21cd944322d40", "text": "\"No, virtually ever item in the CPI is adjusted using hedonics, which by definition can only be used to lower inflation, not adjust it up. Hedonics is not necessarily bad, but it doesn't actually reflect inflation, it reflects standard of living vs. purchasing power, which is not useful for a purely monetary measure. It also does not correctly reflect that despite the fact that a 1970's 20\"\" TV cannot from an economic standpoint be directly compared to a 2012 20\"\" TV, if the price is the same (adjusted for inflation), inflation represents how the value of the dollar has accrued vs the value of a 20\"\" TV, which is what the definition of inflation is. So, no, I don't think you're correct on this. This is also kind of glossing over the fact that the CPI essentially makes the bold argument that energy and transportation prices never affect inflation.\"", "title": "" }, { "docid": "49942f0f2f72466778fed5dd88f92962", "text": "\"But when you focus just on taxes on work, as the OECD does in a new report out this morning, the U.S. starts looking a little less like a low-tax paradise. The total \"\"tax wedge\"\" -- which measures \"\"the difference between labour costs to the employer and the corresponding net take-home pay of the employee\"\" -- was 31.7 percent of labor costs for the average single U.S. worker with no children in 2016, higher than in 10 other OECD countries. https://www.bloomberg.com/view/articles/2017-04-11/why-the-u-s-overtaxes-labor https://www.ssa.gov/oact/progdata/taxRates.html\"", "title": "" }, { "docid": "b7089553b51cc256baf371ae747cacfe", "text": "The long-run goal is to eliminate poverty through wealth creation. If that makes for some weird new social interactions, I'd say that's a reasonable cost. I mention comparing to earlier periods simply as a measure of progress to determine whether or not there is a problem that needs correction, such as a specific group in society experiencing real wage stagnation, or truly anemic growth rates relative to earlier periods. It's the slope of the trend line for each group that I'd be worried about, where linear or exponential is good, and logarithmic should indicate a potential crisis. Ultimately, I believe that it's not a persons absolute circumstances that matter, but the rate at which those circumstances are improving throughout their lives that most strongly affects their subjective well-being (but that's just my theory). As for real estate costs, you're absolutely correct that this is a problem, but it's as easily explainable problem. Supply is artificially constrained in most of the US due to the need for explicit government permission (in the form of building permits and zoning laws) in order to build new units. Basic economics says that when supply is artificially restricted, prices will rise. In areas where government is restrictive, such as San Francisco, prices rise sharply. In places where government is more permissive, like Houston, prices remain much more reasonable.", "title": "" }, { "docid": "22e5d70c66a4c55c4d25da666aa4d951", "text": "Studies suggest people aren't comfortable around others who are way poorer or richer than they. You sound like a rational adult. You would be surprised how weird people associate with money. Also, if we compare to earlier period it can only account as far as the same people in question were alive e.g not a generation before. Why? Because people can't understand how it was to live differently without actual experience. Yes, the majority of the world lives better today but we also have much higher expectations, that needs to be accounted for. Another matter is the rising cost of living expenses. Real estate doesn't seem to be dropping and that easily adds to financial anxiety when due to globalisation and technology the job markets become unstable.", "title": "" }, { "docid": "b69b9e20d4ec892aafc0733c89716ea9", "text": "\"This is only a concern if the payments can be realistically controlled by a central authority. What you're asking is only relevant when dealing with a centrally planned economy. I'm also not sure why you're talking about high payments surrounding basic living. What is \"\"basic living\"\"? What is considered high? You're presupposing information into the question, which is a form of leading and taints the discussion.\"", "title": "" } ]	fiqa
ff4d6adf2a8c1c1e3f2395ceeced6ab1	How can a person protect his savings against a country default?	[ { "docid": "647740b4ae71f5a6f13b36593cb3f041", "text": "The default of the country will affect the country obligations and what's tied to it. If you have treasury bonds, for example - they'll get hit. If you have cash currency - it will get hit. If you're invested in the stock market, however, it may plunge, but will recover, and in the long run you won't get hit. If you're invested in foreign countries (through foreign currency or foreign stocks that you hold), then the default of your local government may have less affect there, if at all. What you should not, in my humble opinion, be doing is digging holes in the ground or probably not exchange all your cash for gold (although it is considered a safe anchor in case of monetary crisis, so may be worth considering some diversifying your portfolio with some gold). Splitting between banks might not make any difference at all because the value won't change, unless you think that one of the banks will fail (then just close the account there). The bottom line is that the key is diversifying, and you don't have to be a seasoned investor for that. I'm sure there are mutual funds in Greece, just pick several different funds (from several different companies) that provide diversified investment, and put your money there.", "title": "" }, { "docid": "45c3cb28491d6b35f3219f442d3100a6", "text": "\"These have the potential to become \"\"end-of-the-world\"\" scenarios, so I'll keep this very clear. If you start to feel that any particular investment may suddenly become worthless then it is wise to liquidate that asset and transfer your wealth somewhere else. If your wealth happens to be invested in cash then transferring that wealth into something else is still valid. Digging a hole in the ground isn't useful and running for the border probably won't be necessary. Consider countries that have suffered actual currency collapse and debt default. Take Zimbabwe, for example. Even as inflation went into the millions of percent, the Zimbabwe stock exchange soared as investors were prepared to spend ever-more of their devaluing currency to buy stable stocks in a small number of locally listed companies. Even if the Euro were to suffer a critical fall, European companies would probably be ok. If you didn't panic and dig caches in the back garden over the fall of dotcom, there is no need to panic over the decline of certain currencies. Just diversify your risk and buy non-cash (or euro) assets. Update: A few ideas re diversification: The problem for Greece isn't really a euro problem; it is local. Local property, local companies ... these can be affected by default because no-one believes in the entirety of the Greek economy, not just the currency it happens to be using - so diversification really means buying things that are outside Greece.\"", "title": "" }, { "docid": "25a38b50c7fa018f6d9168ae1325fc2f", "text": "\"Since you are going to be experiencing a liquidity crisis that even owning physical gold wouldn't solve, may I suggest bitcoins? You will still be liquid and people anywhere will be able to trade it. This is different from precious metals, whereas even if you \"\"invested\"\" in gold you would waste considerable resources on storage, security and actually making it divisible for trade. You would be illiquid. Do note that the bitcoin currency is currently more volatile than a Greek government bond.\"", "title": "" } ]	[ { "docid": "2ebd49168456a4ffc4b7f3ccd5ef1f1a", "text": "\"There's not nearly enough information here for anyone to give you good advice. Additionally, /r/personalfinance will probably be a bit more relevant and helpful for what you're asking. Aside from that, if you don't know what you're doing, stay out of currency trading and mutual funds. If you don't care about losing your money, go right ahead and play in some markets, but remember there are people paid millions of dollars/year who don't make consistent profit. What are the chances a novice with no training will perform well? My $.02, pay your debt, make a general theory about the economy a year from now (e.g. \"\"Things will be worse in Europe than they are now\"\") and then invest your money in an index fund that matches that goal (e.g. Some sort of Europe-Short investment vehicle). Reassess a year from now and don't stress about it.\"", "title": "" }, { "docid": "c47466f7880e9e6b6d3a19c680ce234d", "text": "Bank and most Credit Union deposit accounts (including CDs) are guaranteed by the Federal government by the FDIC and NCUA, respectively. Some state-chartered credit unions use private insurance, you'll want to be careful about storing lots of money in those institutions.", "title": "" }, { "docid": "d701e65d752ded1d87e896f088aea506", "text": "\"Somehow I just stumbled onto this thread... > You essentially robbed the person holding the debt (since you promised to pay it off). Depends on leverage, with fractional reserve lending. Banks are permitted to loan out 30x their actual assets, or more. If I have $1 but can loan out $30, and anything more than $1 gets paid back, I haven't lost any money. In addition, I can write off the amount defaulted, and the government will pay me back for certain types of loans. With student loans, since they are almost impossible to discharge, gov't will pursue the borrower for years and decades, and ultimately collect more interest. Here is an article on it: http://online.wsj.com/article/SB10001424052748704723104576061953842079760.html > According to Kantrowitz, the government stands to earn $2,010.44 more in interest from a $10,000 loan that defaulted than if it had been paid in full over a 20-year term, and $6,522.00 more than if it had been paid back in 10 years. Alan Collinge, founder of borrowers' rights advocacy Student Loan Justice, said the high recovery rates provide a \"\"perverted incentive\"\" for the government to allow loans to go into default. Kantrowitz estimates the recovery rate would need to fall to below 50% in order for default prevention efforts to become more lucrative than defaults themselves. Not to mention: http://studentloanjustice.org/defaults-making-money.html > So essentially, the Department is given a choice: Either do nothing and get nothing, or outlay cash with the knowledge that this outlay will realize a 22 percent return, ultimately (minus the governments cost of money and collection costs). From this perspective, it is clear that based solely on financial motivations, and without specific detailed knowledge of the loan (i.e. borrower characteristics, etc.), the chooser would clearly favor the default scenario, for not only the return, but perhaps the potential savings in subsidy payment as well, And don't forget the penalties accruing to the person defaulting; they will probably have to move out of the country in order to escape collection. And let's factor in the huge ROI the lender sees by creating an indentured servant class. Plus, the gov't will issue as much currency as it wants, to make itself whole. And how much of a loss IS the loss, when the whole of the loan amount went right back into the local economy, paying professors, janitors, landlords, grocery stores, etc.? And don't forget all THOSE taxes (income and sale) that the gov't collects. Government will collect ~30%-50% of the loan immediately as income and sales tax, plus a portion of it every time the money changes hands (I pay income tax, then use some of my after-tax money to pay you for a product or service, and you still have to pay tax on that money, and so on). So it's more complicated than having \"\"robbed the person holding the debt\"\". Banks at 30x leverage don't lose money as long as they get back 1/30th of the total amount lent out, including interest, fees, and penalties, before considering write-offs and government repayment. In fact, the point of over-leverage is so you CAN make loans that have risk attached. If you could only lend what you actually had, you would have to stay away from anything risky because it would be too easy to lose money. Having virtual $ to bet means you can serve market segments that have higher risk. This makes MORE money for the banks, that's why they do it. They are already playing with funny money, so they don't lose any even if you default and move to another country. And the money you \"\"spent\"\" has also made its way back to them in various amounts, such as your professor's mortgage payments, auto loan, etc. Your taking on debt already helped the bank get its OTHER loans repaid. So, roughly speaking, if you took out $90,000 and $3,000 of that made its way back to the bank through various means, they haven't lost any money, because it only cost them $3,000 actual dollars in the first place.\"", "title": "" }, { "docid": "d996dffe8ff062a55256fe700838aff1", "text": "\"Usually when the government defaults, the currency gets devalued. So as a debtor, that's a good thing -- your debt gets devalued. The \"\"catch\"\" is that your income and buying power is also devalued. So unless you happen to own the type of assets that become more valuable during those circumstances (real property, farms, utilities, certain industrial things, etc) you're looking at tough times ahead.\"", "title": "" }, { "docid": "e7ef5250d5231352ccfe61ce9ffb9660", "text": "\"Sovereigns cannot go bankrupt. Basically, when a sovereign government (this includes nations and US States, probably political subdivisions in other countries as well) becomes insolvent, they default. Sovereigns with the ability to issue new currency have the option to do so because it is politically expedient. Sovereigns in default will negotiate with creditor committees to reduce payments. Creditors with debt backed by the \"\"full faith and credit\"\" of the sovereign are generally first in line. Creditors with debt secured by revenue may be entitled to the underlying assets that provide the revenue. The value of your money in the bank in a deposit account may be at risk due to currency devaluation or bank failure. A default by a major country would likely lock up the credit markets, and you may see yourself in a situation where money market accounts actually fall in value.\"", "title": "" }, { "docid": "0389ef13c4efdfebeb2cfe9c55344eb3", "text": "\"This might not map well, because personal finance is not the global economy; but let's start by talking about this in terms of the cost of a loan vs the gain of an investment. If you can buy a house with a mortgage at 3%, but make 7% on average in the stock market... You should take as looong as possible to pay that off, and invest every penny you can spare in the markets. Heck, if you can take on even more debt at 3%, you should still do the same. Now imagine you have the power to literally print money, but, doing so is effectively a form of \"\"loan\"\" to yourself. We call the \"\"interest\"\" on that loan \"\"inflation\"\", and it comes out to roughly 2%, basically the same rate that US treasuries pay (they aren't strictly locked, but they rarely drift far apart). So, if you can print money at 1%, you should rationally print as much money as you possibly can to buy US treasuries at 2+%. But someone has to take that money off your hands - Pallets of money siting in a warehouse aren't worth any more than the paper they're made of. There we get into trade imbalances... Whether printing money costs you 0.1% or 10% or 1000% per year depends on whether your country is, on average, making or losing money on international trade (I'm glossing over a hell of a lot there, as full disclosure), and by how much. If you're printing money as fast as you can just to buy food to stay alive with zero exports, you're screwed; if your country exports $10 to the US (or equivalents) for every $1 you import, the rest of that is essentially \"\"invested\"\" in USD, in that you didn't need to print it yourself just to feed your people.\"", "title": "" }, { "docid": "6e6eb756cc10517e78138928fe576fa8", "text": "\"Depositum irregulare is a Latin phrase that simply means \"\"irregular deposit.\"\" It's a concept from ancient Roman contract law that has a very narrow scope and doesn't actually apply to your example. There are two distinct parts to this concept, one dealing with the notion of a deposit and the other with the notion of irregularity. I'll address them both in turn since they're both relevant to the tax issue. I also think that this is an example of the XY problem, since your proposed solution (\"\"give my money to a friend for safekeeping\"\") isn't the right solution to your actual problem (\"\"how can I keep my money safe\"\"). The currency issue is a complication, but it doesn't change the fact that what you're proposing probably isn't a good solution. The key word in my definition of depositum irregulare is \"\"contract\"\". You don't mention a legally binding contract between you and your friend; an oral contract doesn't qualify because in the event of a breach, it's difficult to enforce the agreement. Legally, there isn't any proof of an oral agreement, and emotionally, taking your friend to court might cost you your friendship. I'm not a lawyer, but I would guess that the absence of a contract implies that even though in the eyes of you and your friend, you're giving him the money for \"\"safekeeping,\"\" in the eyes of the law, you're simply giving it to him. In the US, you would owe gift taxes on these funds if they're higher than a certain amount. In other words, this isn't really a deposit. It's not like a security deposit, in which the money may be held as collateral in exchange for a service, e.g. not trashing your apartment, or a financial deposit, where the money is held in a regulated financial institution like a bank. This isn't a solution to the problem of keeping your money safe because the lack of a contract means you incur additional risk in the form of legal risk that isn't present in the context of actual deposits. Also, if you don't have an account in the right currency, but your friend does, how are you planning for him to store the money anyway? If you convert your money into his currency, you take on exchange rate risk (unless you hedge, which is another complication). If you don't convert it and simply leave it in his safe, house, car boot, etc. you're still taking on risk because the funds aren't insured in the event of loss. Furthermore, the money isn't necessarily \"\"safe\"\" with your friend even if you ignore all the risks above. Without a written contract, you have little recourse if a) your friend decides to spend the money and not return it, b) your friend runs into financial trouble and creditors make claim to his assets, or c) you get into financial trouble and creditors make claims to your assets. The idea of giving money to another individual for safekeeping during bankruptcy has been tested in US courts and ruled invalid. If you do decide to go ahead with a contract and you do want your money back from your friend eventually, you're in essence loaning him money, and this is a different situation with its own complications. Look at this question and this question before loaning money to a friend. Although this does apply to your situation, it's mostly irrelevant because the \"\"irregular\"\" part of the concept of \"\"irregular deposit\"\" is a standard feature of currencies and other legal tender. It's part of the fungibility of modern currencies and doesn't have anything to do with taxes if you're only giving your friend physical currency. If you're giving him property, other assets, etc. for \"\"safekeeping\"\" it's a different issue entirely, but it's still probably going to be considered a gift or a loan. You're basically correct about what depositum irregulare means, but I think you're overestimating its reach in modern law. In Roman times, it simply refers to a contract in which two parties made an agreement for the depositor to deposit money or goods with the depositee and \"\"withdraw\"\" equivalent money or goods sometime in the future. Although this is a feature of the modern deposit banking system, it's one small part alongside contract law, deposit insurance, etc. These other parts add complexity, but they also add security and risk mitigation. Your arrangement with your friend is much simpler, but also much riskier. And yes, there probably are taxes on what you're proposing because you're basically giving or loaning the money to your friend. Even if you say it's not a loan or a gift, the law may still see it that way. The absence of a contract makes this especially important, because you don't have anything speaking in your favor in the event of a legal dispute besides \"\"what you meant the money to be.\"\" Furthermore, the money isn't necessarily safe with your friend, and the absence of a contract exacerbates this issue. If you want to keep your money safe, keep it in an account that's covered by deposit insurance. If you don't have an account in that currency, either a) talk to a lawyer who specializes in situation like this and work out a contract, or b) open an account with that currency. As I've stated, I'm not a lawyer, so none of the above should be interpreted as legal advice. That being said, I'll reiterate again that the concept of depositum irregulare is a concept from ancient Roman law. Trying to apply it within a modern legal system without a contract is a potential recipe for disaster. If you need a legal solution to this problem (not that you do; I think what you're looking for is a bank), talk to a lawyer who understands modern law, since ancient Roman law isn't applicable to and won't pass muster in a modern-day court.\"", "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": "301bfdde2a9a2b9e9e1161c2eb7aba16", "text": "You can't both enforce saving and have access to the money -- from what you say, it's clear that if you can access the money you will spend it. Can you find an account that allows one withdrawal every six months but no more, which should help to cut down on the impulse buys but still let you get at your money in an emergency?", "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": "3e3d6a2ce2c219ca85fe488f106792ae", "text": "\"While you have asked for general principles, I am going to seize onto a specific example you gave in order to illustrate the difficulties here: Argentina. Argentina's bonds are probably not safer than US treasuries. Argentina is presently in the business of seizing foreign oil businesses (Repsol YPF) while championing leftist causes. At the very least this indicates an elevated level of political risk: S&P, which affirmed Argentina's ratings five notches into junk territory at B, said policies such as those enacted since the country's October presidential election could also weaken Argentina's macroeconomic framework and external liquidity... \"\"Actions of this type continue to shorten the economic planning horizon in the country and contribute to Argentina's deteriorating economic and political links with the international community.\"\" -- \"\"S&P Lowers Argentina Outlook To Negative\"\". The Wall Street Journal, 23 April 2012 You're not going to be able to capture that sort of a risk with raw budget numbers. It's hard enough to figure out creditworthiness for a business; for an entire nation it's even harder. That's why credit-rating firms, as faulty as they may be, employ dozens of people to try and figure this sort of thing out. Additionally, there is a currency risk associated with buying bonds denominated in foreign currencies. It doesn't matter much if $nation repays all its bonds if they have so much inflation that the repayment is worth half of what it used to be (nor is it much help if your own nation's currency rises in value while your investment's value is stable elsewhere). Ultimately the value of a bond is \"\"how much money am I actually going to get back?\"\" and while operating a budget surplus isn't a bad sign in and of itself, it's hardly the complete picture. A fair accounting of the relative creditworthiness of any two nations needs to unite two massive fields of study: Macroeconomics and Politics. It is possible that the right sort of degree in economics, risk management, or a similar field of study could prepare you to know exactly what sort of research is necessary to make a meaningful analysis. :) Now, if you just want some commentary on which bonds are safe to buy, ask a credit-rating agency -- for example, read Standard and Poor's sovereign ratings - or find a mutual fund which may invest in international bonds at its own discretion and have someone else make the decisions.\"", "title": "" }, { "docid": "1d0e9fb5f53f1cbe07f842216fc89322", "text": "\"to answer the question in the title of your post... + convince your fellow Euro nations to accept austerity, + convince them to elect responsible governments, + demand transparency from your leaders, and... + make sure this never ever happens again. Alternatively, build a time machine and go back in time to either... + immigrate to another part of the world, + sabotage the corruption of the PIGS nations, + prevent the formation of a shared currency, or finally, + do something to ensure Germany didn't lose WWII, as letting them be in charge of everybody's money would appear to be a sound financial decision. That is how you negate the impact of the Euro collapsing. Now, on to the details of your question... I believe your initial assessment is correct. If one accountable nation were responsible for the solvency of its currency, it could be trusted indefinitely. As is the case with the Euro, as no one country is directly responsible for it, the less responsible governments are in a race to exploit it as much as possible. Remember, \"\"Spain no es Zimbabwe!\"\" I think Euro zone nations will be lucky if all that comes of this is the fall of the Euro. Wars between nations have been fought over less significant developments than what Greece, Italy and Spain have done to the financial stability of their Euro zone counterparts. Foreign gold trusts, possession of physical precious metals and precious metal ETFs (GLD is one stock ticker of such a fund, although I would look to a similar fund issued by a company with better physical gold audits) can hedge your currency risk. Check with local laws regarding physical possession of gold. In the USA when we left the gold standard for our currency, the government confiscated all privately owned precious metals and raided customer bank security boxes. Assess your own risk of that sort of thing happening.\"", "title": "" }, { "docid": "ea4f6d41989081ee98b66fcdd1343613", "text": "Quality of life, success and happiness are three factors that are self define by each individual. Most of the time all three factors go hand by hand with your ability to generate wealth and save. Actually, a recent study showed that there were more happy families with savings than with expensive products (car, jewelry and others). These 3 factors, will be very difficult to maintain after someone commit such action. First, because you will fear every interaction with the origin of the money. Second, because every individual has a notion of wrong doing. Third, for the reasons that Jaydles express. Also, most cards, will call you and stop the cards ability to give money, if they see an abusive pattern. Ether, skipping your country has some adverse psychological impact in the family and individual that most of the time 100K is not enough to motivate such change. Thanks for reading. Geo", "title": "" }, { "docid": "44714eb2b7b27e40ad6de9cdbbec0533", "text": "\"I'll try to give you some clues on how to find an answer to your question, rather than answering directly the question asked. Why not answer it directly? Well, I can, but it won't help you (or anyone else) much in two months when the rates change again. Generally, you won't find such in brick-and-mortar banks. You can save some time and only look at online banks. Examples: ING Direct (CapitalOne), CapitalOne, Amex FSB, E*Trade, Ally, etc. There are plenty. Go to their web sites, look for promotions, and compare. Sometimes you can find coupons/promotions which will yield more than the actual savings rate. For example, ING frequently have a $50 promotion for opening a new account. You need to understand that rates change frequently, and the highest rate account today may become barely average in a week. There are plenty of sites that offer various levels of comparison information. One of the most comprehensive ones (IMHO) is Bankrate.com. Another place to look is MoneyRates.com. These sites provide various comparisons, and you can also find some promotions advertised there. There are more similar sites. Also, search the Internet and you can find various blog posts with additional promotions – frequently banks give \"\"referral bonuses\"\" to provide incentive for clients to promote the banks. Do some due diligence on the results that appear promising. Not much. You won't find any savings account that would keep the value (purchasing power) of your money over the long term. Keeping money in savings accounts is a sure way to lose value because the inflation rate is much higher than even high-yield savings accounts. But, savings accounts are safe (insured by FDIC/NCUA up to the limit), and very convenient to keep short term savings – such as an emergency fund – that you cannot afford to lose to investments. Sometimes you'll get slightly better rates by locking up your money in a Certificate of Deposit (CD), but not significantly higher when the CD is short-term.\"", "title": "" }, { "docid": "404f4c43c7313536978290ab8efe43b7", "text": "Yes, the US dollar is the standard for all global trade - IMF driven And China has been going for that title for the past decade and this is a very smart and tactical way to do it If this goes through, gold & oil might become really good place to be. The US has been in a supply run and kept the price of oil low. Things are changing quick...", "title": "" } ]	fiqa
d97ac382cc64c48761c4ce649bf19cd9	Should I invest in the world's strongest currency instead of my home currency?	[ { "docid": "605eb7aa548de18d74c5f4e178dd3731", "text": "First, currencies are not an investment; they are a medium of exchange; that is, you use currency to buy goods and services and/or investments. The goods and services you intend to buy in your retirement are presumably going to be bought in your country; to buy these you will need your country's currency. The investments you intend to buy now require the currency of whatever country they are located in. If you want to buy shares in Microsoft you need USD; if you want shares in BHP-Billiton you need AUD or GBP (It is traded on two exchanges), if you want property in Kuwait you need KWD and if you want bonds in your country you need IDR. When you sell these later to buy the goods and services you were saving for you need to convert from whatever currency you get for selling them into whatever currency you need to buy. When you invest you are taking on risk for which you expect to be compensated for - the higher the risk you take the better the returns had better be because there is always the chance that they will be negative, right down to losing it all if you are unlucky. There is no 100% safe investment; if you want to make sure you get full value for your money spend it all right now! If you invest overseas then, in addition to all the other investment risks, you are adding currency risk as well. That is, the risk that when you redeem your investments the overseas currency will have fallen relative you your currency. One of the best ways of mitigating risk is diversification; which allows the same return at a lower risk (or a higher return at the same risk). A pure equity portfolio is not diversified across asset classes (hopefully it is diversified across the equities). Equities are a high risk-high yield class; particularly in a developing economy like Indonesia. If you are very young with a decades long investment horizon this may be OK but even then, a diversified portfolio will probably offer better rewards at the same risk. Diversifying into local cash, bonds and property with a little foreign equities, bonds and property will serve you better than worrying about the strength of the IDR. Oh, and pay a professional for some real advice rather than listening to strangers on the internet.", "title": "" }, { "docid": "a3041f3b2f3e082b53a5789066773d5b", "text": "Currency speculation is a very risky investment strategy. But when you are looking for which currency to denote your savings in, looking at the unit value is quite pointless. What is important is how stable the currency is in the long term. You certainly don't want a currency which is prone to inflation, because it means any savings denoted in that currency constantly lose purchasing power. Rather look for a currency which has a very low inflation rate or is even deflating. Another important consideration is how easy it is to exchange between your local currency and the currency you want to own. A fortune in some exotic currency is worth nothing when no local bank will exchange it into your local currency. The big reserve currencies like US Dollar, Euro, Pound Sterling and Japanes yen are usually safe bets, but there are regional differences which can be easily converted and which can't. When the political relations between your country and the countries which manage these currencies is unstable, this might change over night. To avoid these problems, rather invest into a diverse portfolio of commodities and/or stocks. The value of these kinds of investments will automatically adjust to inflation rate, so you won't need to worry about currency fluctuation.", "title": "" }, { "docid": "615d936fbe8731c2a40bba364141b151", "text": "A currency that is strong right now is one that is expensive for you to buy. The perfect one would be a currency that is weak now but will get stronger; the worst currency is one that is strong today and gets weak. If a currency stays unchanged it doesn't matter whether it is weak or strong today as long as it doesn't get weaker / stronger. (While this advice is correct, it is useless for investing since you don't know which currencies will get weaker / stronger in the future). Investing in your own currency means less risk. Your local prices are usually not affected by currency change. If you safe for retirement and want to retire in a foreign country, you might consider in that country's currency.", "title": "" }, { "docid": "2fb7b6d8a5c9f61e3a60aebdd6f41562", "text": "The best thing is to diversify across multiple currencies. USD and EUR seem reliable. But not 100% reliable to keep all your investments in this types of currencies. Invest part of your savings in USD, part - in EUR, and part in your home country's currency. Apart from investing I recommend you to have certain sum in cash and certain on your bank account.", "title": "" } ]	[ { "docid": "d7541f07a95a913977a15cc8030734b8", "text": "\"I still don't understand this \"\"analysis.\"\" Even when the US became the world's largest economy in 1880, the British Pound remained the reserve currency of choice until the 1950s, some seventy years later! Investors prefer stability and property rights and the US has both, especially when considering the alternatives, i.e. Euro tax takings on bank deposits in Cyprus. What about the yuan? China may have recently surpassed US economic power, but it is very likely in the midst of a massive credit bubble. China has also been fudging some of their numbers and in many cases, chooses not to keep economic records at all. The fact that many Chinese elites themselves are buying property in Vancouver and the US as a safe harbor also does not bode well for their systemic problems IMO. I'm sticking with the dollar for now.\"", "title": "" }, { "docid": "e0f0da2c0e5a4bfa04bda19efad7eb01", "text": "There are some ETF's on the Indian market that invest in broad indexes in other countries Here's an article discussing this Be aware that such investments carry an additional risk you do not have when investing in your local market, which is 'currency risk' If for example you invest in a ETF that represents the US S&P500 index, and the US dollar weakens relative to the indian rupee, you could see the value if your investment in the US market go down, even if the index itself is 'up' (but not as much as the change in currency values). A lot of investment advisors recommend that you have at least 75% of your investments in things which are denominated in your local currency (well technically, the same currency as your liabilities), and no more than 25% invested internationally. In large part the reason for this advice is to reduce your exposure to currency risk.", "title": "" }, { "docid": "fe4513005bf90450c2695629c0f31560", "text": "Taking into account that you are in Cyprus, a Euro country, you should not invest in USD as the USA and China are starting a currency war that will benefit the Euro. Meaning, if you buy USD today, they will be worth less in a couple of months. As for the way of investing your money. Look at it like a boat race, starting on the 1st of January and ending on the 31st of December each year. There are a lot of boats in the water. Some are small, some are big, some are whole fleets. Your objective is to choose the fastest boat at any time. If you invest all of your money in one small boat, that might sink before the end of the year, you are putting yourself at risk. Say: Startup Capital. If you invest all of your money in a medium sized boat, you still run the risk of it sinking. Say: Stock market stock. If you invest all of your money in a supertanker, the risk of it sinking is smaller, and the probability of it ending first in the race is also smaller. Say: a stock of a multinational. A fleet is limited by it's slowest boat, but it will surely reach the shore. Say: a fund. Now investing money is time consuming, and you may not have the money to create your own portfolio (your own fleet). So a fund should be your choice. However, there are a lot of funds out there, and not all funds perform the same. Most funds are compared with their index. A 3 star Morningstar rated fund is performing on par with it's index for a time period. A 4 or 5 star rated fund is doing better than it's index. Most funds fluctuate between ratings. A 4 star rated fund can be mismanaged and in a number of months become a 2 star rated fund. Or the other way around. But it's not just luck. Depending on the money you have available, your best bet is to buy a number of star rated, managed funds. There are a lot of factors to keep into account. Currency is one. Geography, Sector... Don't buy for less than 1.000€ in one fund, and don't buy more than 10 funds. Stay away from Gold, unless you want to speculate (short term). Stay away from the USD (for now). And if you can prevent it, don't put all your eggs in one basket.", "title": "" }, { "docid": "b6f1845980e14e2a771a1640c2189af8", "text": "\"A general principle in finance is that you shouldn't stick with an investment or situation just because it's how you're currently invested. You can ask yourself the following question to help you think it through: If, instead, I had enough GBP to buy 20000 CHF, would I think it was a good idea to do so? (I'm guessing the answer is probably \"\"no.\"\") This way of thinking assumes you can actually make the exchange without giving someone too big of a cut. With that much money on the line, be sure to shop around for a good exchange rate.\"", "title": "" }, { "docid": "bf5b32f35f7abee59654d27bc3adecab", "text": "There are legitimate multi currency mutual funds/efts. But I don't think their rate of return will produce the extra money you're looking for any faster than any other kind of investment with comparable risks. To make money fast, you have to accept nontrivial risk of losing money fast, which isn't what you seem to have in mind.", "title": "" }, { "docid": "71973b471b6779c847e78549ccae7fb6", "text": "Rather than screwing around with foreign currencies, hop over to Germany and open an account at the first branch of Deutsche or Commerzbank you see. If the euro really does disintegrate, you want to have your money in the strongest country of the lot. Edit: and what I meant to say is that if the euro implodes, you'll end up with deutschmarks, which, unlike the new IEP, will not need to devalue. (And in the meantime, you've still got euros, so you have no FX risk.)", "title": "" }, { "docid": "3b449602794cc259348a97fddc5cf7f8", "text": "From a purely financial standpoint, you should invest using whatever dollars get you the best rate. The general rule of thumb that I've come across is that if you are making another person/company change your money into another nation's currency, they will likely charge a higher exchange rate than you could get yourself. However, it really depends on your situation, how easy it is for you to exchange money, what your exchange rate is, and what your broker is charging you to exchange to USD (if on the off chance this is truly nothing, then stick with CAD). Don't worry about the strength of the USD to CAD too much because converting your money before you make purchases doesn't allow you to buy more shares. For the vast majority of people, trying to work with national currency exchange rates makes things unnecessarily complex.", "title": "" }, { "docid": "3f8d64a7173e83e85807bda067af93aa", "text": "If S&P crashes, these currencies will appreciate. Note that the above is speculation, not fact. There is definitely no guarantee that, say, the CHF/CAD currency pair is inversely linked to the performance of the US stock market when measured in USD, let alone to the performance of the US stock market as measured in CAD. How can a Canadian get exposure to a safe haven currency like CHF and JPY? I don't want a U.S. dollar denominated ETF. Three simple options come to mind, if you still want to pursue that: Have money in your bank account. Go to your bank, tell them that you want to buy some Swiss francs or Japanese yen. Walk out with a physical wad of cash. Put said wad of cash somewhere safe until needed. It is possible that the bank will tell you to come back later as they might not have the physical cash available at the branch office, but this isn't anything really unusual; it is often highly recommended for people who travel abroad to have some local cash on hand. Contact your bank and tell them that you want to open an account denominated in the foreign currency of your choice. They might ask some questions about why, there might be additional fees associated with it, and you'll probably have to pay an exchange fee when transferring money between it and your local-currency-denominated accounts, but lots of banks offer this service as a service for those of their customers that have lots of foreign currency transactions. If yours doesn't, then shop around. Shop around for money market funds that focus heavily or exclusively on the currency area you are interested in. Look for funds that have a native currency value appreciation as close as possible to 0%. Any value change that you see will then be tied directly to the exchange rate development of the relevant currency pair (for example, CHF/CAD). #1 and #3 are accessible to virtually anyone, no large sums of money needed (in principle). Fees involved in #2 may or may not make it a practical option for someone handling small amounts of money, but I can see no reason why it shouldn't be a possibility again in principle.", "title": "" }, { "docid": "1f73dc803fba81d5dfb602b8038cccdb", "text": "It can be zero or negative given the current market conditions. Any money parked with treasury bonds is 100% risk free. So if I have a large amount of USD, and need a safe place to keep, then in today's environment even the banks (large as well) are at risk. So if I park my money with some large bank and that bank goes bankrupt, my money is gone for good. After a long drawn bankruptcy procedure, I may get back all of it or some of it. Even if the bank does not go bankrupt, it may face liquidity crises and I may not be able to withdraw when I want. Hence it's safer to keep it in Treasury bonds even though I may not gain any interest, or even lose a small amount of money. At least it will be very safe. Today there are very few options for large investors (typically governments and institutional investors.) The Euro is facing uncertainty. The Yuan is still regulated. There is not enough gold to buy (or to store it.) Hence this leads towards the USD. The very fact that USD is safe in today's environment is reflected in the Treasury rates.", "title": "" }, { "docid": "aaf385e8e4cec04116c0701d991180b7", "text": "I think your approach of looking exclusively at USD deposits is a prudent one. Here are my responses to your questions. 1) It is highly unlikely that a USD deposit abroad be converted to local currency upon withdrawal. The reason for offering a deposit in a particular currency in the first place is that the bank wants to attract funds in this currency. 2) Interest rate is a function of various risks mostly supply and demand, central bank policy, perceived risk etc. In recent years low-interest rate policy as led by U.S., European and Japanese central banks has led particularly low yields in certain countries disregarding their level of risk, which can vary substantially (thus e.g. Eastern Europe has very low yields at the moment in spite of its perceived higher risk). Some countries offer depository insurance. 3) I would focus on banks which are among the largest in the country and boast good corporate governance i.e. their ownership is clean and transparent and they are true to their business purpose. Thus, ownership is key, then come financials. Country depository insurance, low external threat (low war risk) is also important. Most banks require a personal visit in order to open the account, thus I wouldn't split much further than 2-3 banks, assuming these are good quality.", "title": "" }, { "docid": "584e97bf18950c72068556fa29320d5b", "text": "You are not missing something basic. Putting money in the bank will cost you in terms of purchasing power. The same thing has been true in the US and other places for a long time now. The real interest rate is negative--there is too much aggregate wealth being saved compared to the number of profitable lending opportunities. That means any truly risk-free investment will not make as much money as you will lose to inflation. If the real interest rate appears to be positive in your home country it means one of the following is happening: Capital controls or other barriers are preventing foreigners from investing in your home country, keeping the interest rate there artificially high Expected inflation is not being measured very accurately in your home country Inflation is variable and unpredictable in your home country, so investors are demanding high interest rates to compensate for inflation risk. In other words, bank accounts are not risk-free in your home country. If you find any securities that are beating inflation, you can bet they are taking on risk. Investing in risky securities is fine, but just understand that it's not a substitute for a risk-free bank account. Part of every interest rate is compensation for the time-value-of-money and the rest is compensation for risk. At present, the global time-value-of-money is negative.", "title": "" }, { "docid": "be5a343ff06889ca387adaed1aed3f15", "text": "From an investor's standpoint, if the value of crude oil increases, economies that are oil dependent become more favourable (oil companies will be more profitable). Therefore, investors will find that country's currency more attractive in the foreign exchange market.", "title": "" }, { "docid": "9b58296e546e1efce9613746b1a82bd7", "text": "Yes. But the question is do you want to have gold? If you are going to buy gold anyway, and if you can get a good conversion rate between USD:gold, then why not? If you are looking to use your earnings on things that you cannot buy using gold, then I'd recommend you take USD instead. Have fun!", "title": "" }, { "docid": "e27b4d067c78c5636685afe87425080c", "text": "No. The long-term valuation of currencies has to do with Purchasing Power Parity. The long-term valuation of stocks has to do with revenues, expenses, market sizes, growth rates, and interest rates. In the short term, currency and stock prices change for many reasons, including interest rate changes, demand for goods and services, asset price changes, political fears, and momentum investing. In any given time window, a currency or stock might be: The Relative Strength Index tries to say whether a currency or stock has recently been rising or falling; it does not inherently say anything about whether the current value is high or low.", "title": "" }, { "docid": "51876fb7fa8f2f1b1c5fc654650a5ef4", "text": "The other obvious suggestion I guess is to buy cheap stocks and bonds (maybe in a dollar denominated fund). If the US dollar rises you'd then get both the fund's US gains plus currency gains. However, no guarantee the US dollar will rise or when. Perhaps a more prudent approach is to simply diversify. Buy both domestic and foreign stocks and bonds. Rebalance regularly.", "title": "" } ]	fiqa
b56c0bfde6b70598f571fd5817595234	Can the Securities Investor Protection Corporation (SIPC) itself go bankrupt?	[ { "docid": "a97a55ff1d603849bb7ca369e42394b4", "text": "\"SIPC is a corporation - a legal entity separate from its owners. In the case of SIPC, it is funded through the fees paid by its members. All the US brokers are required to be members and to contribute to SIPC funds. Can it go bankrupt? Of course. Any legal entity can go bankrupt. A person can go bankrupt. A country can go bankrupt. And so can anything in between. However, looking at the history of things, there are certain assumptions that can be made. These are mere guesses, as there's no law about any of these things (to the best of my knowledge), but seeing how things were - we can try and guess that they will also be like this in the future. I would guess, that in case of a problem for the SIPC to meet its obligation, any of the following would happen (or combinations): Too big to fail - large insurance companies had been bailed out before by the governments since it was considered that their failure would be more destructive to the economy than the bailout. AIG as an example in the US. SIPC is in essence is an insurance company. So is Lloyd's of London. Breach of trust of the individual investors that can lead to a significant market crash. That's what happened in the US to Fannie Mae and Freddie Mac. They're now \"\"officially\"\" backed by the US government. If SIPC is incapable of meeting its obligation, I would definitely expect the US government to step in, even though there's no such obligation. Raising funds through charging other members. If the actuary calculations were incorrect, the insurance companies adjust them and raise premiums. That is what should happen in this case as well. While may not necessarily solve a cashflow issue, in the long term it will allow SIPC to balance, so that bridge loans (from the US government/Feds/public bonds) could be used in between. Not meeting obligations, i.e.: bankruptcy. That is an option, and insurance companies have gone bankrupt before. Not unheard of, but from the past experience - again, I'd expect the US government to step in. In general, I don't see any significant difference between SIPC in the US and a \"\"generic\"\" insurance coverage elsewhere. Except that in the US SIPC is mandatory, well regulated, and the coverage is uniform across brokerages, which is a benefit to the consumer.\"", "title": "" }, { "docid": "2ef4857918552045209a4b65c1bdbf03", "text": "Not sure if I follow your question completely. Re: What if some fraud takes place that's too big even for it to fund? SIPC does not fund anything. What it does is takes over the troubled brokerage firm, books / assets and returns the money faster. Refer to SIPC - What SIPC Covers... What it Does Not and more specifically SIPC - Why We Are Not the FDIC. SIPC is free for ordinary investors. To get the same from elsewhere one has to pay the premium. Edit: The event we are saying is a large brokrage firm, takes all of the Margin Money from Customer Accounts and loses it and also sell off all the stocks actually shown as being held in customer account ... that would be to big. While its not clear as to what exactly will happens, my guess is that the limits per customers will go down as initial payments. Subsequent payments will only be done after recover of funds from the bankrupt firm. What normally happens when a brokrage firm goes down is some of the money from customers account is diverted ... stocks are typically safe and not diverted. Hence the way SIPC works is that it will give the money back to customer faster to individuals. In absence of SIPC individual investors would have had to fight for themselves.", "title": "" } ]	[ { "docid": "69980f8b29a899f4299b650eabfd8e83", "text": "Um, wut? It took a failure for the SIFI to be defined in the first place. It took the failure of Lehman and Bear Stearns for the US goverments to actively attempt precluding any more failures of what were yet-to-be-called, SIFI's. Is this really such a hard concept to grasp? Largely unforeseen failure first, further failure avoidance second.", "title": "" }, { "docid": "24e7fcdfb6bcd46bf5f29fde5e5fd71d", "text": "\"Of course, doing nothing would mean that Social Security won't be able to meet its full obligations two decades from now. But it's not going bankrupt. Bankrupt, as defined in Oxford English Dictionary: \"\"[U]nable to pay outstanding debts.\"\" Am I missing something?\"", "title": "" }, { "docid": "9847099de65fe2eb86b26c98f0d179cb", "text": "I don't know about the liquidation. The capital doesn't evaporate, its source just becomes the corporation itself. The corporation becomes the sole shareholder and acts at the behest of the board. The board then decides both board matters and shareholder matters. Once I talked that through, I realized no one would do this. If the board is in complete control, why clump the ownership together. The directors would be better served by clearly delineating their ownership interests by purchasing shares directly.", "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": "c7238a79b7b4178cf71c34c008b89d9d", "text": "You can avoid companies that might go bankrupt by not buying the stock of companies with debt. Every quarter, a public company must file financials with the EDGAR system called a 10-Q. This filing includes unaudited financial statements and provides a continuing view of the company's financial position during the year. Any debt the company has acquired will appear on this filing and their annual report. If servicing the debt is costing the company a substantial fraction of their income, then the company is a bankruptcy risk.", "title": "" }, { "docid": "e5c96d25cabfb16b086f42e029b0ba1a", "text": "\"Not entirely. For a creditor to go after the \"\"parent company\"\" in one of these cases requires the courts to be willing to \"\"pierce the corporate veil\"\" (in legal parlance). Typically this is only done if the parent company set up the wholly-owned-subsidiary in order to perpetrate a fraud. In this case, the subsidiary has a totally legitimate function - to sequester risk. While you're right that the parent company may have to offer some form of credit guarantees to get the subsidiary to get a loan, often those guarantees still don't create nearly as much exposure for the parent company.\"", "title": "" }, { "docid": "fea1f03de6ce51af347954ec5a54b9f5", "text": "The S.E.C. is just a training camp for financial consultants hired by CEOs of multinational firms. Remember how many people were sent to jail after the financial collapse and the housing bubble? That's about how many you can expect to go to jail this time, too. The worst that will happen is minor fines dwarfed by the amount of money made in any illegal activity that may have occurred. It isn't so much that government has any real problem with white-collar financial crime per se; they just want to make sure they get a cut.", "title": "" }, { "docid": "7f0b2035b9854c22bee04b280dbc32aa", "text": "You should double-check what it means to be in [Chapter 11](http://en.wikipedia.org/wiki/Chapter_11,_Title_11,_United_States_Code) Yes, by filing for bankruptcy, the company gets some protection from creditors and some of their investment dries up, but it's the owners who take it on the nose first. Also, individuals can file for Chapter 11, too. It's not just corporations.", "title": "" }, { "docid": "a7d9132f205e3cc966b4f2f0534c76c4", "text": "Technically, of course. Almost any company can go bankrupt. One small note: a company goes bankrupt, not its stock. Its stock may become worthless in bankruptcy, but a stock disappearing or being delisted doesn't necessarily mean the company went bankrupt. Bankruptcy has implications for a company's debt as well, so it applies to more than just its stock. I don't know of any historical instances where this has happened, but presumably, the warning signs of bankruptcy would be evident enough that a few things could happen. Another company, e.g. another exchange, holding firm, etc. could buy out the exchange that's facing financial difficulty, and the companies traded on it would transfer to the new company that's formed. If another exchange bought out the struggling exchange, the shares of the latter could transfer to the former. This is an attractive option because exchanges possess a great deal of infrastructure already in place. Depending on the country, this could face regulatory scrutiny however. Other firms or governments could bail out the exchange if no one presented a buyout offer. The likelihood of this occurring depends on several factors, e.g. political will, the government(s) in question, etc. For a smaller exchange, the exchange could close all open positions at a set price. This is exactly what happened with the Hong Kong Mercantile Exchange (HKMex) that MSalters mentioned. When the exchange collapsed in May 2013, it closed all open positions for their price on the Thursday before the shutdown date. I don't know if a stock exchange would simply close all open positions at a set price, since equity technically exists in perpetuity regardless of the shutdown of an exchange, while many derivatives have an expiration date. Furthermore, this might not be a feasible option for a large exchange. For example, the Chicago Mercantile Exchange lists thousands of products and manages hundreds of millions of transactions, so closing all open positions could be a significant undertaking. If none of the above options were available, I presume companies listed on the exchange would actively move to other, more financially stable exchanges. These companies wouldn't simply go bankrupt. Contracts can always be listed on other exchanges as well. Considering the high level of mergers and acquisitions, both unsuccessful and successful, in the market for exchanges in recent years, I would assume that option 1 would be the most likely (see the NYSE Euronext/Deutsche Börse merger talks and the NYSE Euronext/ICE merger that's currently in progress), but for smaller exchanges, there is the recent historical precedent of the HKMex that speaks to #3. Also, the above answer really only applies to publicly traded stock exchanges, and not all stock exchanges are publicly-held entities. For example, the Shanghai Stock Exchange is a quasi-governmental organization, so I presume option 2 would apply because it already receives government backing. Its bankruptcy would mean something occurred for the government to withdraw its backing or that it became public, and a discussion of those events occurring in the future is pure speculation.", "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": "a62c1a1a6e6730478c6baf65f0c70e36", "text": "\"If Illinois cannot go bankruptcy This is missing a few, very important words, \"\"...under current law.\"\" The United States changed the law so as to allow Puerto Rico to go into a form of bankruptcy. So you cannot rely on a lack of legal support for bankruptcy to protect any bond investments you might make in Illinois. It is entirely possible for the federal government to add a law enabling a state to discharge its debts through a bankruptcy process. That's why the bonds have been downgraded. They are still fine now, but that could change at any time. I don't want to dive too deep into the politics on this stack, but I could quite easily see a bargain between US President Donald Trump and Democrats in Congress where he agreed to special privileges for pension debts owed to former employees in exchange for full discharge of all other debts. That would lead to a complete loss of value for the bonds that you are considering. There still seem to be other options now, but they seem to be getting closer and closer to that.\"", "title": "" }, { "docid": "3732c03ce8f43f586a8a38188d3be293", "text": "This sounds like a crazy idea, but in reality people don't make the wisest decisions when considering bankruptcy in Australia. My suggestion would be to get some advice from an insolvency specialist.", "title": "" }, { "docid": "489e404056f757fa10948fe9ba49e6e7", "text": "I know folks who have had two personal (chap. 7 both times) bankruptcies in the U.S., including one after the bankruptcy reforms of a few years ago. I did have the 10-year thing wrong, though. It's once every eight years for a chap. 7 liquidation, and once every six years for Chap. 13 restructuring.", "title": "" }, { "docid": "691830ea6b7e3ffbb4cf2dd14adc9f17", "text": "If it were possible to take a loan out for a SIPP investment in the future .. I would suggest having an equivalent invested amount already in an ISA .. simply to cover you in the event of a job loss including additional cash in a deposit account. Secondly .. to increase your chances of success with this strategy I would also suggest doing this when the odds are more in your favour during the bottoming out cycle of a market crash. Thirdly .. it depends on how knowledgeable you are about investment , I would suggest being invested globally & in many different sectors to take advantage of various price movements.", "title": "" }, { "docid": "b215c30565d3c958d20c8f7396cc7cc7", "text": "> Are you saying that OP was just unlucky because he didn't realize that forex wasn't covered under SIPC? Pretty much. Opening an investing account has tons of T&C. You're not going to read every single bit of it.", "title": "" } ]	fiqa
7cb38fbfe4b53ef357268c523da58457	Is it possible for me to keep my credit card APR at 0% permanently?	[ { "docid": "8b9620a800b6f6147c6c93aeefef92c5", "text": "If you pay your statement balance in full before the due date you will never pay a cent in interest no matter what your interest rate is.* In fact, I don't even know what my interest rates are. Credit card companies offer this sort of thing in the hopes you will spend more than you can afford to pay completely in those first 15 months. * Unless you use a cash advance, with those you will accrue interest immediately upon receiving the cash sometimes with an additional fee on top.", "title": "" }, { "docid": "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": "8402cd85b94b8bfaaa6a10c0042a438d", "text": "No. There is no incentive for the card issuer to permanently loan you money for free (Even though they make a small amount of money with every transaction). Yes, there are many credit cards that offer introductory 0% APR, often lasting for a year, some even two years. In theory, you could keep applying for new cards with these terms, and continually transfer the balance to the new card (Though you would probably incur a fee for doing so).", "title": "" }, { "docid": "18669cc27884e61802f45f91344c1972", "text": "Banks don't care that you are responsible cardholder. They care to make money. Interest rates are basically 0% by government policy and the banks charge their responsible cardholders 20% interest rates. Think about that for one second, and realize they really do not care about your ability to avoid paying interest, they only need you to 'slip up' one month during your entire lifetime to make a profit from you. It is in their interest for you to get into a spending habit, from 0% promo rates, so that eventually a frivolous purchase or life changing event causes a balance to stay on the card for over one month.", "title": "" }, { "docid": "d81d8e93b552b7855ff1f70f96b57b5b", "text": "No. The intro rate is a gambit by the bank - they accept losing money in the short term but expect to gain money in the long term when your intro is over and you (hopefully) start paying interest. There's not much in it for them if you never get around to paying interest. Same can be said for people who close the card after their intro period, but that's different - the bank is correctly expecting that most people won't bother.", "title": "" } ]	[ { "docid": "9b0ab23855473235675f7b8af2abbde0", "text": "It's a good idea to have some emergency money so I would propose a plan that keeps some in your savings: If the 0% goes away, then consider paying it off, but by that time hopefully you have built up your savings a bit more. Also consider the ability to move the balance from the 2% cards to the 0% one, if that is possible.", "title": "" }, { "docid": "d4d9b4643ff543beead589bc07cf7501", "text": "\"I think so. I am doing this with our furniture. It doesn't cost me any more money to pay right now than it will to pay over the course of 3 years, and I can earn interest on the money I didn't spend. But know this: they aren't offering 0%, they are deferring interest for 3 years. If you pay it off before then great, if you don't you will owe all the accumulated interest. The key with these is that you always pay it, and on time. Miss a payment and you get hosed. If you don't pay on time you will owe the interest that is being deferred. They will also be financing this through a third party (like a major bank) and that company is now \"\"doing business with you\"\" which means in the US they can call you and solicit new services. I am willing to deal with those trade offs though, plus, as you say, you can always pay it off. WHY THEY DO IT (what is in it for them...) A friend of mine works for a major bank that often finances these deals here is how they work. Basically, banks do this to generate leads for their divisions that do cold calls. If you are a high credit, high income customer you go to a classic bank and request cash, if you are building credit or have bad credit, you go to a \"\"financial services\"\" branch. If you tend to finance things like cars and furniture, you get more cold calls.\"", "title": "" }, { "docid": "d6a60c618fd71bab36039cec4b9b3479", "text": "\"I would think it extremely unlikely that an issuer would cancel your card for having an ADB of approximately zero. The issuer charges the vendor that accepts a card a percentage of the transaction (usually up to ~3%, AMEX is generally higher) - so they are making money even if you carry no balance on your card (the specific language for various vendor-side (acceptor) credit card agreements boils down to \"\"we are essentially giving you, the vendor, a short-term loan and you will pay us for it). This why you see credit-card minimum purchase amounts at places like hot-dog stands - they're getting nailed on the percentage. This is also why, when given the choice between \"\"Debit or Credit\"\" for a particular card, I choose where to put the hit on the company I like less - the retailer or the bank.\"", "title": "" }, { "docid": "0b48baf42307cd1e28e47faa2d310556", "text": "Your utilization ratio history is irrelevant to its impact on your credit score. If you run up 80% of your utilization In January, then pay it back to 10% in March, your score in March will reflect the new reduced ratio with no memory of the 80% utilization last month. With that said, don't go around overspending just because you have 0% apr for a little bit. Spend what you would spend with cash.", "title": "" }, { "docid": "34bc46b28be1a7748e85a0ea7563b7e8", "text": "Do you know how many people end up with an 18-21% rate on their credit card? They started off with low teaser rates. There was an article about it recently on Yahoo. Mainly this comes from a lack of discipline, or an unforeseen emergency. However, lets assume, that you are a bit uncommon and have iron discipline. It comes down to a math question. What is the rate on your student loan? I am going to assume 6%, and lets say that you are now paying interest. So there is 7 months between now an then, you would pay $140 (4000 * .06/12 * 7) in interest if you left it on the student loan. Typically there is not really a free lunch with the zero percent interest rate CC. They often charge a 3% balance transfer fee, so you would pay that on the entire amount, about $120. Is it worth the $20? I would say not. However, those simple calculations are not really correct. Since you would have to pay the CC $588.6/month to take care of this, you have to shrink the balance on the student loan to do a true apples to apples comparison. So doing a little loan amortization, you can retire $4000 on the student loan only paying $583/month, and paying a total of $80.40 in interest. So it would cost you money to do what you are suggesting if there is a 3% transfer fee. Even if there is no transfer fee, you only save about $80 in interest. If it was me, I would direct my energy in other areas, like trying to bring in more money to make this student loan go away ASAP. Oh and GO STEELERS!", "title": "" }, { "docid": "59e5ecb0fe258452782762d4a7e06459", "text": "Even if you can get a credit card with a $0 limit, that doesn't necessarily mean that the charges won't succeed. Some of my credit cards have gone over limit by a significant amount (e.g. 140% of limit) without any transactions being declined. The limit just means that the bank is allowed to decline the transaction, but they are also allowed to approve it anyway. So basically what you would have is a credit card where any transaction can always be declined or approved.", "title": "" }, { "docid": "dded85e983b57d4276a66a7e975a4389", "text": "Yes, 0% APR = no interest. APR = Annual Percentage Rate. As in, the lender gets an annual percentage returned to them for lending you money. This is the opposite of APY, which is Annual Percentage Yield, or the money that an investment yields.", "title": "" }, { "docid": "a5fd677f5148dd5e154d02cf4ee19ad1", "text": "Dude- my background is in banking specifically dealing with these scenarios. Take my advice-look for a balance transfer offer-credit card at 0%. Your cost of capital is your good credit, this is your leverage. Why pay 4.74% when you can pay 0%. Find a credit card company with a balance transfer option for 0%. Pay no interest, and own the car outright. Places to start; check the mail, or check your bank, or check local credit unions. Some credit unions are very relaxed for membership, and ask if they have zero percent balance transfers. Good Luck!", "title": "" }, { "docid": "5af1dcf797340fb21e09e8aeffc86b22", "text": "it is possible that if you do not accept the offer, they will try offering you an even lower rate. if they offered you close to 0%, you could start carrying a balance and find a better use for the cash you would have spent paying it off. there are plenty of investments with a guaranteed return of over 0%. personally, i am using a 0% offer from one of my cards to invest in the stock market. i might lose that bet, but on average over the last 10 years, i have not. a pretty safe bet would be paying down your mortgage, or buying a cd that matures when the offer ends. that said, even a 10k$ balance might only pay you around 300$. is that worth the hassle to you?", "title": "" }, { "docid": "ffb06ce27518d327cca2437728abe156", "text": "Welcome to the world of personal finance. IMO, you are heading for trouble. To answer your question, the APR is the annual percentage rate, or what you pay to borrow money from the CC issuer. For example, if you charge $100, and the bill comes, and you pay $100 on or before the due date you pay nothing. If you pay the minimum payment, which would be around $15, you would then borrow $85 (100-15) and pay interest on that amount. The next month's balance would be 85 + any new charges + interest. The interest in this case can be estimated as follows: 85*.199/12 = 1.41. For your information that is a very high interest rate especially given the current market for borrowed money. Many people become saddled with debilitating debt starting off just like you are planning. If we were friends, I would implore you not to get a CC, instead save up and pay for things with cash.", "title": "" }, { "docid": "6904306c85387acaee0b30433944e2a0", "text": "Look for offers for 0% (or low) APR on balance transfers. It is more likely to get a promotional APR on balance transfer, than to lower the APR you already have. Of course, try to pay off the balance as long as you're in the period of the promotion, because otherwise you'll end up paying the high rate again. If you cannot get such an offer (low credit etc) - then just try to pay off ASAP and start rebuilding your credit, not much workarounds there. BTW: When you consider the balance transfer promotions - look at 3 things: The promotion period - when it ends, so that you'd know how much time you have to pay it off. The balance transfer fee - usually the balance transfer itself is not free, and you pay 3-5% on the transfer. If you have 0% APR for 12 months, it makes it effectively 5% APR (for the 5% fee), if the period is lesser - the APR is higher. Take that into the account. The APR after the promotion, in case you can't pay off in that time frame.", "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": "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": "5a5c0c6c03ff7beba4df4dde569f0efe", "text": "\"I've done exactly what you are describing and it was a great move for me. A few years back I had two credit cards. One had a $6000 balance and a fairly high interest rate that I was making steady payments to (including interest). The other was actually tied to a HELOC (home equity line of credit) whose interest rate was fixed to \"\"prime\"\", which was very low at the time, I think my effective rate on the card was around 3%. So, I pulled out one of the \"\"cash advance checks\"\" from the HELOC account and paid off the $6000 balance. Then I started making my monthly payments against the balance on the HELOC, and paid it off a bit more quickly and with less overall money spent because I was paying way less interest. Another, similar, tactic is to find a card that doesn't charge fees for balance transfers and that has a 0% interest rate for the first 12 months on transferred balances. I am pretty sure they are out there. Open an account on that card, transfer the balance to it, and pay it down within 12 months. And, try not to use the card for anything else if you can help it.\"", "title": "" }, { "docid": "af4c4656175187a75c39d3eddf6c605b", "text": "I also had a student loan and glad you are taking a good look on interest rate as it really makes a huge difference. One of the strategies I followed was since my credit improved as I stepped out of school. I took advantage of a good 0 percent credit card. I applied for discover and got a decent credit limit. There are 2 particular things you are looking for in a credit card in this situation Usually the initial $0 transaction charge is only for a couple of months so ensure you take advantage of that. What is the benefit: Imagine being able to pay off that higher interest rate balance with 0% and not have to worry about it immediately. That way you save on the interest you would be paying and stress as well Watch out for: Although you have to ensure that you do payoff the money you paid through the 0 percent credit card ( which may have been put off for a year or even 15 months or so) other wise you may have to pay it all at once as the offer is expiring. Note: for credit cards ensure to note when the 0% is expiring as that is usually not mentioned on the statement and you may have to call the customer service. I was in a similar situation and was able to pay it all off fairly quickly. I am sure you will as well.", "title": "" } ]	fiqa
de762bc07f7b04270dafcf9054e27d12	Understanding the phrase “afford to lose” better	[ { "docid": "5c31fd2ca20d45cccad3bed1bf0859cf", "text": "\"Well.... If you have alllll your money invested, and then there's a financial crisis, and there's a personal crisis at the same time (e.g. you lose your job) then you're in big trouble. You might not have enough money to cover your bills while you find a new job. You could lose your house, ruin your credit, or something icky like that. Think 2008. Even if there's not a financial crisis, if the money is in a tax-sheltered retirement account then withdrawing it will incur ugly penalities. Now, after you've got an emergency fund established, things are different. If you could probably ride out six to twelve months with your general-purpose savings, then with the money you are investing for the long term (retirement) there's no reason you shouldn't invest 100% of the money in stocks. The difference is that you're not going to come back for that money in 6 months, you're going to come back for it in 40 years. As for retirement savings over the long term, though, I don't think it's a good idea to think of your money in those terms. If you ever lose 100% of your money on the stock market while you've invested in diversified instruments like S&P500 index funds, you're probably screwed one way or another because that represents the core industrial base of the US economy, and you'll have better things to worry about, like looking for a used shotgun. Myself, I prefer to give the suggestion \"\"don't invest any money in stocks if you're going to need to take it out in the next 5 years or so\"\" because you generally shouldn't be worried about a 100% loss of all the money in stocks your retirement accounts nearly so much as you should be worried about weathering large, medium-term setbacks, like the dot-com bubble crash and the 2008 financial crisis. I save the \"\"don't invest money unless you can afford to lose it all\"\" advice for highly speculative instruments like gold futures or social-media IPOs. Remember also that while you might lose a lot of your money on the stock market, your savings accounts and bonds will earn you pathetic amounts by comparison, which you will slowly lose to inflation. If you've had your money invested for decades then even during a crash you may still be coming out ahead relative to bonds.\"", "title": "" }, { "docid": "844e727cb6711f204c235c018b8b8ca0", "text": "It's a phrase that has no meaning out of context. When I go to Las Vegas (I don't go, but if I did) I would treat what I took as money I plan to lose. When I trade stock options and buy puts or calls, I view it as a calculated risk, with a far greater than zero chance of having the trade show zero in time. A single company has a chance of going bankrupt. A mix of stocks has risk, the S&P was at less than half its high in the 2008 crash. The money I had in the S&P was not money I could afford to lose, but I could afford to wait it out. There's a difference. We're not back at the highs, but we're close. By the way, there are many people who would not sleep knowing that their statement shows a 50% loss from a prior high point. Those people should be in a mix more suited to their risk tolerance.", "title": "" }, { "docid": "5f218c61466d5c2c295984a1d83a152b", "text": "\"The way I approach \"\"afford to lose\"\", is that you need to sit down and figure out the amount of money you need at different stages of your life. I can look at my current expenses and figure out what I will always roughly be paying - bills, groceries, rent/mortgage. I can figure out when I want to retire and how much I want to live on - I generally group 401k and other retirement separately to what I want to invest. With these numbers I can figure out how much I need to save to achieve this goal. Maybe you want to purchase a house in 5 years - figure out the rough down payment and include that in your savings plan. Continue for all capital purchases that you can think you would aim for. Subtract your income from this and you have the amount of money you have greater discretion over. Subtracting current liabilities (4th of July holiday... christmas presents) and you have the amount you could \"\"afford to lose\"\". As to the asset allocation you should look at, as others have mentioned that the younger you the greater your opportunity is to recoup losses. Personally I would disagree - you should have some plan for the investment and use that goal to drive your diversification.\"", "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": "0fb727ba72d38d7cc1f514d4dc013e50", "text": "\"I think that people only use the phrase \"\"only spend what you can afford to lose\"\" when they are talking about the most risky or speculative investments, or even gambling. When talking about gambling, the following quote is a bottom line: The speculative investment that brought me to this question via google is how much should I invest in Bitcoin? I was tempted to put in 10% of my investments, not including the 6 month safety fund and not including equity in my home. Now thinking about this question, it seems that it depends on your income as a percentage of your investment income (which should grow in proportion to the whole over time). For example: Early stage of career, not much investment income: 20% Mid career: 5% Mid-late career, moving to more safe investments: 5% Late career, retirement: 1% Another way to calculate would be as a percentage of the amount you put into retirement savings per year. Maybe 10% of this figure when you're young and 1% nearer to retirement.\"", "title": "" }, { "docid": "60c540abcf82bfac279538fd755a87c3", "text": "\"The advice to \"\"Only invest what you can afford to lose\"\" is good advice. Most people should have several pots of money: Checking to pay your bills; short term savings; emergency fund; college fund; retirement. When you think about investing that is the funds that have along lead time: college and retirement. It is never the money you need to pay your bills. Now when somebody is young, the money they have decided to invest can be in riskier investments. You have time to recover. Over time the transition is made to less risky investments because the recovery time is now limited. For example putting all your college savings for your recent high school graduate into the stock market could have devastating consequences. Your hear this advice \"\"Only invest what you can afford to lose\"\" because too many people ask about hove to maximize the return on the down payment for their house: Example A, Example B. They want to use vehicles designed for long term investing, for short term purposes. Imagine a 10% correction while you are waiting for closing.\"", "title": "" }, { "docid": "86f6040b3e8eaec64c6e7b504c54c483", "text": "\"I think it's a silly statement. If you are prepared from the start that you might lose it then you shouldn't invest. You invest to earn not to lose. Most often losses are a result of fear. Remember you only lose when you sell lower than you bought for. So if you have the patience you will probably regain. I ask my clients many times how much do they want to earn and they all say \"\"as much as possible\"\". Last time I checked, that's not an objective and therefore a strategy can't be built for that. If there is a strategy then exiting a stock is easy, without a strategy you never know when to exit and then you are exposed to bottomless losses. I've successfully traded for many years with large amounts of money. I made money in the FC and in the bubble, both times it wasn't because I was prepared to lose but because I had an entry and exit strategy. If you have both the idea of investing what u are prepared to lose has little value.\"", "title": "" } ]	[ { "docid": "810598d503a4143d26ca148267fdc063", "text": "The average inflation rate in the US over the last 17 years is 2.17% per year. source So he has $30,000 now. If another 3 years go by and he doesnt invest it in anything whatsoever, he would have 30,000/(1.0217^3) = $28,128 equivalent buying power 3 years from now. I would not focus on how much money he is losing per year, but instead focus on the religious constraint of not gaining interest. What was the intent of the religious prophet or person who was discussing this issue? If he invested the money with a 1% interest rate, and split the profit down the middle, half of it for his savings and half of it given to a charity of his choice, would that be something that would be likely to change his behavior? Consider this approach if you're trying to help someone to understand the ramifications of a financial.", "title": "" }, { "docid": "7cf3a0af9562c14c623d6225f986f0ce", "text": "\"The key point to answer the question is to consider risk aversion. Assume I suggest a game to you: Throw a coin and if you win, you get $5, if you lose nothing happens. Will you play the game? Of course, you will - you have nothing to lose! What if I suggest this: If you win, you get $10,000,005 and if you lose you must pay $10,000,000 (I also accept cars, houses, spouses, and kidneys as payment). While the expected value of the second game is the same as for the first, if you lose the second game you are more or less doomed to spend the rest of your life in poverty or not even have a rest of your life. Therefore, you will not wish to play the second game. Well, maybe you do - but probably only if you are very, very rich and can easily afford a loss (even if you had $11,000,000 you won't be as happy with a possible raise to $21,000,005 as you'd be unhappy with dropping to a mere $1,000,000, so you'd still not like to play). Some model this by taking logarithms: If your capital grows from $500 to $1000 or from $1000 to $2000, in both cases it doubles, hence is considered the same \"\"personal gain\"\", effectively. And, voíla, the logartithm of your capital grows by the same amount in both cases. This refelcts that a rich man will not be as happy about finding a $10 note as a poor man will be about finding a nickel. The effect of an insurance is that you replace an uncertain event of great damage with a certain event of little damage. Of course, the insurance company plays the same game, with roles swapped - so why do they play? One point is that they play the game very often, which tends to nivel the risks - unless you do something stupid and insure all inhabitants of San Francisco (and nobody else) against eqarthquakes. But also they have enough capital that they can afford to lose the game. In a fair situation, i.e. when the insurance costs just as much as damage cost multiplied with probability of damage, a rational you would eagerly buy the insurance because of risk aversion. Therefore, the insurance will in effect be able to charge more than the statistically fair price and many will still (gnawingly) buy it, and that's how they make a living. The decision how much more one is willing to accept as insurance cost is also a matter of whether you can afford a loss of the insured item easily, with regrets, barely, or not all.\"", "title": "" }, { "docid": "1089e6bf48d8e525ba8d50f75a91228b", "text": "\"I'm not sure the term actually has a clear meaning. We can think of \"\"what does this mean\"\" in two ways: its broad semantic/metaphorical meaning, and its mechanical \"\"what actual variables in the market represent this quantity\"\". Net buying/selling have a clear meaning in the former sense by analogy to the basic concept of supply and demand in equilibrium markets. It's not as clear what their meaning should be in the latter sense. Roughly, as the top comment notes, you could say that a price decrease is because of net selling at the previous price level, while a price rise is driven by net buying at the previous price level. But in terms of actual market mechanics, the only way prices move is by matching of a buyer and a seller, so every market transaction inherently represents an instantaneous balance across the bid/ask spread. So then we could think about the notion of orders. Actual transactions only occur in balance, but there is a whole book of standing orders at various prices. So maybe we could use some measure of the volume at various price levels in each of the bid/ask books to decide some notion of net buying/selling. But again, actual transactions occur only when matched across the spread. If a significant order volume is added on one side or the other, but at a price far away from the bid/offer - far enough that an actual trade at that price is unlikely to occur - should that be included in the notion of net buying/selling? Presumably there is some price distance from the bid/offer where the orders don't matter for net buying/selling. I'm sure you'd find a lot of buyers for BRK.A at $1, but that's completely irrelevant to the notion of net buying/selling in BRK.A. Maybe the closest thing I can think of in terms of actual market mechanics is the comparative total volumes during the period that would still have been executed if forced to execute at the end of period price. Assuming that traders' valuations are fixed through the period in question, and trading occurs on the basis of fundamentals (which I know isn't a good assumption in practice, but the impact of price history upon future price is too complex for this analysis), we have two cases. If price falls, we can assume all buyers who executed above the last price in the period would have happily bought at the last price (saving money), while all sellers who executed below the last price in the period would also be happy to sell for more. The former will be larger than the latter. If the price rises, the reverse is true.\"", "title": "" }, { "docid": "0a0eec08c6dc5f325bd54e3dfe206026", "text": "\"Other people have already demonstrated the effect of compound interest to the question. I'd like to add a totally different perspective. Note that the article says if you can follow this simple recipe throughout your working career, you will almost certainly beat out most professional investors [...] you'll likely accumulate enough savings to retire comfortably. (the latter point may be the more practical mark than the somewhat arbitrary million (rupees? dollars?) My point here is that the group of people who do put away a substantial fraction of their (lower) early wages and keep them invested for decades show (at least) two traits that will make a very substantial difference to the average (western) person. They may be correlated, though: people who are not tempted or able to resist the temptation to spend (almost) their whole income may be more likely to not touch their savings or investments. (In my country, people like to see themselves as \"\"world champions in savings\"\", but if you talk to people you find that many people talk about saving for the next holidays [as opposed to saving for retirement].) Also, if you get going this way long before you are able to retire you reach a relative level of independence that can give you a much better position in wage negotiations as you do not need to take the first badly paid job that comes along in order to survive but can afford to wait and look and negotiate for a better job. Psychologically, it also seems to be easier to consistently keep the increase in your spending below the increase of your income than to reduce spending once you overspent. There are studies around that find homeowners on average substantially more wealthy than people who keep living in rental appartments (I'm mostly talking Germany, were renting is normal and does not imply poverty - but similar findings have also been described for the US) even though someone who'd take the additional money the homeowner put into their home over the rent and invested in other ways would have yielded more value than the home. The difference is largely attributed to the fact that buying and downpaying a home enforces low spending and saving, and it is found that after some decades of downpayment homeowners often go on to spend less than their socio-economic peers who rent. The group that is described in this question is one that does not even need the mental help of enforcing the savings. In addition, if this is not about the fixed million but about reaching a level of wealth that allows you to retire: people who have practised moderate spending habits as adults for decades are typically also much better able to get along with less in retirement than others who did went with a high consumption lifestyle instead (e.g. the homeowners again). My estimate is that these effects compound in a way that is much more important than the \"\"usual\"\" compounding effect of interest - and even more if you look at interest vs. inflation, i.e. the buying power of your investment for everyday life. Note that they also cause the group in question to be more resilient in case of a market crash than the average person with about no savings (note that market crashes lead to increased risk of job loss). Slightly off topic: I do not know enough how difficult saving 50 USD out of 50 USD in Pakistan is - and thus cannot comment whether the savings effort called for in the paper is equivalent/higher/lower than what you achieve. I find that trying to keep to student life (i.e. spending that is within the means of a student) for the first professional years can help kick-starting a nest egg (European experience - again, not sure whether applicable in Pakistan).\"", "title": "" }, { "docid": "8953063491a0162c87cdf123213b6f1a", "text": "I think it's because there are people who build entire wealth-gain strategies around certain conditions. When those conditions change, their mechanism of gaining wealth is threatened and they may take a short term loss as they transform their holdings to a new strategy.", "title": "" }, { "docid": "89a258a36de53233b54fd7978b2143a9", "text": "\"Chance favors the prepared mind - Einstein That being said, I liken it to a poker analogy. To win at poker you must play. To play you must already have something to put on the table. If you are betting your entire existence at every hand because you started poor you can win but it is far less likely to happen. You will make illogical decisions due to the fear or being destroyed. It's like how walking across a tightrope is easy when it is 6\"\" above the ground, but not 600 feet above the ground. Also, in the beggining of life there is a good chance you will flame out or mess up a few times. Rich kids can do this as much as they need to, over and over again, to learn and get their feet under them. Poor kids generally get one chance and if anything goes wrong it's back to the factory to work for several more years to save up money again. I believe they are calling this growing class of young people on the edge the \"\"precariat\"\".\"", "title": "" }, { "docid": "2e901a7a1a642e73ca745a90ec08f180", "text": "\"The title of your question is quite different then the content. The term \"\"Rat Race\"\" was coined in the 70's and refers to the endless cycle of working hard to consume more. Fortunately it is very easy not to participate in the cycle and probably will lead to more happiness. Just because one \"\"works\"\" does not mean they are participating in the \"\"rat race\"\", and I would recommend the following: When I think of \"\"rat race\"\" I picture a a bumper-to-bumper freeway of people struggling to get to work. For others it might be different, but that kind of rat race is easily avoided by the multitude of remote work opportunities. Some jobs allow you to work anywhere in the world. Avoiding the rugged consumerism also helps avoid the feelings of being a rat on the wheel. Sure one can like nice things, but do we have to have everything that Madison Ave is trying to sell us? No. Pick some nice things and pay cash. Debt, especially consumer debt, causes a person (in effect) to work for a bank. Avoiding debt will remove those feelings. Saving and investing also helps avoid those feelings. There is profound satisfaction in watching ones account balances grow. Once you see that your investment earnings can outpace your expenses, and then your salary you really feel like you are getting ahead. Above all else giving is a paramount and often overlooked part of a person's financial life. It causes one to be humble and recognize that most people, in this world, are less fortunate that us. It avoids runaway provide that justifies purchases that we cannot afford. So yea you can avoid the \"\"Rat Race\"\" and still work.\"", "title": "" }, { "docid": "00e2616a1be7163b3ca50a88a80a8c57", "text": "For big values the loss becomes negligible. Say you have a 10% chance to get 10 million $/€/Whatever, expected value 1m. You sell that chance for 990k, which loses you 10k of expected income. Why would you throw away 10k? Because in the face of getting almost 1m the 10k are insignificant, 1m and 990k will make you roughly equally rich. Also the richness increase from 1m to 10m is less than 10x since 1m gives you maybe 90% of the freedom that 10m does (depending on how well you can make 10m work for you, most people will just let it rot in the bank). Another way to look at it is to look at bankruptcy risk. Say I have 10k in the bank, which is nice. Those 10k cannot pay for a new house or 2 cars (mine and the one I hit), so I have a small risk of significant loss. If I buy an insurance I reduce my chance of going bankrupt from maybe 0.001% to 0% for a fairly small price. Usually you can buy insurance fairly cheap if you raise your deductible to maybe 5k (both for the house and the car) so that you shoulder the risk you can (shouldering risk = gaining money) and paying an insurance to shoulder the rest for you. That way you minimize the cost to remove the risk of bankruptcy. It makes sense to shoulder as much risk as you can (unless a fixed fee of the insurance makes in unfeasible) before paying others to do it for you so you can optimize your income while removing fatal risks.", "title": "" }, { "docid": "ad64b8995684cf9541d506b431cd2c60", "text": "\"I don't think \"\"cost of carry\"\" is the right word here. Yes, you have the opportunity cost (what you could have earned during that time if you had invested the money somehwere else) and then you also have interest rate risk and default risk.\"", "title": "" }, { "docid": "382415f3c945cb086cf025a9d8ea6b61", "text": "The principle behind the advice to not throw good money after bad is better restated in economics terms: sunk costs are sunk and irrelevant to today's decisions. Money lost on a stock is sunk and should not affect our decisions today, one way or the other. Similarly, the stock going up should not affect our decisions today, one way or the other. Any advice other than this is assuming some kind of mispricing or predictability in the market. Mispricings in general cannot be reliably identified and stock returns are not normally predictable. The only valid (efficient markets) reason I know of to allow money you have lost or made on a stock to affect your decision today is the tax implications (you may want to lock in gains if your tax rate is temporarily low or vice versa).", "title": "" }, { "docid": "2dae3046106ad0fb5fd19585130bbb51", "text": "cost of carry is a confusing term to use but this is what i was given to work with then again, once you factor in interest rate risk and default risk (if you do), what is a better term? it's not just cost of capital at that pt", "title": "" }, { "docid": "691507a8b59982fbc66bf4fc3f3fa831", "text": "\"It is called \"\"Opportunity Cost.\"\" Opportunity cost is the value you lose because of a decision you made. This is the book definition from Investopedia. The difference in return between a chosen investment and one that is necessarily passed up. Say you invest in a stock and it returns a paltry 2% over the year. In placing your money in the stock, you gave up the opportunity of another investment - say, a risk-free government bond yielding 6%. In this situation, your opportunity costs are 4% (6% - 2%).\"", "title": "" }, { "docid": "4c59cd1269592dcf22c7348de2a45cf4", "text": "\"What it means is that you can always come up with alternative framings where the difference between two options is stated as a gain or a loss, but the effect is the same in either case. For instance, if I offer to sell a T-shirt for $10 and offer a cash discount of $1, you pay $10 if buying with a credit card or $9 if buying with cash. If I instead offer the shirt for $9 with a $1 surcharge for credit card use, you still pay $10 if buying with a credit card or $9 if buying with cash. The financial result is the same in either case, but psychologically people may perceive them differently and make different buying decisions. In a tax situation it may be more complicated since exemptions wouldn't directly reduce your tax, but only your taxable income. However, you can still see that, in general, having to pay $X more in tax for not doing some action (e.g., not purchasing health insurance) is the same as being able to pay $X less in tax as a reward for doing the action. Either way, doing the action results in you paying $X less than you would if you didn't do it; the only difference is in which behavior (doing it or not doing it) is framed as the \"\"default\"\" option. Again, these framings may differentially influence people's behavior even when the net result is the same.\"", "title": "" }, { "docid": "01d6fbf48cee0b91f9eaace2d3c0df0a", "text": "\"It will be helpful to establish some definitions: Long \"\"Long\"\" is financial slang for \"\"to have possession of an asset\"\", legally, and \"\"to debit an asset\"\", financially. Short \"\"Short\"\" is financial slang for \"\"to be liable for an asset\"\", legally, and \"\"to credit an asset\"\", financially. Option \"\"Option\"\" is financial slang for \"\"to have the right but not obligation to force the liable to perform action\"\", legally. Without limits and when taken to absurdity, this can mean slavery. For equities, this means \"\"to have the right but not the obligation to force the liable to buy/sell a specified asset at a specified price with a specified expiration for that right\"\" for a call/put, respectively. By the above, a call option is \"\"the right but not the obligation to force the liable to buy a specified asset at a specified price with a specified expiration for that right\"\". By the definition of \"\"long\"\" above, a call option is actually not long the underlying. By the definitions above and with a narrower scope applied to equities & indexes, to be \"\"long\"\" the call means \"\"to have the right but not the obligation to force the liable to buy a specified asset at a specified price with a specified expiration for that right\"\" while to be \"\"short\"\" the call means \"\"to have the obligation to be forced to sell a specified asset at a specified price with a specified expiration for that right\"\". So, to be \"\"long\"\" a call means to simply own the call.\"", "title": "" }, { "docid": "999a2dc2fff6a8b33603cd971c448913", "text": "\"Here is how the Visa network works: A Visa transaction is a carefully orchestrated process. When a Visa account holder uses a Visa card to buy a pair of shoes, it’s actually the acquirer — the merchant’s bank — that reimburses the merchant for the shoes. Then, the issuer — the account holder’s bank — reimburses the acquirer, usually within 24 to 48 hours. Lastly, the issuer collects from the account holder by withdrawing funds from the account holder’s bank account if a debit account is used, or through billing if a credit account is used. I read this to mean the Merchant's Bank (the Acquirer Bank) gives the merchant the money within 2 days via the Card Issuer's Bank. The issuing bank is the one that provides the \"\"credit\"\" feature since that bank won't get reimbursed until the shopper's bill is paid (or perhaps even longer if the shopper carries a balance). You'll notice the Credit Card company (Visa/MC/etc) is only involved in the process as a way of passing messages. Of course they take a fee for this service so seller ultimately get's less than the buyer bought the shoes for.\"", "title": "" } ]	fiqa
da50130b296b031ce13e4dd9f7023a96	Peer to Peer Lending Small notes Vs Large Notes	[ { "docid": "0dd467f067a26cb6d8483c39f8ba980e", "text": "\"I started with lending club about a year ago. I love it. It has been insightful. Off topic, but I am in a loan to a guy who make 120K a year and is regularly late and has a pretty high interest rate. Crazy. You gain some economies of scale by going with a bigger note. I have $100 notes that I get hit for 2 or 3 cents for a fee, where $25 notes are always a penny. However, I don't think that should be your deciding factor. I scale my note purchases based on how much I like the status of the borrower. For example, I did $100 (which is currently my max) for a guy with a reasonable loan amount 16K, a stable work history (15+ years), a great credit history, and a great interest rate (16.9%). If one of those things were a bit out of \"\"whack\"\". I might go $50, two $25. I prefer 36 month notes, really 5 years to get out of debt? It is unlikely to happen IMHO. Keep in mind that if you invest $100 in a loan, then you get one $100 note. You can't break them up into 4 $25 notes. For that reason, if you are likely to want to sell the note prematurely, keep it at $25. The market is greater. I've had a lot of success using the trading account, buying further discounted notes for people who want out of lending club, or get spooked by a couple of late payments and a change in billing date. Another advantage of using the trading account is you start earning interest day 1. I've had new notes take a couple of weeks to go through. To summarize: There are some other things, but that is the main stuff I look at.\"", "title": "" } ]	[ { "docid": "651f98220897b2a34830fade5ce229dc", "text": "\"Probably the most significant difference is the Damocles Sword hanging over your head, the Margin Call. In a nutshell, the lender (your broker) is going to require you to have a certain amount of assets in your account relative to your outstanding loan balance. The minimum ratio of liquid funds in the account to the loan is regulated in the US at 50% for the initial margin and 25% for maintenance margins. So here's where it gets sticky. If this ratio gets on the wrong side of the limits, the broker will force you to either add more assets/cash to your account t or immediately liquidate some of your holdings to remedy the situation. Assuming you don't have any/enough cash to fix the problem it can effectively force you to sell while your investments are in the tank and lock in a big loss. In fact, most margin agreements give the brokerage the right to sell your investments without your express consent in these situations. In this situation you might not even have the chance to pick which stock they sell. Source: Investopedia article, \"\"The Dreaded Margin Call\"\" Here's an example from the article: Let's say you purchase $20,000 worth of securities by borrowing $10,000 from your brokerage and paying $10,000 yourself. If the market value of the securities drops to $15,000, the equity in your account falls to $5,000 ($15,000 - $10,000 = $5,000). Assuming a maintenance requirement of 25%, you must have $3,750 in equity in your account (25% of $15,000 = $3,750). Thus, you're fine in this situation as the $5,000 worth of equity in your account is greater than the maintenance margin of $3,750. But let's assume the maintenance requirement of your brokerage is 40% instead of 25%. In this case, your equity of $5,000 is less than the maintenance margin of $6,000 (40% of $15,000 = $6,000). As a result, the brokerage may issue you a margin call. Read more: http://www.investopedia.com/university/margin/margin2.asp#ixzz1RUitwcYg\"", "title": "" }, { "docid": "1dd1515d180b076c09d79ffa08fbbf92", "text": "Technically it's an asset - a note you hold and your friend promised to repay you.", "title": "" }, { "docid": "685f5af46c704157e62049b3b1eace69", "text": "I don't know much about paypal or bitcoin, but I can provide a little information on BTC(Paypal I thought was just a service for moving real currency). BTC has an exchange, in which the price of a bitcoin goes up and down. You can invest in to it much like you would invest in the stock market. You can also invest in equipment to mine bitcoins, if you feel like that is worthwhile. It takes quite a bit of research and quite a bit of knowledge. If you are looking to provide loans with interest, I would look into P2P lending. Depending on where you live, you can buy portions of loans, and receive monthly payments with the similiar risk that credit card companies take on(Unsecured debt that can be cleared in bankruptcy). I've thrown a small investment into P2P lending and it has had average returns, although I don't feel like my investment strategy was optimal(took on too many high risk notes, a large portion of which defaulted). I've been doing it for about 8 months, and I've seen an APY of roughly 9%, which again I think is sub-optimal. I think with better investment strategy you could see closer to 12-15%, which could swing heavily with economic downturn. It's hard to say.", "title": "" }, { "docid": "c9fabb1dae4afdd4f326ff0595b5be42", "text": "Echoing the others, never lend money to a friend or family member, just give it to them. If you must have a contract in place then consider it a pay it forward type contract where the friend simply gives the same amount to someone in need at a future date. The value of the friendship can never be measured, but it surely will be diminished by the amount of the loan between the two of you.", "title": "" }, { "docid": "2aa8f9bc9b2fedb0eef66df8b2eea64f", "text": "Smaller markets can actually be more volatile so it's not a good idea to lower Graham's criteria for them. The only real adjustment possible is inflation adjustment. $100 million in 1973 United States works out to $500 million today based on the difference in CPI/Inflation from 1973. This number will be different for other markets where the rate of inflation since 1973 has been different. So the real question to ask is - what is to $100 million in the United States in 1973 worth today in your market? Source: http://www.serenitystocks.com/how-build-complete-benjamin-graham-portfolio", "title": "" }, { "docid": "0368cb6eed25fe1d2d0b92360ba78eec", "text": "Stocks, Bonds, Bills, and Lottery Tickets notes the work of Fama and French who researched the idea of a small-cap premium along with a value premium that may be useful to note in terms of what has outperformed if one looks from 1926 to present. Slice and dice would also be another article about an approach that over weights the small-cap and value sides of things if you want another resource here.", "title": "" }, { "docid": "6e488ba73bb1bea39e9b6737e5018779", "text": "Sorry, but I am absolutely correct. Fractional reserve lending (banking) is simply that when someone deposits money into a bank, the bank is allowed to loan that money out, so long as they keep a reserve. If the reserve rate is 10% (it's much lower in reality), and someone deposits $100 into the bank, the bank can then loan out $90. That is fractional reserve lending at its most basics. Now fractional reserve lending does have a multiplier effect. And this effect is exactly how I described it. Let's go back to the example. Person A deposits the $100, the bank then loans $90 to person B, person B spends it with person C, person C takes the money and deposits back to the bank. Now the bank has the $100 cash back, $90 in loans and the $190 in deposits, so they need to hold onto $19 as a reserve and can loan out $81. Assuming the money cycles with 100% efficiency, the bank can continue loaning out the same money until they are left with $1000 in deposits, $900 in loans, and the original $100 is the reserve. This is the multiplier effect.", "title": "" }, { "docid": "bb9efb537062f9e9ff6780d279fb71ca", "text": "\"I figured that there must be some people in a corporate office somewhere who sign $100M loans for lunch. :) The banks have that experience (but I'm not interested in asking them for a sample), and our consultants definitely have that experience, but I'm looking to evaluate the consultants with this exercise. If they provide the sample, then deliver to that sample, I'm still blind as to whether that sample is \"\"good\"\" as compared to something that the corporate world would use on the daily. I'd take your advice for the $1M loan, but I can't help but think as the factors of 10 increase, the data required to properly negotiate also increases. I don't want to go in blind, and provide a proposal that looks like a high school project.\"", "title": "" }, { "docid": "19e274619afa82cd02d9aab9f56d1ebc", "text": "\"You are confining the way you and the other co-founders are paid for guaranteeing the loan to capital shares. Trying to determine payments by equity distribution is hard. It is a practice that many small companies particularly the ones in their initial stage fall into. I always advise against trying to make payments with equity, weather it is for unpaid salary or for guaranteeing a loan such as your case. Instead of thinking about a super sophisticated algorithm to distribute the new shares between the cofounders and the new investors, given a set of constraints, which will most probably fail to make the satisfactory split, you should simply view the co-founders as debt lenders for the company and the shareholders as a capital contributor. If the co-founders are treated as debt lenders, it will be much easier to determine the risk compensation for guaranteeing the loan because it is now assessed in monetary units and this compensation is equal to the risk premium you see fit \"\"taking into consideration the probability of default \"\". On the other hand, capital contributors will gain capital shares as a percentage of the total value of the company after adding SBA loan.\"", "title": "" }, { "docid": "6216c82a3e886b3a0bbedc9202cbea4a", "text": "\"I experimented with Lending Club, lending a small amount of money in early 2008. (Nice timing right - the recession was December 2007 to June 2009.) I have a few loans still outstanding, but most have prepaid or defaulted by now. I did not reinvest as payments came in. Based on my experience, one \"\"catch\"\" is lack of liquidity. It's like buying individual bonds rather than a mutual fund. Your money is NOT just tied up for the 3-year loan term, because to get good returns you have to keep reinvesting as people pay off their loans. So you always have some just-reinvested money with the full 3 year term left, and that's how long it would take to get all your money back out. You can't just cash out when you feel like it. They have a trading platform (which I did not try out) if you want your money sooner, but I would guess the spreads are wide and you have to take a hit when you sell loans. Again though I did not try the trading platform. On the upside, the yields did seem fine. I got 19 eventual defaults from 81 loans, but many of the borrowers made a number of payments before defaulting so only part of the money was lost. The lower credit ratings default more often obviously, only one of 19 defaults had the top credit score. (I tried investing across a range of credit ratings.) The interest rates appear to cover the risk of default, at least on average. You can of course have varying luck. I made only a slight profit over the 3 years, but I did not reinvest after the first couple months, and it was during a recession. So the claimed yields look plausible to me if you reinvest. They do get people's credit scores, report nonpayment on people's credit reports, and even send people to collections. Seems like borrowers have a reason to pay the bill. In 2008 I think this was a difference compared to the other peer lending sites, but I don't know if that's still true. Anyway, for what it's worth the site seemed to work fine and \"\"as advertised\"\" for me. I probably will not invest more money there for a couple reasons: However as best I could tell from my experiment, it is a perfectly reasonable place to put a portion of your portfolio you might otherwise invest in something like high-yield bonds or some other sub-investment-grade fixed income. Update: here's a useful NY Times article: http://www.nytimes.com/2011/02/05/your-money/05money.html\"", "title": "" }, { "docid": "d10eb268437ac3cb2c275b49b796db2d", "text": "From Dimson, Elroy, Paul Marsh, and Mike Staunton. Triumph of the Optimists: 101 Years of Global Investment Returns. Princeton, N.J: Princeton University Press, 2002: Disappointingly, the small firm effect has not proved the road to great riches since soon after its discovery, the US size premium went into reverse. This was repeated in the United Kingdom and virtually all other markets around the world. Despite their disappointing performance in recent years, the very long-run record of small-caps remains one of outperformance in both the United States and the United Kingdom. Furthermore, mid- and small-size companies are still an important asset class. Their differential performance over long periods of history shows that there is useful scope for investors to reduce risk by diversifying across the “large” and the “small” capitalization sectors of the market. Furthermore, given the pervasiveness of the size effect across the entire size spectrum, it is important to all investors since the size tilt of any portfolio will strongly influence its short- and long-run performance. This holds true whether there is a size premium or a size discount. The size effect has certainly proved persistent and robust. What is at issue is whether we should continue to expect a size premium over the longer haul. And accompanying charts: And one chart from BlackRock:", "title": "" }, { "docid": "40360b49e289a7118e858513501b2fb8", "text": "I think this is off topic, but here is a stab: So these are cashless. It could be a way to smooth out the harsh reality of capitalism (I overproduced my product, I have more capacity than I can sell) and I can trade those good to other capitalists who similarly poorly planned production or capacity. Therefore the market for a system like is limited to businesses that do not plan well. Business that plan production or capacity to levels they can already sell for cash do not need a private system to offload goods. Alternatives to such a system include: (I don't know how many businesses are really in this over production / over capacity state. If my assumption that it isn't many is wrong, my answer is garbage.) This is a bartering system with a brokerage. I think we have historically found that common currencies create more trade and economic activity because the value of the note in your pocket, which is the same type of note in my pocket, is common and understood. Exchange rates typically slow down trade. (There are many other reasons to have different currency or notes on a global sale, but the exchange certainly is a hurdle to clear.) This brokerage is essentially adding a new currency (in a grand metaphor). And that new currency is only spendable on their brokerage, which is of limited use to society as a whole, assuming that society as a whole isn't a participating member of that brokerage. I can't really think of why this type of exchange is better than the current system we have now. I wouldn't invest in this as a business, or invest in this as a person looking for opportunity.", "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": "65cf9a90015e47167757486425ce4587", "text": "\"Oftentimes, the lender (the owner of the security) is not explicitly involved in the lending transaction. Let's say the broker is holding a long-term position of 1MM shares from Client A. It is common for Client A's agreement with Broker A to include a clause that allows the broker to lend out the 1MM shares for its own profit (\"\"rehypothecation\"\"). Client A may be compensated for this in some form (e.g. baked into their financing rates), but they do not receive any compensation that is directly tied to lending activities. You also have securities lending agents that lend securities for an explicit fee. For example, the borrower's broker may not have sufficient inventory, in which case they would need to find a third-party lending agent. This happens both on-demand as well as for a fixed-terms (typically a large basket of securities). SLB (securities lending and borrowing) is a business in its own right. I'm not sure I follow your follow-up question but oftentimes there is no restriction that prevents the broker from lending out shares \"\"for a very short time\"\". Unless there is a transaction-based fee though, the number of times you lend shares does not affect \"\"pocketing the interest\"\" since interest accrues as a function of time.\"", "title": "" }, { "docid": "a4d6cf9cbb5e6ad44af28c621493e016", "text": "\"I'm hopeful that opinion based answers are acceptable in this context. I've been using YNAB classic for some years. I've tried to keep all possible options open in the manner of individual items for budget allocation. There does seem to be a number of \"\"emergency\"\" situations for which one would prefer to not dig into regular scheduled expenses. Having a large number of smaller funds give you flexibility in terms of categorizing your past emergencies. This gives you a better view of future allocation of your funds, perhaps freeing up money you might not have otherwise identified. If you are using a program such as YNAB (classic, I'm not familiar with the current version), you can easily transfer funds from one category to another as needed. After all, it's merely numbers in a file, not \"\"real money\"\" that would be otherwise inaccessible. To summarize, I think the smaller fund concept provides a better picture. The big picture of the small stuff means greater flexibility and forecasting. Prior to the world of personal computers, I had a piece of paper in my wallet. It had every category I could devise, representing every penny in my checking account. Pencils and erasers eventually grew into YNAB, but the concept remained the same all these decades.\"", "title": "" } ]	fiqa
99e28db8f7fe285c0c7e0fc02deeb946	Do large market players using HFT make it unsafe for individual investors to be in the stock market?	[ { "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": "1479b4eb0af174904498d34db9675862", "text": "\"I don't think that HFT is a game-changer for retail investors. It does mean that amateur daytraders need to pack it up and go home, because the HFT guys are smarter, faster and have more money than you. I'm no Warren Buffet, but I've done better in the market over the last 4 years than I ever have, and I've been actively investing since 1995. You need to do your research and understand what you're investing in. Barring outliers like the \"\"Flash Crash\"\", nothing has changed. You have a great opportunity to buy quality companies with long track records of generous dividends right now for the \"\"safe\"\" part of your portfolio. You have great value stock opportunities. You have great opportunities to take risks on good companies the will benefit from economic recovery. What has changed is that the \"\"set it and forget it\"\" advice that people blindly followed from magazines doesn't work anymore. If you expect to park your money in Index funds and don't manage your money, you're going to lose. Remember that saying \"\"Buy low, sell high\"\"? You buy low when everyone is freaked out and you hear Gold commercials 24x7 on the radio.\"", "title": "" }, { "docid": "e450299e0cbede429bd9a9f93b8bee39", "text": "Obviously there are good answers about the alternatives to the stock market in the referenced question. HFT has been debated heavily over the past couple of years, and the Flash crash of May 6, 2010, has spurred regulators to rein in heavy automated trading. HFT takes advantage of churn and split second reactions to changing market trends, news and rumors. It is not wise for individual investors to fight the big boys in these games and you will likely lose money in day trading as a result. HFT's defender's may be right when they claim that it makes the market more liquid for you to get the listed price for a security, but the article points out that their actions more closely resemble the currently illegal practice of front-running than a negotiated trade where both parties feel that they've received a fair value. There are many factors including supply and demand which affect stock prices more than volume does. While market makers are generating the majority of volume with their HFT practices, volume is merely the number of shares bought and sold in a day. Volume shows how many shares people are interested in trading, not the actual underlying value of the security and its long term prospects. Extra volume doesn't affect most long term investments, so your long term investments aren't in any extra danger due to HFT. That said, the stock market is a risky place whether panicked people or poorly written programs are trading out of control. Most people are better off investing rather than merely trading. Long term investors don't need to get the absolute lowest price or the highest sell. They move into and out of positions based on overall value and long term prospects. They're diversified so bad apples like Enron, etc. won't destroy their portfolio. Investors long term view allows them to ignore the effects of churn, while working like the tortoise to win the race while the hare eventually gets swallowed by a bad bet. There are a lot of worrying and stressful uncertainties in the global economy. If it's a question of wisdom, focus on sound investments and work politically (as a citizen and shareholder) to fix problems you see in the system.", "title": "" }, { "docid": "35d6242a9c18d05aa1c2988f791bd14e", "text": "In some senses, any answer to this question is going to be opinion based - nobody outside of HFT firms really know what they do, as they tend to be highly secretive due to the competitive nature of the activity they're engaged in. What's more, people working at HFT firms are bound by confidentiality agreements, so even those in the industry have no idea how other firms operate. And finally, there tend to be very, very few people at each firm who have any kind of overall picture of how things work. The hardware and software that is used to implement HFT is 'modular', and a developer will work on a single component, having no idea how it fits into a bigger machine (a programmer, for instance, might right routines to perform a function for variable 'k', but have absolutely no idea for what 'k' stands!) Keeping this in mind and returning to the question . . . The one thing that is well known about HFT is that it is done at incredibly high speeds, making very small profits many thousands of times per day. Activities are typically associated with market making and 'scalping' which profits from or within the bid-ask spread. Where does all this leave us? At worst, the average investor might get clipped for a few cents per round trip in a stock. Given that investing buy its very nature involves long holding periods and (hopefully) large gains, the dangers associated with the activities of HFT are negligible for the average trader, and can be considered no more than a slight markup in execution costs. A whole other area not really touched upon in the answers above is the endemic instability that HFT can bring to entire financial markets. HFT is associated with the provision of liquidity, and yet this liquidity can vanish very suddenly at times of market stress as the HFT remove themselves from the market; the possibility of lack of liquidity is probably the biggest market-wide danger that may arise from HFT operations.", "title": "" } ]	[ { "docid": "daff22609d39d7ef7c465090f1d9b402", "text": "\"Are you talking long-term institutional or retail investors? Long-term retail investors look for orderly markets, the antithesis of HFT business models, which have a direct correlation between market volatility and profits. To a lesser extent, some \"\"dumb money\"\"/\"\"muppet\"\" institutionals do as well. HFT firms tout they supply liquidity into markets, when in fact the opposite is true. Yes, HFTs supply liquidity, but only when the liquidity's benefits runs in their direction. That is, they are applying the part of the liquidity definition that mentions \"\"high trading activity\"\", and conveniently ignoring the part that simultaneously requires \"\"easily buying or selling an asset\"\". If HFT's are the new exchange floor, then they need to be formalized as such, and become bound to market maker responsibilities. If they are actually supplying liquidity, like real Designated Market Makers in the NYSE for example, they become responsible to supply a specified liquidity for specified ticker symbols in exchange for their informational advantage on those tickers. The indisputable fact is that HFT cannot exist at their current profit levels without the information advantage they gain with preferential access to tick-by-tick data unavailable to investors who cannot afford the exchange fees ($1M per exchange 10 years ago, more now). Restrict the entire market, including HFTs, to only second-by-second price data without the tick-by-tick depth, and they won't do so well. Don't get me wrong, I'm not knocking HFTs per se; I think they are a marvelous development, so long as they really do \"\"supply liquidity\"\". Right now, they aren't doing so, and especially in an orderly manner. If you want retail investors to keep out of the water as they are doing now, by all means let HFT (and regulatory capture, and a whole host of other financial service industry ills) run as they are. There are arguments to be made about \"\"only let the professionals play the market\"\", where there is no role for retail and anyone who doesn't know how to play the long-term investment game needs to get out of the kitchen. But if you are making such an argument, come out and say so.\"", "title": "" }, { "docid": "3bce49c9f14e16724303feccaa0b44cf", "text": "I disagree strongly with the other two answers posted thus far. HFT are not just liquidity providers (in fact that claim is completely bogus, considering liquidity evaporates whenever the market is falling). HFT are not just scalping for pennies, they are also trading based on trends and news releases. So you end up having imperfect algorithms, not humans, deciding the price of almost every security being traded. These algorithms data mine for news releases or they look for and make correlations, even when none exist. The result is that every asset traded using HFT is mispriced. This happens in a variety of ways. Algos will react to the same news event if it has multiple sources (Ive seen stocks soar when week old news was re-released), algos will react to fake news posted on Twitter, and algos will correlate S&P to other indexes such as VIX or currencies. About 2 years ago the S&P was strongly correlated with EURJPY. In other words, the American stock market was completely dependent on the exchange rate of two currencies on completely different continents. In other words, no one knows the true value of stocks anymore because the free market hasnt existed in over 5 years.", "title": "" }, { "docid": "7332bdb9d8afee47b06d1b4655871170", "text": "FFTs target people who make frequent, large transactions. It would primarily affect people like day traders, high frequency traders. If you're doing either of those things with your 401(k), I think you have other problems. Oh, it'll also affect people transferring extremely large amounts of money (like billions), which again, if you have in your 401(k), you have other problems.", "title": "" }, { "docid": "6840ddecbf02e8c564ec38036cce7563", "text": "You can execute block trades on the options market and get exercised for shares to create a very large position in Energy Transfer Partners LP without moving the stock market. You can then place limit sell orders, after selling directly into the market and keep an overhang of low priced shares (the technical analysis traders won't know what you specifically are doing, and will call this 'resistance'). If you hit nice even numbers (multiples of 5, multiples of 10) with your sell orders, you can exacerbate selling as many market participants will have their own stop loss orders at those numbers, causing other people to sell at lower and lower prices automatically, and simultaneously keep your massive ask in effect. If your position is bigger than the demand then you can keep a stock lower. The secondary market doesn't inherently affect a company in any way. But many companies have borrowed against the price of their shares, and if you get the share price low enough they can get suddenly margin called and be unable to service their existing debt. You will also lose a lot of money doing this, so you can also buy puts along the way or attempt to execute a collar to lower your own losses. The collar strategy is nice because it is unlikely that other traders and analysts will notice what you are doing, since there are calls, puts and share orders involved in creating it. One person may notice the block trade for the calls initially, but nobody will notice it is part of a larger strategy with multiple legs. With the share position, you may also be able to vote on some things, but that solely depends on the conditions of the shares.", "title": "" }, { "docid": "a3b07a4b217c94d673981374e4e7ced8", "text": "This can be done, you can be prosecuted for some forms of it, in any case there are more riskless ways of doing what you suggested. First, buying call options from market makers results in market makers buying shares at the same delta as the call option. (100 SHARES X DELTA = How many shares MM's bought). You can time this with the volume and depth of the shares market to get a bigger resulting move caused by your options purchase to get bigger quote changes in your option. So on expiration day you can be trade near at the money options back and forth between being out the money and in the money. You would exit the position into liquidity at a profit. The risk here is that you can be sitting on a big options position, where the commissions costs get really big, but you can spread this out amongst several options contracts. Second, you can again take advantage of market maker inefficiencies by getting your primary position (whether in the share market or options market) placed, and then your other position being a very large buy order a few levels below the best bid. Many market makers and algorithms will jump in front of your, they think they are being smart, but it will raise the best bid and likely make a few higher prints for the mark, raising the price of your call option. And eventually remove your large buy order. Again, you exit into liquidity. This is called spoofing. There have been some regulatory actions against people in doing this in the last few years. As for consequences, you need to put things into perspective. US capital market regulators have the most nuanced regulations and enforcement actions of worldwide capital market regulators, and even then they get criticized for being unable or unwilling to curb these practices. With that perspective American laws are basically a blueprint on what to do in 100 other country's stock exchanges, where the legislature has never gotten around to defining the same laws, the securities regulator is even more underfunded and toothless, and the markets more inefficient. Not advice, just reality.", "title": "" }, { "docid": "13ecea7d2cec3c6c0b9e80e181a53a71", "text": "HFT is a controversial issue and there are smart people with very different opinions on it. You sound like your confidence in your own opinion is not matched with a deep knowledge of market structure. Also, front running has a technical meaning, and what you are referring to as front running is something different.", "title": "" }, { "docid": "941aef807b75234d032142cb464d03de", "text": "\"Not really. High frequency traders affect mainly short term investors. If everyone invested long-term and traded infrequently, there would be no high frequency trading. For a long term investor, you by at X, hold for several years, and sell at Y. At worst, high frequency trading may affect \"\"X\"\" and \"\"Y\"\" by a few pennies (and the changes may cancel out). For a long term trader that doesn't amount to a \"\"hill of beans\"\" It is other frequent traders that will feel the loss of those \"\"pennies.\"\"\"", "title": "" }, { "docid": "879c0735767dce73815b86de9e6871b6", "text": "\"This is a classic correlation does not imply causation situation. There are (at least) three issues at play in this question: If you are swing- or day-trading then the first and second issues can definitely affect your trading. A higher-price, higher-volume stock will have smaller (percentage) volatility fluctuations within a very small period of time. However, in general, and especially when holding any position for any period of time during which unknowns can become known (such as Netflix's customer-loss announcement) it is a mistake to feel \"\"safe\"\" based on price alone. When considering longer-term investments (even weeks or months), and if you were to compare penny stocks with blue chip stocks, you still might find more \"\"stability\"\" in the higher value stocks. This is a correlation alone — in other words, a stable, reliable stock probably has a (relatively) high price but a high price does not mean it's reliable. As Joe said, the stock of any company that is exposed to significant risks can drop (or rise) by large amounts suddenly, and it is common for blue-chip stocks to move significantly in a period of months as changes in the market or the company itself manifest themselves. The last thing to remember when you are looking at raw dollar amounts is to remember to look at shares outstanding. Netflix has a price of $79 to Ford's $12; yet Ford has a larger market cap because there are nearly 4 billion shares compared to Netflix's 52m.\"", "title": "" }, { "docid": "e8592693ad8075012e587f766af2775a", "text": "\"In fact, it's quite the opposite. If someone is willing to sell some stock as low as $30/share, and someone else is willing to pay $31/share, one of those individuals is going to get a good deal - unless HFT acts as the middle-man and snags the extra dollar. In which case the individuals get the worst price they would accept and someone with fast collocated computers gets to skim some profits (while adding no value, the order could have happened without the so called \"\"liquidity\"\" that HFT claims to add). It's not exactly that simple, but that's the basic effect. It's an unnecessary middleman that skims profits away from individuals on both sides. I would like to see a return to \"\"investing\"\" back to the meaning of the word, instead of gambling on daily or short-term fluctuations. I wouldn't mind a long-term holding requirement (3 months?) for every purchase, and a daily exchange-calculated set price (calculated by actual orders placed) that everyone who buys/sells a particular stock on a given day pays. Yes, my ideas would destroy an entire industry. I'm ok with that because it would encourage people to really invest in companies.\"", "title": "" }, { "docid": "32f15a8afc23a2b007d6f89f30eef936", "text": "\"Right, as I stated I agree that it will cause greater variance from the true intrinsic value for individual equities. To take this example to an extreme, traders can throw darts at a board of ticker symbols, purchase them, and still diversify away most firm specific risk. You're correct in stating that such a strategy will eventually cause systematic market failures if everyone does it, but the herd goes where they can make the most profit, and right now that is with ETFs. When fund managers prove they have foresight enough to exploit any systematic failures that this causes, or can start beating ETF returns, the herd will flock back to them. I only meant to point out the reasoning behind why this is happening, not advocating one over the other, and also to point out that Paul Singer shouldn't whine. To re-purpose an old saying, \"\"Don't get mad, get even (by making your investors rich).\"\"\"", "title": "" }, { "docid": "3a71be0c4fad79ee79b2a3bf10b56110", "text": "\"What do you mean by \"\"handful\"\" and \"\"VERY well-funded\"\"? There are a plenty of HFT shops out there that do just fine. But what zenwarrior said before about the effect of fund size is especially true for HFT, since market capacity is usually the limiting factor when making trades.\"", "title": "" }, { "docid": "661faa4d48f96d63ec1a4467fefc9842", "text": "The catch is that you're doing a form of leveraged investing. In other words, you're gambling on the stock market using money that you've borrowed. While it's not as dangerous as say, getting money from a loan shark to play blackjack in Vegas, there is always the chance that markets can collapse and your investment's value will drop rapidly. The amount of risk really depends on what specific investments you choose and how diversified they are - if you buy only Canadian stocks then you're at risk of losing a lot if something happened to our economy. But if your Canadian equities only amount to 3.6% of your total (which is Canada's share of the world market), and you're holding stocks in many different countries then the diversification will reduce your overall risk. The reason I mention that is because many people using the Smith Maneuver are only buying Canadian high-yield dividend stocks, so that they can use the dividends to accelerate the Smith Maneuver process (use the dividends to pay down the mortgage, then borrow more and invest it). They prefer Canadian equities because of preferential tax treatment of the dividend income (in non-registered accounts). But if something happened to those Canadian companies, they stand to lose much of the investment value and suddenly they have the extra debt (the amount borrowed from a HELOC, or from a re-advanceable mortgage) without enough value in the investments to offset it. This could mean that they will not be able to pay off the mortgage by the time they retire!", "title": "" }, { "docid": "7d7022a861bd1e99017015e50ae64583", "text": "The typical structure of an HFT group is very small and flat. A few dozen people (maybe). The firm's capital is at risk, so the principals are usually very involved in what everyone is doing. I haven't seen any of these guys take up the title CEO.", "title": "" }, { "docid": "4fc19dd318f11e0953684c776cace4a4", "text": "\"I can address what it means to \"\"pick off\"\" all those trades... As quantycuenta & littleadv have said, it is absolutely true that professionals \"\"prey\"\" on less-sophisticated market participants. They aren't in the market for charity's sake. If you're not familiar with the definition of the word \"\"arbitrage\"\", look it up. One possible strategy that can be employed with HFT machinery in order to arbitrage successfully in the stock market is to 'intercept' orders that are placed on various exchanges. In order to do this, an HFT organization watches all the transactions at once to find opportunities to buy low and sell high. A good explanation of it is described here in this NY Times article; I'll paraphrase what that article lays out. Stocks are traded through multiple exchanges The first key point to understand is that stocks listed on one exchange (i.e. the NYSE) can be sold on multiple exchanges. That's where the actual \"\"I would like to sell 100 shares of Ford stock\"\" is matched with \"\"I would like to buy 100 shares of Ford stock.\"\" There are multiple clearinghouses on the various exchanges. Your order gets presented to one exchange at a Time An ideal market maker would like to look at the order books for a given stock, say Ford, and see that in exchange A there's a sell order for 100 shares of F at $15.85, and in exchange B there's a buy order for 100 shares of F at $15.90. Arbitrage Market maker buys from A, sells in B, and pockets $0.05 * 100... $5. It's not much, but it was relatively risk free. Also, scale this up to the scale of the US' multiple stock exchanges, and there are lots of opportunities to make $5 every second. Computers are (of course) faster than people To tie it in completely with your question about 'picking off trades', HFT rigs can be set up and programmed to go faster than an average retail investor's order. Let's say you execute the trade to buy 100 shares @ $15.85 as a retail investor. The HFT rigs see your order starting to make the rounds of the different exchanges that your brokerage works through, and go out in front in a matter of milliseconds, finding the orders that are less than $15.85 and less than or equal to 100 shares. They execute a transaction, buy them up, sell to you, and pocket the difference. You have been \"\"picked off\"\". It's admittedly not the only way to use HFT equipment to make money, but it's definitely one way to do it.\"", "title": "" }, { "docid": "02cf1973bc8bfdb5930a3f0b20037ecd", "text": "By exploiting institutional investors, HFT does hurt small investors. People with pension, mutual, and index funds get smaller returns. Endowment funds are also going to get hurt which hurts hospitals, schools, charities, and other institutions that work for the public good. I agree with you though. At this point we would likely be just arguing semantics.", "title": "" } ]	fiqa
d27eaa02862f5292b0fc713e469c4e9b	Formula to determine readiness to retire based on age, networth and annual expense	[ { "docid": "a8136e0b36283542987257724559274e", "text": "\"The standard interpretation of \"\"can I afford to retire\"\" is \"\"can I live on just the income from my savings, never touching the principal.\"\" To estimate that, you need to make reasonable guesses about the return you expect, the rate of inflation, your real costs -- remember to allow for medical emergencies, major house repairs, and the like when determining you average needs, not to mention taxes if this isn't all tax-sheltered! -- and then build in a safety factor. You said liquid assets, and that's correct; you don't want to be forced into a reverse mortgage by anything short of a disaster. An old rule of thumb was that -- properly invested -- you could expect about 4% real return after subtracting inflation. That may or may not still be correct, but it makes an easy starting point. If we take your number of $50k/year (today's dollars) and assume you've included all the tax and contingency amounts, that means your nest egg needs to be 50k/.04, or $1,250,000. (I'm figuring I need at least $1.8M liquid assets to retire.) The $1.5M you gave would, under this set of assumptions, allow drawing up to $60k/year, which gives you some hope that your holdings would mot just maintain themselves but grow, giving you additional buffer against emergencies later. Having said that: some folks have suggested that, given what the market is currently doing, it might be wiser to assume smaller average returns. Or you may make different assumptions about inflation, or want a larger emergency buffer. That's all judgement calls, based on your best guesses about the economy in general and your investments in particular. A good financial advisor (not a broker) will have access to better tools for exploring this, using techniques like monte-carlo simulation to try to estimate both best and worst cases, and can thus give you a somewhat more reliable answer than this rule-of-thumb approach. But that's still probabilities, not promises. Another way to test it: Find out how much an insurance company would want as the price of an open-ended inflation-adjusted $50k-a-year annuity. Making these estimates is their business; if they can't make a good guess, nobody can. Admittedly they're also factoring the odds of your dying early into the mix, but on the other hand they're also planning on making a profit from the deal, so their number might be a reasonable one for \"\"self-insuring\"\" too. Or might not. Or you might decide that it's worth buying an annuity for part or all of this, paying them to absorb the risk. In the end, \"\"ya pays yer money and takes yer cherce.\"\"\"", "title": "" } ]	[ { "docid": "ce932128386e9ac1e3bdbe0c347a0ad7", "text": "If annualized rate of return is what you are looking for, using a tool would make it a lot easier. In the post I've also explained how to use the spreadsheet. Hope this helps.", "title": "" }, { "docid": "441c9c7dbaf65942463e75068c6c32b4", "text": "I'll offer another answer, using different figures. Let's assume 6% is the rate of return you can expect. You are age 25, and plan to retire at age 65. If you have $0 and want $1M at retirement, you will need to put away $524.20/month, or $6,290.40/year, which is 15% of $41,936. So $41,936 is what you'd need to make per year in order to get to your target. You can calculate your own figures with a financial calculator: 480 months as your term (or, adjust this to your time horizon in months), .486755% as your interest (or, take your assumed interest rate + 1 to the 1/12th power and subtract 1 to convert to a monthly interest rate), 0 as your PV, and $1M as your FV; then solve for PMT.", "title": "" }, { "docid": "bd1c2de074d2347fc982182af0792e6e", "text": "\"It depends what you mean. Finance Independence and Retirement Early (FI/RE) are two overlapping ideas. If you plan to retire early and spend the same amount of money every year (adjusted for inflation), then you need to save twenty-times your yearly spending to satisfy the 4% Safe Withdrawal rule of thumb. Carefully notice I say \"\"yearly spending\"\" and not income. I'm unaware how it is in Pakistan, but in America, people who retire in their sixties tend to reduce their spending by 30%. This is for a host of reasons like not eating out as much, not driving to work, paid off mortgages, and their children being adults now. In this type of profile, a person needs to save 17.5x yearly spending. This numbers presume a person will only use their built assets as an income source. Any programs like a government pension acting as a safety net. If you factor those in, the estimates above become smaller.\"", "title": "" }, { "docid": "1dbb5cae6181f36ed255b92b5c7e7977", "text": "You should also update your Net Worth Statement as well as an inventory of all your assets. Unfortunately these are extremely time consuming, but in the event that you pass away your loved ones will know all of your finances and it will be easier for them in a very difficult time. The Net Worth Statement compiles just that, your net worth. The net worth is compiled by subtracting your liabilities from you assets. Assets include things such as cash, money in accounts, all estimated value of your household items, any life insurance, bonds, mutual bonds, and retirement money. The liabilities include amounts such as your mortgage, second mortgage, car loans, unsecured loans, credit cards, student loans, and life insurance loans. This statement is a great way to track year to year how you are doing on your finances and if you are where you need to be in order to retire when you would like. The Inventory is also very important. This is used in the event that you have a fire or some sort of disaster that requires you to give a statement of any items you had in your home. This is a very difficult thing to go through, and having this statement ready to hand over only makes thing easier. There are a couple ways to do this. Some people take pictures of everything they have in their house and make notes of prices and values, some people take a video of the whole house, and some people write down item by item on the computer or on a piece of paper. Whatever way you would like to do it is fine, what works for one person does not necessarily work for the other.", "title": "" }, { "docid": "c19bb8874dcaba8f6d3b4abbcf1dfde0", "text": "You can take a queue from any sales opportunity and position it in ways that will still appeal to someone who intends to continue working perpetually. Here are some of the points I would make: 401k matching funds are free money that you will have access to in ~20 years whether you retire or not. Long-term savings that grow in the stock market turn into residual income that will add to your standard of living whether you retire or not. There are tax advantages to deferring income if you are in a high tax bracket now. You will have flexibility to withdraw that money in future years where you might have lower earnings. (For example, in a future year, you could take a sabbatical trip to Europe for a few months without pay and draw on your savings during that time that you are not making money.) Even if you don't invest in a 401k, you and max out HSA accounts if you are eligible, and position that as money for medical expenses. If you never have medical reasons to spend that money, you can still withdraw at retirement age like a 401k or IRA. (Though it gets taxed as income if not used for qualified medical purposes at retirement time.) With an unwilling partner, it's difficult to make a lot of progress, but if you have matching funds from your employer, do make sure that you are getting at least those for yourself. Ultimately if he doesn't want to save for himself, you should for yourself. There are no guarantees in life. If he dies or leaves, you must be prepared to take care of your own needs.", "title": "" }, { "docid": "cd51568044da756f3d4c0a41df77506d", "text": "\"Not to state the obvious, but whenever an investment is being made, the \"\"nuts and bolts\"\" is your return on investment. Analyzing the rate of return on an investment is the primary factor in any decision. Ideally, once the actual mechanics of investment and side \"\"benefits\"\" are factored out, the goal is to be able to analyze the pure financial return. Usually the biggest problem faced in analyzing various investments is comparing the Present Value of an investment to a series of payments that may be made or received in the future. When considering the purchase of a large equity, for example, you might be looking at what series of payments are required to purchase the asset. You can also reverse this and ask, \"\"What amount of money is equivalent to this series of payments?\"\" Ultimately, the Present Value of an Annuity is the way to make these comparisons equal. Fundamentally, the Present Value of an annuity is an amount of money that should, in theory, be equivalent to a series of payments. There is, for example, technically no difference between $1064.94 today and $100 a month for a year, at an interest rate of 1% per month. Grant you, most people would be happier with the money now, but that is what interest does - it compensates you for waiting on your money. You can fire up a spreadsheet and calculate the Present Value as long as you have the monthly payment, interest rate, and number of periods. Alternatively, you can calculate any one of those missing four variables - and the key is usually to understand what that rate would be in order to compare the investments. Finally, the taxable implication is really just an adjustment to the rate of return. Imagine the following three scenarios: (Obviously the rates are fictional - the goal is to show they are the same). Scenarios 1 & 2 are really just two sides of the same coin. Using the Future Value formula in Excel = FV(0.5%, 12, -100), you get $1233.56. In scenario 1, you would have $1233.56 in your bank account. In scenario 2, your bank would have $1233.56 from you, and you would have $100 less debt per month. They are equivalent transactions. Scenario 3 is really just a variation on scenario 2, localized to the United States. Because the interest is tax deductible, however, the rate of 6% isn't really accurate. Assuming you had a 25% tax bracket, you'd actually be getting back one quarter of your interest. Put another way, 7.5% mortgage interest costs you as much as 6% credit card debt. This is how you compare apples and organges - just turn everything into an annuity or a lump sum, using Present Value calculations. Finally, quick rule of thumb - if you owe taxes in both Canada and the US, your Canadian taxes are probably higher than your American ones. As such, any tax incentives will be concomitantly higher. If you only can only use Canadian tax incentives, then look to those incentives, other things being equal.\"", "title": "" }, { "docid": "cb3ecfb14beec853e9a1bf84bf19d800", "text": "If you set a savings amount now and leave it totally fixed you're likely to massively undershoot or overshoot. What is more likely is that you will adjust either your savings or your retirement expectations as things go along. If it turns out you have $10M (2010 dollars) at age 50 perhaps you'll retire early, and if you have $10k perhaps you'll buckle down and work much longer or save much more. So I think what you are looking for is an assurance that if you budget to save x% of your salary over n years, and you get an after-inflation after-tax return of y% pa, you will eventually be able to retire on an income equivalent to z% of your working income. It's pretty easy to calculate that through a future-value formula. For instance, one set of values that works is saving 20% of income, 5% real return, 30 years = final income of 66% of working income. Or save half your income and within 14 years you can retire and keep spending the amount you were previously spending. Resist the temptation to crank up the assumed return until you get the value you want. I think it would be great hubris to try to make this very precise. Yes, probably you will get raises, of course there are taxes to take into account (probably higher while you're saving), inflation and returns will vary from year to year, et. You can guess at them. But they'll change, and there are bigger things that are unpredictable: your personal life, your health, the economic future of your career or industry. I reckon this simple formula is about as good as you will get.", "title": "" }, { "docid": "03e58b338037cb9b34f764a6061a51ca", "text": "You want the net expense of the surcharge minus the rewards to be no more than the interest that you would pay otherwise. Where t is the compounding period for the rate D expressed as a fraction of the overall period for D. So if D is an annual rate (not the APR, the simple rate), it would be expressed as something like 1/365 if compounded daily. That is the number of years in the compounding period. If a monthly rate or weekly compounding, that would change. And p is the number of such time periods in the grace period. So if the grace period were one month, this might be 30. Other variables are as used in the question, all expressed as percentages (which is why I'm dividing by 100). The D rate should be the simple rate, like 6% not the APR of 6.24% or whatever. Note that I'm saying <=. When equal, there is no financial advantage or disadvantage. You could choose either method for the same cost. Now, one method may be more annoying to implement, in which case you might add a fee for it on one side or the other of the equation. Or simply change the less than or equal to be just less than. I may be missing something that you should consider but I don't know. The problem is generic enough that pertinent details might be hidden. But hopefully this at least gives you a framework under which to consider it.", "title": "" }, { "docid": "e2f74d5da16c8fedf4baa825e11f13d7", "text": "According to my reading, the Trinity study says you can withdraw 4% a year for 30 years without exhausting your nest egg, not necessarily that it won't shrink. In most cases, your nest egg will indeed grow. But unfortunately you can't plan to leave no estate while simultaneously preparing for worst-case scenarios in case you happen to pick a bad year to stop working. You can run simulations based on historical data on sites like cFIREsim. And once you're retired, you could potentially increase your spending if simulations show that you're likely to leave behind a large estate. You also probably want to look into things like charitable remainder trusts.", "title": "" }, { "docid": "b0aa776a9b3efd7a2ab769f190a63fce", "text": "It's important to have both long term goals and milestones along the way. In an article I wrote about saving 15% of one's income, I offered the following table: This table shows savings starting at age 20 (young, I know, so shift 2 years out) and ending at 60 with 18-1/2 year's of income saved due to investment returns. The 18-1/2 results in 74% of one's income replaced at retirement if we follow the 4% rule. One can adjust this number, assuming Social Security will replace 30%, and that spending will go down in retirement, you might need to save less than this shows. What's important is that as a starting point, it shows 2X income saved by age 30. Perhaps 1X is more reasonable. You are at just over .5X and proposing to spend nearly half of that on a single purchase. Financial independence means to somehow create an income you can live on without the need to work. There are many ways to do it, but it usually starts with a high saving rate. Your numbers suggest a good income now, but maybe this is only recently, else you'd have over $200K in the bank. I suggest you read all you can about investments and the types of retirement accounts, including 401(k) (if you have that available to you), IRA, and Roth IRA. The details you offer don't allow me to get much more specific than this.", "title": "" }, { "docid": "617ff2128972845335f0183e4689c6af", "text": "Pete, 25 years of inflation looks like 100% to me with back of napkin math. $220K will feel like $110K. In today's dollars, can you live on $110K? (Plus whatever Social Security you'll get)? My concern from what you wrote, if I'm reading it correctly, is that you have this great income, but relatively low savings until now. From the recent question Building financial independence I offered a guide to savings as it compares to income. Even shifted 5 years for a later start, and scaled for a 70-75% replacement ratio, you should be at 2X (or $440K) by now. That's not a criticism, but an observation that you've been spending at a nice clip so far. The result is less saving, of course, but also a need for a higher replacement ratio. Last, a 10% return for the next 25 years may be optimistic. I'm not forecasting doom or gloom, just a more reasonable rate of return, and wouldn't plan to see higher than 7-8% for purposes of planning. If I am wrong, (and if so, we can both laugh all the way to the bank) you can always scale back savings in 10-15 years. Or retire earlier. Note: Pete's question asks about a 40 year old working till 65, but the comment below has him 48 and planning to work until 62. 14 years of $45K deposits total less than $700K. Even at 10%, it wouldn't grow to much more than $2M, let alone $5M.", "title": "" }, { "docid": "592918b1cf6d66a9a86a98c63e2ebbf6", "text": "\"Another approach would be more personalized, which is to measure the risk of missing your goals, rather than measuring the risk of an investment in some abstract sense. Financial planners do this for example with Monte Carlo simulation software (see http://en.wikipedia.org/wiki/Monte_Carlo_method). They would put in a goal such as not running out of money before you die, with assumptions such as the longest you might live and how much you'll withdraw every year. You'd also assume an asset allocation. The Monte Carlo simulation then generates random market movements over the time period, considering historical behavior of your asset allocation, and each run of the simulation would either succeed (you are able to support yourself until death) or fail (you run out of money). The risk measure is the percentage of simulation runs that fail. You can do this to plan saving for retirement in addition to planning withdrawals; then your goal would be to have X amount of money in real after-inflation dollars, perhaps, and success is if you end up with it, and failure is if you don't. The great thing about this risk measure is that it's relevant and personal; \"\"10% chance of being impoverished at age 85,\"\" \"\"20% chance of having to work an extra decade because you don't have enough at 65,\"\" these kinds of answers. Which is a lot easier to act on than \"\"the variance is 10\"\" or \"\"the beta is 1.5\"\" - would you rather know your plan has a 90% chance of success, or know that you have a variance of 10? Both numbers are probably just guesses, but at least the \"\"chance of success\"\" measure is actionable and relevant. Some tangential thoughts FWIW:\"", "title": "" }, { "docid": "3f7bfbd56d669e0399eb055e331c64dd", "text": "Set your xirr formula to a very tall column, leaving lots of empty rows for future additions. In column C, instead of hardcoding the value, use a formula that tests if it's the current bottom entry, like this: =IF(ISBLANK(A7),-C6, C6) If the next row has no date entered (yet), then this is the latest value, and make it negative. Now, to digress a bit, there are several ways to measure returns. I feel XIRR is good for individual positions, like holding a stock, maybe buying more via DRIP, etc. For the whole portfolio it stinks. XIRR is greatly affected by timing of cash flows. Steady deposits and no withdrawals dramatically skew the return lower. And the opposite is true for steady withdrawals. I prefer to use TWRR (aka TWIRR). Time Weighted Rate of Return. The word 'time' is confusing, because it's the opposite. TWRR is agnostic to timing of cashflows. I have a sample Excel spreadsheet that you're welcome to steal from: http://moosiefinance.com/static/models/spreadsheets.html (it's the top entry in the list). Some people prefer XIRR. TWRR allows an apples-to-apples comparison with indexes and funds. Imagine twin brothers. They both invest in the exact same ideas, but the amount of cash deployed into these ideas is different, solely because one brother gets his salary bonus annually, in January, and the other brother gets no bonus, but has a higher bi-weekly salary to compensate. With TWRR, their percent returns will be identical. With XIRR they will be very different. TWRR separates out investing acumen from the happenstance timing of when you get your money to deposit, and when you retire, when you choose to take withdrawals. Something to think about, if you like. You might find this website interesting, too: http://www.dailyvest.com/", "title": "" }, { "docid": "5c5700d815d1ffe9510d788c7d2f1a85", "text": "Yes, assuming that your cash flow is constantly of size 5 and initial investment is 100, the following applies: IRR of 5% over 3 years: Value of CashFlows: 4.7619 + 4.5351 + 4.3192 = 13.6162 NPV: 100 - 13.6162 = 86.3838 Continuous compounding: 86.3838 * (1.05^3) = 100", "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": "" } ]	fiqa
f9bfa5d892dfb41f8e7dfb2799180eec	Is a fixed-price natural gas or electricity contract likely to save money?	[ { "docid": "6caeee28e88fa3a9cd3c721fa8fe9df8", "text": "In my area, the fixed prices are based on an average. My gas company will look at my previous months (six months if I remember correctly) payments and give me an average based on that amount. Then I am contracted for a year based on that average. If I lower my costs, I'm under contract and will not see the savings but if I go over for some reason, I will save money there. It really depends on how your utility companies work so I would check with them, look at your previous billing cycles and determine if the plan will possibly save you money. Of course some things can't be planned for such as the economic downturn like someone else mentioned.", "title": "" }, { "docid": "2b35780cda789898ec37a6d9718bbd5f", "text": "I can only speak to natural gas but I imagine the answer for electricity is the same. In general, yes, it is better to lock into a fixed price contract as in the long run, natural gas prices increase over time. However, if you locked (signed a fixed price contract) in prior to the economic downturn, most likely you were better off not doing so but the key is long-term. http://en.wikipedia.org/wiki/Natural_gas_prices However, do your research as fixed priced contracts vary considerably from company to company. http://www.energyshop.com/ I think it's a good time to sign a fixed-term contract right now as I don't see prices coming down much further with global economies are now recovering from the downturn. HTH", "title": "" }, { "docid": "1d43ec87c2efba1b4b46326580734644", "text": "\"I have some numbers to share that may help. I've been tracking my home's natural gas consumption in a spreadsheet for years. Much of that time I'd only been interested in the quantity used – to measure my home's efficiency after certain upgrades – but in 2006 I also started tracking the \"\"Gas Supply Charge\"\" costs from my local utility, Enbridge, in Ontario, Canada. My numbers are for the gas commodity only (i.e. excluding delivery and customer charges.) I've never been on a fixed-price contract, so the numbers are supposed to be reflective of market rates. However, the numbers do differ from real \"\"spot prices\"\" because Enbridge estimates gas costs up-front and then applies a \"\"gas cost adjustment\"\" at later dates if their estimate was wrong. Natural gas cost per cubic meter for Chris's home http://img686.imageshack.us/img686/6406/naturalgascosts3priorye.png Since 2006, natural gas prices have been generally falling. The last cost I have on file, from my November 2009 bill, is 12.9 cents per cubic meter – being ~20 cents gas supply rate, less gas cost adjustment of ~7 cents. My average cost over that nearly 4 year period, January 2006 through November 2009, was 38.4 cents per cubic meter. Considering the current 5-year fixed rate I found is about 29 cents per cubic meter, there is a substantial premium to locking in when compared to current market rates. However, one can see that during the last 4 years, market prices did substantially exceed that rate for quite some time. Furthermore, when I last looked at those 5-year fixed rates perhaps a year or more ago, I couldn't find a company charging less than 39 cents per cubic meter. So, contract rates have fallen as well. Consequently, if we are at a natural gas price low and the economy is to recover, I tend to agree with Cart's answer and suggest it could be a good time to consider a fixed-rate contract. But, do your own due diligence and read the fine print if you go for it. UPDATE: In the interest of full disclosure, shortly after I did my own research above, I signed up for my first ever fixed-rate natural gas contract. :-)\"", "title": "" }, { "docid": "65f94da30a427513f22bf182ec06cc63", "text": "\"The answer to this question will vary considerably by state and how utilities are regulated in your area. In New York, ESCOs (Energy Supply Companies) are almost always a ripoff for consumers versus the old-style regulated utility (in NY the utility supply markups are tightly regulated, but ESCOs are less regulated). You also need to really understand the marketplace rules for \"\"locking in\"\" a price. If you can lock in the July price for natural gas for a year, that rocks. There are other factors as well. But even then its a real bet, since weather and supply factors can have a dramatic effect on gas prices in the winter. IMO, the best bet is to run with the market rates and bank the efficiency improvements that you build into your home over time. Some utilities offer \"\"budget plans\"\" that smooth out your payments without interest -- I'd recommend that route if predictable bills are your goal.\"", "title": "" }, { "docid": "ceb7d010ff8aba426f67c1921cd9e779", "text": "I would argue: Because the company only offers you this if it can make money from it. What you are basically doing is betting against the company.", "title": "" } ]	[ { "docid": "6d247b072578c57f4a301eeeaf357a4b", "text": "It's not mentioned in the article, but the state will invariably pay for infrastructure upgrades and maintenance around a project like this. The only way this pays off is if the tax revenue generated is enough to pay for any additional expenditure by the state. And the fact that Foxconn has a track record of not living up to its promises is what prevents this from being a no-brainer. We'll need to revisit the topic in 15 years when this deal has reached its conclusion to know if the gamble was worth it. The thing that is working to Foxconn's advantage here is that there were several states competing for this.", "title": "" }, { "docid": "64bc39d668df90dfd1d51e53c0200cf6", "text": "The real benefit to the environment will come as the grid is powered by more renwables. Tesla will charge when renwables are generating, store power in its big battery, and feed energy back to the grid during times of high demand or when renewable sources are down", "title": "" }, { "docid": "6ab5057a6bbe10ed483b0dd26d3db538", "text": "Are you assuming that net metering will continue forever? Eventually that will have to stop and you'll only receive the market generation rate (the price before all the markups in the submission's graph) for power exported to the grid which is unlikely to net you much profit.", "title": "" }, { "docid": "84eb661ad5e87c2c1813d26e8f203a7e", "text": "They're trying to, but ratepayers and state governments are fighting back, especially in progressive states. The big issue is the degree to which you can bank your summer power surplus to offset your winter deficit. You'd think that since you're generating power for the grid in summer you'd get equal credit for that to use in winter when the sun shines less, but power companies do their best to prevent this, so state governments have to mandate it.", "title": "" }, { "docid": "5d18cc2b8115f7be369cef789d203106", "text": "\"This is the best tl;dr I could make, [original](https://qz.com/1017457/there-is-a-point-at-which-it-will-make-economic-sense-to-defect-from-the-electrical-grid/) reduced by 79%. (I'm a bot) *** > A new study by the consulting firm McKinsey modeled two scenarios: one in which homeowners leave the electrical grid entirely, and one in which they obtain most of their power through solar and battery storage but keep a backup connection to the grid. > As daily needs for many are supplied instead by solar and batteries, McKinsey predicts the electrical grid will be repurposed as an enormous, sophisticated backup. > Solar panels and battery prices are dropping fast-lithium-ion batteries have fallen from $1,000 to $230 per kilowatt-hour since 2010-as massive new solar and battery factories come online in China and the US. By 2020, Greentech Media projects, homes and businesses will have more battery storage for energy than utilities themselves. * [Extended Summary*](http://np.reddit.com/r/autotldr/comments/6kchib/there_is_a_point_at_which_it_will_make_economic/) \| [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~155595 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: grid^#1 battery^#2 utility^#3 solar^#4 McKinsey^#5\"", "title": "" }, { "docid": "8a469385f7fa771b60b35a6ca66f7831", "text": "The key is measuring. Like any project you need to evaluate a baseline, make a change, then re-evaluate. Otherwise you are blindly spending money to save, or worse, being manipulated by advertising. Like Chris W. Rea said before me, using a tool like a Kill-A-Watt to measure the effectiveness of what you are about to do is the most important step. For example, if you have an incandescent light bulb in a back part of your basement that you never turn on, it doesn't make much sense to replace that bulb with a $9 LED to save money. If you have an empty freezer in your basement, turn that thing off. Measure your power usage, then you can know for sure what is the most effective action. If you have a family like mine, the best of intentions still leave lights on all day or tvs on a screensaver all night. Invest in simple automation like motion sensing outlets or light switches to automatically turn off power. (It is my full time job to go around a turn off lights, and I want to retire) The biggest payback that I know of is insulation and caulking of your home to make the energy you do use more efficient. If you don't have enough insulation, that is a great place to start. Here is a calculator to estimate the payback of adding insulation. The US government has a cool website with a bunch of tips for saving energy.", "title": "" }, { "docid": "b66b61ad11cadb30ca1d30f219290326", "text": "UNG United States Natural Gas Fund Natural Gas USO United States Oil Fund West Texas Intermediate Crude Oil UGA United States Gasoline Fund Gasoline DBO PowerShares DB Oil Fund West Texas Intermediate Crude Oil UHN United States Heating Oil Fund Heating Oil I believe these are as close as you'd get. I'd avoid the double return flavors as they do not track well at all. Update - I understand James' issue. An unmanaged single commodity ETF (for which it's impractical to take delivery and store) is always going to lag the spot price rise over time. And therefore, the claims of the ETF issuer aside, these products will almost certain fail over time. As shown above, When my underlying asset rises 50%, and I see 24% return, I'm not happy. Gold doesn't have this effect as the ETF GLD just buys gold, you can't really do that with oil.", "title": "" }, { "docid": "2f7c0fca2c76b98c7fd5ae754ab3ce50", "text": "Well, you could get long kw/hr to effectively lock in your high rate, but not suffer from anymore shocks. You could also (and this is what I would do) get short and activate change through a legal pursuit. So, get short your light bill via kilowatt hour swaps, and hedge your downside with some longer-dated swaptions. I'm looking at the implied vol for these swaptions on my bloomberg -- it's looking surprisingly cheap. As far as position sizing, we're looking at some notionals of about $200/month. A pretty large sum. Look into getting leverage through total return swaps or repo financing. Does that help?", "title": "" }, { "docid": "a9f6015acf220676c78c716f3c0cc596", "text": "Last I checked, all business expenses in regards to * Office Supplies * Stationary * Phone service * Marketing are all tax deductible....so how does cutting those costs save money when you'll get that money back via the corporate tax code?", "title": "" }, { "docid": "5a02fa5e98be35dd643239b46c53a8f5", "text": "It's not like we have a lot of options. We have to stop climate change. Natural gas will be increasingly important, and yes it's a fossil fuel, but not nearly as bad as coal or a oil. Before looking for dealers look at Germany. If only they didn't substitute nuclear with renewables but substituted coal and oil with renewables, they'd have eliminated most fossil fuels.", "title": "" }, { "docid": "b691d2a88102987a7892005486283bea", "text": ">companies supplying the electricity For the most part, the transaction costs make trying to play EON, RWE, EDF, et al on the short term basis useless. Those companies are all so big and hedged that almost any pricing scenario isn't going to materially impact them. This isn't PGAE circa 2000.", "title": "" }, { "docid": "46bf08c29e31aff2e14a975f99c6519c", "text": "They will be metering their own electric , so yes that's a plus. And yes I looked at it the same way, free money. I wonder if uploaded a imugr link to the drawings of where they are placing the equipment would help people with determining the benefit.", "title": "" }, { "docid": "e9cf9dd3dcd45697a09d165c0c5ed726", "text": "Power Options is one such example of what you seek, not cheap, but one good trade will recover a year's fee. There's a lot you can do with the stock price alone as most options pricing will follow Black Scholes. Keep in mind, this is a niche, these questions, while interesting to me, generate little response here.", "title": "" }, { "docid": "bc318b71525376c0e18cccb46902d65b", "text": "Thanks for that great explanation. I figured you were referring to FAFSA but wanted to be sure. I'm just having my first so i'm trying to plan for the future but I probably won't be paying for college either, it seems like trade schools may be the better deal nowadays.", "title": "" }, { "docid": "1f22df4ad20c173484ea9d80aa08c158", "text": "Could you perhaps expand on your reasoning behind wanting to take a loan in the first place? Why would you even consider taking a loan for as much as £7,500 (or even much less) if you aren't planning on buying / investing in anything in particular, and you're not in a bad financial situation? If your account never drops below a hundred or two pounds, why would you need to loan money? Just get yourself a credit card, for those times when you might find yourself without money for a short while. But really, it sounds to me like you should be able to set aside a small sum of money every month and create your own savings buffer to cover these situations.", "title": "" } ]	fiqa
5de777311920efea0d49a6f82d5a5d52	How are bonds affected by the Federal Funds Rate?	[ { "docid": "020d22d766952e6008bf848df7c060d2", "text": "\"I'll answer your question, but first a comment about your intended strategy. Buying government bonds in a retirement account is probably not a good idea. Government bonds (generally) are tax advantaged themselves, so they offer a lower interest rate than other types of bonds. At no tax or reduced tax, many people will accept the lower interest rate because their effective return may be similar or better depending, for example, on their own marginal tax rate. In a tax-advantaged retirement account, however, you'll be getting the lower interest without any additional benefit because that account itself is already tax-advantaged. (Buying bonds generally may be a good idea or not - I won't comment on that - but choose a different category of bonds.) For the general question about the relationship between the Fed rate and the bond rate, they are positively correlated. There's not direct causal relationship in the sense that the Fed is not setting the bond rate directly, but other interest bearing investment options are tied to the Fed rate and many of those interest-bearing options compete for the same investor dollars as the bonds that you're reviewing. That's at a whole market level. Individual bonds, however, may not be so tightly coupled since the creditworthiness of the issuing entity matters a lot too, so it could be that \"\"bond rates\"\" generally are going up but some specific bonds are going down based on something happening with the issuer, just like the stock market might be generally going up even as specific stocks are dropping. Also keep in mind that many bonds trade as securities on a secondary market much like stocks. So I've talked about the bond rate. The price of the bonds themselves on the secondary market generally move opposite to the rate. The reason is that, for example, if you buy a bond at less than face value, you're getting an effective interest rate that's higher because you get the same sized incremental payments of interest but put less money into the investment. And vice versa.\"", "title": "" }, { "docid": "6e4bbd3e7d72c51119d1690928f018d4", "text": "\"The federal funds rate is one of the risk-free short-term rates in the economy. We often think of fixed income securities as paying this rate plus some premia associated with risk. For a treasury security, we can think this way: (interest rate) = (fed funds rate) + (term premium) The term premium is a bit extra the bond pays because if you hold a long term bond, you are exposed to interest rate risk, which is the risk that rates will generally rise after you buy, making your bond worth less. The relation is more complex if people have expectations of future rate moves, but this is the general idea. Anyway, generally speaking, longer term bonds are exposed to more interest rate risk, so they pay more, on average. For a corporate bond, we think this way: (interest rate) = (fed funds rate) + (term premium) + (default premium) where the default premium is some extra that the bond must pay to compensate the holder for default risk, which is the risk that the bond defaults or loses value as the company's prospects fall. You can see that corporate and government bonds are affected the same way (approximately, this is all hand-waving) by changes in the fed funds rate. Now, that all refers to the rates on new bonds. After a bond is issued, its value falls if rates rise because new bonds are relatively more attractive. Its value rises if rates on new bonds falls. So if there is an unexpected rise in the fed funds rate and you are holding a bond, you will be sad, especially if it is a long term bond (doesn't matter if it's corporate or government). Ask yourself, though, whether an increase in fed funds will be unexpected at this point. If the increase was expected, it will already be priced in. Are you more of an expert than the folks on wall-street at predicting interest rate changes? If not, it might not make sense to make decisions based on your belief about where rates are going. Just saying. Brick points out that treasuries are tax advantaged. That is, you don't have to pay state income tax on them (but you do pay federal). If you live in a state where this is true, this may matter to you a little bit. They also pay unnaturally little because they are convenient for use as a cash substitute in transactions and margining (\"\"convenience yield\"\"). In general, treasuries just don't pay much. Young folk like you tend to buy corporate bonds instead, so they can make money on the default and term premia.\"", "title": "" } ]	[ { "docid": "94f4b3bad0673cfc2d66983ab898f89d", "text": "What you said is technically correct. But the implication OP might get from that statement is wrong. If the Fed buys bonds and nominal yields go down (Sometimes they might even go up if it meant the market expected the Fed's actions to cause more inflation), inflation expectations don't go down unless real yields as measured by TIPs stay still.", "title": "" }, { "docid": "aefe743b20c09ba211183e7b92a884ed", "text": "Increasing rates from .75% to 1% is an attempt to control debt. The new 1% rate drives down demand for bonds based on the old .75% rate and drives down demand for stocks who have decrease profit because they pay more interest on debt. This is the federal reserves primary tool controling inflation. 1% is what the banks pay to borrow money, they base their lending rates on this 1% figure. If a person can guarantee a .75% return on money borrowed at 1%, they will opt to save and instead lend their money out at 1%.", "title": "" }, { "docid": "233ea902448875e6343af9b6290c5305", "text": "Investopedia has this note where you'd want the contrapositive point: The interest rate, commonly bandied about by the media, has a wide and varied impact upon the economy. When it is raised, the general effect is a lessening of the amount of money in circulation, which works to keep inflation low. It also makes borrowing money more expensive, which affects how consumers and businesses spend their money; this increases expenses for companies, lowering earnings somewhat for those with debt to pay. Finally, it tends to make the stock market a slightly less attractive place to investment. As for evidence, I'd question that anyone could really take out all the other possible economic influences to prove a direct co-relation between the Federal Funds rate and the stock market returns. For example, of the dozens of indices that are stock related, which ones would you want that evidence: Total market, large-cap, small-cap, value stocks, growth stocks, industrials, tech, utilities, REITs, etc. This is without considering other possible investment choices such as direct Real Estate holdings, compared to REITs that is, precious metals and collectibles that could also be used.", "title": "" }, { "docid": "15259aee6b70c7887800c657f4024033", "text": "I see that you're invested in a couple bond funds. You do not want to be invested in bonds when the Fed raises rates. When rates climb, the value of bond investments decline, and vice-versa. So that means you should sell bonds before a rate hike, and buy them before a rate drop.", "title": "" }, { "docid": "48f0b8daf92c94325fe3993451500c40", "text": "The United States Federal Reserve has decided that interest rates should be low. (They think it may help the economy. The details matter little here though.) It will enforce this low rate by buying Treasury bonds at this very low interest rate. (Bonds are future money, so this means they pay a lot of money up front, for very little interest in the future. The Fed will pay more than anyone who offers less money up front, so they can set the price as long as they're willing to buy.) At the end of the day, Treasury bonds pay nearly no interest. Since there's little money to be made with Treasuries, people who want better-than-zero returns will bid up the current-price of any other bonds or similar loan-like instruments to get what whatever rate of return that they can. There's really no more than one price for money; you can think of the price of those bonds as basically (Treasury rate + some modifier based on the risk) percent. I realize thinking about bond prices is weird and different than other prices (you're measuring future-money using present-money and it's easy to be confused) and assure you it ultimately makes sense :) Anyway. Your savings account money has to compete with everyone else willing to lend money to banks. Everyone-else lends money for peanuts, so you get peanuts on your savings account too. Your banking is probably worth more to your bank on account of your check-card payment processing fees (collected from the merchant) than from the money they make lending out your savings (notice how many places have promotional rates if you make your direct deposits or use your check card to make a purchase N times a month). In Europe, it's similar, except you've got a different central bank. If Europe's bank operated radically differently for an extended period of time, you'd expect to see a difference in the exchange rates which would ultimately make the returns from investing in those currencies pretty similar as well. Such a change may show up domestically as inflation in the country with the loose-money policy, and internationally as weakness against other currencies. There's really only one price for money around the entire world. Any difference boils down to a difference in (perceived) risk.", "title": "" }, { "docid": "b45d931f0cfba1a028cae1a5bc8f4399", "text": "Fundamentally interest rates reflect the time preference people place on money and the things money can buy. If I have a high time preference then I prefer money in my hand versus money promised to me at some date in the future. Thus, I will only loan my money to someone if they offer me an incentive which would be an amount of money to be received in the future that is larger than the amount of money I’m giving the debtor in the present (i.e. the interest rate). Many factors go into my time preference determination. My demand for cash (i.e. my cash balance), the credit rating of the borrower, the length of the loan, and my expectation of the change in currency value are just a few of the factors that affect what interest rate I will loan money. The first loan I make will have a lower interest rate than the last loan, ceteris paribus. This is because my supply of cash diminishes with each loan which makes my remaining cash more valuable and a higher interest rate will be needed to entice me to make additional loans. This is the theory behind why interest rates will rise when QE3 or QEinfinity ever stops. QE is where the Federal Reserve cartel prints new money to purchase bonds from cartel banks. If QE slows or ends the supply of money will stop increasing which will make cash more valuable and higher interest rates will be needed to entice creditors to loan money. Note that increasing the stock of money does not necessarily result in lower interest rates. As stated earlier, the change in value of the currency also affects the interest rate lenders are willing to accept. If the Federal Reserve cartel deposited $1 million everyday into every US citizen’s bank account it wouldn’t take long before lenders demanded very high interest rates as compensation for the decrease in the value of the currency. Does the Federal Reserve cartel affect interest rates? Yes, in two ways. First, as mentioned before, it prints new money that is loaned to the government. It either purchases the bonds directly or purchases the bonds from cartel banks which give them cash to purchase more government bonds. This keeps demand high for government bonds which lowers the yield on government bonds (yields move inverse to the price of the bond). The Federal Reserve cartel also can provide an unlimited amount of funds at the Federal Funds rate to the cartel member banks. Banks can borrow at this rate and then proceed to make loans at a higher rate and pocket the difference. Remember, however, that the Federal Reserve cartel is not the only market participant. Other bond holders, such as foreign governments and pension funds, buy and sell US bonds. At some point they could demand higher rates. The Federal Reserve cartel, which currently holds close to 17% of US public debt, could attempt to keep rates low by printing new money to buy all existing US bonds to prevent the yield on bonds from going up. At that point, however, holding US dollars becomes very dangerous as it is apparent the Federal Reserve cartel is just a money printing machine for the US government. That’s when most people begin to dump dollars en masse.", "title": "" }, { "docid": "d9ff22fad222bb44d548c34d3f973584", "text": "Yes, the interest rate on a Treasury does change as market rates change, through changes in the price. But once you purchase the instrument, the rate you get is locked in. The cashflows on a treasury are fixed. So if the market rate increase, the present value of those future cashflows decreases, so the price of the treasury decreases. If you buy the bond after this happens, you would pay a lower price for the same fixed cashflows, hence you will receive a higher rate. Note that once you purchase the treasury instrument, your returns are locked in and guaranteed, as others have mentioned. Also note that you should distinguish between Treasury Bills and Treasury Bonds, which you seem to use interchangeably. Straight from the horse's mouth, http://www.treasurydirect.gov/indiv/products/products.htm: Treasury Bills are short term securities with maturity up to a year, Treasury Notes are medium term securities with maturity between 1 and 10 years, and Treasury Bonds are anything over 10 years.", "title": "" }, { "docid": "fa30e29f8506005c072899b81da89854", "text": "Let's say today you buy the bond issued by StateX at 18$. Let's say tommorow morning the TV says that StateX is going towards default (if it happens it won't give you back not even the 18$ you invested). You (and others that bought the same bond like you) will get scared and try to sell the bond, but a potential buyer won't buy it for 18$ anymore they will risk maximum couple of bucks, therefor the price of your bond tomorrow is worth 2$ and not 18 anymore. Bond prices (even zero coupon ones) do fluctuate like shares, but with less turbolence (i.e. on the same period of time, ups and downs are smaller in percentage compared to shares) EDIT: Geo asked in the comment below what happens to the bond the FED rises the interest. It' very similar to what I explained above. Let's say today you buy the bond just issued by US treasury at 50$. Today the FED rewards money at 2%, and the bond you bought promised you a reward of 2% per year for 10 years (even if it's zero coupon, it will give you almost the same reward of one with coupons, the only difference is that it will give you all the money back at once, that is when the bond expires). Let's say tommorow morning the TV says that FED decided to rise the interest rates, and now on it lends money rewarding a wonderful 4% to investors. US treasury will also have to issue bonds at 4%. You can obviously keep your bond until expiration (and unless US goes default you will get back all your money until the last cent), but if you decide to sell your bond, you will find out that people won't be willing to pay 50$ anymore because on the market they can now buy the same type of bond (for the same period of time, 10 years) that give them 4% per year and not a poor 2% like yours. So people will be willing to pay maximum 40$ for your bond or less.", "title": "" }, { "docid": "160c44a324bab3abc239fa3ebc2a53bf", "text": "Yes, the Fed has made a point of buying up longer-term bonds to push down rates on that part of the curve. That's not an indication that they're having problems selling Treasuries, in fact far from it. But apparently there's no demand for Treasuries and Bloomberg is just making up lies to help get Obama reelected? >Investors are plowing into Treasuries (USB2YBC) at a record pace as the supply of the world’s safest securities dwindles, ensuring yields will stay low regardless of whether the Federal Reserve undertakes more stimulus to fight unemployment. Buyers bid $3.19 for each dollar of the $538 billion in notes and bonds sold this year, the most since the government began releasing the data in 1992 and on pace to beat the high of $3.04 in 2011. The net amount of Treasuries available will decline by 30 percent once proceeds from maturing securities are reinvested, according to data from CRT Capital Group LLC. http://www.bloomberg.com/news/2012-04-09/record-treasury-demand-keeps-yields-low-as-supply-shrinks.html", "title": "" }, { "docid": "25fd54e7984e8a5af60b1f25acdb4347", "text": "Look at this question here. In my answer there, I put a link to an Investopedia article about the bond prices. Keep in mind that speculating over a short term period is pretty dangerous, even with the Treasury notes, and the prices may be affected temporary but greatly by the ordeals like the latest Republican shenanigans in Washington.", "title": "" }, { "docid": "387c129acc390a3c1a392d09e73a8b0f", "text": "\"Of course Goldman Sacs sells the bonds to the fed without charging a commission. They are well known for their compassionate altruism. Just kidding! Of course they charge. The Federal Reserve Act specifies that the Federal Reserve buy and sell Treasury securities only in the \"\"open market.\"\" The Federal Reserve conducts its purchases through \"\"Primary Dealers\"\" - usually Goldman Sacs-these btw are older securities. The new ones such as the fed has been gobbling up lately are sold at auction. This supposedly supports the central banks independence in conducting monetary policy but still doesn't seem right. But then the fact that we have a central bank at all instead of the U.S. Treasury printing the money, doesn't seem quite right either now does it?\"", "title": "" }, { "docid": "478cdde040cedfb6e01af7f6e8296744", "text": "I looked into the investopedia one (all their videos are mazing), but that detail just was not clear to me, it also makes be wonder, if a country issues bonds to finance itself, what happens at maturity when literally millions of them need to be paid? The income needs to have grown to that level or it defaults? Wouldn't all the countries default if that was the case, or are bonds being issued to being able to pay maturity of older bonds already? (I'm freaking myself out by realizing this)", "title": "" }, { "docid": "ececac6321b8ffaeba94cd84491d095d", "text": "Public Securities Association Standard Prepayment Model is what the acronym psa stands for. My understanding is that it allows for adjustments in monthly pre-payment amounts, which will then affect the yield of the bond. Not really sure what the most important bond measure would be... but if I had to guess I'd say its the mechanical bond price/ bond yield relationship. Yields go down, prices go up and vice versa.", "title": "" }, { "docid": "c480cc34018d4f6ac8d9e295e42efa98", "text": "It is different this time. But I think the risk of asset prices rising is almost as equal as them falling. QE caused asset price inflation, but QE was only to calm/support the market. They're probably not going to stuff that QE money back into the central bank for a very long time either. Maybe, they'll just keep rolling over the bonds out to maturity, while relying on deficits to inflate away the assets at the Fed. https://youtu.be/o8LAUQwv77Q My bet is the main risks going forward are political risks, and continued modest inflation among things not measured by CPI.", "title": "" }, { "docid": "bb27312cdf3703a383fa28960ac1908a", "text": "This directly relates to the ideas behind the yield curve. For a detailed explanation of the yield curve, see the linked answer that Joe and I wrote; in short, the yield curve is a plot of the yield on Treasury securities against their maturities. If short-term Treasuries are paying higher yields than long-term debt, the yield curve has a negative slope. There are a lot of factors that could cause the yield curve to become negatively sloped, or at least less steep, but in this case, oil prices and the effective federal funds rate may have played a significant role. I'll quote from the section of the linked answer that describes the effect of oil prices first: a rise in oil prices may increase expectations of short-term inflation, so investors demand higher interest rates on short-term debt. Because long-term inflation expectations are governed more by fundamental macroeconomic factors than short-term swings in commodity prices, long-term expectations may not rise nearly as much as short term expectations, which leads to a yield curve that is becoming less steep or even negatively sloped. As the graph shows, oil prices increased dramatically, so this increase may have increased expectations of short-term inflation expectations substantially. The other answer describes an easing of monetary policy, e.g. a decrease in the effective federal funds rate (FFR), as a factor that could increase the slope of the yield curve. However, a tightening of monetary policy, e.g. an increase in the FFR, could decrease the slope of the yield curve because a higher FFR leads investors to demand a higher rate of return on shorter-term securities. Longer-term Treasuries aren't as affected by short-term monetary policy, so when short-term yields increase more than long-term yields, the yield curve becomes less steep and/or negatively sloped. The second graph shows the effective federal funds rate for the period in question, and once again, the increase is significant. Finally, look at a graph of inflation for the relevant period. Intuitively, the steady increase in inflation from 1975 onward may have increased investors expectations of short-term inflation, therefore increasing short-term yields more than long-term yields (as described above and in the other answer). These reasons aren't set in stone, and just looking at graphs isn't a substitute for an actual analysis of the data, but logically, it seems plausible that the positive shock to oil prices, increases in the effective federal funds rate, and increases in inflation and expectations of inflation contributed at least partially to the inversion of the yield curve. Keep in mind that these factors are all interconnected as well, so the situation is certainly more complex. If you approve of this answer, be sure to vote up the other answer about the yield curve too.", "title": "" } ]	fiqa
700385f0bbcebee9a683678174df01b9	Ways to save for child's college education where one need not commit to set contributions? [duplicate]	[ { "docid": "bd2b50466c2fb48a74a03351450603f0", "text": "529 plans. They accumulate earnings over time and by the time your child goes to college you will be able to withdraw funds for college TAX FREE. The best part about 529s is that there are several different options you can choose from, and you aren't limited to the plans sponsored by your state, you can use whichever plan works best for you. For example, I live in South Carolina and use Utah's Educational Savings Plan because it has no minimum amount to open one up and it has low fees. Hope this helped. Good luck with your search!", "title": "" }, { "docid": "0eaf00f256cf298387ca5d1c2a154aa4", "text": "\"In my opinion, whichever plan or commodity system you use is just supplemental to a very simple thing: go to your bank's online account, set up a regular transfer (monthly in my case, maybe weekly for you depending on when you get your salary in your country/state) to a savings' account in your kid's name with a decent rate, and just watch it grow. Then adjust to salary fluctuations if needed. Also, prefer a tax-free savings account. Been working fine for me for my oldest who's now 4 yo. Started by saving only a little each month and increased as our financial pressure eased up a bit. For his sister, I already set up a similar thing and I will \"\"equalize\"\" both accounts with additional payments over time (Hmm, actually, maybe that's not fair and they just need to be \"\"equalized\"\" in that they both have the same amount for a given age... but that's another question). Another option, which I set up for my oldest but not for his sister was a child trust fund with an initial payment. We moved countries and I don't find a plan that I find similarly attractive here, and the other one is locked until 18 yo. But, as with all portfolios, it comes with a risk. Note that I don't live in the U.S. in the land of crazy college fees. Though I've studied myself in countries where fees were already a drag (and I'm being polite) for various fields (IT and music studies, anyone?), I have to say when I see fees for the big league universities and colleges in the U.S. I am kind of shocked. Doable, but good luck with that and with your loans.\"", "title": "" }, { "docid": "576cccc84488349299efa67fd9a2de45", "text": "529 is good. Though, I would avoid other kinds of investments in kids names and or setting up accounts that are too complex or difficult to use as college costs will come in may aspects starting application fees and travel expenses when looking for college as well as housing and allowance spending.", "title": "" }, { "docid": "f3e50dd861f531211ef5db6eeca1998b", "text": "Since this post was migrated from Parenting, my reply was in the context where it appeared to be misrepresenting facts to make a point. I've edited it to be more concise to my main point. In my opinion, the best way to save for your childs future is to get rid of as much of your own debt as possible. Starting today. For the average American, a car is 6-10%. Most people have at least a couple credit cards, ranging from 10-25% (no crap). College loans can be all over the map (5-15%) as can be signature (8-15%) or secured bank loans (4-8%). Try to stop living within your credit and live within your means. Yeah it will suck to not go to movies or shop for cute things at Kohl's, but only today. First, incur no more debt. Then, the easiest way I found to pay things off is to use your tax returns and reduce your cable service (both potentially $Ks per year) to pay off a big debt like a car or student loan. You just gave yourself an immediate raise of whatever your payment is. If you think long term (we're talking about long-term savings for a childs college) there are things you can do to pay off debt and save money without having to take up a 2nd job... but you have to think in terms of years, not months. Is this kind of thing pie in the sky? Yes and no, but it takes a plan and diligence. For example, we have no TV service (internet only service redirected an additional $100/mo to the wifes lone credit card) and we used '12 taxes to pay off the last 4k on the car. We did the same thing on our van last year. It takes willpower to not cheat, but that's only really necessary for the first year-ish... well before that point you'll be used to the Atkins Diet on your wallet and will have no desire to cheat. It doesn't really hurt your quality of life (do you really NEED 5 HBO channels?) and it sets everyone up for success down the line. The moral of the story is that by paying down your debt today, you're taking steps to reduce long haul expenditures. A stable household economy is a tremendous foundation for raising children and can set you up to be more able to deal with the costs of higher ed.", "title": "" } ]	[ { "docid": "39efca8110c7d497f195cadf2e5cc2fe", "text": "I think you have a good start understanding the ESA. $2k limit per child per year. The other choice is a 529 account which has a much higher limit. You can deposit up to 5 years worth of gifting per child, or $65k per child from you and another $65k from your wife. Sounds great, right? The downside is the 529 typically has fewer investment options, and doesn't allow for individual stocks. The S&P fund in my 529 costs me nearly 1% per year, in the ESA, .1%. the ESA has to be used by age 30, the 529 can be held indefinitely.", "title": "" }, { "docid": "10ac79d2ac6be5c20574e7d20547be22", "text": "\"You have a few correlated questions here: Yes you can. There are only a few investment strategies that require a minimum contribution and those aren't ones that would get a blanket recommendation anyway. Investing in bonds or stocks is perfectly possible with limited funds. You're never too young to start. The power of interest means that the more time you give your money to grow, the larger your eventual gains will be (provided your investment is beating inflation). If your financial situation allows it, it makes sense to invest money you don't need immediately, which brings us to: This is the one you have to look at most. You're young but have a nice chunk of cash in a savings account. That money won't grow much and you could be losing purchasing power to inflation but on the other hand that money also isn't at risk. While there are dozens of investment options1 the two main ones to look at are: bonds: these are fixed income, which means they're fairly safe, but the downside is that you need to lock up your money for a long time to get a better interest rate than a savings account index funds that track the market: these are basically another form of stock where each share represents fractions of shares of other companies that are tracked on an index such as the S&P 500 or Nasdaq. These are much riskier and more volatile, which is why you should look at this as a long-term investment as well because given enough time these are expected to trend upwards. Look into index funds further to understand why. But this isn't so much about what you should invest in, but more about the fact that an investment, almost by definition, means putting money away for a long period of time. So the real question remains: how much can you afford to put away? For that you need to look at your individual situation and your plans for the future. Do you need that money to pay for expenses in the coming years? Do you want to save it up for college? Do you want to invest and leave it untouched to inspire you to keep saving? Do you want to save for retirement? (I'm not sure if you can start saving via IRAs and the like at your age but it's worth looking into.) Or do you want to spend it on a dream holiday or a car? There are arguments to be made for every one of those. Most people will tell you to keep such a \"\"low\"\" sum in a savings account as an emergency fund but that also depends on whether you have a safety net (i.e. parents) and how reliable they are. Most people will also tell you that your long-term money should be in the stock market in the form of a balanced portfolio of index funds. But I won't tell you what to do since you need to look at your own options and decide for yourself what makes sense for you. You're off to a great start if you're thinking about this at your age and I'd encourage you to take that interest further and look into educating yourself on the investments options and funds that are available to you and decide on a financial plan. Involving your parents in that is sensible, not in the least because your post-high school plans will be the most important variable in said plan. To recap my first point and answer your main question, if you've decided that you want to invest and you've established a specific budget, the size of that investment budget should not factor into what you invest it in. 1 - For the record: penny stocks are not an investment. They're an expensive form of gambling.\"", "title": "" }, { "docid": "d457ed23d4d188203fae9f08792b9a22", "text": "\"This is an old question, but a new product has popped up that provides an alternative answer. There is a website called stockpile.com that allows you to purchase \"\"stock gift certificates\"\" for others. These come in both electronic and traditional physical form. This meets my question's original criteria of a gift giver paying for stock without having any of the recipient's personal information and thus maintaining the gift's surprise. I should note a few things about this service: Despite these limitations I wanted to post it here so others were aware of it as an option. If no other alternative will work and this is what it takes to get a parent interested in teaching their child to invest, then it's well worth the costs.\"", "title": "" }, { "docid": "fcf00c058fb795ee2b66e94a51bb9c79", "text": "\"According to the FAFSA info here, they will count your nonretirement assets when figuring the EFC. The old Motley Fool forum question I mentioned in my comment suggests asking the school for a \"\"special circumstances adjustment to your FAFSA\"\". I don't know much about it, but googling finds many pages about it at different colleges. This would seem to be something you need to do individually with whatever school(s) your son winds up considering. Also, it is up to the school whether to have mercy on you and accept your request. Other than that, you should establish whatever retirement accounts you can and immediately begin contributing as much as possible. Given that the decision is likely to be complicated by your foreign income, you should seek professional advice from an accountant versed in such matters.\"", "title": "" }, { "docid": "d9cb6f639cc02d9fa95f1f7e8dd31186", "text": "Probably the biggest tax-deferment available to US workers is through employee-sponsored investment plans like the 401k. If you meet the income limits, you could also use a Traditional IRA if you do not have a 401k at work. But keep in mind that you are really just deferring taxes here. The US Government will eventually get their due. :) One way which you may find interesting is by using 529 plans, or other college investment plans, to save for your child's (or your) college expenses. Generally, contributions up to a certain amount are deductible on your state taxes, and are exempt from Federal and State taxes when used for qualifying education expenses. The state deduction can lower your taxes and help you save for college for your children, if that is a desire of yours.", "title": "" }, { "docid": "5dcea2a043b2b89f705cdb34fec89fe2", "text": "\"As soon as you specify FDIC you immediately eliminate what most people would call investing. The word you use in the title \"\"Parking\"\" is really appropriate. You want to preserve the value. Therefore bank or credit union deposits into either a high yield account or a Certificate of Deposit are the way to go. Because you are not planning on a lot of transactions you should also look at some of the online only banks, of course only those with FDIC coverage. The money may need to be available over the next 2-5 years to cover college tuition If needing it for college tuition is a high probability you could consider putting some of the money in your state's 529 plan. Many states give you a tax deduction for contributions. You need to check how much is the maximum you can contribute in a year. There may be a maximum for your state. Also gift tax provisions have to be considered. You will also want to understand what is the amount you will need to cover tuition and other eligible expenses. There is a big difference between living at home and going to a state school, and going out of state. The good news is that if you have gains and you use the money for permissible expenses, the gains are tax free. Most states have a plan that becomes more conservative as the child gets closer to college, therefore the chance of losses will be low. The plan is trying to avoid having a large drop in value just a the kid hits their late teens, exactly what you are looking for.\"", "title": "" }, { "docid": "bb1a6886a0414d71c3b50c1163c6222c", "text": "I think you have already outlined for yourself most of the pros and cons of each method of giving. It sounds to me like you have some desire to control how the money is spent, or at least reserve the right not to give it to a child who will waste it (according to your definition). If you set up an UTMA/UGMA account, or just give the money directly each year as a birthday gift, you are surrendering control of the money. It's a gift and is no longer yours to direct. If you set up a 529, you at least restrict the money to a particular, useful purpose. Moreover, if you retain ownership of the 529, you can take the money back, albeit with a tax penalty to yourself. If you do hold a 529 in your name, but for a child's benefit, there are a couple of things to consider with respect to future financial aid (this is from recent experience--my in-laws have 529s for our children, both of whom are currently in college). A 529 not owned by the student or the student's parent is not reported as an asset (of the child or the parent) on the Free Application for Federal Student Aid (FAFSA). However, once such a 529 is used to pay college expenses, the amount of those payments does get reported on the following year's FAFSA, and counts as untaxed income for the purposes of figuring the Expected Family Contribution (EFC). Untaxed income is assessed towards the EFC at 50%. In contrast, parental assets are assessed at around 7%, if I recall correctly, and student assets at around 35%. Student-owned 529s are assessed at the rate of parental assets, which is an advantage. If the amount you will set aside is less than the cost of one year of college, you can avoid the disadvantage of the untaxed income assessment by just using the entire 529 for the final year of school, since there will be no FAFSA for the following year. It occurs to me that there is one other way you can give to them that you did not mention, and may make you more comfortable in terms of encouraging some positive behavior. Namely, save the money in a self-owned account, then, when they are old enough to get a job that provides a W-2 showing declared, earned income, you can use the savings to fund a Traditional or Roth IRA for them, up to the limit allowed each year, until the money you set aside is exhausted. The Roth is a better long-term savings vehicle, but the Traditional would carry bigger penalties for early withdrawal and would therefore be less tempting to draw on.", "title": "" }, { "docid": "d5fccfee4794940e96ad9d71100be6ab", "text": "\"Several student loans are backed by government guarantee and this will allow you to get attractive rates. This may require them to consolidate the three classes of loans separately. Many commercial banks offer consolidation services, one example is Wachovia discussed at https://www.wellsfargo.com/student/private-loan-consolidation/ Other methods of \"\"consolidation\"\" are of course anything that pays off the original loan. If available, using a parent's home equity line of credit to pay of the loans and then paying back the parents can save money. An additional benefit of HELOC-style loans is that they are very flexible in their payment terms. For example you may pay $25 per year to keep the account open and then only be required to make interest payments. Links: https://origin.bankrate.com/finance/college-finance/faqs-on-student-loan-consolidation-1.aspx\"", "title": "" }, { "docid": "c8a1f6e41f6870de191a8e56f1d19176", "text": "You are faced with a dilemma. If you use a 529 plan to fund your education, the short timeline of a few years will limit your returns that are tax free. Most people who use a 529 plan either purchase years of tuition via lump sum, when the child is young; or they put aside money on a regular basis that will grow tax deferred/tax free. Some states do give a tax break when the contribution is made by a state taxpayer into a plan run by the state. The long term plans generally use a risk profile that starts off heavily weighted in stock when the child is young, and becomes more fixed income as the child reaches their high school years. The idea is to protect the fund from big losses when there is no time to recover. If you choose the plan with the least risk the issue is that the amount of gains that are being protected from federal tax is small. If you pick a more aggressive plan the risk is that the losses could be larger than the state tax savings. Look at some of the other tax breaks for tuition to see if you qualify Credits An education credit helps with the cost of higher education by reducing the amount of tax owed on your tax return. If the credit reduces your tax to less than zero, you may get a refund. There are two education credits available: the American Opportunity Tax Credit and the Lifetime Learning Credit. Who Can Claim an Education Credit? There are additional rules for each credit, but you must meet all three of the following for either credit: If you’re eligible to claim the lifetime learning credit and are also eligible to claim the American opportunity credit for the same student in the same year, you can choose to claim either credit, but not both. You can't claim the AOTC if you were a nonresident alien for any part of the tax year unless you elect to be treated as a resident alien for federal tax purposes. For more information about AOTC and foreign students, visit American Opportunity Tax Credit - Information for Foreign Students. Deductions Tuition and Fees Deduction You may be able to deduct qualified education expenses paid during the year for yourself, your spouse or your dependent. You cannot claim this deduction if your filing status is married filing separately or if another person can claim an exemption for you as a dependent on his or her tax return. The qualified expenses must be for higher education. The tuition and fees deduction can reduce the amount of your income subject to tax by up to $4,000. This deduction, reported on Form 8917, Tuition and Fees Deduction, is taken as an adjustment to income. This means you can claim this deduction even if you do not itemize deductions on Schedule A (Form 1040). This deduction may be beneficial to you if, for example, you cannot take the lifetime learning credit because your income is too high. You may be able to take one of the education credits for your education expenses instead of a tuition and fees deduction. You can choose the one that will give you the lower tax.", "title": "" }, { "docid": "902175a618268269d197835f4027f20c", "text": "\"Under current US tax code, you can receive $14K from an unlimited number of people with no tax consequence to them. Yes, the burden is on the giver. There's an exception to most rules. If I gift you a large sum and don't fill out the required paperwork, paying the tax due, the IRS can go after the recipient for their cut. \"\"Follow the money\"\" is still going to be applied. Even if over $14K, a tax isn't always due. Form 709 is required, and will allow a credit against one's lifetime gifting, currently $5.34M. In effect, the current limits mean that 99%+ of us will never worry about this limit, just file the paperwork. Last, the 529 College Savings accounts permit a 5 year look ahead, i.e. a parent can deposit $70K to jump start her child's account. Then no gift for next 4 years.\"", "title": "" }, { "docid": "c79894c7fa372a0fc8b279eaf727db50", "text": "\"In my opinion, you can't save too much for retirement. An extra $3120/yr invested at 8% for 30 years would give you $353K more at retirement. If your \"\"good amount in my 401k\"\" is a hint that you don't want us to go in that direction, then how about saving for the child's college education? 15 years' savings, again at 8% will return $85K, which feels like a low number even in today's dollars, 15 years of college inflation and it won't be much at all. Not sure why there's guilt around spending it. If one has no debt, good retirement savings level, and no pressing need to save for something else, enjoying one's money is an earned reward. Even so, if you want a riskless 'investment' just prepay the mortgage. You'll see an effective return of the mortgage rate, 4%(?) or so, vs the .001% banks are paying. Of course, this creates a monthly windfall once the mortgage is paid off, but it buys you time to make this ultimate decision. In the end, I'd respond that similar to Who can truly afford luxury cars?, one should produce a budget. I don't mean a set of constraints to limit spending in certain categories, but rather, a look back at where the money went last year and even the year before that. What will emerge are the things that are normal, the utility bills, tax bill, mortgage, etc, as well as the discretionary spending. If all your current saving is on track, the investment may be in experiences, not financial products.\"", "title": "" }, { "docid": "98308db7064246b27f37cdf304800bf8", "text": "There are two types of 529 programs. One where you put money aside each month. The one offered by your state may give you a tax break on you deposits. You can pick the one from any state, if you like their options better. During the next 18 years the focus the investment changes from risky to less risky to no risk. This happens automatically. The money can be used for tuition, room, board, books, fees. The 2nd type of 529 is also offered by a state but it is geared for a big lump sum payment when the child is young. This will cover full tuition and fees (not room and board, or books) at a state school. The deal is not as great if they child wants to go out of state, or you move, or they want to go to a private school. You don't lose everything, but you will have to make up the shortfall at the last minute. There are provisions for scholarship money. If you kid goes to West Point you haven't wasted the money in the 529. The money in either plan is ignored while calculating financial aid. Other options such as the Coverdell Education Savings account also exist. But they don't have the options and state tax breaks. Accounts in the child's name can impact the amount of financial aid offered, plus they could decide to spend the money on a car. The automatic investment shift for most of the state 529 plans does cover your question of how much risk to take. There are also ways to transfer the money to other siblings if one decides not to go to college. Keep in mind that the funds don't have to be spent as soon as they turn 18, they can wait a few years before enrolling in college.", "title": "" }, { "docid": "2e808270f61e48530726c53dae641c17", "text": "One big advantage that the 529 plan has is that most operate like a target date fund. As the child approaches college age the investment becomes more conservative. While you can do this by changing the mix of investments, you can't do it without capital gains taxes. Many of the issues you are concerned about are addressed: they are usable by other family members, they don't hurt financial aid offers, they address scholarships, they can be used for books or room and board. Many states also give you a tax break in the year of the contribution.", "title": "" }, { "docid": "7e23806abc4aac758bb9c06fc926f314", "text": "begin having them take community college courses while they are still in high school - this should be a better use of time than AP courses. if they continue and get an associates degree the credits should be transferrable anywhere take the associates degree to a state school and have them finish just their two years (4 semesters) at the state school. that should be an non-stressful and affordable approach that will give them a time/age-based advantage over their peers. so instead of playing with financial aid and retirement plan rules, this sort of goal can help you save, without creating inconsequential and unnecessary expectations for yourself or your family", "title": "" }, { "docid": "f91f4a2c1fefc9609804c9797e792abd", "text": "The British didn't choose to stay away, they were forced out (as was Sweden) by their fucked up policies and being unable to defend their peg against the (trading only at the time) euro currency. They lost a fuckload in the process and when it became apparent that those that understand market arbitrage wouldn't let up (what killed Mexico/Argentia Peso as well), they backed out.", "title": "" } ]	fiqa
f6a6c6a54bca7a2cdb8661119ad25003	Variations of Dual momentum	[ { "docid": "0e67e45b5854d2f1613136954e4faf30", "text": "\"There's a few layers to the Momentum Theory discussed in that book. But speaking in general terms I can answer the following: Kind of. Assuming you understand that historically the Nasdaq has seen a little more volatility than the S&P. And, more importantly, that it tends to track the tech sector more than the general economy. Thus the pitfall is that it is heavily weighted towards (and often tracks) the performance of a few stocks including: Apple, Google (Alphabet), Microsoft, Amazon, Intel and Amgen. It could be argued this is counter intuitive to the general strategy you are trying to employ. This could be tougher to justify. The reason it is potentially not a great idea has less to do with the fact that gold has factors other than just risk on/off and inflation that affect its price (even though it does!); but more to do with the fact that it is harder to own gold and move in and out of positions efficiently than it is a bond index fund. For example, consider buying physical gold. To do so you have to spend some time evaluating the purchase, you are usually paying a slight premium above the spot price to purchase it, and you should usually also have some form of security or insurance for it. So, it has additional costs. Possibly worth it as part of a long-term investment strategy; if you believe gold will appreciate over a decade. But not so much if you are holding it for as little as a few weeks and constantly moving in and out of the position over the year. The same is true to some extent of investing in gold in the form of an ETF. At least a portion of \"\"their gold\"\" comes from paper or futures contracts which must be rolled every month. This creates a slight inefficiency. While possibly not a deal breaker, it would not be as attractive to someone trading on momentum versus fundamentals in my opinion. In the end though, I think all strategies are adaptable. And if you feel gold will be the big mover this year, and want to use it as your risk hedge, who am I or anyone else to tell you that you shouldn't.\"", "title": "" } ]	[ { "docid": "2aa481ffa2d33951bfdbbab1ebf2c7cb", "text": "Not really. You can have two bonds that have identical duration but vastly different convexity. Pensions and insurance portfolio managers are most common buyers as they're trying to deal with liability matching and high convexity allows them to create a barbell around their projected liabilities.", "title": "" }, { "docid": "b486f52ac222a212ce347c49cee3f862", "text": "\"This is the best tl;dr I could make, [original](http://cep.lse.ac.uk/pubs/download/dp1503.pdf) reduced by 99%. (I'm a bot) *** > Alternative risk outcomes All risk outcomes capture ex-post risk realizations rather than ex- ante risks. > 4.8 1.2 1.6 Figure 2: Positive Correlation Tests - Dynamics t+1 t+2 t+3 t+4 t+5 t+6 Displacement Probability in Year t+k t+7 t+8 Notes: Risk realization in t + 1 may fail to fully capture the unemployment risk faced by an individual as she is making her coverage choice at time t, which justifies using risk realizations for that individual further into the future. > 05 Individual-level model &beta;OLS =.082 &beta;2SLS =.245 0.05.1.15 Firm Displacement Risk in t.2 Notes: The Figure uses cross-sectional variation in displacement risk across firms as a risk shifter to estimate how UI coverage choices react to variation in risk that is not driven by individual moral hazard. * [Extended Summary*](http://np.reddit.com/r/autotldr/comments/76t73y/lse_riskbased_selection_in_unemployment_insurance/) \| [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~229382 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: risk^#1 coverage^#2 individual^#3 work^#4 selection^#5\"", "title": "" }, { "docid": "1fec42beb84e2821dd90cd035446ea8d", "text": "Something like cost = a × avg_spreadb + c × volatilityd × (order_size/avg_volume)e. Different brokers have different formulas, and different trading patterns will have different coefficients.", "title": "" }, { "docid": "69e661b4e1154b9542f9d63bc5d62bbb", "text": "So I did some queries on Google Scholar, and the term of art academics seem to use is target date fund. I notice divided opinions among academics on the matter. W. Pfau gave a nice set of citations of papers with which he disagrees, so I'll start with them. In 1969, Paul Sameulson published the paper Lifetime Portfolio Selection By Dynamic Stochaistic Programming, which found that there's no mathematical foundation for an age based risk tolerance. There seems to be a fundamental quibble relating to present value of future wages; if they are stable and uncorrelated with the market, one analysis suggests the optimal lifecycle investment should start at roughly 300 percent of your portfolio in stocks (via crazy borrowing). Other people point out that if your wages are correlated with stock returns, allocations to stock as low as 20 percent might be optimal. So theory isn't helping much. Perhaps with the advent of computers we can find some kind of empirical data. Robert Shiller authored a study on lifecycle funds when they were proposed for personal Social Security accounts. Lifecycle strategies fare poorly in his historical simulation: Moreover, with these life cycle portfolios, relatively little is contributed when the allocation to stocks is high, since earnings are relatively low in the younger years. Workers contribute only a little to stocks, and do not enjoy a strong effect of compounding, since the proceeds of the early investments are taken out of the stock market as time goes on. Basu and Drew follow up on that assertion with a set of lifecycle strategies and their contrarian counterparts: whereas a the lifecycle plan starts high stock exposure and trails off near retirement, the contrarian ones will invest in bonds and cash early in life and move to stocks after a few years. They show that contrarian strategies have higher average returns, even at the low 25th percentile of returns. It's only at the bottom 5 or 10 percent where this is reversed. One problem with these empirical studies is isolating the effect of the glide path from rebalancing. It could be that a simple fixed allocation works plenty fine, and that selling winners and doubling down on losers is the fundamental driver of returns. Schleef and Eisinger compare lifecycle strategy with a number of fixed asset allocation schemes in Monte Carlo simulations and conclude that a 70% equity, 30% long term corp bonds does as well as all of the lifecycle funds. Finally, the earlier W Pfau paper offers a Monte Carlo simulation similar to Schleef and Eisinger, and runs final portfolio values through a utility function designed to calculate diminishing returns to more money. This seems like a good point, as the risk of your portfolio isn't all or nothing, but your first dollar is more valuable than your millionth. Pfau finds that for some risk-aversion coefficients, lifecycles offer greater utility than portfolios with fixed allocations. And Pfau does note that applying their strategies to the historical record makes a strong recommendation for 100 percent stocks in all but 5 years from 1940-2011. So maybe the best retirement allocation is good old low cost S&P index funds!", "title": "" }, { "docid": "5a471ff2224383dc5a4b1d140d6501ee", "text": "The methodology for divisor changes is based on splits and composition changes. Dividends are ignored by the index. Side note - this is why, in my opinion, that any discussion of the Dow's change over a long term becomes meaningless. Ignoring even a 2% per year dividend has a significant impact over many decades. The divisor can be found at http://wsj.com/mdc/public/page/2_3022-djiahourly.html", "title": "" }, { "docid": "61a0389e9614cc542b0d2148ce23e79e", "text": "Here is a list of threads in other subreddits about the same content: * [An alternative entrepreneur principle. \| The Dismal Science](https://www.reddit.com/r/Economics/comments/79fl0a/an_alternative_entrepreneur_principle_the_dismal/) on /r/Economics with 1 karma (created at 2017-10-29 17:13:29 by /u/The_man_who_sold) ---- ^^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": "fbef7be29da184e019befb83c4726298", "text": "If we assume constant volatility, gamma increases as the stock gets closer to the strike price. Thus, delta is increasing at a faster rate as the stock reaches closer to ITM because gamma is the derivative of delta. As the stock gets deeper ITM, the gamma will slow down as delta reaches 1 or -1 (depends if a call or a put). Thus, the value of the option will change depending upon the level of the delta. I am ignoring volatility and time for this description. See this diagram from Investopedia: Gamma", "title": "" }, { "docid": "f93ae4aa6cff425d08d6816d9cb7ee3f", "text": "I understand that ITM have little time value, so they will have small time decay(theta), but why OTM has a lesser theta than ATM? The Time value represents uncertainty. That uncertainty decreases the farther away from ATM you get (in either direction). At-the-money, there is roughly a 50% chance that the option expires worthless. As you get deeper in-the-money, the change that is expires worthless decreases, so there is less uncertainty (there is more certainty that the option will pay off). As you go deeper OTM, the probability that the option expires worthless increases, so there is also less uncertainty. At the TTM decreases, the uncertainty (theta) decreases as well, since there is less time for the option to cross the strike from either direction. Similarly, as volatility decreases, theta decreases, since low-volatility stocks have a less change of crossing the strike.", "title": "" }, { "docid": "a039e10d0c4d9d7534162540396437ee", "text": "\"1. (a) \"\"Stephen Kinzer: The True Flag of American Empire #051\"\" by Guadalajara Geopolitics Institute, published on 14 June 2017: http://guadalajarageopolitics.com/2017/06/14/stephen-kinzer-true-flag-american-empire-051/ YouTube link: https://www.youtube.com/watch?v=qXSMHR-sN1s SoundCloud link: https://soundcloud.com/guadalajara-geopolitics/stephen-kinzer-the-true-flag-of-american-empire-051 Stephen Kinzer: http://stephenkinzer.com (b) Read https://www.reddit.com/r/worldpolitics/comments/6feg5x/putin_interview_did_russia_interfere_in_the/dihhtkq (c) \"\"The CIA's Holy War: No espionage operation or covert action was deemed too extreme by a CIA that saw only friends or enemies\"\" by Stephen Kinzer, published in the June 2016 issue of American History: http://watson.brown.edu/news/2016/cias-holy-war-written-stephen-kinzer PDF: [http://watson.brown.edu/files/watson/imce/news/2016/CIA's Holy Cold War Kinzer.pdf](http://watson.brown.edu/files/watson/imce/news/2016/CIA%27s%20Holy%20Cold%20War%20Kinzer.pdf) American History magazine: http://www.historynet.com/magazines/american-history-magazine (d) \"\"Covert Action: A Systems Approach\"\" by Kristen N. Wood, published December 2014: http://calhoun.nps.edu/bitstream/handle/10945/44692/14Dec_Wood_Kristen.pdf Source: http://hdl.handle.net/10945/44692 2. Read https://www.reddit.com/r/worldpolitics/comments/5b9bza/the_political_system_of_the_usa_is_characterised/d9mq22q Source: #1 at https://www.reddit.com/r/worldpolitics/comments/5bpc5x/an_update_for_my_readers_by_peter_levenda/d9q9006 Via: #26 at https://www.reddit.com/r/Missing411/comments/41oph0/supernatural_abductions_in_japanese_folklore_by/cz3we2z 3. \"\"Jasun Horsley, host of The Liminalist podcast, interviews Peter Levenda about 'The Individuation Chamber' (The Liminalist #11.5), published on 22 April 2015 -- their discussion includes 'Americanism and homogeneity, 'Star Trek' and colonialism, psychology disguised as politics, weaponizing Islam, Eisenhower and Dulles, the sorcerer's apprentice'\"\": #4a at https://www.reddit.com/r/worldpolitics/comments/5bpc5x/an_update_for_my_readers_by_peter_levenda/ddlcuvl Weaponizing religion (religion as a weapon), nuclear power/atomic power, atomic/nuclear bomb explosion: Start at 40:20 (40 minutes and 20 seconds) Source + Much More: #7c at https://www.reddit.com/r/worldpolitics/comments/5bpc5x/an_update_for_my_readers_by_peter_levenda/dfmc7kj Via: https://www.reddit.com/r/worldpolitics/comments/5bpc5x/an_update_for_my_readers_by_peter_levenda/d9q9006 Via: #26 at https://www.reddit.com/r/Missing411/comments/41oph0/supernatural_abductions_in_japanese_folklore_by/cz3we2z 4. Visit (a) https://www.reddit.com/r/worldpolitics/comments/6iho4e/a_house_armed_services_panel_intends_to_create_a/dj6bhas (b) https://www.reddit.com/r/worldpolitics/comments/6hfhh0/take_a_globe_spin_it_and_point_with_a_finger_to/dixva87 (c) https://www.reddit.com/r/worldpolitics/comments/6feg5x/putin_interview_did_russia_interfere_in_the/dihhtkq\"", "title": "" }, { "docid": "8f10343a8acf5d0ed5592b93d1a308df", "text": "It's ok if you haven't fleshed out the ideas yet. It's partially why I'm asking questions. Something you said seemed incorrect and it's better to verify than assume. I'll check out Friedman's video when I have time, though I've read up on him a bit and find some of his theories hold up and some don't. Can't be specific ATM though.", "title": "" }, { "docid": "0044b61fb390a15d42caa49119414285", "text": "I have had similar thoughts regarding alternative diversifiers for the reasons you mention, but for the most part they don't exist. Gold is often mentioned, but outside of 1972-1974 when the US went off the gold standard, it hasn't been very effective in the diversification role. Cash can help a little, but it also fails to effectively protect you in a bear market, as measured by portfolio drawdowns as well as std dev, relative to gov't bonds. There are alternative assets, reverse ETFs, etc which can fulfill a specific short term defensive role in your portfolio, but which can be very dangerous and are especially poor as a long term solution; while some people claim to use them for effective results, I haven't seen anything verifiable. I don't recommend them. Gov't bonds really do have a negative correlation to equities during periods in which equities underperform (timing is often slightly delayed), and that makes them more valuable than any other asset class as a diversifier. If you are concerned about rate increases, avoid LT gov't bond funds. Intermediate will work, but will take a few hits... short term bonds will be the safest. Personally I'm in Intermediates (30%), and willing to take the modest hit, in exchange for the overall portfolio protection they provide against an equity downturn. If the hit concerns you, Tips may provide some long term help, assuming inflation rises along with rates to some degree. I personally think Tips give up too much return when equity performance is strong, but it's a modest concern - Tips may suit you better than any other option. In general, I'm less concerned with a single asset class than with the long term performance of my total portfolio.", "title": "" }, { "docid": "e445a0592214b800d5a666495d7d54d3", "text": "It's called correlation. I found this: http://www.forexrazor.com/en-us/school/tabid/426/ID/437424/currency-pair-correlations it looks a good place to start Similar types of political economies will correlate together, opposite types won't. Also there are geographic correlations (climate, language etc)", "title": "" }, { "docid": "9079ee498ba4f1d27f37c3bc2a997928", "text": "Someone already mentioned that this is a risk-reversal, but as an aside, in the vol market (delta-hedged options) this is a fundamental skew trade. (buying calls, selling puts or vice versa). Initially vega neutral, the greek that this trade largely isolates is vanna (dvega/dspot or ddelta/dvol).", "title": "" }, { "docid": "fdc4bec833f6668910eaae4a1fc0b2ba", "text": "VXX VZX XVIZ and there are plenty others correlated to market volatility if you want the wildest hedge, use VXX, it is also the most liquid", "title": "" }, { "docid": "5b9bddfbc13053744ab668020e549954", "text": "Yes that is the case for the public company approach, but I was referring to the transaction approach: Firm A and Firm B both have $100 in EBITDA. Firm A has $50 in cash, Firm B has $100 in cash. Firm A sells for $500, Firm B sells for $600. If we didn't subtract cash before calculating the multiple: Firm A: 5x Firm B: 6x If we DO subtract cash before calculating the multiple: Firm A: 4.5x Firm B: 5x So yea, subtracting cash does skew the multiple.", "title": "" } ]	fiqa
8b46131ef342fd328a867154596ef7cf	TOCOM oil in USD	[ { "docid": "b696977ed0be24dcb70a0a0d1312c22f", "text": "TOCOM Crude is a cash-settled blend of Oman and Dubai crude oil, both quoted in USD. The daily settlement price is mark to market, but the final settlement price is based on reported prices from Dubai and Oman (or calculated in some cases with a known procedure), averaged and then converted to Yen using monthly average exchange rates as published by a reference bank (see Detailed Rules) You're trying to go all the way back and unfuddle quotes into a blend of USD-quoted oils. The correct procedure here would be to go with the Oman and Dubai prices in the first place (unless you're trying to arbitrage the TOCOM market). As to why they do it this way? It's a service. TOCOM takes on all the challenges to provide customers with a steady and consistent way of trading cash-oil. For physical oil, all you'd have to do is buy the blend on Dubai's and Oman's spot market. You trust TOCOM's price finding process, i.e. there will be no discrepancies between your TOCOM cash-oil and the Middle East physical oil. Edit: As to why Japan isn't buying WTI directly: There's a considerable cost of carry. WTI delivery location is Cushing, OK; there are pipelines but it's still a logistics act to get the oil to a port on the West Coast and then have it shipped to Japan. Dubai's delivery is at Jebel Ali (Persian Gulf), Omani crude can be shipped straight from Mina Al Fahal. Not only is it a shorter trip but also there are more shipping companies specialised in oil deliveries to the Asian hotspots. Why they pay in USD? Persian oil is highly sought after in nearly all of Asia's economies but there's little other exported goods from there. So naturally the market for currency crosses (AEDJPY, OMRJPY, AEDINR, OMRINR, etc.) is not that liquid. At least not as liquid as to make buying Persian oil a smooth deal. Anyway, both Dubai and Oman chose to follow Western practice to quote their contracts in USD and (maybe because of liquidity concerns) also to accept USD for payment only.", "title": "" } ]	[ { "docid": "10f1f5163224b18743d6c5c8c3dbfd22", "text": "December, 7, 2011 ( 01:50 pm) :- Bullion are sparked at the late or and session of MCX & Comex. USA investors are not worried about the coming events because European leaders signals that IMF providing help for European countries who are facing financial crisis. Crude oil momentum also range bound whole day, a rising tension on the Iran exports resistance will trigger oil prices will at new high. Silver have strong resistance at $ 33.20 above this level it's trend bullish under this its trend totally down. Gold have strong resistance at $ 1742 above this trend totally bullish side & unless its in down trend.", "title": "" }, { "docid": "949551126783dc387e3ca4d8f8389f3b", "text": "What you want is the distribution yield, which is 2.65. You can see the yield on FT as well, which is listed as 2.64. The difference between the 2 values is likely to be due to different dates of updates. http://funds.ft.com/uk/Tearsheet/Summary?s=CORP:LSE:USD", "title": "" }, { "docid": "19d03eebdf58ccc4e40479277b793021", "text": "> Arguably, the dollar today is essentially backed by oil i.e. as economists say the 'petrodollar'. This isn't really true. The exchange rate between USD and a barrel of oil floats with the market whereas it was fixed with gold. Also by the nature of the way oil is consumed it doesn't make sense to think of it this way - gold retains state when used whereas oil is burnt up never to be seen again.", "title": "" }, { "docid": "ca9c6e53f61bc171128389984cb3c149", "text": "I think this could be a even bigger problem for us since dollar is not just the international curreny for oil but for like mostly everything. This trend could be pushed by china and russia for other stuff to which is terrible for US.", "title": "" }, { "docid": "a52d39b622243a43eaec2c65193312cc", "text": "This is no big deal, IMO. The only real advantage is that I can think of is that if oil is priced in your currency then you're not subject to foreign currency fluctuations dictating your energy costs. In the short term USD has been falling. If this trend continues and oil switches to yuan, then our energy will become more expensive.", "title": "" }, { "docid": "80e061f28281f79fcdea24712b43a2ab", "text": "\"US is the major oil consumer, and produces only about half as much - so the lower the prices, the better for it. As for the oil industry in the US - it will never fail since government just prints more money to prop it up regardless of its real economic effectiveness: it needs it to defang OPEC from being able to pull off another 1974 Oil Embargo. Hell, Gore even invented the \"\"global warming\"\" just for that purpose!\"", "title": "" }, { "docid": "b2d42137aed0a277db3fba7aab67fa1b", "text": "EFA must be bought and sold in US dollars. XIN allows people to buy and sell EFA in Canadian dollars without exposing their investment to unpredictable swings in the USD/CAD ratio. This is what's known as a currency-hedged instrument. Now, why the chart sums up to over 100% is anyone's guess. Presumably it's the result of a couple hundred rounding errors from all the components. If you view their most recent report, it also sums up to over 100%, but at least the EFA component is (sensibly) under 100%. P.S. I'm not seeing where it says there's only one holding. There's the primary holding, plus over 100 other cash holdings to effect the currency-hedging.", "title": "" }, { "docid": "76f805fba133d2272947714245b4c446", "text": "As the value of a currency declines, commodities, priced in that currency, will rise. The two best commodities to see a change in would be oil and gold.", "title": "" }, { "docid": "bac039338b7d35deb88310614fc1cdde", "text": "Swaps form backstop to a shit load of int'l trade. Liquidity of currency is a huge factor in being a govt reserve currency, which USD currently has the VAST majority of holdings. This agreement is a shove against USE dominance in trade settlements, which is negative. Also challenges us general capital markets dominance a bit", "title": "" }, { "docid": "7ba990649e6c9220ec937aa97e31bcd2", "text": "\"No. Suppose you have 100 Canadian dollars and the exchange rate is 2 CAD = 1 USD. You use your 100 CAD to purchase 50 USD (in your bank account that is in USD). Some time later the Canadian dollar grows stronger, so that now 1 CAD = 1 USD. If you now withdraw your 50 USD and get Canadian dollars, you will receive 50 CAD. You have lost half your money. If you want to make money on currency exchange rates (which is a risky plan), you should buy the currency that is cheap (i.e., \"\"weak\"\"). If, say, oil is very cheap, you don't make money by selling oil; you buy it and sell it later when the price goes up. Likewise, if the Canadian dollar isn't worth much and the US dollar is, you should buy Canadian dollars, not US dollars, hoping to sell them later when the exchange rate is more favorable. See also this similar question.\"", "title": "" }, { "docid": "b9b01c730b07238a85a5411cde684828", "text": "\"That oil is traded in USD makes for extra demand and thus a stronger dollar with more purchasing power. It's not really economics that are the issue though - many might argue a weakened dollar might help the US economy (cheaper exports). The real issue is power. These gold backed securities make it so that certain countries can get around US sanctions. Not to mention that controlling the currency that oil is traded in means the US can devalue their currency to gain an advantage in the event of a shortage. Also, because petroleum is traded in dollars, this means treasury bonds are a natural place to store wealth for oil producers. High demand for these bonds makes it cheap for the US government to borrow and easier to make interest payments thus making T-Bonds a \"\"safe\"\" asset.\"", "title": "" }, { "docid": "317721c16afa000cc9c084a0484496f7", "text": "You can buy the exchange traded fund ETFS WTI Crude Oil (CRUD), amongst other ETFS products. http://funds.ft.com/uk/Tearsheet/Summary?s=CRUD:LSE:USD Note these funds do not 'jump' when the crude oil futures contracts are in contango (e.g. June contract is priced higher than May) and the futures roll-over, as they do monthly. When this happens the EFTS continues with no movement. Currently May is $52.85 and June is $54.15 (so in contango). LSE:CRUD is $13.40 and if the crude oil futures rolled-over it would carry straight on at that value. For this reason one should be cautious buying and holding LSE:CRUD longterm.", "title": "" }, { "docid": "0f18cbce1637a4bb01a6725d1a3c5b52", "text": "China does not use dollar for their largest oil buy, Russia, Iran. They also have yuan swap agreement with their large trading partners like Korea, japan, EU. Basically, the only trade that will be critically affected will be north america and latin america. China's critical trade in Eurasia are all in non dollar already. China has built, its own international payment system, central bank swap agreements, SWIFT alternative, largest commodity market, and various free trade agreements and zones. 20% of US import is chinese goods, mainly consumer product and electrical machines. So that will be interesting. https://en.wikipedia.org/wiki/List_of_the_largest_trading_partners_of_China", "title": "" }, { "docid": "4f8847ee03e084d76b067e940cd6d7e1", "text": "\"It's standard to price oil in US$. That means that if the US$ gets stronger, the prices of oil drops even if its \"\"intrinsic value\"\" remains constant. Same thing happens for other commodities, such as gold. Think of the oil price in barrels/$. If the denominator (value of the $) goes up, then the ratio tends to go down.\"", "title": "" }, { "docid": "11ae7e9ec09f2cb9a371d6f336c3dd6a", "text": "Then, is it possible to deposit rubles at the same ATM to get USD in my account at the same rate? No this is not possible. Generally deposits into accounts outside country and not offered.", "title": "" } ]	fiqa
b06ea41d5083ceaca9f7f5e31baaa5a0	Why are U.S. Treasury interest rates are so low vs. other nearly risk-free rates?	[ { "docid": "4bc4149facdd396eff188dbc9a9af5be", "text": "As I'm sure you are reading in Hull's classic, the basic valuation of bonds depends on the chance of entity defaulting on those bonds. Let's start with just looking at the US. The United States has a big advantage over corporations in issuing debt as it also prints the same currency that the debt is denominated in. This makes it much easier not to default on your debt as you can always print more money to pay it. Printing too much currency would cause inflation lowering the value of debt, but this would also lower the value of US corporate debt as well. So you can think of even the highest rated corporate bonds as having the same rate as government debt plus a little extra due to the additional default risk of the corporation. The situation with other AA rated governments is more complicated. Most of those governments have debt denominated in their local currency as well so it may seem like they should all have similar rates. However, some governments have higher and some actually have lower rates than the United States. Now, as above, some of the difference is due to the possible need of printing too much currency to cover the debt in crisis and now that we have more than one country to invest in the extra risk of international money flowing out of the country's bonds. However, the bigger difference between AA governments rates depends more on money flow, central banks and regulation. Bonds are still mostly freely traded instruments that respond to supply and demand, but this supply and demand is heavily influenced by governments. Central banks buy up large portions of the debt raising demand and lowering rates. Regulators force banks to hold a certain amount of treasuries perhaps inflating demand. Finally, to answer your question the United States has some interesting advantages partially just due to its long history of stability, controlled inflation and large economy making treasuries valuable as one of the lowest risk investments. So its rates are generally on the low end, but government manipulation can still mean that it is not necessarily the lowest.", "title": "" } ]	[ { "docid": "c3ad742e1267bbc34a7d060d900beae9", "text": "\"True, absolutely safe are only death and taxes. Apparently [US treasuries](https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield) yield far less than 3,5-4%, but I guess that's as \"\"100% safe\"\" as it gets. However, best I could find while talking to various banks was a reverse convertible bond that yields 3,5% per year, tax excluded. Worst case scenario: 1) I got all my money back and gained 3,5% for one year. 2) after a few years, I find myself with pretty valuable shares and still cashed in the yearly 3,5%. I was wondering if I got lucky with that, or if there are better things out there and if yes, where I should look. Honestly, in the age of negative interests, I'm more than happy to get enough interest to counter inflation.\"", "title": "" }, { "docid": "d9ff22fad222bb44d548c34d3f973584", "text": "Yes, the interest rate on a Treasury does change as market rates change, through changes in the price. But once you purchase the instrument, the rate you get is locked in. The cashflows on a treasury are fixed. So if the market rate increase, the present value of those future cashflows decreases, so the price of the treasury decreases. If you buy the bond after this happens, you would pay a lower price for the same fixed cashflows, hence you will receive a higher rate. Note that once you purchase the treasury instrument, your returns are locked in and guaranteed, as others have mentioned. Also note that you should distinguish between Treasury Bills and Treasury Bonds, which you seem to use interchangeably. Straight from the horse's mouth, http://www.treasurydirect.gov/indiv/products/products.htm: Treasury Bills are short term securities with maturity up to a year, Treasury Notes are medium term securities with maturity between 1 and 10 years, and Treasury Bonds are anything over 10 years.", "title": "" }, { "docid": "8581237521e013efb99dba1ca0c48598", "text": "Because giving someone a loan and paying them to take it isn't a loan anymore. I'll grant you, some of the treasury bill auctions did slip below 0% -- people paid in slightly more than what the bill would pay out. In as much as this was done by actual investors (and not afore-mentioned helicopter Ben Bernanke keeping the printing presses running hot all night), it was major accounts fearful of the euro disintegrating and banks crashing, and so on, and needing a safe spot to stick their cash for a couple months. Where the Fed is concerned, that interest rate he's referring to is lending they do to banks. So, how much would you take if you ran a bank and the Fed offered to pay you to take their money? A billion? A trillion? As much as you could cram in your vaults, shove in your pockets, and stuff down your favorite teller's blouse? Yea, me too.", "title": "" }, { "docid": "33580f0327e95b794853dd6c811a609b", "text": "Generally, if you watch for the detail in the fine print, and stay away from non-FDIC insured investments, there is little difference, so yes, pick the highest you can get. The offered interest rate is influenced by what the banks are trying to accomplish, and how their current and desired customer base thinks. Some banks have customer bases with very conservative behavior, which will stick with them because they trust them no matter what, so a low interest rate is good enough. The disadvantage for the bank is that such customers prefer brick-and-mortar contact, which is expensive for the bank. Or maybe the bank has already more cash than they need, and has no good way to invest it. Other banks might need more cash flow to be able to get stronger in the mortgage market, and their way of getting that is to offer higher interest rates, so new customers come and invest new money (which the bank in turn can then mortgage out). They also may offer higher rates for online handling only. Overall, there are many different ways to make money as a bank, and they diversify into different niches with other focuses, and that comes with offering quite different interest rates.", "title": "" }, { "docid": "cfdc52a2cfc44ce0064278373b4b6621", "text": "\"If you invest in a foreign bank you are subject to their financial rules and regulations. If you put your money with their CD it will be converted to UAH (grivna) and you will be paid back in UAH, which introduces the exchange rate risk. FDIC is not the only reason why a CD in a US bank pays a lower interest, but it could be seen as a contributing factor. It all comes down to risk and what the bank is willing to pay for your money, when a bank issues a CD they are entering the debt market and competing against other banks, governments, or anyone looking for money. If the yield from lending to one bank is the same as the yield of another, the logical choice would be whichever loan is less risky. So in order for the riskier bank to receive loans they must entice investors by offering a greater rate of return. In addition, if a bank isn't looking for loans they might be less inclined to pay for them. - See \"\"What is the “Bernanke Twist” and “Operation Twist”? What exactly does it do?\"\" If your looking to invest in the CD's of foreign banks I would suggest doing research on their regulations. Especially if and how your money is protected in the event the bank goes bust.\"", "title": "" }, { "docid": "e6d9456ced95d82d4b55a30dcd8ae546", "text": "Russia has become more risky as an investment, thus investors, basically the market, wants to be paid more for investing in or owning those bonds. As yields go up, prices go down. So right now you can buy a low priced Russian bond with a high yield because the market views the risk involved as higher than risks involved in other similar securities.", "title": "" }, { "docid": "d3bae8e3b801de953c6ba778740f8d5c", "text": "\"you want more information on what? The general bond market? This article is getting at something different, but the first several pages are general background info on the corporate bond market. http://home.business.utah.edu/hank.bessembinder/publications/transparencyandbondmarket.pdf If you are trying to relate somehow the issue of federal debt ( a la treasuries) to corporate debt you will find that you are jumping to a lot of conclusions. Debt is not exactly currency, only the promise of repayment at a certain date in the future. The only reason that U.S. treasuries ( and those of certain other highly rated countries ) is interchangeable is because they are both very liquid and have very low risk. There is very little similarity to this in the corporate bond market. Companies are no where near to the risk level of a government (for one they can't print their own money) and when a corporation goes bankrupt it's bondholder are usually s.o.l (recovery rates hover at around 50% of the notional debt amount). This is why investors demand a premium to hold corporate debt. Now consider even the best of companies, (take IBM ) the spread between the interest the government must pay on a treasury bond and that which IBM must pay on a similar bond is still relatively large. But beyond that you run into a liquidity issue. Currency only works because it is highly liquid. If you take the article about Greece you posted above, you can see the problem generated by lack of liquidity. People have to both have currency and be willing to accept currency for trade to occur. Corporate bond are notoriously illiquid because people are unwilling to take on the risk involved with holding the debt (there are other reasons, but I'm abstracting from them). This is the other reason treasuries can be used as \"\"currency\"\" there is always someone willing to take your treasury in trade (for the most part because there is almost zero risk involved). You would always be much more willing to hold a treasury than an equivalent IBM bond. Now take that idea down to a smaller level. Who would want to buy the bonds issued by the mom and pop down the street? Even if someone did buy them who would in turn take these bonds in trade? Practically speaking: no one would. They have no way to identify the riskiness of the bond and have no assurance that there would be anyone willing to trade for it in the future. If you read the whole post by the redditor from your first link this is precisely why government backed currency came about, and why the scenario that I think you are positing is very unlikely.\"", "title": "" }, { "docid": "e5416a1c34543f185d3e43efc655ef62", "text": "As Sean pointed out they usually mean LIBOR or the FFR (or for other countries the equivalent risk free rate of interest). I will just like to add on to what everyone has said here and will like to explain how various interest rates you mentioned work out when the risk free rate moves: For brevity, let's denote the risk free rate by Rf, the savings account interest rate as Rs, a mortgage interest rate as Rmort, and a term deposit rate with the bank as Rterm. Savings account interest rate: When a central bank revises the overnight lending rate (or the prime rate, repo rate etc.), in some countries banks are not obliged to increase the savings account interest rate. Usually a downward revision will force them to lower it (because they net they will be paying out = Rf - Rs). On the other hand, if Rf goes up and if one of the banks increases the Rs then other banks may be forced to do so too under competitive pressure. In some countries the central bank has the authority to revise Rs without revising the overnight lending rate. Term deposits with the bank (or certificates of deposit): Usually movements in these rates are more in sync with Rf than Rs is. The chief difference is that savings account offer more liquidity than term deposits and hence banks can offer lower rates and still get deposits under them --consider the higher interest rate offered by the term deposit as a liquidity risk premium. Generally, interest rates paid by instruments of similar risk profile that offer similar liquidity will move in parallel (otherwise there can be arbitrage). Sometimes these rates can move to anticipate a future change in Rf. Mortgage loan rates or other interests that you pay to the bank: If the risk free rate goes up, banks will increase these rates to keep the net interest they earn over risk free (= Δr = Rmort - Rf) the same. If Rf drops and if banks are not obliged to decrease loan rates then they will only do so if one of the banks does it first. P.S:- Wherever I have said they will do so when one of the banks does it first, I am not referring to a recursion but merely to the competitive market theory. Under such a theory, the first one to cut down the profit margin usually has a strong business incentive to do so (e.g., gain market share, or eliminate competition by lowering profit margins etc.). Others are forced to follow the trend.", "title": "" }, { "docid": "c5f637de23473422719e110e6896e210", "text": "You're mixing up two different concepts: low-risk and recession-proof. I'll assume I don't need to explain risk: there is always risk, regardless what form you keep your assets in. With bonds, the interest rate is supposed to reflect the risk. If a company offers bonds with too low an interest rate for the risk level, few people will buy them. While if a company offers bonds with too high an interest rate for the level of risk, they are gypping themselves. So a bond is a slightly more transparent investment from a risk assessment perspective, but that doesn't mean the risk is necessarily low: if you buy a bond with a 20% effective annual yield, that means there is quite a high risk that the underlying company will fold (unless inflation is in the double-digit range as well, in which case a 20% yield is not that much). Whereas with a stock, no parameter directly tells you anything about the risk. Recession-proof is not the same thing as low-risk. Recession-proof refers to investing in (or holding debt for) industries that perform better in a recession. http://www.investopedia.com/articles/stocks/08/industries-thrive-on-recession.asp.", "title": "" }, { "docid": "1f73dc803fba81d5dfb602b8038cccdb", "text": "It can be zero or negative given the current market conditions. Any money parked with treasury bonds is 100% risk free. So if I have a large amount of USD, and need a safe place to keep, then in today's environment even the banks (large as well) are at risk. So if I park my money with some large bank and that bank goes bankrupt, my money is gone for good. After a long drawn bankruptcy procedure, I may get back all of it or some of it. Even if the bank does not go bankrupt, it may face liquidity crises and I may not be able to withdraw when I want. Hence it's safer to keep it in Treasury bonds even though I may not gain any interest, or even lose a small amount of money. At least it will be very safe. Today there are very few options for large investors (typically governments and institutional investors.) The Euro is facing uncertainty. The Yuan is still regulated. There is not enough gold to buy (or to store it.) Hence this leads towards the USD. The very fact that USD is safe in today's environment is reflected in the Treasury rates.", "title": "" }, { "docid": "731bd197a7cbfbb1f1d38f9348447847", "text": "\"Its because of the economic uncertainty in the world. They are the \"\"risk-free\"\" investment as it is an almost guaranteed return if you exclude inflation and US gov't defaulting. A lot of people are afraid to invest elsewhere given the current economic climate. The yield on bonds is also low due to government intervention. Quantitative easing 1 and 2 and operation twist has forced yield this low, as that is what the government wants.\"", "title": "" }, { "docid": "b605a216befe7244a88edea45dbd0315", "text": "\"Let's talk interest rates on your junk bonds. Even after all that the US has been through (and is still going through), the United States dollar is widely regarded as one of the safest safe havens for your money. As such it serves as a de facto baseline against which all other investments can be measured, the bar everyone has to pass: if you could earn 4% on a 5-year US Treasury bond, or earn 4% on anything else over the next 5 years, you pick the Treasury bond. In many ways this means that the interest rate on a Treasury bond is the closest single measure we have to the price of money all by itself. If someone is loaning you money, they could be loaning it to the Treasury instead; they are losing out by making this loan to you, and must charge you at least this rate just to break even. But most people/governments/countries aren't as credit-worthy as the US Treasury. A few are (the US treasury isn't magical, after all, just really good at what it does), but generally they are not. There is a possibility when loaning money to these entities that you will not get your money back. That is risk. All entities have some risk (even the US treasury!), and some have more than others; \"\"junk bonds\"\" have a somewhat elevated level of this risk. Now, you don't just take a risk on for free (unless you're being charitable or something, but I hope you can find better beneficiaries of charity than the average junk bond). You need to be compensated for that risk. Lenders will demand compensation commensurate with that risk - or they will just walk away without making any loans or buying any bonds because it's not worth it. The difference between the interest rate on a US Treasury bond and the interest rate on another bond, such as a junk bond, is the risk premium - the cost of carrying that risk. Therefore you can see that the interest rate on a junk bond is the price of money plus the risk premium. Now, the Federal Reserve adjusts the price of money from time to time, by buying and selling US Treasury bonds until the price is something they like. This means that one component of interest rate on a junk bond is the interest rate on the US Treasury bond, and it is effectively controlled by the Federal Reserve (through that layer of indirection). The other component of the interest rate on a junk bond is the risk premium. It's not generally possible to know in advance whether or not some company will actually default. People have to guess, and decide how comfortable they are taking that risk. This means that risk is more expensive (and interest rates are higher) when they think the companies in question are going through some hard times, and risk will also be more expensive when people decide that they can't take as many risks (perhaps they've already lost some money and need to take additional steps to protect the rest). It's definitely very hard for an individual to decide what the risk on a particular bond is. The good news is that you generally don't have to. There are a bunch of rich jerks, hedge funds, retirement funds, insurance companies, and other investment entities out there who spend all day looking at things like bonds, trying to estimate the risk. Their willingness to exploit minuscule differences between the interest rate on a bond and the real risk means that the average bond on the market will be fairly priced, according to what all those people think. Plenty of them can still be wrong, mind you (cf. mortgage-backed securities) but in the general case the price of any security reflects all the information everyone in the world has on it on average, so if you're wrong you're in good company. When you buy a nice diversified bond fund, you have access to a bunch of bonds at a pretty-standard price. So that's interest rates for you. But you asked about prices. As it turns out, they're the same thing! - just expressed slightly differently. One way or another a bond is essentially meant to be a stream of payments worth a certain amount in the end - this is why you'll hear them referred to sometimes as a \"\"fixed-income security\"\". The interest rate is essentially the difference between the price you pay now, and the value you receive later, except expressed as a rate. Technically, you could structure the bonds differently (e.g. does the bond pay little bits of interest as you go along, or just pay one big lump sum in the end?) but you can use Math to convert between these two situations, and figure out how much money is worth which when, so it doesn't really matter. Anyway. This means that rising interest rates means lower bond prices on bonds you already own (and falling interest rates means higher bond prices). So if the Federal Reserve increases interest rates, the face value of your bond funds will fall. Also, if people think that the companies issuing the bonds are too risky, the face value of those bonds will also fall. (You were probably expecting the latter effect, though.) Mind you, you will still get the same amount of future money out of them as you would otherwise: that's why they're fixed-income securities. However, a higher interest rate means \"\"I can get more money in the future for less money now\"\", and so people will be willing to pay you less for your bond in the present. This is known as interest rate risk. It is higher on longer term bonds, because those have more time to earn interest.\"", "title": "" }, { "docid": "65ee8fe1e4d415e65ad72de915f56166", "text": "I would also like to have this discussed, alongside the issue that the US has gone into some type of [recession](https://upload.wikimedia.org/wikipedia/commons/c/c0/US_Treasuries_to_Federal_Funds_Rate.png) roughly every ten year. So with the prospect of a possible recession with a close to 0% cash rate looming, what tools will the FED employ to keep Banks borrowing while maintaining inflation rates?", "title": "" }, { "docid": "3ab2573cad4bde03574e290f5e8ed6ac", "text": "\"I think this is a good question with no single right answer. For a conservative investor, possible responses to low rates would be: Probably the best response is somewhere in the middle: consider riskier investments for a part of your portfolio, but still hold on to some cash, and in any case do not expect great results in a bad economy. For a more detailed analysis, let's consider the three main asset classes of cash, bonds, and stocks, and how they might preform in a low-interest-rate environment. (By \"\"stocks\"\" I really mean mutual funds that invest in a diversified mixture of stocks, rather than individual stocks, which would be even riskier. You can use mutual funds for bonds too, although diversification is not important for government bonds.) Cash. Advantages: Safe in the short term. Available on short notice for emergencies. Disadvantages: Low returns, and possibly inflation (although you retain the flexibility to move to other investments if inflation increases.) Bonds. Advantages: Somewhat higher returns than cash. Disadvantages: Returns are still rather low, and more vulnerable to inflation. Also the market price will drop temporarily if rates rise. Stocks. Advantages: Better at preserving your purchasing power against inflation in the long term (20 years or more, say.) Returns are likely to be higher than stocks or bonds on average. Disadvantages: Price can fluctuate a lot in the short-to-medium term. Also, expected returns are still less than they would be in better economic times. Although the low rates may change the question a little, the most important thing for an investor is still to be familiar with these basic asset classes. Note that the best risk-adjusted reward might be attained by some mixture of the three.\"", "title": "" }, { "docid": "020d22d766952e6008bf848df7c060d2", "text": "\"I'll answer your question, but first a comment about your intended strategy. Buying government bonds in a retirement account is probably not a good idea. Government bonds (generally) are tax advantaged themselves, so they offer a lower interest rate than other types of bonds. At no tax or reduced tax, many people will accept the lower interest rate because their effective return may be similar or better depending, for example, on their own marginal tax rate. In a tax-advantaged retirement account, however, you'll be getting the lower interest without any additional benefit because that account itself is already tax-advantaged. (Buying bonds generally may be a good idea or not - I won't comment on that - but choose a different category of bonds.) For the general question about the relationship between the Fed rate and the bond rate, they are positively correlated. There's not direct causal relationship in the sense that the Fed is not setting the bond rate directly, but other interest bearing investment options are tied to the Fed rate and many of those interest-bearing options compete for the same investor dollars as the bonds that you're reviewing. That's at a whole market level. Individual bonds, however, may not be so tightly coupled since the creditworthiness of the issuing entity matters a lot too, so it could be that \"\"bond rates\"\" generally are going up but some specific bonds are going down based on something happening with the issuer, just like the stock market might be generally going up even as specific stocks are dropping. Also keep in mind that many bonds trade as securities on a secondary market much like stocks. So I've talked about the bond rate. The price of the bonds themselves on the secondary market generally move opposite to the rate. The reason is that, for example, if you buy a bond at less than face value, you're getting an effective interest rate that's higher because you get the same sized incremental payments of interest but put less money into the investment. And vice versa.\"", "title": "" } ]	fiqa
722e70707b20a50cb0968d162c568d28	As an investing novice, what to do with my money?	[ { "docid": "1523b155b7a65d32aa8df6599e2e5fd1", "text": "I'd keep the risk inside the well-funded retirement accounts. Outside those accounts, I'd save to have a proper emergency fund, not based on today's expenses, but on expenses post house. The rest, I'd save toward the downpayment. 20% down, with a reserve for the spending that comes with a home purchase. It's my opinion that 3-5 years isn't enough to put this money at risk.", "title": "" }, { "docid": "576946d9e5b614b7760a6fa9ea847863", "text": "3-5 years is long enough of a timeframe that I'd certainly invest it, assuming you have enough (which $10k is). Even conservatively you can guess at 4-5% annual growth; if you invest reasonably conservatively (60/40 mix of stocks/bonds, with both in large ETFs or similar) you should have a good chance to gain along those lines and still be reasonably safe in case the market tanks. Of course, the market could tank at any time and wipe out 20-30% of that or even more, even if you invest conservatively - so you need to think about that risk, and decide if it's worth it or not. But, particularly if your 3-5 year time frame is reasonably flexible (i.e., if in 2019 the market tanks, you can wait the 2-3 years it may take to come back up) you should be investing. And - as usual, the normal warnings apply. Past performance is not a guarantee of future performance, we are not your investment advisors, and you may lose 100% of your investment...", "title": "" }, { "docid": "8dcbe5ddda15574ace112c0a790e58a5", "text": "A lot of people on here will likely disagree with me and this opinion. In my opinion the answer lies in your own motives and intentions. If you'd like to be more cognizant of the market, I'd just dive in and buy a few companies you like. Many people will say you shouldn't pick your own stocks, you should buy an index fund, or this ETF or this much bonds, etc. You already have retirement savings, capital allocation is important there. You're talking about an account total around 10% of your annual salary, and assuming you have sufficient liquid emergency funds; there's a lot of non-monetary benefit to being more aware of the economy and the stock market. But if you find the house you're going to buy, you may have to liquidate this account at a time that's not ideal, possibly at a loss. If all you're after is a greater return on your savings than the paltry 0.05% (or whatever) the big deposit banks are paying, then a high yield savings account is the way I'd go, or a CD ladder. Yes, the market generally goes up but it doesn't ALWAYS go up. Get your money somewhere that it's inured and you can be certain how much you'll have tomorrow. Assuming a gain, the gain you'll see will PALE in comparison to the deposits you'll make. Deposits grow accounts. Consider these scenarios if you allocate $1,000 per month to this account. 1) Assuming an investment return of 5% you're talking about $330 return in the first year (not counting commissions or possible losses). 2) Assuming a high yield savings account at 1.25% you're talking about $80 in the first year. Also remember, both of these amounts would be taxable. I'll admit in the event of 5% return you'll have about four times the gain but you're talking about a difference of ~$250 on $12,000. Over three to five years the most significant contributor to the account, by far, will be your deposits. Anyway, as I'm sure you know this is not investment advice and you may lose money etc.", "title": "" }, { "docid": "841beca334136f5374c2c7e3eac18d71", "text": "I'm normally not a fan of partitioning investment money into buckets but your case may be the clearest case for it I've seen in awhile. Your income and saving is good and you have two clearly defined goals of retirement saving and saving for a house each with very different time frames ~30 years and 3-5 years respectively. For medium term money, like saving for a house, just building up cash is not actually a bad idea. This minimizes the chance that a market crash will happen at the same time you need to withdraw the money. However, given you have the means to take more risk a generally smarter scheme would be to invest much of the money in a broad liquid bond funds with a somewhat lower percentage in stocks and then reduce the amount of stock each year as you get closer even moving some into cash. This gives reasonable positive expected return while lowering the risk of having to sell during a crisis as the time to purchase gets shorter and shorter. The retirement money should be invested for the long term as usual. A majority in low-fee index stock funds/etfs is the standard advice for good reason.", "title": "" } ]	[ { "docid": "8b473900266d99d7287e105b68cc01dd", "text": "\"You could end up with nothing, yes. I imagine those that worked at Enron years ago if their 401(k) was all in company stock would have ended up with nothing to give an example here. However, more likely is for you to end up with less than you thought as you see other choices as being better that with the benefit of hindsight you wish you had made different choices. The strategies will vary as some people will want something similar to a \"\"set it and forget it\"\" kind of investment and there may be fund choices where a fund has a targeted retirement date some years out into the future. These can be useful for people that don't want to do a lot of research and spend time deciding amongst various choices. Other people may prefer something a bit more active. In this case, you have to determine how much work do you want to do, do you want to review fund reviews on places like Morningstar, and do periodic reviews of your investments, etc. What works best for you is for you to resolve for yourself. As for risks, here are a few possible categories: Time - How many hours a week do you want to spend on this? How much time learning this do you want to do in the beginning? While this does apply to everyone, you have to figure out for yourself how much of a cost do you want to take here. Volatility - Some investments may fluctuate in value and this can cause issues for some people as it may change more than they would like. For example, if you invest rather aggressively, there may be times where you could have a -50% return in a year and that isn't really acceptable to some people. Inflation - Similarly to those investments that vary wildly there is also the risk that with time, prices generally rise and thus there is something to be said for the purchasing power of your investment. If you want to consider this in more detail consider what $1,000,000 would have bought 30 years ago compared to now. Currency risk - Some investments may be in other currencies and thus there is a risk of how different denominations may impact a return. Fees - How much do your fund's charge in the form of annual expense ratio? Are you aware of the charges being taken to manage your money here?\"", "title": "" }, { "docid": "6913ee4ec4b8cc12d1a45e16e86dc931", "text": "\"E) Spend a small amount of that money on getting advice from a paid financial planner. (Not a broker or someone offering you \"\"free\"\" advice; their recommendations may be biased toward what makes them the most money). A good financial planner will talk to you about your plans and expectations both short and long term, and about your risk tolerance (would a drop in value panic you even if you know it's likely to recover and average out in the long run, that sort of thing), and about how much time and effort you want to put into actively managing your portfolio. From those answers, they will generate an initial proposed plan, which will be tested against simulations of the stock market to make sure it holds up. Typically they'll do about 100 passes over the plan to get a sense of its probable risk versus growth-potential versus volatility, and tweak the plan until the normal volatility is within the range you've said you're comfortable with while trying to produce the best return with the least risk. This may not be a perfect plan for you -- but at the very least it will be an excellent starting point until you decide (if you ever do decide) that you've learned enough about investing that you want to do something different with the money. It's likely to be better advice than you'll get here simply because they can and will take the time to understand your specific needs rather than offering generalities because we're trying to write something that applies to many people, all of whom have different goals and time horizons and financial intestinal fortitude. As far as a house goes: Making the mistake of thinking of a house as an investment is a large part of the mindset that caused the Great Recession. Property can be an investment (or a business) or it can be something you're living in; never make the mistake of putting it in both categories at once. The time to buy a house is when you want a house, find a house you like in a neighborhood you like, expect not to move out of it for at least five years, can afford to put at least 20% down payment, and can afford the ongoing costs. Owning your home is not more grown-up, or necessarily financially advantageous even with the tax break, or in any other way required until and unless you will enjoy owning your home. (I bought at age 50ish, because I wanted a place around the corner from some of my best friends, because I wanted better noise isolation from my neighbors, because I wanted a garden, because I wanted to do some things that almost any landlord would object to, and because I'm handy enough that I can do a lot of the routine maintenance myself and enjoy doing it -- buy a house, get a free set of hobbies if you're into that. And part of the reason I could afford this house, and the changes that I've made to it, was that renting had allowed me to put more money into investments. My only regret is that I didn't realise how dumb it was not to max out my 401(k) match until I'd been with the company for a decade ... that's free money I left on the table.)\"", "title": "" }, { "docid": "1bf0ea6249344325dfb4fe3bbd68350f", "text": "If you want to invest in stocks, bonds and mutual funds I would suggest you take a portion of your inheritance and use it to learn how to invest in this asset class wisely. Take courses on investing and trading (two different things) in paper assets and start trading on a fantasy exchange to test and hone your investment skills before risking any of your money. Personally I don't find bonds to have a meaningful rate of return and I prefer stocks that have a dividend over those that don't. Parking some of your money in an IRA is a good strategy for when you do not see opportunities to purchase cashflow-positive assets right away; this allows you to wait and deploy your capital when the opportunity presents itself and to educate yourself on what a good opportunity looks like.", "title": "" }, { "docid": "2ebd49168456a4ffc4b7f3ccd5ef1f1a", "text": "\"There's not nearly enough information here for anyone to give you good advice. Additionally, /r/personalfinance will probably be a bit more relevant and helpful for what you're asking. Aside from that, if you don't know what you're doing, stay out of currency trading and mutual funds. If you don't care about losing your money, go right ahead and play in some markets, but remember there are people paid millions of dollars/year who don't make consistent profit. What are the chances a novice with no training will perform well? My $.02, pay your debt, make a general theory about the economy a year from now (e.g. \"\"Things will be worse in Europe than they are now\"\") and then invest your money in an index fund that matches that goal (e.g. Some sort of Europe-Short investment vehicle). Reassess a year from now and don't stress about it.\"", "title": "" }, { "docid": "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": "252851bb2da3621d7ad059dcc0ae87fb", "text": "\"Say you have $15,000 of capital to invest. You want to put the majority of your capital into low risk investments that will yield positive gains over the course of your working career. $5,000: Government bonds and mutual funds, split how you want. $9,500: Low risk, trusted companies with positive historical growth. If the stock market is very unfamiliar for you, I recommend Google Finance, Yahoo Finance, and Zack's to learn about smart investments you can make. You can also research the investments that hedge fund managers and top investors are making. Google \"\"Warren Buffett or Carl Icahn portfolio\"\", and this will give you an idea of stocks you can put your money into. Do not leave your money into a certain company for more than 25 years. Rebalance your portfolio and take the gains when you feel you need them. You have no idea when to take your profits now, but 5 years from now, you will be a smart and experienced investor. A safe investment strategy to start is to put your money into an ETF that mimics the S&P 500. Over the past 20 years, the S&P 500 has yielded gains of about 270%. During the financial crisis a few years back, the S&P 500 had lost over 50% of its value when it reached its low point. However, from when it hit rock bottom in 2009, it has had as high percentage gains in six years as it did in 12 years from 1995 to 2007, which about 200%. The market is very strong and will treat your money well if you invest wisely. $500: Medium - High risk Speculative Stocks There is a reason this category accounts for only approximately 3% of your portfolio. This may take some research on the weekend, but the returns that may result can be extraordinary. Speculative companies are often innovative, low priced stocks that see high volatility, gains or losses of more than 10% over a single month. The likelihood of your $500 investment being completely evaporated is very slim, but if you lose $300 here, the thousands invested in the S&P 500, low risk stocks, government bonds, and mutual funds will more than recuperate the losses. If your pick is a winner, however, expect that the $500 investment could easily double, triple, or gain even more in a single year or over the course of just a few, perhaps, 2-4 years will see a very large return. I hope this advice helps and happy investing! Sending your money to smart investments is the key to financial security, freedom, and later, a comfortable retirement. Good luck, Matt McLaughlin\"", "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": "" }, { "docid": "7624eb3ecdcd90198d5248bf06e3b563", "text": "One possibility would be to invest in a crude oil ETF (or maybe technically they're an ETP), which should be easily accessible through any stock trading platform. In theory, the value of these investments is directly tied to the oil price. There's a list of such ETFs and some comments here. But see also here about some of the problems with such things in practice, and some other products aiming to avoid those issues. Personally I find the idea of putting all my savings into such a vehicle absolutely horrifying; I wouldn't contemplate having more than a small percentage of a much more well diversified portfolio invested in something like that myself, and IMHO it's a completely unsuitable investment for a novice investor. I strongly suggest you read up on topics like portfolio construction and asset allocation (nice introductory article here and here, although maybe UK oriented; US SEC has some dry info here) before proceeding further and putting your savings at risk.", "title": "" }, { "docid": "c5bdd92b794541937b4f697a658e0170", "text": "\"General advice is to keep 6 months worth of income liquid -- in your case, you might want to leave 1 year liquid since, even though your income is stable now, it is not static (i.e., you're not drawing salary from an employer). The rest of it? If you don't plan on using it for any big purchases in the next 5 or so years, invest it. If you don't, you will probably lose money in the long term due to inflation (how's that for a risk? :). There are plenty of options for the risk averse, many of which handily beat inflation, though without knowing your country of residence, it's hard to say. In all likelihood, though, you'll want to invest in index funds -- such as ETFs -- that basically track industries, rather than individual companies. This is basically free portfolio diversity -- they lose money only when an entire sector loses value. Though even with funds of this type, you still want to ensure you purchase multiple different funds that track different industries. Don't just toss all of your funds into an IT index, for example. Before buying, just look at the history of the fund and make sure it has had a general upward trajectory since 2008 (I've bought a few ETFs that remained static...not what we're looking for in an investment!). If the brokerage account you choose doesn't offer commission free trades on any of the funds you want (personally, I use Schwab and their ETF portfolio), try to \"\"buy in bulk.\"\" That way you're not spending so much on trades. There are other considerations (many indexed funds have high management costs, but if you go with ETFs, they don't, and there's the question of dividends, etc), but that is getting into the weeds as far as investing knowledge is concerned. Beyond that, just keep in mind it'll take 1-2 weeks for you to see that money if you need it, and there's obviously no guarantee it'll be there if you do need it for an emergency.\"", "title": "" }, { "docid": "2234ad152a94b06edf2086f30592fe80", "text": "I am not interested in watching stock exchange rates all day long. I just want to place it somewhere and let it grow Your intuition is spot on! To buy & hold is the sensible thing to do. There is no need to constantly monitor the stock market. To invest successfully you only need some basic pointers. People make it look like it's more complicated than it actually is for individual investors. You might find useful some wisdom pearls I wish I had learned even earlier. Stocks & Bonds are the best passive investment available. Stocks offer the best return, while bonds are reduce risk. The stock/bond allocation depends of your risk tolerance. Since you're as young as it gets, I would forget about bonds until later and go with a full stock portfolio. Banks are glorified money mausoleums; the interest you can get from them is rarely noticeable. Index investing is the best alternative. How so? Because 'you can't beat the market'. Nobody can; but people like to try and fail. So instead of trying, some fund managers simply track a market index (always successfully) while others try to beat it (consistently failing). Actively managed mutual funds have higher costs for the extra work involved. Avoid them like the plague. Look for a diversified index fund with low TER (Total Expense Ratio). These are the most important factors. Diversification will increase safety, while low costs guarantee that you get the most out of your money. Vanguard has truly good index funds, as well as Blackrock (iShares). Since you can't simply buy equity by yourself, you need a broker to buy and sell. Luckily, there are many good online brokers in Europe. What we're looking for in a broker is safety (run background checks, ask other wise individual investors that have taken time out of their schedules to read the small print) and that charges us with low fees. You probably can do this through the bank, but... well, it defeats its own purpose. US citizens have their 401(k) accounts. Very neat stuff. Check your country's law to see if you can make use of something similar to reduce the tax cost of investing. Your government will want a slice of those juicy dividends. An alternative is to buy an index fund on which dividends are not distributed, but are automatically reinvested instead. Some links for further reference: Investment 101, and why index investment rocks: However the author is based in the US, so you might find the next link useful. Investment for Europeans: Very useful to check specific information regarding European investing. Portfolio Ideas: You'll realise you don't actually need many equities, since the diversification is built-in the index funds. I hope this helps! There's not much more, but it's all condensed in a handful of blogs.", "title": "" }, { "docid": "d4f9b66d1aa4508cfeffa190848a6514", "text": "Depends what kind of expenses you intend to use this money for. If you plan to buy housing in the future (eg you're saving a deposit), then you need to ensure that the value doesn't deteriorate relative to the value of the housing you are likely to buy - so you could buy a Residential REIT, or buy some investment property. If you expect to use this money for food, then you should buy suitable assets (eg Wheat futures, etc). Link the current asset to the future expense, and you will be fine. If you buy Gold, then you are making a bet that Gold will retain its value compared to the thing you want to purchase in future. It doesn't matter what the price of Gold does in $US.", "title": "" }, { "docid": "343d01b5f2726763ff0f0cd166d76d57", "text": "\"I'm still recommending that you go to a professional. However, I'm going to talk about what you should probably expect the professional to be telling you. These are generalities. It sounds like you're going to keep working for a while. (If nothing else, it'll stave off boredom.) If that's the case, and you don't touch that $1.4 million otherwise, you're pretty much set for retirement and never need to save another penny, and you can afford to treat your girl to a nice dinner on the rest of your income. If you're going to buy expensive things, though - like California real estate and boats and fancy cars and college educations and small businesses - you can dip into that money but things will get trickier. If not, then it's a question of \"\"how do I structure my savings?\"\". A typical structure: Anywho. If you can research general principles in advance, you'll be better prepared.\"", "title": "" }, { "docid": "3fd2c4aac08a0eb253bbb662aec2ca98", "text": "\"It's a good question, but it turns into a general 'how to invest' question. You see, the cliche of \"\"invest the difference\"\" simply point to the ripoff the other two answers discuss. And it doesn't specify how to invest, only that this money should be put to work as long term investments. The best answer is to find the asset allocation appropriate for your age and risk profile. It can be as simple as a low cost S&P ETF, or as complex at a dozen assets that include Stocks, both Domestic and Foreign, REITs, Commodities, etc. It's not as if the saved funds get segregated in a special account just for this purpose, although I suppose one can do this just as others have separate funds for retirement, emergency, vacation, college, etc.\"", "title": "" }, { "docid": "fedc731ab6ca2dc898e6b0f3972279a9", "text": "\"Put it in a Vanguard fund with 80% VTI and 20% VXUS. That's what you'll let set for 10-15 years. For somebody that is totally new to investing, use \"\"play money\"\" in the stock market. It's easy for young people to get dreams of glory and blow it all on some stock tip they've seen on Twitter.\"", "title": "" }, { "docid": "3c9ed0056ff789546cac2040d1a25920", "text": "Internet sites Books Academic", "title": "" } ]	fiqa
17aa99c2e50cf7a73463528f3d26a9b5	How do I bring money overseas?	[ { "docid": "5985a7c041ca425986510e782c5f88bc", "text": "\"This page from TripAdvisor may be of interest. Look at what fees are charged on your ATM cards and credit cards, and consider overpaying your credit card so you have a credit balance that you can draw on for cash \"\"advances\"\" from ATMs that will dispense in local currency. Depending on what fees your bank charges, you may get a better rate than the forex cash traders at the airport. Edit: Cards may not always have the best rate. I recently heard from a traveler who was able to use a locally but not globally dominant currency to buy cash of a major currency at a shopping mall (with competitive forex traders) at rates even better than the mid-market rates posted at xe.com and similar places; I don't think you'll have that experience going from Australia to Malaysia (but another traveler reading this might have a different pair). In my experience the card rates are slightly worse than those and the airport forex traders significantly worse.\"", "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": "5d5612af7d495b352eeb63110fcfde9a", "text": "He can send you a check. This will move the burden of GBP->USD conversion to him (unless the GBP amount is preset, then you'll be the one to pay for conversion either way). You can then deposit the USD check in any Israeli bank (they'll charge commission for the deposit and the USD->ILS conversion). Another, and from my experience significantly cheaper, option would be to wire transfer directly to your account. If you have a USD account and he'll transfer USD out - it will be almost at no cost to you, if you don't have a USD account check with your bank how to open it, or pay for USD->ILS conversion.", "title": "" }, { "docid": "4e6aa2924261e912bdbcdaa2d5fed67f", "text": "\"First thing is that your English is pretty damn good. You should be proud. There are certainly adult native speakers, here in the US, that cannot write as well. I like your ambition, that you are looking to save money and improve yourself. I like that you want to move your funds into a more stable currency. What is really tough with your plan and situation is your salary. Here in the US banks will typically have minimum deposits that are high for you. I imagine the same is true in the EU. You may have to save up before you can deposit into an EU bank. To answer your question: Yes it is very wise to save money in different containers. My wife and I have one household savings account. Yet that is broken down by different categories (using a spreadsheet). A certain amount might be dedicated to vacation, emergency fund, or the purchase of a luxury item. We also have business and accounts and personal accounts. It goes even further. For spending we use the \"\"envelope system\"\". After our pay check is deposited, one of us goes to the bank and withdraws cash. Some goes into the grocery envelope, some in the entertainment envelope, and so on. So yes I think you have a good plan and I would really like to see a plan on how you can increase your income.\"", "title": "" }, { "docid": "b107f95e9f5c4b948052d8f9812b1d38", "text": "The Transfer of funds outside of Bangladesh is restricted. Any transfers required the permission of Bangladesh Bank [Central Bank]. So the only legal option is to apply for the permission and see if its granted. Western Union is a Money Transfer and typically is good for getting funds into Bangladesh, most expats in Bangladesh would use the service. It can unfortunately not be used other way round.", "title": "" }, { "docid": "8f02485a9df69d2c5f96f91ea78db1b1", "text": "\"I have heard that I can give 10k as a gift in cash for my aunt to take on the plane. Please don't, for her own safety. Don't know when was the last you've been to Russia, but that's not a place to walk around with $10K in cash in your pocket. For the rest, the 20k, I am not sure what is the best course of action. Would something like Western Union, Paypal or Bank Wire Transfer be the best course of action? Wire transfer would be the safest option. Would there be tax implications for me as well? Depends on where you are tax resident and where you are a citizen. Some countries have \"\"gift tax\"\", but most don't. If you're a US tax resident, then you're subject to US gift tax rules. Your gifts are taxable if they exceed $14K per year per person. So your $30K to your mom is taxable. But your $10K to your mom, $10K to your dad and $10K to your aunt is not. You cannot however control what they do with it.\"", "title": "" }, { "docid": "bdeb757b60aa6f7d68a075db4b6f8edf", "text": "Do an semi-online transfer. I had a similar situation where i had to transfer 5K USD to a commercial entity. You can request the publisher to give you their bank account details. You will need the SWIFT code of the bank( SWIFT code is a international code that each bank gets to transfer money) You will need bank account number, account name, bank address, address of the publisher. Then just walk into your bank with the above details. Note that you will have to visit a branch in your city that allows forex transfers. They will give you a set of forms to fill up. The above details will be needed to fill up these forms In addition to the above, you will be asked to fill up a purpose code maintained by RBI. This code is used by RBI to understand the reason why you are transferring the money. The bank will provide you with a sheet which will have these codes and explanation of these codes. Read through the codes and in case of any questions ask the bank officials to help Tip: If you have accounts with any private sector banks, please approach them. Public sector banks will give you tough time Hope this helps! Regards, Ravi", "title": "" }, { "docid": "07a3309a18a2c1be2bdf75d191c98722", "text": "If this is your money, and if you can - if asked - prove that you legally made it, there is no limit. You pay taxes on your income, so sending it into the world is tax free. Your citizenship is not relevant for that.", "title": "" }, { "docid": "ea4890b3e7eff99fd2658e853e07baca", "text": "\"The new information helps a little, but you're still stuck as far as doing exactly what you asked. The question that you really should be asking is \"\"How do I deposit money into my BofA checking account from Italy?\"\" If you can figure that out, then the whole part about your father's AmEx card really becomes irrelevant. He might get that money from a cash advance on his AmEx card or he might get it from somewhere else. I think there's some small chance that if you call BofA and ask the right question, they may give you an answer that will let you make this deposit. I tend to doubt it, but this would at least give you a chance. Other than that, you should probably look into some options based in Italy. For example, get the cash from your father and open a bank account in Italy. Maybe you can buy a pre-paid Visa card with the cash to use while you're there. Maybe use traveler's checks for the rest of your trip. Etc. What is available and what makes sense will still depend on a lot of details that we don't have (like how long you're staying and what type of entry visa you got when you entered Italy).\"", "title": "" }, { "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": "0c2dfe34ea55af11139b3dade5f2cb38", "text": "I assume the same criteria apply for this as your previous question. You want to physically transfer in excess of 50,000 USD multiple times a week and you want the transportation mechanism to be instant or very quick. I don't believe there is any option that won't raise serious red flags with the government entities you cross the boundaries of. Even a cheque, which a person in the comments of OP's question suggests, wouldn't be sufficient due to government regulation requiring banks to put holds on such large amounts.", "title": "" }, { "docid": "c0568dee1a562b5ddf66be45c0d8fcde", "text": "\"One option would be to physically ship the money from Israel to the US. I quickly ran the numbers for shipping different amounts of $100 bills (One pound equals 454 bills) using a popular shipping company. Here are the results: The \"\"sweet\"\" spot is $100,000. That would only cost you $76 to ship which is just 0.08% of the amount being transferred. Of course, the shipping company's website says international shipments of money are prohibited. Their website, however, let me categorize the shipment as \"\"money\"\". Strange.\"", "title": "" }, { "docid": "8aa4745955d3eeaef5710f6980b26d55", "text": "You could buy a money order with your cash, then mail the money order to Deutsche Bank Germany for deposit into your account. You could also buy a prepaid debit card (like a Visa/AMEX giftcard) with your cash. Then, open a new Paypal account and add this prepaid card. Finally, send money to yourself using the prepaid card as the funding source. You could use a money transfer service, like Western Union, to transfer the cash to a friend/family in Germany. Then ask them to deposit it for you at Deutsche Bank Germany.", "title": "" }, { "docid": "481656d627aac6f23fffa2d95abc9adc", "text": "Just tell your bank where you're going so they don't lock your account, and then take your Visa, and take enough cash to survive if something happens to your Visa account (sometimes banks lock them anyways out of idiocy). I usually take about 600 bucks cash for a week excursion (enough for food and a shack, or a mansion if you're in Asia). I figure, I'm carrying my passport which is worth thousands to criminals abroad around my neck. Why worry about carrying a little cash. As far as the Visa goes, just make sure your bank doesn't charge enormous fees for currency conversion. As far as carrying the local currency goes. I don't recommend it. Just figure out the conversion rate, and you'll save about 5% of your money from fees converting to and from. If you're going to Russia, do convert your currency first.", "title": "" }, { "docid": "33da7c09e1a08fdf982f837b5ce5fe70", "text": "Most Banks allow to make an international transfer. As the amounts is very small, there is no paperwork required. Have your dad walk into any Bank and request for a transfer. He should be knowing your Bank's SWIFT BIC, Name and Address and account number. Edit: Under the liberalised remittance scheme, any individual can transfer upto 1 million USD or eq. A CA certificate is required. Please get in touch with your bank in India for exact steps", "title": "" }, { "docid": "800c5783f99b60b8c046861416bb28c6", "text": "If you trust the other party, an international bank wire would be the quickest, easiest, and cheapest option. It is the standard way to pay for something overseas from the United States. Unfortunately, in most cases, they are not reversible. I don't believe Paypal is an option for an amount that large. Escrow companies do exist, but you would have to research those on a case by case basis to see if any fit the criteria for your transaction and the countries involved. I'll also add: If it were me, and there was no way to get references or verify the person's identity and intent to my satisfaction, then I would probably consider hopping on a plane. For that amount of money, I would verify the person and items are legitimate, in person, and then wire the money.", "title": "" }, { "docid": "e445fbec7bd8b703081fde4dce9a5c7b", "text": "Nationwide Flex Account lets you receive money internationally for free, but you have to pay to send it. It meets all your other criteria.", "title": "" } ]	fiqa
042c06110d600f08d16908beeab1deaa	Value of tokens bought at an older price	[ { "docid": "2c563cd84f91feb303bc9883e56d5032", "text": "\"You will make a profit in nominal dollars (or nominal units of whatever currency you used to buy the token). Whether you'll make a profit in real dollars depends on inflation, and in practice whether it would be possible to sell your existing tokens to someone else for the new price. Suppose when the price was 50 U (50 \"\"units\"\", since you didn't specify a currency), you bought one token. Today you can either spend 52 U for a token, and get a liter of milk, or you can spend your existing token (for which you paid 50 U) and get a liter of milk. It looks like you are making a profit of 2 U by spending your token. However, whether that profit is real or illusory depends on what else you could do with the token. For instance, suppose that, since the price of a token is now 52 U, you will have no trouble finding someone who wants to buy your token from you for 52 U. If you sell your token for 52 U, you'll still only be able to buy 1 L of milk. So if you measure your wealth in milk, you have made no profit: in the past you had a token representing 1 L of milk, and today you still have a token representing 1 L of milk. Suppose now that in the past, when a token cost 50 U, a hamburger also cost 50 U. Suppose further that a hamburger now costs 52 U. So you can sell your token for 52 U, but that 52 U will still only buy you one hamburger. So, again, if you measure your wealth in hamburgers, your have made no profit. In the past, you could have sold your token and bought a hamburger; today, you can still sell your token and buy a hamburger, and you'll have nothing left over, so you have gained nothing. If, on the other hand, the price of a hamburger today is still 50 U, then you call sell your token for 52 U, buy a hamburger for 50 U, and still have 2 U left over. You have made a profit. What this all goes to show is that, in practice, the idea of \"\"profit\"\" depends on the overall economy, and whether you could exchange the currency units you have in your possession for a greater quantity of goods than you could in the past. Whether this is possible depends on the relative changes in price of various goods. In other words, if you get your money by selling Product A, and later you buy Product B, you may or may not make a profit depending on how the prices of the two products moved relative to one another. Also, in your hypothetical setup, the \"\"currency\"\" (the token) is directly linked to the value of a single good, so you can always at least get 1 L of milk for your token. Most real currency is not bound to specific goods like your milk token, so it is possible for your currency to lose value in an absolute sense. For instance, suppose you sell a book for $5. The $5 is not a \"\"book token\"\" and you cannot rely on being able to exchange it for a book in the future; in the future, all books may cost $10, and the prices of all goods may rise similarly, so your currency will actually be worth less no matter how you try to use it. This could happen with the milk token if the milkman announces that henceforth 1 L of milk will cost 2 tokens; your existing token suddenly loses half its value. In sum, it is easy to calculate whether you made a profit in currency units. What is harder is to calculate whether you made a profit in \"\"real terms\"\" (often referred to as \"\"real dollars\"\" or \"\"inflation-adjusted dollars\"\", or the equivalent in your favorite currency). The reason this is hard is because the idea of \"\"real dollars\"\" is fundamentally linked to the possibility of exchanging currency for goods (and services), and so it depends what goods you're buying. Inflation statistics published by governments and the like use a \"\"basket\"\" of goods to approximate the overall price movements in the economy as a whole.\"", "title": "" } ]	[ { "docid": "329675bf2c9692f2f78d55243aa4920e", "text": "\"Yes, long calls, and that's a good point. Let's see... if I bought one contract at the Bid price above... $97.13 at expiry of $96.43 option = out of the money =- option price(x100) = $113 loss. $97.13 at expiry of $97.00 option = out of the money =- option price(x100) = $77 loss. $97.13 at expiry of $97.14 option = in the money by 1-cent=$1/contract profit - option price(x100) = $1-$58 = $57 loss The higher strike prices have much lower losses if they expire with the underlying stock at- or near-the-money. So, they carry \"\"gentler\"\" downside potential, and are priced much higher to reflect that \"\"controlled\"\" risk potential. That makes sense. Thanks.\"", "title": "" }, { "docid": "ebb41def0224a718e83f9f53e5a8e812", "text": "\"The textbook answer would be \"\"assets-liabilities+present discounted value of all future profit\"\". A&L is usually simple (if a company has an extra $1m in cash, it's worth $1m more; if it has an extra $1m in debt, it's worth $1m less). If a company with ~0 assets and $50k in profit has a $1m valuation, then that implies that whoever makes that valuation (wants to buy at that price) really believes one of two things - either the future profit will be significantly larger than $50k (say, it's rapidly growing); or the true worth of assets is much more - say, there's some IP/code/patents/people that have low book value but some other company would pay $1m just to get that. The point is that valuation is subjective since the key numbers in the calculations are not perfectly known by anyone who doesn't have a time machine, you can make estimates but the knowledge to make the estimates varies (some buyers/sellers have extra information), and they can be influenced by those buyers/sellers; e.g. for strategic acquisitions the value of company is significantly changed simply because someone claims they want to acquire it. And, $1m valuation for a company with $500m in profits isn't appropriate - it's appropriate only if the profits are expected to drop to zero within a couple years; a stagnant but stable company with $500m profits would be worth at least $5m and potentially much more.\"", "title": "" }, { "docid": "6102ca35a6adf578632c2b0f37dadc2f", "text": "\"Below I will try to explain two most common Binomial Option Pricing Models (BOPM) used. First of all, BOPM splits time to expiry into N equal sub-periods and assumes that in each period the underlying security price may rise or fall by a known proportion, so the value of an option in any sub-period is a function of its possible values in the following sub period. Therefore the current value of an option is found by working backwards from expiry date through sub-periods to current time. There is not enough information in the question from your textbook so we may assume that what you are asked to do is to find a value of a call option using just a Single Period BOPM. Here are two ways of doing this: First of all let's summarize your information: Current Share Price (Vs) = $70 Strike or exercise price (X) = $60 Risk-free rate (r) = 5.5% or 0.055 Time to maturity (t) = 12 months Downward movement in share price for the period (d) = $65 / $70 = 0.928571429 Upward movement in share price for the period (u) = 1/d = 1/0.928571429 = 1.076923077 \"\"u\"\" can be translated to $ multiplying by Vs => 1.076923077 * $70 = $75.38 which is the maximum probable share price in 12 months time. If you need more clarification here - the minimum and maximum future share prices are calculated from stocks past volatility which is a measure of risk. But because your textbook question does not seem to be asking this - you probably don't have to bother too much about it yet. Intrinsic Value: Just in case someone reading this is unclear - the Value of an option on maturity is the difference between the exercise (strike) price and the value of a share at the time of the option maturity. This is also called an intrinsic value. Note that American Option can be exercised prior to it's maturity in this case the intrinsic value it simply the diference between strike price and the underlying share price at the time of an exercise. But the Value of an option at period 0 (also called option price) is a price you would normally pay in order to buy it. So, say, with a strike of $60 and Share Price of $70 the intrinsic value is $10, whereas if Share Price was $50 the intrinsic value would be $0. The option price or the value of a call option in both cases would be fixed. So we also need to find intrinsic option values when price falls to the lowest probable and rises to the maximum probable (Vcd and Vcu respectively) (Vcd) = $65-$60 = $5 (remember if Strike was $70 then Vcd would be $0 because nobody would exercise an option that is out of the money) (Vcu) = $75.38-$60 = $15.38 1. Setting up a hedge ratio: h = Vs(u-d)/(Vcu-Vcd) h = 70(1.076923077-0.928571429)/(15.38-5) = 1 That means we have to write (sell) 1 option for each share purchased in order to hedge the risks. You can make a simple calculation to check this, but I'm not going to go into too much detail here as the equestion is not about hedging. Because this position is risk-free in equilibrium it should pay a risk-free rate (5.5%). Then, the formula to price an option (Vc) using the hedging approach is: (Vs-hVc)(e^(rt))=(Vsu-hVcu) Where (Vc) is the value of the call option, (h) is the hedge ratio, (Vs) - Current Share Price, (Vsu) - highest probable share price, (r) - risk-free rate, (t) - time in years, (Vcu) - value of a call option on maturity at the highest probable share price. Therefore solving for (Vc): (70-1Vc)(e^(0.055(12/12))) = (75.38-115.38) => (70-Vc)1.056540615 = 60 => 70-Vc = 60/1.056540615 => Vc = 70 - (60/1.056540615) Which is similar to the formula given in your textbook, so I must assume that using 1+r would be simply a very close approximation of the formula above. Then it is easy to find that Vc = 13.2108911402 ~ $13.21 2. Risk-neutral valuation: Another way to calculate (Vc) is using a risk-neutral approach. We first introduce a variable (p) which is a risk-neutral probability of an increase in share price. p = (e^(rt)-d)/(u-d) so in your case: p = (1.056540615-0.928571429)/(1.076923077-0.928571429) = 0.862607107 Therefore using (p) the (Vc) would be equal: Vc = [pVcu+(1-p)Vcd]/(e^(rt)) => Vc = [(0.86260710715.38)+(0.1373928935)]/1.056540615 => Vc = 13.2071229185 ~ $13.21 As you can see it is very close to the hedging approach. I hope this answers your questions. Also bear in mind that there is much more to the option pricing than this. The most important topics to cover are: Multi-period BOPM Accounting for Dividends Black-Scholes-Merton Option Pricing Model\"", "title": "" }, { "docid": "5db2500544c713428b4b849702c8e351", "text": "In order to see whether you can buy or sell some given quantity of a stock at the current bid price, you need a counterparty (a buyer) who is willing to buy the number of stocks you are wishing to offload. To see whether such a counterparty exists, you can look at the stock's order book, or level two feed. The order book shows all the people who have placed buy or sell orders, the price they are willing to pay, and the quantity they demand at that price. Here is the order book from earlier this morning for the British pharmaceutical company, GlaxoSmithKline PLC. Let's start by looking at the left-hand blue part of the book, beneath the yellow strip. This is called the Buy side. The book is sorted with the highest price at the top, because this is the best price that a seller can presently obtain. If several buyers bid at the same price, then the oldest entry on the book takes precedence. You can see we have five buyers each willing to pay 1543.0 p (that's 1543 British pence, or £15.43) per share. Therefore the current bid price for this instrument is 1543.0. The first buyer wants 175 shares, the next, 300, and so on. The total volume that is demanded at 1543.0p is 2435 shares. This information is summarized on the yellow strip: 5 buyers, total volume of 2435, at 1543.0. These are all buyers who want to buy right now and the exchange will make the trade happen immediately if you put in a sell order for 1543.0 p or less. If you want to sell 2435 shares or fewer, you are good to go. The important thing to note is that once you sell these bidders a total of 2435 shares, then their orders are fulfilled and they will be removed from the order book. At this point, the next bidder is promoted up the book; but his price is 1542.5, 0.5 p lower than before. Absent any further changes to the order book, the bid price will decrease to 1542.5 p. This makes sense because you are selling a lot of shares so you'd expect the market price to be depressed. This information will be disseminated to the level one feed and the level one graph of the stock price will be updated. Thus if you have more than 2435 shares to sell, you cannot expect to execute your order at the bid price in one go. Of course, the more shares you are trying to get rid of, the further down the buy side you will have to go. In reality for a highly liquid stock as this, the order book receives many amendments per second and it is unlikely that your trade would make much difference. On the right hand side of the display you can see the recent trades: these are the times the trades were done (or notified to the exchange), the price of the trade, the volume and the trade type (AT means automatic trade). GlaxoSmithKline is a highly liquid stock with many willing buyers and sellers. But some stocks are less liquid. In order to enable traders to find a counterparty at short notice, exchanges often require less liquid stocks to have market makers. A market maker places buy and sell orders simultaneously, with a spread between the two prices so that they can profit from each transaction. For instance Diurnal Group PLC has had no trades today and no quotes. It has a more complicated order book, enabling both ordinary buyers and sellers to list if they wish, but market makers are separated out at the top. Here you can see that three market makers are providing liquidity on this stock, Peel Hunt (PEEL), Numis (NUMS) and Winterflood (WINS). They have a very unpalatable spread of over 5% between their bid and offer prices. Further in each case the sum total that they are willing to trade is 3000 shares. If you have more than three thousand Dirunal Group shares to sell, you would have to wait for the market makers to come back with a new quote after you'd sold the first 3000.", "title": "" }, { "docid": "96ffe6a551593b9b69ec6a68d6a2175b", "text": "You may refer to project http://jstock.sourceforge.net. It is open source and released under GPL. It is fetching data from Yahoo! Finance, include delayed current price and historical price.", "title": "" }, { "docid": "cd44af0ba38fa7d68265e7bc6603f04d", "text": "According to Active Equity Management by Zhou and Jain: When a stock pays dividend, the adjusted price in Yahoo makes the following adjustment: Let T be the ex-dividend date (the first date that the buyers of a stock will not receive the dividend) and T-1 be the last trading day before T. All prices before T are adjusted by a multiplier (C_{T-1} - d_T)/C_{T-1}, where C_{T-1} is the close price at T-1 and d_T is the dividend per share. This, of course means that the price before T decreases.", "title": "" }, { "docid": "4dd31df3c95814f4714baab5f891da74", "text": "Yes, because most were holding it from 50-300 dollars cost pre-split, giving them a very healthy dividend yield today. The question is upside if you buy today, not upside from 5 years ago. I bought it at 300 too, but today other stocks are making me money...", "title": "" }, { "docid": "5d0b360de7d5745d006ae345e6072492", "text": "The value of the asset doesn't change just because of the exchange rate change. If a thing (valued in USD) costs USD $1 and USD $1 = CAN $1 (so the thing is also valued CAN $1) today and tomorrow CAN $1 worth USD $0.5 - the thing will continue being worth USD $1. If the thing is valued in CAN $, after the exchange rate change, the thing will be worth USD $2, but will still be valued CAN $1. What you're talking about is price quotes, not value. Price quotes will very quickly reach the value, since any deviation will be used by the traders to make profits on arbitrage. And algo-traders will make it happen much quicker than you can even notice the arbitrage existence.", "title": "" }, { "docid": "7cfb787181731c3db190ce83e73934f7", "text": "You can't. If there was a reliable way to identify an undervalued stock, then people would immediately buy it, its price would rise and it wouldn't be undervalued any more.", "title": "" }, { "docid": "ebd1db8d92f3d8dc714ca36e204074bb", "text": "\"To a certain degree \"\"the only sure thing I know is the price I paid for the stock is the fair price at the time I buy it\"\" is absolutely right, by definition, and by the law of the free and efficient market and forces of supply and demand, freedom of public information about share price sensitive information, etc, etc, etc, and you've made a good point that eludes many investors I'd say. However, in practise, the market has many participants, and they will all be arriving at a different idea of what the \"\"fair price\"\" is by way of a slightly different analysis and slightly different information. In theory they all have the same information, but unfortunately in practise there is always some disparity. When one participant feels a stock is undervalued though the last thing they want to do is say so, instead they will start buying stock. They might feel it is undervalued by 20%, but that doesn't mean they'll keep buying and buying until it gets to 20%, they might push the price up just a little, then let the price drift down again, buy some more, relax, buy some more, etc. Over time the price will rise of course because the supply will become weaker, but even if the participant is correct about the 20% the price might have only risen 7% by the time they acquire all the stock they want given their risk models, market exposure and margin guidelines, etc, and it might be more than a year later before the price has actually risen to 20%, presumably because more and more other market participants have come to the same conclusion. The opposite can obviously also happen, a participant might dump stock it feels is over valued long before it hits the values it believes in. So right away you can see that pricing might not really reflect value, or \"\"fair price\"\".\"", "title": "" }, { "docid": "a02e1225d535f7294a762236a0c8f62c", "text": "> “If the [Black-Scholes] formula is applied to extended time periods….it can produce absurd results.” > -Warren Buffett, 2008 Letter to Berkshire Hathaway Shareholders I will give your question more thought, and come back with a quantitative solution. It may be most fruitful to apply a backward-induction options pricing model with detailed scenario-based discounted cash flow valuation models supported by pro forma financial statement and investment analysis. Nonetheless, my initial reaction is inline with Warren Buffett's belief that in the long-run an assumption of the Black-Scholes options pricing model is invalid (see [here](http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.613.1657&rep=rep1&type=pdf) and [here](http://www.elon.edu/docs/e-web/academics/business/economics/faculty/kurt/OptionValuationBuffetCritique_123113.pdf)). The perceived invalid assumption is that the distribution of expected future stock prices is not* log-normal in the long-run. This non-log-normal view is especially true for a single company stock. This invalid assumption results in over-valuation of options prices from Black-Scholes - which makes it much better to sell long-term options than to buy them if market participants are using Black-Scholes pricing models. Again, without having done the math yet, my gut tells me if the option seller is using Black-Sholes pricing for long-dated options, you would be best to avoid buying them as the prices will be inflated compared to an economic reality fair price.", "title": "" }, { "docid": "f27ce88d949d7bc8765788775ccf6f2a", "text": "The problem you're talking about can be handled the same way now until better alternatives appear. I'm simply talking about improving the existing infrastructure to carry out these trades. Instead of holding a number on charles schwab account, you hold a token which is the same as a stock certificate of ownership.", "title": "" }, { "docid": "04b7de29b81964c51f8be69e5e3d5cfe", "text": "\"I don't have a formula for anything like this, but it is important to note that the \"\"current value\"\" of any asset is really theoretical until you actually sell it. For example, let's consider a house. You can get an appraisal done on your house, where your home is inspected, and the sales of similar houses in your area are compared. However, this value is only theoretical. If you found yourself in a situation where you absolutely had to sell your house in one week, you would most likely have to settle for much less than the appraised value. The same hold true for collectibles. If I have something rare that I need cash for immediately, I can take it to a pawn shop and get cash. However, if I take my time and locate a genuinely interested collector, I can get more for it. This is comparable to someone who holds a significant percentage of shares in a publicly held corporation. If the current market value of your shares is $10 million, but you absolutely need to sell your entire stake today, you aren't going to get $10 million. But if you take your time selling a little at a time, you are more likely to get much closer to this $10 million number. A \"\"motivated seller\"\" means that the price will drop.\"", "title": "" }, { "docid": "df41c539018f1fb6adcf160c270d71fe", "text": "Many of the Bitcoin exchanges mimic stock exchanges, though they're much more rudimentary offering only simple buy/sell/cancel orders. It's fairly normal for retail stock brokerage accounts to allow other sorts of more complex orders, where once a certain criteria is met, (the price falls below some $ threshold, or has a movement greater than some %) then your order is executed. The space between the current buy order and the current sell order is the bid/ask spread, it's not really about timing. Person X will buy at $100, person Y will sell at $102. If both had a price set at $101, they would just transact. Both parties think they can do a little bit better than the current offer. The width of the bid/ask spread is not universal by any means. The current highest buy order and the current lowest sell order, are both the current price. The current quoted market price is generally the price of the last transaction, whether it's buy or sell.", "title": "" }, { "docid": "42f339e971647b05cea2661ae64b1c55", "text": "\"The answer is yes. And the reason is if today's interest rates are lower than the interest rate (coupon) at which the bond was issued. The bond's \"\"lifetime value\"\" is 100 cents on the dollar. That's the principal repayment that the investor will get on the maturity date. But suppose the bond's coupon rate is 4% while today's interest rate is 3%. Then, people who bought the bond at 100 would get 4% on their money, while everyone else was getting 3%. To compensate, a three year bond would have to rise to almost 103 so that the so-called yield to maturity\"\" would be 3%. Then there would be a \"\"capital loss\"\" (from almost 103 to 100) that would exactly offset the extra interest, that is 1% \"\"more\"\" for three years. If today's interest rates are negative (as they were from time to time in the 1930s, and in the present decade), the \"\"negative\"\" interest rates will prevent the buyer from getting the \"\"lifetime value\"\" (as defined by the OP) of principal plus interest over the original life of the bond. This happens in a \"\"flight to quality\"\" situation, where people are willing to take a (small) capital loss on Treasuries in order to prevent a large possible loss from bank failures like those that took place in 2008.\"", "title": "" } ]	fiqa
7b6445cba921415d6fb380d648597665	Boyfriend is coowner of a house with his sister, he wants to sell but she doesn't	[ { "docid": "9946428c121f3963f3f50f8b1aefae9b", "text": "He needs to go see a lawyer to find out what all his options are, and the consequences of any of them. Then he needs to get help extricating himself from this situation, in whatever fashion he chooses: buyout, giveaway, what have you. This situation involves property, which involves money, so definitely get professional advice on this. Otherwise, 20 years from now, he could be hit with a bill for back taxes or what have you, if whatever he does, isn't done correctly and completely. The situation does stink, on ice. Either he's going to be the pissed-off party in this situation, or she is, or they both are...but there's money involved, and property involved, and at least one recalcitrant family member involved. Best case scenario, he writes up the story and sells the plot to Lifetime for a movie-of-the-week. (If I were in this situation, I would donate my half of the property to some charitable group, then have a lawyer send Sis a letter saying that it had been donated. Maybe even pick a charitable group aligned with Sis' interests, so that if Sis does want to try and negotiate with them to buy it out, she's giving the sales money to a group/cause that she believes in. But...then, it would No Longer Be My Problem. But that has consequences of its own, and your boyfriend needs to be aware of all of them, including any tax implications for him, before taking any such step.)", "title": "" }, { "docid": "89d9ea459669caeb89bd33fb1fbaf6fc", "text": "It seems likely that the mortgage is not in your boyfriend's name because he never would have qualified if he can't even afford utilities after paying the mortgage. It also seems unfair that his sister continues to have a 50% share of the equity if your boyfriend has been making the entire payment on the mortgage every month. What would happen if your boyfriend stopped making the payments? His sister would have no choice if the property went into foreclosure. Your boyfriend has all the leverage he needs by simply refusing to continue making the payments. Why he won't push his sister to make a deal is the real question you need to ask him. In the meantime, if he wants out, all he has to do is decide not to keep paying whether his sister feels attached or not.", "title": "" }, { "docid": "b4c312ef654f61fddd993f93f158a1a6", "text": "How did the house pass to them? Was it held in Trust? Were they both jointly listed on the deed? If no to both, then the house should have gone into probate..assuming this is going on in the US...where the probate court would reassign ownership. Until this happens the house cannot be sold and is formally owned by the estate. I agree with the former post suggesting you find an estate attorney in the area to see if this dispute can be amicably settled. Tying it up in litigation will be EXPENSIVE and take a great deal of time", "title": "" }, { "docid": "d1700ce173631fa8ff7771d55e1b4c98", "text": "Rent the property?? Is that a possible solution? Since selling the house is not an option and living in it isn't either, then perhaps renting it is the way to go? Since no explanation for the sister's motives is given, i'd speculate it is a mixture of emotional and financial concerns. Maybe mostly emotional. I imagine letting go of the one physical thing that has memories of you and your parents attached to it is very difficult. I don't think getting a lawyer or doing what's convenient for only your boyfriend is the way to go...But that's my own personal opinion. Clearly, he only has one close family member left alive. Creating permanent wounds in that relationship will cost more along the way. And quite frankly, if the house is owned 50-50, don't you need both owners to sign the deed to sell the house anyways? If renting is not an option, then maybe refinancing the mortgage to lower payments? Or Airbnb it only half the time? Or rent it out for events to help with payments? Or ask the sister for a little money...Not for half the mortgage, but at least a few hundred dollars to maintain the house and heat. If she is indeed concerned with the property, then maintaining it to prevent serious damagae is in her interests, no matter her income.", "title": "" }, { "docid": "86947b27e63b44e8de27c9d930ccea82", "text": "\"Time for a lawyer. Essentially, regardless of the situation \"\"it's not right\"\" for him to be paying the mortgage and only get half the value out of the equity in the house. All other things aside, no court I can think of would allow that. The \"\"could happens\"\" are many, but the most common include; Keep in mind that if he keeps paying the mortgage ling enough most courts will end up giving him ownership outright. Essentially, they will say he has already bought her out by paying her half of the debt. Unfortunately, any way he goes he is going to need to take action. When there is a missed mortgage payment, a bad tax year, or some other legal issue (some one is injured on the property), the last thing he is going to want is for the courts to decide the issue for him. For example, John breaks an arm while climbing a tree on the property line. John takes the owners of the property to court. \"\"He\"\" says \"\"but my sister owns half\"\" and the courts decide then and there that because he's been paying the mortgage alone he owns the house alone. Seems like a win, except now he owns the liability alone, and owns John $1,000,000 for a silly lawsuit alone. Point is this. Ownership of property comes with risks and responsibilities. \"\"He\"\" really needs to get those risks and responsibilities under control so he can mitigate them, or he could end up in a very nasty situation in the years to come.\"", "title": "" }, { "docid": "233b7834ac5a15ab9d4b9fb522d80bd0", "text": "He doesn't have to follow through on this, but he could tell this sister that he will stop making mortgage payments, which will result in foreclosure and sale at lower price than might be realized by a voluntary sale. Translation: the house will sold, sis. Do you want to maximize your share of the proceeds? And, as I said in a comment above: I hope that he is keeping careful records of mortgage an utility payments, as he might (should) be entitled to a refund from the proceeds of an eventual sale (possibly adjusted by the fair rent value of the time which he spent living there)", "title": "" }, { "docid": "d412f05433805dbce869dd79e5b3525b", "text": "\"Dear \"\"benevolent\"\" sister, The mortgage, utilities, and taxes for this home can no longer be paid and the bank will repossess it within the coming months. Thank you for your time\"", "title": "" }, { "docid": "b80cd12b199c52298cec99dc26f6ee26", "text": "\"That ain't nothing. It's really easy to get \"\"whipped up\"\" into a sense of entitlement, and forget to be grateful for what you do have. If this house doesn't exist, what would his costs of housing be elsewhere? Realistically. Would landlords rent to him? Would other bankers lend him money to buy a house? Would those costs really be any better? What about the intangible benefits like not having any landlord hassles or having a good relationship with the neighbors? It's entirely possible he has a sweet deal here, and just doesn't make enough money. If your credit rating is poor, your housing options really suck. Banks won't lend you money for a house unless you have a huge ton of upfront cash. Most landlords won't rent to you at all, because they are going to automated scoring systems to avoid accusations of racism. In this day and age, there are lots of ways to make money with a property you own. In fact, I believe very firmly in Robert Allen's doctrine: Never sell. That way you avoid the tens of thousands of dollars of overhead costs you bear with every sale. That's pure profit gone up in smoke. Keep the property forever, keep it working for you. If he doesn't know how, learn. To \"\"get bootstrapped\"\" he can put it up on AirBnB or other services. Or do \"\"housemate shares\"\". When your house is not show-condition, just be very honest and relatable about the condition. Don't oversell it, tell them exactly what they're going to get. People like honesty in the social sharing economy. And here's the important part: Don't booze away the new income, invest it back into the property to make it a better money-maker - better at AirBnB, better at housemate shares, better as a month-to-month renter. So it's too big - Is there a way to subdivide the unit to make it a better renter or AirBnB? Can he carve out an \"\"in-law unit\"\" that would be a good size for him alone? If he can keep turning the money back into the property like that, he could do alright. This is what the new sharing economy is all about. Of course, sister might show up with her hand out, wanting half the revenue since it's half her house. Tell her hell no, this pays the mortgage and you don't! She deserves nothing, yet is getting half the equity from those mortgage payments, and that's enough, doggone it! And if she wants to go to court, get a judge to tell her that. Not that he's going to sell it, but it's a huge deal. He needs to know how much of his payments on the house are turning into real equity that belongs to him. \"\"Owning it on paper\"\" doesn't mean you own it. There's a mortgage on it, which means you don't own all of it. The amount you own is the value of the house minus the mortgage owed. This is called your equity. Of course a sale also MINUS the costs of bringing the house up to mandatory code requirements, MINUS the cost of cosmetically making the house presentable. But when you actually sell, there's also the 6% Realtors' commission and other closing costs. This is where the mortgage is more than the house is worth. This is a dangerous situation. If you keep the house and keep paying the mortgage all right, that is stable, and can be cheaper than the intense disruption and credit-rating shock of a foreclosure or short sale. If sister is half owner, she'll get a credit burn also. That may be why she doesn't want to sell. And that is leverage he has over her. I imagine a \"\"Winter's bone\"\" (great movie) situation where the family is hanging on by a thread and hasn't told the bank the parents died. That could get very complex especially if the brother/sister are not creditworthy, because that means the bank would simply call the loan and force a sale. The upside is this won't result in a credit-rating burn or bankruptcy for the children, because they are not owners of the house and children do not inherit parents' debt.\"", "title": "" } ]	[ { "docid": "bcc7565023a433295ede5c7b73956620", "text": "Can he legally break your lease if he sells the place? If not I would just keep renting. It doesn't sound like you love the house and you plan on moving or would prefer a different type of place long term. Unless you yourself plan on getting involved in being a renting it out to others in the future - just rent and move on at some point. If he can break your lease upon sale of the property then I'd be casually keeping an eye out for another place to rent if that happens.", "title": "" }, { "docid": "a3296028085d2affa9301df284593e8e", "text": "\"Sister is putting down nothing, and paying sub-market rent. It looks to me like if she is assigned anything, it's a gift. You on the other hand, have put down the full downpayment, and instead of breaking even via fair rent, are feeding the property to the tune of $645/mo. In the old days, the days of Robert Allen's \"\"no money down\"\" it was common to see shared equity deals where the investor would put up the down payment, get 1/2 the equity build up, and never pay another dime. This deal reminds me of that, only you are getting the short end of the stick. \"\"you never think something will cause discourse\"\" - I hope you meant this sarcastically. The deal you describe? No good can come of it.\"", "title": "" }, { "docid": "a2fdf74a17ba25e4650efadf59e8b366", "text": "The first and most important thing to consider is that this is a BUSINESS TRANSACTION, and needs to be treated as such. Nail down Absolutely All The Details, specifically including what happens if either of you decides it's time to move and wants to sell off your share of the property. Get at least one lawyer involved in drawing up that contract, perhaps two so there's no risk of conflict of interest. What's your recourse, or his, if the other stops making their share of the payments? Who's responsible for repairs and upkeep? If you make renovations, how does that affect the ownership percentage, and what kind of approval do you need from him first, and how do you get it, and how quickly does he have to respond? If he wants to do something to maintain his investment, such as reroofing, how does he negotiate that with you -- especially if it's something that requires access to the inside of the house? Who is the insurance paid by, or will each of you be insuring it separately? What are the tax implications? Consider EVERY possible outcome; the fact that you're friends now doesn't matter, and in fact arguments over money are one of the classic things that kill friendships. I'd be careful making this deal with a relative (though in fact I did loan my brother a sizable chunk of change to help him bridge between his old house and new house, and that's registered as a mortgage to formalize it). I'd insist on formalizing who owns what even with a spouse, since marriages don't always last. With someone who's just a co-worker and casual friend, it's business and only business, and needs to be both evaluated and contracted as such to protect both of you. If you can't make an agreement that you'd be reasonably comfortable signing with a stranger, think long and hard about whether you want to sign it at all. I'll also point out that nobody is completely safe from long-term unemployment. The odds may be low, but people do get blindsided. The wave of foreclosures during and after the recent depression is direct evidence of that.", "title": "" }, { "docid": "9008113aefe4cd055d3fb9e59ff3ebc7", "text": "With no agreement in place, the other person can go after half the equity in the house. In my opinion, wanting their down payment back seems reasonable.", "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": "ae78b765445388e78ff43a789df3076b", "text": "\"Disclaimer: I am a law student, not a lawyer, and don't claim to have a legal opinion one way or another. My answer is intended to provide a few potentially relevant examples from case law in order to make the point that you should be cautious (and seek proper advice if you think that caution is warranted). Nor am I claiming that the facts in these cases are the same as yours; merely that they highlight the flexible approach that the courts take in such cases, and the fact that this area of law is complicated. I don't think it is sensible to just assume that there is no way that your girlfriend could acquire property rights as a rent paying tenant if arranged on an informal basis with no evidence of the intention of the arrangement. One of the answers mentions a bill which is intended to give non-married partners more rights than they have presently. But the existence of that bill doesn't prove the absence of any existing law, it merely suggests a possible legal position that might exist in the future. A worst-case assumption should also be made here, since you're considering the possibility of what can go wrong. So let's say for the sake of the argument that you have a horrible break up and your girlfriend is willing to be dishonest about what the intentions were regarding the flat (e.g. will claim that she understood the arrangement to be that she would acquire ownership rights in exchange for paying two thirds of the monthly mortgage repayment). Grant v Edwards [1986] Ch 638 - Defendant had property in the name of himself and his brother. Claimant paid nothing towards the purchase price or towards mortgage payments, but paid various outgoings and expenses. The court found a constructive trust in favor of the claimant, who received a 50% beneficial interest in the property. Abbot v Abbot [2007] UKPC 53, [2008] 1 FLR 1451 - Defendant's mother gifted land to a couple with the intention that it be used as a matrimonial home. However it was only put into the defendant's name. The mortgage was paid from a joint account. The claimant was awarded a 50% share. Thompson v Hurst [2012] EWCA Civ 1752, [2014] 1 FLR 238 - Defendant was a council tenant. Later, she formed a relationship with the claimant. They subsequently decided to buy the house from the council, but it was done in the defendant's name. The defendant had paid all the rent while a tenant, and all the mortgage payments while an owner, as well as all utility bills. The claimant sometimes contributed towards the council tax and varying amounts towards general household expenses (housekeeping, children, etc.). During some periods he paid nothing at all, and at other times he did work around the house. Claimant awarded 10% ownership. Aspden v Elvy [2012] EWHC 1387 (Ch), [2012] 2 FCR 435 - The defendant purchased a property in her sole name 10 years after the couple had separated. The claimant helped her convert the property into a house. He did much of the manual work himself, lent his machinery, and contributed financially to the costs. He was awarded a 25% share. Leeds Building Society v York [2015] EWCA Civ 72, [2015] HLR 26 (p 532) - Miss York and Mr York had a dysfunctional and abusive relationship and lived together from 1976 until his death in 2009. In 1983 Mr York bought a house with a mortgage. He paid the monthly mortgage repayments and other outgoings. At varous times Miss York contributed her earnings towards household expenses, but the judge held that this did \"\"not amount to much\"\" over the 33 year period, albeit it had helped Mr York being able to afford the purchase in the first place. She also cooked all the family meals and cared for the daughter. She was awarded a 25% share. Conclusion: Don't make assumptions, consider posting a question on https://law.stackexchange.com/ , consider legal advice, and consider having a formal contract in place which states the exact intentions of the parties. It is a general principle of these kinds of cases that the parties need to have intended for the person lacking legal title to acquire a beneficial interest, and proof to the contrary should make such a claim likely to fail. Alternatively, decide that the risk is low and that it's not worth worrying about. But make a considered decision either way.\"", "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": "7455319de0de59050f5b59e53c48bbe1", "text": "\"I am not a lawyer nor a tax accountant, so if such chimes in here I'll gladly defer. But my understanding is: If you're romantically involved and living together you're considered a \"\"household\"\" and thus your finances are deemed shared for tax purposes. Any money your partner gives you toward paying the bills is not considered \"\"rent\"\" but \"\"her contribution to household expenses\"\". (I don't know the genders but I'll call your partner \"\"her\"\" for convenience.) This is not income and is not taxed. On the off chance that the IRS actually investigated your arrangement, don't call any money she gives you \"\"rent\"\": call it \"\"her contribution to living expenses\"\". If you were two (or more) random people sharing a condo purely for economic reasons, i.e. you are not a family in any sense but each of you would have trouble affording a place on your own, it's common for all the room mates to share the rent or mortgage, utilities, etc, but for one person to collect all the money and write one check to the landlord, etc. Tax law does not see this as the person who writes the check collecting rent from the others, it's just a book-keeping convenience, and so there is no taxable transaction. (Of course the landlord owes taxes on the rental income, but that's not your problem.) In that case it likely would be different if one person outright owned the place and really was charging the others rent. But then he could claim deductions for all the expenses of maintaining it, including depreciation, so if it really was a case of room mates sharing expenses, the taxable income would likely be just about zero anyway. So short answer: If you really are a \"\"couple\"\", there are no taxable transactions here. If the IRS should actually question it, don't refer to it as \"\"collecting rent\"\" or any other words that imply this is a business arrangement. Describe it as a couple sharing expenses. (People sometimes have created tax problems for themselves by their choice of words in an audit.) But the chance that you would ever be audited over something like this is probably remote. I suppose that if at some point you break up, but you continue to live together for financial reasons (or whatever reasons), that could transform this into a business relationship and that would change my answer.\"", "title": "" }, { "docid": "312a0b54124fbd8649a9f9aecd4b5b30", "text": "I second (or fifth?) the answers of the other users in that this should have been foreseen and discussed prior to entering the partnership. But to offer a potential solution: If the mortgage company allows you to assume the whole mortgage (big if) you could buy the other partner out. To determine what a fair buyout would be, take the current value of the house less the remaining mortgage to get the current equity. Half that is each partner's current gain (or potentially loss), and could be considered a fair buyout. At this point the partner realizes any gains made in the last 5 years, and from now on the whole house (and any future gains or losses) will be yours. Alternatively your partner could remain a full partner (if s/he so desires) until the house sells. You would see the house as a separate business, split the cost as you have, and you would pay fair market rent each month (half of which would come back to you). A third option would be to refinance the house, with you as a sole mortgage holder. To factor in how much your partner should receive out of the transaction, you can take his/her current equity and subtract half of the costs associated with the refi. I would also recommend both of you seek out the help of a real estate lawyer at this point to help you draft an agreement. It sounds like you're still on good terms, so you could see a lawyer together; this would be helpful because they should know all the things you should look out for in a situation like this. Good luck!", "title": "" }, { "docid": "cdfe549e223d987b50180c7313a44aa3", "text": "The simplest way to handle this is for you to rent the apartment and sublet to the girlfriend and friend. I'd split the utilities evenly, one-third from each. The reason for this is that each of you contribute evenly to generating the utility bills. It's not like your income makes the water cost more for you. Utilities are driven by usage. Dividing them other than equally is likely to lead to more problems than it solves. Also, it seems unlikely that a different apartment would use significantly different water, electricity, or internet. Those are driven by the appliances rather than the size or location of the apartment. Only pay more for the utilities if you want something that they don't. For example, maybe you want HBO, etc. It would be reasonable for you to pay the entire premium if that's a luxury that they simply wouldn't buy. I'd also divide the groceries evenly if you share and share alike. If you eat separate meals, you can buy separate groceries. If the rent can't be split evenly but you could afford it alone, then you can just sign up for it. If you break up with the girlfriend and/or the friend moves out, you're still fine. You have your fancy apartment and can afford it. The bigger problem comes if you can't afford the apartment without both the girlfriend and friend contributing. If so, you should probably avoid this situation. It's fragile. Any person leaving would put you in a financially untenable position. You can look for a new tenant to replace your friend, but you can't exactly rely on getting a new move-in girlfriend on demand. Neither the girlfriend nor the friend can afford to be on the main lease. In case of emergency or tragedy, they couldn't replace you as a tenant. That's why they should sublet. Then their obligation is to you, not to the landlord. How much apartment would the girlfriend and friend get if you weren't involved? What rents would they pay? That's probably how much rent they should pay for this apartment. You want a better apartment (or a better location)? That's on you. You should only do this if you want to do it. If you want to share apartments with the girlfriend and friend, then do so. Work out something equitable. If you plan on moving in together to reduce your costs, then you don't sound like you are compatible. Obviously there are reasons to move in with the girlfriend aside from costs. Why can't the friend get his or her own place? The added rent probably won't do more than pay for the added room (you could get a one bedroom without the friend). That points to an alternative way of calculating the friend's contribution: the difference between a two bedroom and a one bedroom apartment. That's the additional cost of the bigger apartment. If the friend can't afford that, then this might not be a good idea. Make sure that you can afford the apartment if one or both of the friend and girlfriend move out. You can eventually replace the friend as the tenant but don't rely on doing the same with the girlfriend. Share utilities evenly. Possibly groceries too. The friend should pay at least the added cost of the additional bedroom. Don't expect either to pay more in the new apartment than they would pay without you. You should be the only one on the main lease; sublet to them.", "title": "" }, { "docid": "471cf77dadff4da873d468a9f47e4634", "text": "Trying to forcefully reclaim the money will ruin the relationship. In general it's bad practice to loan money to family.", "title": "" }, { "docid": "28485e0d5f2e225bab5d6de3d6a31d45", "text": "Definitely get a lawyer to write up all the details of the partnership in a formal agreement. If your ex does not want to do this, that is a bad sign. You both need to be clear about expectations and responsibilities in this partnership, and define an exit strategy in the case one of you wants out. This is the most fair to both parties. Generally, what is common is that property is split cleanly when the relationship ends. I would strongly recommend you both work towards a clean split with no joint property ownership. How this looks depends on your unique situation. To address your questions 2 and 3: You have two roles here - tenant and owner. As a 50% owner, you are running a business with a partner. That business will have assets (home), income, expenses, and profit. You basically need to run this partnership as a simple business. All the rent income (your rent and the other tenant's) should go into a separate account. The mortgage and all other housing expenses are then paid from only this account. Any excess is then profit that may be split 50/50. All expenses should be agreed upon by both of you, either by contract or by direct communication. You should see a financial professional to make sure accounting and taxes are set up properly. Under this system, your ex could do work on the house and be paid from the business income. However, they are responsible to you to provide an estimate and scope of work, just like any other contractor. If you as a joint owner agree to his price, he then could be paid out of the business income. This reduces the business cash flow for the year accordingly. You can probably see how this can get very complicated very fast. There is really no right or wrong answer on what both of you decide is fair and best. For the sake of simplicity and the least chance of a disaster, the usual and recommended action is to cleanly split all property. Good Luck!", "title": "" }, { "docid": "cac3fe9a31f1e771a5370d19b23b68b5", "text": "If the house is titled to the estate, neither of you own the house and it cannot be mortgaged. Executor of the will is supposed to provide to you and to the probate court periodic reports as to what is going on. Check them up and talk to your probate lawyer.", "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": "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": "" } ]	fiqa
0894b3b0535cb5489ae3e3cfa243c138	Investment property information resources	[ { "docid": "8ed9ef428b4cc9bb84ceb6bd5124b274", "text": "\"I personally found the \"\"For Dummies\"\" books, on property investment, very helpful and a great primer. I found them unbiased and very informative, laying out the basic principles. Depending on your knowledge it can provide you with enough of a foundation to have an informed conversation with banks/real estates etc. Watch the markets for a while (at least 6 months) to know what prices vendors will be expecting and rents tenants will be expecting, most property magazines will also contain a suburb summary in the back. When you get closer to purchase make sure to ask your bank for the RP Data reports on the properties you are looking at, the banks will typically provide these for free. I also set out some points for myself which I made clear for myself at the beginning: This might provide a good starting point and really narrow down your research options as generic research on property investment can be overwhelming. I ended up with a 3 Bedder in western Sydney that has so far happily paid for itself. Building a good relationship with real estate agents and attending lots of open homes/auctions and talking to other investors can only help. I was once told if you attend free property investment seminars you will always learn at least one new thing (be it statistics, methodologies, finance options etc ), with that in mind always keep a level head, leave your wallet at home and don't sign up to anything. At the end of the day keep a cool head, don't stop reading and rush nothing.\"", "title": "" }, { "docid": "55ecdda1e229a73cd562b64220076832", "text": "As user14469 mentions you would have to decide what type of properties you would like to invest in. Are you after negatively geared properties that may have higher long term growth potential (usually within 15 to 20km from major cities), or after positive cash-flow properties which may have a lower long term growth potential (usually located more than 20km from major cities). With negative geared properties your rent from the property will not cover the mortgage and other costs, so you will have to supplement it through your income. The theory is that you can claim a tax deduction on your employment income from the negative gearing (benefits mainly those on higher tax brackets), and the potential long term growth of the property will make up for the negative gearing over the long term. If you are after these type of properties Michael Yardney has some books on the subject. On the other hand, positive cash-flow properties provide enough rental income to cover the mortgage and other costs. They put cash into your pockets each week. They don't have as much growth potential as more inner city properties, but if you stick to the outer regions of major cities, instead of rural towns, you will still achieve decent long term growth. If you are after these type of properties Margaret Lomas has some books on the subject. My preference is for cash-flow positive properties, and some of the areas user14469 has mentioned. I am personally invested in the Penrith and surrounding areas. With negatively geared properties you generally have to supplement the property with your own income and generally have to wait for the property price to increase so you build up equity in the property. This then allows you to refinance the additional equity so you can use it as deposits to buy other properties or to supplement your income. The problem is if you go through a period of low, stagnate or negative growth, you may have to wait quite a few years for your equity to increase substantially. With positively geared properties, you are getting a net income from the property every week so using none of your other income to supplement the property. You can thus afford to buy more properties sooner. And even if the properties go through a period of low, stagnate or negative growth you are still getting extra income each week. Over the long term these properties will also go up and you will have the benefit of both passive income and capital gains. I also agree with user14469 regarding doing at least 6 months of research in the area/s you are looking to buy. Visit open homes, attend auctions, talk to real estate agents and get to know the area. This kind of research will beat any information you get from websites, books and magazines. You will find that when a property comes onto the market you will know what it is worth and how much you can offer below asking price. Another thing to consider is when to buy. Most people are buying now in Australia because of the record low interest rates (below 5%). This is causing higher demand in the property markets and prices to rise steadily. Many people who buy during this period will be able to afford the property when interest rates are at 5%, but as the housing market and the economy heat up and interest rates start rising, they find it hard to afford the property when interest rate rise to 7%, 8% or higher. I personally prefer to buy when interest rates are on the rise and when they are near their highs. During this time no one wants to touch property with a six foot pole, but all the owners who bought when interest rates where much lower are finding it hard to keep making repayments so they put their properties on the market. There ends up being low demand and increased supply, causing prices to fall. It is very easy to find bargains and negotiate lower prices during this period. Because interest rates will be near or at their highs, the economy will be starting to slow down, so it will not be long before interest rates start dropping again. If you can afford to buy a property at 8% you will definitely be able to afford it at 6% or lower. Plus you would have bought at or near the lows of the price cycle, just before prices once again start increasing as interest rates drop. Read and learn as much as possible from others, but in the end make up your own mind on the type of properties and areas you prefer.", "title": "" } ]	[ { "docid": "f89ed67b5f0774d7905ab336c87cbb9a", "text": "REITs can be classified as equity, mortgage, or hybrid. A security that sells like a stock on the major exchanges and invests in real estate directly, either through properties or mortgages. Trades like equity but the underlying is a property ot mortgage. So you are investing in real estate but without directly dealing with it. So you wouldn't classify it as real estate. CD looks more like a bond.If you look at the terms and conditions they have many conditions as a bond i.e. callable, that is a very precious option for both the buyer and seller. Self occupied house - Yes an asset because it comes with liabilities. When you need to sell it you have to move out. You have to perform repairs to keep it in good condition. Foreign stock mutual fund - Classify it as Foreign stocks, for your own good. Investments in a foreign country aren't the same as in your own country. The foreign economy can go bust, the company may go bust and you would have limited options of recovering your money sitting at home and so on and so forth.", "title": "" }, { "docid": "70011115542a3425b818a404927a4b7b", "text": "I'm a college student and recently got an interview at an energy investing firm for a job upon graduation. I have academic and extracurricular experience in finance, but I'm not too knowledgeable on the energy sector. What are some good resources (websites, newsletters, etc.) on learning more about the energy industry? Are there any industry specific questions that are likely to come up during the interview?", "title": "" }, { "docid": "ce932128386e9ac1e3bdbe0c347a0ad7", "text": "If annualized rate of return is what you are looking for, using a tool would make it a lot easier. In the post I've also explained how to use the spreadsheet. Hope this helps.", "title": "" }, { "docid": "9440b484bb97504f5e7bf8dfd994246b", "text": "If you can get the health ratios based off of the total sales the tenant does divided by their rent plus nets. I know a quite a few big firms look at that to determine the health of the tenant. Another item would be a surrounding market overview. Occupancy rates, average rent, big clients, future developments. The information on existing competitive properties are easy to find, just type in the name of their property plus the word leasing on the end. To find future development information, the city they submit to has to approve the plans. Some cities have it set up on their website over a Google maps type of link. Edit: spelling Good luck! Edit 2: example of competition link. http://properties.brixmor.com/cre/commercial-real-estate-listings/frisco/texas/preston-ridge/overview/", "title": "" }, { "docid": "47949a3d96c655c0cb45eba95c6e912e", "text": "\"This turned out be a lot longer than I expected. So, here's the overview. Despite the presence of asset allocation calculators and what not, this is a subjective matter. Only you know how much risk you are willing to take. You seem to be aware of one rule of thumb, namely that with a longer investing horizon you can stand to take on more risk. However, how much risk you should take is subject to your own risk aversion. Honestly, the best way to answer your questions is to educate yourself about the individual topics. There are just too many variables to provide neat, concise answers to such a broad question. There are no easy ways around this. You should not blindly rely on the opinions of others, but rather use your own judgment to asses their advice. Some of the links I provide in the main text: S&P 500: Total and Inflation-Adjusted Historical Returns 10-year index fund returns The Motley Fool Risk aversion Disclaimer: These are the opinions of an enthusiastic amateur. Why should I invest 20% in domestic large cap and 10% in developing markets instead of 10% in domestic large cap and 20% in developing markets? Should I invest in REITs? Why or why not? Simply put, developing markets are very risky. Even if you have a long investment horizon, you should pace yourself and not take on too much risk. How much is \"\"too much\"\" is ultimately subjective. Specific to why 10% in developing vs 20% in large cap, it is probably because 10% seems like a reasonable amount of your total portfolio to gamble. Another way to look at this is to consider that 10% as gone, because it is invested in very risky markets. So, if you're willing to take a 20% haircut, then by all means do that. However, realize that you may be throwing 1/5 of your money out the window. Meanwhile, REITs can be quite risky as investing in the real estate market itself can be quite risky. One reason is that the assets are very much fixed in place and thus can not be liquidated in the same way as other assets. Thus, you are subject to the vicissitudes of a relatively small market. Another issue is the large capital outlays required for most commercial building projects, thus typically requiring quite a bit of credit and risk. Another way to put it: Donald Trump made his name in real estate, but it was (and still is) a very bumpy ride. Yet another way to put it: you have to build it before they will come and there is no guarantee that they will like what you built. What mutual funds or index funds should I investigate to implement these strategies? I would generally avoid actively managed mutual funds, due to the expenses. They can seriously eat into the returns. There is a reason that the most mutual funds compare themselves to the Lipper average instead of something like the S&P 500. All of those costs involved in managing a mutual fund (teams of people and trading costs) tend to weigh down on them quite heavily. As the Motley Fool expounded on years ago, if you can not do better than the S&P 500, you should save yourself the headaches and simply invest in an S&P 500 index fund. That said, depending on your skill (and luck) picking stocks (or even funds), you may very well have been able to beat the S&P 500 over the past 10 years. Of course, you may have also done a whole lot worse. This article discusses the performance of the S&P 500 over the past 60 years. As you can see, the past 10 years have been a very bumpy ride yielding in a negative return. Again, keep in mind that you could have done much worse with other investments. That site, Simple Stock Investing may be a good place to start educating yourself. I am not familiar with the site, so do not take this as an endorsement. A quick once-over of the material on the site leads me to believe that it may provide a good bit of information in readily digestible forms. The Motley Fool was a favorite site of mine in the past for the individual investor. However, they seem to have turned to the dark side, charging for much of their advice. That said, it may still be a good place to get started. You may also decide that it is worth paying for their advice. This blog post, though dated, compares some Vanguard index funds and is a light introduction into the contrarian view of investing. Simply put, this view holds that one should not be a lemming following the crowd, rather one should do the opposite of what everyone else is doing. One strong argument in favor of this view is the fact that as more people pile onto an investing strategy or into a particular market, the yields thin out and the risk of a correction (i.e. a downturn) increases. In the worst case, this leads to a bubble, which corrects itself suddenly (or \"\"pops\"\" thus the term \"\"bubble\"\") leading to quite a bit of pain for the unprepared participants. An unprepared participant is one who is not hedged properly. Basically, this means they were not invested in other markets/strategies that would increase in yield as a result of the event that caused the bubble to pop. Note that the recent housing bubble and resulting credit crunch beat quite heavily on the both the stock and bond markets. So, the easy hedge for stocks being bonds did not necessarily work out so well. This makes sense, as the housing bubble burst due to concerns over easy credit. Unfortunately, I don't have any good resources on hand that may provide starting points or discuss the various investing strategies. I must admit that I am turning my interests back to investing after a hiatus. As I stated, I used to really like the Motley Fool, but now I am somewhat suspicious of them. The main reason is the fact that as they were exploring alternatives to advertising driven revenue for their site, they promised to always have free resources available for those unwilling to pay for their advice. A cursory review of their site does show a decent amount of general investing information, so take these words with a grain of salt. (Another reason I am suspicious of them is the fact that they \"\"spammed\"\" me with lots of enticements to pay for their advice which seemed just like the type of advice they spoke against.) Anyway, time to put the soapbox away. As I do that though, I should explain the reason for this soapboxing. Simply put, investing is a risky endeavor, any way you slice it. You can never eliminate risk, you can only hope to reduce it to an acceptable level. What is acceptable is subject to your situation and to the magnitude of your risk aversion. Ultimately, it is rather subjective and you should not blindly follow someone else's opinion (professional or otherwise). Point being, use your judgment to evaluate anything you read about investing. If it sounds too good to be true, it probably is. If someone purports to have some strategy for guaranteed (steady) returns, be very suspicious of it. (Read up on the Bernard Madoff scandal.) If someone is putting on a heavy sales pitch, be weary. Be especially suspicious of anyone asking you to pay for their advice before giving you any solid understanding of their strategy. Sure, many people want to get paid for their advice in some way (in fact, I am getting \"\"paid\"\" with reputation on this site). However, if they take the sketchy approach of a slimy salesmen, they are likely making more money from selling their strategy, than they are from the advice itself. Most likely, if they were getting outsized returns from their strategy they would keep quiet about it and continue using it themselves. As stated before, the more people pile onto a strategy, the smaller the returns. The typical model for selling is to make money from the sale. When the item being sold is an intangible good, your risk as a buyer increases. You may wonder why I have written at length without much discussion of asset allocation. One reason is that I am still a relative neophyte and have a mostly high level understanding of the various strategies. While I feel confident enough in my understanding for my own purposes, I do not necessarily feel confident creating an asset allocation strategy for someone else. The more important reason is that this is a subjective matter with a lot of variables to consider. If you want a quick and simple answer, I am afraid you will be disappointed. The best approach is to educate yourself and make these decisions for yourself. Hence, my attempt to educate you as best as I can at this point in time. Personally, I suggest you do what I did. Start reading the Wall Street Journal every day. (An acceptable substitute may be the business section of the New York Times.) At first you will be overwhelmed with information, but in the long run it will pay off. Another good piece of advice is to be patient and not rush into investing. If you are in a hurry to determine how you should invest in a 401(k) or other such investment vehicle due to a desire to take advantage of an employer's matching funds, then I would place my money in an S&P 500 index fund. I would also explore placing some of that money into broad index funds from other regions of the globe. The reason for broad index funds is to provide some protection from the normal fluctuations and to reduce the risk of a sudden downturn causing you a lot pain while you determine the best approach for yourself. In this scenario, think more about capital preservation and hedging against inflation then about \"\"beating\"\" the market.\"", "title": "" }, { "docid": "c517ef7ba52c41d23492de2239036a19", "text": "Investing in property hoping that it will gain value is usually foolish; real estate increases about 3% a year in the long run. Investing in property to rent is labor-intensive; you have to deal with tenants, and also have to take care of repairs. It's essentially getting a second job. I don't know what the word pension implies in Europe; in America, it's an employer-funded retirement plan separate from personally funded retirement. I'd invest in personally funded retirement well before buying real estate to rent, and diversify my money in that retirement plan widely if I was within 10-20 years of retirement.", "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": "5a30a07893c7f5127ae40ca9d2e3ee11", "text": "I think it would be good to familiarize yourself with the market in the subject building's area and convey that knowledge. What is a typical cap rate for the area? Comparable sales? Any new employers coming into the area that affect the local economy in a positive way?", "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": "ba0f6fa81e3978cf65053e7e4e9a322f", "text": "I've been starting to invest in real estate myself, and [this site](http://www.biggerpockets.com/forums/categories) has been incredibly helpful. It was started by a professional real estate investor who wanted to create a community for helping investors of all types and experience levels. You can learn a lot just by reading the various posts, but I highly recommend creating an account and introducing yourself to the community. There are many members with a lot of experience who are happy to help newbies.", "title": "" }, { "docid": "15b788b4c1659b1bb97b9e014bb2e216", "text": "You're off to a great start. Here are the steps I would take: 1.) Pay off any high-interest debt. 2.) Keep six to twelve months in a highly liquid emergency fund. If the banks aren't safe, also consider having one or two months of cash or cash-equivalents on the premises. 3.) Rent a larger apartment, if possible, until you've saved more. The cost of the land and construction will consume a very large portion of your net worth. Given the historical political instability in that region, mentioned by the previous comments, I would hesitate to put such a large percentage of your wealth in to real estate. 4.) Get a brokerage account that's insured and well known. If you're willing to take the five percent hit to move assets offshore, then consider Vanguard. I'm not sure if they'll give you an account but they're generally acknowledged as an amazing broker in the US with low fees and amazing funds. Five percent (12,500) is worth it in my opinion. As you accumulate more wealth, you can stop moving cash overseas and keep a larger mix domestically. 5.) Invest in your business and yourself even more. As far as finding new investment opportunities, I would go through the list of all the typical major asset classes and consider the pros and cons: fixed-income, stocks, currencies, real estate / REITs, own a small business, commodities etc.,", "title": "" }, { "docid": "122d68290fbabfe0f17c8406271bf9f1", "text": "Based on what you've said I think buying a rental is risky for you. It looks like you heard that renting a house is profitable and Zillow supported that idea. Vague advice + a website designed for selling + large amounts of money = risky at the very least. That doesn't mean that rental property is super risky it just means that you haven't invested any time into learning the risks and how you can manage them. Once you learn that your risk reduces dramatically. In general though I feel that rental property has a good risk/reward ratio. If you're willing to put in the time and energy to learn the business then I'd encourage you to buy property. If you're not willing to do that then rentals will always be a crap shoot. One thing about investing in rental property is you have the ability to have more impact on your investment than you do dropping money in the stock market which is good and bad.", "title": "" }, { "docid": "e3834023eee46345c1a76dc2fc03ec2f", "text": "Here is one the links for Goldmansachs. Not to state the obvious, but most of their research is only available to their clients. http://www.goldmansachs.com/research/equity_ratings.html", "title": "" }, { "docid": "b4510cf6016c180b947eab26ae6b837c", "text": "\"Here's a very basic MySQL query I put together that does what I want for income/expense report. Basically it reports the same info as the canned income/expense report, but limits it those income/expenses associated with a particular account (rental property, in my case). My main complaint is the output \"\"report\"\" is pretty ugly. And modifying for a different rental property requires changing the code (I could pass parameters etc). Again, the main \"\"issue\"\" in my mind with GnuCash income/expense report is that there is no filter for which account (rental property) you want income/expenses for, unless you set up account tree so that each rental property has its own defined incomes and expenses (i.e. PropertyA:Expense:Utility:electric). Hopefully someone will point me to a more elegant solution that uses the report generator built into GnuCash. THanks! SELECT a2.account_type , a4.name, a3.name, a2.name, SUM(ROUND(IF(a2.account_type='EXPENSE',- s2.value_num,ABS(s2.value_num))/s2.value_denom,2)) AS amt FROM ( SELECT s1.tx_guid FROM gnucash.accounts AS a1 INNER JOIN gnucash.splits AS s1 ON s1.account_guid = a1.guid WHERE a1.name='Property A' ) AS X INNER JOIN gnucash.splits s2 ON x.tx_guid = s2.tx_guid INNER JOIN gnucash.accounts a2 ON a2.guid=s2.account_guid INNER JOIN gnucash.transactions t ON t.guid=s2.tx_guid LEFT JOIN gnucash.accounts a3 ON a3.guid = a2.parent_guid LEFT JOIN gnucash.accounts a4 ON a4.guid = a3.parent_guid WHERE a2.name <> 'Property A' # get all the accounts associated with tx in Property A account (but not the actual Property A Bank duplicate entries. AND t.post_date BETWEEN CAST('2016-01-01' AS DATE) AND CAST('2016-12-31' AS DATE) GROUP BY a2.account_type ,a4.name, a3.name, a2.name WITH ROLLUP ; And here's the output. Hopefully someone has a better suggested approach!\"", "title": "" }, { "docid": "13eebc93749f883f4ed2b7a6c5550e65", "text": "If the cash flow information is complete, the valuation can be determined with relative accuracy and precision. Assuming the monthly rent is correct, the annual revenue is $1,600 per year, $250/mo * 12 months - $1,400/year in taxes. Real estate is best valued as a perpetuity where P is the price, i is the income, and r is the rate of interest. Theoreticians would suggest that the best available rate of interest would be the risk free rate, a 30 year Treasury rate ~3.5%, but the competition can't get these rates, so it is probably unrealistic. Anways, aassuming no expenses, the value of the property is $1,600 / 0.035 at most, $45,714.29. This is the general formula, and it should definitely be adjusted for expenses and a more realistic interest rate. Now, with a better understanding of interest rates and expenses, this will predict the most likely market value; however, it should be known that whatever interest rate is applied to the formula will be the most likely rate of return received from the investment. A Graham-Buffett value investor would suggest using a valuation no less than 15% since to a value investor, there's no point in bidding unless if the profits can be above average, ~7.5%. With a 15% interest rate and no expenses, $1,600 / .15, is $10,666.67. On average, it is unlikely that a bid this low will be successful; nevertheless, if multiple bids are placed using this similar methodology, by the law of small numbers, it is likely to hit the lottery on at most one bid.", "title": "" } ]	fiqa
32cf47ccab147cb78c1cf3b72005c626	What are the downsides that prevent more people from working in high-income countries, and then retiring in low-income (and cost of living) ones?	[ { "docid": "ec7a96693ca65aa885de59ddd1eb7c0e", "text": "\"There are two parts to the hack you describe. One is moving to a high-cost, high-pay country to work, and the other is moving to a low-cost, low-pay country to retire. As Dilip mentioned in a comment, the first part is not so easy in many cases. You can't just take a plane to the USA and start making big bucks immediately. In the first place, it's illegal to work without special visa permissions. Even if you manage to secure that permission (or take the risk of trying to work illegally), there's no guarantee you'll get a job, let alone a high-paying one. The same is true in most other high-paying countries. As for the second part, that takes considerable willpower as well. After spending X years getting used to a country, investing time and money, you must then have the resolve to uproot your life a second time and move to another country. For the most part, countries are expensive for a reason. Even if you in principle reject the cost-benefit tradeoffs of a particular country, it can be difficult to give up some of those benefits when the time comes (e.g., trains running on time, reliable electricity, donut shops, or whatever). You might \"\"get soft\"\" or become co-opted by the rich-country rat race and find it difficult to extricate yourself. All of these problems are compounded if, as in many cases, you happened to start a family while in the expensive country. At the least, moving would require uprooting not just you but your family. Also, quality of education is often one of the main reasons people immigrate permanently to expensive countries. Even a person who personally would prefer to retire to a cheaper country may be unwilling to transplant their children into that country's education system. (Of course, they could wait until the children are self-supporting, but that makes the wait longer, and may result in them living far away from their children, which they may not want.) As JoeTaxpayer notes, the same reasons may work on smaller levels, even within a country. In theory it's perfectly possible to power through a brief, lucrative career in Silicon Valley and then retire to Idaho, but it doesn't seem to happen as often as the plain numbers might suggest. A simple way to put it might be that the kind of person who would be happy living in a cheap environment often cannot or will not endure a lengthy \"\"tour of duty\"\" in an expensive environment. Either you like the expensive environment and stay, or you leave, not as a planned lifehack, but because you realize you don't like it.\"", "title": "" }, { "docid": "37c05107be7bdf0be738b728398db828", "text": "I was at a restaurant in NYC, 1st Avenue and 63rd street. I don't recall how the conversation started, but the woman at the next table remarked how none of her friends from the West side, 9th avenue or thereabout, would visit her. Less than 2 miles away, yet in their minds, too far. Your question isn't likely to be answered with facts, but opinion. In this case an anecdote. Human nature is such that a good number of people have a small geographic circle of comfort. Of course some do exactly as you suggest. But not the majority.", "title": "" }, { "docid": "1b314bf9393bf0fc7e6c3ed56b45a664", "text": "At retirement age, your life priorities are somewhat different, and two key items come to mind. Your social circle, community and extended family contacts are highly related with your lifespan at retirement age. Loneliness kills, literally. Long distance relocation would weaken those ties exactly at the time when you most need and want them. You are also likely to need at least occasional physical assistance at random times, so living in a spot where none your friends&family can visit at a day's notice is hard. Cheaper living locations tend to have worse healthcare. Again, this doesn't matter much for a 25 year old expat, but at an age where you likely have one or multiple chronic diseases, general frailty and a very frequent need for healthcare this is a priority. This might work if you can do it as a family. I met a retired British couple in southern India, and they had a nice system where they were living in UK during the (UK) summer, and in India for the rest of the year. However, the above concerns don't disappear - when at a later time their health deterioates and one of them dies, then it would probably be better for the widow[er] to stay in UK permanently closer to their extended family and with the local healthcare system.", "title": "" }, { "docid": "4722df0f1ad238061da904d88a4b2533", "text": "I'm currently working as an expat, and my grandparents used to work overseas but retired to Canada so you could say my family has done things completely the opposite of what you suggest. However there are a number of very good reasons that my grandparents have done things the way we have, and I think it's worth sharing the rationale there. Low-cost moving to high-cost is a no-brainer: it's not easy to do, but many people are trying nonetheless. However, even they will be likely to stay in the high-cost countries, mostly because of health care, also safety is a factor, but social factors also matter. Firstly, I think two key factors that have been overlooked are language and health care-- most low-cost countries speak different languages than high-cost countries. This isn't a problem if you're young, but it becomes prohibitive if you are older. Even if you can manage, it's inconvenient in most countries. You can't just walk down the street and do whatever you like. You either have to keep a translator handy, or restrict your activities to places where you can communicate in your native language. Your favorite sports channels (rugby, american football etc.) might not be available, because nobody there cares. Your favorite news channel, or food (even in grocery stores) might not be so readily available. All these reasons made living abroad undesirable for my grandparents, but the big deal for them was healthcare. Outside of the US, every single developed economy has socialized healthcare to a large extent. When you're young it doesn't really matter, but when you are older, it's a constant concern! There are two aspects to healthcare-- firstly, if you are a citizen in a developed country there are significant financial benefits (In the US there is also medicare/medicaid but I don't know how those work so I'm not going to talk about that) to staying in-country when you retire, even if the health care would be more expensive- it's the government that's paying! Secondly, health care in low-cost countries tends to either be cheap and poor quality (and by poor quality I mean really, really scary!) or expensive and almost as good as a developed country. Again, high-quality hospitals in low-cost countries may still save you money, but the nurses may not speak good English and the doctors may not have a great bed-side manner. In many low-cost countries, nobody calls the police because they know the cops don't care, or will never solve the problem (i.e. they will arrive hours or days after it's too late), or the cops may even be 'in on it'. So basically you try to protect yourself from the inevitable robbery,swindle,extortion,hold-up,you-name-it but sooner or later something bad will happen. With security guards and being younger, it's less of an issue, but when you're elderly, especially if you look foreign and rich, it's definitely more dangerous. Many of my friends from low-income countries try to emigrate for this reason (and/or in combination with the political climate, which is largely corrupt and full of problems). So, if you're old, why risk it? Stay somewhere safe.", "title": "" }, { "docid": "842a5b351388cef8d9c9461e5cec69c1", "text": "\"One thing not mentioned is that in so called third world countries, a lot of \"\"stuff\"\" isn't actually less expensive. Food is almost always less expensive, housing is often less expensive, but cars, fuel, computers, smartphones, electronics, brand name clothing, shoes, cosmetics, tools, art supplies, internet service, bicycles, sporting goods and many other consumer items are typically more expensive.\"", "title": "" }, { "docid": "71a0aa50312ad0c82ff4b45f4b5c1a99", "text": "\"I should think the primary reason is due why those countries have a higher standard of salary - its not what you get, but what it buys you. In a high-salary, low-exchange-rate country like Sweden, you get a lot of services that your taxes buy you. Healthcare and quality of life in a stable country is something you want when you get old (note that your viewpoint might be very different when you're a kid). Moving to a country that has less impact on your finances is often because that country has significantly fewer services to offer. So a Swedish citizen might think about moving to a 3rd world country and find that their retirement income isn't sufficient to pay for the kind of lifestyle they actually want, such countries tend to be pleasant to live in only if you are exceptionally wealthy. Now this kind of thing does happen, but only \"\"within reason\"\", there are a number of old people who retire to the coast (in the UK at least) and many people who used to work in London who retire to the south west. For them, the idea of moving doesn't seem so bad as they are moving to areas where many other people in their situation have also moved. See Florida for an example for US citizens too.\"", "title": "" }, { "docid": "4aa0a0bfdbaf89180bbdcb060b549dc8", "text": "\"Political instability and general inability of the government to control crime, economomy, or even remain in existence, would be my greatest worry. I wouldn't want my bank account to randomly disappear, criminals to come take my stuff and/or life by force because nobody is going to stop them, or a hoarde of revolutionaries appearing at my door telling me \"\"get lost, the times they are a-changin\"\". On a whim, I tried to compare instability to cost of living. I used lowest monthly disposable income as my correlation to cost of living and the Fragile State index to measure instability. I picked the 55 lowest to get the countries with $500.00 (usd) and lower in monthly income. Those countries average out to 83.42 on the Fragile State index, which would be in the \"\"Very High Warning\"\" range and includes 18 countries in the \"\"Alert\"\", \"\"High Alert\"\", or \"\"Very High Alert\"\" status. Obviously, there is some subjectivity in an attempt to measure something in as broad a term as \"\"fragile state\"\", but it illustrates it's point well enough. Sources: http://en.wikipedia.org/wiki/List_of_countries_by_Fragile_States_Index http://www.nationmaster.com/country-info/stats/Cost-of-living/Average-monthly-disposable-salary/After-tax\"", "title": "" }, { "docid": "81772a0c0197ace840d55cb37d1ca0f5", "text": "I know folks who considered retiring to another country. Their conclusion was that while base cost of living was lower, the cost of the things that they enjoy doing -- not to mention the cost of spending time with friends they didn't want to give up -- would be sufficiently higher to erase most of the advantages. Those of us who grew up in or close to cities feel much the same way about moving out to less-populated and less-expensive parts of our own country. Basically, when cost of living is high it tends to be because there are more people who want to live there and are competing for resources (and driving prices up). Low cost of living is generally tied to less-desired locations, for the same reasons. IF you can find a location that appeals to you, and if you can get the resources there which your preferred lifestyle requires, this may make sense. For a while there were a number of professional writers moving from the US to Ireland, in part because the Irish tax structure heavily favored writers and other creative artists. (Katherine Kurtz spent several years living in a renovated Irish castle.) I'm not sure how many have stayed there after the novelty wore off.", "title": "" }, { "docid": "5bcb0c1de1eb32429119e19110d75852", "text": "A lot of good answers, but there’s one more factor: ignorance. The majority haven’t considered it, or considered it and assumed it’s not an option without investigating. PLUS, the widespread myth that every other country is primitive, unhealthy, and dangerous.", "title": "" } ]	[ { "docid": "176edc9065bac5e5c2b6e0bd9ca7c1ad", "text": "Well, if you worked in the United States you have social security, and medicare and medicaid in most cases as well. So you have a small amount of income to spend every month to cover your most basic living expenses, as well as your basic medical expenses. At least, that's the idea. In reality, it probably isn't anywhere near enough money for most to live comfortably. Also, there is a real fear that the US will have to inflate itself out of its debt to some extent in the future. This theory implies that the money retired individuals have saved or are receiving down the road could buy significantly less in the future than they expect. If you have the ability to put money away into an IRA or 401K early in your life, it will be greatly beneficial to do so. However, that is another issue I won't begin to discuss fully here. Edit since your question was restated after I typed my initial response, the final answer is: You will receive some assistance from Social Security, Medicare, and Medicaid. You will most likely need to either continue working, draw on savings such as an IRA or 401k, or will need assistance from others. If none of those are options, you would most likely end up living in poverty or worse.", "title": "" }, { "docid": "97dd95216f61b7b4ca84a94b66c47844", "text": "There are a lot of forces at play here, one of which is addressed in your second bullet point. Housing, transportation, food, and healthcare are pretty much the staple expenses of a modern day human. While these expenses all have a range from minimum required to function and luxurious all humans incur these costs. The lower rung wage earners earn an amount closer to their actual costs than higher earners. As income scales up these expenses typically also scale up with different lifestyle choices. There reaches a breaking point though where is so much excess to your income that you begin meaningfully spending on investments; you may also begin to take a meaningful portion of your compensation in securities rather than currency. In times where the economy is booming, folks who hold assets in securities rather than currency really win. In 2008 people in that highest rung really took a wealth hit (and probably an income hit).", "title": "" }, { "docid": "ecc7cd7e9dfb44b948d3c910f7b8a2af", "text": "Yup. Same reason why developers go to Mexico and build huge resorts in the poorest places. Then you get the people who live there to work for you for dirt-cheap because, what else are they going to do? If the per capita income is $10,000, a yearly salary of $20,000 is going to look awesome.", "title": "" }, { "docid": "6133f6d083b06457fb1454a44b740a51", "text": "These scenarios discuss the period to 2025. They assess the deep uncertainty that is paralysing decision-taking. They identify the roots of this as the failure of the social model on which the West has operated since the 1920s. Related and pending problems imply that this situation is not recoverable without major change: for example, pensions shortfalls are greater in real terms that entire expenditure on World War II, and health care and age support will treble that. Due to the prolonged recession, competition will impact complex industries earlier than expected. Social responses which seek job protection, the maintenance of welfare and also support in old age will tear at the social fabric of the industrial world. There are ways to meet this, implying a major change in approach, and a characteristic way in which to fail to respond to it in time, creating a dangerous and unstable world. The need for such change will alter the social and commercial environment very considerably. The absence of such change will alter it even more. The summary is available [here](http://www.chforum.org/scenario2012/paper-4-6.shtml) or at the foot of the link given in the header. The much richer paper is [here](http://www.chforum.org/scenario2012/paper-4-1.shtml). These scenarios are the latest in a series in a project that dates back to 1995. Over a hundred people participated from every continent, over a six month period. The working documents are available on the web.", "title": "" }, { "docid": "adda4a9f88198cd8bcf8f5d44e0473bc", "text": "Many examples in Europe and other countries have shown once you break that barrier people will go to extreme lengths to avoid it. So much so back in the 80s in the UK tax rates over 75% were imposed, needless to say when they reduced it to 40% they actually got more money. Ultimately it does more harm than good to the economy and means well paid jobs leave the country and go elsewhere. The exact same thing is happening right now with the French moving to London. http://www.bbc.co.uk/news/magazine-18234930", "title": "" }, { "docid": "30ba162804859dd1871475d85a83ae6b", "text": "To answer your question, Retirement Revolution may fit the bill to some extent. I'd also like to address some of the indirect assumptions that were made in your bullet points. I'm convinced that the best way to overcome this is not simply to hold down a good job with COLAs every year, max out your IRA accounts and 401(k)s, invest another 10-20% on top, and live off of the savings and whatever Social Security decides to pay you. Instead, the trick is to not retire -- to make a transition into an income-producing activity that can be done in the typical retirement years, hopefully one that is closer to one's calling (i.e., more fulfilling). This takes time, not money. If people just shut off the TV and spent the time building up a side business that has a high passive component, they'd stand a much better chance of not outliving their money.", "title": "" }, { "docid": "0dac6b6e314f66c0706678876430085d", "text": "Losing the manufacturing jobs is a necessary evil of any developed nation. Yes Germany is an exception but that is only because they specialise in expensive high quality items. This transition has happened before in every developed nation when manufacturing replaced agriculture as the main sector of income and the same is happening again. The key is that we have to adapt and accept that rather than fight it. Fighting this transition will simply slow progress. People simply have to retrain and adapt to a knew skill set. Yes it isn't easy but trying to artificially stop low paid jobs moving to places with a cheaper labour force is impossible. Companies have to remain globally competitive. I appreciate if everyone globally gets paid a descent salary this wouldn't be an issue. However, this is not the case and will not be any time soon. The reality is manufacturing of non luxury goods will hardly exist in developed nations and will be solely down by the likes of china and india. However give it another 20 years china will be in exactly the same boat losing their manufacturing jobs to a less developed nations or maybe robots by then.", "title": "" }, { "docid": "12e9c8711f77b9ff7a4678592ba758ec", "text": "if someone wants to retire, they can save up for it themselves. we're no longer the richest country in the world surrounded by a rest-of-the-world destroyed by world war II. big news. on average, people need to work to get by.", "title": "" }, { "docid": "59d589d10cc8188fd72df234da857fcf", "text": "That's not a valid counterpoint. It doesn't rub you the right way because it would require you to take responsibility for your own future and do the work yourself. It doesn't rub you the right way because it would mean that you couldn't blame anyone else if you weren't able to retire when you wanted to.", "title": "" }, { "docid": "1866cd82c6f43cc68fab4d8acfb68c0f", "text": "While it may look similar income and wealth inequality is not directly related H1 visa. After all, it provides someone from poorer region jobs. It has more to do with technology. Stopping H1B visa won't solve that issue.", "title": "" }, { "docid": "828c11ab1a9dd388af11264f4d0f4c04", "text": "The US is one of the only countries which taxes its citizens on global income. You're ignoring the high fixed costs of compliance with the US tax code, both for individuals and institutions. Compliance is so big an issue that foreign banks are turning away US customers rather than having to comply with FATCA, leaving people unable to open a bank account. Also, renunciations of citizenship are up something like 400%, and they aren't all billionaires.", "title": "" }, { "docid": "f1e68de4d5af666c6ba83f415ec29fd4", "text": "There are a host of programs in the US to help low/no-income seniors: Many states discount property taxes for the elderly as well. Not a dream retirement, but plenty of people are provided for without having prepared for retirement whether due to poor decisions or unfortunate circumstances.", "title": "" }, { "docid": "efbadeeca682449b4fefe1f2e9aa63e6", "text": "Indian workers are hard to manage. I work in Japan as a consultant managing offshore development projects. The Indian companies are not doing that well here. They cannot deliver, and the Indian companies themselves are very slow to move. They are not even landing the jobs because Indian expat execs are too slow. I have noticed that they are using development centers in the US and China as well to support global contracts. The reason is that Indian workers stay on the job for little longer than 3 mos before they move onto a better position. They are only interested in status climbing because the companies are nickeling and diming them while management charges much the same as a local Japanese integrators. On the few occasions they have tried to recruit me, even though I agreed to take a salary reduction (lehman shock) and meet their conditions, they were too wishy washy made the proposal late and never hired me. Overall way too flaky.", "title": "" }, { "docid": "04ee203af8fe82883eda286baad2d378", "text": "Because all things being equal, unless they can pay the new graduate significantly less (which they won't be able to do, if the Millenials are still hard up for work), then employers will likely defer to candidates that they deem to be more mature. Additionally, Millenials won't just sit around; they'll work independently, take courses at community college to advance their knowledge, etc. At this point, I'd be more concerned about what happens if the economy DOESN'T return...", "title": "" }, { "docid": "d5b20e52a87063de073192df82373049", "text": "Public sector and private industry retirement plans, taxation and estate planning would be the most substantial differences between the two countries. The concepts for accumulating wealth are the same, and if you are doing anything particularly lucrative with an above average amount of risk, the aforementioned differences are not very relevant, for a twenty something.", "title": "" } ]	fiqa
41df0bab5d11a87aecdeefdd547f8a58	Why buy bonds in a no-arbitrage market?	[ { "docid": "307191f5ae6dbc398f2cb2c30b15c1b7", "text": "Rates are a complex field. I will assume that context wise you are talking about rates for a individual saver quantities. The two rates you are asking about are personal bank saving account and exchange traded bonds. The points you want to compare between them are. In general, a bond is what we called a fixed rate instrument. This means that for the life of the product, it will yield a fixed percentage of its face value at a regular period. Baring any extreme circumstances (such as bankruptcy), no external factors will change the payment schedule on a bond. Conversely, by placing your money into a bank, you will accrue interest rate at some value related to some published interest rate. For example, if tomorrow, the Treasury decided to try to stimulate the economy, they could slash the interest rate, this would directly affect the rate at which your savings account would accrue interest. In general, a bond has a maturity date, where the capital is finally released from the bond. Until such date, you cannot access the money directly (you can however sell the bond, but it would likely be at a discounted value). Therefore, in general, you cannot get access to the money whenever you want it. As for a saving account, normally one can access the funds instantly, if not within a few days. This seems to the reason people seem to be focusing on. For each bond, the issuer of the bond is obligated to pay you the holder of the bond fixed payments at an interval, plus the capital at the maturity. However, obligation does not mean guarantee. If the issuer, is unable to make the payments, they may go into bankruptcy to avoid paying you. There are companies setup to advise people on the likelihood of each bond issuer on their ability to honour their debts. For example Standard and Poor issues a rating which goes all the way up to AAA for bonds. Recently, many sovereign countries have lost their AAA rating from S&P. Meaning that S&P feel that the possibility of these countries going bankrupt is non-zero. Conversely, banks may also be unable to give you your money when requested. In the US, the reserve requirements means that at any one time it only holds 10% of the money it owes to its customers. This can mean that if every customer turns up to the bank to demand their money, that bank would be unable to pay. This situation is called a Bank Run. During such a situation, the bank would likely collapse and default. In many modern countries, the government put into place guarantees on the first xxx amount in saving accounts, but otherwise, your savings could be lost. There are many complex reasons to choose one instrument over another (including some I have avoided), even if at the outset, they could appear to have the same rates.", "title": "" }, { "docid": "e81e513209a8bafc75b1ded70705dada", "text": "For safety. If something catastrophic happens to your bank and your money is in there you will lose any not covered by FDIC. So if you have a very large amount of money you will store it in bonds as its much less likely that the US treasury will go bankrupt than your bank. I also literally just posted this in another thread: Certain rules and regulations penalize companies or institutions for holding cash, so they are shifting to bonds and bills. Fidelity, for example, is completely converting its $100 billion dollar cash fund to short term bills. Its estimated that over $2 trillion that is now in cash may be converted to bills, and that will obviously put upward preasure on the price of them. The treasury is trying to issue more short term debt to balance out the demand. read more here: http://www.wsj.com/articles/money-funds-clamor-for-short-term-treasurys-1445300813", "title": "" }, { "docid": "d4bd9d7b067b67dad5472849802226cc", "text": "\"If by \"\"putting money in the bank\"\" you mean regular savings or checking, then the bond locks a rate for a period of time, whereas your savings/checking rate can vary over that period. That variation might go for you or against you. Depending on your situation, you might prefer to take a determined rate to the variations. In addition, some bond types provide tax benefits (e.g. treasuries and municipal bonds) that change the effective return - You cannot just compare the interest rates. Finally, the bonds have \"\"resale\"\" value on the secondary market like stock - Depending on your outlook and strategy, you might by the bond for its value as a security rather than for the interest specifically just like you'd could buy a dividend-paying stock for its value as a security rather than for the dividend. In other words, you might think that bond values are going up, so you buy bonds with the intent of making a capital gain rather than counting on the interest returned. (The bond market does depend on the interest rate, so these are not independent factors.) I see the other answer that mentions the potential for your bank busting and you losing money beyond the FDIC insurance limit. The question doesn't specify U.S. Government bonds though, so I don't think that answer is generally good. It would be good in the case that you had a lot of money (especially an institution or foreign government) and you were specifically interested in U.S. Treasury bonds. Not so much if you invest in corporate bonds where you have no government insurance / assurance of any sort. Municipal bounds are also not backed by the U.S. (federal) government, but they may have some backing at the state level, depending on the state.\"", "title": "" }, { "docid": "6e732648b31005f1d4e21e034a068d67", "text": "There is no single 'market interest rate'; there are myriad interest rates that vary by risk profile & term. Corporate bonds are (typically) riskier than bank deposits, and therefore pay a higher effective rate when the market for that bond is in equilibrium than a bank account does. If you are willing to accept a higher risk in order gain a higher return, you might choose bonds over bank deposits. If you want an even higher return and can accept even higher risk, you might turn to stocks over bonds. If you want still higher return and can bear the still higher risk, derivatives may be more appealing than stocks.", "title": "" }, { "docid": "e96efcfab2cdc6ccf5a9aaf632736584", "text": "It is my understanding that banks pay less than the going rate on savings accounts and require that the person who takes out a loan pay more than the going rate. That is how the bank gets its money. Usually the going rate is affected by the current inflation rate (but that has not been true for the last few weeks). So that means that, typically, the money you have in the bank is, gradually, losing purchasing power as the bank typically pays you less than the inflation rate. So if you want your money to keep pace with inflation (or do a bit better) then you should buy bonds.", "title": "" }, { "docid": "2aaca1bc531b6eef0e29db9a819bcf72", "text": "Bonds can increase in price, if the demand is high and offer solid yield if the demand is low. For instance, Russian bond prices a year ago contracted big in price (ie: fell), but were paying 18% and made a solid buy. Now that the demand has risen, the price is up with the yield for those early investors the same, though newer investors are receiving less yield (about 9ish percent) and paying higher prices. I've rarely seen banks pay more variable interest than short term treasuries and the same holds true for long term CDs and long term treasuries. This isn't to say it's impossible, just rare. Also variable is different than a set term; if you buy a 10 year treasury at 18%, that means you get 18% for 10 years, even if interest rates fall four years later. Think about the people buying 30 year US treasuries during 1980-1985. Yowza. So if you have a very large amount of money you will store it in bonds as its much less likely that the US treasury will go bankrupt than your bank. Less likely? I don't know about your bank, but my bank doesn't owe $19 trillion.", "title": "" } ]	[ { "docid": "bd4931e1968953260f3368e895dd5e48", "text": "Bonds provide protections against stock market crashes, diversity and returns as the other posters have said but the primary reason to invest in bonds is to receive relatively guaranteed income. By that I mean you receive regular payments as long as the debtor doesn't go bankrupt and stop paying. Even when this happens, bondholders are the first in line to get paid from the sale of the business's assets. This also makes them less risky. Stocks don't guarantee income and shareholders are last in line to get paid. When a stock goes to zero, you lose everything, where as a bondholder will get some face value redemption to the notes issue price and still keep all the previous income payments. In addition, you can use your bond income to buy more shares of stock and increase your gains there.", "title": "" }, { "docid": "238b8ff8728c9bc18c819b8167faf591", "text": "\"TL;DR: If your currently held bond's bid yield is smaller than another bonds' ask yield. You can swap your bond for bigger returns. Let's imagine you buy a long bond for $12000 (face value of $10000) and it has 6% coupon. The cash flows will have an internal return rate of 4.37%, this is the published \"\"ask yield\"\" in 2014 of the bond. After six years, prices have fallen, inflation and yields went up. So you can sell it for only $10000. If you would do it, the IRR will be only 2.55%, so there will be less return, than if you keep it. But if you would \"\"undo\"\" the transaction, then the future cash flows would yield 6.38%. This is the \"\"bid yield\"\" in 2020 of the bond. If you can find an offer that yields more than 6.38%, you have better returns if you sell your bond and invest that $10000 in the other bond. But as other answers pointed it out, you rarely have this opportunity as the market is very effective. (Assuming everything else is equal.)\"", "title": "" }, { "docid": "c224346604b8d4e798f6453fcb10053b", "text": "stocks represent ownership in a company. their price can go up or down depending on how much profit the company makes (or is expected to make). stocks owners are sometimes paid money by the company if the company has extra cash. these payments are called dividends. bonds represent a debt that a company owes. when you buy a bond, then the company owes that debt to you. typically, the company will pay a small amount of money on a regular basis to the bond owner, then a large lump some at some point in the future. assuming the company does not file bankrupcy, and you keep the bond until it becomes worthless, then you know exactly how much money you will get from buying a bond. because bonds have a fixed payout (assuming no bankrupcy), they tend to have lower average returns. on the other hand, while stocks have a higher average return, some stocks never return any money. in the usa, stocks and bonds can be purchased through a brokerage account. examples are etrade, tradeking, or robinhood.com. before purchasing stocks or bonds, you should probably learn a great deal more about other investment concepts such as: diversification, volatility, interest rates, inflation risk, capital gains taxes, (in the usa: ira's, 401k's, the mortgage interest deduction). at the very least, you will need to decide if you want to buy stocks inside an ira or in a regular brokerage account. you will also probably want to buy a low-expense ration etf (e.g. an index fund etf) unless you feel confident in some other choice.", "title": "" }, { "docid": "020d22d766952e6008bf848df7c060d2", "text": "\"I'll answer your question, but first a comment about your intended strategy. Buying government bonds in a retirement account is probably not a good idea. Government bonds (generally) are tax advantaged themselves, so they offer a lower interest rate than other types of bonds. At no tax or reduced tax, many people will accept the lower interest rate because their effective return may be similar or better depending, for example, on their own marginal tax rate. In a tax-advantaged retirement account, however, you'll be getting the lower interest without any additional benefit because that account itself is already tax-advantaged. (Buying bonds generally may be a good idea or not - I won't comment on that - but choose a different category of bonds.) For the general question about the relationship between the Fed rate and the bond rate, they are positively correlated. There's not direct causal relationship in the sense that the Fed is not setting the bond rate directly, but other interest bearing investment options are tied to the Fed rate and many of those interest-bearing options compete for the same investor dollars as the bonds that you're reviewing. That's at a whole market level. Individual bonds, however, may not be so tightly coupled since the creditworthiness of the issuing entity matters a lot too, so it could be that \"\"bond rates\"\" generally are going up but some specific bonds are going down based on something happening with the issuer, just like the stock market might be generally going up even as specific stocks are dropping. Also keep in mind that many bonds trade as securities on a secondary market much like stocks. So I've talked about the bond rate. The price of the bonds themselves on the secondary market generally move opposite to the rate. The reason is that, for example, if you buy a bond at less than face value, you're getting an effective interest rate that's higher because you get the same sized incremental payments of interest but put less money into the investment. And vice versa.\"", "title": "" }, { "docid": "6039901bd125dde0231f61f69b5073ed", "text": "\"Were you thinking of an annuity? They guarantee regular payments, usually after retirement. In any case, every investment has counterparty risk. Bonds guarantee payout, but the issuer could always default. This is why Treasury bonds have the lowest yields, the Treasury is the world's most trusted borrower. It's also why \"\"junk\"\" bonds have higher yields than investment grade and partially why longer duration bonds have higher yields. As mentioned, there's bank accounts, which gain interest and are insured by FDIC up to $250,000. If the bank folds, they'll be acquired by another and your account balance will simply transfer. Similar to bank accounts are money market funds. These are funds that purchase very short term \"\"paper\"\" (basically <90 day bonds). They maintain a share price of $1 and pay interest in the form of additional shares. These have the risk of \"\"breaking the buck\"\" where they need to sell assets at a loss to meet investor withdrawal demands and NAV drops below $1.00. Fortunately, that's a super rare occurance, but still definitely possible. Finally, there's one guy I've seen on TV pitching a no risk high yield investment. I can't remember the firm, but I am waiting to see them shut down for running a ponzi scheme.\"", "title": "" }, { "docid": "8384d354271018c0de0dce360c7a96e0", "text": "\"Consider the futures market. Traders buy and sell gold futures, but very few contracts, relatively speaking, result in delivery. The contracts are sold, and \"\"Open interest\"\" dwindles to near zero most months as the final date approaches. The seller buys back his short position, the buyer sells off his longs. When I own a call, and am 'winning,' say the option that cost me $1 is now worth $2, I'd rather sell that option for even $1.95 than to buy 100 shares of a $148 stock. The punchline is that very few option buyers actually hope to own the stock in the end. Just like the futures, open interest falls as expiration approaches.\"", "title": "" }, { "docid": "f5980ed493aedbecbc092add2c4be4dc", "text": "QE is artificial demand for bonds, but as always when there are more buyers than sellers the price of anything goes up. When QE ends the price of bonds will fall because everyone will know that the biggest buyer in the market is no longer there. So price of bonds will fall. And therefore the interest rate on new bonds must increase to match the total return available to buyers in the secondary market.", "title": "" }, { "docid": "fa30e29f8506005c072899b81da89854", "text": "Let's say today you buy the bond issued by StateX at 18$. Let's say tommorow morning the TV says that StateX is going towards default (if it happens it won't give you back not even the 18$ you invested). You (and others that bought the same bond like you) will get scared and try to sell the bond, but a potential buyer won't buy it for 18$ anymore they will risk maximum couple of bucks, therefor the price of your bond tomorrow is worth 2$ and not 18 anymore. Bond prices (even zero coupon ones) do fluctuate like shares, but with less turbolence (i.e. on the same period of time, ups and downs are smaller in percentage compared to shares) EDIT: Geo asked in the comment below what happens to the bond the FED rises the interest. It' very similar to what I explained above. Let's say today you buy the bond just issued by US treasury at 50$. Today the FED rewards money at 2%, and the bond you bought promised you a reward of 2% per year for 10 years (even if it's zero coupon, it will give you almost the same reward of one with coupons, the only difference is that it will give you all the money back at once, that is when the bond expires). Let's say tommorow morning the TV says that FED decided to rise the interest rates, and now on it lends money rewarding a wonderful 4% to investors. US treasury will also have to issue bonds at 4%. You can obviously keep your bond until expiration (and unless US goes default you will get back all your money until the last cent), but if you decide to sell your bond, you will find out that people won't be willing to pay 50$ anymore because on the market they can now buy the same type of bond (for the same period of time, 10 years) that give them 4% per year and not a poor 2% like yours. So people will be willing to pay maximum 40$ for your bond or less.", "title": "" }, { "docid": "74ede1bfc19a1ebc6de5dec45e802bfd", "text": "\"[...] are all bonds priced in such a way so that they all return the same amount (on average), after accounting for risk? In other words, do risk premiums ONLY compensate for the amount investors might lose? No. GE might be able to issue a bond with lower yield than, say, a company from China with no previous records of its presence in the U.S. markets. A bond price not only contains the risk of default, but also encompasses the servicability of the bond by the issuer with a specific stream of income, location of main business, any specific terms and conditions in the prospectus, e.g.callable or not, insurances against default, etc. Else for the same payoff, why would you take a higher risk? The payoff of a higher risk (not only default, but term structure, e.g. 5 years or 10 years, coupon payments) bond is more, to compensate for the extra risk it entails for the bondholder. The yield of a high risk bond will always be higher than a bond with lower risk. If you travel back in time, to 2011-2012, you would see the yields on Greek bonds were in the range of 25-30%, to reflect the high risk of a Greek default. Some hedge funds made a killing by buying Greek bonds during the eurozone crisis. If you go through the Efficient frontier theory, your argument is a counter statement to it. Same with individual bonds, or a portfolio of bonds. You always want to be compensated for the risk you take. The higher the risk, the higher the compensation, and vice versa. When investors buy the bond at this price, they are essentially buying a \"\"risk free\"\" bond [...] Logically yes, but no it isn't, and you shouldn't make that assumption.\"", "title": "" }, { "docid": "7752f67b871bc3bc345990de3f5221fa", "text": "why would anyone buy a long-term bond fund in a market like this one, where interest rates are practically bottomed out? 1) You are making the assumption that interest rates has bottom out hence there is no further possibility of it going down further , i mean who expected Lehman Brother to go bankrupt 2) Long term investors who are able to wait for the bad times of the bond market to end and in the mean time dont mind some dividend payment of 2-3%", "title": "" }, { "docid": "f4dfadeeefad1c3988f5f9ae9342142f", "text": "Why does selling a bond drive up the yield? The bond will pay back a fixed amount when it comes due. The yield is a comparison of what you pay for the bond and what will be repaid when it matures (assuming no default). Why does the yield go up if the country is economically unstable? If the country's economy is unstable, that increases the chance that they will default and not pay the full value of the bonds when they mature. People are selling them now at a loss instead of waiting for a default later for a greater loss. So if you think Greece is not going to default as it's highly likely a country would completely default, wouldn't it make sense to hold onto the bonds? Only if you also think that they will pay back the full value at maturity. It's possible that they pay some, but not all. It's also possible that they will default. It's also possible that they will get kicked out of the Euro and start printing Drachmas again, and try to pay the bonds back with those which could devalue the bonds through inflation. The market is made of lots of smart people. If they think there are reasons to worry, there probably are. That doesn't mean they can predict the future, it just means that they are pricing the risk with good information. If you are smarter than the herd, by all means, bet against them and buy the bonds now. It can indeed be lucrative if you are right, and they are wrong.", "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": "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": "db66be504a892bc3ea02c50fdb954cbc", "text": "\"In the quoted passage, the bonds are \"\"risky\"\" because you CAN lose money. Money markets can be insured by the FDIC, and thus are without risk in many instances. In general, there are a few categories of risks that affect bonds. These include: The most obvious general risk with long-term bonds versus short-term bonds today is that rates are historically low.\"", "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": "" } ]	fiqa
74eaab244336452904e5bade0649086b	Are the stocks of competitor companies negatively correlated?	[ { "docid": "b1455abc3bce335fa208812b8e9d6e38", "text": "Not especially. It depends on why sales have changed. If it's just consumer demand, that affects everyone in parallel rather than pushing in opposite direactions. If it's changes other than sales, that may have no effect on other companies. If it's because someone introduced the next must-have-it device and they're selling rapidly and drawing customers from the competing brands, maybe. And that's all neglecting the fact that this may already have been incorporated into the competitor's share price long ago, in anticipation of this news. Sorry, but the market just ain't simple.", "title": "" }, { "docid": "c1c2620e960c66a3465df030519f8644", "text": "\"It is important to first understand that true causation of share price may not relate to historical correlation. Just like with scientific experiments, correlation does not imply causation. But we use stock price correlation to attempt to infer causation, where it is reasonable to do so. And to do that you need to understand that prices change for many reasons; some company specific, some industry specific, some market specific. Companies in the same industry may correlate when that industry goes up or down; companies with the same market may correlate when that market goes up or down. In general, in most industries, it is reasonable to assume that competitor companies have stocks which strongly correlate (positively) with each-other to the extent that they do the same thing. For a simple example, consider three resource companies: \"\"Oil Ltd.\"\" [100% of its assets relate to Oil]; \"\"Oil and Iron Inc.\"\" [50% of its value relates to Oil, 50% to Iron]; and \"\"Iron and Copper Ltd.\"\" [50% of its value relates to Iron, 50% to Copper]. For each of these companies, there are many things which affect value, but one could naively simplify things by saying \"\"value of a resource company is defined by the expected future volume of goods mined/drilled * the expected resource price, less all fixed and variable costs\"\". So, one major thing that impacts resource companies is simply the current & projected price of those resources. This means that if the price of Oil goes up or down, it will partially affect the value of the two Oil companies above - but how much it affects each company will depend on the volume of Oil it drills, and the timeline that it expects to get that Oil. For example, maybe Oil and Iron Ltd. has no currently producing Oil rigs, but it has just made massive investments which expect to drill Oil in 2 years - and the market expects Oil prices to return to a high value in 2 years. In that case, a drop in Oil would impact Oil Inc. severely, but perhaps it wouldn't impact Oil and Iron Ltd. as much. In this case, for the particular share price movement related to the price of Oil, the two companies would not be correlated. Iron and Copper Ltd. would be unaffected by the price of Oil [this is a simplification; Oil prices impact many areas of the economy], and therefore there would be no correlation at all between this company's shares. It is also likely that competitors face similar markets. If consumer spending goes down, then perhaps the stock of most consumer product companies would go down as well. There would be outliers, because specific companies may still succeed in a falling market, but in generally, there would be a lot of correlation between two companies with the same market. In the case that you list, Sony vs Samsung, there would be some factors that correlate positively, and some that correlate negatively. A clean example would be Blackberry stock vs Apple stock - because Apple's success had specifically negative ramifications for Blackberry. And yet, other tech company competitors also succeeded in the same time period, meaning they did not correlate negatively with Apple.\"", "title": "" }, { "docid": "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": "66510e569c3a5f89618930166f832af3", "text": "\"The correlation I heard most about in economics/finance was that stock prices and bond yields were negatively correlated; as the stock market does better, bond yields fall (company's doing well as evidenced by stocks, so it's a good credit risk, so YTM of its bonds on the market goes down). The correlation, if any, between the stock and futures market should be visible in the actual price histories. Index prices may be useful, but what's more likely is that various future prices have correlation with various companies' stocks. Where the future reflects the price of a raw material that is a significant cost of goods sold for a company, you'll see these two move inversely to each other in the short term. I think that if there is a causative relationship here, its that futures prices influence stock prices, not the other way around. The futures market generally represents the cost side of a consumer goods producer's bottom line. The stock market represents its profits. As futures go up, profit expectations go down, putting pressure on stock prices. Industries that deal in services, or in other types of goods, can still be affected because a rise in the cost of something consumers need will cause them to spend less on other things which affects margins in those other areas. So, in the short and medium term, when the futures market goes up the stock market sees a dip, and vice versa. However, companies adapt; they can put upward pressure on prices for their goods to restore their desired margins, usually by slowly increasing them to prevent sticker shock (though elasticity of demand plays a part; the more we need something no matter what it costs, the faster prices can increase). To maintain costs, they can make things cheaper using less expensive materials (more plastic, less steel). They can restructure production processes (translated: move factories offshore, or at least to \"\"right-to-work\"\" states with less union strength) to save costs elsewhere. All of these reduce costs and thus increase profits, but take time to implement. Many of these things reduce direct costs, reducing demand for the commodity and causing the futures prices to go back down. So, over the long term, these differences even out, and it's down to the things that affect the entire market (inflation, consumer/investor confidence, monetary policy).\"", "title": "" }, { "docid": "50fa48a8fc3119c070df2336f45c69d6", "text": "This depends very much on why A is making massive losses and how big they are in relation to B. If the group has a history of successfully launching profitable brands, and A is a new brand that has high expenses (production, marketing, etc.) but not yet generating much revenue, then despite the current losses it can be seen as a source of future profits. Or A might be established but currently undergoing an expensive remodelling that promises future success. Or B might simply be a huge cash cow that funds the losses of A out of petty cash.", "title": "" }, { "docid": "21253916624b7918f6c3709e9a984172", "text": "Its pretty much always a positive to have large institutional investors. Here's a few cases where I can see an argument against large institutional investors: In recent years, we've seen corporate raiders and institutional investors that tend to influence management in ways that are focused on short term gain. They'll often go for board seats and disrupt the existing management team. It can serve as a distraction and really hurt morale. Institutional investors also have rules in their prospectus that they are required to abide by. For example, some institutional investors will not hold on to stock below $5. This really affected major banking stocks, some of which ended up doing reverse stock splits to keep their share price high. Institutional investors will also setup specific funds that require a stock to be listed as part of an index (i.e. the SPY, DJIA etc.,). When a stock is removed from an index, big investors leave quickly and the share price suffers. In recent months, companies like Apple have made their share price more affordable to attract retail investors. It gives an opportunity for retail to feel even more connected to the company. I'm not sure how much this affects overall sales... Generally, a good stock should be able to attract both retail and institutional investors. If there's not a good mix, then its usually a sign that somethings amiss.", "title": "" }, { "docid": "f3a59c57da20adef21327a28f4e6b7f5", "text": "\"Sure, and I made it clear in my post that I'm willing to accept that I may be wrong. But the author does a poor job of arguing his point, his argument in the article is based on an unsubstantiated claim that a certain activity is bad. He says it \"\"impairs price performance\"\" but offers no proof that this occurs. Now granted, I haven't had a chance to look at the data either, but as myself and other posters have mentioned, this claim is quite debatable. I need a bit more material to be convinced.\"", "title": "" }, { "docid": "b30bd7a9465bf07e15893e3617051654", "text": "\"I am doing an assignment for a finance class, and I am writing a recommendation for a specific capital structure. One of the concerns brought up by the \"\"board of directors\"\" was interest coverage, so in my addressing that topic in my report, I want to compare to competitors. The interest coverage ratio under this capital structure that I'm choosing is 11.8 and the two competitors we are given information on are Company A (who has an interest coverage ratio of 6.67) and Company B (who has an interest coverage ratio of 11.25). It seems good, but my concern is that I may be missing something, as Company A is similar in size (in terms of sales) to the company I am writing a report for while Company B has ~50 times more sales than the company I am writing a report for. Advice, things to consider as I move forward?\"", "title": "" }, { "docid": "6d27696136ba1887f2e334a643403052", "text": "You question is very hard to answer as it is tough to put a value on how much bad your added investment in evil companies would cause and also how much value the charities add. However, there has been a bunch of really good work on socially responsible investing in general. This paper might be too technical for some but the conclusion section is very readable and clear. The big worry about socially responsible investing from a financial standpoint is that it will lower returns in the long run. The paper above and others show fairly clearly that as long as you only exclude a few classes of stocks and still have a fairly broad base that the expected returns are similar. The main issue though is some socially responsible funds have much higher fees. So the usual advice applies, do your research to make sure your investments are well diversified and have low fees. As long as the index is fairly broad you can consider the difference between the fees on the socially responsible index and investing in a more common index as the long run cost. Then you can balance that cost and having more money for charity against the benefits of not investing in evil companies.", "title": "" }, { "docid": "3f66d5baa80fec1f570bf779849b435e", "text": "Also keep note - some companies have a combined CEO/Chairman of the board role. While he/she would not be allowed to negotiate contracts or stock plans, some corporate governance analysts advocate for the separation of the roles to remove any opportunity for the CEO to unduly influence the board. This could be the case for dysfunctional boards. However, the alternate camps will say that the combined role has no negative effect on shareholder returns. SEC regulations require companies to disclose negotiations between the board and CEO (as well as other named executives) for contracts, employee stock plans, and related information. Sometimes reading the proxy statement to find out, for example, how many times the board meets a year, how many other boards a director serves on, and if the CEO sits on any other board (usually discouraged to serve on more than 2) will provide some insight into a well-run (or not well-run) board.", "title": "" }, { "docid": "56aa3ca6fafa34bb40c1be345be4135a", "text": "Nope, sorry. ChemChina-Syngenta are not US companies and they couldn't care less about US when it comes to long term strategy. Chem china is also in about to merge with sino chem. This will be by far the largest diversified company in the world. followed by BASF. Dow Dupont, will shrink, since they have the weakest global reach, compared to Asian and european counterpart. Bayer-Monsanso? They see the writing on the wall. Either they look for partners quickly or become irrelevant. There is no option. Either become bigger/more efficient or perish.", "title": "" }, { "docid": "d52617a3b93fb720163e424395e3032a", "text": "Absolutely. In fact, all stock purchases of more than 5% of a company's stock must be reported to the SEC, so assuming A and B are publicly traded companies in the US, the purchase would likely be a matter of public record. There are probably special cases where this could cause problems, however; any case where A's purchase of B's stock (or vice versa) runs afoul of regulation would be one such case. For example, if company A wants to own a controlling interest in company B and appoint members of its board of directors and both companies were in the same heavily-concentrated market, regulators may frown on the potential for decreased competition. Such regulations may apply to any purchase of a controlling interest in a company, though.", "title": "" }, { "docid": "c13c73a337f0b416dd0e626ae4d9b7cf", "text": "To be fair, the analyst is talking about the book value of the firm. Basically, the value of all the stuff it owns now. There are plenty of companies with negative book value that can justify a positive share price. Ford, for instance, had negative book value but positive future earnings.", "title": "" }, { "docid": "957c5899a0d1a893be298c8bffe79a4d", "text": "It's got to be a bad chunk of data on Google. Yahoo finance does not show that anomaly for 1988, nor does the chart from Home Depot's investor relations site:", "title": "" }, { "docid": "9ac7c6630baa51700ec34153a9559f2b", "text": "Okay I don't know where my disconnect was, in my mind I was viewing that as a negative for some reason haha. Thanks! That makes sense. What is your perspective on the large amount of companies buying back shares right now?", "title": "" }, { "docid": "e76b027a9e1943e499ed139aa5f86886", "text": "The top ten holdings for these funds don't overlap by even one stock. It seems to me they are targeting an index for comparison, but making no attempt to replicate a list of holdings as would, say, a true S&P index.", "title": "" }, { "docid": "a44bb66c5d620fbe35cf2db31fe54c8a", "text": "\"lol, please, calculate the correlation and let me know how close to 1 it is. And then let me know what kind of sensible economic model looks like SPX Level = const + beta * Fed Balance Sheet Level. That's a great way to just throw useful statistical inference out the fucking window. Edit: I'd also like to make it abundantly clear that this is a monumentally retarded \"\"correlation\"\" to consider in the first place. The Fed balance sheet prior to 2008 was relatively tiny and unchanging, and yet the stock market was just as volatile in prior years.\"", "title": "" }, { "docid": "5f710bf3dafd6bd265175acae324ef66", "text": "if the consolidated joint venture/sub has a negative net worth, then it is backing out the minority owner's share. if another entity is taking the hit, or responsible for a hit/liability instead of you, then it should improve your valuation. do not confuse net worth with net income. BS vs IS.", "title": "" } ]	fiqa
be81bc3d2c76925559417d2b1a9c17a8	Should I start investing in property with $10,000 deposit and $35,000 annual wage	[ { "docid": "1ae3cb543558e6c150f706998416094c", "text": "You want to buy a house for $150,000. It may be possible to do this with $10,000 and a 3.5% downpayment, but it would be a lot better to have $40,000 and make a 20% downpayment. That would give you a cushion in case house prices fall, and there are often advantages to a 20% downpayment (lower rate; less mandatory insurance). You have an income of $35,000 and expenses of $23,000 (if you are careful with the money--what if you aren't?). You should have savings of either $17,500 or $11,500 in case of emergencies. Perhaps you simply weren't mentioning that. Note that you also need at least $137 * 26 = $3562 more to cover mortgage payments, so $15,062 by the expenses standard. This is in addition to the $40,000 for downpayment and closing costs. What do you plan to do if there is a problem with the new house, e.g. you need a new roof? Or smaller expenses like a new furnace or appliance? A plumbing problem? Damages from a storm? What if the tenants' teenage child has a party and trashes the place? What if your tenants stop paying rent but refuse to move out, trashing the place while being evicted? Your emergency savings need to be able to cover those situations. You checked comps (comparable properties). Great! But notice that you are looking at a one bathroom property for $150,000 and comparing to $180,000 houses. Consider that you may not get the $235 for that house, which is cheaper. Perhaps the rent for that house will only be $195 or less, because one bathroom doesn't really support three bedrooms of people. While real estate can be part of a portfolio, balance would suggest that much more of your portfolio be in things like stocks and bonds. What are you doing for retirement? Are you maxing out any tax-advantaged options that you have available? It might be better to do that before entering the real estate market. I am a 23 year old Australian man with a degree in computer science and a steady job from home working as a web developer. I'm a bit unclear on this. What makes the job steady? Is it employment with a large company? Are you self-employed with what has been a steady flow of customers? Regardless of which it is, consider the possibility of a recession. The company can lay you off (presumably you are at the bottom of the seniority). The new customers may be reluctant to start new projects while their cash flow is restrained. And your tenants may move out. At the same time. What will you do then? A mortgage is an obligation. You have to pay it regardless. While currently flush, are you the kind of flush that can weather a major setback? I would feel a lot better about an investment like this if you had $600,000 in savings and were using this as a complementary investment to broaden your portfolio. Even if you had $60,000 in savings and would still have substantial savings after the purchase. This feels more like you are trying to maximize your purchase. Money burning a hole in your pocket and trying to escape. It would be a lot safer to stick to securities. The worst that happens there is that you lose your investment (and it's more likely that the value will be reduced but recover). With mortgages, you can lose your entire investment and then some. Yes, the price may recover, but it may do so after the bank forecloses on the mortgage.", "title": "" }, { "docid": "924b595836b4404f4be44823643bf657", "text": "In general people make a few key mistakes with property: 1) Not factoring in depreciation properly. Houses are perpetually falling down, and if you are renting them perpetually being trashed by the tenants as well - particularly in bad areas. Accurate depreciation costs can often run in the 5-20% range per year depending on the property/area. Add insurance to this as well. 2) Related to 1), they take the index price of house price rises as something they can achieve, when in reality a lot of the house price 'rise' is just everyone having to spend a lot of money keeping them standing up. No investor can actually track a house price graph due to 1) so be careful to make reasonable assumptions about actual achievable future growth. 3) Failure to price in the huge transaction costs (often 5%+ per sale) and capital gains/other taxes (depends on the exact tax structure where you are). These add up very fast if you are buying and selling at all frequently. 4) Costs in either time or fees to real estate rental agents. Having to fill, check, evict, fix and maintain rental properties is a lot more work than most people realise, and you either have to pay this in your own time or someone else’s. Again, has to be factored in. 5) Liquidity issues. Selling houses in down markets is very, very hard. They are not like stocks where they can be moved quickly. Houses can often sit on the market for years before sale if you are not prepared to take low prices. As the bank owns your house if you fail to pay the mortgage (rents collapse, loss of job etc) they can force you to fire sale it leaving you in a whole world of pain depending on the exact legal system (negative equity etc). These factors are generally correlated if you work in the same cities you are buying in so quite a lot of potential long tail risk if the regional economy collapses. 6) Finally, if you’re young they can tie you to areas where your earnings potential is limited. Renting can be immensely beneficial early on in a career as it gives you huge freedom to up sticks and leave fast when new opportunities arise. Locking yourself into 20yr+ contracts/activities when young can be hugely inhibiting to your earnings potential – particularly in fast moving jobs like software development. Without more details on the exact legal framework, area, house type etc it’s hard to give more specific advise, but in general you need a very large margin of safety with property due to all of the above, so if the numbers you’re running are coming out close, it’s probably not worth it, and you’re better of sticking with more hands off investments like stocks and bonds.", "title": "" }, { "docid": "6adfc37167cca13c23799cd8c226a6d5", "text": "I would strongly, strongly advise against it. Others here are answering the question of, having decided to invest in property, how one ought to ensure that one invests in the right property. What has not really been discussed here is the issue of diversification. There are a number of serious risks to property investment. In fact, it is one of the riskiest types of investment. You face more of almost every type of risk in property than maybe any other asset class. It is one thing to take on those risks as part of a diverse portfolio including other asset classes. It is quite another - extremely irresponsible - thing to take on those risks as your sole investment, when your portfolio is in its infancy. So no, do not invest in property when you lack any other investments. Absolutely not.", "title": "" }, { "docid": "579f9a0a5a958b3a896d6f07239b2853", "text": "\"I want to caveat that I am not an active investor in Australia, you most likely should seek out other investors in your market and ask them for advice/mentorship, but since you came here I can give you some generalized advice. When investing in real estate there are a two main rules of thumb to quickly determine if the property will be a good investment. The 50% rule and the 2% (or 1%) rule. The 50% rules says that in general 50% if the income from the property will go to expenses not including debt service. If you are bringing in $1000 a month 500 of that will go to utilities, taxes, repair, capital expenditures, advertising, lawn care, etc. That leave you with 500 to pay the mortgage and if anything is left that can be cash flow. As this is your first property and it is in \"\" a relatively bad neighbourhood\"\" you might consider bumping that up to 60% just to make sure you have padding. The 1 or 2% rules says that the monthly rent should be 1(or 2) percent of the purchase price in this case the home is bought at 150,000. If the rent is 1,500 a month it might be a good investment but if it rents for 3,000 a month it probably is a good investment. There are other factors to consider if a home meets the 2% rule it might be in a rough neighborhood which increases turnover which in general is the biggest expense in an investment property. If a property meets one or both of these rules you should take a closer look at it and with proper due diligence determine that it is a deal. These rules are just hard and fast guidelines to property analysis, they may need to be adapted to you market. For example these rules will not hold in most (all?) big cities.\"", "title": "" } ]	[ { "docid": "1cc9fda9a30d5e545deb8607f0ed6bc2", "text": "I would suggest you to put your money in an FD for a year, and as soon as you get paid the interest, start investing that interest in a SIP(Systematic investment plan). This is your safest option but it will not give you a lot of returns. But I can guarantee that you will not lose your capital(Unless the economy fails as a whole, which is unlikely). For example: - you have 500000 rupees. If you put it in a fixed deposit for 1 year, you earn 46500 in interest(At 9% compounded quarterly). With this interest you can invest Rs.3875(46500/12) every month in an SIP for 12 months and also renew your FD, so that you can keep earning that interest.So at the end of 10 years, you will have 5 lacs in your FD and Rs. 4,18,500 in your SIP(Good funds usually make 13-16 % a year). Assuming your fund gives you 14%, you make: - 1.) 46500 at 14% for 9 years - 1,51,215 2.)8 years - 1,32,645 3.) 7 years - 1,16,355 4.) 6 years - 1,02,066 5.) 5 years - 89,531 6.) 4 years - 78,536 7.) 3 years - 68891 8.) 2 years 60,431 9.) 1 year - 53010 Total Maturity Value on SIP = Rs, 8,52,680 Principal on FD = Rs 5,00,000 Interest earned on 10th year = Rs. 46,500 Total = Rs. 13,99,180(14 lacs). Please note: - Interest rates and rate of return on funds may vary. This figure can only be assumed if these rates stay the same.:). Cheers!", "title": "" }, { "docid": "c255f9fe7a02eec2d330e649199f09dc", "text": "Unfortunately, in this market environment your goal is not very realistic. At the moment real interest rates are negative (and have been for some time). This means if you invest in something that will pay out for sure, you can expect to earn less than you lose through inflation. In other words, if you save your $50K, when you withdraw it in a few years you will be able to buy less with it then than you can now. You can invest in risky securities like stocks or mutual funds. These assets can easily generate 10% per year, but they can (and do) also generate negative returns. This means you can and likely will lose money after investing in them. There's an even better chance that you will make money, but that varies year by year. If you invest in something that expects to make 10% per year (meaning it makes that much on average), it will be extremely risky and many years it will lose money, perhaps a lot of it. That's the way risk is. Are you comfortable taking on large amounts of risk (good chances of losing a lot of your money)? You could make some kind of real investment. $50K is a little small to buy real estate, but you may be able to find something like real estate that can generate income, especially if you use it as a down payment to borrow from the bank. There is risk in being a landlord as well, of course, and a lot of work. But real investments like that are a reasonable alternative to financial markets for some people. Another possibility is to just keep it in your bank account or something else with no risk and take $5000 out per year. It will only last you 10 years that way, but if you are not too young, that will be a significant portion of your life. If you are young, you can work and add to it. Unfortunately, financial markets don't magically make people rich. If you make a lot of money in the market, it's because you took a risk and got lucky. If you make a comfortable amount with no risk, it means you invested in a market environment very different from what we see today. --------- EDIT ------------ To get an idea of what risk free investments (after inflation) earn per year at various horizons see this table at the treasury. At the time of this writing you would have to invest in a security with maturity almost 10 years in order to break even with inflation. Beating it by 10% or even 3% per year with minimal risk is a pipe dream.", "title": "" }, { "docid": "c20caa866e1e2694a2da247c5e9f80a9", "text": "A common rule of thumb is the 28/36 ratio. It's described here. In your case, with a gross (?) salary of £50,000, that means that you should spend no more than 28% of it, or £1,167 per month on housing. You may be able to swing a bit more because you have no debts and a modest amount in your savings. The 36% part comes in as the amount you can spend servicing all your debt, including mortgage. In your case, based on a gross (?) salary of £50,000, that'd be £1,500 per month. Again, that is to cover your housing costs and any additional debt you are servicing. So, you need to figure out how much you could bring in through rent to make up the rest. As at least one other person has commented, the rule of thumb is that your mortgage should be no more than 2.5 - 3 times your income. I personally think you are not a good candidate for a mortgage of the size you are discussing. That said, I no longer live in England. If you could feel fairly secure getting someone to pay you enough in rent to bring down your total mortgage and loan repayment amounts to £1,500 or so a month, you may want to consider it. Remember, though, that it may not always be easy to find renters.", "title": "" }, { "docid": "72dd5b02c4594d20c11789f4b6b44525", "text": "Financial advice from good advisers sounds a good idea. Talk to two or three before taking their advice... their services and advice are surprisingly and sometimes alarmingly diverse. Gaining money from renting out property is harder than it seems and 10% sounds very ambitious after all costs. Buying abroad especially is a challenge to make money on.. You need to be lucky, and have a strong flair to do it despite all. Bear in mind santander pay 3% on current accounts by the way. Have you ever thought about living abroad somewhere stable or cheap or downsizing. A part time job or low pressure job might top up a limited pension for long enough to find a long term solution while giving you the feeling of starting retirement. Just some thoughts... think it through carefully .. weigh the risks.. be realistic and good luck. Jonjo", "title": "" }, { "docid": "55ecdda1e229a73cd562b64220076832", "text": "As user14469 mentions you would have to decide what type of properties you would like to invest in. Are you after negatively geared properties that may have higher long term growth potential (usually within 15 to 20km from major cities), or after positive cash-flow properties which may have a lower long term growth potential (usually located more than 20km from major cities). With negative geared properties your rent from the property will not cover the mortgage and other costs, so you will have to supplement it through your income. The theory is that you can claim a tax deduction on your employment income from the negative gearing (benefits mainly those on higher tax brackets), and the potential long term growth of the property will make up for the negative gearing over the long term. If you are after these type of properties Michael Yardney has some books on the subject. On the other hand, positive cash-flow properties provide enough rental income to cover the mortgage and other costs. They put cash into your pockets each week. They don't have as much growth potential as more inner city properties, but if you stick to the outer regions of major cities, instead of rural towns, you will still achieve decent long term growth. If you are after these type of properties Margaret Lomas has some books on the subject. My preference is for cash-flow positive properties, and some of the areas user14469 has mentioned. I am personally invested in the Penrith and surrounding areas. With negatively geared properties you generally have to supplement the property with your own income and generally have to wait for the property price to increase so you build up equity in the property. This then allows you to refinance the additional equity so you can use it as deposits to buy other properties or to supplement your income. The problem is if you go through a period of low, stagnate or negative growth, you may have to wait quite a few years for your equity to increase substantially. With positively geared properties, you are getting a net income from the property every week so using none of your other income to supplement the property. You can thus afford to buy more properties sooner. And even if the properties go through a period of low, stagnate or negative growth you are still getting extra income each week. Over the long term these properties will also go up and you will have the benefit of both passive income and capital gains. I also agree with user14469 regarding doing at least 6 months of research in the area/s you are looking to buy. Visit open homes, attend auctions, talk to real estate agents and get to know the area. This kind of research will beat any information you get from websites, books and magazines. You will find that when a property comes onto the market you will know what it is worth and how much you can offer below asking price. Another thing to consider is when to buy. Most people are buying now in Australia because of the record low interest rates (below 5%). This is causing higher demand in the property markets and prices to rise steadily. Many people who buy during this period will be able to afford the property when interest rates are at 5%, but as the housing market and the economy heat up and interest rates start rising, they find it hard to afford the property when interest rate rise to 7%, 8% or higher. I personally prefer to buy when interest rates are on the rise and when they are near their highs. During this time no one wants to touch property with a six foot pole, but all the owners who bought when interest rates where much lower are finding it hard to keep making repayments so they put their properties on the market. There ends up being low demand and increased supply, causing prices to fall. It is very easy to find bargains and negotiate lower prices during this period. Because interest rates will be near or at their highs, the economy will be starting to slow down, so it will not be long before interest rates start dropping again. If you can afford to buy a property at 8% you will definitely be able to afford it at 6% or lower. Plus you would have bought at or near the lows of the price cycle, just before prices once again start increasing as interest rates drop. Read and learn as much as possible from others, but in the end make up your own mind on the type of properties and areas you prefer.", "title": "" }, { "docid": "f826bafa5b768c0119ad66f18bd1b81d", "text": "Major things to consider: If you're expecting to look at the property market: it might prove to be sensible to start doing it now, since the market is just recovering, and (IMHO warning -I'm not a professional investor, just a random guy on the internet) prices still hasn't caught up with value fundamentals. check out cash ISA's for a 24-36 month timeframe; most do a reasonable 3-4% AER, with the current inflation rate being around 4%, this will, at the very least, make sure your money doesn't loose it's purchasing power. Finally, a word of caution: SIPPs have a rather rubbish AER rates. This, by itself, wouldn't be much of a problem on a 30-40 years timeframe, but keep the (current, and historically strictly monotonically increasing) 4% inflation rate in mind: this implies the purchasing power of any money tied in these vehicles will loose it's purchasing power, in a compounding manner. Hope this helps, let me know if you have any questions.", "title": "" }, { "docid": "78073fba775581c025e7fb35c48e3db3", "text": "I don't know enough about taxes and real-state in the Netherlands to be super helpful in determining whether or not a rental property is a good investment. One thing for certain is that there's some risk in spending everything on a rental property. It's wise to have some buffer, an emergency fund of 3-6 months expenses. If things got dire, you'd still need to live somewhere until your tenant was gone, and you'd want to be able to handle any major repairs that crop up. So, even if it is a good idea to buy a rental property, you should probably wait until doing so doesn't leave you without a healthy buffer. As for owning a rental, you described a scenario where you'd get 6% income on your investment each year if there were zero expenses associated with owning the property. Are there property taxes? Is there a monthly cost to maintain the building the apartment is in? Are rental incomes taxed more heavily than other investment income? Just be aware of the full financial picture before deciding if it's a worthwhile investment.", "title": "" }, { "docid": "181412d0dfd9b6ebf68ab4c0aa3b8b44", "text": "There is no generic formula as such, but you can work it out using all known incomes and expenses and by making some educated assuption. You should generaly know your buying costs, which include the purchase price, legal fees, taxes (in Australia we have Stamp Duty, which is a large state based tax when you purchase a property). Other things to consider include estimates for any repairs and/or renovations. Also, you should look at the long term growth in your area and use this as an estimate of your potential growth over the period you wish to hold the property, and estimate the agent fees if you were to sell, and the depreciation on the building. These things, including the agent fees when selling and building depreciation, will all be added or deducted to your cost base to determine the amount of capital gain when and if you sell the property. You then need to multiply this gain by the capital gains tax rate to determine the capital gains tax you may have to pay. From all the items above you will be able to estimate the net capital gain (after all taxes) you could expect to make on the property over the period you are looking to hold it for. In regards to holding and renting the property, things you will need to consider include the rent, the long term growth of rent in your area, and all the expenses including, loan fees and interest, insurance, rates, land tax, and an estimate of the annual maintenance cost per year. Also, you would need to consider any depreciation deductions you can claim. Other things you will need to consider, is the change in these values as time goes by, and provide an estimate for these in your calculations. Any increase in the value of land will increase the amount of rates and the land tax you pay, and generally your insurance and maintenance costs will increase with time. However, your interest and mortgage repayments will reduce over time. Will your rent increases cover your increases in the expenses. From all the items above you should be able to work out an estimate of your net rental gain or loss for each year. Again do this for the number of years you are looking to hold the property for and then sum up the total to give a net profit or loss. If there is a net loss from the income, then you need to consider if the net capital gain will cover these losses and still give you a reasonable return over the period you will own the property. Below is a sample calculation showing most of the variables I have discussed.", "title": "" }, { "docid": "b214c21bfffcc07a9824cab573471df1", "text": "That is a decision you need to make, but some of the pros and cons you could consider to help your decision making include: Pros: If bought at the right time in the property cycle and in a good growth area, it can help you grow your net worth much quicker than having money in the bank earning near zero interest. You would be replacing rent payments with mortgage payments and if your mortage payments are less than your current rent you will have additional money to pay for any expenses on the property and have a similar cashflow as you do now. You will be able to deduct your interest payments on the mortgage against your income if you are in the USA, thus reducing the tax you pay. You will have the security of your own house and not have to worry about moving if the landlord wants you out after your lease expires. Cons: If bought in a bad area and at the top of the property cycle you may never make any capital gains on the property and in fact may lose money on it long term. If the mortgage payments are more than your current rent you may be paying more especially at the start of your mortgage. If you buy a house you are generally stuck in one spot, it will be harder to move to different areas or states as it can cost a lot of money and time to sell and buy elsewhere, if renting you can generally just give notice and find a new place to rent. Property maintenance costs and taxes could be a drain on your finances, especially if the mortgage repayments are more than your current rent. If your mortgage payments and property expenses are way more than your current rent, it may reduce what you could be investing in other areas to help increase your net worth.", "title": "" }, { "docid": "a5e1360f3a804475b28a1f26149f104b", "text": "Anybody that offers a bigger return than a deposit claiming 100% safe is a fraud. There is always a risk: Yes, you can gain 30% in a year, but nobody can guarantee that you'll repeat that gain the next. My own experience (and I do take risks), one year I go up, the next year I go down...", "title": "" }, { "docid": "d0a4f30fe175ac4fea44cfdb318900d9", "text": "When buying investment properties there are different levels of passive investment involved. At one end you have those that will buy an investment property and give it to a real estate agent to manage and don't want to think of it again (apart from watching the rent come in every week). At the other end there are those that will do everything themselves including knocking on the door to collect the rent. Where is the best place to be - well somewhere in the middle. The most successful property investors treat their investment properties like a business. They handle the overall management of the properties and then have a team taking care of the day-to-day nitty gritty of the properties. Regarding the brand new or 5 to 10 year old property, you are going to pay a premium for the brand new. A property that is 5 years old will be like new but without the premium. I once bought a unit which was 2 to 3 years old for less than the original buyer bought it at brand new. Also you will still get the majority of the depreciation benefits on a 5 year old property. You also should not expect too much maintenance on a 5 to 10 year old property. Another option you may want to look at is Defence Housing. They are managed by the Department of Defence and you can be guaranteed rent for 10 years or more, whether they have a tenant in the property or not. They also carry out all the maintenance on the property and restore it to original condition once their contract is over. The pitfall is that you will pay a lot more for the management of these properties (up to 15% or more). Personally, I would not go for a Defence Housing property as I consider the fees too high and would not agree with some of their terms and conditions. However, considering your emphasis on a passive investment, this may be an option for you.", "title": "" }, { "docid": "47cea5f4c2bd6ef611d52e55975e7338", "text": "I have done something similar to this myself. What you are suggesting is a sound theory and it works. The issues are (which is why it's the reason not everyone does it) : The initial cost is great, many people in their 20s or 30s cannot afford their own home, let alone buy second properties. The time to build up a portfolio is very long term and is best for a pension investment. it's often not best for diversification - you've heard not putting all your eggs in one basket? With property deposits, you need to put a lot of eggs in to make it work and this can leave you vulnerable. there can be lots of work involved. Renovating is a huge pain and cost and you've already mentioned tennants not paying! unlike a bank account or bonds/shares etc. You cannot get to your savings/investments quickly if you need to (or find an opportunity) But after considering these and deciding the plunge is worth it, I would say go for it, be a good landlord, with good quality property and you'll have a great nest egg. If you try just one and see how it goes, with population increase, in a safe (respectable) location, the value of the investment should continue to rise (which it doesn't in a bank) and you can expect a 5%+ rental return (very hard to find in cash account!) Hope it goes well!", "title": "" }, { "docid": "f401b03c9a02d7b203368bb932406d81", "text": "In no particular order - to help you on deciding whether to invest or not: Building Wealth One House at a Time Buy & Rent Foreclosures: 3 Million Net Worth, 22,000 Net Per Month, In 7 Years...You can too! Landlording on Auto-Pilot: A Simple, No-Brainer System for Higher Profits and Fewer Headaches and for when/if you actually decide to start: Investing in Real Estate I've read all the books above and they all have a little bit of information here and there to take out - although they have some redudency it is the good type you need to learn/know anyway. Hope this helps.", "title": "" }, { "docid": "acbae95606e012afa793a1d678fdec38", "text": "I'm pretty sure you are don't actually plan to put £120,000 into a zero interest account, because when you take inflation into account, in 20 years, then £120,000 won't be worth anywhere near that amount. For its value to grow you need the interest rate to exceed the rate of inflation and so paying 20% (or even 40%) tax on the interest can make the difference between whether being richer and getting poorer.", "title": "" }, { "docid": "2cd11f8d10fca96e0b515190f11ccc66", "text": "I wouldn't go into a stock market related investment if you plan on buying a house in 4-5 years, you really need to tie money up in stocks for 10 years plus to be confident of a good return. Of course, you might do well in stocks over 4-5 years but historically it's unlikely. I'd look for a safe place to save some money for the deposit, the more deposit you can get the better as this will lower your loan to valuation (LTV) and therefore you may find you get a better interest rate for your mortgage. Regards the pension, are you paying the maximum you can into the company scheme? If not then top that up as much as you can, company schemes tend to be good as they have low charges, but check the documentation about that and make sure that is the case. Failing that stakeholder pension schemes can also have very low charges, have a look at what's available.", "title": "" } ]	fiqa
f3618d57e13e6f553b7a925bf6b0ada7	Recent college grad. Down payment on a house or car?	[ { "docid": "ee60151939fc8a15f134d44755e021c1", "text": "$27,000 for a car?! Please, don't do that to yourself! That sounds like a new-car price. If it is, you can kiss $4k-$5k of that price goodbye the moment you drive it off the lot. You'll pay the worst part of the depreciation on that vehicle. You can get a 4-5 year old Corolla (or similar import) for less than half that price, and if you take care of it, you can get easily another 100k miles out of it. Check out Dave Ramsey's video. (It's funny that the car payment he chooses as his example is the same one as yours: $475! ;) ) I don't buy his take on the 12% return on the stock market (which is fantasy in my book) but buying cars outright instead of borrowing or (gasp) leasing, and working your way up the food chain a bit with the bells/whistles/newness of your cars, is the way to go.", "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": "8d280f9654cc7e6f9132494b19bc1d4f", "text": "Not long after college in my new job I bought a used car with payments, I have never done that since. I just don't like having a car payment. I have bought every car since then with cash. You should never borrow money to buy a car There are several things that come into play when buying a car. When you are shopping with cash you tend to be more conservative with your purchases look at this Study on Credit card purchases. A Dunn & Bradstreet study found that people spend 12-18% more when using credit cards than when using cash. And McDonald's found that the average transaction rose from $4.50 to $7.00 when customers used plastic instead of cash. I would bet you if you had $27,000 dollars cash in your hand you wouldn't buy that car. You'd find a better deal, and or a cheaper car. When you finance it, it just doesn't seem to hurt as bad. Even though it's worse because now you are paying interest. A new car is just insanity unless you have a high net worth, at least seven figures. Your $27,000 car in 5 years will be worth about $6500. That's like striking a match to $340 dollars a month, you can't afford to lose that much money. Pay Cash If you lose your job, get hurt, or any number of things that can cost you money or reduce your income, it's no problem with a paid for car. They don't repo paid for cars. You have so much more flexibility when you don't have payments. You mention you have 10k in cash, and a $2000 a month positive cash flow. I would find a deal on a 8000 - 9000 car I would not buy from a dealer. Sell the car you have put that money with the positive cash flow and every other dime you can get at your student loans and any other debt you have, keep renting cheap keep the college lifestyle (broke) until you are completely out of debt. Then I would save for a house. Finally I would read this Dave Ramsey book, if I would have read this at your age, I would literally be a millionaire by now, I'm 37. Don't buy from a dealer Find a private sale car that you can get a deal on, pay less than Kelly Blue Book. Pay a little money $50 - 75 to have an automotive technician to check it out for you and get a car fax, to make sure there are no major problems. I have worked in the automotive industry for 20 + years and you rarely get a good deal from a dealer. “Everything popular is wrong.” Oscar Wilde", "title": "" }, { "docid": "8f7b37b3ab5986dbffeac01e38736a33", "text": "Don't buy the new car. Buy a $15k car with $5k down and a 3 year loan and save up the rest for your car. A $500/mo car payment is nuts unless you're making alot of money. I've been there, and it was probably the dumbest decision that I have ever made. When you buy a house, you end up with all sorts of unexpected expenses. When you buy a house AND are stuck in a $500/mo payment, that means that those unexpected expenses end up on a credit card.", "title": "" }, { "docid": "d177e5bd6dc03b1ea4340348efe98d92", "text": "\"As a car guy, I wouldn't spend 27 large on anything that wasn't \"\"special\"\" - you'll be looking at for at least the duration of the loan and for me it'll better be very special lest I get bored with it during that time. But that's just me. If you want a transport appliance - spend around $5k-$7k on a decent used vehicle, pay it off within a couple of years or less and keep throwing money at your downpayment. Now if you have any student loan debt, buy a $3k car, learn how to fix it if necessary and pay off the millstone, err, student loan ASAP.\"", "title": "" }, { "docid": "4bd6b94ca104beaee378478bb89e9716", "text": "I'd suggest buying a used car for cash, car loans are a bad idea. I bought my last car a few years ago for $8k off of craigslist, and it is still running great. Make sure you get a car checked out by a mechanic before buying (usually they'll drop it off at a mechanic you want to have take a look, or perhaps just go with you). My general rule is to not take out loans for anything which decreases in value. So a home mortgage would be fine, a car loan is not a great plan. Buy cash, and save for the next purchase. If you buy a decent used Corolla (or other small import car), you can get it for $8k, it will likely last a few years at least. That could end up costing you less than $200 per month total, or less. Much better deal in the long run.", "title": "" }, { "docid": "94ec729c39a0ce1c1e813fa20155dd7e", "text": "That sounds like way too much for a car! I suggest you get a used car that only has a few years on it and is in mint condition. Not only are they cheaper to purchase, they are also the cheapest to insure.", "title": "" }, { "docid": "751399e0e631d9deba48c25b9d4e5cfa", "text": "When I was in that boat a few years ago, I went for the car first. My thoughts: If I get the car first, I'm guaranteed to have a car that runs well. That makes it more convenient to commute to any job, or for social functions. I ended up dropping about $20k into a car (paid cash, I don't like being in debt). I chose to buy a really nice car, knowing it will last for many years to come - I'm expecting to not replace it for about 10 years from the purchase. I would urge you to consider paying in full for the car; dumping $20k+ is a lot, and there are plenty of nice cars out there in the $10-20k range that will work just fine for years to come. One benefit of paying in full is that you don't have a portion of your income tied into the car loan. The main reason I chose not to go for the house first had more to do with the difference in commitment. A home mortgage is a 30-year commitment on a large chunk of your income. With the job market and housing markets both currently working against you, it's better to wait until you have a large safety net to fall into. For example, it's always recommended to have several months worth of living expenses in savings. Compared to renting, having 6 or more months of mortgage payments + utilities + insurance + property taxes + other mandatory expenses (see: food, gas) comes out to a significant amount more that you should have saved (for me, I'm looking at a minimum of about $20k in savings just to feel comfortable; YMMV). Also, owning a house always has more maintenance costs than you will predict. Even if it's just replacing a few light bulbs at first, eventually you'll need something major: an appliance will die, your roof will spring a leak, anything (I had both of those happen in the first year, though it could be bad luck). You should make sure that you can afford the increased monthly payments while still well under your income. Once you're locked in to the house, you can still set aside a smaller chunk of your income for a new car 5-10 years down the road. But if you're current car is getting down to it's last legs, you should get that fixed up before you lock yourself in to an uncomfortable situation. Don't be in too much of a hurry to buy a house. The housing market still has a ways to go before it recovers, and there's not a whole lot to help it along. Interest rates may go up, but that will only hurt the housing market, so I don't expect it to change too much for the next several months. With a little bit of sanity, we won't have another outrageous housing bubble for many years, so houses should remain somewhat affordable (interest rates may vary). Also keep in mind that if you pay less that 20% down on the house, you may end up with some form of mortgage interest, which is just extra interest you'll owe each month.", "title": "" }, { "docid": "dea0beca5d6b4d30f2d160718895470e", "text": "I generally agree with the sentiment in many other answers that $27K is more I would personally spend on a car if I were in your position. Having said that, the following assumes you are already intent on buying that car. Even if you change your mind, I think the general ideas still apply.", "title": "" }, { "docid": "9d05584f82fe96e043702213bf3c41ea", "text": "Buy a car. Unless you definitely know you are living in the area for a good long time, avoid buying a house and get a car instead.", "title": "" } ]	[ { "docid": "e61c4eefe4e13b331a8080a779818718", "text": "Not really money related, but: how long are you going to be staying there? Once your wife graduates, would you be potentially moving to another area, or needing to move to be closer to where she works? If so, you might want to wait until after she graduates and you know where you'll be, before putting down money on large stationary items like houses.", "title": "" }, { "docid": "60107ac23bd15c65c2221bab687a1a2b", "text": "What are your goals in life? If one of them is to appear wealthy then buying a high price import is a great place to start. You certainly have the salary for it (congratulations BTW). If one of your goals is to build wealth, then why not buy a ~5000 to ~6000 car and have a goal to zero out that student loan by the end of the year? You can still contribute to your 401k, and have a nice life style living on ~60K (sending 30 to the student loan). Edit: I graduated with a CS degree in '96 and have been working in the industry since '93. When I started, demand was like it is now, rather insane. It probably won't always be like that and I would prepare for some ups and downs in the industry. One of the things that encouraged me to lead a debt free lifestyle happened in 2008. My employer cut salaries by 5%...no big deal they said. Except they also cut support pay, bonuses, and 401K matching. When the dust cleared my salary was cut 22%, and I was lucky as others were laid off. If you are in debt a 22% pay cut hurts bad.", "title": "" }, { "docid": "b56ba9b16a6dfd5a08e1b0450ed6d876", "text": "The house next door to the one I grew up in just sold for $45k. Just because they build bigger houses doesn't mean that you have to buy one. I'm sure my parents could have bought a much bigger house. Did you ever look into community college for core classes, I had many friends in college that go about 1/3 of their credits out of the way for about 1/4 the state college. College has always been expensive, it's nothing new. And a new car is a pretty idiot investment, a good education in an indemand field not so much. I was able to graduate debt free, but after a year of college was able to land jobs at more than 2x minimum wage. Remember, few unskilled people, mostly high school age are the ones earning minimum wage, [5.2%](http://www.bls.gov/cps/minwage2011.htm).", "title": "" }, { "docid": "4b1cb0ad4e652985327450bce1e0935f", "text": "There is no correct answer. It all depends on you. If you have a fund dedicated to a purpose (house, car, daycare, vacation, etc), in my opinion you are best served by keeping it dedicated to that function in most cases. Say that you find a home that you want to by in two years. If you have good credit and appropriate debt/income ratios, your car payment will not pose a problem to getting that home. But not having enough money for a down payment will.", "title": "" }, { "docid": "ee6c38fd143f2637083b440ec48fbf01", "text": "I like Nathan's answer some, but am horribly curious as to why you have not made payments on a $3500 student loan? If you are wealthy enough to afford a new car, this should be paid off next week. IMHO. Above all else your financial goals should dictate if you buy a new car. What are they for you? If the goal is to build wealthy quickly then Nathan's advice may be to unfrugal for you. If your goal is to impress people with the car you drive and accumulate very little real wealth then purchasing or leasing a car should be a top priority. So to answer your question correctly one must understand your goals. For 2016, the average car payment is $479 per month. If you invested that in a decent growth stock mutual fund in 40 years you'll have around 2.6 million. However, you do need something to drive now. If you can cut your car expense to $200 per month, and save the other $279 you will still end up with about 1.5 million in that same 40 years. Personally I attempt to shoot for $200 ownership cost per car per month. Its a bit difficult as I drive a lot. Also I would not purchase a new car until my net worth exceeded 2 million. At that point my investments could mitigate the steep depreciation costs of owning a new car.", "title": "" }, { "docid": "4577731b949a0dece0a8ed46a0bc96d8", "text": "\"I recently moved out from my parents place, after having built up sufficient funds, and gone through these questions myself. I live near Louisville, KY which has a significant effect on my income, cost of living, and cost of housing. Factor that into your decisions. To answer your questions in order: When do I know that I'm financially stable to move out? When you have enough money set aside for all projected expenses for 3-6 months and an emergency fund of 4-10K, depending on how large a safety net you want or need. Note that part of the reason for the emergency fund is as a buffer for the things you won't realize you need until you move out, such as pots or chairs. It also covers things being more expensive than anticipated. Should I wait until both my emergency fund is at least 6 months of pay and my loans in my parents' names is paid off (to free up money)? 6 months of pay is not a good measuring stick. Use months of expenses instead. In general, student loans are a small enough cost per month that you just need to factor them into your costs. When should I factor in the newer car investment? How much should I have set aside for the car? Do the car while you are living at home. This allows you to put more than the minimum payment down each month, and you can get ahead. That looks good on your credit, and allows refinancing later for a lower minimum payment when you move out. Finally, it gives you a \"\"sense\"\" of the monthly cost while you still have leeway to adjust things. Depending on new/used status of the car, set aside around 3-5K for a down payment. That gives you a decent rate, without too much haggling trouble. Should I get an apartment for a couple years before looking for my own house? Not unless you want the flexibility of an apartment. In general, living at home is cheaper. If you intend to eventually buy property in the same area, an apartment is throwing money away. If you want to move every few years, an apartment can, depending on the lease, give you that. How much should I set aside for either investment (apartment vs house)? 10-20K for a down payment, if you live around Louisville, KY. Be very choosy about the price of your house and this gives you the best of everything. The biggest mistake you can make is trying to get into a place too \"\"early\"\". Banks pay attention to the down payment for a good reason. It indicates commitment, care, and an ability to go the distance. In general, a mortgage is 30 years. You won't pay it off for a long time, so plan for that. Is there anything else I should be doing/taking advantage of with my money during this \"\"living at home\"\" period before I finally leave the nest? If there is something you want, now's the time to get it. You can make snap purchases on furniture/motorcycles/games and not hurt yourself. Take vacations, since there is room in the budget. If you've thought about moving to a different state for work, travel there for a weekend/week and see if you even like the place. Look for deals on things you'll need when you move out. Utensils, towels, brooms, furniture, and so forth can be bought cheaply, and you can get quality, but it takes time to find these deals. Pick up activities with monthly expenses. Boxing, dancing, gym memberships, hackerspaces and so forth become much more difficult to fit into the budget later. They also give you a better credit rating for a recurring expense, and allow you to get a \"\"feel\"\" for how things like a monthly utility bill will work. Finally, get involved in various investments. A 401k is only the start, so look at penny stocks, indexed funds, ETFs or other things to diversify with. Check out local businesses, or start something on the side. Experiment, and have fun.\"", "title": "" }, { "docid": "76f84e708a51517019013542f87d9de6", "text": "On paper the whole 6 months living costs sounds (and is) great, but in real life there are a lot of things that you need to consider. For example, my first car was constantly falling apart and was an SUV that got 16MPG. I have to travel for work (about 300 miles per week) so getting a sedan that averages close to 40MPG saves me more in gas and maintenance than the monthly payment for the new car costs. When our apartment lease was up, the new monthly rent would have been $1685 per month, we got a 30 year mortgage with a monthly payment of $1372. So buying a house actually let us put aside more each month. We have just under 3 months of living expenses set aside (1 month in liquid assets, 2 months in a brokerage account) and I worry about it. I wish we had a better buffer, but in our case the house and car made more sense as an early investment compared to just squirreling away all our savings. Also, do you have any debt? Paying off debt (student loans, credit card debt, etc.) should often take top priority. Have some rainy day funds, of course, but pay down debts, and then create a personal financial plan for what works best in your situation. That would be my suggestion.", "title": "" }, { "docid": "ed5fb75f53cbfb9ec38c820ec74761d4", "text": "I'd suggest waiting until a bit after you are married. To Eagle1's point, even $23,000 is not a huge sum of money. You didn't make any mention of a desire to buy a home, but if that becomes part of the plan, I'd want every cent of liquidity I can get. I wrote Student Loans and Your First Mortgage to explain why your buying power for the house is lowered by paying that loan. In your case, $5000 is 20% of $25000. For a good 20% down purchase, I'd want those funds available. You also don't mention retirement accounts. Depending on the home purchase timing, I'd start to think about putting aside at least the $5500 per year IRA/Roth IRA maximum.", "title": "" }, { "docid": "8a9db923f5454f64bb4e44d06c74908f", "text": "\"The loan is the loan, the down payment is not part of the loan. The principle amount owed on the loan at the beginning of the loan is the amount of the loan. If your loan amount is $390,000 then that's below the \"\"jumbo\"\" classification. Your down payment is irrelevant. Lenders may want or require 20% (or any other amount) down so the loan will meet certain \"\"loan to value\"\" ratio requirements. In the case of real estate the lenders in general want a 20% down side cushion before you're \"\"upside down\"\" (owe more than the home is worth). This is not unique to homes and is common in many secured lending instruments; like cars for example.\"", "title": "" }, { "docid": "fcf95360f8338c753cdf113a0bb17793", "text": "Buy a house when you can, but keep driving your current car until it dies. In ten years' time, a house should be worth more than you paid for it, while a new car will be worth next to nothing. And research shows that buying possessions like cars doesn't actually make you happier, even though you think it will.", "title": "" }, { "docid": "1d1b257f29aaef270074323d88d51d45", "text": "The good debt/bad debt paradigm only applies if you are considering this as a pure investment situation and not factoring in: A house is something you live in and a car is something you use for transportation. These are not substitutes for each other! While you can live in your car in a pinch, you can't take your house to the shops. Looking at the car, I will simplify it to 3 options: You can now make a list of pros and cons for each one and decide the value you place on each of them. E.g. public transport will add 5h travel time per week @ $X per hour (how much you value your leisure time), an expensive car will make me feel good and I value that at $Y. For each option, put all the benefits together - this is the value of that option to you. Then put all of the costs together - this is what the option costs you. Then make a decision on which is the best value for you. Once you have decided which option is best for you then you can consider how you will fund it.", "title": "" }, { "docid": "63e5c9801550ba4a55aac9ededafef9e", "text": "As a new graduate, aside from the fact that you seem to have the extra $193/mo to pay more towards your loan, we don't know anything else. I wrote a lengthy article on this in response to a friend who had a loan, but was also pondering a home purchase in the future. Student Loans and Your First Mortgage discusses the math behind one's ability to put a downpayment on a house vs having that monthly cash to pay towards the mortgage. In your case, the question is whether, in 5 years, the $8500 would be best spent as a home down payment or to pay off the 6.8% loan. If you specifically had plans toward home ownership, the timing of that plan would affect my answer here, as I discuss in the article. The right answer to your question can only come by knowing far more of your personal situation. Meanwhile, the plan comes at a cost. Your plan will get rid of the loan in about 5 years, but if you simply double up the payments, advising the servicing company to apply the extra to principal, it would drop to just a couple month over over 4. As you read more about personal finance, you'll find a lot of different views. Some people are fixated on having zero debt, others will focus on liquidity. In the end, you need to understand each approach and decide what's right for you.", "title": "" }, { "docid": "67c1f9a423ceb1f692cfb733a892d559", "text": "From personal experience (I financed a new car from the dealer/manufacturer within weeks of graduating, still on an F1-OPT):", "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": "d8a17e9673fda9e7ad31cebd8b86c853", "text": "The key to becoming wealthy as a self-employed person is the drive to be successful. A driven person, who starts their own company (or companies, should they fail), will find success. Assuming that you define success as the accumulation of wealth, then yes, self-employment is correlated with wealth. But as matt mentions in the comments, there is no casual (in the statistical sense) relationship between self-employment and wealth. While I can't say for sure, I would argue that drive is more important that the employment situation.", "title": "" } ]	fiqa
9e6a3212c8eb117cbb33e404dc5046a1	Protecting savings from exceptional taxes	[ { "docid": "20e4a5eb388c4491e671bc71b905befc", "text": "\"What EU wanted to force Cyprus to do is to break the insurance contract the government has with the bank depositors. The parliament rightfully refused, and it didn't pass. In the EU, and Cyprus as part of it, all bank deposits are insured up to 100,000EUR by the government. This is similar to the US FDIC insurance. Thus, requiring the \"\"small\"\" (up to 100K) depositors to participate in the bank reorganization means that the government breaks its word to people, and effectively defaults. That is exactly what the Cyprus government wanted to avoid, the default, so I can't understand why the idea even came up. Depositors of more than 100k are not guaranteed against bank failures, and indeed - in Cyprus these depositors will get \"\"haircuts\"\". But before them, first come shareholders and bondholders who would be completely wiped out. Thus, first and foremost, those who failed (the bank owners) will be the first to pay the price. However, governments can default. This happened in many places, for example in Russia in the 90's, in Argentina in 2000's (and in fact numerous times during the last century), the US in the 1930's, and many other examples - you can see a list in Wikipedia. When government defaults on its debts, it will not pay some or all of them, and its currency may also be devaluated. For example, in Russia in 1998 the currency lost 70% of its value against the USD within months, and much of the cash at hands of the public became worthless overnight. In the US in 1933 the President issued an executive order forbidding private citizens keeping gold and silver bullions and coins, which resulted in dollar devaluation by about 30% and investors in precious metals losing large amounts of money. The executive order requiring surrender of the Treasury gold certificates is in fact the government's failure to pay on these obligations. While the US or Russia control their own currency, European countries don't and cannot devaluate the currency as they wish in order to ease their debts. Thus in Euro-zone the devaluation solutions taken by Russia and the US are not possible. Cyprus cannot devaluate its currency, and even if it could - its external debt would not likely to be denominated in it (actually, Russian debt isn't denominated in Rubles, that's why they forced restructuring of their own debt, but devaluating the currency helped raising the money from the citizens similarly to the US seizing the gold in 1930's). Thus, in case of Cyprus or other Euro-zone countries, direct taxes is the only way to raise money from the citizens. So if you're in a country that controls its own currency (such as the US, Russia, Argentina, etc) and especially if the debt is denominated in that currency (mainly the US) - you should be worried more of inflation than taxes. But if you're in the Euro-zone and your country is in troubles (which is almost any country in the zone) - you can expect taxes. How to avoid that? Deal with your elected officials and have them fix your economy, but know that you can't just \"\"erase\"\" the debt through inflation as the Americans can (and will), someone will have to pay.\"", "title": "" }, { "docid": "93bd1971ca0c84f2a6edc1cea926be7d", "text": "Don't worry. The Cyprus situation could only occur because those banks were paying interest rates well above EU market rates, and the government did not tax them at all. Even the one-time 6.75% tax discussed is comparable to e.g. Germany and the Netherlands, if you average over the last 5 years. The simple solution is to just spread your money over multiple banks, with assets at each bank staying below EUR 100.000. There are more than 100 banks large enough that they'll come under ECB supervision this year; you'd be able to squirrel away over 10 million there. (Each branch of the Dutch Rabobank is insured individually, so you could even save 14 million there alone, and they're collectively AAA-rated.) Additionally, those savings will then be backed by more than 10 governments, many of which are still AAA-rated. Once you have to worry about those limits, you should really talk to an independent advisor. Investing in AAA government bonds is also pretty safe. The examples given by littleadv all involve known risky bonds. E.g. Argentina was on a credit watch, and paying 16% interest rates.", "title": "" }, { "docid": "aface92198df28c3d0d1148bbc9a3571", "text": "Over the last few years I've read quite a bit about monetary history. I've developed two very important rules from this study: If you follow these two rules you will be able to weather almost any governmental or banking crisis.", "title": "" } ]	[ { "docid": "eb0aaf07385a614da2199677cdbf2c77", "text": "Look into the Coverdell Education Savings Account (ESA). This is like a Roth IRA for higher education expenses. Withdrawals are tax free when used for qualified expenses. Contributions are capped at $2000/year per beneficiary (not per account) so it works well for young kids, and not so well for kids about to go to College. This program (like all tax law) are prone to changes due to action (or inaction) in the US Congress. Currently, some of the benefits are set to sunset in 2010 though they are expected to be renewed in some form by Congress this year.", "title": "" }, { "docid": "29079941bcf673433726120d468485ea", "text": "If you have multiple accounts, you have to empty them all before you can deduct any losses. Your loss is not a capital loss, its a deduction. It is calculated based on the total amount you have withdrawn from all your Roth IRA's, minus the total basis. It will be subject to the 2% AGI treshhold (i.e.: if your AGI is > 100K, none of it is deductible, and you have to itemize to get it). Bottom line - think twice. Summarizing the discussion in comments: If you have a very low AGI, I would guess that your tax liability is pretty low as well. Even if you deduct the whole $2K, and all of it is above the other deductions you have (which in turn is above the standard deduction of almost $6K), you save say $300 if you're in 15% tax bracket. That's the most savings you have. However I'm assuming something here: I'm assuming that you're itemizing your deductions already and they're above the standard deduction. This is very unlikely, with such a low income. You don't have state taxes to deduct, you probably don't spend a lot to deduct sales taxes, and I would argue that with the low AGI you probably don't own property, and if you do - you don't have a mortgage with a significant interest on it. You can be in 15% bracket with AGI between (roughly) $8K and $35K, i.e.: you cannot deduct between $160 and $750 of the $2K, so it's already less than the maximum $300. If your AGI is $8K, the deduction doesn't matter, EIC might cover all of your taxes anyway. If your AGI is $30K, you can deduct only $1400, so if you're in the 15% bracket - you saved $210. That, again, assuming it's above your other deductions, which in turn are already above the standard deduction. Highly unlikely. As I said in the comments - I do not think you can realistically save on taxes because of this loss in such a manner.", "title": "" }, { "docid": "0a9e5e503ff2d51c31561721478e15c2", "text": "You can't max out your retirement savings. There are vehicles that aren't tax-advantaged that you can fund after you've exhausted the tax-advantaged ones. Consider how much you want to put into these vehicles. There are disadvantages as well as advantages. The rules on these can change at any time and can make it harder for you to get your money out. How's your liquid (cash) emergency fund? It sounds like you're in a position to amass a good one. Don't miss this opportunity. Save like crazy while you can. Kids make this harder. Paying down your mortgage will save you interest, of course, but make sure you're not cash-poor as a result. If something happens to your income(s), the bank will still foreclose on you even if you only owe $15,000. A cash cushion buys you time.", "title": "" }, { "docid": "132ecb257ac4664dc0b3037828419962", "text": "You should definitely favor holding bonds in tax-advantaged accounts, because bonds are not tax-efficient. The reason is that more of their value comes in the form of regular, periodic distributions, rather than an increase in value as is the case with stocks or stock funds. With stocks, you can choose to realize all that appreciation when it is most advantageous for you from a tax perspective. Additionally, stock dividends often receive lower tax rates. For much more detail, see Tax-efficient fund placement.", "title": "" }, { "docid": "1a827f57147977cbd2526a8de675299a", "text": "If your regular withholding is not enough to cover your tax due, then you can withhold extra taxes to avoid owing anything the following April 15. Alternatively, you may make estimated tax payments to avoid owing anything the following year. Some taxpayers will be required to make estimated payments, typically when the tax due will be sufficiently larger than the amount of withholding. If your husband says that you owed $5,000 in April, then he wants you both to withhold $2,500 for the entire year. If all your income is shared, then that makes sense. But if your income is not entirely shared and your personal luxury expenses come from your income, then this sounds a little unfair (you are paying some of the tax on his income). If you don't share 100% of your income, then he should withhold more extra than you do (something more like $2,700 for him and $2,300 for you, depending on the details). If you share everything, then all the income and all the taxes are shared so the individual accounting matters little. Yes, if you overpay taxes, you may get a refund. Do not do this, that's just an interest-free loan to the government. Instead, put the extra money into a savings account of your choice and withdraw it whenever you want.", "title": "" }, { "docid": "95e90433ef39fdd56ddc0a47483bb000", "text": "Keep in mind that chasing after tax savings tends to not be a good way of saving money. What is a good strategy? Making sure that you take all the deductions you are entitled to. What is a bad strategy: You asked for a book recommendation. The problem is that I don't know of any books that cover all these topics. Also keep in mind that all books, blogs, articles, and yes answers to questions have a bias. Sometimes the bias can be ignored, other times it can't. Just keep looking for information on this site, and ask good specific questions about these topics.", "title": "" }, { "docid": "c60dde0bae237546b457df7b10b7b21c", "text": "Ditto @MichaelBorgwardt Just to get concrete: I just checked one bank in India and they say they are paying 4% on savings accounts. I don't know what you're getting or if 4% is typical in India, but it's at least an example. So if the bank pays interest based on average daily balance, and you left the money in the bank for a week, you'd get 4%/52 = .077%. So on Rs 95,000 that would be Rs 73. I live in the US where typical interest on a savings account today is about 1%. So an equivalent amount of money -- I think that would be about $1,500 -- would get 1/52 of 1%, or 29 cents. Don't leave the lights turned on while you do the calculations -- you'll spend more on the electricity than you make on the interest. :-) Addendum This suddenly reminds me ... I read a news story a few years ago about a man who was expecting a tax refund check from the IRS of a few hundred dollars, and when the check arrived it was for several million. Well obviously it was a mistake. But he came up with the clever idea: Deposit the check in an interest-bearing account. Promptly contact the IRS, inform them of the mistake, and ask how and where to go about returning the money. Hope that it takes at least a few days for them to figure everything out. Then keep the interest accumulated on the several-million dollars for the time that he had the money. And as he contacted them immediately about the error, they can't say he was trying to hide anything. It was a nice try, but it didn't work. They demanded he send them the interest as well as the principle.", "title": "" }, { "docid": "068bed5880ce9e76d2f629508242671d", "text": "You might want to bring this fancy new IRS rule to your employer's attention. If your employer sets it up, an After-Tax 401(k) Plan allows employees to contribute after-tax money above the $18k/year limit into a special 401(k) that allows deferral of tax on all earnings until withdrawal in retirement. Now, if you think about it, that's not all that special on its own. Since you've already paid tax on the contribution, you could imitate the above plan all by yourself by simply investing in things that generate no income until the day you sell them and then just waiting to sell them until retirement. So basically you're locking up money until retirement and getting zero benefit. But here's the cool part: the new IRS rule says you can roll over these contributions into a Roth 401(k) or Roth IRA with no extra taxes or penalties! And a Roth plan is much better, because you don't have to pay tax ever on the earnings. So you can contribute to this After-Tax plan and then immediately roll over into a Roth plan and start earning tax-free forever. Now, the article I linked above gets some important things slightly wrong. It seems to suggest that your company is not allowed to create a brand new 401(k) bucket for these special After-Tax contributions. And that means that you would have to mingle pre-tax and post-tax dollars in your existing Traditional 401(k), which would just completely destroy the usefulness of the rollover to Roth. That would make this whole thing worthless. However, I know from personal experience that this is not true. Your company can most definitely set up a separate After-Tax plan to receive all of these new contributions. Then there's no mingling of pre-tax and post-tax dollars, and you can do the rollover to Roth with the click of a button, no taxes or penalties owed. Now, this new plan still sits under the overall umbrella of your company's total retirement plan offerings. So the total amount of money that you can put into a Traditional 401(k), a Roth 401(k), and this new After-Tax 401(k) -- both your personal contributions and your company's match (if any) -- is still limited to $53k per year and still must satisfy all the non-discrimination rules for HCEs, etc. So it's not trivial to set up, and your company will almost certainly not be able to go all the way to $53k, but they could get a lot closer than they currently do.", "title": "" }, { "docid": "3ed949c726920255e6c945d8db1f3e72", "text": "\"Your #1 problem is the Government both in it's form as a taxation outfit and as a 'law and order' outfit. You'd be very surprised at how fast a bank seizes your bank account in response to a court order. Purchase 100 Mexican 50 Peso Gold (1.2 oz/ea). These coins are cheap (lowest cost to get into) and will not be reportable on sale to taxing authorities. That money is out of the banking system and legal system(s). Do not store them in a bank! You need to find a tax strategist, probably a former IRS agent / CPA type. With the rest remaining money... There's an old saying, Don't fight the Fed. As well as \"\"The trend is your friend\"\". So, the Fed wants all savers fully invested right now (near 0 interest rates). When investing, I find that if you do exactly opposite what you think is the smart thing, that's the best thing. Therefore, it follows: 1) Don't fight the Fed 2) Do opposite of smart 3) Do: Fight the Fed (and stay 100% out of the market and in cash) We're looking like Japan so could remain deflationary for decades to come. Cash is king...\"", "title": "" }, { "docid": "085e2dffab276a036853dd071ebe34cc", "text": "\"Offset against taxable gains means that the amount - $25 million in this case - can be used to reduce another sum that the company would otherwise have to pay tax on. Suppose the company had made a profit of $100 million on some other investments. At some point, they are likely to have to pay corporation tax on that amount before being able to distribute it as a cash dividend to shareholders. However if they can offset the $25 million, then they will only have to pay tax on $75 million. This is quite normal as you usually only pay tax on the aggregate of your gains and losses. If corporation tax is about 32% that would explain the claimed saving of approximately $8 million. It sounds like the Plaintiffs want the stock to be sold on the market to get that tax saving. Presumably they believe that distributing it directly would not have the same effect because of the way the tax rules work. I don't know if the Plaintiffs are right or not, but if they are the difference would probably come about due to the stock being treated as a \"\"realized loss\"\" in the case where they sell it but not in the case where they distribute it. It's also possible - though this is all very speculative - that if the loss isn't realised when they distribute it directly, then the \"\"cost basis\"\" of the shareholders would be the price the company originally paid for the stock, rather than the value at the time they receive it. That in turn could mean a tax advantage for the shareholders.\"", "title": "" }, { "docid": "671a7c03188d20ca748faab01b5e0b28", "text": "Asset protection is broad subject. In your examples it is certainly possible to have accounts that exist undisclosed from a spouse and legally inaccessible by said spouse. In the US, balances in 401k retirement accounts are exempt from forfeitures in bankruptcy. The only trick to secret stashes is that it involves you having any wealth in the first place, that you don't need to access. It is more worth it, for most people, to use all of their access to wealth to get out of debt, earn claims to property, and save for retirement. This takes up all of their earnings, making hidden wealth of any significant portion to be an impractical pipe dream. But with trust laws, corporate laws, and marriage property laws being different in practically every jurisdiction, there is plenty of flexibility to construct the form of your secret wealth. Cryptocurrency makes it much easier, at the expense of net asset value volatility.", "title": "" }, { "docid": "9261b5cc8faec072e234aace913f48c3", "text": "@BlackJack does a good answer of addressing the gains and when you are taxed on them and at what kind of rate. Money held in a brokerage account will usually be in a money-market fund, so you would own taxes on the interest it earned. There is one important consideration that must be understood for capitol Losses. This is called the Wash Sale Rule. This rule comes into affect if you sell a stock at a LOSS, and buy shares of the same stock within 30 days (before or after) the sale. A common tactic used to minimize taxes paid is to 'capture losses' when they occur, since these can be used to offset gains and lower your taxes. This is normally done by selling a stock in which you have a LOSS, and then either buying another similar stock, or waiting and buying back the stock you sold. However, if you are intending to buy back the same stock, you must not 'trigger' the Wash Sale Rule or you are forbidden to take the loss. Examples. Lets presume you own 1000 shares of a stock and it's trading 25% below where you bought it, and you want to capture the loss to use on your taxes. This can be a very important consideration if trading index ETF's if you have a loss in something like a S&P500 ETF, you would likely incur a wash sale if you sold it and bought a different S&P500 ETF from another company since they are effectively the same thing. OTOH, if you sold an S&P500 ETF and bought something like a 'viper''total stock market' ETF it should be different enough to not trigger the wash sale rule. If you are trying to minimize the taxes you pay on stocks, there are basically two rules to follow. 1) When a gain is involved, hold things at least a year before selling, if at all possible. 2) Capture losses when they occur and use to offset gains, but be sure not to trigger the wash sale rule when doing so.", "title": "" }, { "docid": "17c82c8934c11cba29787c4df49b7d52", "text": "In a comment on this answer you asked It's not clear to me why the ability to defer the gains would matter (since you never materially benefit until you actually sell) but the estate step up in basis is a great point! Could you describe a hypothetical exploitive scenario (utilizing a wash sale) in a little more detail? This sounds like you still have the same question as originally, so I'll take a stab at answering with an example. I sell some security for a $10,000 profit. I then sell another security at a $10,000 loss and immediately rebuy. So pay no taxes (without the rule). Assuming a 15% rate, that's $1500 in savings which I realize immediately. Next year, I sell that same security for a $20,000 profit over the $10,000 loss basis (so a $10,000 profit over my original purchase). I sell and buy another security to pay no taxes. In fact, I pay no taxes like this for fifty years as I live off my investments (and a pension or social security that uses up my tax deductions). Then I die. All my securities step up in basis to their current market value. So I completely evade taxes on $500,000 in profits. That's $75,000 in tax savings to make my heirs richer. And they're already getting at least $500,000 worth of securities. Especially consider the case where I sell a privately held security to a private buyer who then sells me back the same shares at the same price. Don't think that $10,000 is enough? Remember that you also get the original value. But this also scales. It could be $100,000 in gains as well, for $750,000 in tax savings over the fifty years. That's at least $5 million of securities. The effective result of this would be to make a 0% tax on capital gains for many rich people. Worse, a poorer person can't do the same thing. You need to have many investments to take advantage of this. If a relatively poor person with two $500 investments tried this, that person would lose all the benefit in trading fees. And of course such a person would run out of investments quickly. Really poor people have $0 in investments, so this is totally impractical.", "title": "" }, { "docid": "bd6eecc9738b213f4a0e3ccc7411900f", "text": "You have two different operations going on: They each have of a set of rules regarding amounts, timelines, taxes, and penalties. The excess money can't be recharacterized except during a specific window of time. I would see a tax professional to work through all the details.", "title": "" }, { "docid": "a17f801749c61e70721be29bae27a51d", "text": "There is the underpayment penalty, and of course the general risk of any balloon-style loan. While you think that you have enough self-discipline, you never know what may happen that may prevent you from having enough cash at hands to pay the accumulated tax at the end of the year. If you try to do more risky investments (trying to maximize the opportunity) you may lose some of the money, or have some other kind of emergency that may preempt the tax payment.", "title": "" } ]	fiqa
5cc29a12bfa375a85bc9a5bf6db146ef	Does high frequency trading provide economic value?	[ { "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": "9202657a6d8efb57f44a9dcbda756d63", "text": "You pointed out that HFT does not create ipods are mine minerals. Neither does human trading. HFT is a proxy for human trading. Although the computer is executing trades automatically based on an algorithm, it is still using money from a human being's account so the trading is still being done with someone's money. Fast execution of trades is desirable in exchanges. Imagine two exchanges: One only executes trades once a month, the other executes trades once a week. Which exchange would be more desirable? The exchange that trades once a week. Why? Because if I'm holding a stock that I would like to sell, I want to sell it now - not a month from now. Same reason for buying. This concept works all the way down to seconds and fractions of seconds. The issue with HFT, however, is there are cases where the market goes against the HFT algorithm and the algorithm continues to execute trades driving prices up or down by large amounts in the matter of minutes or even seconds. The exchange frequently cancels these trades which only encourages more aggressive HFT trading since HFT traders can have their losses cancelled. This is a privilege that LFTs (low frequency traders) do not receive. This is a valid criticism of HFTs. A short list of such cancelled trades: 8/26/2010: Nasdaq cancels trades of CORE stock 10/4/2010: Nasdaq cancels trades of CENX stock 10/15/2010: NYSE cancels trades of PAY stock 10/18/2010: NYSE cancels $500 million worth of SPY trades 5/18/2011: NYSE cancels 15,900 trades of BEE.PR.C 6/21/2011: Nasdaq cancels CNTY trades 12/2/2011: London Metals Exchange cancel trades of copper", "title": "" } ]	[ { "docid": "dcf6b3771ad03916adfe08e2982cd346", "text": "\"An answer can be found in my book, \"\"A Modern Approach to Graham and Dodd Investing,\"\" p. 89 http://www.amazon.com/Modern-Approach-Graham-Investing-Finance/dp/0471584150/ref=sr_1_1?s=books&ie=UTF8&qid=1321628992&sr=1-1 \"\"If a company has no sustained cash flow over time, it has no value...If a company has positive cash flow but economic earnings are zero or less, it has a value less than book value and is a wasting asset. There is enough cash to pay interim dividends, bu the net present value of the dividend stream is less than book value.\"\" A company with a stock trading below book value is believed to be \"\"impaired,\"\" perhaps because assets are overstated. Depending on the situation, it may or may not be a bankruptcy candidate.\"", "title": "" }, { "docid": "3acf275d77964f6b617beee49dcc0d64", "text": "There are those who would suggest that due to the Efficient Market Hypothesis, stocks are always fairly valued. Consider, if non-professional posters on SE (here) had a method that worked beyond random chance, everyone seeking such a method would soon know it. If everyone used that method, it would lose its advantage. In theory, this is how stocks' values remain rational. That said, Williams %R is one such indicator. It can be seen in action on Yahoo finance - In the end, I find such indicators far less useful than the news itself. BP oil spill - Did anyone believe that such a huge oil company wouldn't recover from that disaster? It recovered by nearly doubling from its bottom after that news. A chart of NFLX (Netflix) offers a similar news disaster, and recovery. Both of these examples are not quantifiable, in my opinion, just gut reactions. A quick look at the company and answer to one question - Do I feel this company will recover? To be candid - in the 08/09 crash, I felt that way about Ford and GM. Ford returned 10X from the bottom, GM went through bankruptcy. That observation suggests another question, i.e. where is the line drawn between 'investing' and 'gambling'? My answer is that buying one stock hoping for its recovery is gambling. Being able to do this for 5-10 stocks, or one every few months, is investing.", "title": "" }, { "docid": "291ef739389b414110b5d02538f9e616", "text": "\"I think, the top three answers by Joe, Anthony and Bigh are giving you all the detail that you need on a technical sense. Although I would like to add a simple picture that underlines, that you can not really compare day trading to long-term trading and that the addictive and psychologic aspect that you mentioned can not be taken out of consideration. The long term investor is like someone buying a house for investment. You carefully look at all offers on the market. You choose by many factors, price, location, quality, environment, neighborhood and extras. After a long research, you pick your favorites and give them a closer look until you finally choose the object of desire, which will pay off in 10 years and will be a wise investment in your future. Now this sounds like a careful but smart person, who knows what he wants and has enough patience to have his earnings in the future. The short term investor is like someone running into the casino for a game of black-jack, roulette or poker. He is a person that thinks he has found the one and only formula, the philosopher's stone, the money-press and is seeking immense profits in just one night. And if it does not work, he is sure, that this was just bad coincidence and that his \"\"formula\"\" is correct and will work the next night. This person is a pure gambler and running the risk of becoming addicted. He is seeking quick and massive profits and does not give up, even though he knows, that the chances of becoming a millionaire in a casino are quite unrealistic and not better than playing in a lottery. So if you are a gamer, and the profit is less important than the \"\"fun\"\", then short term is the thing for you. If you are not necessarily seeking tons of millions, but just want to keep your risk of loss to a minimum, then long term is your way to go. So it is a question of personality, expectations and priorities. The answer why losses are bigger on high frequency signals is answered elsewhere. But I am convinced in reality it is a question of what you want and therefore very subjective. I have worked for both. I have worked for a portfolio company that has gone through periods of ups and downs, but on the long term has made a very tempting profit, which made me regret, that I did not ask for shares instead of money as payment. These people are very calm and intelligent people. They spend all their time investigating and searching for interesting objects for their portfolio and replace losers with winners. They are working for your money and investors just relax and wait. This has a very serious taste to it and I for my part would always prefer this form of investment. I have worked for an investment broker selling futures. I programmed the account management for their customers and in all those years I have only seen one customer that made the million. But tons of customers that had made huge losses. And this company was very emotional, harsh, unpersonal - employees changing day by day, top sellers coming in corvettes. All the people working there where gamblers, just like their customers. Well, it ended one day, when the police came and confiscated all computers from them, because customers have complained about their huge losses. I am glad, that I worked as a remote developer for them and got paid in money and not in options. So both worlds are so different from each other. The chances for bigger profits are higher on day trading, but so are the chances for bigger losses - so it is pure gambling. If you like gambling, split your investment: half in long term and other half in short term, that is fun and wise in one. But one thing is for sure: in over ten years, I have seen many customers loosing loads of money in options in the future markets or currencies. But I have never seen anyone making a loss in long term portfolio investment. There have been hard years, where the value dropped almost 30%, but that was caught up by the following years, so that the only risk was minimizing the profit.\"", "title": "" }, { "docid": "13ecea7d2cec3c6c0b9e80e181a53a71", "text": "HFT is a controversial issue and there are smart people with very different opinions on it. You sound like your confidence in your own opinion is not matched with a deep knowledge of market structure. Also, front running has a technical meaning, and what you are referring to as front running is something different.", "title": "" }, { "docid": "f68f47fbd9b39e55236bab0b0720c9dd", "text": "Don't like HFT? Use a stock exchange or dealer network that only allows manually entered trades. I hope readers are not convinced by this article to support the enactment of regulations that prevent people from using HFT. Maybe he's right and HFT is detrimental (which I doubt), but this is something that should be decided by the free market.", "title": "" }, { "docid": "941aef807b75234d032142cb464d03de", "text": "\"Not really. High frequency traders affect mainly short term investors. If everyone invested long-term and traded infrequently, there would be no high frequency trading. For a long term investor, you by at X, hold for several years, and sell at Y. At worst, high frequency trading may affect \"\"X\"\" and \"\"Y\"\" by a few pennies (and the changes may cancel out). For a long term trader that doesn't amount to a \"\"hill of beans\"\" It is other frequent traders that will feel the loss of those \"\"pennies.\"\"\"", "title": "" }, { "docid": "c28eb69add00010b45511f54bf8ebe0e", "text": "\"Maria, there are a few questions I think you must consider when considering this problem. Do fundamental or technical strategies provide meaningful information? Are the signals they produce actionable? In my experience, and many quantitative traders will probably say similar things, technical analysis is unlikely to provide anything meaningful. Of course you may find phenomena when looking back on data and a particular indicator, but this is often after the fact. One cannot action-ably trade these observations. On the other hand, it does seem that fundamentals can play a crucial role in the overall (typically long run) dynamics of stock movement. Here are two examples, Technical: suppose we follow stock X and buy every time the price crosses above the 30 day moving average. There is one obvious issue with this strategy - why does this signal have significance? If the method is designed arbitrarily then the answer is that it does not have significance. Moreover, much of the research supports that stocks move close to a geometric brownian motion with jumps. This supports the implication that the system is meaningless - if the probability of up or down is always close to 50/50 then why would an average based on the price be predictive? Fundamental: Suppose we buy stocks with the best P/E ratios (defined by some cutoff). This makes sense from a logical perspective and may have some long run merit. However, there is always a chance that an internal blowup or some macro event creates a large loss. A blended approach: for sake of balance perhaps we consider fundamentals as a good long-term indication of growth (what quants might call drift). We then restrict ourselves to equities in a particular index - say the S&P500. We compare the growth of these stocks vs. their P/E ratios and possibly do some regression. A natural strategy would be to sell those which have exceeded the expected return given the P/E ratio and buy those which have underperformed. Since all equities we are considering are in the same index, they are most likely somewhat correlated (especially when traded in baskets). If we sell 10 equities that are deemed \"\"too high\"\" and buy 10 which are \"\"too low\"\" we will be taking a neutral position and betting on convergence of the spread to the market average growth. We have this constructed a hedged position using a fundamental metric (and some helpful statistics). This method can be categorized as a type of index arbitrage and is done (roughly) in a similar fashion. If you dig through some data (yahoo finance is great) over the past 5 years on just the S&P500 I'm sure you'll find plenty of signals (and perhaps profitable if you calibrate with specific numbers). Sorry for the long and rambling style but I wanted to hit a few key points and show a clever methods of using fundamentals.\"", "title": "" }, { "docid": "d7e580929c80c1a59673b0da603501aa", "text": "In the short term the market is a popularity contest In the short run which in value investing time can extend even to many years, an equity is subject to the vicissitudes of the whims by every scale of panic and elation. This can be seen by examining the daily chart of any large cap equity in the US. Even such large holdings can be affected by any set of fear and greed in the market and in the subset of traders trading the equity. Quantitatively, this statement means that equities experience high variance in the short rurn. in the long term [the stock market] is a weighing machine In the long run which in value investing time can extend to even multiple decades, an equity is more or less subject only to the variance of the underlying value. This can be seen by examining the annual chart of even the smallest cap equities over decades. An equity over such time periods is almost exclusively affected by its changes in value. Quantitatively, this statement means that equities experience low variance in the long run.", "title": "" }, { "docid": "e27b4d067c78c5636685afe87425080c", "text": "No. The long-term valuation of currencies has to do with Purchasing Power Parity. The long-term valuation of stocks has to do with revenues, expenses, market sizes, growth rates, and interest rates. In the short term, currency and stock prices change for many reasons, including interest rate changes, demand for goods and services, asset price changes, political fears, and momentum investing. In any given time window, a currency or stock might be: The Relative Strength Index tries to say whether a currency or stock has recently been rising or falling; it does not inherently say anything about whether the current value is high or low.", "title": "" }, { "docid": "89940e315a6cc1493916b85e348e62eb", "text": "In my experience thanks to algorithmic trading the variation of the spread and the range of trading straight after a major data release will be as random as possible, since we live in an age that if some pattern existed at these times HFT firms would take out any opportunity within nanoseconds. Remember that some firms write algorithms to predict other algorithms, and it is at times like those that this strategy would be most effective. With regards to my own trading experience I have seen orders fill almost €400 per contract outside of the quoted range, but this is only in the most volatile market conditions. Generally speaking, event investing around numbers like these are only for top wall street firms that can use co-location servers and get a ping time to the exchange of less than 5ms. Also, after a data release the market can surge/plummet in either direction, only to recover almost instantly and take out any stops that were in its path. So generally, I would say that slippage is extremely unpredictable in these cases( because it is an advantage to HFT firms to make it so ) and stop-loss orders will only provide limited protection. There is stop-limit orders( which allow you to specify a price limit that is acceptable ) on some markets and as far as I know InteractiveBrokers provide a guaranteed stop-loss fill( For a price of course ) that could be worth looking at, personally I dont use IB. I hope this answer provides some helpful information, and generally speaking, super-short term investing is for algorithms.", "title": "" }, { "docid": "daff22609d39d7ef7c465090f1d9b402", "text": "\"Are you talking long-term institutional or retail investors? Long-term retail investors look for orderly markets, the antithesis of HFT business models, which have a direct correlation between market volatility and profits. To a lesser extent, some \"\"dumb money\"\"/\"\"muppet\"\" institutionals do as well. HFT firms tout they supply liquidity into markets, when in fact the opposite is true. Yes, HFTs supply liquidity, but only when the liquidity's benefits runs in their direction. That is, they are applying the part of the liquidity definition that mentions \"\"high trading activity\"\", and conveniently ignoring the part that simultaneously requires \"\"easily buying or selling an asset\"\". If HFT's are the new exchange floor, then they need to be formalized as such, and become bound to market maker responsibilities. If they are actually supplying liquidity, like real Designated Market Makers in the NYSE for example, they become responsible to supply a specified liquidity for specified ticker symbols in exchange for their informational advantage on those tickers. The indisputable fact is that HFT cannot exist at their current profit levels without the information advantage they gain with preferential access to tick-by-tick data unavailable to investors who cannot afford the exchange fees ($1M per exchange 10 years ago, more now). Restrict the entire market, including HFTs, to only second-by-second price data without the tick-by-tick depth, and they won't do so well. Don't get me wrong, I'm not knocking HFTs per se; I think they are a marvelous development, so long as they really do \"\"supply liquidity\"\". Right now, they aren't doing so, and especially in an orderly manner. If you want retail investors to keep out of the water as they are doing now, by all means let HFT (and regulatory capture, and a whole host of other financial service industry ills) run as they are. There are arguments to be made about \"\"only let the professionals play the market\"\", where there is no role for retail and anyone who doesn't know how to play the long-term investment game needs to get out of the kitchen. But if you are making such an argument, come out and say so.\"", "title": "" }, { "docid": "1d9157558f778c26156143f17b8efa30", "text": "Yes, but it must be remembered that these conditions only last for instants, and that's why only HFTs can take advantage of this. During 2/28/14's selloff from the invasion of Ukraine, many times, there were moments where there was overwhelming liquidity on the bid relative to the ask, but the price continued to drop.", "title": "" }, { "docid": "27c4e69d2f392f68687ad026b2b9ae91", "text": "The stock market's principal justification is matching investors with investment opportunities. That's only reasonably feasible with long-term investments. High frequency traders are not interested in investments, they are interested in buying cheap and selling expensive. Holding reasonably robust shares for longer binds their capital which is one reason the faster-paced business of dealing with options is popular instead. So their main manner of operation is leeching off actually occuring investments by letting the investors pay more than the recipients of the investments receive. By now, the majority of stock market business is indirect and tries guessing where the money goes rather than where the business goes. For one thing, this leads to the stock market's evaluations being largely inflated over the actual underlying committed deals happening. And as the commitment to an investment becomes rare, the market becomes more volatile and instable: it's money running in circles. Fast trading is about running in front of where the money goes, anticipating the market. But if there is no actual market to anticipate, only people running before the imagination of other people running before money, the net payout converges to zero as the ratio of serious actual investments in tangible targets declines. By and large, high frequency trading converges to a Ponzi scheme, and you try being among the winners of such a scheme. But there are a whole lot of people competing here, and essentially the net payoff is close to zero due to the large volumes in circulation as opposed to what ends up in actual tangible investments. It's a completely different game with different rules riding on the original idea of a stock market. So you have to figure out what your money should be doing according to your plans.", "title": "" }, { "docid": "50451e2cbef427cc3c98fa671d73052a", "text": "> Stock markets are supposed to be about investment and providing capital to companies for operations and research. High frequency trading is only about gaming the market and nothing else. Arguments that this provides more capital or liquidity don't make any sense because the speed of trading is such that listed companies cannot take advantage and only high frequency traders are served. I used to feel this way about derivatives but a commentator on reddit disabused me of that notion - http://www.reddit.com/r/Entrepreneur/comments/11bqnk/what_you_wont_see_on_the_front_page_of_reddit_the/c6lnqow If the only function of the stock market is investment and provide capital to companies, why have a secondary market at all?", "title": "" }, { "docid": "f01516ef052e1c21bf289ad223b08b6a", "text": "> I no longer have the fantasy belief that I can do better managing my money than professional investors The pension fund probably lost about as much as your investments did, but they still had to pay out as if they were meeting their targets. I understand you weren't really offered a choice between a higher salary or a pension, so my observation is academic, but to me it just seems strange to believe that a company can pay you a fixed sum of money 30 years in the future. Maybe it's just a generational thing but the whole idea of investing (figuratively) your entire future in a single company doesn't make sense to me. I actually think it's good in the long run that we're moving away from the work at one company your entire life model. Companies shouldn't be in the business of providing retirement benefits any more than they should healthcare plans, IMO.", "title": "" } ]	fiqa
5223b34614533466fb83c7fac0b0c495	Accepting high volatility for high long-term returns	[ { "docid": "073cb8a7fb44788cd73b350958d3e45c", "text": "\"This is basically what financial advisers have been saying for years...that you should invest in higher risk securities when you are young and lower risk securities when you get older. However, despite the fact that this is taken as truth by so many financial professionals, financial economists have been unable to formulate a coherent theory that supports it. By changing the preferences of their theoretical investors, they can get solutions like putting all your investments in a super safe asset until you get to a minimum survival level for retirement and then investing aggressively and many other solutions. But for none of the typically assumed preferences does investing aggressively when young and becoming more conservative as you near retirement seem to be the solution. I'm not saying there can be no such preferences, but the difficulty in finding them makes me think maybe this idea is not actually correct. Couple of problems with your intuition that you should think about: It's not clear that things \"\"average out\"\" over time. If you lose a bunch of money in some asset, there's no reason to think that by holding that asset for a while you will make back what you lost--prices are not cyclical. Moreover, doesn't your intuition implicitly suggest that you should transition out of risky securities as you get older...perhaps after having lost money? You can invest in safe assets (or even better, the tangency portfolio from your graph) and then lever up if you do want higher risk/return. You don't need to change your allocation to risky assets (and it is suboptimal to do so--you want to move along the CAL, not the curve). The riskiness of your portfolio should generally coincide (negatively) with your risk-aversion. When you are older and more certain about your life expectancy and your assets, are you exposed to more or less risks? In many cases, less risks. This means you would choose a more risky portfolio (because you are more sure you will have enough to live on until death even if your portfolio takes a dive). Your actual portfolio consists both of your investments and your human capital (the present value of your time and skills). When you are young, the value of this capital changes significantly with market performance so you already have background risk. Buying risky securities adds to that risk. When you are old, your human capital is worth little, so your overall portfolio becomes less risky. You might want to compensate by increasing the risk of your investments. EDIT: Note that this point may depend on how risky your human capital is (how likely it is that your wage or job prospects will change with the economy). Overall the answer to your question is not definitively known, but there is theoretical evidence that investing in risky securities when young isn't optimal. Having said that, most people do seem to invest in riskier securities when young and safer when they are older. I suspect this is because with life experience people become less optimistic as they get older, not because it is optimal to do so. But I can't be sure.\"", "title": "" }, { "docid": "cc3b53420f83deaefdcd21bacc9b616d", "text": "Modern portfolio theory has a strong theoretical background and its conclusions on the risk/return trade-off have a lot of good supporting evidence. However, the conclusions it draws need to be used very carefully when thinking about retirement investing. If you were really just trying to just pick the one investment that you would guess would make you the most money in the future then yes, given no other information, the riskiest asset would be the best one. However, for most people the goal retirement investing is to be as sure as possible to retire comfortably. If you were to just invest in a single, very risky asset you may have the highest expected return, but the risk involved would mean there might be a good chance you money may not be there when you need it. Instead, a broad diversified basket of riskier and safer assets leaning more toward the riskier investments when younger and the safer assets when you get closer to retirement tends to be a better fit with most people's retirement goals. This tends to give (on average) more return when you are young and can better deal with the risk, but dials back the risk later in life when your investment portfolio is a majority of your wealth and you can least afford any major swings. This combines the lessons of MPT (diversity, risk/return trade-off) in a clearer way with common goals of retirement. Caveat: Your retirement goals and risk-tolerance may be very different from other peoples'. It is often good to talk to (fee-only) financial planner.", "title": "" }, { "docid": "fe9921a7843fe5fe58cfc9155f83a271", "text": "\"Modern portfolio theory dramatically underestimates the risk of the recommended assets. This is because so few underlying assets are in the recommended part of the curve. As investors identify such assets, large amounts of money are invested in them. This temporarily reduces measured risk, and temporarily increases measured return. Sooner or later, \"\"the trade\"\" becomes \"\"crowded\"\". Eventually, large amounts of money try to \"\"exit the trade\"\" (into cash or the next discovered asset). And so the measurable risk suddenly rises, and the measured return drops. In other words, modern portfolio theory causes bubbles, and causes those bubbles to pop. Some other strategies to consider:\"", "title": "" } ]	[ { "docid": "67f1c7c53edae7785bd1600b725bbafc", "text": "When volatility is higher, the option is more likely to end up in-the-money. Moreover, when it ends up in-the-money, it is likely to be over the strike price by a greater amount. Consider a call option. With high volatility, moves in the stock price are big - both up moves and down moves. If the stock moves up by a lot, the call option holder will benefit greatly. On the other hand, when the stock moves down, below a certain point the option holder does not care how big a down move the stock has. His downside is limited. Hence, the value of the option is increased by high volatility. I know everyone who searches this is looking for this answer. Bump so people are able to get this concept instead of looking all over the web for it.", "title": "" }, { "docid": "c49bd44e7d3b0a7175b32dfd136e5cd2", "text": "\"Let me see if I can restate your question: are speculative investments more volatile (subject to greater spikes and drops in pricing) than are more long-term investments which are defined by the predictability of their dividend returns? The short answer is: yes. However, where it gets complicated is in deciding whether something is a speculative investment. Take your example of housing. People who buy a house as an investment either choose to rent it out (so receive \"\"rent\"\" as \"\"dividend\"\") or live in it (foregoing dividends). Either way, the scale of the investment is large and this is often the only direct investment that people manage themselves. For this reason houses are bound up in the sentimental value people attach to a home, the difficulty of uprooting and moving elsewhere in search of cheaper housing or better employment, or the sunk cost of debt that can't be recovered by a fire-sale. Such inertia can lead to sudden sell-offs as critical inflection points are reached (such as hoped-for economic improvements fail to materialise and cash needs become critical). At different levels that is true of just about every investment. Driving price-volatility is the ease of sale and the trade-offs involved. A share that offers regular and dependable dividends, even if its absolute value falls, is going to be hung on to more frequently than those shares that suffer a similar decline but only offer a capital gain. For the latter, the race is on to sell before the drop neutralises any remaining capital gain the investor may have experienced. A house with a good tenant or a share with stable dividends will be kept in preference for the quick cash-return of selling an asset that offers no such ongoing returns. This would result, visually, in more eratic curves for \"\"speculative\"\" shares while more stable shares are characterised by periods of stability interspersed with moments of mania. But I have to take your query further, since you provide graphical evidence to support your thesis. Your charts combine varying time-scales, different sample rates and different scales (one of which is even a log scale). It becomes impossible to draw any sort of meaningful micro-comparison unless they're all presented using exactly the same criteria.\"", "title": "" }, { "docid": "3a16e38607c9d834e9d46ff63df423c5", "text": "No I get that. But if you don’t want risk, then buy bonds. Long term an S&P Index has very low risk. On the other hand, actively managed funds have fees that take out a ton of the gain that could be had. I don’t have time to look for the study but I read recently that 97% of actively managed funds were outperformed by S&P Indexes after fees. Now I don’t know about you but I think the risk of not picking a top 3% fund is probably higher than the safe return of index’s.", "title": "" }, { "docid": "d1791a006cbced74f19d94ae64a7dc2e", "text": "Since near-term at-the-money (ATM) options are generally the most liquid, the listed implied vol for a stock is usually pretty close to the nearest ATM volatility, but there's not a set convention that I'm aware of. Also note that for most stocks, vol skew (the difference in vol between away-from-the-money and at-the-money options) is relatively small, correct me if I'm wrong, IV is the markets assessment that the stock is about 70% likely (1 Standard Deviation) to move (in either direction) by that percent over the next year. Not exactly. It's an annualized standard deviation of the anticipated movements over the time period of the option that it's implied from. Implied vol for near-term options can be higher or lower than longer-term options, depending on if the market believes that there will be more uncertainty in the short-term. Also, it's the bounds of the expected movement in that time period. so if a stock is at $100 with an implied vol of 30% for 1-year term options, then the market thinks that the stock will be somewhere between $70 and $130 after 1 year. If you look at the implied vol for a 6-month term option, half of that vol is the range of expected movement in 6 months.", "title": "" }, { "docid": "3f9e5de579b5f93a6f62a45d4bce105d", "text": "\"You should establish a strategy -- eg a specific mix of investments/funds which has the long-term tradeofv of risk, returns, and diversification you want -- and stick to that strategy, rebalancing periodically to maintain your strategic ratios betwedn those investments. Yes, that means you will somettimes sell things that have been doing well and buy others that have been doing less well -- but that's to be expected; it's exactly what happens when you \"\"buy low, sell high\"\".\"", "title": "" }, { "docid": "e3cc2326e8fa93452b5c41bfe54f0584", "text": "Right now, the unrealized appreciation of Vanguard Tax-Managed Small-Cap Fund Admiral Shares is 28.4% of NAV. As long as the fund delivers decent returns over the long term, is there anything stopping this amount from ballooning to, say, 90% fifty years hence? I'd have a heck of a time imagining how this grows to that high a number realistically. The inflows and outflows of the fund are a bigger question along with what kinds of changes are there to capital gains that may make the fund try to hold onto the stocks longer and minimize the tax burden. If this happens, won't new investors be scared away by the prospect of owing taxes on these gains? For example, a financial crisis or a superior new investment technology could lead investors to dump their shares of tax-managed index funds, triggering enormous capital-gains distributions. And if new investors are scared away, won't the fund be forced to sell its assets to cover redemptions (even if there is no disruptive event), leading to larger capital-gains distributions than in the past? Possibly but you have more than a few assumptions in this to my mind that I wonder how well are you estimating the probability of this happening. Finally, do ETFs avoid this problem (assuming it is a problem)? Yes, ETFs have creation and redemption units that allow for in-kind transactions and thus there isn't a selling of the stock. However, if one wants to pull out various unlikely scenarios then there is the potential of the market being shut down for an extended period of time that would prevent one from selling shares of the ETF that may or may not be as applicable as open-end fund shares. I would however suggest researching if there are hybrid funds that mix open-end fund shares with ETF shares which could be an alternative here.", "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": "ed5e9ea4c94d16c474d6154a73443ab5", "text": "Ok, so disregarding passivity, could you help me through a simplified example? Say I only had two assets, SPY and TLT, with a respective weight of 35 and 65% and I want want to leverage this to 4x. Additionally, say daily return covar is: * B/B .004% * B/S -.004% * S/S .02% Now, if I read correctly, I should buy ATM calls xxx days in the future. Which may look like: Ticker, S, K, Option Price, Delta, Lambda * TLT $126.04 $126.00 $4.35 0.50 14.5 * SPY $134.91 $134.00 $6.26 0.55 11.8 ^ This example is pretty close but some assets are far off. I feel like I'm on the wrong track so I'll stop here. I just want to lever up my risk-parity. Margin rates are too high and I'm docked by Reg-T.", "title": "" }, { "docid": "1b807557ba137c1143736dc37981715b", "text": "I think your premise is slightly flawed. Every investment can add or reduce risk, depending on how it's used. If your ordering above is intended to represent the probability you will lose your principal, then it's roughly right, with caveats. If you buy a long-term government bond and interest rates increase while you're holding it, its value will decrease on the secondary markets. If you need/want to sell it before maturity, you may not recover your principal, and if you hold it, you will probably be subject to erosion of value due to inflation (inflation and interest rates are correlated). Over the short-term, the stock market can be very volatile, and you can suffer large paper losses. But over the long-term (decades), the stock market has beaten inflation. But this is true in aggregate, so, if you want to decrease equity risk, you need to invest in a very diversified portfolio (index mutual funds) and hold the portfolio for a long time. With a strategy like this, the stock market is not that risky over time. Derivatives, if used for their original purpose, can actually reduce volatility (and therefore risk) by reducing both the upside and downside of your other investments. For example, if you sell covered calls on your equity investments, you get an income stream as long as the underlying equities have a value that stays below the strike price. The cost to you is that you are forced to sell the equity at the strike price if its value increases above that. The person on the other side of that transaction loses the price of the call if the equity price doesn't go up, but gets a benefit if it does. In the commodity markets, Southwest Airlines used derivatives (options to buy at a fixed price in the future) on fuel to hedge against increases in fuel prices for years. This way, they added predictability to their cost structure and were able to beat the competition when fuel prices rose. Even had fuel prices dropped to zero, their exposure was limited to the pre-negotiated price of the fuel, which they'd already planned for. On the other hand, if you start doing things like selling uncovered calls, you expose yourself to potentially infinite losses, since there are no caps on how high the price of a stock can go. So it's not possible to say that derivatives as a class of investment are risky per se, because they can be used to reduce risk. I would take hedge funds, as a class, out of your list. You can't generally invest in those unless you have quite a lot of money, and they use strategies that vary widely, many of which are quite risky.", "title": "" }, { "docid": "5ec6f6d74a9946f9c7b7f8f7132d8642", "text": "I guess I wasn't clear. I want to modestly leverage (3-4x) my portfolio using options. I believe long deep-in-the-money calls would be the best way to do this? (Let me know if not.) It's important to me that the covariance matrix from the equity portfolio scales up but doesn't fundamentally change. (I liken it to systemic change as opposed to idiosyncratic change.) This is what I was thinking: * For the same expiry date, find each positions lowest lambda. * Match all option to the the highest of the lowest lambda. * Adjust number of contracts to compensate for higher leverage. I don't think this will work because if I matched the lowest lambda of options on bond etfs to my equity options they would be out-of-the-money. By the way, thanks for your time.", "title": "" }, { "docid": "1aa8e87a1881bf344bdfee7c4c4e4eb5", "text": "For a time period as short as a matter of months, commercial paper or bonds about to mature are the highest returning investments, as defined by Benjamin Graham: An investment operation is one which, upon thorough analysis, promises safety of principal and a satisfactory return. Operations not meeting these requirements are speculative. There are no well-known methods that can be applied to cryptocurrencies or forex for such short time periods to promise safety of principal. The problem is that with $1,500, it will be impossible to buy any worthy credit directly and hold to maturity; besides, the need for liquidity eats up the return, risk-adjusted. The only alternative is a bond ETF which has a high probability of getting crushed as interest rates continue to rise, so that fails the above criteria. The only alternative for investment now is a short term deposit with a bank. For speculation, anything goes... The best strategy is to take the money and continue to build up a financial structure: saving for risk-adjusted and time-discounted future annual cash flows. After the average unemployment cycle is funded, approximately six or so years, then long-term investments should be accumulated, internationally diversified equities.", "title": "" }, { "docid": "99a35d8a21693b605106176989414fed", "text": "This is Rob Bennett, the fellow who developed the Valuation-Informed Indexing strategy and the fellow who is discussed in the comment above. The facts stated in that comment are accurate -- I went to a zero stock allocation in the Summer of 1996 because of my belief in Robert Shiller's research showing that valuations affect long-term returns. The conclusion stated, that I have said that I do not myself follow the strategy, is of course silly. If I believe in it, why wouldn't I follow it? It's true that this is a long-term strategy. That's by design. I see that as a benefit, not a bad thing. It's certainly true that VII presumes that the Efficient Market Theory is invalid. If I thought that the market were efficient, I would endorse Buy-and-Hold. All of the conventional investing advice of recent decades follows logically from a belief in the Efficient Market Theory. The only problem I have with that advice is that Shiller's research discredits the Efficient Market Theory. There is no one stock allocation that everyone following a VII strategy should adopt any more than there is any one stock allocation that everyone following a Buy-and-Hold strategy should adopt. My personal circumstances have called for a zero stock allocation. But I generally recommend that the typical middle-class investor go with a 20 percent stock allocation even at times when stock prices are insanely high. You have to make adjustments for your personal financial circumstances. It is certainly fair to say that it is strange that stock prices have remained insanely high for so long. What people are missing is that we have never before had claims that Buy-and-Hold strategies are supported by academic research. Those claims caused the biggest bull market in history and it will take some time for the widespread belief in such claims to diminish. We are in the process of seeing that happen today. The good news is that, once there is a consensus that Buy-and-Hold can never work, we will likely have the greatest period of economic growth in U.S. history. The power of academic research has been used to support Buy-and-Hold for decades now because of the widespread belief that the market is efficient. Turn that around and investors will possess a stronger belief in the need to practice long-term market timing than they have ever possessed before. In that sort of environment, both bull markets and bear markets become logical impossibilities. Emotional extremes in one direction beget emotional extremes in the other direction. The stock market has been more emotional in the past 16 years than it has ever been in any earlier time (this is evidenced by the wild P/E10 numbers that have applied for that entire time-period). Now that we are seeing the losses that follow from investing in highly emotional ways, we may see rational strategies becoming exceptionally popular for an exceptionally long period of time. I certainly hope so! The comment above that this will not work for individual stocks is correct. This works only for those investing in indexes. The academic research shows that there has never yet in 140 years of data been a time when Valuation-Informed Indexing has not provided far higher long-term returns at greatly diminished risk. But VII is not a strategy designed for stock pickers. There is no reason to believe that it would work for stock pickers. Thanks much for giving this new investing strategy some thought and consideration and for inviting comments that help investors to understand both points of view about it. Rob", "title": "" }, { "docid": "3d1babfc30d5ff74831c9c3ab4156b3c", "text": "\"If you want to make a profit from long term trading (whatever \"\"long term\"\" means for you), the best strategy is to let the good performers in your portfolio run, and cull the bad ones. Of course that strategy is hard to follow, unless you have the perfect foresight to know exactly how long your best performing investments will continue to outperform the market, but markets don't always follow the assumption that perfect information is available to all participants, and hence \"\"momentum\"\" has a real-world effect on prices, whether or not some theorists have chosen to ignore it. But a fixed strategy of \"\"daily rebalancing\"\" does exactly the opposite of the above - it continuously reduces the holdings of good performers and increases the holdings of bad. If this type of rebalancing is done more frequently than the constituents of benchmark index are adjusted, it is very likely to underperform the index in the long term. Other issues in a \"\"real world\"\" market are the impact of increased dealing costs on smaller parcels of securities, and the buy/sell spreads incurred in the daily rebalancing trades. If the market is up and down 1% on alternate days with no long tern trend, quite likely the fund will be repeatedly buying and selling small parcels of the same stocks to do its daily balancing.\"", "title": "" }, { "docid": "9fc75c244e6640325c4d982543c01e93", "text": "If you are going to be a long term investor you are only going to buy and hold. You will not sell. Thus future price is not relevant. Only dividend payout is relevant. Divide the dividend by the price you paid to get the yeald. Edit: once again the sitesite will not allow me to add a comment, so I have to edit a previous post... What you call 'active investor' is not really investing, it is speculating. When you try to 'buy low, sell high' you have, at best, a 50-50 chance of picking the low. You then pay a commission on that buy. After you buy then you have a 50-50 chance, at best, of picking the high. You also have to pay the commission on the sell. 50% times 50% is 25%.So you have, at best a 25% chance of buying low and selling high. You are churning your account which makes money for the broker whether you make money or not. If, instead, you buy and hold a dividend paying security then the going price is irrelevant. You paid for the security once and do not have to pay for it again. Meanwhile the dividends roll in forever. 'Buy low, sell high' is a fools game. Warren Buffet does not do it, he buys and holds.", "title": "" }, { "docid": "d262fd91fe48c9dd57b1c42114c26ab5", "text": "With the netural position delta strategy under high IV returns short vega,there is a possibility to profit from a decline in IV. Of course, if volatility rises higher, the position will lose money. It is therefore best to establish short vega delta-neutral positions when implied volatility is at levels that are in the 90th percentile ranking.", "title": "" } ]	fiqa
2248ef6792731d4b65d36f21d49292ac	Should I invest in my house, when it's in my wife's name?	[ { "docid": "4b00d105170bc88586f0b766974b7dbe", "text": "The best answer to this question will depend on you and your wife. What is 'fair' for some may not be 'fair' for others. Some couples split expenses 50:50. Some split proportionately based on income. Some pool everything together. What works best for you will depend on your relative incomes, your financial goals, living standards, and most importantly, your personal beliefs. Here is a great question with various viewpoints: How to organize bank accounts with wife. It doesn't touch heavily on home ownership / pre-nuptial agreements, but might be a good starting point to getting you to think about your options. Consider providing another loan to your wife for additional investments in the home. It seems you are both comfortable with the realities of the pre-nuptial agreement; one of those realities seems to be that in the event of divorce you would lose access to the house. Loaning money has the benefit of allowing for the improvements to be done immediately, while clearly delineating what you have spent on the home from what she has spent on the home. However, this may not be 'fair', depending on how you both define the term. Have you discussed how expenses and savings would be split between you? Since there is no mortgage on the house, she has effectively contributed her pre-marital assets towards paying substantially all of your housing costs. It may be 'fair' for you to contribute to housing costs by at least splitting maintenance 50:50, or it may not be. Hopefully you talked about finances before you got married, and if not, now would be the best time to start. I personally would hate to have an 'uneasy' feeling about a relationship because I failed to openly communicate about finances.", "title": "" }, { "docid": "a41d142cd350fe9e91d6300c38723bd1", "text": "Have you talked with her about this? On the one hand you have a point. Given the prenuptial agreements why should you invest in something that you can never have interest in. However, you also live in the property. You did not go into the arrangements but presumably you should be contributing to the upkeep of the home as otherwise you would live there for free. Additionally you did not mention it but it sounds like the prenuptial does not cover your assets. In the event of divorce she, presumably, would own half of your 400K. Correct? The key here is a conversation. What is right for the two of you? While some might be very uncomfortable with the situation, as is, you two seem to be okay with it. Go from there, build on it. Come up with something that is equitable for both parties and your heirs.", "title": "" }, { "docid": "fcde0c9bc541fa6e39fe1e997dadcc4c", "text": "If you are concerned about it being inequitable due to the prenuptial agreement, discuss the idea of amending the prenuptial agreement to give you some consideration for your investments in the house. Prenuptial agreements often get amended over the course of a marriage. How do you proceed? It has to start with discussion. It's not an unreasonable concern given your legal separation of assets, so broach the subject and go from there. Perhaps you'll find there's a good reason for you to invest in the property even without having interest in it, who knows.", "title": "" }, { "docid": "583cffbcbec14df4b5a6fb12db7fbfff", "text": "\"The prenup complicates things. The traditional vow of a marriage is \"\"What's mine is yours, what's yours is mine\"\". With such a traditional marriage it doesn't matter too much which partner's name something is in, in the event of a divorce the assets of the couple would be considered as a whole and then split. But you have a prenup which is presumably intended to change this traditional arrangement (and may or may not actually be enforceable). I think you are as such right to be wary. I think your only way forward long term is to amend the prenup and/or the legal status of the house to recognize it as a shared asset that you will both be contributing to and that it's value should be split in some way in the event of a divorce. In exchange you should probably be contributing some or all of the cash pile you have from selling your house to the common pot. Another loan may seem like a good option in the short term but in the long term the appreciation on a house is likely to be worth more than any interest on the loan (assuming you are using an interest rate comparable to commercial mortgage deals), plus any interest may well end up being taxable.\"", "title": "" }, { "docid": "f0e42866e18ab51395e88ba021614b7d", "text": "I'm not going to speculate on the nature of your relationship with your wife, but the fact that you are worried about what would happen in the event of a divorce is a bit concerning. Presumably you married her with the intent of staying together forever, so what's the big deal if you spend 50k upgrading the house you live in, assuming you won't get divorced? Now, if you really are worried about something happening in the future, you might want to seek legal advice about the content of the prenup. I am guessing if the 400k were your assets before marriage, you have full claim to that amount in the event of a divorce. If you document the loan, or make some agreement, I would think you would have claim to at least some of the house's appreciation due to the renovations if they were made with your money. obligatgory IANAL", "title": "" }, { "docid": "5fb65a985b04ebc0e224cab352a24540", "text": "\"It is my opinion that part of having a successful long-term relationship is being committed to the other person's success and well-being. This commitment is a form of investment in and of itself. The returns are typically non-monetary, so it's important to understand what money actually is. Money is a token people exchange for favors. If I go to a deli and ask for a sandwich. I give them tokens for the favor of having received a sandwich. The people at the deli then exchange those tokens for other favors, and that's the entire economy: people doing favors for other people in exchange for tokens that represent more favors. Sometimes being invested in your spouse is giving them a back rub when they've had a hard day. The investment pays off when you have a hard day and they give you a back rub. Sometimes being invested in your spouse is taking them to a masseuse for a professional massage. The investment pays off when they get two tickets to that thing you love. At the small scale it's easy to mostly ignore minor monetary discrepancies. At the large scale (which I think £50k is plenty large enough given your listed net worth) it becomes harder to tell if the opportunity cost will be worth making that investment. It pretty much comes down to: Will the quality-of-life improvements from that investment be better than the quality-of-life improvements you receive from investing that money elsewhere? As far as answering your actual question of: How should I proceed? There isn't a one-size fits all answer to this. It comes down to decisions you have to make, such as: in theory it's easy to say that everyone should be able to trust their spouse, but in practice there are a lot of people who are very bad at handling money. It can be worthwhile in some instances to keep your spouse at an arms length from your finances for their own good, such as if your spouse has a gambling addiction. With all of that said, it sounds like you're living in a £1.5m house rent-free. How much of an opportunity cost is that to your wife? Has she been freely investing in your well-being with no explicit expectation of being repaid? This can be your chance to provide a return on her investment. If it were me, I'd make the investment in my spouse, and consider it \"\"rent\"\" while enjoying the improvements to my quality of life that come with it.\"", "title": "" } ]	[ { "docid": "c10ace4aedb72bf50cc35dc0869e866d", "text": "\"I'm not an attorney or a tax advisor. The following is NOT to be considered advice, just general information. In the US, \"\"putting your name on the deed\"\" would mean making you a co-owner. Absent any other legal agreement between you (e.g. a contract stating each of you owns 50% of the house), both of you would then be considered to own 100% of the house, jointly and severally: In addition, the IRS would almost certainly interpret the creation of your ownership interest as a gift from your partner to you, making them liable for gift tax. The gift tax could be postponed by filing a gift tax return, which would reduce partner's lifetime combined gift/estate tax exemption. And if you sought to get rid of your ownership interest by giving it to your partner, it would again be a taxable gift, with the tax (or loss of estate tax exemption) accruing to you. However, it is likely that this is all moot because of the mortgage on the house. Any change to the deed would have to be approved by the mortgage holder and (if so approved) executed by a title company/registered closing agent or similar (depending on the laws of your state). In my similar case, the mortgage holder refused to add or remove any names from the deed unless I refinanced (at a higher rate, naturally) making the new partners jointly liable for the mortgage. We also had to pay an additional title fee to change the deed.\"", "title": "" }, { "docid": "6f1757e12b8309837d76e792e3845e77", "text": "\"I don't believe it makes a difference at the federal level -- if you file taxes jointly, gains, losses, and dividends appear on the joint tax account. If you file separately, I assume the tax implications only appear on the owner's tax return. Then the benefits might outweigh the costs, but only if you correctly predict market behavior and the behavior of your positions. For example, lets say you lose 30k in the market in one year, and your spouse makes 30k. If you're filing jointly, the loss washes out the gain, and you have no net taxes on the investment. If you're filing separately, you can claim 3k in loss (the remaining 27k in loss is banked to future tax years), but your spouse pays taxes on 30k in gain. Where things get more interesting is at the state level. I live in a \"\"community property state,\"\" where it doesn't matter whether you have separate accounts or not. If I use \"\"community money\"\" to purchase a stock and make a million bucks, that million bucks is shared by the two of us, whether the account is in my name our in our name. income during the marriage is considered community property. However property you bring into the marriage is not. And inheritances are not community property -- until co-mingled. Not sure how it works in other states. I grew up in what's called an \"\"equitable property state.\"\"\"", "title": "" }, { "docid": "488a2e2da0765eb148803ded8cdeccfb", "text": "Like @littleadv, I don't consider a mortgage on a primary residence to be a low-risk investment. It is an asset, but one that can be rather illiquid, depending on the nature of the real estate market in your area. There are enough additional costs associated with home-ownership (down-payment, insurance, repairs) relative to more traditional investments to argue against a primary residence being an investment. Your question didn't indicate when and where you bought your home, the type of home (single-family, townhouse, or condo) the nature of your mortgage (fixed-rate or adjustable rate), or your interest rate, but since you're in your mid-20s, I'm guessing you bought after the crash. If that's the case, your odds of making a profit if/when you sell your home are higher than they would be if you bought in the 2006/2007 time-frame. This is no guarantee of course. Given the amount of housing stock still available, housing prices could still fall further. While it is possible to lose money in all sorts of investments, the illiquid nature of real estate makes it a lot more difficult to limit your losses by selling. If preserving principal is your objective, money market funds and treasury inflation protected securities are better choices than your home. The diversification your financial advisor is suggesting is a way to manage risk. Not all investments perform the same way in a given economic climate. When stocks increase in value, bonds tend to decrease (and vice versa). Too much money in a single investment means you could be wiped out in a downturn.", "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": "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": "4fd9b92c9d79afce35eef887de01bad3", "text": "Before doing anything else: you want a lawyer involved right from the beginning, to make sure that something reasonable happens with the house if one of you dies or leaves. Seriously, you'll both be safer and happier if it's all explicit. How much you should put on the house is not the right question. Houses don't sell instantly, and while you can access some of their stored value by borrowing against them that too can take some time to arrange. You need to have enough operating capital for normal finances, plus an emergency reserve to cover unexpectedly being out of work or sudden medical expenses. There are suggestions for how much that should be in answers to other questions. After that, the question is whether you should really be buying a house at all. It isn't always a better option than renting and (again as discussed in answers to other questions) there are ongoing costs in time and upkeep and taxes and insurance. If you're just thinking about the financials, it may be better to continue to rent and to invest the savings in the market. The time to buy a house is when you have the money and a reliable income, plan not to move for at least five years, really want the advantages of more elbow room and the freedom to alter the place to suit your needs (which will absorb more money)... As far as how much to put down vs. finance: you really want a down payment of at least 20%. Anything less than that, and the bank will insist you pay for mortgage insurance, which is a significant expense. Whether you want to pay more than that out of your savings depends on how low an interest rate you can get (this is a good time in that regard) versus how much return you are getting on your investments, combined with how long you want the mortgage to run and how large a mortgage payment you're comfortable committing to. If you've got a good investment plan in progress and can get a mortgage which charges a lower interest rate than your investments can reasonably be expected to pay you, putting less down and taking a larger mortgage is one of the safer forms of leveraged investing... IF you're comfortable with that. If the larger mortgage hanging over you is going to make you uncomfortable, this might not be a good answer for you. It's a judgement call. I waited until i'd been in out of school about 25 years before I was ready to buy a house. Since i'd been careful with my money over that time, I had enough in investments that I could have bought the house for cash. Or I could have gone the other way and financed 80% of it for maximum leverage. I decided that what I was comfortable with was financing 50%. You'll have to work thru the numbers and decide what you are comfortable with. But I say again, if buying shared property you need a lawyer involved. It may be absolutely the right thing to do ... but you want to make sure everything is fully spelled out... and you'll also want appropriate terms written into your wills. (Being married would carry some automatic assumptions about joint ownership and survivor rights... but even then it's safer to make it all explicit.) Edit: Yes, making a larger down payment may let you negotiate a lower interest rate on the loan. You'll have to find out what each bank is willing to offer you, or work with a mortgage broker who can explore those options for you.", "title": "" }, { "docid": "aa381432a94c74fa8cc9b5ffd9ec4751", "text": "Owning a stock via a fund and selling it short simultaneously should have the same net financial effect as not owning the stock. This should work both for your personal finances as well as the impact of (not) owning the shares has on the stock's price. To use an extreme example, suppose there are 4 million outstanding shares of Evil Oil Company. Suppose a group of concerned index fund investors owns 25% of the stock and sells short the same amount. They've borrowed someone else's 25% of the company and sold it to a third party. It should have the same effect as selling their own shares of the company, which they can't otherwise do. Now when 25% of the company's stock becomes available for purchase at market price, what happens to the stock? It falls, of course. Regarding how it affects your own finances, suppose the stock price rises and the investors have to return the shares to the lender. They buy 1 million shares at market price, pushing the stock price up, give them back, and then sell another million shares short, subsequently pushing the stock price back down. If enough people do this to effect the share price of a stock or asset class, the managers at the companies might be forced into behaving in a way that satisfies the investors. In your case, perhaps the company could issue a press release and fire the employee that tried to extort money from your wife's estate in order to win your investment business back. Okay, well maybe that's a stretch.", "title": "" }, { "docid": "518790024d1d008884adf628880d51c1", "text": "I personally think that you should do whatever you believe works best. I am not married but when I get married I would also want to do what you are doing with having a joint account for certain things but also still having seperate accounts. I find this is a good approach so that neither of you is dependent finanically on the other one. Also, if you want to buy a present for your wife you would do it with your own money and not the joint account money. I hope my answer helps.", "title": "" }, { "docid": "ae20a73a57469e8a6781b4deec5cc182", "text": "You're being too hard on yourself. You've managed to save quite a bit, which is more than most people ever do. You're in a wonderful position, actually -- you have savings and time! You don't mention how long you want/need to continue working, but I'll assume 20 years or so? You don't have to invest it all at once. Like Pete B says, index funds (just read what Mr. Buffett said in recent news: he'd tell his widow to invest in the S&P 500 Index and not Berkshire Hathaway!) should be a decent percentage. You can also pick a target fund from any of the major investment firms (fees are higher than an Index, but it will take care of any asset allocation decisions). Put some in each. Also look at retirement accounts to take advantage of tax-deferred or tax-free growth, but that's another question and country-specific. In any case, don't even blink when the market goes down. And it will go down. If you're still working, earning, and saving, it'll just be another opportunity to buy more at lower prices. As for the house, no reason you can't invest and save for a house. Invest some for the long term and set aside the rest for the house in 1-5 years. If you don't think you'll ever really buy the house, though, invest the majority of it for the long-term: I have a feeling from the tone of your question that you tend to put off the big financial decisions. So if you won't really buy the house, just admit it to yourself now!", "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": "919c215dc649a8d23306318f5a6a9451", "text": "Many partnership agreements include a shotgun clause: one person sets a price, the other can either buy at that price or sell at it. It's rather brutal. You can make offers that you know are less than the company is worth if you're sure the other person will have to take that money from you, say if you know they can't run the company without you. He has asked for $X to be bought out, and failing that he would like to keep owning his half and send his wife (who may very well be competent, but who among other things has a very ill husband to deal with) to take his place. If he can occasionally contribute to the overall vision, and she can do the day to day, then keeping things as they are may be the smart move. But if that's not possible, it doesn't mean you have to buy him out for twice what you think it's worth. In the absence of a partnership agreement, it's going to be hard to know what to do. But one approach might be to pretend there is a shotgun clause. Ask him, if he thinks half the company is worth $X, if he's willing to buy you out for that price and have his wife run it without you. He is likely to blurt out that it isn't worth that and she can't do that. And at that point, you'll actually be negotiating.", "title": "" }, { "docid": "f22e594c021241f4b17a7979fa3d07c4", "text": "The equity you have is an asset. Locked away until you sell, and sometimes pledged as a loan if you wish. The idea that it's dead money is nonsense, it's a pretty illiquid asset that has the potential for growth (at the rate of inflation or slightly higher, long term) and provides you an annual dividend in the form of free rent. In this country, most people who own homes have a disproportionate amount of their wealth in their house. This is more a testament to the poor saving rate than anything else. For me, a high equity position means that I can sell my home and buy a lesser sized house for cash. I am older and my own goal (with the mrs) is to have the house paid and college for the kid fully funded before we think of retiring. For others, it's cash they can use to rent after they retire. I hope that helped, there's nothing magic about this, just a lot of opinions.", "title": "" }, { "docid": "92f2653684d88975ae329e1a54900c99", "text": "I think your best course of action depends on the likely outcome of the divorce proceedings. The alimony/child support payments are controlled externally. I don't like to plan around things that I have no control over. In your shoes, I would probably avoid buying until things are settled down.", "title": "" }, { "docid": "5de97a1bc0bbdec7f2e311fbfba9d0bd", "text": "\"Be careful that pride is not getting in the way of making a good decision. As it stands now what difference does it make to have 200K worth of debt and a 200K house or 225K of debt and a 250K house? Sure you would have a 25K higher net worth, but is that really important? Some may even argue that such an increase is not real as equity in primary residence might not be a good indication of wealth. While there is nothing wrong with sitting down with a banker, most are likely to see your scheme as dubious. Home improvements rarely have a 100% ROI and almost never have a 200% ROI, I'd say you'd be pretty lucky to get a 65% ROI. That is not to say they will deny you. The banks are in the business of lending money, and have the goal of taking as much of your hard earned paycheck as possible. They are always looking to \"\"sheer the sheep\"\". Why not take a more systematic approach to improving your home? Save up and pay cash as these don't seem to cause significant discomfort. With that size budget and some elbow grease you can probably get these all done in three years. So in three years you'll have about 192K in debt and a home worth 250K or more.\"", "title": "" }, { "docid": "3becf428add18f59ba38d20807e3f7d7", "text": "Shop around for Gym January is a great time to look because that's when most people join and the gyms are competing for your business. Also, look beyond the monthly dues. Many gyms will give free personal training sessions when you sign up - a necessity if you are serious about getting in shape! My gym offered a one time fee for 3 years. It cost around $600 which comes out to under $17 a month. Not bad for a new modern state of the art gym.", "title": "" } ]	fiqa
263c7006ee85c4a97796dd5cc1b47a34	Is it possible for the average person to profit on the stock market?	[ { "docid": "bb28cf4e4e06bf5115246d92fa92e80b", "text": "\"There's a huge difference between \"\"can an anverage person make a profit on the stock market\"\" and \"\"can an average person get rich off the stock market\"\". It is certainly possible for an average person to profit, but of course you are unlikely to profit as much as the big Wall Street guys. An S&P 500 index fund, for instance, would be a pretty good way to profit. People with high-powered tools may make a lot of money picking individual stocks, and may even make some choices that help them when the market is down, but it's difficult to see how they could consistently make money over the long term without the S&P 500 also going up. The same applies, to varying extents, to various other index funds, ETFs, and mutual funds. I agree with littleadv that there is no single \"\"right\"\" thing for everyone to do. My personal take is that index funds are a good bet, and I've seen a lot of people take that view on personal finance blogs, etc. (for whatever that's worth). One advantage of index funds that track major indexes (like the S&P 500) is that because they are and are perceived as macro-indicators of the overall economic situation, at least you're in the same boat as many other people. On one level, that means that if you lose money a lot of other investors are also losing money, and when large numbers of people start losing money, that makes governments take action, etc., to turn things around. On another level, the S&P 500 is a lot of big companies; if it goes down, some of those big companies are losing value, and they will use their big-company resources to gain value, and if they succeed, the index goes up again and you benefit. In other words, index funds (and large mutual funds, ETFs, etc.) make investing less about what day-trading wonks focus on, which is trying to make a \"\"hot choice\"\" for a large gain. They make it more about hitching your wagon to an extremely large star that is powered by all the resources of extremely large companies, so that when those companies increase their value, you gain. The bigger the pool of people whose fortunes rise and fall with your own, the more you become part of an investment portfolio that is (I can't resist saying it) \"\"too big to fail\"\". That isn't to say that the S&P 500 can't lose value from time to time, but rather that if it does go down big and hard and stay there, you probably have bigger problems than losing money in the stock market (e.g., the US economy is collapsing and you should begin stockpiling bullets and canned food).\"", "title": "" }, { "docid": "f010325a3fe156fe86ddd14c85278e5e", "text": "\"Of course. \"\"Best\"\" is a subjective term. However relying on the resources of the larger institutions by pooling with them will definitely reduce your own burden with regards to the research and keeping track. So yes, investing in mutual funds and ETFs is a very sound strategy. It would be better to diversify, and not to invest all your money in one fund, or in one industry/area. That said, there are more than enough individuals who do their own research and stock picking and invest, with various degrees of success, in individual securities. Some also employe more advanced strategies such as leveraging, options, futures, margins, etc. These advance strategies come at a greater risk, but may bring a greater rewards as well. So the answer to the question in the subject line is YES. For all the rest - there's no one right or wrong answer, it depends greatly on your abilities, time, risk tolerance, cash available to invest, etc etc.\"", "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": "cfb8eb76f144b9bc12d00e547c5e16c9", "text": "\"I'd refer you to Is it true that 90% of investors lose their money? The answer there is \"\"no, not true,\"\" and much of the discussion applies to this question. The stock market rises over time. Even after adjusting for inflation, a positive return. Those who try to beat the market, choosing individual stocks, on average, lag the market quite a bit. Even in a year of great returns, as is this year ('13 is up nearly 25% as measured by the S&P) there are stocks that are up, and stocks that are down. Simply look at a dozen stock funds and see the variety of returns. I don't even look anymore, because I'm sure that of 12, 2 or three will be ahead, 3-4 well behind, and the rest clustered near 25. Still, if you wish to embark on individual stock purchases, I recommend starting when you can invest in 20 different stocks, spread over different industries, and be willing to commit time to follow them, so each year you might be selling 3-5 and replacing with stocks you prefer. It's the ETF I recommend for most, along with a buy and hold strategy, buying in over time will show decent returns over the long run, and the ETF strategy will keep costs low.\"", "title": "" }, { "docid": "d3c3966b5e38b2427a3327868d0fcfa7", "text": "Below is a list of rules that will help you to decide what types of products you should be investing in:", "title": "" } ]	[ { "docid": "3df74b1e4403aecc1a7f0ac1bc084481", "text": "I read about the 90-90-90 rule aka 90% of the people lose 90% of the money in 90 days. Anything that happens in 90 days or less is speculation (effectively gambling), not investment. And the 90-90-90 thing sounds around right for inexperienced amateurs going up against professionals in that space. I don't know anyone who actually made significant amount money by investing in stocks or other financial products except those appearing in TVs. Lots and lots and lots of people do. I heard that people who actually encourage common people to invest in stocks are stock brokers and fund managers who actually gain by the fact that more people invest. No. It's true that lots of people will give you advice to by specific stocks or financial instruments that will earn them comission or fees, but the basic idea of investing in the stock market is very sound; ultimately, it's based on the ability of companies to create value and pay dividends. Could you please give some valid reasons to invest in stocks or other financial market. Thank you. Well, what else can you do with your money? Put it in an interest-bearing bank account? Effectively, you'll still be investing in the stock market, the bank is just taking most of the returns in exchange for guaranteeing that you'll never lose money even temporarily.", "title": "" }, { "docid": "7cdda4d3caa04e644bcc253415266fa0", "text": "Yes under certain circumstances! Educate yourself first. Consider algorithmic trading when you code your strategies and implement your ideas - a bit easier for psychology. And let the computer to trade for you. Start with demo account without taking personal risk. Only after a year of experience try small amount of cash like you said 100$. Avoid trade when big news events are released. Stick to strategy, use money management, stop loss, write results in the journal... learn & improve... be careful it is very hard journey.", "title": "" }, { "docid": "ac33ea50dc277176327736a8f2fae978", "text": "\"I think this is possible under very special conditions. The important part of the description here is probably retired and rich. The answers so far apply to people with \"\"normal\"\" incomes - both in the sense of \"\"not rich\"\" and in the sense of \"\"earned income.\"\" If you sit at the top tax bracket and get most of your income through things like dividends, then you might be able to win multiple ways with the strategy described. First you get the tax deduction on the mortgage interest, which everyone has properly noted is not by itself a winning game - You spend more than you save. BUT... There are other factors, especially for the rich and those whose income is mostly passive: I'm not motivated enough on the hypothetical situation to come up with a detailed example, but I think it's possible that this could work out. In any case, the current answers using \"\"normal sized\"\" incomes and middle tax brackets don't necessarily give the insight that you might hope if the tax payer really is unusually wealthy and retired.\"", "title": "" }, { "docid": "ea31ddc06a51ed2dd31734c86942e590", "text": "I remember like 20 years ago someone did an experiment where Peter Lynch, elementary school kids, and an ape, all picked stocks in a situation similar to this. The result was almost the same, with the elementary school kids coming out slightly better Picking correct stocks is a craps shoot, as the market is an emotional entity, and in the short run, even educated guesses don't give an edge. People like Peter Lynch eventually win of course because of discipline, long term goals, and knowledge of tools like derivatives", "title": "" }, { "docid": "1113a65ceab6020675408bde08a986cd", "text": "\"This probably won't be a popular answer due to the many number of disadvantaged market participants out there but: Yes, it is possible to distort the markets for securities this way. But it is more useful to understand how this works for any market (since it is illegal in securities markets where company shares are involves). Since you asked about the company Apple, you should be aware this is a form of market manipulation and is illegal... when dealing with securities. In any supply and demand market this is possible especially during periods when other market participants are not prevalent. Now the way to do this usually involves having multiple accounts you control, where you are acting as multiple market participants with different brokers etc. The most crafty ways to do with involve shell companies w/ brokerage accounts but this is usually to mask illegal behavior In the securities markets where there are consequences for manipulating the shares of securities. In other markets this is not necessary because there is no authority prohibiting this kind of trading behavior. Account B buys from Account A, account A buys from Account B, etc. The biggest issue is getting all of the accounts capitalized initially. The third issue is then actually being able to make a profit from doing this at all. Because eventually one of your accounts will have all of the shares or whatever, and there would still be no way to sell them because there are no other market participants to sell to, since you were the only one moving the price. Therefore this kind of market manipulation is coupled with \"\"promotions\"\" to attract liquidity to a financial product. (NOTE the mere fact of a promotion does not mean that illegal trading behavior is occurring, but it does usually mean that someone else is selling into the liquidity) Another way to make this kind of trading behavior profitable is via the derivatives market. Options contracts are priced solely by the trading price of the underlying asset, so even if your multiple account trading could only at best break even when you sell your final holdings (basically resetting the price to where it was because you started distorting it), this is fine because your real trade is in the options market. Lets say Apple was trading at $200 , the options contract at the $200 strike is a call trading at $1 with no intrinsic value. You can buy to open several thousand of the $200 strike without distorting the shares market at all, then in the shares market you bid up Apple to $210, now your options contract is trading at $11 with $10 of intrinsic value, so you just made 1000% gain and are able to sell to close those call options. Then you unwind the rest of your trade and sell your $210 apple shares, probably for $200 or $198 or less (because there are few market participants that actually valued the shares for that high, the real bidders are at $200 and lower). This is hardly a discreet thing to do, so like I mentioned before, this is illegal in markets where actual company shares are involved and should not be attempted in stock markets but other markets won't have the same prohibitions, this is a general inefficiency in capital markets in general and certain derivatives pricing formulas. It is important to understand these things if you plan to participate in markets that claim to be fair. There is nothing novel about this sort of thing, and it is just a problem of allocating enough capital to do so.\"", "title": "" }, { "docid": "f6f3af904870fa87141b1519e22bcd73", "text": "Sure.. its possible, its exactly what activist investors do (with institutional money - e.g. pension funds, family foundations). Crowdsourcing probably implies an average <$100 donation per contributor in your mind however, so you'd need a lot of contributors (as opposed to an institution writing a $1B check out of the box) As a benchmark, you can start agitating even without owning shares, but it probably lends credibility to have a few percentage points. As of today, GS's market cap is $46B, JPM's market cap is $122B, BAML's market cap is $77B... so you'd need at least $1B of capital to buy a percentage point or two. At $100 per ticket. that's 10M individual donors.", "title": "" }, { "docid": "1c007d2f764ed54de2b635b1ceb950c4", "text": "\"(Leaving aside the question of why should you try and convince him...) I don't know about a very convincing \"\"tl;dr\"\" online resource, but two books in particular convinced me that active management is generally foolish, but staying out of the markets is also foolish. They are: The Intelligent Asset Allocator: How to Build Your Portfolio to Maximize Returns and Minimize Risk by William Bernstein, and A Random Walk Down Wall Street: The Time Tested-Strategy for Successful Investing by Burton G. Malkiel Berstein's book really drives home the fact that adding some amount of a risky asset class to a portfolio can actually reduce overall portfolio risk. Some folks won a Nobel Prize for coming up with this modern portfolio theory stuff. If your friend is truly risk-averse, he can't afford not to diversify. The single asset class he's focusing on certainly has risks, most likely inflation / purchasing power risk ... and that risk that could be reduced by including some percentage of other assets to compensate, even small amounts. Perhaps the issue is one of psychology? Many people can't stomach the ups-and-downs of the stock market. Bernstein's also-excellent follow-up book, The Four Pillars of Investing: Lessons for Building a Winning Portfolio, specifically addresses psychology as one of the pillars.\"", "title": "" }, { "docid": "ef4b0cff3e13cb4f5bf4142ca6be722e", "text": "\"I'm going to take a very crude view of this: Suppose that you have an event that would cost $100,000 if it occurred. If there's a 10% chance that it'll happen to you and the insurance costs less than $10,000, you'll make a profit \"\"on average.\"\" This is, of course, assuming that you could afford a $100,000 loss. If you can't, the actual loss could be much higher (or different). For example, if you couldn't afford surgery because you didn't have health insurance, it could be a lot more \"\"costly\"\" in a way that could be difficult to compare to the $100,000. Obviously, this is a very simplistic view of things. For example, making more than you paid on the premium typically isn't the only reason you'd buy insurance (even if you're high net worth). Just wanted to throw this out there for what it's worth though.\"", "title": "" }, { "docid": "8bd6dba8603aef66808526c01453503b", "text": "How can you correlate a company stock's performance with overall market performance. No you can't. There is no simple magic formulae that will result in profits. There are quite a few statistical algorithms that specialists have built, that work most of the times. But they are incorrect most of the times as well.", "title": "" }, { "docid": "e5394b50bb1808b2c811f7e934f56908", "text": "Well lets see... JP Morgan Chase, for example, has a market cap of $118 billion. The U.S. labor force is about 158 million people. So if every working american kicked in about 400 bucks, you'd have enough money to buy a a controlling stake in JPM. Goldman Sachs has a market cap of $44 billion. You could buy a controlling stake in Goldman if every working american threw in about 150 bucks. Of course you'd have to purchase the stock at a large premium if you're trying to gain a controlling stake.", "title": "" }, { "docid": "fd619dbf12a5842646b8f3a2a387df3e", "text": "\"The stock market is not a zero-sum game. Some parts are (forex, some option trading), but plain old stock trading is not zero sum. That is to say, if you were to invest \"\"at random\"\", you would on average make money. That's because the market as a whole makes money - it goes up over time (6-10% annually, averaged over time). That's because you're not just gambling when you buy a stock; you're actually contributing money to a company (directly or indirectly), which it uses to fund activities that (on average) make money. When you buy Caterpillar stock, you're indirectly funding Caterpillar building tractors, which they then sell for a profit, and thus your stock appreciates in value. While not every company makes a profit, and thus not every stock appreciates in true value, the average one does. To some extent, buying index funds is pretty close to \"\"investing at random\"\". It has a far lower risk quotient, of course, since you're not buying a few stocks at random but instead are buying all stocks in an index; but buying stocks from the S&P 500 at random would on average give the same return as VOO (with way more volatility). So for one, you definitely could do worse than 50/50; if you simply sold the market short (sold random stocks short), you would lose money over time on average, above and beyond the transaction cost, since the market will go up over time on average. Secondly, there is the consideration of limited and unlimited gains or losses. Some trades, specifically some option trades, have limited potential gains, and unlimited potential losses. Take for example, a simple call option. If you sell a naked call option - meaning you sell a call option but don't own the stock - for $100, at a strike price of $20, for 100 shares, you make money as long as the price of that stock is under $21. You have a potential to make $100, because that's what you sold it for; if the price is under $20, it's not exercised, and you just get that $100, free. But, on the other hand, if the stock goes up, you could potentially be out any amount of money. If the stock trades at $24, you're out $400-100 = $300, right? (Plus transaction costs.) But what if it trades at $60? Or $100? Or $10000? You're still out 100 * that amount, so in the latter case, $1 million. It's not likely to trade at that point, but it could. If you were to trade \"\"at random\"\", you'd probably run into one of those types of situations. That's because there are lots of potential trades out there that nobody expects anyone to take - but that doesn't mean that people wouldn't be happy to take your money if you offered it to them. That's the reason your 16.66 vs 83.33 argument is faulty: you're absolutely right that if there were a consistently losing line, that the consistently winning line would exist, but that requires someone that is willing to take the losing line. Trades require two actors, one on each side; if you're willing to be the patsy, there's always someone happy to take advantage of you, but you might not get a patsy.\"", "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": "6e9ebc57e4df203c6ab584cc9e5ec0ed", "text": "\"First of all, the annual returns are an average, there are probably some years where their return was several thousand percent, this can make a decade of 2% a year become an average of 20% . Second of all, accredited investors are allowed to do many things that the majority of the population cannot do. Although this is mostly tied to net worth, less than 3% of the US population is registered as accredited investors. Accredited Investors are allowed to participate in private offerings of securities that do not have to be registered with the SEC, although theoretically riskier, these can have greater returns. Indeed a lot of companies that go public these days only do so after the majority of the growth potential is done. For example, a company like Facebook in the 90s would have gone public when it was a million dollar company, instead Facebook went public when it was already a 100 billion dollar company. The people that were privileged enough to be ALLOWED to invest in Facebook while it was private, experienced 10000% returns, public stock market investors from Facebook's IPO have experienced a nearly 100% return, in comparison. Third, there are even more rules that are simply different between the \"\"underclass\"\" and the \"\"upperclass\"\". Especially when it comes to leverage, the rules on margin in the stock market and options markets are simply different between classes of investors. The more capital you have, the less you actually have to use to open a trade. Imagine a situation where a retail investor can invest in a stock by only putting down 25% of the value of the stock's shares. Someone with the net worth of an accredited investor could put down 5% of the value of the shares. So if the stock goes up, the person that already has money would earn a greater percentage than the peon thats actually investing to earn money at all. Fourth, Warren Buffett's fund and George Soros' funds aren't just in stocks. George Soros' claim to fame was taking big bets in the foreign exchange market. The leverage in that market is much greater than one can experience in the stock market. Fifth, Options. Anyone can open an options contract, but getting someone else to be on the other side of it is harder. Someone with clout can negotiate a 10 year options contract for pretty cheap and gain greatly if their stock or other asset appreciates in value much greater. There are cultural limitations that prompt some people to make a distinction between investing and gambling, but others are not bound by those limitations and can take any kind of bet they like.\"", "title": "" }, { "docid": "9825521e8c224412f832211f9404e01c", "text": "> The stock market measures individual companies' ups and downs, right? Not precisely, no. If anything it measures... 1. Information 2. Risk and Riskiness 3. Market Sentiment > Perhaps it could even gain over my life. One would assume that this would be a relatively flat graph, with little if any trend, and occasional spikes upwards and downwards. It'd also be subject to caps and floors, unlike the market which is only floored (at 0). > I don't know if anyone could come up with a kind of standardised measurement we could use to do this. It'd be impossible. Happiness is subjective and relative. Getting a million bucks might make me happy, but Bill Gates bored. Having a child can be conflicting intensely. The death of a loved one could be both sad and a relief.", "title": "" }, { "docid": "2a0647d77fef4096af105b3852b291cd", "text": "\"You can hold a wide variety of investments in your TFSA account, including stocks such as SLF. But if the stocks are being purchased via a company stock purchase plan, they are typically deposited in a regular margin account with a brokerage firm (a few companies may issue physical stock certificates but that is very rare these days). That account would not be a TFSA but you can perform what's called an \"\"in-kind\"\" transfer to move them into a TFSA that you open with either the same brokerage firm, or a different one. There will be a fee for the transfer - check with the brokerage that currently holds the stock to find out how costly that will be. Assuming the stock gained in value while you held it outside the TFSA, this transfer will result in capital gains tax that you'll have to pay when you file your taxes for the year in which the transfer occurs. The tax would be calculated by taking the value at time of transfer, minus the purchase price (or the market value at time of purchase, if your plan allowed you to buy it at a discounted price; the discounted amount will be automatically taxed by your employer). 50% of the capital gain is added to your annual income when calculating taxes owed. Normally when you sell a stock that has lost value, you can actually get a \"\"capital loss\"\" deduction that is used to offset gains that you made in other stocks, or redeemed against capital gains tax paid in previous years, or carried forward to apply against gains in future years. However, if the stock decreased in value and you transfer it, you are not eligible to claim a capital loss. I'm not sure why you said \"\"TFSA for a family member\"\", as you cannot directly contribute to someone else's TFSA account. You can give them a gift of money or stocks, which they can deposit in their TFSA account, but that involves that extra step of gifting, and the money/stocks become their property to do with as they please. Now that I've (hopefully) answered all your questions, let me offer you some advice, as someone who also participates in an employee stock purchase plan. Holding stock in the company that you work for is a bad idea. The reason is simple: if something terrible happens to the company, their stock will plummet and at the same time they may be forced to lay off many employees. So just at the time when you lose your job and might want to sell your stock, suddenly the value of your stocks has gone way down! So you really should sell your company shares at least once a year, and then use that money to invest in your TFSA account. You also don't want to put all your eggs in one basket - you should be spreading your investment among many companies, or better yet, buy index mutual funds or ETFs which hold all the companies in a certain index. There's lots of good info about index investing available at Canadian Couch Potato. The types of investments recommended there are all possible to purchase inside a TFSA account, to shelter the growth from being taxed. EDIT: Here is an article from MoneySense that talks about transferring stocks into a TFSA. It also mentions the importance of having a diversified portfolio!\"", "title": "" } ]	fiqa
e5546400a617d146b92d37dd82e41f15	What is the risk-neutral probability?	[ { "docid": "cccddce7245c2fc6e6ab69142941c94c", "text": "\"You have actually asked several questions, so I think what I'll do is give you an intuition about risk-neutral pricing to get you started. Then I think the answer to many of your questions will become clear. Physical Probability There is some probability of every event out there actually occurring, including the price of a stock going up. That's what we call the physical probability. It's very intuitive, but not directly useful for finding the price of something because price is not the weighted average of future outcomes. For example, if you have a stock that is highly correlated with the market and has 50% chance of being worth $20 dollars tomorrow and a 50% chance of being worth $10, it's value today is not $15. It will be worth less, because it's a risky stock and must earn a premium. When you are dealing with physical probabilities, if you want to compute value you have to take the probability-weighted average of all the prices it could have tomorrow and then add in some kind of compensation for risk, which may be hard to compute. Risk-Neutral Probability Finance theory has shown that instead of computing values this way, we can embed risk-compensation into our probabilities. That is, we can create a new set up \"\"probabilities\"\" by adjusting the probability of good market outcomes downward and increasing the probability of bad market outcomes. This may sound crazy because these probabilities are no longer physical, but it has the desirable property that we then use this set of probabilities to price of every asset out there: all of them (equity, options, bonds, savings accounts, etc.). We call these adjusted probabilities that risk-neutral probabilities. When I say price I mean that you can multiply every outcome by its risk-neutral probability and discount at the risk-free rate to find its correct price. To be clear, we have changed the probability of the market going up and down, not our probability of a particular stock moving independent of the market. Because moves that are independent of the market do not affect prices, we don't have to adjust the probabilities of them happening in order to get risk-neutral probabilities. Anyway, the best way to think of risk-neutral probabilities is as a set of bogus probabilities that consistently give the correct price of every asset in the economy without having to add a risk premium. If we just take the risk-neutral probability-weighted average of all outcomes and discount at the risk-free rate, we get the price. Very handy if you have them. Risk-Neutral Pricing We can't get risk-neutral probabilities from research about how likely a stock is to actually go up or down. That would be the physical probability. Instead, we can figure out the risk-neutral probabilities from prices. If a stock has only two possible prices tomorrow, U and D, and the risk-neutral probability of U is q, then Price = [ Uq + D(1-q) ] / e^(rt) The exponential there is just discounting by the risk-free rate. This is the beginning of the equations you have mentioned. The main thing to remember is that q is not the physical probability, it's the risk-neutral one. I can't emphasize that enough. If you have prespecified what U and D can be, then there is only one unknown in that equation: q. That means you can look at the stock price and solve for the risk neutral probability of the stock going up. The reason this is useful is that you can same risk-neutral probability to price the associated option. In the case of the option you don't know its price today (yet) but you do know how much money it will be worth if the stock moves up or down. Use those values and the risk-neutral probability you computed from the stock to compute the option's price. That's what's going on here. To remember: the same risk-neutral probability measure prices everything out there. That is, if you choose an asset, multiply each possibly outcome by its risk-neutral probability, and discount at the risk-free rate, you get its price. In general we use prices of things we know to infer things about the risk-neutral probability measure in order to get prices we do not know.\"", "title": "" } ]	[ { "docid": "a82bece8a7b6c04dce89b387fe72c88e", "text": "To get the probability of hitting a target price you need a little more math and an assumption about the expected return of your stock. First let's examine the parts of this expression. IV is the implied volatility of the option. That means it's the volatility of the underlying that is associated with the observed option price. As a practical matter, volatility is the standard deviation of returns, expressed in annualized terms. So if the monthly standard deviation is Y, then YSQRT(12) is the volatility. From the above you can see that IVSQRT(DaysToExpire/356) de-annualizes the volatility to get back to a standard deviation. So you get an estimate of the expected standard deviation of the return between now and expiration. If you multiply this by the stock price, then you get what you have called X, which is the standard deviation of the dollars gained or lost between now and expiration. Denote the price change by A (so that the standard deviation of A is X). Note that we seek the expression for the probability of hitting a target level, Q, so mathematically we want 1 - Pr( A < Q - StockPrice) We do 1 minus the probability of being below this threshold because cumulative distribution functions always find the probability of being BELOW a threshold, not above. If you are using excel and assuming a mean of zero for returns, the probability of hitting or exceeding Q at expiration, then, is That's your answer for the probability of exceeding Q. Accuracy is in the eye of the beholder. You'd have to specify a criterion by which to judge it to know the answer. I'm sure more sophisticated methods exist that are more unbiased and have less error, but I think it's a fine first approximation.", "title": "" }, { "docid": "53119f50382b91202397bc9c9433a5eb", "text": "This doesn't make sense in an economic context. For justice to provide sufficient deterrent, it needs to be rational to avoid a crime. If your probability of being caught is comparatively lower, the punishment needs to be higher in order to remain a deterrent. Basically, P(get caught) * Punitive Cost > Profit", "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": "93ac5c7e87fbf813b47b44d966bcd307", "text": "\"Yes, and the math that tells you when is called the Kelly Criterion. The Kelly Criterion is on its face about how much you should bet on a positive-sum game. Imagine you have a game where you flip a coin, and if heads you are given 3 times your bet, and if tails you lose your bet. Naively you'd think \"\"great, I should play, and bet every dollar I have!\"\" -- after all, it has a 50% average return on investment. You get back on average 1.5$ for every dollar you bet, so every dollar you don't bet is a 0.5$ loss. But if you do this and you play every day for 10 years, you'll almost always end up bankrupt. Funny that. On the other hand, if you bet nothing, you are losing out on a great investment. So under certain assumptions, you neither want to bet everything, nor do you want to bet nothing (assuming you can repeat the bet almost indefinitely). The question then becomes, what percentage of your bankroll should you bet? Kelly Criterion answers this question. The typical Kelly Criterion case is where we are making a bet with positive returns, not an insurance against loss; but with a bit of mathematical trickery, we can use it to determine how much you should spend on insuring against loss. An \"\"easy\"\" way to undertand the Kelly Criterion is that you want to maximize the logarithm of your worth in a given period. Such a maximization results in the largest long-term value in some sense. Let us give it a try in an insurance case. Suppose you have a 1 million dollar asset. It has a 1% chance per year of being destroyed by some random event (flood, fire, taxes, pitchforks). You can buy insurance against this for 2% of its value per year. It even covers pitchforks. On its face this looks like a bad deal. Your expected loss is only 1%, but the cost to hide the loss is 2%? If this is your only asset, then the loss makes your net worth 0. The log of zero is negative infinity. Under Kelly, any insurance (no matter how inefficient) is worth it. This is a bit of an extreme case, and we'll cover why it doesn't apply even when it seems like it does elsewhere. Now suppose you have 1 million dollars in other assets. In the insured case, we always end the year with 1.98 million dollars, regardless of if the disaster happens. In the non-insured case, 99% of the time we have 2 million dollars, and 1% of the time we have 1 million dollars. We want to maximize the expected log value of our worth. We have log(2 million - 20,000) (the insured case) vs 1% * log(1 million) + 99% * log(2 million). Or 13.7953 vs 14.49. The Kelly Criterion says insurance is worth it; note that you could \"\"afford\"\" to replace your home, but because it makes up so much of your net worth, Kelly says the \"\"hit it too painful\"\" and you should just pay for insurance. Now suppose you are worth 1 billion. We have log(1 billion - 20k) on the insured side, and 1%log(999 million) + 99% log(1 billion) on the uninsured side. The logs of each side are 21.42 vs 20.72. (Note that the base of the logarithm doesn't matter; so long as you use the same base on each side). According to Kelly, we have found a case where insurance isn't worth it. The Kelly Criterion roughly tells you \"\"if I took this bet every (period of time), would I be on average richer after (many repeats of this bet) than if I didn't take this bet?\"\" When the answer is \"\"no\"\", it implies self-insurance is more efficient than using external insurance. The answer is going to be sensitive to the profit margin of the insurance product you are buying, and the size of the asset relative to your total wealth. Now, the Kelly Criterion can easily be misapplied. Being worth financially zero in current assets can easily ignore non-financial assets (like your ability to work, or friends, or whatever). And it presumes repeat to infinity, and people tend not to live that long. But it is a good starting spot. Note that the option of bankruptcy can easily make insurance not \"\"worth it\"\" for people far poorer; this is one of the reasons why banks insist you have insurance on your proprety. You can use Kelly to calculate how much insurance you should purchase at a given profit margin for the insurance company given your net worth and the risk involved. This can be used in Finance to work out how much you should hedge your bets in an investment as well; in effect, it quantifies how having money makes it easier to make money.\"", "title": "" }, { "docid": "ad95ac2efa8c6f348e8f9de9c1bdc83f", "text": "Risk and return always go hand by hand.* Risk is a measure of expected return volatility. The best investment at this stage is a good, easy to understand but thorough book on finance. Applies to efficient markets only.", "title": "" }, { "docid": "52711cc145662d771c2d381f9909a103", "text": "A number of ways exist to calculate the chances of a particular outcome. Options, for example, use current price, cost of money, and volatility among other factors to price the chance of an underlying asset reaching a certain price in a certain timeframe. A graphical forecast simply puts these calculations into a visual format. That said, it appears the image you offer shows the prediction as it existed in the past along with how the stock has done since. A disclaimer - The odds of a fair die being rolled to a given number are 1 in 6. It's a fact. With stocks, on the other hand, models try to simulate real life and many factors can't be accounted for.", "title": "" }, { "docid": "1507aaef499b0cce4fb9076b9116d3d3", "text": "How about looking into the market price of risk? Ive always wanted to know if risk is or should be priced the same across markets/asset classes/etc. Eh? Let me know what you figure out. Edit: I just realized you people probably consider it to be the Sharpe ratio. That's not what I meant. I meant in the sense of option pricing.", "title": "" }, { "docid": "bf07ec9e09b72c3b44f4c116f1caed05", "text": "Someone entering a casino with $15 could employ a very simple strategy and have a better-than-90% chance of walking out with $16. Unfortunately, the person would have a non-trivial chance (about one in 14) of walking out with $0. If after losing $15 the person withdrew $240 from the bank and tried to win $16, the person would have a better-than-90% chance of succeeding and ending up ahead (holding the original $15, plus the additional $240, plus $1) but would have at that point about a one in 14 chance from that point of losing the $240 along with the original $15. Measured from the starting point, you'd have about a 199 out of 200 chance of gaining $1, and a one out of 200 chance of losing $240. Market-timing bets are like that. You can arrange things so you have a significant chance of making a small profit, but at the risk of a large downside. If you haven't firmly decided exactly how much downside you are willing to accept, it's very easy to simultaneously believe you don't have much money at risk, but that you'll be able to win back anything you lose. The only way you can hope to win back anything you lose is by bringing a lot more money to the table, which will of course greatly increase your downside risk. The probability of making money for the person willing to accept $15 of downside risk to earn $1 is about 93%. The probability of making money for the person willing to accept $255 worth of risk is about 99.5%. It's easy to see that there are ways of playing which have a 99.5% chance of winning, and that there are ways of playing that only have a 15:1 downside risk. Unfortunately, the ways of playing that have the smaller risk don't have anything near a 99.9% chance of winning, and those that have a better chance of winning have a much larger downside risk.", "title": "" }, { "docid": "770018f155276945e734c862080a7847", "text": "\"A subsidy is a benefit. While you're right most of the time it is a crude \"\"transfer of wealth by the US government\"\" the formal intent of a subsidy is to assist so as to confer an advantage or mitigate a disadvantage. If as you say \"\"discounting the risk premium\"\" actively by the US government so as to confer, in the words of Ueda and Di Mauro, a \"\"funding cost advantage [to] SIFIs [of] around 60bp in 2007 and 80bp in 2009\"\" is not a subsidy, then what is it?\"", "title": "" }, { "docid": "a8322b4c03d89bd5951593ec8cc1b48a", "text": "I would say binomial tree, except your last sentence, > The probabilities of the various outcomes are unknown. causes issues with that. You could do a scenario analysis in which you compare values using different %chances of up vs. down.", "title": "" }, { "docid": "c6d90f991f80e65e67aa8585a99deacf", "text": "\"This is the best tl;dr I could make, [original](https://www.richmondfed.org/-/media/richmondfedorg/publications/research/working_papers/2017/pdf/wp17-12.pdf) reduced by 98%. (I'm a bot) ** > 7 3 Local Dynamics The local dynamics of the simple search and matching model have been studied by Krause and Lubik. > In the previous literature, for example Mendes and Mendes and Bhattacharya and Bunzel, the backward dynamics are defined via the map g by rearranging to isolate &theta;t : \u0010 \u00111/&xi; &theta;t = a&theta;t+1 c&theta;t+1 + d = g. 11 Under risk aversion, the dynamics depend on the time path of output yt. > 4.2 Stability Properties We now study the dynamics of the backward map zt = f. We first establish the properties of the function f. We then study the stability properties of the steady state, where we distinguish between two broad areas of dynamics in the backward map, namely stable and unstable. * [Extended Summary*](http://np.reddit.com/r/autotldr/comments/788alk/fed_global_dynamics_in_a_search_and_matching/) \| [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~233564 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: dynamic^#1 model^#2 0.1^#3 1^#4 map^#5\"", "title": "" }, { "docid": "d62b517174738aa290ba762275cecc45", "text": "if I have a asset A with expected return of 100% and risk(measured by standard deviation) 1%, and asset B with expected return of 1% and risk 100%, would it be rational to put asset B into the portfolio ? No, because Modern Portfolio Theory would say that if there is another asset (B2) with the same (or higher) return but less risk (which you already have in asset A), you should invest in that. If those are the only two assets you can choose from, you would invest completely in Asset A. The point of diversification is that, so long as two assets aren't perfectly positively correlated (meaning that if one moves up the other always moves up), then losses in one asset will sometimes be offset by gains in another, reducing the overall risk.", "title": "" }, { "docid": "7da3ed09c146ab37ff05f628df76df15", "text": "Can you give more detail on the problem? If you can model it with a one step binomial tree, then the price is favourable as long as the chance to multiply is P(S^1 = 10 S^0 ) > 0.1. If you don't know the probabilities, then the usual go-to is to determine what probability space is that would lead to an expected profit (plus an error, and a cushion for risk aversion if the bet is sufficiently large).", "title": "" }, { "docid": "59ee99fc3853372dbb802b2e295679f8", "text": "Dummy example to explain this. Suppose your portfolio contained just two securities; a thirty year US government bond and a Tesla stock. Both of those position are currently valued at $1mm. The Tesla position however is very volatile with its daily volatility being about 5% (based on the standard deviation of its daily return) whole there bond's daily volatility is 1%. Then the Tesla position is 5/6 of your risk while being only 1/2 of the portfolio. Now if in month the Tesla stock tanks to half is values then. Then it's risk is half as much as before and so it's total contribution to risk has gone down.", "title": "" }, { "docid": "fef760738b2b90f87c049bb8f0a1675f", "text": "Consider the black-scholes-merton result. Notice that the expected value of the bond is its present value, discounted from the expiration date. The same is not applied to the price of the stock. The further in the future you go, the less value the bond carries because it's being discounted into oblivion. Now, looking at d1, as time tends towards infinity, so does d1. N(d1) is a probability. The higher d1, the higher the probability and vice versa, so as time increases, the probability for S trends to 100% while K is discounted away. Note that the math doesn't yet fully model reality, as extremely long dated options such as the European puts Buffett wrote were traded at ~1/2 the value the model said he should've. He still had to take a GAAP loss: http://www.berkshirehathaway.com/letters/2008ltr.pdf", "title": "" } ]	fiqa
0bd5400342aa9e422d62001eff9ef283	Prices go up and salary doesn't: where goes delta?	[ { "docid": "fcb7db1a6c827df2536e19a202f8f991", "text": "\"Where goes the Delta? To the sea, of course. Your question is very valid and for once, I think most of the answers are too involved into mechanical details and are badly missing the big picture. At the risk of over simplifying things, let me try to describe the situation in broad strokes: Inflation: the volume of money grows faster than production (including services). Deflation: production increase faster than the volume of money. Imagine an economy with 10 products and $10. 1 product = $1. In an inflationary scenario, money available increase: $20 for 10 products. 1 product = $2. In a deflationary scenario, money available decrease: $5 for 10 products. 1 product = $0.5. So far, it's pretty textbook. Now onto the stuff that you don't usually read in textbooks: Time. Say 10 people are attending an auction, each with $10 bucks. 10 items are for sale. $100 and 10 items. Item price is $10. Now, if just before opening the bidding, you go around and give each person $40, every one has $50. Each product sells for $50. That's the picture people have of inflation. Prices have increased, but everybody has more money, so it comes down to the same thing. Now, let's bring this example closer to reality: You have to distribute $400, so the total amount of money is $500, which means that the normal price of each item should be $50. Now, imagine that instead of giving money to everyone at the same time, you started by giving $40 to 1 guy who was hanging out in front. The auction starts. While you go around distributing the money, the first guy manages to buy 2 items at $10 each. Now, there is $480 in the market, and only 8 items, making each item $60 on average. The next guy to get money manages to snap 2 items at $15. 6 items left and $450 in play. Each item now costs $75....and keep increasing in price as things move along. People who get the money early buy items under their real value, and people who get paid at the end pick up the tab, because by then, there are only a few items left. Back to reality, while inflation means that wages eventually increase (and they do), actual purchasing decrease for most people due to this simple trick. Employees are pretty much at the end of the chain. Income tax Another major source of \"\"signal loss\"\" is income tax. It works by brackets, as you certainly know. Simplifying again because I am lazy: Take a guy who earns $100. Pays no taxes. Can buy 100 products at $1 each. Now, put in some inflation... He earns $500. He pays $50 in taxes and can buy 90 products at $5 each. By the time he earns $10,000, he can only buy 50 products on account of income tax. So this is another area where you are bleeding purchasing power, and why income tax, which was originally presented as a tax for the ultra-rich is now a fact of life for most people (except the ultra-rich, of course). Money as debt Next stop: Money itself. Money is created as debt in our society. At the risk of over-simplifying things again, let's say Bank A has $1000 in assets. In the fractional reserve system (our current system), Bank A can lend out many times over that amount. Let's say $9,000, for a total of $10,000 (much more in reality). And of course, it lends that money at interest. When bank A has made $10,000 available through 10% interest loans, the total amount of money has increased by $10,000, but when the loans are paid back, $11,000 must be paid to the bank, so the net result of the operation is that $1,000 get taken out of the market. This system explains why almost all companies and governments have huge debts, and why most of the world's large companies belong to financial institutions of some kind, and why most of the world's wealth rest in very very few hands. To fully answer your question and provide details and references and names, one would have to write a book or 5. There is a lot more than can be said on the subject, and of course, all the examples given here are extremely simplified, but I think they illustrate the key issues pretty well. Bottom-line is that our system is designed that way. Our economic system is rigged and the delta bleeds out on automatic.\"", "title": "" }, { "docid": "2740fb3fb253ef1a93365882d51669df", "text": "Purchasing commodities (whose prices are increasing rapidly), improving corporate profitability, buying imports (the US dollar is weaker than it was, so the price of everything imported has gone up), paying down corporate debt, etc.", "title": "" }, { "docid": "31bde56d88360f6b81c9690a0ede9fe8", "text": "One of the byproducts of free trade is that there is now a global labor market. So companies routinely review their operations and think strategically about where the company is going. Standard options are: Because the disincentives that once existed in the past are gone (the need for humans to do work, tariffs, regulation, poor infrastructure in the developing world), the available supply of labor is greater and demand lower -- thus wages are falling in real terms. Think in the simplest terms in an office environment. In 1980 to make photocopies, you needed a Xerox machine that required a technician on site every couple of weeks to make adjustments, change toner, etc. There was probably a local rep you called to schedule break/fix serivce. Now technology has replaced that copy machine with a cheap multi-function device that requires no maintenance and any technical support is delivered by a person sitting in a Indian call center. So to answer your question, the incremental money from rising prices goes to a number a places. Alot of it goes to oil producers and other commodity producers. Much of it consists of indirect costs that fulfill other mandated services -- when you buy something, buried in that cost are things like health insurance, prescription drugs and school taxes.", "title": "" }, { "docid": "b58a17c07773d726555b5e59b03903ed", "text": "\"Salaries normally shouldn't fluctuate with inflation and deflation... Inflation prevents consumers from spending (prices get too high), ultimately taking money out of circulation. This causes the market to go in to deflation (or at least deflate back to normal). That's when people begin to spend again, and start the cycle all over again. Now... Imagine if salaries increased with inflation... Inflation would never end. Everyone could keep affording the high prices. A Starbucks coffee would eventually cost $150, but the \"\"middle-class\"\" would all be millionaires. Your \"\"small-change\"\" would consist of a wad of useless bills, and the government would have to continually print out more money just to keep up. NOTE: This is not a direct answer to \"\"where goes delta?\"\", but would more be directed to the part \"\"Prices go up and salary doesn't\"\".\"", "title": "" }, { "docid": "04981ace31d06259a6ce292baf8a6279", "text": "I expected a word or two on the price elasticity of demand here :) Andrey, Your question needs slight revision in its current form. Rising prices actually do not mean increased profitability for a company. The quantity they sell also pays a huge part and actually is correlated to the price at which they sell the goods (and other factors such as the price at which their competitor sells the goods etc., but we will ignore it for simplicity). The net profit of sales for any firm is equal to (Qty x Sale Price) - COGS - SG&A - taxes - other expenses where, COGS means cost of goods sold SG&A means sales, general and admin costs (e.g., cleaning the inventory storage area daily so that the goods stay fresh etc.) other expenses include any miscellaneous other costs that the firm incurs to make the sale. Now, if everything in that equation remains same (COGS, SG&A, taxes, and other expenditures), rising prices will only translate into a higher profit if the quantity does not fall by the same margin. Prices may also rise simply as a response to risking COGS, SG&A or other expenditures --the latter may be observed in inflationary environments. In such a case, the supplying firm can end up losing its profit margin if the quantity falls by more than the price rise.", "title": "" } ]	[ { "docid": "2affc10785332c9954c413bcfa677e8f", "text": "\"To add to MrChrister's answer: Canada also has a Consumer Price Index (CPI) used to measure inflation that is distinct and separate from that maintained by the United States. There are differences in inflation between the U.S. and Canada because our currencies are different, and there may be different items in the \"\"basket\"\" of goods that constitutes the index. You can find current information on the Canadian CPI at Statistics Canada, here: Latest release from the Consumer Price Index. Also, the Bank of Canada – our central bank – maintains a free online Inflation Calculator. The BoC's inflation calculator is handy because you can enter a dollar amount for a past date and it will figure out what that would be in today's dollars. For instance, $100 in 1970 dollars had the same purchasing power (under the CPI) as $561.76 in 2009 dollars! And you're right – if you get a salary increase that is less than the rate of inflation, then in theory you have lost purchasing power. So, anybody really looking for a raise ought to make an effort to get more than the increase in CPI. Of course, some employers are counting on you not knowing that, because any increase that's less than CPI is effectively a salary decrease; which could mean more profit for them, if they are able to increase their prices / revenues at inflation or better. Finally, consider that salary & wage increases also contribute to inflation! Perhaps you've heard of the wage/price inflation spiral. If you haven't, there's more on that here and here.\"", "title": "" }, { "docid": "65249dc846a82a10509e3d93e81b8325", "text": "\"Is there ever any ambiguity on what that that exact strike is in delta space, or does everyone back it out from the pricing model the same way? I ask, because in my product nearly everyone runs a heavier delta to the put (the severity of that varies). So on trades that are \"\"tied up\"\", everyone participating on it can have slightly different deltas that they are modeling\"", "title": "" }, { "docid": "80c583af794eda201b0de82fc49db9b6", "text": "Actually it has been disproven that minimum wage leads to higher earnings for companies. You are without a doubt wrong on that fact. Because money has fluctuating value, more money does not necessarily lead to higher purchasing power. This is pretty well known by most monetary theorist. It's actually pretty ridiculous to believe otherwise. But hey, if you want to be wrong be my guest.", "title": "" }, { "docid": "fca905748df3570644b395fc9ae8fbc7", "text": "\"This is pretty meaningless and somewhat misleading. They measured price increases mostly on things that were produced elsewhere and would not be expected to see price increases (e.g. gas). Most retail prices are not heavily impacted by local labor prices. For many goods, local retail labor costs would constitute less than 5% of the total cost. Plus, local retailers still have to compete with online retailers, as well as retailers outside the city limits, so they can't dramatically hike prices and be competitive. If the min wage increases did impact prices, it's more likely that local retailers would see their margins shrink and some of them would go out of business as a result. On the things that are produced locally, such as food from a restaurant, they found significant price increases. There's also been significant evidence showing that restaurant job creation lagged behind in Seattle versus the rest of Washington state. http://www.aei.org/publication/some-early-results-from-seattles-radical-experiment-with-a-15-an-hour-minimum-wage-fewer-jobs-fewer-hours/ https://www.aei.org/publication/minimum-wage-effect-seattle-area-restaurant-jobs-have-fallen-900-this-year-vs-6200-food-jobs-in-rest-of-state/ They also seem to have forgotten to mention substitution effects for labor; such as restaurants using more technology to eliminate labor. Overall, the articles reads like yet another \"\"rose colored classes\"\" spin on one of the most detrimental economic policies in the US. It's almost silly watching people try to find reasons how \"\"increasing the price of labor\"\" and \"\"destroying contractual freedom for unskilled laborers\"\" creates magical free lunches.\"", "title": "" }, { "docid": "9f6afef6b64a4f1725e6c9221de1d9be", "text": "Yep, I often think that baby boomers don't understand that there's inflation and that the salary they had years ago might not be good enough.. Sure, median income has decreased in the last decade, but it's no excuse for paying engineers 45K because they'll jump ship as soon as they put their resume on Monster and get offer of 60-80k.", "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": "abde78073282f0ab99adf09574459065", "text": "This sort of thinking is one of the problems with economics. It's way too simplistic, and unrepresentative of how a company works. No company increases the price of a product because they hired a more expensive employee, unless said employee is dead weight. It might be a process engineer, that right now costs the company a bit more, but 12 months down the line will improve production efficiency by at least the value of his salary. And if they improve it more, by say 200% of their salary? Product price stays the same, he gets a pat on his back from the boss, and the company increases it's profits. And what usually happens when you nickel-and-dime your employees? They lose engagement and interest, or worst, they hire a shit employee for a shit salary and get little to no benefit from hiring.", "title": "" }, { "docid": "2d5a638a8b9faa5ee29777fb9df9a222", "text": "\"Your first article is all about analyzing the effect of minimum wage on employment by looking at rents. Their analysis \"\"assumes peoples' utility functions in a particular city depend on wages plus amenities less the cost of rent available in that city\"\" Basically if wages go up (due to a minimum wage hike for example) the city is more desirable to live in and people would lay more to live there. That is not at all the mechanism you were talking about and would not apply for a national raise in minimum wage. Why should I read the rest of your links when you didn't even read the first one?\"", "title": "" }, { "docid": "0789f2f54cd1d242c521474bc9a7efa3", "text": "The history of the last 100 years has demonstrated that inflation need not be a straight-line advance in price across the board. New technology has delivered productivity gains which have in many cases compensated for inflation. Keep in mind that price changes may be inflationary, but may not attributable to inflation. For example, the massive swing upward in gasoline prices had more to do with the market, specifically Chinese demand for gas than inflation. But increased fuel costs trickle into the prices of other commodities that we need to buy as well!", "title": "" }, { "docid": "4f315abdca6c8233805b0f9339ee1385", "text": "I think it's important to be clear what is being studied here. It's the effect of a more dramatic increase in the min wage than we've seen before. There are many studies which show no negative effect at all on employment in situations where gradual increases in the min wage happen. Just like there are several well known studies that compare similar cities with different minimum wages that show no negative affect on employment in the city with the higher wage. But in none of those situations was the wage ever increased quite like it was in Seattle, so that's the new thing to study here. So again, the study is clearly not trying to say that raising the minimum wage has a negative effect on employment. Rather it's looking at just this particular significant increase. For me, this really is an indictment on the unwillingness of congress to gradually raise the minimum wage over time using some sort of sensible inflationary benchmark. Had they been gradually inflating the wage over time to coincide with normal inflation, we could see a $12 min wage already that had no appreciable effect on employment. So is the solution a sudden correction to get to the wage up to a liveable standard in one, perhaps slightly painful to employment swoop? Or is it to go more gradually, meaning that you'll still remain decades behind inflation growth?", "title": "" }, { "docid": "371e8f2e82be060229ed7fa33316d364", "text": "The mechanism of supply and demand is imperfect. Producers don't know exactly how many purchasers/consumers for a good there are. Some goods, by their nature, are in short supply, and some are plentiful. The process of price discovery is one where (in a nominally free market) producers and purchasers make offers and counter-offers to assess what the price should be. As they do this the historical price changes, usually floating around some long-term average. As it goes up, we experience inflation. As it goes down, deflation. However, there isn't a fixed supply of producers and purchasers, so as new ones arrive and old ones leave, this too has an impact on supply and prices. Money (either in electronic or physical form) needs to be available to reflect the transactions and underpin the economy. Most central banks (at least in more established economies) aim for inflation of 2-4% by controlling the availability of money and the cost of borrowing new money. There are numerous ways they can do this (printing, issuing bonds, etc.). The reason one wants some degree of inflation is because employees will never accept a pay cut even when one would significantly improve the overall economy. Companies often decrease their prices in order to match lower demand, but employees don't usually accept decreased wages for decreased labour demand. A nominal degree of overall money inflation therefore solves this problem. Employees who get a below-inflation wage increase are actually getting a wage cut. Supply and demand must be matched and some inflation is the inevitable consequence of this.", "title": "" }, { "docid": "f73c5e2421b687b44ad0d6913311ff7a", "text": "As an expansion on the correct answer: Consider a really boring economy. Nothing changes; wages and prices stay constant for years at a time. Every month the Consumer Price Index stays at 0%. Then, something catastrophic happens, say on July 31, 2000. A cheap local source for a vital resource runs out, and it must be obtained from a higher cost source. Floods cut internal road networks, resulting in higher transportation costs. Whatever. The new situation is permanent. As a result, the next month, August, 2000, prices go up 5%. That is, 5% higher than the previous month, July, 2000, and 5% higher than a year previously, August 1999. There is a lot of consternation, and politicians each promise that they and only they can wrestle inflation to the ground. But, when the figures for September, 2000 come out, inflation stays the same. Prices are the same as in August, 2000, and 5% higher than in September, 1999. This goes on for months. Nothing changes, prices stay the same, and the inflation rate, year over year, stays at 5%. Finally, the figures for August, 2001 come out. Wonder of wonders; prices are the same as in August, 2000, and inflation drops to zero. And the politicians all take the credit. Short version: inflation year over year changes either because of what in now included in the month just past, or what is now excluded from a year ago.", "title": "" }, { "docid": "63b7637214edacc81cb96fc946aaab97", "text": "FYI...prices don't always go up. Inflation is a monetary phenomenon. I'm simplifying greatly here: if more money is printed (or the money supply increases through fractional reserve banking) and it is chasing the same amount of goods then prices will go up. Conversely, if money is held constant and the economy becomes more productive, producing more goods, then a constant amount of money is chasing an increasing amount of goods and prices go down. After the Civil War the greenback went back to being on a gold standard in 1879. After 1879 greenbacks could be redeemed for gold. Gold restricts money growth since it is difficult to obtain. Here are the price and wage indexes from 1869 - 1889 (from here): Notice from 1879 to 1889 that wholesale and consumer prices fall but wages start to increase. Imagine your salary staying the same (or even increasing) but the prices of items falling. Still don't think inflation is a monetary phenomenon? Here is a CPI chart from 1800 to 2007: Notice how the curve starts to go drastically up around 1970. What happen then? The US dollar went off the gold-exchange standard and the US dollar became a purely fiat currency backed by nothing but government decree which allows the Federal Reserve to print money ad nauseum.", "title": "" }, { "docid": "d262fd91fe48c9dd57b1c42114c26ab5", "text": "With the netural position delta strategy under high IV returns short vega,there is a possibility to profit from a decline in IV. Of course, if volatility rises higher, the position will lose money. It is therefore best to establish short vega delta-neutral positions when implied volatility is at levels that are in the 90th percentile ranking.", "title": "" }, { "docid": "281b87ce29ace56b33b832593ffd7a81", "text": "Avoiding tobacco, etc is fairly standard for a fund claiming ethical investing, though it varies. The hard one on your list is loans. You might want to check out Islamic mutual funds. Charging interest is against Sharia law. For example: http://www.saturna.com/amana/index.shtml From their about page: Our Funds favor companies with low price-to-earnings multiples, strong balance sheets, and proven businesses. They follow a value-oriented approach consistent with Islamic finance principles. Generally, these principles require that investors avoid interest and investments in businesses such as liquor, pornography, gambling, and banks. The Funds avoid bonds and other conventional fixed-income securities. So, it looks like it's got your list covered. (Not a recommendation, btw. I know nothing about Amana's performance.) Edit: A little more detail of their philosophy from Amana's growth fund page: Generally, Islamic principles require that investors share in profit and loss, that they receive no usury or interest, and that they do not invest in a business that is prohibited by Islamic principles. Some of the businesses not permitted are liquor, wine, casinos, pornography, insurance, gambling, pork processing, and interest-based banks or finance associations. The Growth Fund does not make any investments that pay interest. In accordance with Islamic principles, the Fund shall not purchase conventional bonds, debentures, or other interest-paying obligations of indebtedness. Islamic principles discourage speculation, and the Fund tends to hold investments for several years.", "title": "" } ]	fiqa
3516417e8492fab7becbb9b5e40af2ea	Retirement Options for Income	[ { "docid": "9c3f83e175a8cc33986f6538defbd934", "text": "\"I can think of one major income source you didn't mention, dividends. Rather than withdrawing from your pension pot, you can roll it over to a SIPP, invest it in quality dividend growth stocks, then (depending on your pension size) withdraw only the dividends to live on. The goal here is that you buy quality dividend growth stocks. This will mean you rarely have to sell your investments, and can weather the ups and downs of the market in relative comfort, while using the dividends as your income to live off of. The growth aspect comes into play when considering keeping up with inflation, or simply growing your income. In effect, companies grow the size of their dividend payments and you use that to beat the effects of inflation. Meanwhile, you do get the benefit of principle growth in the companies you've invested in. I don't know the history of the UK stock market, but the US market has averaged over 7% total return (including dividends) over the long term. A typical dividend payout is not much better than your annuity option though -- 3% to 4% is probably achievable. Although, looking at the list of UK Dividend Champion list (companies that have grown their dividend for 25 years continuous), some of them have higher yields than that right now. Though that might be a warning sign... BTW, given all the legal changes around buy-to-lets recently (increases stamp duty on purchase, reduction in mortgage interest deduction, increased paperwork burden due to \"\"right to rent\"\" laws, etc.) you want to check this carefully to make sure you're safe on forecasting your return.\"", "title": "" }, { "docid": "47d0174bbb4750ed16c6be1e7aa8e18d", "text": "If you withdraw all (or most) of your pension 25% is tax free but the rest is treated as income upon which you will pay income tax at the usual UK rates. Withdrawing a lump sum to buy property is therefore unlikely to be 10% per annum as you'll spend years making up lost ground on the initial capital investment. If your pension is a self invested personal pension (a SIPP) you could buy property within the pension wrapper itself which would avoid the income tax hit. if you don't have a SIPP you may be able to convert your pension to a SIPP but you would be wise to seek professional advice about that. The UK government is also introducing an additional 3% stamp duty on properties which are not your first home so this may further impact your returns. This would apply whether you withdraw your pension as cash or buy the property within a SIPP. One other alternative to an annuity in the UK is called drawdown where you keep the money invested in your pension as it is now and withdraw an annual income. This means your tax bill is reduced as you get to use your annual allowance each year and will also pay less higher rate tax. The government provides more details on its website.", "title": "" }, { "docid": "38209351c883c0ccdec99ec8f3586956", "text": "\"I agree that you should CONSIDER a shares based dividend income SIPP, however unless you've done self executed trading before, enough to understand and be comfortable with it and know what you're getting into, I would strongly suggest that as you are now near retirement, you have to appreciate that as well as the usual risks associated with markets and their constituent stocks and shares going down as well as up, there is an additional risk that you will achieve sub optimal performance because you are new to the game. I took up self executed trading in 2008 (oh yes, what a great time to learn) and whilst I might have chosen a better time to get into it, and despite being quite successful over all, I have to say it's the hardest thing I've ever done! The biggest reason it'll be hard is emotionally, because this pension pot is all the money you've got to live off until you die right? So, even though you may choose safe quality stocks, when the world economy goes wrong it goes wrong, and your pension pot will still plummet, somewhat at least. Unless you \"\"beat the market\"\", something you should not expect to do if you haven't done it before, taking the rather abysmal FTSE100 as a benchmark (all quality stocks, right? LOL) from last Aprils highs to this months lows, and projecting that performance forwards to the end of March, assuming you get reasonable dividends and draw out £1000 per month, your pot could be worth £164K after one year. Where as with normal / stable / long term market performance (i.e. no horrible devaluation of the market) it could be worth £198K! Going forwards from those 2 hypothetical positions, assuming total market stability for the rest of your life and the same reasonable dividend payouts, this one year of devaluation at the start of your pensions life is enough to reduce the time your pension pot can afford to pay out £1000 per month from 36 years to 24 years. Even if every year after that devaluation is an extra 1% higher return it could still only improve to 30 years. Normally of course, any stocks and shares investment is a long term investment and long term the income should be good, but pensions usually diversify into less and less risky investments as they get close to maturity, holding a certain amount of cash and bonds as well, so in my view a SIPP with stocks and shares should be AT MOST just a part of your strategy, and if you can't watch your pension pot payout term shrink from 26 years to 24 years hold your nerve, then maybe a SIPP with stocks and shares should be a smaller part! When you're dependent on your SIPP for income a market crash could cause you to make bad decisions and lose even more income. All that said now, even with all the new taxes and loss of tax deductible costs, etc, I think your property idea might not be a bad one. It's just diversification at the end of the day, and that's rarely a bad thing. I really DON'T think you should consider it to be a magic bullet though, it's not impossible to get a 10% yield from a property, but usually you won't. I assume you've never done buy to let before, so I would encourage you to set up a spread sheet and model it carefully. If you are realistic then you should find that you have to find really REALLY exceptional properties to get that sort of return, and you won't find them all the time. When you do your spread sheet, make sure you take into account all the one off buying costs, build a ledger effectively, so that you can plot all your costs, income and on going balance, and then see what payouts your model can afford over a reasonable number of years (say 10). Take the sum of those payouts and compare them against the sum you put in to find the whole thing. You must include budget for periodic minor and less frequent larger renovations (your tenants WON'T respect your property like you would, I promise you), land lord insurance (don't omit it unless you maintain capability to access a decent reserve (at least 10-20K say, I mean it, it's happened to me, it cost me 10K once to fix up a place after the damage and negligence of a tenant, and it definitely could have been worse) but I don't really recommend you insuring yourself like this, and taking on the inherent risk), budget for plumber and electrician call out, or for appropriate schemes which include boiler maintenance, etc (basically more insurance). Also consider estate agent fees, which will be either finders fees and/or 10% management fees if you don't manage them yourself. If you manage it yourself, fine, but consider the possibility that at some point someone might have to do that for you... either temporarily or permanently. Budget for a couple of months of vacancy every couple of years is probably prudent. Don't forget you have to pay utilities and council tax when its vacant. For leaseholds don't forget ground rent. You can get a better return on investment by taking out a mortgage (because you make money out of the underlying ROI and the mortgage APR) (this is usually the only way you can approach 10% yield) but don't forget to include the cost of mortgage fees, valuation fees, legal fees, etc, every 2 years (or however long)... and repeat your model to make sure it is viable when interest rates go up a few percent.\"", "title": "" } ]	[ { "docid": "7b6a14735718b5db9645179bf66da501", "text": "\"There is a basic difference between saving for voluntary retirement (i.e. choosing to do things other than work even though you could still work) and the need to save for later in life in general. Regardless of how much you like your job, a time will eventually come when you are no longer able to work, and you will need an alternate source of income to live from at that point. Unfortuately, this is also the time when most people generally have the highest medical bills as well, and may need other services such as long-term nursing home care. So even if you plan to work as long as possible, a retirement fund is an excellent way to plan for these needs as it is tax-advantaged and many companies offer matching contributions. I would simply recommend that you see \"\"retirement accounts\"\" as a good way to accomplish your goals - you don't have to use them to create a \"\"typical\"\" retirement. Once you've taken advantages of the match and tax subsidies, you may also wish to consider saving for an annuity. Fees can be high, so you will need to do your homework (generally, you want to wait and buy an immediate annuity), but this is another way to turn savings into guaranteed income once you need to stop working. Best of luck!\"", "title": "" }, { "docid": "20f1eb0b7b0447afe91dcda52c1035e0", "text": "By not saving some of your income you put yourself at risk of the following: If you are comfortable taking on those risks, then continue what you are doing (I'm not being sarcastic here...some people are perfectly comfortable taking on these risks). I plan on working until I die so I am not as concerned with saving for retirement but I do save some money for temporary job loss situations. Saving money presents its own set of issues (e.g. Where should I put the money?, Should I invest the money?, What type of investments?). If you have no interest in researching answers to these type of questions then I would suggest what others have already suggested: have part of your paycheck automatically siphoned into an account that can only be accessed by a trusted family member.", "title": "" }, { "docid": "a448d95f22d848cd9953392e69d8a3c6", "text": "If you exceed the income limit for deducting a traditional IRA (which is very low if you are covered by a 401(k) ), then your IRA options are basically limited to a Roth IRA. The Cramer person probably meant to compare 401(k) and IRA from the same pre-/post-tax-ness, so i.e. Traditional 401(k) vs. Traditional IRA, or Roth 401(k) vs. Roth IRA. Comparing a Roth investment against a Traditional investment goes into a whole other topic that only confuses what is being discussed here. So if deducting a traditional IRA is ruled out, then I don't think Cramer's advice can be as simply applied regarding a Traditional 401(k). (However, by that logic, and since most people on 401(k) have Traditional 401(k), and if you are covered by a 401(k) then you cannot deduct a Traditional IRA unless you are super low income, that would mean Cramer's advice is not applicable in most situations. So I don't really know what to think here.)", "title": "" }, { "docid": "24636a04a95c3c08276dbab00b3e20a9", "text": "Yes, quite easily, in fact. You left a lot of numbers out, so lets start with some assumptions. If you are at the median of middle income families in the US that might mean $70,000/year. 15% of that is an investment of $875 per month. If you invest that amount monthly and assume a 6% return, then you will have a million dollars at approximately 57 years old. 6% is a very conservative number, and as Ben Miller points out, the S&P 500 has historically returned closer to 11%. If you assumed an aggressive 9% return, and continued with that $875/month for 40 years until you turn 65, that becomes $4 million. Start with a much more conservative $9/hr for $18,720 per year (40 hours * 52 weeks, no overtime). If that person saved 14% of his/her income or about $219 per month from 25 to 65 years old with the same 9%, they would still achieve $1 million for retirement. Is it much harder for a poor person? Certainly, but hopefully these numbers illustrate that it is better to save and invest even a small amount if that's all that can be done. High income earners have the most to gain if they save and the most to lose if they don't. Let's just assume an even $100,000/year salary and modest 401(k) match of 3%. Even married filing jointly a good portion of that salary is going to be taxed at the 25% rate. If single you'll be hitting the 28% income tax rate. If you can max out the $18,000 (2017) contribution limit and get an additional $3,000 from an employer match (for a total monthly contribution of $1750) 40 years of contributions would become $8.2 million with the 9% rate of return. If you withdrew that money at 4% per year you would have a residual income of $300k throughout your retirement.", "title": "" }, { "docid": "2a4b58782ce98a91cf8fa116d088a391", "text": "\"I'd suggest you avoid the Roth for now and use pretax accounts to get the greatest return. I'd deposit to the 401(k), enough to get as much match as permitted, then use a traditional IRA. You should understand how tax brackets work, and aim to use pre-tax to the extent it helps you avoid the 25% rate. If any incremental deposit would be 15% money, use Roth for that. Most discussions of the pre-tax / post tax decision talk about 2 rates. That at the time of deposit and time of withdrawal. There are decades in between that shouldn't be ignored. If you have any life change, a marriage, child, home purchase, etc, there's a chance your marginal bracket drops back down to 15%. That's the time to convert to Roth, just enough to \"\"top off\"\" the 15% bracket. Last, I wouldn't count on that pension, there's too much time until you retire to count on that income. Few people stay at one job long enough to collect on the promise of a pension that takes 30+ years to earn, and even if you did, there's the real chance the company cancels the plan long before you retire.\"", "title": "" }, { "docid": "20ec0911ab39c1fa1e63136f80b996c9", "text": "If your employer offers a 401k retirement plan then you can contribute a portion of your salary to your retirement and that will lower your effective income to remain in the 15% bracket (although as others have pointed out, only the dollars that exceed the 15% bracket will be taxed at the higher rate anyway). AND if your employer offers any kind of 401k matching contribution, that's effectively a pay-raise or 100% return on investment (depending on how you prefer to look at it).", "title": "" }, { "docid": "5b740b898731a15a46298c807c24c05d", "text": "\"I'll add 2 observations regarding current answers. Jack nailed it - a 401(k) match beats all. But choose the right flavor account. You are currently in the 15% bracket (i.e. your marginal tax rate, the rate paid on the last taxed $100, and next taxed $100.) You should focus on Roth. Roth 401(k) (and if any company match, that goes into a traditional pretax 401(k). But if they permit conversions to the Roth side, do it) You have a long time before retirement to earn your way into the next tax bracket, 25%. As your income rises, use the deductible IRA/ 401(k) to take out money pretax that would otherwise be taxed at 25%. One day, you'll be so far into the 25% bracket, you'll benefit by 100% traditional. But why waste the opportunity to deposit to Roth money that's taxed at just 15%? To clarify the above, this is the single rate table for 2015: For this discussion, I am talking taxable income, the line on the tax return designating this number. If that line is $37,450 or less, you are in the 15% bracket and I recommend Roth. Say it's $40,000. In hindsight on should put $2,550 in a pretax account (Traditional 401(k) or IRA) to bring it down to the $37,450. In other words, try to keep the 15% bracket full, but not push into 25%. Last, after enough raises, say you at $60,000 taxable. That, to me is \"\"far into the 25% bracket.\"\" $20,000 or 1/3 of income into the 401(k) and IRA and you're still in the 25% bracket. One can plan to a point, and then use the IRA flavors to get it dead on in April of the following year. To Ben's point regarding paying off the Student Loan faster - A $33K income for a single person, about to have the new expense of rent, is not a huge income. I'll concede that there's a sleep factor, the long tern benefit of being debt free, and won't argue the long term market return vs the rate on the loan. But here we have the probability that OP is not investing at all. It may take $2000/yr to his 401(k) capture the match (my 401 had a dollar for dollar match up to first 6% of income). This $45K, after killing the card, may be his only source for the extra money to replace what he deposits to his 401(k). And also serve as his emergency fund along the way.\"", "title": "" }, { "docid": "54b561dd3d3abc1fbe047ea8d373a47f", "text": "Yes, you can have both. You'll need business income to contribute to a SEP IRA though.", "title": "" }, { "docid": "e3933fbac5eaa1df4c0b1e86f9e77bde", "text": "\"My understanding is that credit card companies are allowed to accept retirement income as part of the income that would qualify you for credit. The Consumer Finance Protection Bureau issued a final rule amendment to Regulation Z (the regulations around Truth in Lending Act) in 2013 in response to some of the tightening of credit that resulted from the Credit CARD Act of 2009. The final rule allows for credit issuers to \"\"consider income and assets to which such consumers have a reasonable expectation of access.\"\" (Page 1) On page 75, it outlines some examples: Other sources of income include interest or dividends, retirement benefits, public assistance, alimony, child support, and separate maintenance payments.... Current or reasonably expected income also includes income that is being deposited regularly into an account on which the consumer is an accountholder (e.g., an individual deposit account or joint account). Assets include, for example, savings accounts and investments. Fannie Mae explicitly mentions IRA distributions in its Documentation Requirements on mortgage applications. For them, they require that the income be \"\"expected to continue for at least three years after the date of the mortgage application.\"\" Lenders can reject or lower your credit limit for just about any reason that they want, but it seems appropriate for you to include your retirement distributions in your income for credit applications.\"", "title": "" }, { "docid": "fb78091094c61cbf35643c978ba23f06", "text": "I am in the process of writing an article about how to maximize one's Social Security benefits, or at least, how to start the analysis. This chart, from my friends at the Social Security office shows the advantage of waiting to take your benefit. In your case, you are getting $1525 at age 62. Now, if you wait 4 years, the benefit jumps to $2033 or $508/mo more. You would get no benefit for 4 years and draw down savings by $73,200, but would get $6,096/yr more from 64 on. Put it off until 70, and you'd have $2684/mo. At some point, your husband should apply for a spousal benefit (age 66 for him is what I suggest) and collect that for 4 years before moving to his own benefit if it's higher than that. Keep in mind, your generous pensions are likely to push you into having your social security benefit taxed, and my plan, above will give you time to draw down the 401(k) to help avoid or at least reduce this.", "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": "a5962b3b7eac619b9f8797580b9e859f", "text": "The 20x number is drawn directly from the assumption that it should be easy to get more than 4% average return on investment. After lots of historical studies, Monte Carlo simulations, and the like there was a consensus that saving more didn't significantly increase the odds of achieving at least the desired yearly income sustainably. (That's the same calculations the insurance firms use as the starting point for writing annuities.) There are also some assumptions about inflation and its interaction with the market built into this rule-of-thumb. Note that this is 20x what you want as post-retirement income, not necessarily 20x your current income. I have a moderately frugal lifestyle, And my budget confirms that my actual spending -- even in years when I allow myself a splurge -- is well below my current income, with the excess going into the investments. To sustain my lifestyle, I need that lower number plus any taxes that'll be due on it plus whatever I want to allocate as average emergency reserve... and theoretically I should be able to base the 20x on that lower number. When I run estimates (Quicken has a tool for this, so does my credit union, I presume others are widely available), they tend to confirm this. I'm still using the higher number for planning, though. I don't feel any need to retire early (though I have issues with my current manager), and I have no objection at all to being able to afford better toys on occasion. Or to leaving a legacy to friends, relatives, and/or charity. But it's nice to know exactly when I could punt the day job if I wanted to.", "title": "" }, { "docid": "810eceab7edb6216ea4133d029874089", "text": "\"I humbly disagree with #2. the use of Roth or pre-tax IRA depends on your circumstance. With no match in the 401(k), I'd start with an IRA. If you have more than $5k to put in, then some 401(k) would be needed. Edit - to add detail on Roth decision. I was invited to write a guest article \"\"Roth IRAs and your retirement income\"\" some time ago. In it, I discuss the large amount of pretax savings it takes to generate the income to put you in a high bracket in retirement. This analysis leads me to believe the risk of paying tax now only to find tHat you are in a lower bracket upon retiring is far greater than the opposite. I think if there were any generalization (I hate rules of thumb, they are utterly pick-apartable) to be made, it's that if you are in the 15% bracket or lower, go Roth. As your income puts you into 25%, go pretax. I believe this would apply to the bulk of investors, 80%+.\"", "title": "" }, { "docid": "4b24c9a7d92256bd10cb736a31dce103", "text": "I'm concerned about your extreme focus on Roth. In today's dollars it would take nearly $2 million to produce enough of an annual withdrawal to fill the 15% bracket. If you are able to fund both 401(k)s and 2 IRAs (total $43K) you're clearly in the 25% bracket or higher. If you retire 100% with Roth savings, and little to no pretax money, you miss the opportunity to receive withdrawals at zero(1), 10, and 15% brackets. Missing this isn't much better than having too much pretax and being in a higher bracket at retirement. One factor often overlooked is that few people manage a working life with no gaps. During times when income is lower for whatever reason, it's a great time to convert a bit to Roth. (1)by zero bracket, I mean the combined standard deduction and exemptions. For two people this is currently (for 2017) $20,800 total. And it goes up a bit most years.", "title": "" }, { "docid": "416ef7846826a6105c8771f921f2ad33", "text": "\"You don't state a long term goal for your finances in your message, but I'm going to assume you want to retire early, and retire well. :-) any other ideas I'm missing out on? A fairly common way to reach financial independence is to build one or more passive income streams. The money returned by stock investing (capital gains and dividends) is just one such type of stream. Some others include owning rental properties, being a passive owner of a business, and producing goods that earn long-term royalties instead of just an immediate exchange of time & effort for cash. Of these, rental property is probably one of the most well-known and easiest to learn about, so I'd suggest you start with that as a second type of investment if you feel you need to diversify from stock ownership. Especially given your association with the military, it is likely there is a nearby supply of private housing that isn't too expensive (so easier to get started with) and has a high rental demand (so less risk in many ways.) Also, with our continued current low rate environment, now is the time to lock-in long term mortgage rates. Doing so will reap huge benefits as rates and rents will presumably rise from here (though that isn't guaranteed.) Regarding the idea of being a passive business owner, keep in mind that this doesn't necessarily mean starting a business yourself. Instead, you might look to become a partner by investing money with an existing or startup business, or even buying an existing business or franchise. Sometimes, perfectly good business can be transferred for surprisingly little down with the right deal structure. If you're creative in any way, producing goods to earn long-term royalties might be a useful path to go down. Writing books, articles, etc. is just one example of this. There are other opportunities depending on your interests and skill, but remember, the focus ought to be on passive royalties rather than trading time and effort for immediate money. You only have so many hours in a year. Would you rather spend 100 hours to earn $100 every year for 20 years, or have to spend 100 hours per year for 20 years to earn that same $100 every year? .... All that being said, while you're way ahead of the game for the average person of your age ($30k cash, $20k stocks, unknown TSP balance, low expenses,) I'm not sure I'd recommend trying to diversify quite yet. For one thing, I think you need to keep some amount of your $30k as cash to cover emergency situations. Typically people would say 6 months living expenses for covering employment gaps, but as you are in the military I don't think it's as likely you'll lose your job! So instead, I'd approach it as \"\"How much of this cash do I need over the next 5 years?\"\" That is, sum up $X for the car, $Y for fun & travel, $Z for emergencies, etc. Keep that amount as cash for now. Beyond that, I'd put the balance in your brokerage and get it working hard for you now. (I don't think an average of a 3% div yield is too hard to achieve even when picking a safe, conservative portfolio. Though you do run the risk of capital losses if invested.) Once your total portfolio (TSP + brokerage) is $100k* or more, then consider pulling the trigger on a second passive income stream by splitting off some of your brokerage balance. Until then, keep learning what you can about stock investing and also start the learning process on additional streams. Always keep an eye out for any opportunistic ways to kick additional streams off early if you can find a low cost entry. (*) The $100k number is admittedly a rough guess pulled from the air. I just think splitting your efforts and money prior to this will limit your opportunities to get a good start on any additional streams. Yes, you could do it earlier, but probably only with increased risk (lower capital means less opportunities to pick from, lower knowledge levels -- both stock investing and property rental) also increase risk of making bad choices.\"", "title": "" } ]	fiqa
5fdc98d9226f1e7a90b598b1669a46c8	What does “Yield Curve” mean?	[ { "docid": "8ad5f8bd548127edc2bc57ee3372271b", "text": "\"Great question! A Yield Curve is a plot of the yields for different maturities of debt. This can be for any debt, but the most common used when discussing yield curves is the debt of the Federal Government. The yield curve is observed by its slope. A curve with a positive slope (up and to the right) or a steepening curve, i.e. one that's becoming more positively sloped or less negatively sloped, may indicate several different situations. The Kansas City Federal Reserve has a nice paper that summarizes various economic theories about the yield curve, and even though it's a bit dated, the theories are still valid. I'll summarize the major points here. A positively sloped yield curve can indicate expectations of inflation in the future. The longer a security has before it matures, the more opportunities it has to be affected by changes in inflation, so if investors expect inflation to occur in the future, they may demand higher yields on longer-term securities to compensate them for the additional inflationary risk. A steepening yield curve may indicate that investors are increasing their expectations of future inflation. A positively sloped yield curve may also reflect expectations of deprecation in the dollar. The publication linked before states that depreciation of the dollar may have increased the perceived risk of future exchange rate changes and discouraged purchases of long-term Treasury securities by Japanese and other foreign investors, forcing the yields on these securities higher. Supply shocks, e.g. decreases in oil prices that lead to decreased production, may cause the yield curve to steepen because they affect short-term inflation expectations significantly more than long-term inflation. For example, a decrease in oil prices may decrease short-term inflation expectations, so short-term nominal interest rates decline. Investors usually assume that long-term inflation is governed more by fundamental macroeconomic factors than short-term factors like commodity price swings, so this price shock may lead short-term yields to decrease but leave long-term relatively unaffected, thus steepening the yield curve. Even if inflation expectations remain unchanged, the yield curve can still change. The supply of and demand for money affects the \"\"required real rate,\"\" i.e. the price of credit, loans, etc. The supply comes from private savings, money coming from abroad, and growth in the money supply, while demand comes from private investors and the government. The paper summarizes the effects on real rates by saying Lower private saving, declines in the real money supply, and reduced capital inflows decrease the supply of funds and raise the required real rate. A larger government deficit and stronger private investment raise the required real rate by increasing the demand for funds. The upward pressure on future real interest rates contributes to the yield curve's positive slope, and a steepening yield curve could indicate an increasing government deficit, declines in private savings, or reduced capital coming in from abroad (for example, because of a recession in Europe that reduces their demand for US imports). an easing of monetary policy when is economy is already producing near its capacity ... would initially expand the real money supply, lowering required short-term real interest rates. With long-term real interest rates unchanged, the yield curve would steepen. Lower interest rates in turn would stimulate domestic spending, putting upward pressure on prices. This upward price pressure would probably increase expected inflation, and as the first bullet point describes, this can cause long-term nominal interest rates to rise. The combination of the decline in short-term rates and the rise in long-term rates steepens the yield curve. Similarly, an inverted yield curve or a positively sloped yield curve that is becoming less steep may indicate the reverse of some or all of the above situations. For example, a rise in oil prices may increase expectations of short-term inflation, so investors demand higher interest rates on short-term debt. Because long-term inflation expectations are governed more by fundamental macroeconomic factors than short-term swings in commodity prices, long-term expectations may not rise nearly as much as short term expectations, which leads to a yield curve that is becoming less steep or even negatively sloped. Forecasting based on the curve slope is not an exact science, just one of many indicators used. Note - Yield Curve was not yet defined here and was key to my answer for What is the \"\"Bernanke Twist\"\" and \"\"Operation Twist\"\"? What exactly does it do? So I took the liberty of ask/answer.\"", "title": "" }, { "docid": "2a0324b0cdfebc89bc0461b5ea87187f", "text": "Yield is the term used to describe how much income the bond will generate if the bond was purchased at a particular moment in time. If I pay $100 for a one year, $100 par value bond that pays 5% interest then the bond yields 5% since I will receive $5 from a $100 investment if I held the bond to maturity. If I pay $90 for the same one year bond then the bond yields 17% since I will receive $15 from a $90 investment if I held the bond to maturity. There are many factors that affect what yield creditors will accept: It is the last bullet that ultimately determines yield. The other factors feed into the creditor’s desire to hold money today versus receiving money in the future. I desire money in my hand more than a promise to receive money in the future. In order to entice me to lend my money someone must offer me an incentive. Thus, they must offer me more money in the future in order for me to part with money I have. A yield curve is a snapshot of the yields for different loan durations. The x-axis is the amount of time left on the bond while the y-axis is the yield. The most cited yield curve is the US treasury curve which displays the yields for loans to the US government. The yield curve changes while bonds are being traded thus it is always a snapshot of a particular moment in time. Short term loans typically have less yield than longer term loans since there is less uncertainty about the near future. Yield curves will flatten or slightly invert when creditors desire to keep their money instead of loaning it out. This can occur because of a sudden disruption in the market that causes uncertainty about the future which leads to an increase in the demand for cash on hand. The US government yield curve should be looked at with some reservation however since there is a very large creditor to the US government that has the ability to loan the government an unlimited amount of funds.", "title": "" } ]	[ { "docid": "a87286cb3d08b943e91444698796d93f", "text": "The SEC 30-Day Yield you're seeing is a standardized yield calculation set out by the Securities & Exchange Commission. It can be useful for comparing bond funds, but it doesn't guarantee what you'll actually earn from a fund. IMPORTANT: The SEC 30-day yield represents a bond fund's returns from the previous 30 days expressed as an annual percentage of the current fund price — yes, an annual percentage. In other words, don't expect 1.81% return on your money every 30 days! Such a return is too-good-to-be-true return in today's low rate environment. 1.81% per year? More reasonable. Even then, the 1.81% you see is merely an estimate, one based on assumptions, of what you might expect to earn if you keep your money in place for the next year. The estimate is based on the assumptions that: These aren't reliable assumptions. BIV's price does fluctuate. You are not promised to get your principal back with a bond fund. Only an individual bond promises your principal back, and only at maturity. So, earning $181 on $10,000 invested for a full year while taking on interest-rate and other risks might not be worth the trouble of putting your money in a brokerage account. You'll need to transfer the money in and out, and there are potential trading fees to take into account. (How much to buy/sell units?) An FDIC-insured high interest savings account makes more sense.", "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": "4b7f04d94c8e7840ef8cb467b3b6f302", "text": "\"When \"\"people say\"\", each person is referring to whatever he/she is looking at. Interest rates tend to move roughly the same, but often there is a bias regarding long vs. short term. In the US right now, short term interest rates are very low but there is a lot of chatter saying they will rise in the future. The differential between long term rates and short term rates is high compared to historical norms, suggesting that the market believes this chatter. You can also look at the differences in rates between different quality levels. If the economy is improving, the difference in rate for lower rated debt vs. higher rated debt decreases as people think the chance of businesses failing is decreasing. Right now, any interest rate you look at is well below long term historical averages, so asserting that interest rates are low is quite safe.\"", "title": "" }, { "docid": "a94b5eecca6ba3b05164821c00dcc103", "text": "\"https://www.fool.com/investing/general/2013/07/30/2-types-of-risk-2-types-of-bubbles.aspx (mirror): The Wall Street Journal reviews: What Mr. Bernstein calls \"\"shallow risk\"\" is a temporary drop in an asset's market price; decades ago, the great investment analyst Benjamin Graham referred to such an interim decline as \"\"quotational loss.\"\" \"\"Deep risk,\"\" on the other hand, is an irretrievable real loss of capital, meaning that after inflation you won't recover for decades -- if ever. So quotational loss = loss not explained by change of actual value of a firm.\"", "title": "" }, { "docid": "b692f4e4eeeb8f983144d9d77026b05b", "text": "\"Like all financial investments, the value of a bond is the present value of expected future cash flows. The Yield to Maturity is the annualized return you get on your initial investment, which is equivalent to the discount rate you'd use to discount future cash flows. So if you discount all future cashflows at 6% annually, you can calculate the price of the bond: So the price of a $1,000 bond (which is how bond prices are typically quoted) would be $1,097.12. The current yield is just the current coupon payment divided by the current price, which is 70/1,097.12 or 6.38% Question 3 makes no sense, since the yield to maturity would be the same if you bought the bond at market price Question 4 talks about a \"\"sale\"\" date which makes me think that it assumes you sold the bond on the coupon date, but you'd have to know the sale price to calculate the rate of return.\"", "title": "" }, { "docid": "2b49a84cc6307004df52a8092a033866", "text": "\"You are asking multiple questions here, pieces of which may have been addressed in other questions. A bond (I'm using US Government bonds in this example, and making the 'zero risk of default' assumption) will be priced based on today's interest rate. This is true whether it's a 10% bond with 10 years left (say rates were 10% on the 30 yr bond 20 years ago) a 2% bond with 10 years, or a new 3% 10 year bond. The rate I use above is the 'coupon' rate, i.e. the amount the bond will pay each year in interest. What's the same for each bond is called the \"\"Yield to Maturity.\"\" The price adjusts, by the market, so the return over the next ten years is the same. A bond fund simply contains a mix of bonds, but in aggregate, has a yield as well as a duration, the time-and-interest-weighted maturity. When rates rise, the bond fund will drop in value based on this factor (duration). Does this begin to answer your question?\"", "title": "" }, { "docid": "69ac5ff91f14b449464ffc5a50c2545a", "text": "\"Is there more on where Dalio gets his definitions for the short-term debt cycle (5-8 years or so) and \"\"deleveraging\"\" and the long-term debt cycle (75-100 years)? (or his evidence that separates the two)? At one point 18:10, he says the difference is that in a deleveraging, interest rates hit 0 and can no longer go lower, but I don't know if that works as a definition per se. There are other things that central banks do when interest rates hit 0, like buy up assets (which he does mention and include in the \"\"print money\"\" category of things that can be done during a deleveraging). And one of the deleveragings he cites, England in the 1950s, according to Wikipedia was due to difficulty in transitioning out from war production, and according to [this excel file](http://www.bankofengland.co.uk/statistics/Documents/rates/baserate.xls) from the Bank of England on historical rates, it doesn't say interest rates went to 0 at that time (unless Dalio is referring to another point in history when he cites 1950s England). 20:30 His definition of a depression is when debt restructuring or defaults happen. Interesting. What I learned was that there isn't really a hard and fast definition for recessions and depressions (e.g. a recession is two quarters of negative growth in a row and a depression is just a reeeaallly bad/long recession). And I don't think I recall encountering in the past an attempt to define what a \"\"deleveraging\"\" event of an economy is. 24:30 Is debt reduction and redistribution of wealth deflationary? I think it depends on how much the debt reduction or redistribution hurts the spending of the lender or wealthy versus how much it helps the spending of the borrower or the poor. Both are actually similarly \"\"giving some from the haves to the have nots,\"\" and especially redistribution of wealth is similar to fiscal spending, which is mentioned 25:30 as a valid inflationary way to try to help the economy. 26:00 Are deflationary methods (say, austerity) needed to balance out the inflationary methods (central bank buying assets and fiscal spending)? Aren't central bank (interest rates, quantitative easing) and the government (fiscal policy) still the main things that move inflation or deflation? I would think that debt reduction and redistribution of wealth are good when needed, but I wouldn't think you would do those things mainly* for their (supposed, see above for my doubts) deflationary effects. Still, a very interesting video and one of the best presented videos on a difficult subject.\"", "title": "" }, { "docid": "9419a87ad91b67ff8b186bc3e8ba3e11", "text": "Your question asked about a specific time the yield curve flattened or inverted. There are other times when the yield curve inverted or flattened. You also imply in your question that investors were flocking to long term bonds which lowered their yields. I don't believe this is the case. I believe investors were fleeing from short term bonds causing the yields on short term bonds to rise to meet those of long term bonds. The chart below shows the history of yields on US bonds over time. The shaded areas are where the yield curve flattened or inverted. Notice that after 1982 it is the short term yields that rise sharply to meet or cross the yields on longer term bonds. The yields on longer term bonds move little compared to the movement in yields on the short term bonds. Thus it is investors moving out of short term bonds that cause the yield curve to flatten or invert. These investors are not moving into longer term bonds since the yields on the longer term bonds do not move much at all at these times. In fact, in 2006 the longer term bond market was only 25% of the total US public debt while short term bonds made up 75%. It would take less money to move the yields on longer term bonds than it would on short term bonds yet the longer term yields did not move near as much as short term yields. So why are investors or banks moving out of short term bonds causing their yields to rise? I believe this happens for one of two reasons: they are moving into higher yielding investments or they need to raise cash to cover bad investments. Charts and more information here.", "title": "" }, { "docid": "099a0afe44a9775482bc038a44439a33", "text": "\"Beyond the yield/price relationship, a good intuitive way to understand it is just this: these people control a substantial amount of money that could be essentially loaned to governments. If they feel a particular policy is likely to lead to inflation or default, they may decide not to loan that country any more money. All else being equal, with a smaller supply of possible borrowers, the country will have to pay higher interest to fund a particular amount of debt. Furthermore they may loudly publicly announce that they will no longer lend to that country, in which case other participants may be persuaded that they too should no longer lend at the going rate. What's more, this is somewhat self-fulfilling: as rates go up, the country will spend more money servicing its debt, and will in fact become a worse risk. So I think the thing that gives them their \"\"vigilante\"\" nature is that governments worry they will round up a posse and things will run away. As far as actual incentives, I would welcome more information but I think the main bond vigilante case is that they are basically long on the country but want it to tighten up its policy so their existing holdings don't decline.\"", "title": "" }, { "docid": "325ef8ebd7d05c2444b8ed63b93414b1", "text": "\"Those are the \"\"right\"\" yields. They are historically (but not \"\"nonsensically\"\") low. Those yields are reflective of the sluggish U.S. and global economic activity of the past decade. If global growth were higher, the yields would be higher. The period most nearly comparable to the past 10 years in U.S. and world history was the depressed 1930s. (I am the author of this 2004 book that predicted a stock market crash (which occurred in 2008), and the modern 1930s, but I was wrong in my assumption that the modern 1930s would involve another depression rather than 'slow growth.')\"", "title": "" }, { "docid": "a67a9aa56c7f5ce0cb27dd013d0dc2a8", "text": "Mortgage rates tend to track the yield on the 10-year Treasury note. The CBOE Interest Rate 10-Year T-Note, TNX, is a security directly related to this rate. Divide the CBOE price of TNX by 10 to get the yield. One can also track the 10Y T-Note yield at yahoo finance using ticker symbol (^TNX). One can also track the 10Y T-Note yield at yahoo finance using ticker symbol (^TNX).", "title": "" }, { "docid": "0fa34b85c96df77350bbe15dc4f87d3f", "text": "It refers to the risk free rate of a particular country. Because all other rates are usually pegged to the risk free rate. In US,it is the 30 day treasury rate. In England, it is the LIBOR In Canada, it is the overnight rate at which banks lend money to each other. All of these come under the category of risk free rate.", "title": "" }, { "docid": "37b135e4dca1a8ccbea2e58b9507de8c", "text": "No, it means what it says. Prices change, hence price of the derivative can go down even if the price of the underlying doesn't change (e.g. theta decay in options).", "title": "" }, { "docid": "3c54acf90c8b30c09d6c9550bc7ab692", "text": "Usually the market. I'm a company issuing a 5-year bond with 5% coupon payments. It goes on the market to whoever is willing to pay the most for it. The prices that those investors pay implies what the required yield is. For instance, if they're willing to pay exactly face value for the bond, then that shows they have a required return of (in this case) 5%. Paying more or less for the bond implies a require rate less than or greater than 5%, with the exact amounts derivable with basic algebra. The same principle can be applied to any other asset.", "title": "" }, { "docid": "b2e48515aa9d61db8cdfc0c509211815", "text": "\"he is saying that \"\"QE\"\" meaning \"\"quantitative easing\"\" meaning \"\"the theory that the government flooded the markets with money, artificially driving up the price of stocks\"\" meant that hedge funds, which HEDGE, and benefit from an up-and-down market, couldn't win in a market where it just kept going up. It's basically a conspiracy theory bears have been pushing for years \"\"QE artificially inflated the market, it's gonna crash!\"\"\"", "title": "" } ]	fiqa
aa2293b67cd33de5f913481d609fc3e6	How do banks lose money on foreclosures?	[ { "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": "6de8275802733d88deb52209a02a4bd5", "text": "\"Someone has to hand out cash to the seller. Even if no physical money changes hands (and I've bought a house; I can tell you a LOT of money changes hands at closing in at least the form of a personal check), and regardless of exactly how the bank accounts for the actual disbursement of the loan, the net result is that the buyer has cash that they give the seller, and are now in debt to the bank for least that amount (but, they now have a house). Now, the bank probably didn't have that money just sitting in its vault. Money sitting in a vault is money that is not making more money for the bank; therefore most banks keep only fractionally more than the percentage of deposit balances that they are required to keep by the Feds. There are also restrictions on what depositors' money can be spent on, and loans are not one of them; the model of taking in money in savings accounts and then loaning it out is what caused the savings and loan collapse in the 80s. So, to get the money, it turns to investors; the bank sells bonds, putting itself in debt to bond holders, then takes that money and loans it out at a higher rate, covering the interest on the bond and making itself a tidy profit for its own shareholders. Banks lose money on defaults in two ways. First, they lose all future interest payments that would have been made on the loan. Technically, this isn't \"\"revenue\"\" until the interest is calculated for each month and \"\"accrues\"\" on the loan; therefore, it doesn't show on the balance sheet one way or the other. However, the holders of those bonds will expect a return, and the banks no longer have the mortgage payment to cover the coupon payments that they themselves have to pay bondholders, creating cash flow problems. The second, and far more real and damaging, way that banks lose money on a foreclosure is the loss of collateral value. A bank virtually never offers an unsecured \"\"signature loan\"\" for a house (certainly not at the advertised 3-4% interest rates). They want something to back up the loan, so if you disappear off the face of the earth they have a clear claim to something that can help them recover their money. Usually, that's the house itself; if you default, they get the house from you and sell it to recover their money. Now, a major cause of foreclosure is economic downturn, like the one we had in 2009 and are still recovering from. When the economy goes in the crapper, a lot of things we generally consider \"\"stores of value\"\" lose that value, because the value of the whatzit (any whatzit, really) is based on what someone else would pay to have it. When fewer people are looking to buy that whatzit, demand drops, bringing prices with it. Homes and real estate are one of the real big-ticket items subject to this loss of value; when the average Joe doesn't know whether he'll have a job tomorrow, he doesn't go house-hunting. This average Joe may even be looking to sell an extra parcel of land or an income property for cash, increasing supply, further decreasing prices. Economic downturn can often increase crime and decrease local government spending on upkeep of public lands (as well as homeowners' upkeep of their own property). By the \"\"broken window\"\" effect, this makes the neighborhood even less desirable in a vicious cycle. What made this current recession a double-whammy for mortgage lenders is that it was caused, in large part, by a housing bubble; cheap money for houses made housing prices balloon rapidly, and then when the money became more expensive (such as in sub-prime ARMs), a lot of those loans, which should never have been signed off on by either side, went belly-up. Between the loss of home value (a lot of which will likely turn out to be permanent; that's the problem with a bubble, things never recover to their peak) and the adjustment of interest rates on mortgages to terms that will actually pay off the loan, many homeowners found themselves so far underwater (and sinking fast) that the best financial move for them was to walk away from the whole thing and try again in seven years. Now the bank's in a quandary. They have this loan they'll never see repaid in cash, and they have this home that's worth maybe 75% of the mortgage's outstanding balance (if they're lucky; some homes in extremely \"\"distressed\"\" areas like Detroit are currently trading for 30-40% of what they sold for just before the bubble burst). Multiply that by, say, 100,000 distressed homes with similar declines in value, and you're talking about tens of billions of dollars in losses. On top of that, the guarantor (basically the bank's insurance company against these types of losses) is now in financial trouble themselves, because they took on so many contracts for debt that turned out to be bad (AIG, Fannie/Freddie); they may very well declare bankruptcy and leave the bank holding the bag. Even if the guarantor remains solvent (as they did thanks to generous taxpayer bailouts), the bank's swap contract with the guarantor usually requires them to sell the house, thus realizing the loss between what they paid and what they finally got back, before the guarantor will pay out. But nobody's buying houses anymore, because prices are on their way down; the only people who'd buy a house now versus a year from now (or two or three years) are the people who have no choice, and if you have no choice you're probably in a financial situation that would mean you'd never be approved for the loan anyway. In order to get rid of them, the bank has to sell them at auction for pennies on the dollar. That further increases the supply of cheap homes and further drives down prices, making even the nicer homes the bank's willing to keep on the books worth less (there's a reason these distresed homes were called \"\"toxic assets\"\"; they're poisonous to the banks whether they keep or sell them). Meanwhile, all this price depression is now affecting the people who did everything right; even people who bought their homes years before the bubble even formed are watching years of equity-building go down the crapper. That's to say nothing of the people with prime credit who bought at just the wrong time, when the bubble was at its peak. Even without an adjusting ARM to contend with, these guys are still facing the fact that they paid top dollar for a house that likely will not be worth its purchase price again in their lifetime. Even with a fixed mortgage rate, they'll be underwater, effectively losing their entire payment to the bank as if it were rent, for much longer than it would take to have this entire mess completely behind them if they just walked away from the whole thing, moved back into an apartment and waited it out. So, these guys decide on a \"\"strategic default\"\"; give the bank the house (which doesn't cover the outstanding balance of course) and if they sue, file bankruptcy. That really makes the banks nervous; if people who did everything right are considering the hell of foreclosure and bankruptcy to be preferable to their current state of affairs, the bank's main threat keeping people in their homes is hollow. That makes them very reluctant to sign new mortgages, because the risk of default is now much less certain. Now people who do want houses in this market can't buy them, further reducing demand, further decreasing prices... You get the idea. That's the housing collapse in a nutshell, and what banks and our free market have been working through for the past five years, with only the glimmer of a turnaround picking up home sales.\"", "title": "" } ]	[ { "docid": "32e935b4339ffb2917c8b86d2b58f554", "text": "\"During the actual decline, there's very little money to be made and a lot to lose. When housing prices tank, everybody loses; the banks are exposed to higher risk of mortgage defaults, insurers start having to pay out more for \"\"gas leaks\"\" claiming over-leveraged homes, realtors starve because their commissions go down (even as foreclosures put more homes on the market) and people faced with financial uncertainty will stay put in their current homes instead of moving elsewhere. And homebuilders and contractors go broke because nobody wants to spend cash on a new home or major reno that looks like a losing investment. There can be some bright spots. Smaller hardware stores will make money as people do relatively small DIY projects to improve the condition of their current home. The larger stores get this business too, but it tends to be more than offset by the loss of contractor business (FAR more lucrative, and something the ACEs and True-Values don't really get in on). Of course the \"\"grave-robbers\"\" do well; gold buyers, auctioneers, pawn shops, repo firms; these guys eat well when other people are defaulting on loans or have to sell their stuff for fast cash. Most of these businesses are not publicly traded. One thing that was seen was increased revenues at discount retailers like Wal-Mart, Dollar General etc. When things are bad, people in the middle class who had avoided these stores for image or morality reasons learn to swallow their pride and buy discount store brands for half the price of national brand names. That lessens the blow felt by the discount retailers as overall consumer spending decreases; the pie shrinks, but the discount retailers get a bigger slice of the mandatory spending on food, clothing, etc (and the higher-level retailers get it in the shorts). When the pie starts to grow again as consumer spending picks back up, the discount retailers retain their percentage for a while, as the fickle middle class can afford to buy more from the discount retailer but can't yet afford to take their business back to the shopping mall stores. This produces a flatter, \"\"offset\"\" price graph for discount retailers through the business cycle; they don't lose as early or as much as everyone else in a major downturn, and they turn it around sooner while everyone else may still be on the way down, but as everything gets better for everyone on the upswing it's less great for the discount guys, as they start losing customers and their dollars to competitors with better stuff, even as the ones they keep spend more. This doesn't generally manifest as a true negative correlation, but it can be a good hedge. The number one money-making investment in a tanking economy is gold. When things go down the crapper, everyone wants gold, so if you see the train wreck coming far enough in advance, you can make a big move to gold and really make some money off that investment. For instance, when the first whispers about ARM adjustments and mass defaults reached the public consciousness in mid-2005, gold bullion jumped from about $400 to over $700 in a nine-month period. It cooled off again in 06-07 but only to about $600/oz, and then in late 07 it steadily climbed to peak at $1000/oz; even if you got in late, an investment of $1000 in July '07 in \"\"bulk\"\" gold would have netted you $650 in one year; that's a 65% APY. Then the economy hit bottom and a lot of investors ditched gold for investments they thought would pull back out of their holes quickly; For just a little while in '08 gold was down to $700 again. Then came all the government reports; unemployment not budging, home prices still declining, a lot of banks still hiding just how bad their position was. If you had seen that it was going to be bad, bad, bad, like a lot of now-billionaire hedge fund investors did, a $1000 investment in gold in July 05, and then cashing out at the tops of the peaks and buying back in at the major troughs, would be worth almost $4000 today. That's a 400% return over 7 years, or an annual average yield of 57%. There simply hasn't been anything like that in the last 7 years.\"", "title": "" }, { "docid": "690b591bb9ac43bf175f9ab597744115", "text": "Banks have huge amounts of foreclosure or pending foreclosure properties on their books that they haven't even listed for sale yet. The ratio is something like 6 to 1. The amount of inventory held on the books, but off the market is larger than the entire MLS market. In a competitive market, a smart bank would try to dump their property now before the other banks do. But instead, all the banks are holding their properties off the market and trickling them out at a slow rate. Collusion?", "title": "" }, { "docid": "a5d1e46007a73134f5a59e6f5781bd63", "text": "To supplement existing answers: the appraised value does not necessarily represent the net amount the bank could actually recover with a foreclosure. Let's look at it from the point of view of the bank. Suppose the property appraises at $200,000 and they do what you want: loan you $200,000 with the property as collateral. Now suppose a short time later, you quit paying the mortgage and they have to foreclose. Can the bank get their $200,000 back? An appraisal is only an estimate; nobody can predict perfectly how much a property will sell for. Maybe the appraiser missed something significant, and the property will only fetch $180,000. Even if the appraisal was accurate when it was made, property values may have dropped in the meantime. Maybe a sudden economic crisis is driving real estate prices down across the board. Maybe interest rates have spiked. Maybe the county has changed the zoning regulations to locate a toxic waste dump next door to the property. In any of these cases, the property may again fetch well under $200,000. Maybe the condition of the property has changed. Perhaps you trashed the place and it will take $30,000 to clean it up. (People have a tendency to do things like that when they get foreclosed.) If the bank wants to get full market value for the property, they will incur the usual costs of selling a property: paying a real estate agent's commission, painting, renting furniture to stage the property, and so on. This will eat into the net amount they actually get from the sale. It may take some time (perhaps months) for a property to sell at its full market value. During this time, the bank is out $200,000. That's money they would rather be loaning out at interest to someone else, so this represents lost income. Foreclosing a mortgage is a fairly complicated procedure. The bank has to pay its staff, including lawyers, for a significant number of hours to get the foreclosure done. There will be court filing fees and so on. If you refuse to leave, they may have to get the sheriff to evict you; that has a fee as well. If you fight the foreclosure, that racks up even more legal fees. This too eats into the net proceeds from the sale. So if the bank loans you the full $200,000, they stand a pretty significant risk of not getting all of it back, after expenses. You can understand that risk may not be worth the interest they would get from you on the extra $40,000. On the other hand, if they loan you only 80% of the property's appraised value ($160,000), they effectively shift that risk onto you. Should you default on the loan, and they foreclose, all they have to do is sell the property for $160,000 or a little bit more. That shouldn't be too hard, even if it is not freshly painted or a bit trashed. They probably don't need to hire a real estate agent: just hold a quick auction, maybe first calling up a few investors who might be interested in flipping it. If it happens to sell for more than the outstanding principal of the loan, plus the bank's costs, then they will pay you the difference; but they have no incentive to make that happen, and every incentive to just get it sold quick. So any difference between the property's true value and the actual sale price now represents a loss to you first, not to the bank. So you can see why the bank would rather not loan you the full value of the property. 80% is a somewhat arbitrary figure but it cuts their risk by a lot.", "title": "" }, { "docid": "1cb916d0e43a50f25c6741433bb8358f", "text": "\"Can it be so that these low-interest rates cause investors to take greater risk to get a decent return? With interest rates being as low as they are, there is little to no risk in banking; especially after Dodd-Frank. \"\"Risk\"\" is just a fancy word for \"\"Will I make money in the near/ long future.\"\" No one knows what the actual risk is (unless you can see into the future.) But there are ways to mitigate it. So, arguably, the best way to make money is the stock market, not in banking. There is a great misallocation of resources which at some point will show itself and cause tremendous losses, even maybe cause a new financial crisis? A financial crisis is backed on a believed-to-be strong investment that goes belly-up. \"\"Tremendous Losses\"\" is a rather grand term with no merit. Banks are not purposely keeping interest rates low to cause a financial crisis. As the central banks have kept interest rates extremely low for a decade, even negative, this affects how much we save and borrow. The biggest point here is to know one thing: bonds. Bonds affect all things from municipalities, construction, to pensions. If interest rates increased currently, the current rate of bonds would drop vastly and actually cause a financial crisis (in the U.S.) due to millions of older persons relying on bonds as sources of income.\"", "title": "" }, { "docid": "c1b7910c61fff560df444892317f451c", "text": "\"If banks really controlled house prices, then why do banks now own a shitload of houses that are no longer being paid for? So many that they can't sell them now because that would drive prices down even more, and they'd lose more. Sigh... go ahead and continue to blame \"\"them\"\" for everything. It's easier that way, because then you will never have to take responsibility for any of your mistakes.\"", "title": "" }, { "docid": "9976b46a505265ecde11fd4c7e9925a7", "text": "Foreclosure is at a high level the bank declaring that the debtor cannot pay their promissory note (their debt). This is shortly followed by default, which is the removal of debtors rights to the property. After the debtor has defaulted, he either chooses to voluntarily remove himself and his belongings from the property, or is forcibly evicted. In the US eviction is carried out by local law enforcement, such as the sheriff's office. The bank is now the sole owner of the property, and proceeds to sell it, in an attempt to recoup their investment. If the bank cannot recoup their investment by selling the house, the rest may be converted to unsecured debt against the debtor. If the bank chooses to forgive the remaining debt, the debtor may have a tax liability for cancellation of debt. Also the debtor may also be liable for any appreciation the house did before it was sold, but this likely to be nontaxable if the house in question is the debtor's primary residence. They also send the credit bureaus the notice of foreclosure, which is how your credit score is hurt. Private Mortgage Insurance or Lenders Mortgage Insurance will pay the lender some amount back to cover their losses. See Also:", "title": "" }, { "docid": "d46a7d2f95353b06f0e2dabc034064ac", "text": "\"the \"\"consumer relief\"\" only affects people who have mortgages. so people who lost everything don't have mortgages any more and are unaffected by this \"\"consumer relief\"\" the \"\"relief\"\" is not limited to individuals directly harmed by the bank. recipients are chosen by the bank, for the bank's maximum profit extraction.\"", "title": "" }, { "docid": "464c9b92963363ecd1df7012855d3cf6", "text": "If the homeowner knows the situation is hopeless, and the end result will be the loss of the home, jumping to the end result can be helpful. It is quicker, they don't spend as much time fighting a losing battle. Deed in Lieu of foreclosure is not so great for the borrower if the bank goes after them for the rest of the money owed. There can also be tax implications if the debt is forgiven. Though these issues also exist when the drawn out foreclosure option is done. For the bank. The longer the process the more the house deteriorates. The borrower may stop maintenance and may even vandalize the house. Getting their lock on the door quickly is important to them. They protect it, clean it, and prep it for sale right away. They also save on lawyer fees. They know that the moment they start the foreclosure process all money from the borrower stops, this can save thousands in carrying costs. One issue will be how the accounting losses will be divided among the servicing company, and the investors. If the servicing company will make more money from the longer process they may not push for the quick settlement. If the opposite is true, they will be quickly on board. For the new buyer, the issue with either foreclosure is that the longer process can result in greater hidden and visible damage. The heat pump may work, but the disgruntled homeowner stopped changing the filters the last six months. They may have also removed and damaged things on the way out. Other than that I don't see a big difference. Because the bank had lower costs involved in the foreclosure they might settle for a lower purchase price, but that might be hard to know.", "title": "" }, { "docid": "5c6a870d896ba0f0ddafe2dbe1357b2f", "text": "Banks don't want to manage property. They despise the fact that they have all of these foreclosures that they can't sell. They just want to loan you the money at X% and collect the fees and interest. The value of a reverse mortgage to the lender is that it's a collateralized loan against a property. When the owner exits the property, it's attached to the property and must be paid back before the property is sold. They carefully consider the age of the recipient, equity in the property, etc. when they decide how much to pay the owner so that the chances of the loan going underwater are minimized.", "title": "" }, { "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": "b20dde4b533b9447acdebeffe1611f43", "text": "According to the article this is not actually a fine, they are just buying back the mortgages they sold in the first place. One has to wonder if they are buying them back at the same price that they sold them or if it's a discount. E.g. They sold you a lemon for $1000, offer to buy it back for $10? Other questions: If they are buying them back then are they now going to start foreclosing like criminals like BoA did?", "title": "" }, { "docid": "18a79eb08dc3d53a6c2c3ed6f6d25b4b", "text": "\"Banks make less profit when \"\"long\"\" rates are low compared to \"\"short\"\" rates. Banks lend for long term purposes like five year business loans or 30 year mortgages. They get their funds from (mostly) \"\"short term\"\" deposits, which can be emptied in days. Banks make money on the difference between 5 and 30 year rates, and short term rates. It is the difference, and not the absolute level of rates, that determines their profitability. A bank that pays 1% on CDs, and lends at 3% will make money. During the 1970s, short rates kept rising,and banks were stuck with 30 year loans at 7% from the early part of the decade, when short rates rose to double digits around 1980, and they lost money.\"", "title": "" }, { "docid": "7c3c9107673fd5927e3e38d0ef07c60d", "text": "It was both. CDOs also contributed. Unfortunately, when the bankers kept packing up their loans they lost track of the risk as did the financial institutions offering instruments to deleverage that risk. So when the subprime borrowers began to fail the institutions started getting hit with risk that they hadn't prepared for. Flippers and home owners who used their homes as ATMs then saw their home values crash and it all fell apart. We are seeing some of this again with owners getting more HELOCs but the real concern is with car loans, credit card and student loan debt.", "title": "" }, { "docid": "c65e180a03ca3811c59fe7efaec2ad2f", "text": "\"When a house is sold at a foreclosure auction, the selling bank usually does not provide the guarantees that a normal house seller provides. Furthermore, the previous owner may have neglected the property, and/or spitefully damaged the property. Bank-owned properties are often neglected and/or vandalized. Banks are usually too short-sighted to properly market the real estate they own, and do a poor job of making it easy to buy the property. Thus, foreclosure sales usually happen at a price that is significantly below the \"\"fair market value\"\" of sales between competent households. It is common for a house that is worth $ 125,000 (even in a depressed market) to sell for only $ 100,000 in a short sale or foreclosure. It is possible that this property sold for an even larger discount. It is also possible that the tax assessor is (inadvertently) comparing a run-down property with well-maintained properties that have extra expensive features, without fully adjusting for the properties' conditions and features. In the latter scenario, the property owner can ask the tax assessor to re-consider the assessment. Usually this request is called an \"\"appeal\"\".\"", "title": "" }, { "docid": "b19c0e2592607bf404db322381f746c5", "text": "I agree with the others that the ROTH is probably better. See this list of benefit/cost comparison (as opposed to rule differences)http://en.wikipedia.org/w/index.php?title=Comparison_of_401%28k%29_and_IRA_accounts&oldid=582368417", "title": "" } ]	fiqa
f3a74b8d506ffd6e1a5244a4eaef9bef	Moving from Google Finance to Yahoo Finance	[ { "docid": "f1e2b2fb775eb50ea82359cd6eda94ad", "text": "Perhaps you should use your own tracking software, such as GnuCash, Quicken, Mint, or even Excel. The latter would work given you say you're manually putting in your transactions. There's lots of pre-done spreadsheets for tracking investments if you look around. I'm hoping that a web search gets you help on migrating transaction data, but I've yet to run into any tools to do the export and import beyond a manual effort. Then again, I haven't checked for this lately. Not sure about your other questions, but I'd recommend you edit the question to only contain what you're asking about in the subject.", "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": "202984fdfca72013590d80a373c28d40", "text": "\"P/E is Price divided by Earnings Per Share (EPS). P/E TTM is Price divided by the actual EPS earned over the previous 12 months - hence \"\"Trailing Twelve Month\"\". In Forward P/E is the \"\"E\"\" is the average of analyst expectations for the next year in EPS. Now, as to what's being displayed. Yahoo shows EPS to be 1.34. 493.90/1.34 = P/E of 368.58 Google shows EPS to be 0.85. 493.40/0.85 = P/E of 580.47 (Prices as displayed, respectively) So, by the info that they are themselves displaying, it's Google, not Yahoo, that's displaying the wrong P/E. Note that the P/E it is showing is 5.80 -- a decimal misplacement from 580 Note that CNBC shows the Earnings as 0.85 as well, and correctly show the P/E as 580 http://data.cnbc.com/quotes/BP.L A quick use of a currency calculator reveals a possible reason why EPS is listed differently at yahoo. 0.85 pounds is 1.3318 dollars, currently. So, I think the Yahoo EPS listing is in dollars. A look at the last 4 quarters on CNBC makes that seem reasonable: http://data.cnbc.com/quotes/BP.L/tab/5 those add up to $1.40.\"", "title": "" }, { "docid": "e50fbda863f078d02e1be7577f198d04", "text": "http://www.euroinvestor.com/exchanges/nasdaq/macromedia-inc/41408/history will work as DumbCoder states, but didn't contain LEHMQ (Lehman Brother's holding company). You can use Yahoo for companies that have declared bankruptcy, such as Lehman Brothers: http://finance.yahoo.com/q/hp?s=LEHMQ&a=08&b=01&c=2008&d=08&e=30&f=2008&g=d but you have to know the symbol of the holding company.", "title": "" }, { "docid": "14a425ef8cb11db564bada29217d8e6f", "text": "First - Google's snapshot - Then - Yahoo - I took these snapshots because they will not exist on line after the market opens, and without this context, your question won't make sense. With the two snapshots you can see, Yahoo shows the after hours trades and not just the official market close for the day. The amount it's down is exactly tracked from the close shown on Google. Now you know.", "title": "" }, { "docid": "42a3839e68b1f3ff5b97da306e838cce", "text": "\"There are several reasons to pay for data instead of using Yahoo Finance, although these reasons don't necessarily apply to you if you're only planning to use the data for personal use. Yahoo will throttle you if you attempt to download too much data in a short time period. You can opt to use the Yahoo Query Language (YQL), which does provide another interface to their financial data apart from simply downloading the CSV files. Although the rate limit is higher for YQL, you may still run into it. An API that a paid data provider exposes will likely have higher thresholds. Although the reliability varies throughout the site, Yahoo Finance isn't considered the most reliable of sources. You can't beat free, of course, but at least for research purposes, the Center for Research in Security Prices (CRSP) at UChicago and Wharton is considered the gold standard. On the commercial side, data providers like eSignal, Bloomberg, Reuters also enjoy widespread popularity. Although both the output from YQL and Yahoo's current CSV output are fairly standard, they won't necessarily remain that way. A commercial API is basically a contract with the data provider that they won't change the format without significant prior notice, but it's reasonable to assume that if Yahoo wanted to, they could make minor changes to the format and break many commercial applications. A change in Yahoo's format would likely break many sites or applications too, but their terms of use do state that Yahoo \"\"may change, suspend, or discontinue any aspect of the Yahoo! Finance Modules at any time, including the availability of any Yahoo! Finance Modules. Yahoo! may also impose limits on certain features and services or restrict your access to parts or all of the Yahoo! Finance Modules or the Yahoo! Web site without notice or liability.\"\" If you're designing a commercial application, a paid provider will probably provide technical support for their API. According to Yahoo Finance's license terms, you can't use the data in a commercial application unless you specifically use their \"\"badges\"\" (whatever those are). See here. In this post, a Yahoo employee states: The Finance TOS is fairly specific. Redistribution of data is only allowed if you are using the badges the team has created. Otherwise, you can use YQL or whatever method to obtain data for personal use. The license itself states that you may not: sell, lease, or sublicense the Yahoo! Finance Modules or access thereto or derive income from the use or provision of the Yahoo! Finance Modules, whether for direct commercial or monetary gain or otherwise, without Yahoo!'s prior, express, written permission In short, for personal use, Yahoo Finance is more than adequate. For research or commercial purposes, a data provider is a better option. Furthermore, many commercial applications require more data than Yahoo provides, e.g. tick-by-tick data for equities, derivatives, futures, data on mergers, etc., which a paid data source will likely provide. Yahoo is also known for inaccuracies in its financial statements; I can't find any examples at the moment, but I had a professor who enjoyed pointing out flaws in the 10K's that he had come across. I've always assumed this is because the data were manually entered, although I would assume EDGAR has some method for automatic retrieval. If you want data that are guaranteed to be accurate, or at least have a support contract associated with them so you know who to bother if it isn't, you'll need to pay for it.\"", "title": "" }, { "docid": "a6cbcbd8b3cddff05df38d1e7b8f0339", "text": "I won't be able to model stock prices using this information. The pros aren't likely to use Google as much. Even the casual investor is likely to have his own habits. For example, I've come to like how Yahoo permits me to set up a portfolio and follow the stocks I want. And the information that interests me is there, laid out nicely, price, history, insider trades, news etc. But your effort probably still has some discovery value, as it will help you understand when interest in a company suddenly swells above normal. Nothing wrong with a good project like that. Just don't expect to extract too much market-beating success from it. The pros will eat your lunch, take your money, and not even say thanks. Welcome to Money.SE.", "title": "" }, { "docid": "a70f3bb1503144ad1c52173d8d7638ba", "text": "I can't give you a detailed answer because I'm away from the computer where I use kMyMoney, but IIRC to add investments you have to create new transactions on the 'brokerage account' linked to your investment account.", "title": "" }, { "docid": "8f399907f2221e4bdc9aefb8c11cf52c", "text": "This is from Google Finance right now.", "title": "" }, { "docid": "3bf4513d6e76ed2e63e58c4b9760adbe", "text": "On NASDAQ the ^ is used to denote other securities and / to denote warrents for the underlying company. Yahoo maybe using some other designators for same.", "title": "" }, { "docid": "f9c64c3b2016141277efdf4e834774e1", "text": "Google Finance gives you this information.", "title": "" }, { "docid": "9f726f42e288957f12902d0dad5d50bf", "text": "\"There is probably a better way, but you can do the following: (1) Right click on the right pointing arrow next to the \"\"1-20 of xx rows\"\" message at the bottom right of the table, and select \"\"Copy link location\"\" (2) Paste that into the location (3) At the end of the pasted text there is a \"\"&output=json\"\", delete that and everything after it. (4) hit enter What you get is a page that displays the set of securities returned by and in a very similar display to the \"\"stock screener\"\" without the UI elements to change your selections. You can bookmark this page.\"", "title": "" }, { "docid": "420f4726f5eff4d17dbcf18d85d62d3b", "text": "Google Finance and Yahoo Finance have been transitioning their API (data interface) over the last 3 months. They are currently unreliable. If you're just interested in historical price data, I would recommend either Quandl or Tiingo (I am not affiliated with either, but I use them as data sources). Both have the same historical data (open, close, high, low, dividends, etc.) on a daily closing for thousands of Ticker symbols. Each service requires you to register and get a unique token. For basic historical data, there is no charge. I've been using both for many months and the data quality has been excellent and API (at least for python) is very easy! If you have an inclination for python software development, you can read about the drama with Google and Yahoo finance at the pandas-datareader group at https://github.com/pydata/pandas-datareader.", "title": "" }, { "docid": "7f3e8cac96486db24344d65596d6fff2", "text": "Yahoo Finance has this now, the ticker is CL=F.", "title": "" }, { "docid": "1ca4aa43255f1b1f575ff0e602651839", "text": "\"Remember that in most news outlets journalists do not get to pick the titles of their articles. That's up to the editor. So even though the article was primarily about ETFs, the reporter made the mistake of including some tangential references to mutual funds. The editor then saw that the article talked about ETFs and mutual funds and -- knowing even less about the subject matter than the reporter, but recognizing that more readers' eyeballs would be attracted to a headline about mutual funds than to a headline about ETFs -- went with the \"\"shocking\"\" headline about the former. In any case, as you already pointed out, ETFs need to know their value throughout the day, as do the investors in that ETF. Even momentary outages of price sources can be disastrous. Although mutual funds do not generally make transactions throughout the day, and fund investors are not typically interested in the fund's NAV more than once per day, the fund managers don't just sit around all day doing nothing and then press a couple buttons before the market closes. They do watch their NAV very closely during the day and think very carefully about which buttons to press at the end of the day. If their source of stock price data goes offline, then they're impacted almost as severely as -- if less visibly than -- an ETF. Asking Yahoo for prices seems straightforward, but (1) you get what you pay for, and (2) these fund companies are built on massive automated infrastructures that expect to receive their data from a certain source in a certain way at a certain time. (And they pay a lot of money in order to be able to expect that.) It would be quite difficult to just feed in manual data, although in the end I suspect some of these companies did just that. Either they fell back to a secondary data supplier, or they manually constructed datasets for their programs to consume.\"", "title": "" }, { "docid": "dc791ff7f4a2e648915913f2f2bc62ae", "text": "Yup. What I wanted to know was where they are pulling it up from. Have casually used Google finance for personal investments, but they suck at corp actions. Not sure if they provide free APIs, but that would probably suck too! :D", "title": "" } ]	fiqa
c441e93b1a26ee7fb216353c4bb3f337	New car cash vs finance	[ { "docid": "5493c7944b022ecf3075500fc2deeafc", "text": "Yes, maybe. Sometimes the mother company (that makes the car) covers a bit of the loss that comes from the super-offer loan, so the dealer loses a bit less. But generally, you are right. you should be able to talk them into some rebate that gets you around the given number, depending on how good you are a negotiator (and how urgently they need to sell a car)", "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": "b31d9b98a4891e6facb0202448d55049", "text": "\"New car loans, used car loans, and refinances have different rates because they have different risks associated with them, different levels of ability to recoup losses if there is a default, and different customer profiles. (I'm assuming third party lender for all of these questions, not financing the dealer arranges, as that has other considerations built into it.) A new car loan is both safer to some extent (as the car is a \"\"known\"\" risk, having no risk of damage/etc. prior to purchase), but also harder to recoup losses (because new cars immediately devalue significantly, while used cars keep more of their value). Thus the APRs are a little different; in general for the same amount a new car will be a bit lower APR, but of course used car loans are typically lower amounts. Refinance is also different; customer profile wise, the customer who is refinancing in these times is likely someone who is a higher risk (as why are they asking for a loan when they're mostly paid off their car?). Otherwise it's fairly similar to a used car, though probably a bit newer than the average used car.\"", "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": "0ef7667232ab7ff56a77be06213e42c5", "text": "\"Yes, he can retract the offer - it was a cash-only offer, and if you're financing, it's no longer \"\"cash\"\". Unless, of course, you get the financing through your local bank / credit union, and they hand you a check (like on a personal loan). Then it's still cash. However, the salesman can still retract the offer unless it's in writing because you haven't signed anything yet. The price of financing will always be higher because the dealer doesn't get all their money today. Also, if you finance, you are not paying just the cost of the vehicle, you are paying interest, so your final cost will be higher (unless you were one of the lucky souls who got 0% financing atop employee pricing, and therefore are actually saving money by having a payment).\"", "title": "" }, { "docid": "b90152e12b9beda4523a34625545dbca", "text": "\"Your son is in the right. But he broke the \"\"unwritten\"\" rules, which is why the car dealer is upset. Basically, cars are sold in the United States at a breakeven price. The car company makes ALL its money on the financing. If everyone bought \"\"all cash,\"\" the car companies would not be profitable. No one expected anyone, least of all your son, a \"\"young person,\"\" to pay \"\"all cash.\"\" When he did, they lost all the profit on the deal. On the other hand, they signed a contract, your son met all the FORMAL requirements, and if there was an \"\"understanding\"\" (an assumption, actually), that the car was supposed to be financed, your son was not part of it. Good for him. And if necessary, you should be prepared to back him up on court.\"", "title": "" }, { "docid": "230bf99815c0f1b4b3d8aea5c08f2c0f", "text": "The car dealership doesn't care where you get the cash; they care about it becoming their money immediately and with no risk or complications. Any loan or other arrangements you make to raise the cash is Your Problem, not theirs, unless you arrange the loan through them.", "title": "" }, { "docid": "833192fa2624bd4fca23f6210fe60398", "text": "It is almost never going to be more economical to buy a new car versus repairing your current car. If you want a new car, that is justification enough.", "title": "" }, { "docid": "1c42f580bbe721965a6f98e30226dc44", "text": "The other answers have offered some great advice, but here is an alternative that hasn't been mentioned yet. I'm assuming that you have an adequately-sized emergency fund in savings, and that your cars are your only non-mortgage debt. Since you still have car debt, you probably don't have anything saved for buying a new car when your current cars are at the end-of-life. Consider paying off your car loans early, then begin saving for your next car. Having cash in the bank for a car is very freeing, and it changes your mindset when it comes time to purchase a car, as it is easy to waste a lot of money on something that depreciates rapidly when you aren't paying for it immediately. This approach might be counterintuitive if your car loan interest rate is less than your mortgage rate, but you will probably need another car before you need another house, and paying cash for a car is worth doing.", "title": "" }, { "docid": "1d799c3133fcb24c4d751bc73e760e3d", "text": "\"Lachlan has $600 cash and a car worth $500. That's $1,100. The new car is priced at $21,800. Lachlan needs a loan for $20,700. However, the finance company insists that the buyer must pay a 10% deposit, which is $2,180. Lachlan only has $1,100, so no loan. The car dealer wants to make a sale, so suggests some tricks. The car dealer could buy Lachlan's old banger for $1,500 instead of $500, and sell the new car for $22,800 instead of $21,800. Doesn't make a difference to the dealer, he gets the same amount of cash. Now Lachlan has $600 cash and $1,500 for his car or $2,100 in total. He needs 10% of $22,800 as deposit which is $2,280. That's not quite there but you see how the principle works. Lachlan is about $200 short. So the dealer adds $1,200 to both car prices. Lachlan has $600 cash and a car \"\"worth\"\" $1,700, total $2,300. The new car is sold for $23,000 requiring a $2,300 deposit which works out exactly. How could we have found the right amount without guessing? Lachlan had $1,100. The new car costs $21,800. The dealer increases both prices by x dollars. Lachlan has now $1,100 + x deposit. The car now costs $21,800 + x. The deposit should be 10%, so $1,100 + x = 10% of ($21,800 + x) = $2,180 + 0.1 x. $1,100 + x = $2,180 + 0.1 x : Subtract $1,100 x = $1,080 + 0.1 x : Subtract 0.1 x 0.9 x = $1,080 : Divide by 0.9 x = $1,080 / 0.9 = $1,200 The dealer inflates the cost of the new car and the value of the old car by $1,200. Now that's the theory. In practice I don't know how the finance company feels about this, and if they would be happy if they found out.\"", "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": "8d280f9654cc7e6f9132494b19bc1d4f", "text": "Not long after college in my new job I bought a used car with payments, I have never done that since. I just don't like having a car payment. I have bought every car since then with cash. You should never borrow money to buy a car There are several things that come into play when buying a car. When you are shopping with cash you tend to be more conservative with your purchases look at this Study on Credit card purchases. A Dunn & Bradstreet study found that people spend 12-18% more when using credit cards than when using cash. And McDonald's found that the average transaction rose from $4.50 to $7.00 when customers used plastic instead of cash. I would bet you if you had $27,000 dollars cash in your hand you wouldn't buy that car. You'd find a better deal, and or a cheaper car. When you finance it, it just doesn't seem to hurt as bad. Even though it's worse because now you are paying interest. A new car is just insanity unless you have a high net worth, at least seven figures. Your $27,000 car in 5 years will be worth about $6500. That's like striking a match to $340 dollars a month, you can't afford to lose that much money. Pay Cash If you lose your job, get hurt, or any number of things that can cost you money or reduce your income, it's no problem with a paid for car. They don't repo paid for cars. You have so much more flexibility when you don't have payments. You mention you have 10k in cash, and a $2000 a month positive cash flow. I would find a deal on a 8000 - 9000 car I would not buy from a dealer. Sell the car you have put that money with the positive cash flow and every other dime you can get at your student loans and any other debt you have, keep renting cheap keep the college lifestyle (broke) until you are completely out of debt. Then I would save for a house. Finally I would read this Dave Ramsey book, if I would have read this at your age, I would literally be a millionaire by now, I'm 37. Don't buy from a dealer Find a private sale car that you can get a deal on, pay less than Kelly Blue Book. Pay a little money $50 - 75 to have an automotive technician to check it out for you and get a car fax, to make sure there are no major problems. I have worked in the automotive industry for 20 + years and you rarely get a good deal from a dealer. “Everything popular is wrong.” Oscar Wilde", "title": "" }, { "docid": "2a4e4589e77150edb6090a7c725d0b86", "text": "I am going to give advice that is slightly differently based on my own experiences. First, regarding the financing, I have found that the dealers do in fact have access to the best interest rates, but only after negotiating with a better financing offer from a bank. When I bought my current car, the dealer was offering somewhere around 3.3%, which I knew was way above the current industry standard and I knew I had good credit. So, like I did with my previous car and my wife's car, I went to local and national banks, came back with deals around 2.5 or 2.6%. When I told the dealer, they were able to offer 2.19%. So it's ok to go with the dealer's financing, just never take them at face value. Whatever they offer you and no matter how much they insist it's the best deal, never believe it! They can do better! With my first car, I had little credit history, similar to your situation, and interest rates were much higher then, like 6 - 8%. The dealer offered me 10%. I almost walked out the door laughing. I went to my own bank and they offered me 8%, which was still high, but better than 10%. Suddenly, the dealer could do 7.5% with a 0.25% discount if I auto-pay through my checking account. Down-payment wise, there is nothing wrong with a 35% down payment. When I purchased my current car, I put 50% down. All else being equal, the more cash down, the better off you'll be. The only issue is to weigh that down payment and interest rate against the cost of other debts you may have. If you have a 7% student loan and the car loan is only 3%, you're better off paying the minimum on the car and using your cash to pay down your student loan. Unless your student loan balance is significantly more than the 8k you need to finance (like a 20k or 30k loan). Also remember that a car is a depreciating asset. I pay off cars as fast as I can. They are terrible debt to have. A home can rise in value, offsetting a mortgage. Your education keeps you employed and employable and will certainly not make you dumber, so that is a win. But a car? You pay $15k for a car that will be worth $14k the next day and $10k a year from now. It's easy to get underwater with a car loan if the down payment is small, interest rate high, and the car loses value quickly. To make sure I answer your questions: Do you guys think it's a good idea to put that much down on the car? If you can afford it and it will not interfere with repayment of much higher interest debts, then yes. A car loan is a major liability, so if you can minimize the debt, you'll be better off. What interest rate is reasonable based on my credit score? I am not a banker, loan officer, or dealer, so I cannot answer this with much credibility. But given today's market, 2.5 - 4% seems reasonable. Do you think I'll get approved? Probably, but only one way to find out!", "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": "" }, { "docid": "83f722d2f398117aafd522e4bfb3384e", "text": "I think you are making this more complicated that it has to be. In the end you will end up with a car that you paid X, and is worth Y. Your numbers are a bit hard to follow. Hopefully I got this right. I am no accountant, this is how I would figure the deal: The payments made are irrelevant. The downpayment is irrelevant as it is still a reduction in net worth. Your current car has a asset value of <29,500>. That should make anyone pause a bit. In order to get into this new car you will have to finance the shortfall on the current car (29,500), the price of the vehicle (45,300), the immediate depreciation (say 7,000). In the end you will have a car worth 38K and owe 82K. So you will have a asset value of <44,000>. Obviously a much worse situation. To do this car deal it would cost the person 14,500 of net worth the day the deal was done. As time marched on, it would be more as the reduction in debt is unlikely to keep up with the depreciation. Additionally the new car purchase screen shows a payment of $609/month if you bought the car with zero down. Except you don't have zero down, you have -29,500 down. Making the car payment higher, I estamate 1005/month with 3.5%@84 months. So rather than having a hit to your cash flow of $567 for 69 more months, you would have a payment of about $1000 for 84 months if you could obtain the interest rate of 3.5%. Those are the two things I would focus on is the reduction in net worth and the cash flow liability. I understand you are trying to get a feel for things, but there are two things that make this very unrealistic. The first is financing. It is unlikely that financing could be obtained with this deal and if it could this would be considered a sub-prime loan. However, perhaps a relative could finance the deal. Secondly, there is no way even a moderately financially responsible spouse would approve this deal. That is provided there were not sigificant assets, like a few million. If that is the case why not just write a check?", "title": "" }, { "docid": "fbe3c32df23d6bab65850a0504a96d0d", "text": "Very generally speaking if you have a loan, in which something is used as collateral, the leader will likely require you to insure that collateral. In your case that would be a car. Yes certainly a lender will require you to insure the vehicle that they finance (Toyota or otherwise). Of course, if you purchase a vehicle for cash (which is advisable anyway), then the insurance option is somewhat yours. Some states may require that a certain amount of coverage is carried on a registered vehicle. However, you may be able to drop the collision, rental car, and other options from your policy saving you some money. So you buy a new car for cash ($25K or so) and store the thing. What happens if the car suffers damage during storage? Are you willing to save a few dollars to have the loss of an asset? You will have to insure the thing in some way and I bet if you buy the proper policy the amount save will be very minimal. Sure you could drop the road side assistance, rental car, and some other options, during your storage time but that probably will not amount to a lot of money.", "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": "" } ]	fiqa
c17902bc2b61814edda5c038171c9f6b	Google Finance Cash Flow Statement	[ { "docid": "e4a90d1ebbcee62fce3683b0de21ecd4", "text": "I'm a big believer in pulling the quarterly and or annual statements and deriving your own analysis. The automated parsing systems at Google, Yahoo, and others are a good starting point and they'll let you generally compare various metrics of different companies or market segments. With that in mind, there are any number of reasons Google's scripts could have broken out or combined a couple of cash flow line items. If you're digging this deep in the weeds on this company you should pull the SEC filings and build out your own data.", "title": "" } ]	[ { "docid": "8ad8c31cf38ded9ae11e02d78b881164", "text": "\"Thank you for the in-depth, detailed explanation; it's refreshing to see a concise, non verbose explanation on reddit. I have a couple of questions, if that's alright. Firstly, concerning mezzanine investors. Based on my understanding from Google, these people invest after a venture has been partially financed (can I use venture like that in a financial context, or does it refer specifically to venture capital?) so they would receive a smaller return, yes? Is mezzanine investing particularly profitable? It sounds like you'd need a wide portfolio. Secondly, why is dilution so important further down the road? Is it to do with valuation? Finally, at what point would a company aim to meet an IPO? Is it case specific, or is there a general understanding of the \"\"best time\"\"? Thank you so much for answering my questions.\"", "title": "" }, { "docid": "9b5e65391762cad073c42a9fac453c4d", "text": "The issue I run into with that is that it does nothing to change the cash flows over the five years because it doesn't change any of the numbers across the board. This course has the worst worded assignments I have ever seen and I appreciate your assistance.", "title": "" }, { "docid": "efde1ab1a9035da2874810c95db67d9e", "text": "\"I think you're on the right track. Your #2 journal entry is incorrect. It should be (I usually put the debit entry on top, but I followed your formatting) I'm assuming your employer uses an accountable reimbursement plan (reimbursing you when you turn in your payment bill/receipts). This is not salary. Reimbursements under the accountable plan in the US are not taxed as income. If you think about it though, \"\"phone expense\"\" isn't really your phone expense. So, instead of #1 entry, you could make an account receivable, or other current asset account, maybe call it Reimbursables - cellphone, and debit this account, and credit your cash account. When you receive the $30 back, you will reverse the entries on the day of payment. If you do it this way, you should be able to see a list of receivables outstanding (I'm not too familiar with GNUCash but I'm sure it has this type of report).\"", "title": "" }, { "docid": "3daa8dfcc2bb62b6a3a6ee4291dda11f", "text": "Google Finance portfolios take into account splits and cash deposits/withdrawals.", "title": "" }, { "docid": "9764ba3afd9210806de741e49eaf845a", "text": "\"Google Docs spreadsheets have a function for filling in stock and fund prices. You can use that data to graph (fund1 / fund2) over some time period. Syntax: =GoogleFinance(\"\"symbol\"\", \"\"attribute\"\", \"\"start_date\"\", \"\"num_days\|end_date\"\", \"\"interval\"\") where: This analysis won’t include dividends or distributions. Yahoo provides adjusted data, if you want to include that.\"", "title": "" }, { "docid": "dd8db8786f838db8585c79d79d3e10c8", "text": "I have a discounted cash flow that's monthly. My annualized discount rate is 8%. 1)What is the formula to turn the annualized rate into a monthly rate? 2)What is the formula to find out the NPV of monthly cash flows? For example, if I get $1000, $2000, and $3000 in months 1, 2, and 3, how do I calculate how much each of those are equal to as a present value if the annual discount rate is 8%?", "title": "" }, { "docid": "b75f0705566b077e94ec8e033f33d09e", "text": "Inflows to the US equity market can come from a variety of sources; for instance: You were paid a year-end bonus and decided to invest it in US equities instead of foreign equities, bonds, savings or debt reduction. You sold foreign equities, bonds, or other non-US equities and decided to invest in US equities. You decided a better use of cash in a savings account, CD or money market fund, was to invest in US equities. If for every buyer, there's a seller, doesn't that also mean that there were $25B in outflows in the same time period? Not necessarily. Generally, the mentions we see of inflows and outflows are net; that is, the gross investment in US equities, minus gross sales of US equities equals net inflows or outflows. The mere fact that I sold my position in, say, Caterpillar, doesn't mean that I had to re-invest in US equities. I may have bought a bond or a CD or a house. Because of fluctuations in existing stocks market value, bankruptcies and new issues, US equities never are and never will be a zero-sum game.", "title": "" }, { "docid": "f140602b8d3a82ed0ca20c229cbe9769", "text": "\"Their interest expense was $17M. Where you see $5.14/sh in Key Statistics, any daily interest received is more than canceled out by the expense paid at the same time. I understand your concern, but this company is not \"\"sitting on cash\"\" as are Apple, Google, etc. Short term rates are well below 1%, 1yr tbill looks like about .2%. So strictly speaking, each share might have 1 cent interest you need to concern yourself with. Disclaimer to other readers - This has nothing to do with taxes. OP is asking about a specific part of the company cash flow. His worst case is $1 per 100 shares.\"", "title": "" }, { "docid": "e3ddaf7271004c475e64b50bd5c65277", "text": "\"This formula is not calculating \"\"Earnings\"\". Instead, it is calculating \"\"Free Cash Flow from Operations\"\". As the original poster notes, the \"\"Earnings\"\" calculation subtracted out depreciation and amortization. The \"\"Free Cash Flow from Operations\"\" adds these values back, but for two different reasons:\"", "title": "" }, { "docid": "242876aa631d68d5e2aa0e20a00e08bf", "text": "\"I was wondering how \"\"future cash flows of the asset\"\" are predicted? Are they also predicted using fundamental and/or technical analysis? There are a many ways to forecast the future cash flows of assets. For example, for companies: It seems like calculating expected/required rate using CAPM does not belong to either fundamental or technical analysis, does it? I would qualify the CAPM as quantitative analysis because it's mathematics and statistics. It's not really fundamental since its does not relies on economical data (except the prices). And as for technical analysis, the term is often used as a synonym for graphical analysis or chartism, but quantitative analysis can also be referred as technical analysis. the present value of future cash flows [...] (called intrinsic price/value, if I am correct?) Yes you are correct. I wonder when deciding whether an asset is over/fair/under-valued, ususally what kind of price is compared to what other kind of price? If it's only to compare with the price, usually, the Net asset value (which is the book value), the Discount Cash flows (the intrinsic value) and the price of comparable companies and the CAPM are used in comparison to current market price of the asset that you are studying. Why is it in the quote to compare the first two kinds of prices, instead of comparing the current real price on the markets to any of the other three kinds? Actually the last line of the quote says that the comparison is done on the observed price which is the market price (the other prices can't really be observed). But, think that the part: an asset is correctly priced when its estimated price is the same as the present value of future cash flows of the asset means that, since the CAPM gives you an expected rate of return, by using this rate to compute the present value of future cash flows of the asset, you should have the same predicted price. I wrote this post explaining some valuation strategies. Maybe you can find some more information by reading it.\"", "title": "" }, { "docid": "d1dbe7bda5a57a5d62c4680327a932c6", "text": "It is difficult to reconcile historical balance sheets with historical cash flow statements because there are adjustments that are not always clearly disclosed. Practitioners consider activity on historical cash flow statements but generally don't invest time reconciling historical accounts, instead focusing on balancing projected balance sheets / cash flow statements. If you had non-public internal books, you could reconcile the figures (presuming they are accurate). In regards to Mike Haskel's comment, there's also a section pertaining to operating capital, not just effects on net income.", "title": "" }, { "docid": "79f1a5f67ed8cd607f935dae6a14f53f", "text": "Not quite the usual DCF or valuation question, but more FP&A: any ideas how to bridge cash forecast to financial forecast? To clarify, financial forecast is mostly done on an accrual basis whereas cash is outflows and inflows. Trying to figure out how to have better visibility into cash discrepancies", "title": "" }, { "docid": "1ebc364846535cd64021290e9b7af494", "text": "You could create your own spreadsheet of Cash Flows and use the XIRR function in Excel: The formula is:", "title": "" }, { "docid": "0b055c497ebf3938a1c1d306b56febe6", "text": "It is. The outstanding value is the net cash flow, but it will always be higher than cash outflow due to a constant growth rate/expected return. I was slightly confused when my manager told me to find the IRR before and after cash inflows (the whole life of the investment). Especially as IRR after cash inflows is higher than the former.", "title": "" }, { "docid": "1754c182047fa24bb9978d4df8af2c42", "text": "Cash flow is needed for expansion, either to increase manufacturing capacity or to expand the workforce. Other times companies use it to purchase other companies. Microsoft and Google have both used their cash or stocks to purchase companies. Examples by Google include YouTube, Keyhole (Google Earth), and now part of Motorola to expand into Phones. If you are investing for the future, you don't want a lot of dividends. They do bring tax issues. That is not a big problem if you are investing in an IRA or 401K. It is an issue if the non-tax-defered mutual fund distributes those dividends via the 1099, forcing you to address it on your taxes each year. Some investors do like dividends, but they are looking for their investments to generate cash. Who would require it? Would it be an SEC requirement? Even more government paperwork for companies.", "title": "" } ]	fiqa
34620286e894e548ad64f1b452992c5b	Yahoo finance vs SEC filings fundamentals	[ { "docid": "2e985fd0802a5664343a1f2e720c11ad", "text": "\"Sure, Yahoo Finance makes mistakes from time to time. That's the nature of free data. However, I think the issue here is that yahoo is aggregating several line items into one. Like maybe reporting cash equivalents plus total investment securities minus loans as \"\"cash equivalents.\"\" This aggregation is done by a computer program somewhere and may or may not be appropriate for a particular purpose and firm. For this reason, if you are trying to do top quality research, it's always better to go to the original SEC filings, if you can. Then you will know for sure which items you are looking at. The only mistakes will be the ones made by the accountants at the firm in question. If there's a reason you prefer to use yahoo, like if it's easier for your code to scrape, then spend a little time comparing to the SEC filing to ensure you know where the numbers really come from before using it.\"", "title": "" } ]	[ { "docid": "7978a163ea6fbead1bd037bcc1a14902", "text": "I also searched for some time before discovering Market Archive, which AFAIK is the most affordable option that basically gives you a massive multi-GB dump of data. I needed sufficient data to build a model and didn't want to work through an API or have to hand-pick the securities to train from. After trying to do this on my own by scraping Yahoo and using the various known tools, I decided my time was better spent not dealing with rate-limiting issues and parsing quirks and whatnot, so I just subscribed to Market Archive (they update the data daily).", "title": "" }, { "docid": "793747651d0125a3ed9bc1db898787a9", "text": "Well, it also discusses other traditional valuation techniques such as the economic profit model and it has a chapter on real option valuation. But I would not label those exotic valuation methods. However, I would say that the CFA challenge is much about standard valuation methods due to the limited page limit and considering that there should properly also be an analysis of the external and internal environment to determine the future prospects of the given company.", "title": "" }, { "docid": "f34126938100d1ea659c4147bd5c1df9", "text": "\"The SEC requires a certain format when submitting filings, which generally does not line up with how documents are typeset for printing. Rather than typeset the entire document again, it's just sort of accepted that the format in EDGAR will suck. Typesetters actually call the process \"\"EDGARizing.\"\" (I'm not making this up, I used to work in the department at a mutual fund company that put together the financial reports for the funds.) My guess is it's a relic from legacy systems at the SEC that can't handle newer formats like PDF.\"", "title": "" }, { "docid": "5b4bcb6123a3389992ed76936b0d2204", "text": "You will need to merge CRSP with the Compustat Annual Fundamentals database, since CRSP only contains stock price/return data, whereas Compustat has data on total assets and other accounting variables. What software are you using? It's usually very easy to filter the data after loading it into your software.", "title": "" }, { "docid": "b622bc6d4c5c0e320f76c82c2ef0411a", "text": "\"SEC filings do not contain this information, generally. You can find intangible assets on balance sheets, but not as detailed as writing down every asset separately, only aggregated at some level (may be as detailed as specifying \"\"patents\"\" as a separate line, although even that I wouldn't count on). Companies may hold different rights to different patents in different countries, patents are being granted and expired constantly, and unless this is a pharma industry or a startup - each single patent doesn't have a critical bearing on the company performance.\"", "title": "" }, { "docid": "9764ba3afd9210806de741e49eaf845a", "text": "\"Google Docs spreadsheets have a function for filling in stock and fund prices. You can use that data to graph (fund1 / fund2) over some time period. Syntax: =GoogleFinance(\"\"symbol\"\", \"\"attribute\"\", \"\"start_date\"\", \"\"num_days\|end_date\"\", \"\"interval\"\") where: This analysis won’t include dividends or distributions. Yahoo provides adjusted data, if you want to include that.\"", "title": "" }, { "docid": "756e78426f383d7d85ced0fe4ffce165", "text": "The 15% Alibaba stake was invested in way before Mayer's came on board. It's worth $51.75B right now. Yahoo Japan is an autonomous company, that Yahoo has a 36% stake in, spun off well before Mayer's came on board and that stake is conservatively worth$10B. Yahoo market cap is only $49B right now. If anything, Marissa Mayers tenure just killed off the core value of Yahoo itself to the level that it's a liability and it's asset portfolio is the only thing holding it aloft.", "title": "" }, { "docid": "2b91ea9ba00641d019c71d2986da2f19", "text": "the financial information is generally filed via SEDAR (Canada) or SEC (US) before the conference call with the investment community. This can take before either before the market opens or after the market closes. The information is generally distribute to the various newswire service and company website at the same time the filing is made with SEDAR/SEC.", "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": "a55c561f1b764a53cd32c5d652555a73", "text": "This is correct. The most rapidly expanding areas in finance resemble computer science more than they resemble traditional finance. The compliance and legal side of things, however, is only getting more and more complicated. At my firm, the compliance personnel outnumber the traders three to one.", "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": "202984fdfca72013590d80a373c28d40", "text": "\"P/E is Price divided by Earnings Per Share (EPS). P/E TTM is Price divided by the actual EPS earned over the previous 12 months - hence \"\"Trailing Twelve Month\"\". In Forward P/E is the \"\"E\"\" is the average of analyst expectations for the next year in EPS. Now, as to what's being displayed. Yahoo shows EPS to be 1.34. 493.90/1.34 = P/E of 368.58 Google shows EPS to be 0.85. 493.40/0.85 = P/E of 580.47 (Prices as displayed, respectively) So, by the info that they are themselves displaying, it's Google, not Yahoo, that's displaying the wrong P/E. Note that the P/E it is showing is 5.80 -- a decimal misplacement from 580 Note that CNBC shows the Earnings as 0.85 as well, and correctly show the P/E as 580 http://data.cnbc.com/quotes/BP.L A quick use of a currency calculator reveals a possible reason why EPS is listed differently at yahoo. 0.85 pounds is 1.3318 dollars, currently. So, I think the Yahoo EPS listing is in dollars. A look at the last 4 quarters on CNBC makes that seem reasonable: http://data.cnbc.com/quotes/BP.L/tab/5 those add up to $1.40.\"", "title": "" }, { "docid": "9d77881dc3d8a425eeea4703c169e0b3", "text": "\"First, don't use Yahoo's mangling of the XBRL data to do financial analysis. Get it from the horse's mouth: http://www.sec.gov/edgar/searchedgar/companysearch.html Search for Facebook, select the latest 10-Q, and look at the income statement on pg. 6 (helpfully linked in the table of contents). This is what humans do. When you do this, you see that Yahoo omitted FB's (admittedly trivial) interest expense. I've seen much worse errors. If you're trying to scrape Yahoo... well do what you must. You'll do better getting the XBRL data straight from EDGAR and mangling it yourself, but there's a learning curve, and if you're trying to compare lots of companies there's a problem of mapping everybody to a common chart of accounts. Second, assuming you're not using FCF as a valuation metric (which has got some problems)... you don't want to exclude interest expense from the calculation of free cash flow. This becomes significant for heavily indebted firms. You might as well just start from net income and adjust from there... which, as it happens, is exactly the approach taken by the normal \"\"indirect\"\" form of the statement of cash flows. That's what this statement is for. Essentially you want to take cash flow from operations and subtract capital expenditures (from the cash flow from investments section). It's not an encouraging sign that Yahoo's lines on the cash flow statement don't sum to the totals. As far as definitions go... working capital is not assets - liabilities, it is current assets - current liabilities. Furthermore, you want to calculate changes in working capital, i.e. the difference in net current assets from the previous quarter. What you're doing here is subtracting the company's accumulated equity capital from a single quarter's operating results, which is why you're getting an insane result that in no way resembles what appears in the statement of cash flows. Also you seem to be using the numbers for the wrong quarter - 2014q4 instead of 2015q3. I can't figure out where you're getting your depreciation number from, but the statement of cash flows shows they booked $486M in depreciation for 2015q3; your number is high. FB doesn't have negative FCF.\"", "title": "" }, { "docid": "2417b02e66123869fd899f08d512aae3", "text": "Option tiers are broker specific, according mostly to their business model and presumably within the bounds of FINRA Rule 2111 (Suitability). The tier system can be as complex as E*Trade or as simple as none with Interactive Brokers. The suitability is determined presumably by compliance presumably by the legal history of the rule. The exact reasoning is political, effected by the relevant party composition of the legislature and executive. The full legal history will have the judiciary's interpretations of legislation and policy. Cash and margin rules are dictated primarily by the Federal Reserve and more precisely by FINRA and the SEC. This is the only distinction made by IB.", "title": "" }, { "docid": "8313daf3ed3b50a118993059f1fd633f", "text": "\"Although is not online, I use a standalone version from http://jstock.sourceforge.net It got drag-n-drop boxes, to let me design my own indicators. However, it only contain technical analysis information, not fundamental analysis information. It does come with tutorial http://jstock.sourceforge.net/help_stock_indicator_editor.html#indicator-example, on how to to build an indicator, to screen \"\"Stock which Its Price Hits Their 14 Days Maximum\"\"\"", "title": "" } ]	fiqa
57de9c2e2e2bb2fe8d9f84bf9cecf656	Finance the land on a non-financeable house?	[ { "docid": "782c618d2c4d91bfd53884f278be5636", "text": "Some lenders will make loans for vacant land, others will not. You have to discuss with local bank what are your plan for the land: live in the old mobile home; install a new mobile home; build a new house; Sell it to a developer; use it for camping... Is the property part of a development with other mobile homes? If so there may be complications regarding the use and rights of the property. Some local jurisdictions also want to eliminate mobile homes, so they may put limitations on the housing options.", "title": "" } ]	[ { "docid": "e6dc7770bf9cfddeb08a32ff783991cc", "text": "Insurance you purchase is paid to you. However, even if the home is destroyed, you still owe all the money to the bank, and you no longer have the house as part of the land's value to guarantee the loan. So depending on how much the land is still worth versus how much you owe -- and exactly what the terms of the loan are -- you may need to use some or all of that money to repay enough of the loan to bring it back within the bank's policies. Read the terms of the loan -- consider asking a lawyer to clarify it for you if necessary; having a lawyer review that kind of major contract is always wise anyway. –", "title": "" }, { "docid": "e34733e8209beceff2f237e0e73fdc3c", "text": "\"The Answer is yes according to multiple online sources and my local bank. This approach is a common technique to building your own home. You finance the land, build the simplest possible dwelling (say a garage with 1 bathroom/bedroom), refi into a mortgage and get cash back and then build your \"\"real house\"\" or add on, etc. This eliminates the banks demands that come with a \"\"construction loan\"\" and saves you 10s of thousands in the process (fees, contractors, scheduling, design, etc)\"", "title": "" }, { "docid": "e8c1fadc1acf3f0837888d5de85b18a2", "text": "\"No no no no!!!! Do not spend 25k on a damn slab of concrete when you don't even own the land! You are not \"\"truly\"\" the owner unless you legally own the land. I don't care what country your talking about. If you like I'll come over to your place, mix and pour some concrete on the floor, and you can pay me 5 euro. Deal? Buy the smallest parcel of land you can find. Own the land. Pour some concrete on it and viola!!!\"", "title": "" }, { "docid": "476f4752e0df9c8705abf1d9084b0471", "text": "You need a mixture of real estate, funds, and cash in the bank. Putting all your eggs in one basket is never wise. I would also stay away from land-banking period... Like you had mentioned, scam after scam after scam... Here in Tokyo, Royal Siam Trust (White Sands Beach?) is the token land-banking scam... funny enough it was hosted by the OP...", "title": "" }, { "docid": "819946382517061214fcfcea1453525c", "text": "You're right. That's a large part of what I talked about in my post, I just didn't call it that. The other provision of Title III (aka CROWDFUND Act) is that all the equity has to be purchased through a brokerage or funding portal. I mentioned those in another post in this thread.", "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": "58d0d217c99d6926134267f306746b27", "text": "Check your mortgage paper work. Most mortgages have clauses requiring you to maintain the property, keep it in good repair, and to prevent spoilage. The property is the mortgagee's security for the loan, so it's reasonable that they have a voice in keeping the property in good shape. You can tell them to pound sand, and then they can call the loan due in full.", "title": "" }, { "docid": "bc51b36b9bf082a42f9d53d5552018d3", "text": "They're probably talking about flipping houses. The conventional wisdom when flipping is to purchase the property with a mortgage or other loan on day-0. Do the work to rehabilitate it. Get it listed for re-sale promptly (this step has varying strategies) with a profitable price but one that will make it move. Have the house sold on or before the first payment would be due. This is anywhere from 30 to 60 days. The flipper then never has to make a payment on the mortgage or loan, the costs of rehabilitating the home are recovered promptly (potentially before any loan, credit card payments, or invoices are due), and there is a profit. This also assumes that either a 100% loan or some other mechanism is used to address closing costs and fees. This model fits the premise of the infomercial in that you make money investing in real estate but never have to tie up any of your own money in the process.", "title": "" }, { "docid": "b67ed38c1456b3055eecd16463a8927b", "text": "\"The whole story of \"\"Pamela Shea\"\" is so light on facts that it makes it hard for me to see what happened to her as example of a problem, let alone a tragedy. What kind of weird house purchase involves the forfeiture of the down payment in the event you can't get financing? Yes, there is money you commit when you make an offer on a house that is non-refundable, but it's less than 1% of the value - it's not the \"\"down payment\"\". And if the life savings of a woman with a \"\"six-figure income\"\" are less than 1% of the cost of the home she's buying, then I'd say she's not ready to buy a home, or she needs to look at less expensive property.\"", "title": "" }, { "docid": "8731ee298da7607a7efbd8933a6864d5", "text": "There are a few ways to get money from property, but I'm not sure any would work for you: 1) Firstly you could sell it. Selling the building might require enough repairs that the building is habitable; if the repair costs are too high, you might not be able to recover costs from selling. For a particularly old and unkempt building, this is more likely to be the case. In extreme scenarios, you may earn more net profit by demolishing a decrepit building, and simply selling the land. Make sure you aren't setting your price too high if you are desperate to sell; dropping your price might make the headache of upkeep go away, and might be better for you financially in the long run. 2) You could rent it - but if it is so uninhabitable you can't sell it, then this is unlikely without repairs (and it seems you don't want to do this anyway). 3) If your building is in an area where the zoning laws are not strict, you may be able to apply for a permit to have it zoned for commercial use - and either run a business out of it, or rent it to someone else to do so. Again, this would be dependent on repairs if the building is uninhabitable, and also would require the building to well-situated for a business. 4) You could take out a mortgage on the building. Of course, this has two big caveats: (a) the bank would need to assess the building for value [and it seems not to be worth much in your case]; and (b) this provides only temporary cash, which you would need to pay back to the bank over time. In some cases, if you had a solid plan, you might be able to take a mortgage out against the value of the land, and use the cash from the mortgage to do some repairs, so that it would be in good shape for selling.", "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": "8604c06699e97cc1cb620fd3f660efac", "text": "I don't know any clever way to do what you're describing. And, in a sense, you can see why there might not be one. A mortgage isn't just a magical way to reduce your housing expenses; it's a tradeoff in which you agree to a long-term commitment in exchange for fixed costs (or at least costs with a prearranged structure) over that long term. If you're unwilling to accept the obligation of paying for and maintaining the property over a long period, you can't really expect to reap the benefits of lowered costs. Part of the reason people say buying is better is because people often do live in the same place for a long time, in which case, if they rent, they might miss out on savings they could have had if they bought instead. If you're not going to live in the same place for a long time, buying may not actually be better for you.", "title": "" }, { "docid": "2b3b2e5062878bf61abca53309a877dc", "text": "Obviously you're missing that there is no house on the land so the cost comparison between a house and land isn't terribly valid. The land might not have connections to the municipal sewage/power/electrical and may need zoning changes and permits for those connections. You're missing that you don't know how to design and build a house so you'll need to hire people for those tasks; then live through the process, headaches, and probable budget overruns. Edit: You're also missing that lending for speculative land development is significantly different from lending for a single family home.", "title": "" }, { "docid": "d98a1a97eb6179caef1f1e5c9c6958c7", "text": "\"Not at all impossible. What you need is Fundamental Analysis and Relationship with your investment. If you are just buying shares - not sure you can have those. I will provide examples from my personal experience: My mother has barely high school education. When she saw house and land prices in Bulgaria, she thought it's impossibly cheap. We lived on rent in Israel, our horrible apartment was worth $1M and it was horrible. We could never imagine buying it because we were middle class at best. My mother insisted that we all sell whatever we have and buy land and houses in Bulgaria. One house, for example, went from $20k to EUR150k between 2001 and 2007. But we knew Bulgaria, we knew how to buy, we knew lawyers, we knew builders. The company I currently work for. When I joined, share prices were around 240 (2006). They are now (2015) at 1500. I didn't buy because I was repaying mortgage (at 5%). I am very sorry I didn't. Everybody knew 240 is not a real share price for our company - an established (+30 years) software company with piles of cash. We were not a hot startup, outsiders didn't invest. Many developers and finance people WHO WORK IN THE COMPANY made a fortune. Again: relationship, knowledge! I bought a house in the UK in 2012 - everyone knew house prices were about to go up. I was lucky I had a friend who was a surveyor, he told me: \"\"buy now or lose money\"\". I bought a little house for 200k, it is now worth 260k. Not double, but pretty good money! My point is: take your investment personally. Don't just dump money into something. Once you are an insider, your risk will be almost mitigated and you could buy where you see an opportunity and sell when you feel you are near the maximal real worth of your investment. It's not hard to analyse, it's hard to make a commitment.\"", "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": "" } ]	fiqa
d3b8ff7cefa5a5291641ff407eed863f	Finance options for a new furnace.	[ { "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": "dfbd71984ce3632baec4675987b94844", "text": "what do you mean by abnormal amount of risk on day to day operations? and upfront ill more than likely need quite a bit of capital. as far as partnership I'd be the sole owner for now. unless I find a better option along the way. also thank you for all your help.", "title": "" }, { "docid": "7bc709e0c92e4abf2f119a1a3f385d46", "text": "You can go to the required company's website and check out their investor section. Here is an example from GE and Apple.", "title": "" }, { "docid": "f09139630d79fcf3de3541ad61eb8b70", "text": "If you're looking for a purely financial answer (ignoring the social/environmental aspects) there are a few different ways you can look at it. For these types of improvements the simplest is a payback calculation. How long would it take you to recoup the initial costs? For example, if the entire installation cost $5,000 (including any tax credits), and you save $100 per month (I'm making both numbers up), you'll pay back your investment in 50 months, or about 4 years. (Note that if you borrow money to do the improvement, then your payback period is longer because you're reducing the amount that you're saving each month by paying interest.) If you're deciding between different uses for the money (like investing, or paying down other debt) then you can look at the return that you're getting. Using the same example, you are spending $5,000 and getting $100 per month back, for a 24% annual return ($1,200 / $5,000), which is better than you can get on almost anything but a 401(k) match (meaning don't stop your 401(k) contributions to do this either). The decision on whether or wait or not then becomes - will the price drop faster than the amount of savings you will realize. So if you will save $100 per month in your electric bill, is the price of the complete installation going down by more than $100 each month? If not, you'd be better off buying now and start paying back the investment sooner.", "title": "" }, { "docid": "43d91d123b12ab2a842cb27998906545", "text": "Dealhoud, You are on the right path but this is actually an Equivalent annual cost problem. You have to take it a step further and divide the NPV by the Annuity factor. You need to calculate the annuity factor and divide the investment by that amount. Annuity Factor = (1-(1/(1+r)^n )) /r We know the annual cost of the the current forklift = $5K. We need to figure out the Equivalent annual cost of the new forklift. Investment / Annuity Factor + annual Cost = EAC. Therefore $20K / (1 - (1/(1.04^10 )) / 0.04 = $2,465.82 + annual Maintenance = $4,465.82 therefore it makes sense to replace the old machine.", "title": "" }, { "docid": "50532dba417e7878dd4042a85918e8ac", "text": "Look into commodities futures & options. Unfortunately, they are not trivial instruments.", "title": "" }, { "docid": "94ddf1032cb45bb5c777b866ae873592", "text": "\"I found your post while searching for this same exact problem. Found the answer on a different forum about a different topic, but what you want is a Cash Flow report. Go to Reports>Income & Expenses>Cash Flow - then in Options, select the asset accounts you'd like to run the report for (\"\"Calle's Checking\"\" or whatever) and the time period. It will show you a list of all the accounts (expense and others) with transactions effecting that asset. You can probably refine this further to show only expenses, but I found it useful to have all of it listed. Not the prettiest report, but it'll get your there.\"", "title": "" }, { "docid": "381563a5ff5f8c8db9c154df4fd540d0", "text": "Run the numbers in advance. Understand what are the current rates for an additional 2nd mortgage, what are the rates for a brand new mortgage that will cover the additional funds. Understand what they are for another lender. Estimate the amount of paperwork involved in each option (new first, new 2nd, and new lender). Ask the what are the options they can offer you. Because you have estimated the costs in money and time for the different options, you can evaluate the offer they make. What they offer you can range from everything you want to nothing you would accept. What they offer will depend on several factors: Do they care to keep you as a customer?; Do they expect you to walk away?; are they trying to get rid of mortgages like the one you have?; Can they make more money with the plan they are offering you? You will be interested in the upfront costs, the monthly costs, and the amount of time required for the process to be completed.", "title": "" }, { "docid": "ae1d9140fa353b223f504333df2c180b", "text": "For whatever reason, I don't believe they offer it. Yahoo does. A google for google finance VIX turns up people asking the question, but no quote on google.", "title": "" }, { "docid": "f942f83af50827f1778ff784b6e6f832", "text": "You can also use ICS<GO> on Bloomberg and choose the right category (many subcategories, probably you'll start on home builders or something like that). If that doesn't work, press F1 twice and ask it to an analyst. I'm sure they have this info.", "title": "" }, { "docid": "931efdb6af74a7feffd7a87fd30575f2", "text": "Inflation is not applicable in the said example. You are better off paying 300 every month as the balance when invested will return you income.", "title": "" }, { "docid": "4d2dca01d9cfa77aa73046505321e972", "text": "\"I see two important things missing from your ongoing costs: maintenance and equipment. I also don't see the one-time costs of buying and moving. Maintenance involves doing some boring math like \"\"roofs go every 20 years or so and a new roof would cost $20k, so I need $1000 a year in the roof fund. Furnaces go every 20 years and cost $5k, so I need $250 a year in the furnace fund.\"\" etc etc. Use your own local numbers for both how long things last and how much they cost to replace. One rule of thumb is a percentage of the house (not house and land) price each year keeping in mind that while roof, furnace, carpet, stove, toilets etc all need to get replaced eventually, not everything does - the walls for example cost a lot to build but don't wear out - and not all at a 20 year pace. Some is more often, some is less often. I've heard 5% but think that's too high. Try 3% maybe? So if you paid $200,000 for a $100,000 house sitting on $100,000 of land, you put $3000 a year or about $250 a month into a repair fund. Then ignore it until something needs to be repaired. When that happens, fund the repair from the savings. If you're lucky, there will always be enough in there. If the house is kind of old and on its last legs, you might need to start with a 10 or 20k infusion into that repair fund. Equipment means a lawnmower and trimmer, a snow shovel, tools for fixing things (screwdriver, hammer, glue, pliers, that sort of thing.) Maybe tools for gardening or other hobbies that house-owners are likely to have. You might need to prune back some trees or bushes if nothing else. Eventually you get tools for your tools such as a doo-dad for sharpening your lawnmower. Well, lots of doo-dads for sharpening lots of things. One time expenses include moving, new curtains, appliances if they don't come with the house, possibly new furniture if you would otherwise have a lot of empty rooms, paint and painting equipment, and your housewarming party. There are also closing costs associated with buying a house, and you might need to give deposits for some of your utilities, or pay to have something (eg internet) installed. Be sure to research these since you have to pay them right when you have the least money, as you move in.\"", "title": "" }, { "docid": "fbbf17c08d1c70f87858bd019e6db31c", "text": "If they don't spoil, you can still get some marginal benefit if buying in bulk means you avoid the need for a trip to the shops to get a replacement. If the item is a commodity that you will use eventually you are unlikely to lose out as the prices tend to remain fairly stable. There's also the inconvenience factor, I like to have plenty of some items so I'm not caught short, consider how important your furnace is in mid winter, or the inconvenience of running out of an item right when you need it.", "title": "" }, { "docid": "8a577accc4d151f7a1e3550a1b212d49", "text": "Vehicles (plural, because I'd be filling multiple roles, and also because I'd really prefer to have spare parts). Self-sufficient farm with machine shop, heavy-duty fabric production/sewing capacity. Hunting/camping gear. That kind of thing. I have about $600 in student loan debt remaining, which should be gone in the next year. No car loan (own my truck outright), don't own a house, carry 0 balance on my credit card. I suspect I'm a bit older than you (28) and I'm finding increasingly that I'm feeling financially strained by both current needs and projected needs. Moreso future than current, as a matter of fact, though I am unemployed right now. No matter how I look at it, barring some exceptional luck, there's no good way to obtain what I feel is needed to ensure that I can retire in safety. The current system basically forces you to take on nigh-crippling debt and hope like hell you can remain employed almost constantly through the most productive years of your life so that you may retire with some degree of security. 75K would make me feel a lot closer, but it only really deals with the immediate concerns and gives me room to hope to rectify the future ones in the next decade. If it were a completely foolproof 75K with no chance of vanishing, it'd go a lot further -- but still wouldn't alleviate my worries entirely.", "title": "" }, { "docid": "83634132effd6fa98942c23cc8c36e2d", "text": "The way you ask this is interesting, it implies (quite correctly) that for many, an annual bill for house insurance, property tax, etc, can turn into an emergency. My answer to the true emergency is a breakage that can't be foreseen (although you have to know the furnace isn't going to last forever) or a medical bill that's not covered (our dental is limited and the Mrs root canal can be $1000 out of pocket)", "title": "" }, { "docid": "563370102cb9f40dac98d141693dfb3a", "text": "For now we can pay off our debt in United States dollars. If we lose our reserve currency status, we would have to pay it off with a different currency. If we continued printing money we would be debasing our currency against the new reserve currency, which would mean that after we took on too much debt we wouldn't really be able to pay our creditors back after exchanging our devalued currency for the new one on the international markets. We are lucky enough not to have to worry about this now. But I think OP was referring to all countries in these situations. Other countries don't have the luxury of just printing out massive amounts of money to pay off their debts. That is why I am saying that America has a very disillusioned view of reality when it comes to deficit spending. We wouldn't have that any more if the UN followed through with its suggestion to create a global reserve currency or reverted back to the gold standard (I don't think the second option is nearly as realistic but we never know).", "title": "" } ]	fiqa
aa7219c0f97675ebad4bb2496976d912	Why does Yahoo Finance list the 10y T note (TNX) at 1/10 of CBOE and Google Finance?	[ { "docid": "cd32495b2fc65a7b03e82757110cf866", "text": "\"The CBOE states, in an investor's guide to Interest Rate Options: The Options’ Underlying Values Underlying values for the option contracts are 10 times the underlying Treasury yields (rates)— 13-week T-bill yield (for IRX), 5-year T-note yield (for FVX), 10-year T-note yield (for TNX) and 30-year T-bond yield (for TYX). The Yahoo! rate listed is the actual Treasury yield; the Google Finance and CBOE rates reflect the 10 times value. I don't think there's a specific advantage to \"\"being contrary\"\", more likely it's a mistake, or just different.\"", "title": "" } ]	[ { "docid": "9c86a630ecf155dcaf2bee7e2e0a1963", "text": "\"I mean, I'd say \"\"no shit\"\". The model is easy to reproduce (see the inverse model proposed by CHX and the new NYSE American), and people don't have a real incentive to trade there. IEX's main selling point to the buy side was the reduced price impact order router, which ultimately went away when they became an exchange. Listings could be interesting, but I can't see why any company that doesn't have some sort of statement to make would want to list there versus the big two, or BATS. Hell, even BATS, a much more established market, has had a hard time drawing listings. I'm glad they've seen a small bump in market share in the last few months, but I can't see them becoming one of the big three players any time soon (especially after having shat all over the industry during their launch period). Side note: The UTP SIP (and soon the CTA SIP) are both much faster than when IEX went live. Turns out inside updates via the SIP are received faster than the prop market data feed, and faster than updates received over an order entry connection. Under these circumstances the street knows a trade occurred before the participants in the trade. This information asymmetry often results in market makers getting run the hell over, and makes them less likely to quote at the inside on your market.\"", "title": "" }, { "docid": "a11010563c94f613133d44194ae7dfae", "text": "The official source for the Dow Jones P/E is Dow Jones. Unfortunately, the P/E is behind a pay-wall and not included in the free registration. The easiest (but only approximate) solution is to track against an equivalent ETF. Here's a list of popular indexes with an equivalent ETF. Source", "title": "" }, { "docid": "464177eb11eecd60e4df20aec0b705d4", "text": "A few days ago they launched Fannie Mae Guaranteed Multifamily Structures (link) but who knows? It's a penny stock now. Google Finance is pretty good at marking news right on the chart for a particular stock. That's how I tracked that piece of news down. Can't say that it precipitated a lot of people buying the stock, but Google Finance isn't a bad place to start looking.", "title": "" }, { "docid": "d6614c80a1bfd3d9994c53dd2e02b2ba", "text": "Try Google Finance Screener ; you will be able to filter for NASDAQ and NYSE exchanges.", "title": "" }, { "docid": "f2b2cd5d67aa4c7040942dcefbcbc302", "text": "The biggest issue with Yahoo Finance is the recent change to the API in May. The data is good quality, includes both dividend/split adjusted and raw prices, but it's much more difficult to pull the data with packages like R quantmod than before. Google is fine as well, but there are some missing data points and you can't unadjust the prices (or is it that they're all unadjusted and you can't get adjusted? I can't recall). I use Google at home, when I can't pull from Bloomberg directly and when I'm not too concerned with accuracy. Quandl seems quite good but I haven't tried them. There's also a newer website called www.alphavantage.co, I haven't tried them yet either but their data seems to be pretty good quality from what I've heard.", "title": "" }, { "docid": "26263c06cc76b461c3899c9387a36d3d", "text": "http://www.pacificrubiales.com/investor-relations/reports.html does have financial reports on their website for the example you list. There is the potential for some data to not be easily imported into a format that Yahoo! Finance uses would be my guess for why some data may be missing though an alternative explanation for some companies would be that they may not have been around for a long enough time period to report this information,e.g. if the company is a spin-off of an existing company.", "title": "" }, { "docid": "202984fdfca72013590d80a373c28d40", "text": "\"P/E is Price divided by Earnings Per Share (EPS). P/E TTM is Price divided by the actual EPS earned over the previous 12 months - hence \"\"Trailing Twelve Month\"\". In Forward P/E is the \"\"E\"\" is the average of analyst expectations for the next year in EPS. Now, as to what's being displayed. Yahoo shows EPS to be 1.34. 493.90/1.34 = P/E of 368.58 Google shows EPS to be 0.85. 493.40/0.85 = P/E of 580.47 (Prices as displayed, respectively) So, by the info that they are themselves displaying, it's Google, not Yahoo, that's displaying the wrong P/E. Note that the P/E it is showing is 5.80 -- a decimal misplacement from 580 Note that CNBC shows the Earnings as 0.85 as well, and correctly show the P/E as 580 http://data.cnbc.com/quotes/BP.L A quick use of a currency calculator reveals a possible reason why EPS is listed differently at yahoo. 0.85 pounds is 1.3318 dollars, currently. So, I think the Yahoo EPS listing is in dollars. A look at the last 4 quarters on CNBC makes that seem reasonable: http://data.cnbc.com/quotes/BP.L/tab/5 those add up to $1.40.\"", "title": "" }, { "docid": "593f6298656a2b96117729003a4e30dd", "text": "You bought 1 share of Google at $67.05 while it has a current trading price of $1204.11. Now, if you bought a widget for under $70 and it currently sells for over $1200 that is quite the increase, no? Be careful of what prices you enter into a portfolio tool as some people may be able to use options to have a strike price different than the current trading price by a sizable difference. Take the gain of $1122.06 on an initial cost of $82.05 for seeing where the 1367% is coming. User error on the portfolio will lead to misleading statistics I think as you meant to put in something else, right?", "title": "" }, { "docid": "ee38ff2600bbead5ea7a8544ebc0d198", "text": "Nanex just doesn't have the data. Some guy at CNBC, knowing that this stuff is great fodder for pageviews, particularly when there is a mysterious unnamed firm (its much too boring when there is an actual firm named, and the reason turns out to be something mundane like a slow market data feed), scooped it up and packaged it into a fear mongering story, and here we are.", "title": "" }, { "docid": "f057ba558284c21dbce37c95a845abb6", "text": "Sheegan has a great explanation of how the TBA market contributes to mortgage rates. The 30 Year Mortgage rates are closely tied to the 10-Year Treasury. One can track this rate at many stock quoting sites using symbol TNX.", "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": "2d4ea113bce589e1648c170a6a81c74a", "text": "Traditionally, the Dow Jones Industrial Average (DJIA) was only comprised of stocks that were traded on the New York Stock exchange. Neither Apple (AAPL) nor Google (GOOG) are traded on the New York Stock Exchange but instead are traded on NASDAQ. All NASDAQ tickers are four characters long and all NYSE tickers are only three or less characters long (e.g. IBM or T (AT&T)). However in 1999, MSFT became the first NASDAQ stock to be included in the DJIA. Given that AAPL now has the largest market capitalization of any company in U.S. history, I think it is likely if they retain that position, that they would eventually be let into the DOW club too, perhaps, ironically, even supplanting Microsoft.", "title": "" }, { "docid": "957c5899a0d1a893be298c8bffe79a4d", "text": "It's got to be a bad chunk of data on Google. Yahoo finance does not show that anomaly for 1988, nor does the chart from Home Depot's investor relations site:", "title": "" }, { "docid": "a26da9e8aaa057b993b4972726e78b83", "text": "For each class A share (GOOGL) there's a class C share (GOOG), hence the missing half in your calculation. The almost comes from the slightly higher market price of the class A shares (due to them having voting powers) over class C (which have no voting powers). There's also class B share which is owned by the founders (Larry, Sergei, Eric and perhaps some to Stanford University and others) and differs from class A by the voting power. These are not publicly traded.", "title": "" }, { "docid": "c9e93eacddd5b462e5df20e20436b1f6", "text": "\"I'm familiar with and have traded U.S.-listed LEAPS and I've always used the CBOE quotes page you linked to. So, I too was surprised I couldn't find 3M (MMM) LEAPS quotes at that page, even after checking the \"\"List all options, LEAPS, Credit Options & Weeklys if avail.\"\" radio button. Used to work! Fortunately, I was able to get access to the full chain of option quotes from the CBOE's other quotes page: Go to the \"\"Quotes & Data\"\" menu, then select Delayed Quotes - NEW! Here's how: I think the new interface is terrible: it's too many steps to get to the information desired. I preferred the all-in-one table of the Delayed Quotes Classic page, the one you linked to. As to why that classic page isn't yielding the full chain, I can only suggest it is a recently introduced bug (software defect). I certainly was able to get LEAPS quotes from that page before. On Yahoo! Finance option quotes: I don't know why their chain is incomplete – I can't see the logic, for instance, as to why MMM Jan 2012 60 calls are missing. I thought at first it may be lack of volume or open interest, but nope. Anyway, I don't trust Yahoo! to provide accurate, reliable quotes anyway, having seen too many errors and missing data in particular in the feed of Canadian stocks, which I also trade. I rely on the exchange's quotes, and my broker's real-time quotes. I check Yahoo! only for convenience sake, and when it actually matters I go to the other more reliable sources. For what it's worth, though, you can also get full chain option quotes at NASDAQ. See here for the 3M (MMM) example then click on the \"\"Jan 12\"\" link near the top. However, I would consider CBOE's quotes more definitive, since they are the options exchange.\"", "title": "" } ]	fiqa
d46f6914ca4716ae7a80e04b12f8e69a	How do finance professionals procounce “CECL”?	[ { "docid": "061e7f8c0908cf07f2829824c7c6e243", "text": "\"According to the following links, it is commonly pronounced \"\"Cecil\"\". https://kaufmanrossin.com/blog/bank-ready-meet-cecil/ The proposed model introduces the concept of shifting from an incurred loss model to the current expected credit loss model commonly referred to as CECL (pronounced “Cecil”). http://www.gonzobanker.com/2016/02/cecl-the-blind-leading-the-blurry/ [...] and its name is CECL (Current Estimated Credit Losses, pronounced like the name “Cecil”). The name Cecil means “blind,” which is ironic, because FASB’s upcoming guidance will push FIs to clarify the future performance of their loan portfolios by using models to predict CECL of all loan portfolios. https://www.linkedin.com/pulse/operational-financial-impact-cecl-banks-nikhil-deshmukh Termed as Current Expected Credit Loss (CECL, or Cecil, as some call it), [...]\"", "title": "" } ]	[ { "docid": "7f9e3a993c0abf7fca0c5873bb9a45c1", "text": "Yes it's a very specialized profession. Like extremely specialized. I've read in the WSJ a number of times that finance is unsurprisingly moving in a more intellectual direction, so i feel having this license in the long run may really pay off. Thank you for your two cents. I especially like the Board of Directors bit. I really don't know if that is a good reason to dedicate my life to becoming an actuary.", "title": "" }, { "docid": "9f0aa52447ab80bd79438d8d2ebd4366", "text": "I work in financial tech, and we've been working on regulatory projects non stop since the middle of last year. Not a single feature enhancement for traders has been implemented despite very high demand. The other (smaller) wing of the tech division has been working on electronic trading. As regulation and position transparency ramp up, voice spreads will fall and desks will have to rely on volume driven by electronic trading to make up revenue. The people driving this will be technology, and not the traders. So: if you want to get in on the finances money, brush up on your programming skills: C++, Java, python are the bare minimum.", "title": "" }, { "docid": "8753871fa539a3cd8957b1bd8db5b58e", "text": "So, you don't necessarily have to have your job be your life to work in finance. That's good to know, and makes sense, since surely there aren't enough Type A's to populate an entire, large, industry. Man, I don't understand how one could work 100 hours a week for more than maybe one week. It would seem like basic needs such as sleep would become difficult with that level of work.", "title": "" }, { "docid": "bac26e6289d4d3b07230a31701149d43", "text": "I think that MFin is best suited for more technical roles in banks (I assume when you say IB you mean sell/buy side M&A), HF, AM, and PM roles. I don't view PE, CF, or IB as technically challenging as most of the analysis is done on the areas outside of finance.", "title": "" }, { "docid": "4d71ed4a3c2a4630d8ee5190254fae36", "text": "\"Background: I live and work in a small city (250k) and want to work somewhere much larger (New York, London, Chicago, Sydney). Ideal job is something quantitative and related to programming/analytics in finance, though I have passed the CFA Level III Exam to show my interest in the field and currently work as a systems and database analyst (job title is \"\"Senior financial analyst\"\".) I have a Master's in mathematical finance but my work mostly relates to personal side projects. Questions: Short of packing up and moving, what is an effective way to network with people from these larger cities? Is there demand for quants and junior quants, or is there too much supply? Will I need to get a PhD to be relevant? Can I transfer my background or skills into another area of finance first to get the networking contacts?\"", "title": "" }, { "docid": "6315b769b8a2a8cbad2ddccfdd115de1", "text": "What is the best way to learn SQL for use in finance, namely FP&A? I've watched videos on YouTube but most of them focus on syntax. I do know that SQL is used in some type of DBMS like IBM / Oracle / Microsoft Excel. So, when job applications list SQL experience (like for FP&A Analyst positions), what DBMS are they referring to? Oracle? Microsoft Excel? Does it matter? If I learn the syntax, is that enough? I have searched for resources but again, they seem to be focusing on the syntax. https://www.reddit.com/r/SQL/wiki/index Can someone who works in FP&A please explain or recommend a MOOC or other sources that will show me how to use SQL just like you do on the job? Thanks.", "title": "" }, { "docid": "2b91ea9ba00641d019c71d2986da2f19", "text": "the financial information is generally filed via SEDAR (Canada) or SEC (US) before the conference call with the investment community. This can take before either before the market opens or after the market closes. The information is generally distribute to the various newswire service and company website at the same time the filing is made with SEDAR/SEC.", "title": "" }, { "docid": "fdb0d925b58ea2b1b9af8fe85c545a4c", "text": "E&P can be valid throug Net Present Value methods, on a field-by-field basis. As no field is ever-lasting, and there Are not an unlimited number of fields, perpetuity-formulaes Are shitty. FCFF on a per-field basis with WC and Capex, with a definite lifetime. Thank you for the compliment.", "title": "" }, { "docid": "ca1e0012af250bc79f95ce5ee61324ad", "text": "When you do finance problems the first thing you need to think about is how the interest is accrued. Is it monthly semi annually or yearly? Once you understand the period of time on the interest and payments it’ll help you understand these problems more. Also a good thing to memorize is converting from EAR to APR. and APR to EAR. You’ll use that a lot. Good luck!", "title": "" }, { "docid": "89384df345b80235245368c544acceb1", "text": "\"Try to appear interesting to the guy. Don't try and discuss finance, your views on current finance events, or anything of that nature. Listen a lot to what s/he has to say and - when you hear something that you know a lot about - talk about that, in your most articulate and interesting tone. The reason I say \"\"don't talk about finance\"\" is that - given your level of education and work experience - there's likely nothing you know that s/he doesn't, and it's even more likely that you're going to talk about something that you don't truly understand on a functional level. What's likely to happen in this case is that you're probably going to be forgotten as just another person who talks about entry-level finance. To reiterate: Just make sure you come off as interesting (\"\"memorable\"\"), and relaxed/easy going. It might help if you network over a drink or two...\"", "title": "" }, { "docid": "0700971fbc357b77224692f5644dac4a", "text": "The person you're talking to is probably someone in the company. They need to convey the message to their bank. So you need to explain it to them as if they were 3 year old kids. You may be used to SWIFT transactions because that's how you always get paid, but unless the UK firm regularly employes Russian freelancers, this is probably the first time ever they have heard of it. Similarly, someone in the local branch of their community bank has probably never heard of it before either. In Europe they use IBANs and SWIFTs are rather uncommon. Be patient, explain the issue and the solution in as many words as you can, and suggest them putting you on speaker at the bank so that you could talk directly to the person executing the transaction. If you do the same on your side and let the bankers talk directly to each other - that would probably be ideal.", "title": "" }, { "docid": "8aab733e55ada36c6c0e039c24d391e5", "text": "\"I'm with you here, I can't imagine who in IB would be \"\"financial modeling\"\" with Excel. Matlab, R, or even more general purpose languages like C are much more common. Even things like cookie-cutter monte carlo simulations or many-step binomial trees are a pain with excel.\"", "title": "" }, { "docid": "8b2553ca379034c58a9b65547529cb50", "text": "\"Amount is the closest single word. \"\"Amount in dollars\"\" would be the easiest way to specify information you are requesting. \"\"Amount and currency\"\" if you ware in an area using multiple currencies. An accountant might be able to give you a more technical term, but it would be accountancy jargon. Amount due, credit amount, debit amount, amount deposited, amount credited, amount withdrawn, or amount included. If you're writing instructions and want to specify that the person following the instructions needs to indicate the currency, you'll probably have to simply state that requirement. Based on US centric thinking, inside the US, money is dollars, dollars is money. For US citizens outside the country, we would always tack on the currency. 100 dollars, or 100 Euro. There is a segment of Americans who do not understand geography, and that other countries exist, and that they use different currencies, might not realize that other countries have currencies named dollars, and that USD means US Dollars. So for U.S. citizens, be specific and clear. Bottom line, if this is written for US residents, and they need to specify the currency, you need to explicitly require them to \"\"List the amount and currency.\"\"\"", "title": "" }, { "docid": "48b8c97f3504a8f579cdae8344d47681", "text": "\"According to Wikipedia: In the finance industry, something done on a secular basis is done on a long-term basis, not a temporary or cyclical one, with a time frame of \"\"10–50 years or more\"\" Source\"", "title": "" }, { "docid": "5e773d0aa02456d51473a32d0d58d4c3", "text": "I think you can solve the problem of different wordings by having a lookup with a table of all the different ways companies spell the same words that returns a standard format that you use. That way you only need to update the table every time you come across a new company and you wont have to type it out all the time.", "title": "" } ]	fiqa
44b6ea31f7ad2fac97b968561cf31b37	How is yahoo finance P/E Ratio TTM calculated?	[ { "docid": "829e686278a4a68bc87296349e46fb35", "text": "The correct p/e for bp.l is 5.80. Bp.l is on the London stock exchange and prices are in local currency. The share price of 493 is reported in pence (not dollars). The EPS is reported in pounds. Using .85 pounds = 85 pence, you calculate the EPS as follows: 493.40/85 = 5.80 PE Yahoo totally screwed up. They converted the .85 pounds into US dollars ($1.34) but didn't convert the 493 pence. By using the 493 as dollars, they got 493.9/1.34 = 368 pe! Notice that Yahoo reports the American Depository Shares (symbol 'BP') with an EPS of $8.06. That correctly reflects that there are 6 shares of BP.l per ADS (1.34 * 6 = 8.04). But why is the share price listed at $46.69? Well... 493 GBp (pence) = 4.93 pounds 4.93 pounds = 7.73 USD 7.73 USD * 6 shares per ADS = 46.38 USD", "title": "" }, { "docid": "202984fdfca72013590d80a373c28d40", "text": "\"P/E is Price divided by Earnings Per Share (EPS). P/E TTM is Price divided by the actual EPS earned over the previous 12 months - hence \"\"Trailing Twelve Month\"\". In Forward P/E is the \"\"E\"\" is the average of analyst expectations for the next year in EPS. Now, as to what's being displayed. Yahoo shows EPS to be 1.34. 493.90/1.34 = P/E of 368.58 Google shows EPS to be 0.85. 493.40/0.85 = P/E of 580.47 (Prices as displayed, respectively) So, by the info that they are themselves displaying, it's Google, not Yahoo, that's displaying the wrong P/E. Note that the P/E it is showing is 5.80 -- a decimal misplacement from 580 Note that CNBC shows the Earnings as 0.85 as well, and correctly show the P/E as 580 http://data.cnbc.com/quotes/BP.L A quick use of a currency calculator reveals a possible reason why EPS is listed differently at yahoo. 0.85 pounds is 1.3318 dollars, currently. So, I think the Yahoo EPS listing is in dollars. A look at the last 4 quarters on CNBC makes that seem reasonable: http://data.cnbc.com/quotes/BP.L/tab/5 those add up to $1.40.\"", "title": "" } ]	[ { "docid": "6bc624692d06ad64e7f32232c19638f6", "text": "Your observation is mostly right, that 1 is a the number around which this varies. You are actually referencing PEG, P/E to Growth ratio, which is a common benchmark to use to evaluate a stock. The article I link to provides more discussion.", "title": "" }, { "docid": "5e7a7044a927ec8ab40b5f4398ddd8cb", "text": "Generally speaking. 1. Take the position size / average daily volume. 2. Multiply that number by 10 or whatever 1/whatever % of volume you think you can execute, ( you can at best acct for 10 percent of traded volume on a day). 3. You now have days until liquidation (x) 4. Take the days until liquidation sample the return over time x. I.e. if days until liquidation is 10, you would sample 10 day returns. 5. Calculate the distribution characteristics of this window (mean, var, skew, kurt) and calculate VaR based on some confidence. You can now have a liquidity risk expected loss and a VaR. If position is on margin don't forget to add the interest cost. Note: Instead of taking 10 day return, you can take the 10 day VWAP and calculate return between Open and 10 day vwap.", "title": "" }, { "docid": "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": "ee11814d8241b9c20bfa447f2388a983", "text": "I have asked myself this exact same question many times. The analysis would be simple if you invested all your money in a single day, but I did not and therefore I would need to convert your cash transactions into Index fund buys/sells. I got tired of trying to do this using Yahoo's data and excel so I built a website in my spare time. I humbly suggest you try my website out in the hopes that it helps you perform this computation: http://www.amibeatingthemarket.com/", "title": "" }, { "docid": "5c90ee4ba274fd55bd125b0bc0623285", "text": "On closer look, it appears that Google Finance relies on the last released 10-k statement (filing date 10/30/2013), but outstanding shares as of last 10-Q statement. Using these forms, you get ($37,037M / 5.989B ) = $6.18 EPS. I think this is good to note, as you can manually calculate a more up to date EPS value than what the majority of investors out there are relying on.", "title": "" }, { "docid": "0fabf85cd931ba89b9c27fcb7b04bb9b", "text": "\"To my knowledge, there's no universal equation, so this could vary by individual/company. The equation I use (outside of sentiment measurement) is the below - which carries its own risks: This equations assumes two key points: Anything over 1.2 is considered oversold if those two conditions apply. The reason for the bear market is that that's the time stocks generally go on \"\"sale\"\" and if a company has a solid balance sheet, even in a downturn, while their profit may decrease some, a value over 1.2 could indicate the company is oversold. An example of this is Warren Buffett's investment in Wells Fargo in 2009 (around March) when WFC hit approximately 7-9 a share. Although the banking world was experiencing a crisis, Buffett saw that WFC still had a solid balance sheet, even with a decrease in profit. The missing logic with many investors was a decrease in profits - if you look at the per capita income figures, Americans lost some income, but not near enough to justify the stock falling 50%+ from its high when evaluating its business and balance sheet. The market quickly caught this too - within two months, WFC was almost at $30 a share. As an interesting side note on this, WFC now pays $1.20 dividend a year. A person who bought it at $7 a share is receiving a yield of 17%+ on their $7 a share investment. Still, this equation is not without its risks. A company may have a solid balance sheet, but end up borrowing more money while losing a ton of profit, which the investor finds out about ad-hoc (seen this happen several times). Suddenly, what \"\"appeared\"\" to be a good sale, turns into a person buying a penny with a dollar. This is why, to my knowledge, no universal equation applies, as if one did exist, every hedge fund, mutual fund, etc would be using it. One final note: with robotraders becoming more common, I'm not sure we'll see this type of opportunity again. 2009 offered some great deals, but a robotrader could easily be built with the above equation (or a similar one), meaning that as soon as we had that type of environment, all stocks fitting that scenario would be bought, pushing up their PEs. Some companies might be willing to take an \"\"all risk\"\" if they assess that this equation works for more than n% of companies (especially if that n% returns an m% that outweighs the loss). The only advantage that a small investor might have is that these large companies with robotraders are over-leveraged in bad investments and with a decline, they can't make the good investments until its too late. Remember, the equation ultimately assumes a person/company has free cash to use it (this was also a problem for many large investment firms in 2009 - they were over-leveraged in bad debt).\"", "title": "" }, { "docid": "a0d96161e8f3b899c36c596612638ed2", "text": "The dividend is for a quarter of the year, three months. 80 cents is 3.9% of $20.51. Presumably the Div/yield changes as the stock price changes. On Yahoo, they specify that the yield is based on a particular stated date. So it's only the exact number if the stock trades at the price on that date.", "title": "" }, { "docid": "43b5e2eff2438cb0614ae2ecf7afe2da", "text": "Yes, Alpha Vantage. As MasticatedTesticle points out, it is worth asking where it originally comes from, but it looked to me like a solid source for, in particular, intraday trading data. Additionally, Yahoo finance is done on R (zoo, PerformanceAnalytics libraries don't work anymore as far as I can tell). The numbers look right to me tho, let me know if things are off.", "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": "306e4dbc38dd9989c1d6bd8e12f8a6bc", "text": "\"What you need to do is go to yahoo finance and look at different stock's P/E ratios. You'll quickly see that the stocks can be sorted by this number. It would be an interesting exercise to get an idea of why P/E isn't a fixed number, how certain industries cluster around a certain number, but even this isn't precise. But, it will give you an idea as to why your question has no answer. \"\"Annual earnings are $1. What is the share price?\"\" \"\"Question has no answer\"\"\"", "title": "" }, { "docid": "d298f15e936007876cd081e40c7107c7", "text": "I think what's screwing up my calculation is the (reL), return on equity levereged figure. The beta for KORS apparently is -0.58, so when I use the formula reL = rf + (ßL)(rm - rf), I get -0.0048 as my reL. Am I doing my beta wrong? Am I supposed to use a different figure for my beta? ALSO, further in the process, when using the formula for WACC, my E/(D+E) is essentially 1.0 because market value of equity for KORS is 7bill and its market value of debt is only like 147 million. edit: I'm beginning to believe that my beta of -0.58 is not rightly used. It's what yahoo told me, but other sources are saying that the beta of KORS is more like -0.01 or close to 0. Yes? edit 2: Using -0.01 beta, I get a rdWACC of 2.2%. Now this seems more plausible. I did some research on negative betas and found out that they basically don't really exist aside from gold. So Yahoo must be giving me a weird beta figure. Other websites are all giving me -0.01, so I believe that is correct.", "title": "" }, { "docid": "f93ae4aa6cff425d08d6816d9cb7ee3f", "text": "I understand that ITM have little time value, so they will have small time decay(theta), but why OTM has a lesser theta than ATM? The Time value represents uncertainty. That uncertainty decreases the farther away from ATM you get (in either direction). At-the-money, there is roughly a 50% chance that the option expires worthless. As you get deeper in-the-money, the change that is expires worthless decreases, so there is less uncertainty (there is more certainty that the option will pay off). As you go deeper OTM, the probability that the option expires worthless increases, so there is also less uncertainty. At the TTM decreases, the uncertainty (theta) decreases as well, since there is less time for the option to cross the strike from either direction. Similarly, as volatility decreases, theta decreases, since low-volatility stocks have a less change of crossing the strike.", "title": "" }, { "docid": "8b16542ff6aa0d91ed303490a3691bc1", "text": "You could use the Gordon growth model implied expected return: P = D/(r-g) --> r = D/P (forward dividend yield) + g (expected dividend growth). But obviously there is no such thing as a good market return proxy.", "title": "" }, { "docid": "2737555cec11157babb0aff5bd578d75", "text": "\"the \"\"how\"\" all depends on your level of computer savvy. Are you an Excel spreadsheet user or can you write in programming languages such as python? Either approach have math functions that make the calculation of ROI and Volatility trivial. If you're a python coder, then look up \"\"pandas\"\" (http://pandas.pydata.org/) - it handles a lot of the book-keeping and downloading of end of day equities data. With a dozen lines of code, you can compute ROI and volatility.\"", "title": "" }, { "docid": "f0af13625a8bea1d18a009d4c8ad44a5", "text": "There are many ways to calculate the return, and every way will give you a different results in terms of a percentage-value. One way to always get something meaningful - count the cash. You had 977 (+ 31) and in the end you have 1.370, which means you have earned 363 dollars. But what is your return in terms of percentage? One way to look at it, is by pretending that it is a fund in which you invest 1 dollar. What is the fund worth in the beginning and in the end? The tricky part in your example is, you injected new capital into the equation. Initially you invested 977 dollars which later, in the second period became worth 1.473. You then sold off 200 shares for 950 dollars. Remember your portfolio is still worth 1.473, split between 950 in cash and 523 in Shares. So far so good - still easy to calculate return (1.473 / 977 -1 = 50.8% return). Now you buy share for 981 dollars, but you only had 950 in cash? We now need to consider 2 scenarios. Either you (or someone else) injected 31 dollars into the fund - or you actually had the 31 dollars in the fund to begin with. If you already had the cash in the fund to begin with, your initial investment is 1.008 and not 977 (977 in shares and 31 in cash). In the end the value of the fund is 1.370, which means your return is 1.370 / 1.007 = 36%. Consider if the 31 dollars was paid in to the fund by someone other than you. You will then need to recalculate how much you each own of the fund. Just before the injection, the fund was worth 950 in cash and 387 in stock (310 - 200 = 110 x 3.54) = 1.339 dollars - then 31 dollars are injected, bringing the value of the fund up to 1.370. The ownership of the fund is split with 1.339 / 1.370 = 97.8% of the value for the old capital and 2.2% for the new capital. If the value of the fund was to change from here, you could calculate the return for each investor individually by applying their share of the funds value respective to their investment. Because the value of the fund has not changed since the last period (bullet 3), the return on the original investment is (977 / 1.339 - 1 = 37.2%) and the return on the new capital is (31 / 31 = 0%). If you (and not someone else) injected the 31 dollar into the fund, you will need to calculate the weight of each share of capital in each period and get the average return for each period to get to a total return. In this specific case you will still get 37.2% return - but it gets even more comlex for each time you inject new capital.", "title": "" } ]	fiqa
75a1b414d12c0c8ce02330d73f81b915	Is there any “Personal” Finance app that allows 2 administrators?	[ { "docid": "b94f220f1c1d6cb0122ab502a91a8596", "text": "We use YNAB to handle our household budget - their latest version allows cloud sync between Android/iOS devices and various desktop installs. I have the budget folder shared with my wife's Dropbox account so we both an view the budget, enter spending, and make changes.", "title": "" }, { "docid": "1b8aec839c09dcb7999a5de7634ce90b", "text": "\"We use mint for just that. We have a \"\"shared\"\" account. We each have the mobile app and share the same pin for the application (not our phones -- you can set a pin in the settings on the application). Thus we each share a login to the site, where we have setup all of our accounts. In the \"\"Your Profile\"\" link at the top of the page, you may select the Email & Alerts option. From here you may add a second e-mail account. This way if you go over a budget or have a bill upcoming each of you will get a notification. We have setup budgeting through the web site, and either of us can modify the budget via logging in.\"", "title": "" }, { "docid": "f6e28aca217b83085a5143051ab9e18f", "text": "The best solution I've been able to find for this is MoneyWiz, where both are logged into the same sync account.", "title": "" } ]	[ { "docid": "e7ecc10268766997672000064e46af68", "text": "\"Not knowing anything about your situation or what makes it so complex, I would have to agree with the other commenters. If your accountant screws up your business goes under, but at least your personal finances are safe from that and you'll recover (unless all your wealth is tied up in your business). If your virtual assistant uses your personal information to take all your money, ruin your credit, or any number of other things, you're going to spend a loooong time trying to get things \"\"back to normal\"\". If the few hours per month spent managing your finances is starting to add up, I might suggest looking into other ways to automate and manage them. For instance, are all of your bills (or as many as you can) e-bills that can be issued electronically to your bank? Have you set up online bill pay with your bank, so that you can automatically pay all the bills when they arrive? Have you tried using any number of online services (Mint, Thrive, your bank's \"\"virtual wallet/portfolio\"\") to help with budget, expense tracking, etc.? Again, I don't know your exact situation, but hopefully some of these suggestions help. Once I started automating my savings and a lot of my bill paying, it gave me a lot of peace of mind.\"", "title": "" }, { "docid": "90444e54339405ab045d9a427e75f038", "text": "You can look into getting a business credit card. When I had my Chase business credit card, I could add authorized users to the main account and set a spending limit on each card.", "title": "" }, { "docid": "a5a8f00d13d6121c63e2703247e507dc", "text": "\"Bookkeeping and double-entry accounting is really designed for tracking the finances of a single entity. It sounds like you're trying to use it to keep multiple entities' information, which may somewhat work but isn't really going to be the easiest to understand. Here's a few approaches: In this approach, the books are entirely from your perspective. So, if you're holding onto money that \"\"really\"\" belongs to your kids, then what you've done is you're taking a loan from them. This means that you should record it as a liability on your books. If you received $300, of which $100 was actually yours, $100 belongs to Kid #1 (and thus is a loan from him), and $100 belongs to Kid #2 (and thus is a loan from her), you'd record it just that way. Note that you only received $100 of income, since that's the only money that's \"\"yours\"\", and the other $200 you're only holding on behalf of your kids. When you give the money to your kids or spend it on their behalf, then you debit the liability accordingly and credit the Petty Cash or other account you spent it from. If you wanted to do this in excruciating detail, then your kids could each have their own set of books, in which they would see a transfer from their own Income:Garage Sale account into their Assets:Held by Parents account. For this, you just apportion each of your asset accounts into subaccounts tracking how much money each of you has in it. This lets you treat the whole family as one single entity, sharing in the income, expenses, etc. It lets you see the whole pool of money as being the family's, but also lets you track internally some value of assets for each person. Whenever you spend money you need to record which subaccount it came from, and it could be more challenging if you actually need to record income or expenses separately per person (for some sort of tax reasons, say) unless you also break up each Income and Expense account per person as well. (In which case, it may be easier just to have each person keep their entirely separate set of books.) I don't see a whole lot of advantages, but I'll mention it because you suggested using equity accounts. Equity is designed for tracking how much \"\"capital\"\" each \"\"investor\"\" contributes to the entity, and for tracking a household it can be hard for that to make a lot of sense, though I suppose it can be done. From a math perspective, Equity is treated exactly like Liabilities in the accounting equation, so you could end up using it a lot like in my Approach #1, where Equity represents how much you owe each of the kids. But in that case, I'd find it simpler to just go ahead and treat them as Liabilities. But if it makes you feel better to just use the word Equity rather than Liability, to represent that the kids are \"\"investing\"\" in the household or the like, go right ahead. If you're going to look at the books from your perspective and the kids as investing in it, the transaction would look like this: And it's really all handled in the same way an Approach #1. If on the other hand, you really want the books to represent \"\"the family\"\", then you'd need to have the family's books really look more like a partnership. This is getting a bit out of my league, but I'd imagine it'd be something like this: That is to say, the family make the sale, and has the money, and the \"\"shareholders\"\" could see it as such, but don't have any obvious direct claim to the money since there hasn't been a distribution to them yet. Any assets would just be assumed to be split three ways, if it's an equal partnership. Then, when being spent, the entity would have an Expense transaction of \"\"Dividend\"\" or the like, where it distributes the money to the shareholders so that they could do something with it. Alternatively, you'd just have the capital be contributed, And then any \"\"income\"\" would have to be handled on the individual books of the \"\"investors\"\" involved, as it would represent that they make the money, and then contributed it to the \"\"family books\"\". This approach seems much more complicated than I'd want to do myself, though.\"", "title": "" }, { "docid": "90b0557ba3649538e4ef1b972e18f484", "text": "Mint.com is a fantastic free personal finance software that can assist you with managing your money, planning budgets and setting financial goals. I've found the features to be more than adequate with keeping me informed of my financial situation. The advantage with Mint over Microsoft Money is that all of your debit/credit transactions are automatically imported and categorized (imperfectly but good enough). Mint is capable of handling bank accounts, credit card accounts, loans, and assets (such as cars, houses, etc). The downsides are:", "title": "" }, { "docid": "ed212fdfbc12e3eee785a6b795226751", "text": "A desktop application that has the same features (although as already stated, nothing will be identical but if you are looking for functionality then certainly there will be) and pretty simple to use was Microsoft Money, however, Microsoft stopped supporting it with newer versions and while the existing versions will work, I still use mine, there will be no future updates. I like the interface, its simple to use and has all the features you want. They abandoned it in favor of Intuit's Quicken but personally I am not a fan of the Quicken interface. They still had a more extensive and probably too much for the average user application called Office Accounting, but they abandoned future updates and supports on that in favor of Intuit's Quickbooks. Again, I am not a fan of the interface but they are very feature rich including invoicing and payroll, again overkill for the average user. They still have the Small Business Accounting in the form of Microsoft Dynamics, but that is utterly overkill for personal use. I generally don't trust online or cloud based accounting solutions like Mint or even Quicken online because I don't trust my information security to some third party without knowing how they are securing it and what will happen to me if/when they are leaked due to breach. So I like to keep everything local to myself and that's a good move for you, you should do that. It seems at the moment the market standard without much competition is Quicken for personal use and Quickbooks for small business. I would recommend you start with Quicken and if your needs increase in the future, you can easily transfer into Quickbooks to scale up as they are fully compatible with each other. Check it out here and compare their products to see what works best for your needs.", "title": "" }, { "docid": "8018eefd837fd80fcc3c6bd9a4cb2eb5", "text": "\"JoeTaxpayer's answer mentions using a third \"\"house\"\" account. In my comment on his answer, I mentioned that you could simply use a bookkeeping account to track this instead of the overhead of an extra real bank account. Here's the detail of what I think will work for you. If you use a tool like gnucash (probably also possible in quicken, or if you use paper tracking, etc), create an account called \"\"Shared Expenses\"\". Create two sub accounts under that called \"\"his\"\" and \"\"hers\"\". (I'm assuming you'll have your other accounts tracked in the software as well.) I haven't fully tested this approach, so you may have to tweak it a little bit to get exactly what you want. When she pays the rent, record two transactions: When you pay the electric bill, record two transactions: Then you can see at a glance whether the balances on \"\"his\"\" and \"\"hers\"\" match.\"", "title": "" }, { "docid": "5685b1ded2c93079cd5e6b11fdc85535", "text": "I found that an application already exists which does virtually everything I want to do with a reasonable interface. Its called My Personal Index. It has allowed me to look at my asset allocation all in one place. I'll have to enter: The features which solve my problems above include: Note - This is related to an earlier post I made regarding dollar cost averaging and determining rate of returns. (I finally got off my duff and did something about it)", "title": "" }, { "docid": "e398e303fb3180307362ca764a3a80b9", "text": "\"As your financial situation becomes more complex, it becomes increasingly more difficult to keep track of everything with a simple spreadsheet. It is much easier to work with software that is specifically designed for personal finances. A good program will allow you to keep track of as many accounts as you want. A great program will completely separate the different account balances (location of the money) from the budget category balances (purpose of the money). Let me explain: When you set up the software, you will enter in all of your different bank accounts with their balances. Perhaps you have three savings accounts and two checking accounts. It doesn't matter. When you are done entering those, the software will total them up, and the next job you have is assigning this money into different budget categories: your spending plan. For example, you might put some of it into a grocery category, some into an entertainment category, some will be assigned to pay your next car insurance bill, and some will be an emergency fund. (These categories are completely customizable, and your budget can be as broad or as detailed as you wish.) When you deposit your paycheck, you assign that new income into budget categories as well. It doesn't matter at this point which accounts your money are located in; the only thing that matters is that you own this money and you have access to it. Now, you might want to use a certain account for a certain budget category, but you are not required to do so. (For example, your grocery category money will probably be in your checking account, since you will be spending from it regularly. Your emergency fund will hopefully be in an account that earns a little higher interest.) Once you take this approach, you might find you don't need as many bank accounts as you thought you did, because the software does the job of separating your money into different \"\"accounts\"\" for different purposes. I've written before about the different categories of personal finance software. YNAB, Mvelopes, and EveryDollar are three examples of software that will take this approach of separating the concepts of the bank account and the budget category.\"", "title": "" }, { "docid": "b274dcbeca8aaf4a0d475b7e2101809b", "text": "Mint has worked fairly well for tracking budgets and expenses, but I use GnuCash to plug in the holes. It offers MSFT$ like registers; the ability to track cash expenses, assets, and liabilities; and the option to track individual investment transactions. I also use GnuCash reports for my taxes since it gives a clearer picture of my finances than Mint does.", "title": "" }, { "docid": "500aba91d79281094dbadba775df5b7a", "text": "I'm using iBank on my Mac here and that definitely supports different currencies and is also supposed to be able to track investments (I haven't used it to track investments yet, hence the 'supposed to' caveat).", "title": "" }, { "docid": "f7c21c567f8858dae9181f8fb9ab5db7", "text": "My wife and I do this. We have one account for income and one for expenditures (and around 7 others for dedicated savings.) Doing this we are forcing ourselves to keep track of all expenditures as we have to manually transfer funds from one to the other, we try to do this periodically (every Wednesday) and then keep the expenditures within what is actually on the account. It is a really good way to keep track of everything. Bear in mind that our bank provides a fast handy smartphone app where we both can check our account as well as transfer funds in less than 10 seconds. (Fingerprint authentication, instant funds transfer as well as zero fees for transfers.) Right now we have a credit card each attached to the expenditures account, but earlier we only had a debit card each and no credit cards. Meaning that when the weekly funds ran out we where simply not able to pay. We did this to mimic living only on cash and when the cash runs out you simply have to stop buying stuff. And at the same time we could accrue quite a bit of savings. I would definitely recommend this if you have problems with over expenditures.", "title": "" }, { "docid": "fad2f2893d5c2be6029ac8d3af9dc96a", "text": "For any android device you can try: Daily Expense Manager - to track your expenses and a host of other apps to suit your specific needs.", "title": "" }, { "docid": "b571809824f8d4516f9f62c50bb3d418", "text": "\"I use the (gratis, libre) command-line program ledger for my personal accounts. It handles funds across accounts gracefully, through a feature called \"\"Virtual Accounts\"\". A transaction can add or subtract money from a virtual account, which need not balance with all the other entries in the transaction. Then it's just a matter of setting up reports to include or exclude these accounts.\"", "title": "" }, { "docid": "afae3b9d38616f166679f52fff990a33", "text": "I use GnuCash which I really like. However, I've never used any other personal finance software so I can't really compare. Before GnuCash, I used an Excel spreadsheet which works fine for very basic finances. Pros Cons", "title": "" }, { "docid": "6227665539adcf4ff59654255a8cf00c", "text": "\"You Need A Budget is a nice budgeting tool that works on the desktop. It is more focused on manual entry and budgeting over auto-downloading and categorizing. It does support downloading transactions from banks and then importing the transaction files. You mentioned having \"\"trust issues\"\" with a bank and this would be safe as you don't enter your credentials into the app. It also has a mobile app that works well. Not exactly what you are looking for, but it would work in India and be safe if you have an untrustworthy bank and it would allow you to import transactions.\"", "title": "" } ]	fiqa
0a1910ec63d3e673caed23af43e1877d	Google Finance gain value incorrect because of currency fluctuation	[ { "docid": "6626c4f142e3832bfc708cd93472796d", "text": "You can easily build a Google Sheet spreadsheet to track what you want as Sheet has a 'googlefinance()' function to look-up the same prices and data you can enter and track in a Google Finance portfolio, except you can use it in ways you want. For example, you can track your purchase price at a fixed exchange rate, track the current market value as the product of the stock's price times the floating exchange rate, and then record your realized profit and loss using another fixed exchange rate. You don't have to record the rates either, as googlefinance() func is able to lookup prices as of a particular date. You can access Google Sheet through a web browser or Android app.", "title": "" } ]	[ { "docid": "c83ab56176a53cc349d933f86728f74c", "text": "\"I use Google Finance too. The only thing I have problem with is dividend info which it wouldn't automatically add to my portfolio. At the same time, I think that's a lot to ask for a free web site tool. So when dividend comes, I manually \"\"deposit\"\" the dividend payment by updating the cash amount. If the dividend comes in share form, I do a BUY at price 0 for that particular stock. If you only have 5 stocks, this additional effort is not bad at all. I also use the Hong Kong version of it so perhaps there maybe an implementation difference across country versions. Hope this helps. CF\"", "title": "" }, { "docid": "505ca7e221596c6b8fd0ab08c320d875", "text": "Your assumption that funds sold in GBP trade in GBP is incorrect. In general funds purchase their constituent stocks in the fund currency which may be different to the subscription currency. Where the subscription currency is different from the fund currency subscriptions are converted into the fund currency before the extra money is used to increase holdings. An ETF, on the other hand, does not take subscriptions directly but by creation (and redemption) of shares. The principle is the same however; monies received from creation of ETF shares are converted into the fund currency and then used to buy stock. This ensures that only one currency transaction is done. In your specific example the fund currency will be USD so your purchase of the shares (assuming there are no sellers and creation occurs) will be converted from GBP to USD and held in that currency in the fund. The fund then trades entirely in USD to avoid currency risk. When you want to sell your exposure (supposing redemption occurs) enough holdings required to redeem your money are sold to get cash in USD and then converted to GBP before paying you. This means that trading activity where there is no need to convert to GBP (or any other currency) does not incur currency conversion costs. In practice funds will always have some cash (or cash equivalents) on hand to pay out redemptions and will have an idea of the number and size of redemptions each calendar period so will use futures and swaps to mitigate FX risk. Where the same firm has two funds traded in different currencies with the same objectives it is likely that one is a wrapper for the other such that one simply converts the currency and buys the other currency denominated ETF. As these are exchange traded funds with a price in GBP the amount you pay for the ETF or gain on selling it is the price given and you will not have to consider currency exchange as that should be done internally as explained above. However, there can be a (temporary) arbitrage opportunity if the price in GBP does not reflect the price in USD and the exchange rate put together.", "title": "" }, { "docid": "d9f08fc15393c1e8664baf7badbf7311", "text": "It looks like GOOG did not have a pre-market trade until 7:14 am ET, so Google Finance was still reporting the last trade it had, which was in the after-hours session yesterday. FB, on the other hand, was trading like crazy after-hours yesterday and pre-market today as it had an earnings report yesterday.", "title": "" }, { "docid": "a0f9c638a7c7fec5710781b49a98dfc8", "text": "The math is wrong. $16m grows to $72b over 44 years at 21% return (exact return is (72000/16)^(1/44) - 1 = 0.21067). At one percentage point lower return, i.e. 20%, $16m grows to $50b (16m x 1.21^44 = 49.985b). In that case you would have paid about 30 percent of your gain in fees. Still a lot, but not severe. Even the calculation of percent fees is wrong in the article!", "title": "" }, { "docid": "8f399907f2221e4bdc9aefb8c11cf52c", "text": "This is from Google Finance right now.", "title": "" }, { "docid": "5d0b360de7d5745d006ae345e6072492", "text": "The value of the asset doesn't change just because of the exchange rate change. If a thing (valued in USD) costs USD $1 and USD $1 = CAN $1 (so the thing is also valued CAN $1) today and tomorrow CAN $1 worth USD $0.5 - the thing will continue being worth USD $1. If the thing is valued in CAN $, after the exchange rate change, the thing will be worth USD $2, but will still be valued CAN $1. What you're talking about is price quotes, not value. Price quotes will very quickly reach the value, since any deviation will be used by the traders to make profits on arbitrage. And algo-traders will make it happen much quicker than you can even notice the arbitrage existence.", "title": "" }, { "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": "593f6298656a2b96117729003a4e30dd", "text": "You bought 1 share of Google at $67.05 while it has a current trading price of $1204.11. Now, if you bought a widget for under $70 and it currently sells for over $1200 that is quite the increase, no? Be careful of what prices you enter into a portfolio tool as some people may be able to use options to have a strike price different than the current trading price by a sizable difference. Take the gain of $1122.06 on an initial cost of $82.05 for seeing where the 1367% is coming. User error on the portfolio will lead to misleading statistics I think as you meant to put in something else, right?", "title": "" }, { "docid": "a6cf13ea4d096712e382bab3746657bf", "text": "\"BestInvest is a UK site looking at that URL, base on the \"\"co.uk\"\" ending. Yahoo! Finance that you use is a US-based site unless you add something else to the URL. UK & Ireland Yahoo! Finance is different from where you were as there is something to be said for where are you looking. If I was looking for a quarter dollar there are Canadian and American coins that meet this so there is something to be said for a higher level of categorization being done. \"\"EUN.L\"\" would likely denote the \"\"London\"\" exchange as tickers are exchange-specific you do realize, right?\"", "title": "" }, { "docid": "2e23c82ab6bb3ab7a9a80b14ade2e0cd", "text": "There's a concept called interest rate parity, which sort of says that you cannot profit on the difference in interest rates. This difference accounts for the predicted movement in exchange rates as well, along with the stability of the currencies.", "title": "" }, { "docid": "6d9657c607586b37a6adb1bcd2413064", "text": "Returns reported by mutual funds to shareholders, google, etc. are computed after all the funds' costs, including Therefore the returns you see on google finance are the returns you would actually have gotten.", "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": "5c90ee4ba274fd55bd125b0bc0623285", "text": "On closer look, it appears that Google Finance relies on the last released 10-k statement (filing date 10/30/2013), but outstanding shares as of last 10-Q statement. Using these forms, you get ($37,037M / 5.989B ) = $6.18 EPS. I think this is good to note, as you can manually calculate a more up to date EPS value than what the majority of investors out there are relying on.", "title": "" }, { "docid": "93ed9100864a8c4146441b8c7bc0dab5", "text": "Now, is there any clever way to combine FOREX transactions so that you receive the US interest on $100K instead of the $2K you deposited as margin? Yes, absolutely. But think about it -- why would the interest rates be different? Imagine you're making two loans, one for 10,000 USD and one for 10,000 CHF, and you're going to charge a different interest rate on the two loans. Why would you do that? There is really only one reason -- you would charge more interest for the currency that you think is less likely to hold its value such that the expected value of the money you are repaid is the same. In other words, currencies pay a higher interest when their value is expected to go down and currencies pay a lower interest when their value is expected to go up. So yes, you could do this. But the profits you make in interest would have to equal the expected loss you would take in the devaluation of the currency. People will only offer you these interest rates if they think the loss will exceed the profit. Unless you know better than them, you will take a loss.", "title": "" }, { "docid": "2c91dbcb174171eab32c85abaddec8f3", "text": "\"What most of these answers here seem to be missing is that a stock \"\"price\"\" is not exactly what we typically expect a price to be--for example, when we go in to the supermarket and see that the price of a gallon of milk is $2.00, we know that when we go to the cash register that is exactly how much we will pay. This is not, however, the case for stocks. For stocks, when most people talk about the price or quote, they are really referring to the last price at which that stock traded--which unlike for a gallon of milk at the supermarket, is no guarantee of what the next stock price will be. Relatively speaking, most stocks are extremely liquid, so they will react to any information which the \"\"market\"\" believes has a bearing on the value of their underlying asset almost (if not) immediately. As an extreme example, if allegations of accounting fraud for a particular company whose stock is trading at $40 come out mid-session, there will not be a gradual decline in the price ($40 -> $39.99 -> $39.97, etc.)-- instead, the price will jump from $40 to say, $20. In the time between the the $40 trade and the $20 trade, even though we may say the price of the stock was $40, that quote was actually a terrible estimate of the stock's current (post-fraud announcement) price. Considering that the \"\"price\"\" of a stock typically does not remain constant even in the span of a few seconds to a few minutes, it should not be hard to believe that this price will not remain constant over the 17.5 hour period from the previous day's close to the current day's open. Don't forget that as Americans go to bed, the Asian markets are just opening, and by the time US markets have opened, it is already past 2PM in London. In addition to the information (and therefore new knowledge) gained from these foreign markets' movements, macro factors can also play an important part in a security's price-- perhaps the ECB makes a morning statement that is interpreted as negative news for the markets or a foreign government before the US markets open. Stock prices on the NYSE, NASDAQ, etc. won't be able to react until 9:30, but the $40 price of the last trade of a broad market ETF at 4PM yesterday probably isn't looking so hot at 6:30 this morning... don't forget either that most individual stocks are correlated with the movement of the broader market, so even news that is not specific to a given security will in all likelihood still have an impact on that security's price. The above are only a few of many examples of things that can impact a stock's valuation between close and open: all sorts of geopolitical events, announcements from large, multi-national companies, macroeconomic stats such as unemployment rates, etc. announced in foreign countries can all play a role in affecting a security's price overnight. As an aside, one of the answers mentioned after hours trading as a reason--in actuality this typically has very little (if any) impact on the next day's prices and is often referred to as \"\"amateur hour\"\", due to the fact that trading during this time typically consists of small-time investors. Prices in AH are very poor predictors of a stock's price at open.\"", "title": "" } ]	fiqa
4a4829b9a22ccacad2f7378464186619	Online Personal finance with QIF import	[ { "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": "90b0557ba3649538e4ef1b972e18f484", "text": "Mint.com is a fantastic free personal finance software that can assist you with managing your money, planning budgets and setting financial goals. I've found the features to be more than adequate with keeping me informed of my financial situation. The advantage with Mint over Microsoft Money is that all of your debit/credit transactions are automatically imported and categorized (imperfectly but good enough). Mint is capable of handling bank accounts, credit card accounts, loans, and assets (such as cars, houses, etc). The downsides are:", "title": "" }, { "docid": "10aa2b0954ea833c97fd9e0d7f1ffcbb", "text": "Converting fideli comment to answer I don't think any Canadian bank offers this capability for online banking. However, there seems to be a fierce push right now at most banks to improve their online banking platform so they may be open to the suggestion of guest accounts", "title": "" }, { "docid": "6ffed1ba7c7a5456be4234ae36bda59c", "text": "Online banks are the future. As long as you don't need a clerk to talk to (and why would you need?) there's nothing you can't do with an online bank that you can with a brick and mortar robbers. I use E*Trade trading account as a checking account (it allows writing paper checks, debit card transactions, ACH in/out, free ATM, etc). If you don't need paper checks that often you can use ING or something similar. You can always go to a local credit union, but those will wave the fee in exchange for direct deposit or high balance, and that you can also get from the large banks as well, so no much difference there. Oh where where did Washington Mutual go....", "title": "" }, { "docid": "17128da1cfb30687aaaf4b34ddc9b3ce", "text": "You need 2 things One a Demat Account and second a Broker Account. If you need to trade online, then an agreement [Power of Attorney] between Your Saving Bank Account, the Demat Account and the Trading Account. So there are quite a few forms that need signature and proof of identify. Physical presence is required.", "title": "" }, { "docid": "67e6df622dd88179304c2e78cbeab65a", "text": "CashBase has a web app, an iPhone app and an Android app, all sync'ed up. It doesn't integrate with banks automatically, but you can import bank statements as CSV. Disclosure: Filip is CashBase's founder.", "title": "" }, { "docid": "d806870dd32858170d30a0ef2ed45e93", "text": "MoneyDance Is the way to go. I've been using it for years and it works well. It keeps getting better, and best of all, it's completely cross platform! Mac, Windows and linux!", "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": "5685b1ded2c93079cd5e6b11fdc85535", "text": "I found that an application already exists which does virtually everything I want to do with a reasonable interface. Its called My Personal Index. It has allowed me to look at my asset allocation all in one place. I'll have to enter: The features which solve my problems above include: Note - This is related to an earlier post I made regarding dollar cost averaging and determining rate of returns. (I finally got off my duff and did something about it)", "title": "" }, { "docid": "198cba582cbd5efbc4acd1da63d19d23", "text": "You could try looking for a UK implementation of http://www.yodlee.com/ : Google tells me that http://www.lovemoney.com/ ( http://www.yodlee.com/2010_1_20.html ) is one such service. I use ANZ money manager - an Australian implementation of Yodlee and find it very useful. I wouldn't use Yodlee directly though (http://money-watch.co.uk/7197/uk-pfm-tool-review-yodlee-moneycenter) those T&Cs don't sound great.", "title": "" }, { "docid": "0b9356353617057df4141fe06695ce80", "text": "I use MoneyStrands.com to manage my spending. It's a lot like Mint, but provides support for more banks, and works with most Canadian financial institutions. I can't really compare them fairly though, since I didn't bother with Mint after learning that they don't care about Canadians. If your bank isn't supported by MoneyStrands, or you don't want to trust an online webiste with your account login, you can create accounts for manually uploaded files. It just means you have to log into your bank yourself, download the transactions as QFX, OFX, CSV or other supported formats, and then upload the files to the appropriate account in MoneyStrands. I love the expense tracking and reporting that MoneyStrands offers, but like Mint, their budgeting feature is seriously lacking. Fortunately I don't need to budget month-to-month, I just use it to see how much I spend on various categories, to help create annual budgets and decide how much I can invest or use for a vacation.", "title": "" }, { "docid": "94f119c9fab05e9547f93016e03b7aa8", "text": "Google Finance will do all the bullet points in your list and a few more. The only drawback is that you have to enter ALL buy and sell manually. It has an import feature, but it does not work with all trading software. http://www.google.com/finance Let me know if it works. Also, yahoo.com/finance has a good tool, but I still like better Google's application.", "title": "" }, { "docid": "05c1584104a608dbd02b92a376e479f0", "text": "You'll need to find out in what format MoneyStrands expects the data. A .qif or an .ofx file may not be the answer.", "title": "" }, { "docid": "6227665539adcf4ff59654255a8cf00c", "text": "\"You Need A Budget is a nice budgeting tool that works on the desktop. It is more focused on manual entry and budgeting over auto-downloading and categorizing. It does support downloading transactions from banks and then importing the transaction files. You mentioned having \"\"trust issues\"\" with a bank and this would be safe as you don't enter your credentials into the app. It also has a mobile app that works well. Not exactly what you are looking for, but it would work in India and be safe if you have an untrustworthy bank and it would allow you to import transactions.\"", "title": "" }, { "docid": "8acc504cb209517ea0de61366d0ec50e", "text": "Not sure you are going to find anything like this in Excel - with the automatic lookup in specific. Microsoft has a template available; but it looks to be a pretty busy page. Why not look at other software? If you have a PC, Quicken and Microsoft Money are of course the big guns. You don't mention why you switched away from MS Money... There are many other packages as well. The one that I use (but have no other financial interest in) is Moneydance as it was the best on Mac at the time I was looking. It also runs on Windows and Linux.", "title": "" }, { "docid": "caedaceb019af0723b7f062ea089b6c2", "text": "None of what you said is correct. Wells Fargo makes over half of it's net income from community banking. Investment Banking is tucked inside of the Wholesale division and represents a relatively small piece of that. Wells' auto portfolio is at $58 billion; by no means as large as say the mortgage exposure, but certainly nothing to sneeze at.", "title": "" } ]	fiqa
2269223da36e7e05ece3a0214704f181	Finance car with or with out a balloon payment	[ { "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": "103910ac8dd3b76e41e68a79b1d5874f", "text": "My grandmother passed away earlier this year. When I got my car 3 years ago, I did not have good enough credit to do it on my own or have her as a co-signer. We had arranged so that my grandmother was buying the car and I was co-signing. A similar situation was happening and I went to my bank and took out a re-finance loan prior to her passing. I explained to them that my grandmother was sick and on her death bed. They never once requested a power of attorney or required her signature. I am now the sole owner of the vehicle.", "title": "" }, { "docid": "a453b102c970df29de645d3513f34325", "text": "\"Care to elaborate? It is my understanding that any asset can be rehypothecated at least in theory. By saying these car loans \"\"aren't\"\" rehypo'd, do you mean this is not the practice, or that there is a law/regulation prohibiting it?\"", "title": "" }, { "docid": "887b6da259f747c3ebaa6117d49b4758", "text": "Not sure if it is the same in the States as it is here in the UK (or possibly even depends on the lender) but if you have any amount outstanding on the loan then you wouldn't own the vehicle, the loan company would. This often offers extra protection if something goes wrong with the vehicle - a loan company talking to the manufacturer to get it resolved carries more weight than an individual. The laon company will have an army of lawyers (should it get that far) and a lot more resources to deal with anything, they may also throw in a courtesy car etc.", "title": "" }, { "docid": "beb3f083af599d46d40746bcc6f23dda", "text": "\"I think everything in your case is just simply missing one important rule of how credit works. Essentially, your MIL cannot get a loan. You can. You are making her a large loan that she cannot get for herself. That is all. That is the essence of what this deal is. It is not without interest - she makes a financial contribution toward your son, you get the deal in 2 years assuming she doesn't default (she will), etc. Imagine it this way: you are sitting in the dealership with the dealer and your MIL. She wants a loan to pay for the car. The dealership says, \"\"you are way not credit worthy.\"\" So your MIL says, \"\"why doesn't my son-in-law take out the loan instead?\"\" Now the dealership says, sure, that's fine. From the dealer's standpoint, every other part of your arrangement is irrelevant - boring, even. The only magic trick is in who takes the loan out, no other difference. You're letting your MIL pull a car out of her sleeve like a magician, and in taking the deal you're believing her. This sentence: I am pretty sure that the ex-MIL will not let me down (I've loaned her large sums of money before and she always promptly repaid). is everything. You're making a rather large bet that the things that can go wrong in two years - including any situation involving your wife's welfare - are rather miniscule. And furthermore, that the few times she's paid you back - that did NOT convince banks and dealer she is more creditworthy - justifies her good creditworthiness. Is the interest worth it? Do you really believe that your MIL needs to wring a car out of you before she would consider contributing to her grandson's well-being (which is, essentially, the interest)? But wait, it's NOT everything. Her daughter (my ex-wife) would drive it for 2 years and then turn the car over to our son. Even if your MIL is creditworthy, the woman you described as follows: Her daughter, though, is a loose cannon. Will be holding and returning the collateral in this deal. Things she can do include: So I'm arguing two points: Obviously my opinion on this is clear. I hope I did a decent job of explaining where the components of this deal (credit, interest, collateral) play out in the eyes of a dealer or bank, and get lost in the mechanics of the rules you worked out with your family.\"", "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": "927daf0565187ad69e532a058862b42f", "text": "The optimal down payment is 0% IF your interest rate is also 0%. As the interest rate increases, so does the likelihood of the better option being to pay for the car outright. Note that this is probably a binary choice. In other words, depending on the rate you will pay, you should either put 0% down, or 100% down. The interesting question is what formula should you use to determine which way to go? Obviously if you can invest at a higher return than the rate you pay on the car, you would still want to put 0% down. The same goes for inflation, and you can add these two numbers together. For example, if you estimate 2% inflation plus 1% guaranteed investment, then as long as the rate on your car is less than 3%, you would want to minimize the amount you put down. The key here is you must actually invest it. Other possible reasons to minimize the down payment would be if you have other loans with higher rates- then obviously use that money to pay down those loans before the car loan. All that being said, some dealers will give you cash back if you pay for the car outright. If you have this option, do the math and see where it lands. Most likely taking the cash back is going to be more attractive so you don't even have to hedge inflation at all. Tip: Make sure to negotiate the price of the car before you tell them how you are going to pay for it. (And during this process you can hint that you'll pay cash for it.)", "title": "" }, { "docid": "e6bf0329cade75454187b0320816ddc2", "text": "\"One part of the equation that I don't think you are considering is the loss in value of the car. What will this 30K car be worth in 84 months or even 60 months? This is dependent upon condition, but probably in the neighborhood of $8 to $10K. If one is comfortable with that level of financial loss, I doubt they are concerned with the investment value of 27K over the loan of 30K @.9%. I also think it sets a bad precedent. Many, and I used to be among them, consider a car payment a necessary evil. Once you have one, it is a difficult habit to break. Psychologically you feel richer when you drive a paid for car. Will that advantage of positive thinking lead to higher earnings? Its possible. The old testament book of proverbs gives many sound words of advice. And you probably know this but it says: \"\"...the borrower is slave to the lender\"\". In my own experience, I feel there is a transformation that is beyond physical to being debt free.\"", "title": "" }, { "docid": "832fdc8c674902d98b80c697574456cb", "text": "The price inflation isn't a percentage, it's a fixed amount. If the dealer adds $R to the price of both the trade-in and the purchased car, then everyone ends up with the right amount of money in their pockets. So your formula should be: D + T + R = 0.1 * (P + R)", "title": "" }, { "docid": "2514a39fecbdb5edb8a2ca787065cc4c", "text": "Since this is the reasoning: I don't want to bother with micropayments, and harassing her for monthly payments. You must do one the following: Provide the money to your mom as a loan (i.e.: with a note and interest) payable when the full repayment of the loan to the bank is done (i.e.: balloon note). The terms of the note should be that the money to be used as collateral for the secured loan from the bank. Provide the money to your mom directly. In this case you have to pay gift tax on $7K (above the 13K exemption limit). Since you want the money back - you'll probably want the option #1. Your interest rate should be above a certain level to avoid reclassifying it as a gift by the IRS (your tax adviser can help you with that). Your mom will pay interest to the bank on the secured loan, and to you on the collateral (unless you wave it, subject to gift tax, again - talk to the tax adviser). You will only need to harass your mom about the balloon payment in the end. This is not a tax or legal advice. Talk to your tax adviser and a legal counsel about the details and additional options.", "title": "" }, { "docid": "dba4f638e967cf689e1b735cc9daed10", "text": "No, it would not show up on the income statement as it isn't income. It would show up in the cash flow statement as a result of financing activities.", "title": "" }, { "docid": "9e814218015e61c473d66135a4cfd495", "text": "I agree with the deposit part. But if you are buying a new car, the loan term should meet the warranty term. Assuming you know you won't exceed the mileage limits, it's a car with only maintainence costs and the repayment cost at that point.", "title": "" }, { "docid": "5453e13b2b0aef8cdb621aee02f79ded", "text": "\"Convenience, and of course money. In case of an event, you'll have to spend the full worth of money to fix/replace, while if you're insured - you get the insurance to pay for it. It is up to you to decide, if the money saved on the lower premiums worth the risk of paying much more in case of an event. Of course, the cheaper the car the more it makes sense not to pay the premiums. Many people do that. Regarding the bargaining power, I actually think that you would pay less if it is not going through insurance than the bill the insurance pays. I fixed a nasty dent for like $300 at one shop, while at the other they said \"\"It's $1200, but what do you care, your insurance will cover it\"\" (I had $500 deductible, so in the end it was cheaper for me to pay $300 without the insurance at all).\"", "title": "" }, { "docid": "393ee932bbcbbe5f9751ffa34a64af45", "text": "\"It sounds like you're basing your understanding of your options regarding financing (and even if you need a car) on what the car salesman told you. It's important to remember that a car salesman will do anything and say anything to get you to buy a car. Saying something as simple as, \"\"You have a low credit score, but we can still help you.\"\" can encourage someone who does not realize that the car salesman is not a financial advisor to make the purchase. In conclusion,\"", "title": "" }, { "docid": "0abf2d4619c289bdab3c1e7ba705521d", "text": "\"A repossessed automobile will have lost some value from sale price, but it's not valueless. They market \"\"title loans\"\" to people without good credit on this basis so its a reasonably well understood risk pool.\"", "title": "" }, { "docid": "f31db5acfc76067558fb64fe71b7f964", "text": "I'd finance the car (for 60 or 48 months), but stash enough money in a separate account so to guarantee the ability to pay it off in case of job loss. The rationales would be: Note that I'd only do this if the loan rate were very low (under 2%).", "title": "" } ]	fiqa
a78150ca867589a2b5e15f3b3214fe29	Is there any online personal finance software without online banking?	[ { "docid": "67e6df622dd88179304c2e78cbeab65a", "text": "CashBase has a web app, an iPhone app and an Android app, all sync'ed up. It doesn't integrate with banks automatically, but you can import bank statements as CSV. Disclosure: Filip is CashBase's founder.", "title": "" }, { "docid": "806551235283f9d9a95065c5b04a2cbc", "text": "neobudget.com is a website that does exactly what you are describing. It is set up for electronically using the envelope system of budgeting. Disclosure: neobudget was founded by a former coworker of mine.", "title": "" }, { "docid": "535fe2de4b0d7b8130a5c2fd22865b52", "text": "MoneyStrands is a site very similar to Mint, but does not force you to link bank accounts. You can create manual accounts and use all features of the site without linking to banks.", "title": "" }, { "docid": "0e4b08d2324e9ae8352ba159dbe915f8", "text": "SavingsMap is a web-based personal finance forecasting tool that requires no bank account or personal information other than an email address. As founder of SavingsMap, our goal is to forecast future cash flows based on your current budget, while using strategies to minimize US tax obligations and taking into account expected major life events.", "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": "dcf7b6129f6a8a9145f65dc426f9870e", "text": "PocketSmith is another tool you might like to consider. No personal banking details are required, but you can upload your transactions in a variety of formats. Pocketsmith is interesting because it really focus on your future cash flow, and the main feature of the interface is around having a calendar(s) where you easily enter one off or repetitive expenses/income. http://www.pocketsmith.com/", "title": "" }, { "docid": "322f5d10292e959303f15a52b5dd1380", "text": "Out Of The Dark OOTD is a budgeting and personal money management web app that does not require you to give out access to your bank accounts or even your personal identity. It's a great tool for people with no financial experience with features like Cash Put-Aside and the Credit Card Debt Terminator and it has tons of instant guides explaining how to use every feature. You can check it out at myootd.org.", "title": "" } ]	[ { "docid": "8695e8030ee3269d15f22929ed6fbf9f", "text": "I know of websites that do this, but I don't know of banks that do. Is there any reason you want to do this at a bank rather than use a service? My main concern with using a bank for this would be the risk of overdraft fees", "title": "" }, { "docid": "05b062c3dbfae8603e25530ca2902b85", "text": "Yodlee's Moneycenter is the system that powered Mint.com before Intuit bought them. It works great for managing accounts in a similar fashion to Mint. They have a development platform that might be worth checking out.", "title": "" }, { "docid": "1f4dbe88221367fcb6ae3ac4fade687a", "text": "I haven't found a drop-in replacement for MS Money, but I've tried a few of the Mac desktop programs. I settled on Iggsoftware's iBank, which seems to do what I need it to do. It also appears to be able to import transactions from MS Money if you export your accounts as QIF files at the MS Money end, but I never tried it.", "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": "a41c9f182f2aa4a77e16a1f6c6a69eb4", "text": "USAA does - that's my bank. Wells Fargo tries to determine whether the online activity is a risk; if it is, they'll require an SMS code or phoned code be entered. You can get a fairly definitive list of online companies at twofactorauth.org.", "title": "" }, { "docid": "5551e1d6c53d78ac4f021ce3d5c4c4b4", "text": "I traded futures for a brief period in school using the BrokersXpress platform (now part of OptionsXpress, which is in turn now part of Charles Schwab). They had a virtual trading platform, and apparently still do, and it was excellent. Since my main account was enabled for futures, this carried over to the virtual account, so I could trade a whole range of futures, options, stocks, etc. I spoke with OptionsXpress, and you don't need to fund your acount to use the virtual trading platform. However, they will cancel your account after an arbitrary period of time if you don't log in every few days. According to their customer service, there is no inactivity fee on your main account if you don't fund it and make no trades. I also used Stock-Trak for a class and despite finding the occasional bug or website performance issue, it provided a good experience. I received a discount because I used it through an educational institution, and customer service was quite good (probably for the same reason), but I don't know if those same benefits would apply to an individual signing up for it. I signed up for top10traders about seven years ago when I was in secondary school, and it's completely free. Unfortunately, you get what you pay for, and the interface was poorly designed and slow. Furthermore, at that time, there were no restrictions that limited the number of shares you could buy to the number of outstanding shares, so you could buy as many as you could afford, even if you exceeded the number that physically existed. While this isn't an issue for large companies, it meant you could earn a killing trading highly illiquid pink sheet stocks because you could purchase billions of shares of companies with only a few thousand shares actually outstanding. I don't know if these issues have been corrected or not, but at the time, I and several other users took advantage of these oversights to rack up hundreds of trillions of dollars in a matter of days, so if you want a realistic simulation, this isn't it. Investopedia also has a stock simulator that I've heard positive things about, although I haven't used it personally.", "title": "" }, { "docid": "e24bf7a39a85a27540fd6df3267e7eb0", "text": "\"Excellent question. I'm not aware of one. I was going to say \"\"go visit some personal finance blogs\"\" but then I remembered that I write on one, and that I often get a commission if I talk about online accounts, so unless something is really bad I'm not going to post on it because I want to make money, not chase it away. This isn't to say that I'm biased by commissions, but among a bunch of online banks paying pretty much the same (crappy) interest rate and giving pretty much the same (often not crappy) service, I'm going to give air time to the ones that pay the best commissions. That, and some of the affiliate programs would kick me out if I trashed them on my blog. This also would taint any site, blog or not, that does not explicitly say that they do not have affiliate relationships with the banks they review. I suppose if you read enough blogs you can figure out the bad ones by their absence, but that takes a lot of time. Seems like you'd do all right by doing a \"\"--bank name-- sucks\"\" Google search to dig up the dirt. That, or call up / e-mail / post on their forum any questions you have about their services before sending them your money. If they're up front, they'll answer you.\"", "title": "" }, { "docid": "8293b2227b2cf8e7b7a54f44800b5ed7", "text": "often financial software is dire, with crappy interfaces and poorly integrated to the wider company. I have an ambition one day to create a modern human centred financial software that is focused on the task at hand rather than forcing the user to jump through unnecessary hoops. Also Excel should be banned for many reasons.", "title": "" }, { "docid": "e2762d545460a22c939b7c8db3bd238a", "text": "\"Uh, have you tried google docs? Start off simple. Other than that, for the moment I use GNUCash. Some day I might try to write my own, but for now it works well enough. I have a number of scheduled transactions in GNUCash, and it records them days in advance. You talk about \"\"I should have how much money\"\", but GNUCash offers a slightly better format: Future Minimum Balance. If you want to know whether you can spend money in an account without triggering a chain reaction, that's the number you want. Being web-based so that it can be accessed from any OS. GNUCash is cross platform, with Windows, OSX and Linux clients. It also supports mysql/postgres database backends, so while it's not \"\"Web based\"\", you can keep your data \"\"in the cloud\"\".\"", "title": "" }, { "docid": "1f54884ae32eefec916c3d43e722d841", "text": "At one point you could log into your HSBC account from the command line, but gosh, I've never heard of a bank that has a command line interface!", "title": "" }, { "docid": "0b9356353617057df4141fe06695ce80", "text": "I use MoneyStrands.com to manage my spending. It's a lot like Mint, but provides support for more banks, and works with most Canadian financial institutions. I can't really compare them fairly though, since I didn't bother with Mint after learning that they don't care about Canadians. If your bank isn't supported by MoneyStrands, or you don't want to trust an online webiste with your account login, you can create accounts for manually uploaded files. It just means you have to log into your bank yourself, download the transactions as QFX, OFX, CSV or other supported formats, and then upload the files to the appropriate account in MoneyStrands. I love the expense tracking and reporting that MoneyStrands offers, but like Mint, their budgeting feature is seriously lacking. Fortunately I don't need to budget month-to-month, I just use it to see how much I spend on various categories, to help create annual budgets and decide how much I can invest or use for a vacation.", "title": "" }, { "docid": "a471c4c58c07ed7ca866cff9414c8695", "text": "There isn't one. I haven't been very happy with anything I've tried, commercial or open source. I've used Quicken for a while and been fairly happy with the user experience, but I hate the idea of their sunset policy (forced upgrades) and using proprietary format for the data files. Note that I wouldn't mind using proprietary and/or commercial software if it used a format that allowed me to easily migrate to another application. And no, QIF/OFX/CSV doesn't count. What I've found works well for me is to use Mint.com for pulling transactions from my accounts and categorizing them. I then export the transaction history as a CSV file and convert it to QIF/OFX using csv2ofx, and then import the resulting file into GNUCash. The hardest part is using categories (Mint.com) and accounts (GnuCash) properly. Not perfect by any means, but certainly better than manually exporting transactions from each account.", "title": "" }, { "docid": "f11a80155394033607a1016edc314a65", "text": "As I mentioned in my comment, mint.com might work for you. The downsides are giving them access to all your accounts, and still having to manually enter transactions that are done in cash. If you are ok with those however, it can automate almost everything else for you.", "title": "" }, { "docid": "d7701032534ea45756ab7256d60fb80c", "text": "If liquidity and cost are your primary objectives, Vanguard is indeed a good bet. They are the walmart of finance and the absolute best at minimizing fees and other expenses. Your main portfolio holding should be VTI, the total stock market fund. Highly liquid and has the lowest fees out there at 0.05%. You can augment this with a world-minus-US fund if you want. No need to buy sector or specific geography funds when you can get the whole market for less. Add some bond funds and alternative investments (but not too much) if you want to be fully diversified.", "title": "" }, { "docid": "bbf944a4d58bf8b85e060ca338784b6b", "text": "Your math shows that you bought an 'at the money' option for .35 and when the stock is $1 above the strike, your $35 (options trade as a contract for 100 shares) is now worth $100. You knew this, just spelling it out for future readers. 1 - Yes 2 - An execute/sell may not be nesesary, the ooption will have time value right until expiration, and most ofter the bid/ask will favor selling the option. You should ask the broker what the margin requirement is for an execute/sell. Keep in mind this usually cannot be done on line, if I recall, when I wanted to execute, it was a (n expensive) manual order. 3 - I think I answered in (2), but in general they are not identical, the bid/ask on options can get crazy. Just look at some thinly traded strikes and you'll see what I mean.", "title": "" } ]	fiqa
63df80d25c7762992b149913d5d8501a	Best personal finance software for Mac for German resident	[ { "docid": "1c4a0bcd6ec884cb4e38e9035f7e5ffb", "text": "I haven't used it in years, but look at GnuCash. From the site, one bullet point under Feature Highlights:", "title": "" } ]	[ { "docid": "0d1e91dd9b70da76f6ad1b4bb1a86ab0", "text": "Personally I solve this by saving enough liquid capital (aka checking and savings) to cover pretty much everything for six months. But this is a bad habit. A better approach is to use budget tracking software to make virtual savings accounts and place payments every paycheck into them, in step with your budget. The biggest challenge you'll likely face is the initial implementation; if you're saving up for a semi-annual car insurance premium and you've got two months left, that's gonna make things difficult. In the best case scenario you already have a savings account, which you reapportion among your various lumpy expenses. This does mean you need to plan when it is you will actually buy that shiny new Macbook Pro, and stick to it for a number of months. Much more difficult than buying on credit. Especially since these retailers hate dealing in cash.", "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": "46bc1213fb52a6c9ecdc1047f6d59daa", "text": "For double entry bookkeeping, personal or small business, GnuCash is very good. Exists for Mac Os.", "title": "" }, { "docid": "0b31fca82fd425b962d53f66cd11e408", "text": "Start with his website, specifically his seven steps. Most everything else is around motivating people to actually do the plan. As he often says personal finance is 80% personal and 20% finance, by which he means that things that make sense financially (paying off high interest debt first) don't necessarily motivate action (so instead pay off the smallest debt first to get motivation). Really the rest is details around those seven concepts. On his site there is a link to a free one-hour podcast for the iPod, and you can pay for the full three hours of his radio show on podcast. He started on radio, and it is probably his best format. The reason Dave Ramsey has limited appeal beyond the US is that he is explicitly evangelical. He views his system as an extension of his Christian beliefs. That sells very well in parts of the US, but doesn't port very well. There is actually nothing religious in his program, other than the occasional reference to biblical verses in an attempt to tie his program into his religion, but people who are really interested and want to teach his program, not just practice it, are going to find they need to be an Evangelical (or at least a Christian) to fit in. Addendum: I should mention that Dave Ramsey is changing the FPU program (and I expect it will trickle into other things) to be more explicitly (although apparently not overtly) religious and have a stronger emphasis on budgeting. See here.", "title": "" }, { "docid": "cdeaaa906e58736739bf21d721baf316", "text": "I suggest you to test AlauxSoft Accounts and Budget. This software is a money-like. There is a freeware and a shareware (24 EUR). You will find its at http://www.alauxsoft.com Best regards, Michel ALAUX.", "title": "" }, { "docid": "830ab9fb4caf0738837905aa1d8a5b57", "text": "I generally concur with your sentiments. mint.com has 'hack me' written all over it. I know of two major open source tools for accounting: GNUCash and LedgerSMB. I use GNUCash, which comes close to meeting your needs: The 2.4 series introduced SQL DB support; mysql, postgres and sqlite are all supported. I migrated to sqlite to see how the schema looked and ran, the conclusion was that it runs fine but writing direct sql queries is probably beyond me. I may move it to postgres in the future, just so I can write some decent reports. Note that while it uses HTML for reporting, there is no no web frontend. It still requires a client, and is not multi-user safe. But it's probably about the closest to what you what that still falls under the heading of 'personal finance'. A fork of SQL Ledger, this is postgreSQL only but does have a web frontend. All the open source finance webapps I've found are designed for small to medium busineses. I believe it should meet your needs, though I've never used it. It might be overkill and difficult to use for your limited purposes though. I know one or two people in the regional LUG use LedgerSMB, but I really don't need invoicing and paystubs.", "title": "" }, { "docid": "282f7837d0a479b69a571c897a726ac4", "text": "\"I'm a big fan of Mint. I tried Wesabe prior to mint and at the time (about a year ago) it was lacking the integration of many of my accounts, so I had to go with Mint by necessity. Since then, Mint has gotten better almost monthly. I can do almost everything I want, and the budgeting tools (which would address your \"\"6 months out\"\" forecast desires) and deal alerts (basically tells you if you can get a better interest rate on savings/credit card/etc) are really helpful. Highly recommended!\"", "title": "" }, { "docid": "c33880c4c168a4317fdad0185359c7a0", "text": "I switched from Quicken for Mac to Moneydance, and have not regretted it. I see only one weakness in MD compared with Quicken: its reporting is not very good. Your information is all there and well organized, but sometimes it's hard work to extract it in a convenient form. Of course a lot depends on what you need from the application, but I strongly recommend you take a look at MD before deciding.", "title": "" }, { "docid": "3b97c12e43ff897b685f9465d1f85e67", "text": "I had the same problem and was looking for a software that would give me easy access to historical financial statements of a company, preferably in a chart. So that I could easily compare earnings per share or other data between competitors. Have a look at Stockdance this might be what you are looking for. Reuters Terminal is way out of my league (price and complexity) and Yahoo and Google Finance just don't offer the features I want, especially on financials. Stockdance offers a sort of stock selection check list on which you can define your own criterion’s. Hence it makes no investment suggestions but let's you implement your own investing strategy.", "title": "" }, { "docid": "d806870dd32858170d30a0ef2ed45e93", "text": "MoneyDance Is the way to go. I've been using it for years and it works well. It keeps getting better, and best of all, it's completely cross platform! Mac, Windows and linux!", "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": "c55c405c834c45e2dcf101bef19613ad", "text": "The answer to this question can be found in the related question Is there any online personal finance software without online banking?", "title": "" }, { "docid": "929cc868870e45ef33de54abb9d7320c", "text": "\"I've tried Mint, and I've tried Quicken. Now, I think Quicken is an annoying, crashy little piece of software, but it is also quite capable; overall I think it has the features you want. You can enter your bills, broken down by category, in advance. You can enter your paychecks, broken down by category (gross income, federal income tax, state income tax, social security, SDI, transfers to tax-protected 401(k) account, etc) in advance. You can enter in your stock trades and it can tell you how much you'll need to end up paying in capital gains taxes. You can even enter in your stock option vesting schedule in advance (it's a royal pain because you can't go back and change anything without deleting everything, but you can do it). It'll forecast your bank account balance in all of your bank accounts in advance with a shiny chart. It'll even model your loans, if you set it up right. I didn't do too much with the \"\"budgeting\"\" tools per se, but the account-balances-daily features sound like the closest thing to what you're looking for that's likely to exist. The only thing that's a trifle tricky is that transfers from one account to another may take multiple days (hello, ACH) and you'll have to decide whether to record them at departure or arrival.\"", "title": "" }, { "docid": "94c2b0c5d718b73fc598879131d2e8ee", "text": "\"Mint.com does this quite well. The graph views of your budgets, investments, debts, and other aspects of your financial life can be shown in gestalt, or on a per-account basis (at least, it does for me). See the investment \"\"how it works\"\" page for more information. \"\"Find out whether you're beating the market–or it's beating you. Compare your portfolio to market benchmarks, and instantly see your asset allocation across all your investment accounts: 401k, mutual funds, brokerage accounts, even IRAs.\"\"\"", "title": "" }, { "docid": "e5757b6e4e418452ae0693563db8b0ec", "text": "GnuCash—Great for the meticulous who want to know every detail of their finances. Pros: Cons:", "title": "" } ]	fiqa
23ca519e9a02d792704a24d533c5b9a7	Personal finance web service with account syncing in Germany	[ { "docid": "5e7e75cacb7d4a8796673232198e2982", "text": "\"I don't think there is a law against it. For example comdirect offers multi banking so you can access your accounts from other banks through the comdirect website. My guess would be: Germans are very conservative when it comes to their money (preferring cash above cards, using \"\"safe\"\" low interest saving accounts instead of stocks) so there just might be no market for such a tool. There are desktop apps with bank syncing that offer different levels of personal finance management. Some I know are MoneyMoney, outbank, numbrs, GNUCash and StarMoney.\"", "title": "" }, { "docid": "6d4dda5733c64ae1e43a453e77a300b6", "text": "As much as I know StarMoney has also a web service for banking.", "title": "" } ]	[ { "docid": "9c7310340478610eea3f1d4b154baaf6", "text": "\"As far as I can tell there are no \"\"out-of-the-box\"\" solutions for this. Nor will Moneydance or GnuCash give you the full solution you are looking for. I imaging people don't write a well-known, open-source, tool that will do this for fear of the negative uses it could have, and the resulting liability. You can roll-you-own using the following obscure tools that approximate a solution: First download the bank's CSV information: http://baruch.ev-en.org/proj/gnucash.html That guy did it with a perl script that you can modify. Then convert the result to OFX for use elsewhere: http://allmybrain.com/2009/02/04/converting-financial-csv-data-to-ofx-or-qif-import-files/\"", "title": "" }, { "docid": "0cb596c3982679cb59da8ba7d152b20e", "text": "Proposed solutions 1 and 3 sound like extra work. Is a dual-file system something that you and your wife will be willing to maintain? Having separate files may better reflect your financial structure, but be sure that the expense of added time and overhead is worth it to you in the long run. You could track your own accounts, your wife's accounts, and your joint accounts in the same Money file (solution 2). Getting married can be a simple matter of adding the wife's accounts and recording transfers as money flows into joint accounts. This would make transfers between accounts easy to record and would afford easy reporting of overall income and spending. To maintain a degree of continuity for your own accounts, customize some reports to exclude your wife's accounts and joint accounts. A note about Microsoft Money I think Microsoft Money is fantastic and I have no plans to stop using it despite the fact that Microsoft killed the product line. All Money users should be made aware of the free Sunset version that requires no online activation. Also check out PocketSense, a collection of free Python scripts that can download transactions from some banks directly into Money. I use and highly recommend both.", "title": "" }, { "docid": "684d7001ce736907f3d1b01865d78eaf", "text": "Specifically I'm trying to understand this pargraph: >Stripping the German mobile-phone unit of its cash and increasing its net debt before the IPO could help lower the unit’s average cost of capital, said Carlos Winzer, a senior vice president at Moody’s Investors Service. >“Telefonica Deutschland had a very strong cash position and no debt, so this move will allow the German unit to have a more efficient balance sheet structure,” said Winzer, who has covered Telefonica for 20 years How does moving cash from the German unit to the Spanish Telefonica unit induce a more efficient balance sheet structure for the German unit? Appreciate any help!", "title": "" }, { "docid": "55499b6ed28e12db2ea47757a12c865f", "text": "Just signed up to them recently myself. Still not sure if I want to delete my account now, or wait and see if they can get more western European documents on line. Just haven't had time to find out who this Primera is, and if I need to worry about them selling my data.", "title": "" }, { "docid": "05b062c3dbfae8603e25530ca2902b85", "text": "Yodlee's Moneycenter is the system that powered Mint.com before Intuit bought them. It works great for managing accounts in a similar fashion to Mint. They have a development platform that might be worth checking out.", "title": "" }, { "docid": "bebaa6b3cce1a7612b581d6cba1a3810", "text": "MoneyDashboard or XeroPersonal are similar sites to Mint.com MoneyDashboard is planning on releasing an Android App XeroPersonal is also in development of an Android App For more details about the differences between the two apps, see this Web App question", "title": "" }, { "docid": "94e4d5ca28ad25d8016392b2891ba804", "text": "\"As many before me said but will say again for the sake of completeness of an answer: First off provision to have an emergency fund of 6 months living expenses to cover loss of employment, unforeseen medical issues etc. When that is done you re free to start investing. Do remember that putting all your eggs in one basket enable risks, so diversify your portfolio and diversify even within each investment vehicle. Stocks: I would personally stay away from stocks as it's for the most part a bear market right now (and I assume you re not interested day-trading to make any short term return) and most importantly you dont mention any trading experience which means you can get shafted. Mutual Funds: Long story short most of these work; mainly for the benefit for their management and people selling them. Bonds Instead, I would go for corporate bonds where you essentially buy the seller(aka the issuing company) and unlike gambling on stocks of the same company, you dont rely on speculation and stock gains to make a profit. As long as the company is standing when the bond matures you get your payment. This allows you to invest with less effort spent on a daily basis to monitor your investments and much better returns(especially if you find opportunities where you can buy bonds from structurally sound companies that have for reasons you deem irrelevant, purchase prices in the secondary market for cents in the dollar) than your other long term \"\"stable options\"\" like German issued bonds or saving accounts that are low in general and more so like in the current situation for German banks. Cryptocurrency I would also look into cryptocurrency for the long term as that seems to be past its childhood diseases and its also a good period of time to invest in as even the blue chips of that market are down party due to correction from all time highs and partly due to speculation. As Im more knowledgeable on this than German-locale bonds, a few coins I suggest you look into and decide for yourself would be the obvious ETH & BTC, then a slew of newer ones including but not limited to OmiseGO, Tenx(Pay), Augur and IOTA. Beware though, make sure to understand the basics of security and good practices on this field, as there's no central bank in this sector and if you leave funds in an exchange or your wallet's private key is compromised the money are as good as gone.\"", "title": "" }, { "docid": "82b9b92a9cd236b37a2eb01f8a3d5dfb", "text": "The best way to answer this question is to try. GnuCash is free, so setting it up and giving it a go shouldn't be too hard. After all, what really matters is how helpful the program is for your purposes. One aspect of personal finance that stops me from jumping to GnuCash/KMyMoney/MoneyDance is the ability to download transactions from my financial institutions. Last time I checked, the process was somewhat involved and support was limited for a handful of banks. Because of that, I decided to stick with MS Money (and once Microsoft dropped the ball, with Quicken). I am sure things are better these days, but I am still not comfortable with trusting my finances to something new and unproven. I still remember how painful it was several years ago, when some bug in MS Money caused occasional mess-up of the reconciliation state for the American Express credit cards.", "title": "" }, { "docid": "198cba582cbd5efbc4acd1da63d19d23", "text": "You could try looking for a UK implementation of http://www.yodlee.com/ : Google tells me that http://www.lovemoney.com/ ( http://www.yodlee.com/2010_1_20.html ) is one such service. I use ANZ money manager - an Australian implementation of Yodlee and find it very useful. I wouldn't use Yodlee directly though (http://money-watch.co.uk/7197/uk-pfm-tool-review-yodlee-moneycenter) those T&Cs don't sound great.", "title": "" }, { "docid": "322adf88e50cec540e2b289c981ad770", "text": "You can invest in a couple of Sharia-conform ETFs which are available in Germany and issued by Deutsche Bank (and other financial institutions). For instance, have a look at these ETFs: DB Sharia ETFs In addition, Kuveyt Turk Bank aims to become Germany's first Islamic bank offering Sharia conform investments (Reuters).", "title": "" }, { "docid": "2b21b7787891776d81772e462a27e786", "text": "\"My wife and I have been ridiculously happy with YNAB. It's not \"\"online,\"\" but syncs across our phones & computers using Dropbox. It supposedly supports different locales and currencies, but I have never needed to try that out.\"", "title": "" }, { "docid": "638947ae1029dd877c240c92506276e6", "text": "Are there banks where you can open a bank account without being a citizen of that country without having to visit the bank in person? I've done it the other way around, opened a bank account in the UK so I have a way to store GBP. Given that Britain is still in the EU you can basically open an account anywhere. German online banks for instance allow you to administrate anything online, should there be cards issued you would need an address in the country. And for opening an account a passport is sufficient, you can identify yourself in a video chat. Now what's the downside? French banks' online services are in French, German banks' services are in German. If that doesn't put you off, I would name such banks in the comments if asked. Are there any online services for investing money that aren't tied to any particular country? Can you clarify that? You should at least be able to buy into any European or American stock through your broker. That should give you an ease of mind being FCA-regulated. However, those are usually GDRs (global depository receipts) and denominated in GBp (pence) so you'd be visually exposed to currency rates, by which I mean that if the stock goes up 1% but the GBP goes up 1% in the same period then your GDR would show a 0% profit on that day; also, and more annoyingly, dividends are distributed in the foreign currency, then exchanged by the issuer of the GDR on that day and booked into your account, so if you want to be in full control of the cashflows you should get a trading account denominated in the currency (and maybe situated in the country) you're planning to invest in. If you're really serious about it, some brokers/banks offer multi-currency trading accounts (again I will name them if asked) where you can trade a wide range of instruments natively (i.e. on the primary exchanges) and you get to manage everything in one interface. Those accounts typically include access to the foreign exchange markets so you can move cash between your accounts freely (well for a surcharge). Also, typically each subaccount is issued its own IBAN.", "title": "" }, { "docid": "90b0557ba3649538e4ef1b972e18f484", "text": "Mint.com is a fantastic free personal finance software that can assist you with managing your money, planning budgets and setting financial goals. I've found the features to be more than adequate with keeping me informed of my financial situation. The advantage with Mint over Microsoft Money is that all of your debit/credit transactions are automatically imported and categorized (imperfectly but good enough). Mint is capable of handling bank accounts, credit card accounts, loans, and assets (such as cars, houses, etc). The downsides are:", "title": "" }, { "docid": "3e89d3c295686a29498edd78227a5181", "text": "Take a look at Everbank. They offer CDs and Money Market Accounts denominated in Euros for US residents. https://www.everbank.com/personal/foreign-currencies.aspx", "title": "" }, { "docid": "7ec741c8c86592e33bb9e96b367e02cc", "text": "The answer today is the Fidelity Rewards Amex. This card pays the highest cash back (2%) on ALL purchases. The answer gets more complicated if you like miles, or you want to use one card for groceries and gas and another for restaurants, etc. But the Fidelity Amex gives you 2% on everything you purchase, automatically deposited into your Fidelity account as cash (no coupons to rip off, or checks to deposit).", "title": "" } ]	fiqa
63a9b4f2cbcfaf84fb1c8f94b7f3c698	How to save criteria in Google Finance Stock Screener?	[ { "docid": "9f726f42e288957f12902d0dad5d50bf", "text": "\"There is probably a better way, but you can do the following: (1) Right click on the right pointing arrow next to the \"\"1-20 of xx rows\"\" message at the bottom right of the table, and select \"\"Copy link location\"\" (2) Paste that into the location (3) At the end of the pasted text there is a \"\"&output=json\"\", delete that and everything after it. (4) hit enter What you get is a page that displays the set of securities returned by and in a very similar display to the \"\"stock screener\"\" without the UI elements to change your selections. You can bookmark this page.\"", "title": "" } ]	[ { "docid": "5b00300f2a333c26c62eefd7a6367917", "text": "When you look at the charts in Google Finance, they put the news on the right hand side. The time stamp for each news item is indicated with a letter in the chart. This often shows what news the market is reacting to. In your example: Clicking on the letter F leads to this Reuters story: http://www.reuters.com/article/2011/02/04/usa-housing-s-idUSWAT01486120110204", "title": "" }, { "docid": "9e6f5a82008f9330d2061b78d7cbadd5", "text": "I spent a while looking for something similar a few weeks back and ended up getting frustrated and asking to borrow a friend's Bloombterg. I wish you the best of luck finding something, but I wasn't able to. S&P and Morningstar have some stuff on their site, but I wasn't able to make use of it. Edit: Also, Bloomberg allows shared terminals. Depending on how much you think as a firm, these questions might come up, it might be worth the 20k / year", "title": "" }, { "docid": "f9c64c3b2016141277efdf4e834774e1", "text": "Google Finance gives you this information.", "title": "" }, { "docid": "90fead46e9d8314e5f383a09a89b73e6", "text": "I've not gotten an answer so far. Since I've started my search for a new financial planner here are the criteria I am using:", "title": "" }, { "docid": "57f41222ce7dc5831f6d274d9d46090a", "text": "I know nice and free stock screener for UK (and 20+ exchanges) - https://unicornbay.com/screener?f=exchange_str\|%3D\|LSE;&s=MarketCapitalization\|desc&p=1\|20 from Unicorn Bay. It supports both fundamental and technical analysis.", "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": "c83ab56176a53cc349d933f86728f74c", "text": "\"I use Google Finance too. The only thing I have problem with is dividend info which it wouldn't automatically add to my portfolio. At the same time, I think that's a lot to ask for a free web site tool. So when dividend comes, I manually \"\"deposit\"\" the dividend payment by updating the cash amount. If the dividend comes in share form, I do a BUY at price 0 for that particular stock. If you only have 5 stocks, this additional effort is not bad at all. I also use the Hong Kong version of it so perhaps there maybe an implementation difference across country versions. Hope this helps. CF\"", "title": "" }, { "docid": "3e1635a637bbb1a5c4363476bdfa51e1", "text": "\"For US equities, Edgar Online is where companies post their government filings to the SEC. On Google Finance, you would look at the \"\"SEC filings\"\" link on the page, and then find their 10K and 10Q documents, where that information is listed and already calculated. Many companies also have these same documents posted on their Investor Relations web pages.\"", "title": "" }, { "docid": "76e2f1493af491c6de3ccbfff6b5a825", "text": "What you're looking for is the 'Transaction Report'. When you're looking at the report (it comes up empty), open the options and click on the first tab 'Accounts'. Here you can highlight multiple source accounts in the top pane, and filter by the Expense accounts that you are interested in the bottom pane. Here's an example that goes over the process (there are many examples online, I just included the first one that came up in a search).", "title": "" }, { "docid": "dd0cdb33bb16c2cd9885660a2f39574d", "text": "The article links to William Bernstein’s plan that he outlined for Business Insider, which says: Modelling this investment strategy Picking three funds from Google and running some numbers. The international stock index only goes back to April 29th 1996, so a run of 21 years was modelled. Based on 15% of a salary of $550 per month with various annual raises: Broadly speaking, this investment doubles the value of the contributions over two decades. Note: Rebalancing fees are not included in the simulation. Below is the code used to run the simulation. If you have Mathematica you can try with different funds. Notice above how the bond index (VBMFX) preserves value during the 2008 crash. This illustrates the rationale for diversifying across different fund types.", "title": "" }, { "docid": "509035e481f4760683199a219b1375d9", "text": "\"If by saying you wish to invest \"\"for the long term 5-10 years\"\" I take it you mean to hold a stock for between 5-10 years. If this is the case, this is the fundamental flaw in your screening algorithm. No company stock price continues to go up without end for 5-10 years. The price of every company's stock goes down at some point. You have to decide on a company by company basis whether you want to ride out the downturn or sell and get out. This is a personal decision based on your own research. The list of screening criteria you list indicates you are looking for solid earnings companies. Try not to apply these rules rigidly because every company runs through a rough patch. At times past, GE (for example) met all of your criteria. However, in 2017, it would not and therefore would not meet your screening criteria. Would you sell GE if you owned it? Maybe, or maybe you would hold through the downturn. The same be said for MSFT in 2010 or AAPL pre-Jobs return. A rule you may want to add to your list: know the company business well; that is, don't invest in companies you have no understanding of their business model.\"", "title": "" }, { "docid": "dd81a47a62701df97740f33adf7b8b22", "text": "\"Just an FYI, this can be a risky move. Unless you have been in the industry for a while, or are extremely well averse in investment management/research, keep it pretty short. In a lot of ways, you might want to think about tailoring it more like a sell-side report. Also, make sure you understand the style of investing the PM/company you are applying to likes. The reason I say this is because every buy-side shop is different. Some do 1-2 page write-ups with models and walk through's, others will expect 60 page \"\"decks\"\" (i.e. Powerpoints). The longer the deck, the more you have that can go wrong. If one tiny thing is wrong, or you have a typo anywhere, it hurts you more than it helps that you wrote something long (I once had the wrong rating on one issuance of a bond ladder I was pitching; it's all the PM's focused on). The more important aspect is that you understand the shop you are applying to and then tailoring the pitch to them. For example, don't do a growth tech company with an 80x forward P/E if you're applying to a fundamental value shop. It shows you didn't do research on the firm you're applying to and that you won't fit the culture. This is part of why I was saying that this can be a risky move, if the firm is large enough to have an HR department, they likely have a lot of different investment styles in house. Finally, try to keep it to a small/mid-cap company. Analysts/PMs follow stocks all day long and will most likely have an opinion on 99% of large caps, no matter the sector. In summary, I'd recommend a 1-2 page sell-side style write-up with a backup model (printed excel file). KISS (keep it simple stupid), have a summary, couple years worth of historical's, 2 years forward, and a few main bullet points of why you like them. In your case, this pitch should be something to pique the interest so that you can NAIL a real pitch in the interview. If you get an interview, know everything about everything in the industry as well as that specific company. For example, lets say you do a smartphone secular theme investment. Do you know what outstanding AAPL/Android cases there are, and more importantly, how would each ruling likely affect the marketplace? This is because I can guarantee if you're pitching to another tech guy, he knows and has an educated opinion on it. Also, in many cases having a great model can mean more than a long write-up, it shows that you're good with numbers and can think about FUTURE earnings, which are all that matter. Last point, IMO you'd be better off trying to get your foot in the door through networking than HR. HR doesn't really do much on the buy-side with recruiting and won't really understand what to look for in a good pitch (they're HR after-all, not an analyst). Try to meet someone over coffee and then have a pitch READY to bring out/discuss. The buy-side is selective enough that usually when positions open up it's either because they are creating one for you or they already have an idea of who is going to fill it. This mean HR has little to no say in helping you get in. You'll have a lot more success this way than blasting to a bunch of HR emails.\"", "title": "" }, { "docid": "7e1b383fd0db28de0e0948544e307d5f", "text": "Yes, add the stocks/mutual funds that you want and then you would just need to add all the transactions that you theoretically would have made. Performing the look up on the price at each date that you would have sold or bought is quite tedious as well as adding each transaction.", "title": "" }, { "docid": "420f4726f5eff4d17dbcf18d85d62d3b", "text": "Google Finance and Yahoo Finance have been transitioning their API (data interface) over the last 3 months. They are currently unreliable. If you're just interested in historical price data, I would recommend either Quandl or Tiingo (I am not affiliated with either, but I use them as data sources). Both have the same historical data (open, close, high, low, dividends, etc.) on a daily closing for thousands of Ticker symbols. Each service requires you to register and get a unique token. For basic historical data, there is no charge. I've been using both for many months and the data quality has been excellent and API (at least for python) is very easy! If you have an inclination for python software development, you can read about the drama with Google and Yahoo finance at the pandas-datareader group at https://github.com/pydata/pandas-datareader.", "title": "" }, { "docid": "04b9c34b353fc353f0aafb56a22df8c5", "text": "Start by paying down any high interest debt you may have, like credit cards. Reason being that they ultimately eat into any (positive) returns you may have from investing. Another good reason is to build up some discipline. You will need discipline to be a successful investor. Educate yourself about investing. The Motley Fool is probably still a good place to start. I would also suggest getting into the habit of reading the Wall Street Journal or at the very least the business section of the New York Times. You'll be overwhelmed with the terminology at first, but stick with it. It is certainly worth it, if you want to be an investor. The Investor's Business Daily is another good resource for information, though you will be lost in the deep end of the pool with that publication for sure. (That is not a reason to avoid getting familiar with it. Though at first, it may very well be overkill.) Save some money to open a brokerage account or even an IRA. (You'll learn that there are some restrictions on what you can do in an IRA account. Though they shouldn't necessarily be shunned as a result. Money placed in an IRA is tax deductible, up to certain limits.) ????? Profit! Note: In case you are not familiar with the joke, steps 4 & 5 are supposed to be humorous. Which provides a good time to bring up another point, if you are not having fun investing, then get out. Put your money in something like an S&P 500 index fund and enjoy your life. There are a lot more things to say on this subject, though that could take up a book. Come back with more questions as you learn about investing. Edit: I forgot to mention DRIPs and Investment Clubs. Both ideas are suggested by The Motley Fool.", "title": "" } ]	fiqa
b77e49d3c6f1b1eb5a4ff0a26659fdeb	Retired, want to buy a mobile home; how to finance?	[ { "docid": "140add684e81369c5d46fa6354930056", "text": "Do you think your 403b will earn more than the mortgage interest rate? If so, then mortgage seems the way to go. Conservative investment strategies might not earn much more than a 3-4% mortgage, and if you're paying 5-6% it's more likely you'll be earning less than the mortgage. From another point of view, though, I would probably take a loan anyway just from a security standpoint - you have more risk if you put a third of your retirement savings into one purchase directly, whereas if you do a 10-15 year loan, you'll have more of a cushion. Also, if you don't outlive the mortgage, you'll have had use of more of your retirement income than otherwise - though I do wonder if it puts you at some risk if you have significant medical bills (which might require you to liquidate your 403b but wouldn't require you to sell your house, so paying it off has some upside). Also, as @chili555 notes in comments, you should consider the taxation of your 403(b) income. If you pull it out in one lump sum, some of it may be taxed at a higher rate than if you pulled it out more slowly over time, which will easily overwhelm any interest rate differences. This assumes it's not a Roth 403(b) account; if it is Roth then it doesn't matter.", "title": "" } ]	[ { "docid": "baf4a66f0886365f9902946fec70f750", "text": "I am going through this right now. We recently moved and learned the lesson of needing a good bit of wealth in easily accessible accounts. In our case for a down payment on a new house. So we have decided to increase our emergency fund to $50,000.00 minimum. Then throwing the rest in retirement accounts seems like a safe bet. So my rule of thumb is think of how much a 20% down payment would be on a new house if you needed to move. That way you can avoid pmi while also avoiding penalties for withdrawing from your retirement accounts.", "title": "" }, { "docid": "4224baa1404950971eeb2d436c65719a", "text": "\"The first issue you'll find is that if you aren't going to immediately live in the house as a primary residence, this property counts as a \"\"second home\"\" or \"\"investment property\"\". You'll generally pay a higher interest rate, have a larger down payment, and qualify for less government-backed programs/incentives/subsidies than you would otherwise. The lending criteria on such properties is always more strict - and generally more costly - than an equivalent primary residence. Lenders won't really care that in 10 years you or your parents plan to move in - you can't be held to that, so they'll generally ignore that plan entirely. On a related note, you should be aware that insurance for the property will also generally cost more, but you'd need to get quotes to determine if that is at all significant in your situation. You'll need to talk with a few potential lenders, but from a first read it sounds like it would be best \"\"storied\"\" like so: you and your parents want to buy a 2nd home or vacation home, which you'll share the use of (vacations, etc, and being converted to a primary residence later). It'll need to be clear what plan to use the property for - if you intend to rent out the home in the interim years then instead make that clear and state it will be an investment home; if it is what you are planning it might make it easier, as expected rent for the property will be considered. Saying you want a mortgage for a home no one will live in for a decade probably isn't a good idea, as a general plan anyway. Either way, this can be called a \"\"joint mortgage\"\". When I was a loan officer we didn't use that term, but it's basically just a mortgage application with multiple people on it, all of whom are combined together to qualify for the loan. Everyone's income, debts, assets, and credit get included, which can work or one person's situation can cause the whole thing to collapse. From your description I think this could work for you, and one option is to set it up where only one of the parents is on the application if the other parent has problematic credit situation. Note that his possibility is often restricted by local law, so it may not be an option for you in your jurisdiction, but worth being aware of. An alternative is you just buy the property and the parents gift you the down payment, and you list them as beneficiaries in will/trust in case something happens to you before they retire, but I don't know if that would make any sense in your situation. This is a single applicant mortgage, and it means only you are considered as buying it, which sometimes is the only option depending on your parents current financial situation. It's usually something you try if the other option doesn't work, but it's a fallback plan. Some lenders will allow guarantors (co-signers in US parlance), but this will vary by lender and locale - often what they actually want is a joint mortgage, not really a guarantor/cosigner. Finally, you'll need to plan for what happens if things don't go as planned, regardless of what happens. What if your income changes, if either of your parents become deceased in advance of retirement, if they get a divorced from each other, or if either/both become ill or disabled and need assisted care? Planning for such unpleasant possibilities (even if they seem crazy and not going to happen in your mind right now) can save you all a tremendous amount of heart ache later on when the unexpected (including things I didn't mention) pops up.\"", "title": "" }, { "docid": "53b62a34f0578acb43007f4c1bd73f71", "text": "To me, the simple answer might be to tap the equity in the $400k home you owe $77k on and use the proceeds to purchase the new retirement home. Even if you were to do that, you'd still have almost $100k in untapped equity in the existing home, no mortgage on the retirement home, nothing out of pocket (other than refi fees), and probably no more of a mortgage payment than you already have on the house with equity. I don't see any reason why the bank wouldn't go for that, especially if you've got a good payment history on your existing mortgage. I hope this helps. Good luck!", "title": "" }, { "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": "fcbcbebeb0e6fc63a5f9ab0ae5e4448e", "text": "\"Your question isn't great, but I will attempt to answer this piece as it seems really the root of your personal finance question: I want to convince my wife to make this move because it will save us at least 800 month, but she fails to see how buying a second home is financially sound because we have to lose our savings and we have to pay interest on our second home. And... Her logic is it will take almost 5 years to get back our down payment and we have to pay interest as well. So how can this move help our family financially in the long run? ... Is she right? She is mostly wrong. First, consider that there is no \"\"ROI\"\" really on your down payment. Assuming you are paying what your home would sell for the next day, then your \"\"RIO\"\" is already yours (minus realtor fees). She is talking about cash on hand, not ROI. I will use an example without taking into account risk of home markets going down or other risks to ownership. Example: Let's say you pay $2800 a month in mortgage interest+principle at 5.5% apr and $200 a month in taxes+insurance on a $360k loan ($400k house). In this example let's say the same house if you were to rent it is $3800 a month. Understand the Opportunity Cost of renting (the marginal amount it costs you to NOT buy). So far, your opportunity cost is $800 a month. The principle of your house will be increasing with each payment. In our example, it's about $400 for the first payment, and will increase with each payment made while decreasing the interest payment (Suggest you look at an amortization table for your specific mortgage example). So, you're real number is now $1200 a month opportunity cost. Consider also the fact that the $400 a month is sitting in a savings account of sorts. While most savings accounts give you less than 1% in returns and then charge taxes on that gain, your home may (or may not be) much higher than that and won't charge you taxes on the gains when you sell it (If you live in it for a period of time as defined by the IRS.) Let's assume a conservative long term appreciation rate of 3%. That's $12k a year on a $400k house. So, now you're at $2200 a month opportunity cost. In this example I didn't touch on your tax savings of ownership. I also didn't touch on the maintenance cost of ownership or the maintenance cost of renting (your deposit + other fees) which all should be considered. You may have other costs involved in renting. For instance: The cost of not being able to fully utilize your rental as your own house. This may be an even simpler and more convincing way to explain it: On the $2800 mortgage example, you will be paying around $19k in interest and $2400 on taxes, insurance = $23k per year (number could be way different in your example). That is basically throw away money you're never getting back. On the rental, 100% of your rent at $3800 a month is throw away money you're never getting back. That's $45,600 a year.\"", "title": "" }, { "docid": "a4c1779fd37ae3e3d469b29eb9282d49", "text": "No, it is never impossible to get credit so long as there are no price controls or quotas. In most of the United States, the impetus for housing is so strong that it's one sector of credit that has nearly no price regulation, price in this case being interest rates. Corporate banks will not touch you now because Dodd-Frank now makes them liable to you and investors if you default on the mortgage. Also, Fannie & Freddie, who ultimately finance most mortgages in the US now require banks to buy back loans if they fail, so banks are only financing the most creditworthy. All is not lost because markets are like rivers if not fully dammed: they find a way through. In your case, you can get a fully-financed mortgage if you're willing to pay interest rates probably double what you could otherwise get in the market with good credit. If the foreclosure process is quick and benefits the lender more in your state, the interest rate will be even lower. Your creditors will most likely be individuals you find at mortgage investment clubs and religious institutions. If you shop around, you'll be surprised at how low a rate you might get. Also, since the cost of your prospective home is so low, it's very easy for an investor flush with cash and few investments to take a flier on a mother committed to her children who only needs $50,000. The FHA has been vastly expanded, and since your individual credit is clean, there may be a chance to get financing through it, but be prepared for red tape.", "title": "" }, { "docid": "ba829169ea7a9f59eff7d4d7423f2150", "text": "\"I don't know about the technicalities of retirement accounts, but I would advise you to please please please do not use retirement money to buy a home. The reason for not ever wanting to spend your retirement is.. when can you make it up? When you retire, you are by definition no longer earning money, so all your expenses can only come from the money you have saved. If you are willing to borrow from your retirement, it is not hard to imagine you are willing are willing to get a new car, or a new barbecue, or a new fishing boat before you repay yourself. So the question to ask yourself is, \"\"can I deal with renting for a few years knowing that I can retire comfortably, or am I willing to risk retirement to have a house now.\"\" Part of the will power it takes to pay yourself first is not taking from your own savings. You cannot count on anybody but yourself to take care of you when you are old. It is just opinion, but risking a comfortable retirement for a home now is not a risk anybody should take.\"", "title": "" }, { "docid": "d9b7a9e4e0ca3011841150d8457efa6a", "text": "The rules are quite different. There is no special home purchase penalty-free withdrawal. In the case that your account has been open for five years, you can withdraw the principal (but not the earnings) without penalty. You may want to talk to a professional for further details. The real question is: why do you want to borrow against your future to finance your present? Your down payment funds should come from another source than your retirement. Retirement funds should only be touched in the direst financial straights.", "title": "" }, { "docid": "e9736dc511d3b562f2279b7227c40a95", "text": "There's probably no simple answer, but it's fair to say there are bad times to buy, and better times. If you look at a house and see the rent is more than the mortgage payment, it may be time to consider buying. Right now, the market is depressed, if you buy and plan to stay put, not caring if it drops from here because you plan to be there for the long term, you may find a great deal to be had. Over the long term, housing matches inflation. Sounds crazy, but. Even into the bubble, if you looked at housing in terms of mortgage payment at the prevailing 30yr fixed rate and converted the payment to hours needed to work to make the payment, the 2005 bubble never was. Not at the median, anyway. At today's <5% rate, the mortgage will cost you 3.75% after taxes. And assuming a 3% long term inflation rate, less than 1%. You have expenses, to be sure, property tax, maintenance, etc, but if you fix the mortgage, inflation will eat away at it, and ultimately it's over. At retirement, I'll take a paid for house over rising rents any day.", "title": "" }, { "docid": "a8136e0b36283542987257724559274e", "text": "\"The standard interpretation of \"\"can I afford to retire\"\" is \"\"can I live on just the income from my savings, never touching the principal.\"\" To estimate that, you need to make reasonable guesses about the return you expect, the rate of inflation, your real costs -- remember to allow for medical emergencies, major house repairs, and the like when determining you average needs, not to mention taxes if this isn't all tax-sheltered! -- and then build in a safety factor. You said liquid assets, and that's correct; you don't want to be forced into a reverse mortgage by anything short of a disaster. An old rule of thumb was that -- properly invested -- you could expect about 4% real return after subtracting inflation. That may or may not still be correct, but it makes an easy starting point. If we take your number of $50k/year (today's dollars) and assume you've included all the tax and contingency amounts, that means your nest egg needs to be 50k/.04, or $1,250,000. (I'm figuring I need at least $1.8M liquid assets to retire.) The $1.5M you gave would, under this set of assumptions, allow drawing up to $60k/year, which gives you some hope that your holdings would mot just maintain themselves but grow, giving you additional buffer against emergencies later. Having said that: some folks have suggested that, given what the market is currently doing, it might be wiser to assume smaller average returns. Or you may make different assumptions about inflation, or want a larger emergency buffer. That's all judgement calls, based on your best guesses about the economy in general and your investments in particular. A good financial advisor (not a broker) will have access to better tools for exploring this, using techniques like monte-carlo simulation to try to estimate both best and worst cases, and can thus give you a somewhat more reliable answer than this rule-of-thumb approach. But that's still probabilities, not promises. Another way to test it: Find out how much an insurance company would want as the price of an open-ended inflation-adjusted $50k-a-year annuity. Making these estimates is their business; if they can't make a good guess, nobody can. Admittedly they're also factoring the odds of your dying early into the mix, but on the other hand they're also planning on making a profit from the deal, so their number might be a reasonable one for \"\"self-insuring\"\" too. Or might not. Or you might decide that it's worth buying an annuity for part or all of this, paying them to absorb the risk. In the end, \"\"ya pays yer money and takes yer cherce.\"\"\"", "title": "" }, { "docid": "533546a8bd52ff06c852c9289bb0573c", "text": "\"Banks are currently a lot less open to 'creative financing' than they were a few years ago, but you may still be able to take advantage of the tactic of splitting the loan into two parts, a smaller 'second mortgage' sometimes called a 'purchase money second' at a slightly higher interest rate for around 15-20% of the value, and the remaining in a conventional mortgage. Since this tactic has been around for a long time, it's not quite in the category of the shenanegans they were pulling a few years back, so has a lot more potential to still be an option. I did this in for my first house in '93 and again in '99 when I moved to a larger home after getting married. It allowed me to get into both houses with less than 20% down and not pay PMI. This way neither loan is above 80% so you don't have to pay PMI. The interest on the second loan will be higher, but usually only a few percent, and is thus usually a fraction of what you were paying for the PMI. (and it's deductible from your taxes) If you've been making your payments on time and have a good credit rating, then you might be able to find someone who would offer you such a deal. You might even be able to get a rate for your primary that is down in the low 4's depending on where rates are today and what your credit rating is like. If you can get the main loan low enough, even if the other is like say 7%, your blended rate may still be right around 5% If you can find a deal like this, it's also great material to use to negotiate with your current lender \"\"either help me get the PMI off this loan or I'm going to refinance.\"\" Then you can compare what they will offer you with what you can get in a refinance and decide what makes the most sense for you. On word of warning, when refinancing, do NOT get sucked into an adjustable rate mortgage. If you are finding life 'tight' right now with house payments and all, the an ARM could be highly seductive since they often offer a very low initial rate.. however then invariably adjust upwards, and you could suddenly find yourself with a monster payment far larger than what you have now. With low rates where they are, getting a conventional fixed rate loan (or loans in the case of the tactic being discussed here) is the way to go.\"", "title": "" }, { "docid": "da2523eb4bc3dc71b2bdad2079ee2ec5", "text": "\"Buy and Hope is a common investment strategy. It's also one that will keep you poor. Instead of thinking about saving money to put against a credit card or line of credit using your own job and hard-earned dollars, why not use someone else's money? If you have enough of a down payment for a property of your own, consider a duplex, triplex, or 4-plex where you live in one of the units. Since you will be living there you only need 5% down as opposed to 20% down if you do not live there. This arrangement gives you a place to live while you have other people paying your mortgage and other debts. If done properly, you can find a place that is cash-flow positive so you basically live rent-free. This all assumes you have a down payment and a bank that will work with you. Your best bet is to discuss your situation with a mortgage broker. They know all the rules, and which banks have the best deal for you. A mortgage broker works on your behalf and is paid by the lending institution, not you. There are various caveats with this strategy, and they all revolve around knowing what to do and how to execute the plan. I suggest Googling Robert Kiyosaki and reading \"\"Rich Dad Poor Dad\"\" before taking this journey. He offers a number of free and paid seminars that teach people how to purchase real estate and make it pay. I have taken the free evening seminar and the $500 weekend seminar on how to purchase properties and make money with them. Note that I have no affiliation with Kiyosaki, and I do find his methods to work.\"", "title": "" }, { "docid": "6950d92f340ffdb328d15afac8299aba", "text": "BLUF: Continue renting, and work toward financial independence, you can always buy later if your situation changes. Owning the house you live in can be a poor investment. It is totally dependent on the housing market where you live. Do the math. The rumors may have depressed the market to the point where the houses are cheaper to buy. When you do the estimate, don't forget any homeowners association fees and periodic replacement of the roof, HVAC system and fencing, and money for repairs of plumbing and electrical systems. Calculate all the replacements as cost over the average lifespan of each system. And the repairs as an average yearly cost. Additionally, consider that remodeling will be needful every 20 years or so. There are also intangibles between owning and renting that can tip the scales no matter what the numbers alone say. Ownership comes with significant opportunity and maintenance costs and is by definition not liquid, but provides stability. As long as you make your payments, and the government doesn't use imminent domain, you cannot be forced to move. Renting gives you freedom from paying for maintenance and repairs on the house and the freedom to move with only a lease to break.", "title": "" }, { "docid": "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": "7ad87a90c0c9695b48710dafc42e7a3b", "text": "I recognize you are probably somewhere in the middle of various steps here... but I'd start and go through one-by-one in a disciplined way. That helps to cut through the overwhelming torrent of information that's out there. Here is my start at a general checklist: others can feel free to edit it or add their input. How 'much' house would you like to buy in terms of $$$ and bedrooms/sq ft. You can start pretty general here, but the idea is to figure out if you can actually afford a brand new 4bd/3ba 2,500 sq ft house (upwards of $500K in your neck of the woods according to trulia.com). Or maybe with your current resources you'll be looking at something like a townhome that is more entry-level but still yours. Some might recommend that this is a good time to talk to any significant others/whomevers and understand/manage expectations. My wife usually cares a lot about schools at this stage, but I think it's too early. Just ballpark whether you're looking at a $500K house, a $300K house, or a $200K townhome. How much house can you afford in terms of monthly payments only... (not considering other costs like utilities yet). Looking around at calculators like this one from bankrate.com can help you figure this out. Set the interest rate @ 5%, 30-year loan, and change the 'mortgage amount' until you have something that is about 80%-90% of what you currently pay in rent each month. I'll get to 'why' to undershoot your rent payment later. Crap... can't afford my dream house... If you don't have the down payment to make the numbers work (remember that this doesn't even include closing costs yet), there are other loan options like FHA loans that can go as low as about 5% down payment. The math would be the same but you replace 0.8 with 0.95. Then, look at your personal budget. Come up with general estimates of what you currently bring in and spend each month overall. Just ballpark it... Next, figure what you currently spend towards housing in particular. Whether you are paying for it or your landlord is paying for it, someone pays for a lot of different things for housing. For now, my list would include (1) Rent, (2) Mortgage Payment, (3) Electricity, (4) Gas, (5) Sewer, (6) Water, (7) Trash, (8) Other utilities... TV/Internet/Phone, (9) Property Insurance, (10) Renter's Insurance, and (11) Property Taxes. I would put it into a table in Excel somewhere that has 3 columns... The first has the labels, the second will have what you spend now, and the third will have what you might spend on each one as a homeowner. If you pay it now, put it in the second column. If your landlord pays it right now, leave it out as that's included in your rent payment. Obviously each cell won't be filled in. Fill in the rest of the third column. You won't pay rent anymore, but you will have a mortgage payment. You probably have a good estimate of any electricity bills, etc that you currently pay, but those may be slightly higher in a house vs. a condo or an apartment. As for things like sewer, water, trash or other 'community' utilities, my bet would be that your landlord pays for those. If you need a good estimate ask around with some co-workers or friends that own their own places. They would also be a good resource for property insurance estimates... shooting from the hip I would say about $100/month based on this website. (I'm not affiliated). The real 'ouch' is going to be property tax rates. Based on the data from this website, your county is about 9% of property value. So add that into the third column as well. Can you really afford a house? round 2 Now... add up the third column and see how that monthly expense amount on housing compares against your current monthly budget. If it's over, you don't have to give up, but you should just understand how much your decision to purchase a house will strain your budget. Also, you should use this information to look again at 'how much house can you afford.' Now, do some more research. If you need to get a revised loan amount based on the FHA loan decision, then use the bankrate calculator to find out what the monthly payment is for a 95% loan against your target price. But remember that an FHA loan will also carry PMI that is extra on top of your monthly payment. Or, if you need to revise your mortgage payment downwards (or upwards) change the loan amount accordingly. Once you've got the numbers set, look for properties that fit. This way you can have a meaningful discussion with yourself or other stakeholders about what you can afford. As far as arranging financing... a realtor will be able and willing to point you in the right direction for obtaining funding, etc. And at that point you can just check anything you're offered by shopping interest rates, etc against what the internet has to say. Feel free to ask us, too... it's hard to give much better direction without more specifics.", "title": "" } ]	fiqa
176b7854f4671a94cccc79d68203502d	Where to start with personal finance in Canada?	[ { "docid": "94486c7158fe5681abe710fc46ebb6c2", "text": "There are some great answers on this site similar to what you asked, with either a non-jurisdictional or a US-centric focus. I would read those answers as well to give yourself more points of view on early investing. There are a few differences between Canada and the US from an investing perspective that you should also then consider, namely tax rules, healthcare, and education. I'll get Healthcare and Education out of the way quickly. Just note the difference in perspective in Canada of having government healthcare; putting money into health-savings plans or focusing on insurance as a workplace benefit is not a key motivating factor, but more a 'nice-to-have'. For education, it is more common in Canada for a student to either pay for school while working summer / part-time jobs, or at least taking on manageable levels of debt [because it is typically not quite as expensive as private colleges in the US]. There is still somewhat of a culture of saving for your child's education here, but it is not as much of a necessity as it may be in the US. From an investing perspective, I will quickly note some common [though not universal] general advice, before getting Canadian specific. I have blatantly stolen the meat of this section from Ben Miller's great answer here: Oversimplify it for me: the correct order of investing Once you have a solid financial footing, some peculiarities of Canadian investing are below. For all the tax-specific plans I'm about to mention, note that the banks do a very good job here of tricking you into believing they are complex, and that you need your hand to be held. I have gotten some criminally bad tax advice from banking reps, so at the risk of sounding prejudiced, I recommend that you learn everything you can beforehand, and only go into your bank when you already know the right answer. The 'account types' themselves just involve a few pages of paperwork to open, and the banks will often do that for free. They make up their fees in offering investment types that earn them management fees once the accounts are created. Be sure to separate the investments (stocks vs bonds etc.) vs the investment vehicles. Canada has 'Tax Free Savings Accounts', where you can contribute a certain amount of money every year, and invest in just about anything you want, from bonds to stocks to mutual funds. Any Income you earn in this account is completely tax free. You can withdraw these investments any time you want, but you can't re-contribute until January 1st of next year. ie: you invest $5k today in stocks held in a TFSA, and they grow to $6k. You withdraw $6k in July. No tax is involved. On January 1st next year, you can re-contribute a new $6K, and also any additional amounts added to your total limit annually. TFSA's are good for short-term liquid investments. If you don't know for sure when you'll need the money, putting it in a TFSA saves you some tax, but doesn't commit you to any specific plan of action. Registered Retirement Savings Plans allow you to contribute money based on your employment income accrued over your lifetime in Canada. The contributions are deducted from your taxable income in the year you make them. When you withdraw money from your RRSP, the amount you withdraw gets added as additional income in that year. ie: you invest $5k today in stocks held in an RRSP, and get a $5k deduction from your taxable income this year. The investments grow to $6k. You withdraw $6k next year. Your taxable income increases by $6k [note that if the investments were held 'normally' {outside of an RRSP}, you would have a taxable gain of only 50% of the total gain; but withdrawing the amount from your RRSP makes the gain 100% taxable]. On January 1st next year, you CANNOT recontribute this amount. Once withdrawn, it cannot be recontributed [except for below items]. RRSP's are good for long-term investing for retirement. There are a few factors at play here: (1) you get an immediate tax deduction, thus increasing the original size of investment by deferring tax to the withdrawal date; (2) your investments compound tax-free [you only pay tax at the end when you withdraw, not annually on earnings]; and (3) many people expect that they will have a lower tax-rate when they retire, than they do today. Some warnings about RRSP's: (1) They are less liquid than TFSA's; you can't put money in, take it out, and put it in again. In general, when you take it out, it's out, and therefore useless unless you leave it in for a long time; (2) Income gets re-characterized to be fully taxable [no dividend tax credits, no reduced capital gains tax rate]; and (3) There is no guarantee that your tax rate on retirement will be less than today. If you contribute only when your tax rate is in the top bracket, then this is a good bet, but even still, in 30 years, tax rates might rise by 20% [who knows?], meaning you could end up paying more tax on the back-end, than you saved in the short term. Home Buyer Plan RRSP withdrawals My single favourite piece of advice for young Canadians is this: if you contribute to an RRSP at least 3 months before you make a down payment on your first house, you can withdraw up to $25k from your RRSP without paying tax! to use for the down payment. Then over the next ~10 years, you need to recontribute money back to your RRSP, and you will ultimately be taxed when you finally take the money out at retirement. This means that contributing up to 25k to an RRSP can multiply your savings available for a down payment, by the amount of your tax rate. So if you make ~60k, you'll save ~35% on your 25k deposited, turning your down payment into $33,750. Getting immediate access to the tax savings while also having access to the cash for a downpayment, makes the Home Buyer Plan a solid way to make the most out of your RRSP, as long as one of your near-term goals is to own your own home. Registered Pension Plans are even less liquid than RRSPs. Tax-wise, they basically work the same: you get a deduction in the year you contribute, and are taxed when you withdraw. The big difference is that there are rules on when you are allowed to withdraw: only in retirement [barring specific circumstances]. Typically your employer's matching program (if you have one) will be inside of an RPP. Note that RPP's and RRSP's reduce your taxes on your employment paycheques immediately, if you contribute through a work program. That means you get the tax savings during the year, instead of all at once a year later on April 30th. *Note that I have attempted at all times to keep my advice current with applicable tax legislation, but I do not guarantee accuracy. Research these things yourself because I may have missed something relevant to your situation, I may be just plain wrong, and tax law may have changed since I wrote this to when you read it.", "title": "" } ]	[ { "docid": "c05926a5cd70e78245f8f52bec13e4d2", "text": "\"As user quid states in his answer, all you need to do is open an account with a stock broker in order to gain access to the world's stock markets. If you are currently banking with one of the six big bank, then they will offer stockbroking services. You can shop around for the best commission rates. If you wish to manage your own investments, then you will open a \"\"self-directed\"\" account. You can shelter your investments from all taxation by opening a TFSA account with your stock broker. Currently, you can add $5,500 per year to your TFSA. Unused allowances from previous years can still be used. Thus, if you have not yet made any TFSA contributions, you can add upto $46,500 to your TFSA and enjoy the benefits of tax free investing. Investing in what you are calling \"\"unmanaged index funds\"\" means investing in ETFs (Exchange Traded Funds). Once you have opened your account you can invest in any ETFs traded on the stock markets accessible through your stock broker. Buying shares on foreign markets may carry higher commission rates, but for the US markets commissions are generally the same as they are for Canadian markets. However, in the case of buying foreign shares you will carry the extra cost and risk of selling Canadian dollars and buying foreign currency. There are also issues to do with foreign withholding taxes when you trade foreign shares directly. In the case of the US, you will also need to register with the US tax authorities. Foreign withholding taxes payable are generally treated as a tax credit with respect to Canadian taxation, so you will not be double taxed. In today's market, for most investors there is generally no need to invest directly in foreign market indices since you can do so indirectly on the Toronto stock market. The large Canadian ETF providers offer a wide range of US, European, Asian, and Global ETFs as well as Canadian ETFs. For example, you can track all of the major US indices by trading in Toronto in Canadian dollars. The S&P500, the Dow Jones, and the NASDAQ100 are offered in both \"\"currency hedged\"\" and \"\"unhedged\"\" forms. In addition, there are ETFs on the total US Market, US Small Caps, US sectors such as banks, and more exotic ETFs such as those offering \"\"covered call\"\" strategies and \"\"put write\"\" strategies. Here is a link to the BMO ETF website. Here is a link to the iShares (Canada) ETF website.\"", "title": "" }, { "docid": "1b56332284074941947f1f4196a9f43a", "text": "\"I don't know Canada very well, but can offer some general points when considering where to park your emergency fund. Savings rates are currently low, but then so is inflation. Always bear in mind that inflation decreases the value of your money, so if you're getting 4% interest and inflation is 2%, you're making 2% gross in real terms. If you're getting 2% and inflation is close to zero, you're actually earning a similar amount, it's just the numbers are going up more slowly. Obviously when and how much tax you pay affects the actual return, it's just worth bearing in mind that low interest and low inflation are actually not that bad a savings environment as they first appear. For an emergency fund the key thing is ease of access, consider keeping some portion of your savings in an instant access account for those emergencies that happen when the banks are closed. In the UK there are various tax-free savings options, I'm guessing Canada has a few too, if so you should explore those options. While these may not have attractive headline rates, you don't pay tax on the interest, this can make them much more competitive (4% tax free is the same as 5% gross if you would have to pay tax at 20%). Normally tax free investments have caps so once you've invested a set amount you can't add anymore. This may be a consideration if you regularly dip into your emergency fund as you might not easily be able to build it up again. My approach is to have about 90% of my \"\"rainy day\"\" fund in easily accessible but tax free savings. This discourages me from spending it unless I really need to. I then keep a slush fund sufficient to cover every day disasters (boiler packing up, needing a hire car for a week etc) in instant access accounts .\"", "title": "" }, { "docid": "9268699a8e454c4bfa37870d0f661398", "text": "If you just want to save for retirement, start with a financial planning book, like this one: http://www.amazon.com/Smart-Simple-Financial-Strategies-People/dp/0743269942 and here's my editorial on the investing part: http://blog.ometer.com/2010/11/10/take-risks-in-life-for-savings-choose-a-balanced-fund/ If you're thinking of spending time stock-picking or trading for fun, then there are lots of options. Web site: Morningstar Premium (http://morningstar.com) has very good information. They analyze almost all large-cap stocks and some small caps too, plus mutual funds and ETFs, and have some good general information articles. It doesn't have the sales-pitch hot-blooded tone of most other sites. Morningstar analyzes companies from a value investing point of view which is probably what you want unless you're day trading. Also they analyze funds, which are probably the most practical investment. Books: If you want to be competent (in the sense that a professional investor trying to beat the market or control risk vs. the market would be) then I thought the CFA curriculum was pretty good: However, this will quickly teach you how much is involved in being competent. The level 1 curriculum when I did it was 6 or 7 thick textbooks, equivalent to probably a college semester courseload. I didn't do level 2 or 3. I don't think level 1 was enough to become competent, it's just enough to learn what you don't know. The actual CFA charter requires all three levels and years of work experience. If you more want to dabble, then Benjamin Graham's The Intelligent Investor certainly isn't a bad place to start, but you'd also want to read some efficient markets stuff (Random Walk Down Wall Street, or something by Bogle, or The Intelligent Asset Allocator http://www.amazon.com/Intelligent-Asset-Allocator-Portfolio-Maximize/dp/0071362363, are some options). It wouldn't be bad to just read a textbook like http://www.amazon.com/Investments-Irwin-Finance-Zvi-Bodie/dp/0256146381 which would be the much-abridged version of the CFA level 1 stuff. If you're into day trading / charting, then I don't know much about that at all, some of the other answers may have some ideas. I've never been able to find info on this that didn't seem like it had a sketchy sales pitch kind of vibe. Honestly in a world of high-frequency trading computers I'm skeptical this is something to get into. Unless you want to program HFT computers: http://howtohft.wordpress.com/", "title": "" }, { "docid": "7ec5dc1438ba1aafda40e08231cb4cd1", "text": "Actually there has been lots of talk around using a TFSA (Tax Free Savings Account) in Canada for just that purpose. A TFSA allows you: This blog makes some good points about exactly that: The bestest thing about the TFSA is its flexibility. You can take money out of your TFSA at any time for any purpose, without losing the contribution room, which makes this account the number one choice for socking away an emergency fund. So even if you take money out in one year, you can put it back the next, without affecting that year’s $5,000 contribution limit.", "title": "" }, { "docid": "2ccdf1e5dd46c8433b4bc98d3814f4ea", "text": "We don't have a good answer for how to start investing in poland. We do have good answers for the more general case, which should also work in Poland. E.g. Best way to start investing, for a young person just starting their career? This answer provides a checklist of things to do. Let's see how you're doing: Match on work pension plan. You don't mention this. May not apply in Poland, but ask around in case it does. Given your income, you should be doing this if it's available. Emergency savings. You have plenty. Either six months of spending or six months of income. Make sure that you maintain this. Don't let us talk you into putting all your money in better long term investments. High interest debt. You don't have any. Keep up the good work. Avoid PMI on mortgage. As I understand it, you don't have a mortgage. If you did, you should probably pay it off. Not sure if PMI is an issue in Poland. Roth IRA. Not sure if this is an issue in Poland. A personal retirement account in the US. Additional 401k. A reminder to max out whatever your work pension plan allows. The name here is specific to the United States. You should be doing this in whatever form is available. After that, I disagree with the options. I also disagree with the order a bit, but the basic idea is sound: one time opportunities; emergency savings; eliminate debt; maximize retirement savings. Check with a tax accountant so as not to make easily avoidable tax mistakes. You can use some of the additional money for things like real estate or a business. Try to keep under 20% for each. But if you don't want to worry about that kind of stuff, it's not that important. There's a certain amount of effort to maintain either of those options. If you don't want to put in the effort to do that, it makes sense not to do this. If you have additional money split the bulk of it between stock and bond index funds. You want to maintain a mix between about 70/30 and 75/25 stocks to bonds. The index funds should be based on broad indexes. They probably should be European wide for the most part, although for stocks you might put 10% or so in a Polish fund and another 15% in a true international fund. Think over your retirement plans. Where do you want to live? In your current apartment? In a different apartment in the same city? In one of the places where you inherited property? Somewhere else entirely? Also, do you like to vacation in that same place? Consider buying a place in the appropriate location now (or keeping the one you have if it's one of the inherited properties). You can always rent it out until then. Many realtors are willing to handle the details for you. If the place that you want to retire also works for vacations, consider short term rentals of a place that you buy. Then you can reserve your vacation times while having rentals pay for maintenance the rest of the year. As to the stuff that you have now: Look that over and see if you want any of it. You also might check if there are any other family members that might be interested. E.g. cousins, aunts, uncles, etc. If not, you can probably sell it to a professional company that handles estate sales. Make sure that they clear out any junk along with the valuable stuff. Consider keeping furniture for now. Sometimes it can help sell a property. You might check if you want to drive either of them. If not, the same applies, check family first. Otherwise, someone will buy them, perhaps on consignment (they sell for a commission rather than buying and reselling). There's no hurry to sell these. Think over whether you might want them. Consider if they hold any sentimental value to you or someone else. If not, sell them. If there's any difficulty finding a buyer, consider renting them out. You can also rent them out if you want time to make a decision. Don't leave them empty too long. There's maintenance that may need done, e.g. heat to keep water from freezing in the pipes. That's easy, just invest that. I wouldn't get in too much of a hurry to donate to charity. You can always do that later. And try to donate anonymously if you can. Donating often leads to spam, where they try to get you to donate more.", "title": "" }, { "docid": "f47bdeb2d0972bb69521a13551d181af", "text": "\"You don't state where you are, so any answers to this will by necessity be very general in nature. How many bank accounts should I have and what kinds You should have one transaction account and one savings account. You can get by with just a single transaction account, but I really don't recommend that. These are referred to with different names in different jurisdictions, but the basic idea is that you have one account where money is going in and out (the transaction account), and one where money goes in and stays (the savings account). You can then later on, as you discover various needs, build on top of that basic foundation. For example, I have separate accounts for each source of money that comes into my personal finances, which makes things much easier when I sit down to fill out the tax forms up to almost a year and a half later, but also adds a bit of complexity. For me, that simplicity at tax time is worth the additional complexity; for someone just starting out, it might not be. (And of course, it is completely unnecessary if you have only one source of taxable income and no other specific reason to separate income streams.) how much (percentage-wise) of my income should I put into each one? With a single transaction account, your entire income will be going into that account. Having a single account to pay money into will also make life easier for your employer. You will then have to work out a budget that says how much you plan to spend on food, shelter, savings, and so on. how do I portion them out into budgets and savings? If you have no idea where to start, but have an appropriate financial history (as opposed to just now moving into a household of your own), bring out some old account statements and categorize each line item in a way that makes sense to you. Don't be too specific; four or five categories will probably be plenty. These are categories like \"\"living expenses\"\" (rent, electricity, utilities, ...), \"\"food and eating out\"\" (everything you put in your mouth), \"\"savings\"\" (don't forget to subtract what you take out of savings), and so on. This will be your initial budget. If you have no financial history, you are probably quite young and just moving out from living with your parents. Ask them how much might be reasonable in your area to spend on basic food, a place to live, and so on. Use those numbers as a starting point for a budget of your own, but don't take them as absolute truths. Always have a \"\"miscellaneous expenses\"\" or \"\"other\"\" line in your budget. There will always be expenses that you didn't plan for, and/or which don't neatly fall into any other category. Allocate a reasonable sum of money to this category. This should be where you take money from during a normal month when you overshoot in some budget category; your savings should be a last resort, not something you tap into on a regular basis. (If you find yourself needing to tap into your savings on a regular basis, adjust your budget accordingly.) Figure out based on your projected expenses and income how much you can reasonably set aside and not touch. It's impossible for us to say exactly how much this will be. Some people have trouble setting aside 5% of their income on a regular basis without touching it; others easily manage to save over 50% of their income. Don't worry if this turns out a small amount at first. Get in touch with your bank and set up an automatic transfer from your transaction account to the savings account, set to recur each and every time you get paid (you may want to allow a day or two of margin to ensure that the money has arrived in your account before it gets taken out), of the amount you determined that you can save on a regular basis. Then, try to forget that this money ever makes it into your finances. This is often referred to as the \"\"pay yourself first\"\" principle. You won't hit your budget exactly every month. Nobody does. In fact, it's more likely that no month will have you hit the budget exactly. Try to stay under your budgeted expenses, and when you get your next pay, unless you have a large bill coming up soon, transfer whatever remains into your savings account. Spend some time at the end of each month looking back at how well you managed to match your budget, and make any necessary adjustments. If you do this regularly, it won't take very long, and it will greatly increase the value of the budget you have made. Should I use credit cards for spending to reap benefits? Only if you would have made those purchases anyway, and have the money on hand to pay the bill in full when it comes due. Using credit cards to pay for things is a great convenience in many cases. Using credit cards to pay for things that you couldn't pay for using cash instead, is a recipe for financial disaster. People have also mentioned investment accounts, brokerage accounts, etc. This is good to have in mind, but in my opinion, the exact \"\"savings vehicle\"\" (type of place where you put the money) is a lot less important than getting into the habit of saving regularly and not touching that money. That is why I recommend just a savings account: if you miscalculate, forgot a large bill coming up, or for any other (good!) reason need access to the money, it won't be at a time when the investment has dropped 15% in value and you face a large penalty for withdrawing from your retirement savings. Once you have a good understanding of how much you are able to save reliably, you can divert a portion of that into other savings vehicles, including retirement savings. In fact, at that point, you probably should. Also, I suggest making a list of every single bill you pay regularly, its amount, when you paid it last time, and when you expect the next one to be due. Some bills are easy to predict (\"\"$234 rent is due the 1st of every month\"\"), and some are more difficult (\"\"the electricity bill is due on the 15th of the month after I use the electricity, but the amount due varies greatly from month to month\"\"). This isn't to know exactly how much you will have to pay, but to ensure that you aren't surprised by a bill that you didn't expect.\"", "title": "" }, { "docid": "ce98800ddfa4c44fe836bcef62c53ab0", "text": "\"The primary tax-sheltered investing vehicles in Canada include: The RRSP. You can contribute up to 18% of your prior year's earned income, up to a limit ($24,930 in 2015, plus past unused contribution allowance) and receive an income tax deduction for your contributions. In an RRSP, investments grow on a tax-deferred basis. No tax is due until you begin withdrawals. When you withdraw funds, the withdrawn amount will be taxed at marginal income tax rates in effect at that time. The RRSP is similar to the U.S. \"\"traditional\"\" IRA, being an individual account with pre-tax contributions, tax-deferred growth, and ordinary tax rates applied to withdrawals. Yet, RRSPs have contribution limits higher than IRAs; higher, even, than U.S. 401(k) employee contribution limits. But, the RRSP is dissimilar to the IRA and 401(k) since an individual's annual contribution allowance isn't use-it-or-lose-it—unused allowance accumulates. The TFSA. Once you turn 18, you can put in up to $5,500 each year, irrespective of earned income. Like the RRSP, contribution room accumulates. If you were 18 in 2009 (when TFSAs were introduced) you'd be able to contribute $36,500 if you'd never contributed to one before. Unlike the RRSP, contributions to a TFSA are made on an after-tax basis and you pay no tax when you withdraw money. The post-tax nature of the TFSA and completely tax-free withdrawals makes them comparable to Roth-type accounts in the U.S.; i.e. while you won't get a tax deduction for contributing, you won't pay tax on earnings when withdrawn. Yet, unlike U.S. Roth-type accounts, you are not required to use the TFSA strictly for retirement savings—there is no penalty for pre-retirement withdrawal of TFSA funds. There are also employer-sponsored defined benefit (DB) and defined contribution (DC) retirement pension plans. Generally, employees who participate in these kinds of plans have their annual RRSP contribution limits reduced. I won't comment on these kinds of plans other than to say they exist and if your employer has one, check it out—many employees lose out on free money by not participating. The under-appreciated RESP. Typically used for education savings. A lifetime $50,000 contribution limit per beneficiary, and you can put that all in at once if you're not concerned about maximizing grants (see below). No tax deduction for contributions, but investments grow on a tax-deferred basis. Original contributions can be withdrawn tax-free. Qualified educational withdrawals of earnings are taxed as regular income in the hands of the beneficiary. An RESP beneficiary is typically a child, and in a child's case the Canadian federal government provides matching grant money (called CESG) of 20% on the first $2500 contributed each year, up to age 18, to a lifetime maximum of $7200 per beneficiary. Grant money is subject to additional conditions for withdrawal. While RESPs are typically used to save for a child's future education, there's nothing stopping an adult from opening an RESP for himself. If you've never had one, you can deposit $50,000 of after-tax money to grow on a tax-deferred basis for up to 36 years ... as far as I understand. An adult RESP will not qualify for CESG. Moreover, if you use the RESP strictly as a tax shelter and don't make qualified educational withdrawals when the time comes, your original contributions still come out free of tax but you'll pay ordinary income tax plus 20% additional tax on the earnings portion. That's the \"\"catch\"\". However, if at that time you have accumulated sufficient RRSP contribution room, you may move up to $50,000 of your RESP earnings into your RRSP without any tax consequences (i.e. also avoiding the 20% additional tax) at time of transfer. Perhaps there's something above you haven't considered. Still, be sure to do your own due diligence and to consult a qualified, experienced, and conflict-free financial advisor for advice particular to your own situation.\"", "title": "" }, { "docid": "17f422763da7c98daaef8a2982acbe14", "text": "This is what helped me. - I did my own taxes - get your own job, not from your parents, or parents friends, but entirely by yourself. Complete independence will equate to financial independence - Wikipedia (for specifics and definitions) paired with finance genre movies - audiobook, or YouTube video, 'why an economy grows, and why it doesnt' That's a good start. Good luck! Don't be too gung ho to invest and all that crap, you got lots too learn. Rule 1: don't be too eager, that's how you lose all your money! My best financial investments to date were: 1) my education (engineering) 2) I didn't pay my student loan off, instead, I bought a property, and I made $70,000 in 8 months off of one, and $100,000 off of another one in 2 years, 3) still making minimum payments on my student loan, a dollar today is worth more than a dollar tomorrow 4) pack my own lunches every day, eating out every meal ends up costing more than most mortgage payments. This is in Vancouver BC, Canada.", "title": "" }, { "docid": "ef3df544d40cefb5109c5334ffe89341", "text": "Can you wait until you retire before needing the money? Will you buy your first house sometime in the future? If yes, then favour an RRSP. Remember that you are rewarded by paying less tax for having the foresight and commitment to defer income taxes until your retirement, when you are presumably earning less income. Are your household expenses higher than 28% of your gross income? 35% of your net income? Does making your mortgage payments stress you? Are interest rates lower than their historical norm and an increase would cause you difficulty? If yes, then favour your mortgage. Do you need this money before your retire? Does your TFSA earn more interest than your mortgage costs your? If yes, then favour a TFSA. Does an alternative investment earn more than your TFSA? Can you handle an uptick in your mortgage interest rate? If yes, then favour the alternative investment and not your RRSP, mortgage or TFSA.", "title": "" }, { "docid": "d0dc5fa4905cb40edf4151ebb4465f9b", "text": "\"I've never invested in penny stocks. My #1 investing rule, buy what you know and use. People get burned because they hear about the next big thing, go invest! to just end up losing everything because they have no clue in what they're investing in. From what I've found, until you have minimum of $5k to invest, put everything in a single investment. The reason for this, as others have mentioned, is that commissions eat up just about all your profits. My opinion, don't put it in a bond, returns are garbage right now - however they are \"\"safe\"\". Because this is $1000 we're talking about and not your life savings, put it in a equity like a stock to try and maximize your return. I aim for 15% returns on stocks and can generally achieve 10-15% consistently. The problem is when you get greedy and keep thinking it will go above once you're at 10-15%. Sell it. Sell it right away :) If it drops down -15% you have to be willing to accept that risk. The nice thing is that you can wait it out. I try to put a 3 month time frame on things I buy to make money. Once you start getting a more sizable chunk of money to play around with you should start to diversify. In Canada at least, once you have a trading account with a decent size investment the commissions get reduced to like $10 a trade. With your consistent 10% returns and additional savings you'll start to build up your portfolio. Keep at it and best of luck!\"", "title": "" }, { "docid": "42ca73dfd3632949047be4a350b2a169", "text": "Wikipedia has a nice definition of financial literacy (emphasis below is mine): [...] refers to an individual's ability to make informed judgments and effective decisions about the use and management of their money. Raising interest in personal finance is now a focus of state-run programs in countries including Australia, Japan, the United States and the UK. [...] As for how you can become financially literate, here are some suggestions: Learn about how basic financial products works: bank accounts, mortgages, credit cards, investment accounts, insurance (home, car, life, disability, medical.) Free printed & online materials should be available from your existing financial service providers to help you with your existing products. In particular, learn about the fees, interest, or other charges you may incur with these products. Becoming fee-aware is a step towards financial literacy, since financially literate people compare costs. Seek out additional information on each type of product from unbiased sources (i.e. sources not trying to sell you something.) Get out of debt and stay out of debt. This may take a while. Focus on your highest-interest loans first. Learn the difference between good debt and bad debt. Learn about compound interest. Once you understand compound interest, you'll understand why being in debt is bad for your financial well-being. If you aren't already saving money for retirement, start now. Investigate whether your employer offers an advantageous matched 401(k) plan (or group RRSP/DC plan for Canadians) or a pension plan. If your employer offers a good plan, sign up. If you get to choose your own investments, keep it simple and favor low-cost balanced index funds until you understand the different types of investments. Read the material provided by the plan sponsor, try online tools provided, and seek out additional information from unbiased sources. If your employer doesn't offer an advantageous retirement plan, open an individual retirement account or IRA (or personal RRSP for Canadians.) If your employer does offer a plan, you can set one of these up to save even more. You could start with access to a family of low-cost mutual funds (examples: Vanguard for Americans, or TD eFunds for Canadians) or earn advanced credit by learning about discount brokers and self-directed accounts. Understand how income taxes and other taxes work. If you have an accountant prepare your taxes, ask questions. If you prepare your taxes yourself, understand what you're doing and don't file blind. Seek help if necessary. There are many good books on how income tax works. Software packages that help you self-file often have online help worth reading – read it. Learn about life insurance, medical insurance, disability insurance, wills, living wills & powers of attorney, and estate planning. Death and illness can derail your family's finances. Learn how these things can help. Seek out and read key books on personal finance topics. e.g. Your Money Or Your Life, Why Smart People Make Big Money Mistakes, The Four Pillars of Investing, The Random Walk Guide to Investing, and many more. Seek out and read good personal finance blogs. There's a wealth of information available for free on the Internet, but do check facts and assumptions. Here are some suggested blogs for American readers and some suggested blogs for Canadian readers. Subscribe to a personal finance periodical and read it. Good ones to start with are Kiplinger's Personal Finance Magazine in the U.S. and MoneySense Magazine in Canada. The business section in your local newspaper may sometimes have personal finance articles worth reading, too. Shameless plug: Ask more questions on this site. The Personal Finance & Money Stack Exchange is here to help you learn about money & finance, so you can make better financial decisions. We're all here to learn and help others learn about money. Keep learning!", "title": "" }, { "docid": "26b37f71f94754dec7bfa1c9bcb2a39f", "text": "I had this problem when I finished my job in Canada in Sept 2013. You'll likely have to open the account in person in Canada, at least if you don't already have a relationship with a broker there. DO NOT go to Virtual Brokers. They told me that my US citizenship was no problem, but right before I left Canada to double check. It wasn't until I asked specifically which US states they were licensed in that they realized they were licensed in NO US STATES. They told me that they'd freeze my account when I left. I then moved my (former) pension to a locked-in RRSP at BMO. As of September 2010 BMO could handle residents of most US states, but it took some tooth pulling to get the list out of them. However, after I flew to the USA, BMO called to demand more ID. My account was frozen until I flew back to Canada in person just to show ID. Annoyed, I closed the BMO account and moved it to TD Waterhouse. TD waterhouse can handle accounts for residents of all the US states EXCEPT Virginia, Louisiana, and Nebraska. (I only got the complete list of exceptions when I made my first trade, since the guys at the trading desk are much more knowledgeable about such things than the guys in the branch.) TD was extremely friendly about my USA citizenship/residence. (Many Canadian brokers simply won't accept US residents, at least as of the end of 2013.) Whichever broker you choose, BRING LOTS MORE ID than they require. Insist that they zerox it all. Make sure to include your social security card. You don't want them to demand more ID after you've left the country, like BMO did. They may even make such a move simply to get rid of US customers, because the FATCA is a pain for foreign banks.", "title": "" }, { "docid": "32ac818960c21a78d7a83f46630da254", "text": "I don't know about down there but up here in Canada, unless those companies have some track history, you ARE personally responsible. Or at least that's how I remember it; someone feel free to correct me... (Unless you were wise enough and had enough capital to begin with a shell company)", "title": "" }, { "docid": "c01f6134cede65f12425fb5a39d1ce54", "text": "1) The easy way is to find a job and they will assign you an SSN. 2) Here's the hard way. If you're Canadian, open a TD Boarderless account in the U.S. Put a small investment into any investment that would generate some type of income, such as capital gain, dividends, interest and etc... Then you will need to file a US tax return to declare your income if you receive U.S. tax slips (although you're likely below the min filing requirement) at year end. To file a U.S. tax return, you may need what's called an ITIN or individual tax id number. With the ITIN, you can get credit from the US TD boarderless account (only). Consider getting a prepaid US credit card with the TD account to futher build credit at that specific bank. It's not much credit, but you do start with creating a history.", "title": "" }, { "docid": "fda5f5c4f7c382202bb5fab7941277f4", "text": "\"The Financial Consumer Agency of Canada (FCAC) has a page specifically about working with a financial planner or advisor. It's a good starting point if you are thinking about getting a financial professional to help you plan and manage your investments. In the \"\"Where To Look\"\" section on that page, FCAC refers to a handful of industry associations. I'll specifically highlight the Financial Planning Standards Council's \"\"Find a planner\"\" page, which can help you locate a Certified Financial Planner (CFP). Choose financial advice carefully. Prefer certified professionals who charge a set fee for service over advisors who work on commission to push investment products. Commission-based advice is seldom unbiased. MoneySense magazine published a listing last year for where to find a fee-only financial planner, calling it \"\"The most comprehensive listing of Canadian fee-only financial planners on the web\"\" — but do note the caveat (near the bottom of the page) that the individuals & firms have not been screened. Do your own due diligence and check references.\"", "title": "" } ]	fiqa
62e73af1ddaa45968d09b4bbf13218f4	Getting live data from Yahoo! Finance for the National Stock Exchange of India (NSE)?	[ { "docid": "9bd6c9487986c28f0e9fc0e9a7a2627c", "text": "I wouldn't think so. If you read the list of features listed on the page you referred to, notice: Track Stocks It looks like it is restricted to the major U.S. stock markets. No mention of India's NSE.", "title": "" } ]	[ { "docid": "402212bfb569a8f87f74352254c9928e", "text": "Yahoo's primary business isn't providing mutual fund performance data. They aim to be convenient, but often leave something to be desired in terms of completeness. Try Morningstar instead. Their mission is investment research. Here's a link to Morningstar's data for the fund you specified. If you scroll down, you'll see:", "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": "6e1a49099026facd9c7a976bb9804035", "text": "I searched for FTSE 100 fund on Yahoo Finance and found POW FTSE RAF UK 100 (PSRU.L), among many others. Google Finance is another possible source that immediately comes to mind.", "title": "" }, { "docid": "0abcd449cae2ed7664022837ddd01ced", "text": "\"Google's RSI is using a 10 period on 2 minute bars - i.e. it is based upon the last 20 minutes of data. Yahoo's RSI is using a 14 period lookback on an undetermined timeframe (you could maybe mouse-over and see what incremental part of the chart is giving) and given the \"\"choppier\"\" price chart, probably 30 second or 1 minute bars. Given the difference in both the period specified and the periodicity of the charts - you should expect different results.\"", "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": "7602775b21de86391db58f419dad795a", "text": "Since I've been doing this since late 03 I have colo machines in Chicago and NYC, and have direct exchange data feeds etc. I mentioned in a prior post though, for someone starting out on algorithmic trading, I'd recommend Nanex for tick data and Interactive Brokers for your brokerage account. IB has a robust and easy to use API. It won't let you do the most low latency stuff bc you can't colo at the exchange and have to clear through their order management systems but if you are looking at opportunities that exist in the market in excess of 50ms it's probably a good place to start. If not, go Lightspeed imo, but that'll cost you on the colo/data a lot more.", "title": "" }, { "docid": "e72fec842579c94379154c5c9e31b87d", "text": "IESC has a one-time, non-repeatable event in its operating income stream. It magnifies operating income by about a factor of five. It impacts both the numerator and the denominator. Without knowing exactly how the adjustments are made it would take too much work for me to calculate it exactly, but I did get close to their number using a relatively crude adjustment rule. Basically, Yahoo is excluding one-time events from its definitions since, although they are classified as operating events, they distort the financial record. I teach securities analysis and have done it as a profession. If I had to choose between Yahoo and Marketwatch, at least for this security, I would clearly choose Yahoo.", "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": "307fc0322c1cc6b4e936b694408c617b", "text": "Generally Google gets their data, directly from the exchanges (Nasdaq, NYSE). This is really expensive -- tens of thousands of dollars a month just for the license from the exchange, and lots of telecom costs on top of that.", "title": "" }, { "docid": "c974fce2e0de21ef5938bef66aad614f", "text": "\"Using your example link, I found the corresponding chart for a stock that trades on London Stock Exchange: https://ca.finance.yahoo.com/echarts?s=RIO.L#symbol=RIO.L;range=1d As you can see there, the chart runs from ~8:00am to ~4:30pm, and as I write this post it is only 2:14pm Eastern Time. So clearly this foreign chart is using a foreign time zone. And as you can see from this Wikipedia page, those hours are exactly the London Stock Exchange's hours. Additionally, the closing price listed above the graph has a timestamp of \"\"11:35AM EST\"\", meaning that the rightmost timestamp in the graph (~4:30pm) is equal to 11:35AM EST. 16:30 - 11:30 = 5 hours = difference between London and New York at this time of year. So those are two data points showing that Yahoo uses the exchange's native time zone when displaying these charts.\"", "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": "1853960b1c7da6cdde6a9175cc4b18fe", "text": "You can pull up the VIX index on Google Finance by entering INDEXCBOE:VIX", "title": "" }, { "docid": "3cf0e38a9490502c906628977ecba626", "text": "Under construction, but here's what I have so far: Schwab Data from 1970-2012: About.com data from 1980-2012:", "title": "" }, { "docid": "edd9e052636764c8304b7effaf696a9e", "text": "December, 7, 2011 ( 01:40 pm) :- Reliance industries buy which is chain by Mr. Mukesh Ambani, company planes to offer 4 G services as a low Cost by which they help the growth of Indians. Company plans to launch their tab around Rs 3500 & with data download or uploading facility for 10 Rs of every 1 GB. If company able to provided all there technology, Reliance will be the next year favorite stock for many investors. But now, Reliance have strong resistance at Rs XXX & support at Rs XXX above this trend bullish side.", "title": "" }, { "docid": "d59301acd1b942e879c09beefec5df5d", "text": "tl;dr: The CNN Money and Yahoo Finance charts are wildly inaccurate. The TD Ameritrade chart appears to be accurate and shows returns with reinvested dividends. Ignoring buggy data, CNN most likely shows reinvested dividends for quoted securities but not for the S&P 500 index. Yahoo most likely shows all returns without reinvested dividends. Thanks to a tip from Grade Eh Bacon, I was able to determine that TD Ameritrade reports returns with reinvested dividends (as it claims to do). Eyeballing the chart, it appears that S&P 500 grew by ~90% over the five year period the chart covers. Meanwhile, according to this S&P 500 return estimator, the five year return of S&P 500, with reinvested dividends, was 97.1% between July 2012 to July 2017 (vs. 78.4% raw returns). I have no idea what numbers CNN Money is working from, because it claims S&P 500 only grew about 35% over the last five years, which is less than half of the raw return. Ditto for Yahoo, which claims 45% growth. Even stranger still, the CNN chart for VFINX (an S&P 500 index fund) clearly shows the correct market growth (without reinvesting dividends from the S&P 500 index), so whatever problem exists is inconsistent: Yahoo also agrees with itself for VFINX, but comes in a bit low even if your assume no reinvestment of dividends (68% vs. 78% expected); I'm not sure if it's ever right. By way of comparison, TD's chart for VFINX seems to be consistent with its ABALX chart and with reality: As a final sanity check, I pulled historical ^GSPC prices from Yahoo Finance. It closed at $1406.58 on 27 Aug 2012 and $2477.55 on 28 Aug 2017, or 76.1% growth overall. That agrees with TD and the return calculator above, and disagrees with CNN Money (on ABALX). Worse, Yahoo's own charts (both ABALX and VFINX) disagree with Yahoo's own historical data.", "title": "" } ]	fiqa
94e05ba87ff11332ad0f47c157921477	Correct Ways of Importing Personal Finance Transaction Data	[ { "docid": "05c1584104a608dbd02b92a376e479f0", "text": "You'll need to find out in what format MoneyStrands expects the data. A .qif or an .ofx file may not be the answer.", "title": "" } ]	[ { "docid": "500aba91d79281094dbadba775df5b7a", "text": "I'm using iBank on my Mac here and that definitely supports different currencies and is also supposed to be able to track investments (I haven't used it to track investments yet, hence the 'supposed to' caveat).", "title": "" }, { "docid": "763b586d811fa6556c94d509dafdbe69", "text": "\"Yodlee and Mint are good solutions if you don't mind your personal financial information being stored \"\"in the cloud\"\". I do, so I use Quicken. Quicken stores whatever you give to it for as long as you want: so the only question is how to get the credit card transactions you want into it? All my financial institutions allow me to view my credit card statements for a year back, and download them in a form Quicken can read. So you can have a record of your transactions from a year ago right now, and in a year you will have two year's worth.\"", "title": "" }, { "docid": "82d2d4a07821a9bb5dad39c545650d9a", "text": "Assuming you have registered your activities as partnership and receiving this money as Individual, you need to show this under Schedule OS, 1d [other income]. this will be under the ITR-2 [tab CG-OS] XLS tax preparation utility given by Tax Department. The XLS can be found at https://incometaxindiaefiling.gov.in/portal/individual_huf.do If the funds you are receiving are large [more than say Rs 500,000] then suggest you incorporate a partnership firm or company, there are quite a few exceptions you can claim lowering you tax outgo. The fact that you are transferring funds to your partners can be an issue incase you get audited. You would need to have sufficient evidence to show that the money paid was for services rendered directly and not your income. It would be easier if you create a partnership or have the client directly pay to them. Again if the sum is small its fine, as the sum becomes large, it would get noticed by the tax authorities.", "title": "" }, { "docid": "3bda3e210ba9b35e0f5b54f23bb862c4", "text": "I use MoneyStrands (formerly called Expensr), but mostly just to track expenses and look at reports on my spending habits. It has some really pretty charts, with the ability to drill down into categories and sub-categories, or graph monthly spending for any custom date range. It does a half-decent job of auto-categorizing the imported bank transactions, and you can set up additional rules for common vendors, but I still have to do some manual work after each import. It does a good job of integrating my credit cards, bank accounts, and I can even manually add cash transactions. It has some basic budgeting capabilities, but they're not very useful for someone who needs to carefully budget thier monthly spending. Another one I've heard about is mint.com, but it only supports American banks (last I heard, anyway).", "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": "0efe2844118714ca1c92e0350393e1cb", "text": "You can take a shortcut and make a few cumulative transactions, maybe just estimate how much of your spending landed in each of your budget categories, but you will lose a lot of the value that you were building for yourself by tracking your spending during the earlier months. I reconcile my budget and categorize my spending on a monthly basis. It's always a chore to pull out the big stack of receipts and plow through them, but I've learned the value of having an accurate picture of where all my money went. There is no clean way to fake it. You can either take the time and reconcile your spending, or you can take a short cut. It probably renders your efforts to track everything from the beginning of the year invalid though. If you want to start over this month (as you did at the beginning of the year) that would probably be a cleaner way to reconcile things.", "title": "" }, { "docid": "dc791ff7f4a2e648915913f2f2bc62ae", "text": "Yup. What I wanted to know was where they are pulling it up from. Have casually used Google finance for personal investments, but they suck at corp actions. Not sure if they provide free APIs, but that would probably suck too! :D", "title": "" }, { "docid": "e05dcedf1a1bea716785027fabcee543", "text": "\"Considering the fact that you are so unaware of how to find such data, I find it very very hard to believe that you actually need it. \"\"All trade and finance data for as much tickers and markets as possible.\"\" Wtf does that even mean. You could be referencing thousands of different types of data for any given \"\"ticker\"\" with a statement so vague. What are you looking for?\"", "title": "" }, { "docid": "830ab9fb4caf0738837905aa1d8a5b57", "text": "I generally concur with your sentiments. mint.com has 'hack me' written all over it. I know of two major open source tools for accounting: GNUCash and LedgerSMB. I use GNUCash, which comes close to meeting your needs: The 2.4 series introduced SQL DB support; mysql, postgres and sqlite are all supported. I migrated to sqlite to see how the schema looked and ran, the conclusion was that it runs fine but writing direct sql queries is probably beyond me. I may move it to postgres in the future, just so I can write some decent reports. Note that while it uses HTML for reporting, there is no no web frontend. It still requires a client, and is not multi-user safe. But it's probably about the closest to what you what that still falls under the heading of 'personal finance'. A fork of SQL Ledger, this is postgreSQL only but does have a web frontend. All the open source finance webapps I've found are designed for small to medium busineses. I believe it should meet your needs, though I've never used it. It might be overkill and difficult to use for your limited purposes though. I know one or two people in the regional LUG use LedgerSMB, but I really don't need invoicing and paystubs.", "title": "" }, { "docid": "af504736fd19c5cd3ff3b7ffda83e9c1", "text": "You decide on a cost bases attribution yourself, per transaction (except for averaging for mutual funds, which if I remember correctly applies to all the positions). It is not a decision your broker makes. Broker only needs to know what you've decided to report it to the IRS on 1099, but if the broker reported wrong basis (because you didn't update your account settings properly, or for whatever else reason) you can always correct it on form 8949 (columns f/g).", "title": "" }, { "docid": "1577e21bf4ad3391c4631197ed104014", "text": "I would say when starting with Gnucash to start with the level of granularity you are comfortable with while sticking to the double entry bookkeeping practices. So going through each one: Refund for Parking Pass. Assuming you treat the Parking Pass as a sunk cost, i.e. an Expense account, its just a negative entry in the Expense account which turns into a positive one in your Bank account. Yes it may look weird, and if you don't like it you can always 'pay from Equity' the prior month, or your Bank Account if you're backfilling old statements. Selling physical items. If you sold it on eBay and the value is high enough you'll get tax forms indicating you've earned x. Even if its small or not done via eBay, treat it the same way and create a 'Personal Items/Goods' Income account to track all of it. So the money you get in your Bank account would have come from there. Found jacket money would be an Equity entry, either Opening Balances into Cash or Bank account. Remember you are treating Equity / Opening Balances as the state before you started recording every transaction so both the value going into Assets (Banks,Stock,Mutual Funds) and Liabilities (Mortgage, Student Debt, Credit Card Debt) originate from there.", "title": "" }, { "docid": "97793b3a30e5346c88a4c290d48d8e81", "text": "\"That's Imbalance-USD (or whatever your default currency is). This is the default \"\"uncategorized\"\" account. My question is, is it possible to get the \"\"unbalanced\"\" account to zero and eliminate it? Yes, it's possible to get this down to zero, and in fact desirable. Any transactions in there should be reviewed and fixed. You can delete it once you've emptied it, but it will be recreated the next time an unbalanced transaction is entered. Ideally, I figure it should autohide unless there's something in it, but it's a minor annoyance. Presumably you've imported a lot of data into what's known as a transaction account like checking, and it's all going to Imbalance, because it's double entry and it has to go somewhere. Open up the checking account and you'll see they're all going to Imbalance. You'll need to start creating expense, liability and income accounts to direct these into. Once you've got your history all classified, data entry will be easier. Autocomplete will suggest transactions, and online transaction pull will try to guess which account a given transaction should match with based on that data.\"", "title": "" }, { "docid": "101bd8af9cec549d6f124020231f8ebe", "text": "\"These sort of issues in structuring your personal finances relative to expenses can get complicated quickly, as your example demonstrates. I would recommend a solution that reduces duplication as much as possible- and depending on what information you're interested in tracking you could set it up in very different ways. One solution would be to create virtual sub accounts of your assets, and to record the source of money rather than the destination. Thus, when you do an expense report, you can limit on the \"\"his\"\" or \"\"hers\"\" asset accounts, and see only the expenses which pertain to those accounts (likewise for liabilities/credit cards). If, on the other hand, you're more interested in a running sum of expenses- rather than create \"\"Me\"\" and \"\"Spouse\"\" accounts at every leaf of the expense tree, it would make much more sense to create top level accounts for Expenses:His:etc and Expenses:Hers:etc. Using this model, you could create only the sub expense accounts that apply for each of your spending (with matching account structures for common accounts).\"", "title": "" }, { "docid": "0c509b1b72a4cbf876193786938eb9a1", "text": "Use one journal entry, and split the expenses into the appropriate accounts. This can happen even if you never mix business and personal on the same receipt: say you order office supplies (which where I live are immediately deductible as an expense) and software or hardware (which must be depreciated because they are assets) on the same order. We have an account called Proprietors Loan which represents money the company is lending to the humans who own it, or that the humans are lending to the company. Were I to pay for my personal lunch on a business credit card, it would go through that account, increasing the amount the company has lent me or decreasing the amount I have lent it. Similarly if I made a business purchase with a personal card it would go through that account in the other direction. Where I live, I can lend my company all the money I want any time, but if the company lends me money there can't be an outstanding balance over the corporate year end. If you make two credit card entries of 5 and 10 when you go to reconcile your accounts it will be harder because you'll have to realize they together match the single 15 line on your statement. Making a single entry (your A option) will make reconciling your statement much easier. And that way, you'll probably reconcile your statements, which is vital to knowing you actually recorded everything.", "title": "" }, { "docid": "94ddf1032cb45bb5c777b866ae873592", "text": "\"I found your post while searching for this same exact problem. Found the answer on a different forum about a different topic, but what you want is a Cash Flow report. Go to Reports>Income & Expenses>Cash Flow - then in Options, select the asset accounts you'd like to run the report for (\"\"Calle's Checking\"\" or whatever) and the time period. It will show you a list of all the accounts (expense and others) with transactions effecting that asset. You can probably refine this further to show only expenses, but I found it useful to have all of it listed. Not the prettiest report, but it'll get your there.\"", "title": "" } ]	fiqa
68dbb98d4857a048cd991573ac924c1b	Should I finance a used car or pay cash?	[ { "docid": "8cc41e5f9dfa3cd2344fc7977f6f5230", "text": "There are several factors here. Firstly, there's opportunity cost, i.e. what you would get with the money elsewhere. If you have higher interest opportunities (investing, paying down debt) elsewhere, you could be paying that down instead. There's also domino effects: by reducing your liquid savings to or below the minimum, you can't move any of it into tax advantaged retirement accounts earning higher interest. Then there's the insurance costs. You are required to buy extra insurance to protect your lender. You should factor in the extra insurance you would buy vs the insurance required. Given that you can buy the car yourself, catastrophic insurance may not be necessary, or you may prefer a higher deductible than your lender will allow. If you're not sufficiently capitalized, you may need gap insurance to cover when your car depreciates faster than your loan is paid down. A 30 percent payment should be enough to not need it though. Finally, there's some value in having options. If you have the loan and the cash, you can likely pay it off without penalty. But it will be harder to get the loan if you don't finance it. Maybe you can take out a loan against the car later, but I haven't looked into the fees that might incur. If it's any help, I'm in the last stretch of a 3 year car loan. At the time paying in cash wasn't an option, and having done it I recognize that it's more complicated than it seems.", "title": "" }, { "docid": "fd5ff70947319aa159d422cbc5ac42db", "text": "Unless you are getting better than a 2.95% return on that money market account. Pay cash. That's the purely logical way to make the decision. However if it were me I'd pay cash anyway just because I like the idea of not owing money and having the hassle of dealing with a payment every month.", "title": "" }, { "docid": "1dcfca5dc125aa1279c8d3034291cb9f", "text": "One additional reason to pay with cash rather than financing is that you will be able to completely shut down the dealership from haggling over finance terms and get right to the point of haggling over the cost of the car (which you should always do).", "title": "" }, { "docid": "a19a12381407a53ef09ec1a7fdea9e04", "text": "I'd pay cash. Car loans are amortized, so sometimes you can get upside-down on the loan between 18-30 months because you are pre-paying interest. This can get you into trouble if you get into an accident. Given the low rate and the type of car you're buying, you're probably fine either way.", "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": "1fcdc5d9cd3b7f6107c1f75848119357", "text": "\"There's two scenarios: the loan accrues interest on the remaining balance, or the total interest was computed ahead of time and your payments were averaged over x years so your payments are always the same. The second scenarios is better for the bank, so guess what you probably have... In the first scenario, I would pay it off to avoid paying interest. (Unless there is a compelling reason to keep the cash available for something else, and you don't mind paying interest) In the second case, you're going to pay \"\"interest over x years\"\" as computed when you bought the car no matter how quickly you pay it off, so take your time. (If you pay it earlier, it's like paying interest that would not have actually accrued, since you're paying it off faster than necessary) If you pay it off, I'm not sure if it would \"\"close\"\" the account, your credit history might show the account as being paid, which is a good thing.\"", "title": "" }, { "docid": "0c651f3f081d045f93bd810edfa83fd7", "text": "\"You want to know if you should pay cash or use a credit card like cash? There are so many benefits to the card, like purchase protection, cash back, and postponed payments, that there needs to be a really good reason to pay cash. If you are concerned about the 10% threshold, ask your credit card company to raise your limit. If you are indifferent, let the merchant decide for you by asking for a discount if you pay cash. The biggest reason is that credit cards, when handled shrewdly, make your money work for you by keeping it in less liquid / higher interest investments like inflation-adjusted T-bills. You will still be able to access it by using the credit card to float large expenses without liquidating at a loss. Investment Accounts like Schwab One are great for this since you can \"\"borrow\"\" cash at a low interest rate against your securities, until your security sale clears.\"", "title": "" }, { "docid": "a31c57db14f6ad422dce707e8eeb3d93", "text": "Your practice of waiting until you can pay cash is a good one. It will certainly prevent you from getting into debt! Now, to be clear, your question puts a credit card in the same category as a loan, but it doesn't have to be. You could use a credit card almost like cash, if you are careful. I'm not familiar with the system in France, but in the US, even if you are paying cash all the time, there are some benefits to getting a credit card and paying it off in full every month, instead of simply paying with cash. Some of those benefits are: One pretty big downside of having a credit card depends on your personality. Some people, once they have credit, end up spending beyond their means, and end up getting into debt. Please look into whether credit cards work the same way in France before considering the above advice. As for your question regarding getting a loan vs paying cash, that will usually be personal preference, since with a loan you can buy expensive items (such as a house or car) much sooner than you otherwise could if you waited until you saved the money. For example, it might take 10 years or more to build up enough money to purchase a house with cash, so if you don't want to wait that long, you'll need to finance it.", "title": "" }, { "docid": "cd7306a60bf14d01085ce39d5567c46d", "text": "Two adages come to mind. Never finance a depreciating asset. If you can't pay cash for a car, you can't afford it. If you decide you can finance at a low rate and invest at a higher one, you're leveraging your capital. The risk here is that your investment drops in value, or your cash flow stops and you are unable to continue payments and have to sell the car, or surrender it. There are fewer risks if you buy the car outright. There is one cost that is not considered though. Opportunity cost. Since you've declared transportation necessary, I'd say that opportunity cost is worth the lower risk, assuming you have enough cash left after buying a car to fund your emergency fund. Which brings me to my final point. Be sure to buy a quality used car, not a new one. Your emergency fund should be able to replace the car completely, in the case of a total loss where you are at fault and the loss is not covered by insurance. TLDR: My opinion is that it would be better to pay for a quality, efficient, basic transportation car up front than to take on a debt.", "title": "" }, { "docid": "391c13f6e7ed4eae2efb564718fe3d25", "text": "Buy a car. Vehicle loans, like mortgages, are installment loans. Credit cards are revolving lines of credit. In the US, your credit score factors in the different types of credit you have. Note that there are several methods for calculating credit scores, including multiple types of FICO scores. You could buy a car and drive for Uber to help cash flow the car payments and/or save for your next purchase. As others have suggested, you should be very careful with debt and ask critical questions before taking it on. Swiping a credit card is more about your behavior and self-control than it is logic and math. And if you ever want to start a business or make multi-million dollar purchases (e.g. real estate), or do a lot of other things, you'll need good credit.", "title": "" }, { "docid": "d2aa9ba776cab68fb9f0bd1333bbea3b", "text": "\"You can find out the most money they will loan you for a car loan when you approach your current bank/credit union. They should be willing to layout options based on your income, and credit history. You then have to decide if those terms work for you. There are several dangers with getting loan estimates, they may be willing to lend you more than you can actually handle. They think you can afford it, but maybe you can't. They may also have a loan with a longer term, which does bring the monthly cost down, but exposes you to being upside down on the loan. You then use this a a data point when looking at other lenders. The last place you look is the auto dealer. They will be trying to pressure you on both the loan and the price, that is not the time to do doing complex mental calculations. The Suntrust web page was interesting, it included the quote: The lowest rate in each range is for LightStream's unsecured auto loan product and requires that you have an excellent credit profile. It also induced the example the rate of 2.19% - 4.24% for a 24 to 36 month loan of $10,000 to $24,999 for a used car purchased from a dealer. Also note that my local credit union has a new/used loan at 1.49%, but you have to be a member. Sunstrust seems to be in the minority. In general a loan for X$ and y months will have a lower rate if it is secured with collateral. But Suntrust is offering unsecured loans (i.e. no collateral) at a low rate. The big benefit for their product is that you get the cash today. You can get the cash before you know what you want to buy. You get the cash before you have negotiated with the dealer. That makes that step easier. Now will they in the near future ask for proof you bought a car with the money? no idea. If you went to the same web page and wanted a debt consolidation loan the rate for the same $ range and the same months is: 5.49% - 11.24% the quote now changes to: The lowest rate in each range requires that you have an excellent credit profile. I have no idea what rate they will actually approve you for. It is possible that if you don't have excellent credit the rate rises quickly, but 4.24% for the worst auto loan is better than 5.49% for the best debt consolidation. Excellent Credit Given the unique nature of each individual’s credit situation, LightStream believes there is no single definition for \"\"excellent credit\"\". However, we find individuals with excellent credit usually share the following characteristics: Finally, it should be noted again that each individual situation is different and that we make our credit judgment based on the specific facts of that situation. Ultimately our determination of excellent credit is based on whether we conclude that there is a very high likelihood that our loan will be repaid in a full and timely manner. All the rates mentioned in this answer are from 15 July 2017.\"", "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": "a6c4ae5dec040649e1cfeea63f1c9ee3", "text": "Obviously, the best thing financially would be to continue using your present car, unless it impacts you financially on a regular basis. For example, maintenance or breakdowns impacting your ability to work. An unreliable car also impacts your freedom, for example preventing you from taking road-trips you might want to take or taking up free time with maintenance. Give thought to what it is about your present car that you dislike, both to determine the value you gain from a new car and what's most important to you. Anytime you buy a car, you generally lose thousands of dollars simply driving it off the lot. This is the profit which goes to dealers, salespeople, etc... and not part of the actual value of the car. Cars also depreciate over time, with most of the depreciation happening in the first few years of operation. Many of the newer model cars have additional expenses. (For example, replacement $200 keys or electronic systems that can only be repaired at special facilities.) In addition, if you have insurance (other than the minimum third-party required by law), consider the rate increases and add up the long-term impact of that. Imagine you had invested that money instead at 8% interest over the lifetime of the car. If you don't have insurance, consider what you would do in the unfortunate situation where you were at fault in a collision. Could you afford to lose your investment? Even with safe responsible driving, there is always the potential for road/weather conditions or mechanical failures. If you determine there is sufficient value to be gained from changing vehicles, I would recommend that you buy a vehicle with history from someone privately, doing appropriate background checks and consulting friends or family who know about vehicles and can provide feedback. Do research into the models which interest you ahead of time, read online reviews. Every vehicle generally has known advantages and disadvantages which can take years to discover, so buying an older vehicle gives you the advantage of knowing what to expect. I would say there is probably a reasonable middle ground between using a 1991 vehicle you don't like (that's as old as you are) and getting a relatively new model. Look at what you value in the vehicle, consider all the costs, and find the balance that works best for you. Vehicles from 2000-2005 years are quite affordable and still 10-15 years newer than your car.", "title": "" }, { "docid": "da02720a8b9ffe0e17799b5fe72029d6", "text": "Here's another way to look at this that might make the decision easier: Looking at it this way you can turn this into a financial arbitrage opportunity, returning 2.5% compared to paying cash for the vehicle and carrying the student loan. Of course you need to take other factors into account as well, such as your need for liquidity and credit. I hope this helps!", "title": "" }, { "docid": "ba1fbcb5b6de5bf4d70c78c1731ee206", "text": "I don't see how anyone could give you a hard-and-fast formula, unless they know where to get some applicable statistics. Because several factors here are not a straight calculation. If you don't replace the tires but keeping driving the car, what is the increased probability that you will get into an accident because of the bald tires? How much will bald tires vs new tires affect the selling price of the car? Presumably the longer you drive the car after getting new tires, the less increase this will give to the market value of the car. What's the formula for that? If you keep the car, what's the probability that it will have other maintenance problems? Etc. That said, it's almost always cheaper to keep your current car than to buy a new one. Even if you have maintenance problems, it would have to be a huge problem to cost more than buying a new car. Suppose you buy a $25,000 car with ... what's a typical new car loan these days? maybe 5 years at 5%? So your payments would be about $470 per month. If you compare spending $1000 for new tires versus paying $470 per month on a new car loan, the tires are cheaper within 3 months. The principle is the same if you buy with cash. To justify buying a new car you have to factor in the value of the pleasure you get from a new car, the peace of mind from having something more reliable, etc, mostly intangibles.", "title": "" }, { "docid": "5e9b3afd041177df172055cd40cbd57b", "text": "Alternative: buy a recent-model used car in good condition. Or buy an older car in good condition. Let someone else pay the heavy depreciation that happens the moment you drive a new car off the dealer's lot.", "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": "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": "" }, { "docid": "d11150ad71b4a63f4fb167151bf58d3a", "text": "Advantage of cash: You can spend the money without having to pay any fees or taxes to get it out. Disadvantage: When inflation is greater than zero, which it has been for many decades, your cash is continually losing value. Advantages of an IRA (Roth or classic): Your money will usually grow as the investments return a profit. You get special tax benefits. Disadvantages: There's risk -- you may lose money. There are tax penalties for withdrawing the money before retirement. In general, you should only put money in an IRA if you expect to leave it there until you retire. Or at least, for a long time. Whole life is a combination of a life insurance policy and an investment. Advantages: Combines insurance and investment into one convenient monthly payment. Disadvantages: The investment portion typically has lower returns than you could get elsewhere. If you have no need for life insurance -- if you're not supporting anyone or you're confidant they could get along without you or you don't like them and don't care what happens to them when you're gone or whatever -- then there's no point buying life insurance, whole or term. You're paying for a product that you don't need. It's pretty common advice to tell people that instead of buying a whole life policy, they should buy a term policy with the same coverage, and then invest the difference in the premium. For example, if you were considering getting a $100,000 whole life policy that costs $50 per month (just making up numbers, of course it depends on your age, health, etc), and you see you could get a $100,000 term life policy for $30 per month, you will almost certainly do better in the long run to buy the $30 term policy and put the other $20 into investments. The catch to this plan is that there are usually transaction costs to investing. Even a discount broker like Ameritrade or Scott Trade charges around $10 per transaction. So if you tried to invest $20 each month, you'd lose half of it to transaction fees. Which means that in practice, you'd have to save that money up until you had at least a few hundred. And at that point many people find other things always seem to come up to spend the money on, so that while they start out with every intention of investing this money, they don't.", "title": "" } ]	fiqa
a8f65eb80cc5daedce56a113df4da9a6	Finance algebra	[ { "docid": "c3d8d070a56a01810b48d789ecb1cddf", "text": "With the following variables the periodic (annual) repayment is given by The recurrence equation for the balance b at the end of month x is derived from b[x + 1] = b[x] (1 + r) - d where b[0] = s giving The interest portion of the final payment is b[n - 1] r and the total principal repaid at the end of period n - 1 is s - b[n - 1] Solving simultaneously n = 8.9998 and s = 7240 The principal repaid at the end of the first period is s - b[1] or d - r s = 479.74", "title": "" } ]	[ { "docid": "5085b7413e9cb158544dce5b32e82066", "text": "According to my calculations, you always lose money on group B. x = average monthly balance Income for a year = 0.015 * (12 * x) = 0.18 * x Cost of funds for one month = 0.04 * x Cost of funds for one year = 12 * (0.04 * x) = 0.48 * x Profit? at end of year = income_for_year - cost_of_funds_for_one_year = (0.18 * x) - (0.48 * x) = forever loss", "title": "" }, { "docid": "b5fd19ab54421c37827997573a990684", "text": "There are really three routes in academic finance. 1) Corporate finance - you probably have enough math for this 2) Market forecasting and modeling - this relies more heavily on econometrics, or more basic math 3) Quantitative valuations - most of the work here is in exotic asymmetric derivatives, which is almost entirely differential equations.", "title": "" }, { "docid": "bb740ba099d06d877310e698592e265b", "text": "Finance at the PhD level requires a pretty complete understanding of linear algebra, multivariate calc (cIII), vector calc, stochastic calc, diff eq, and numerical analysis. As someone who had math for one of his majors for undergrad, it's not about the intuitive understanding but the abstract as well. Most of the finance professors that I had and researched under were originally undergrad for math. Very few of them actually started out in business roles/degrees....", "title": "" }, { "docid": "e6a86727ce2c1f10f9574097f583a59e", "text": "Shareholders are the equity holders. They mean the same thing. A simplified formula for the total value of a company is the value of its equity, plus the value of its debt, less its cash (for reasons I won't get into). There are usually other things to add or subtract, but that's the basic formula.", "title": "" }, { "docid": "38a40a042d5b041ca4f66bd1f0adc2b9", "text": "I work in asset pricing/market microstructure research so I do come across a decent amount of topics at work that utilize my applied math degree. For the topics I'm working on right now on it's usually time series or econometrics stuff like vector autoregression, principal components, regressions, etc. Some of my coworkers are working on papers that use stochastic calculus and other aspects of continuous time finance.", "title": "" }, { "docid": "c7487e4e9f05ef9095d429fe366d9cc5", "text": "The accounting equation, in short, is: This can be further broken down into: Which can be further broken down into: The GnuCash equation is right, though I would substitute the word equity in that equation with a more-specific paid-in capital. Equity is (simply put) made up of 2 parts: shareholders' equity and retained earnings. Shareholders' equity is the amount invested by shareholders. Retained earnings is the amount earned by the business on behalf of the shareholders. Retained earnings is directly affected by your net income (which is income minus expenses). An increase in income will result in an increase in retained earnings. This must be balanced somewhere. Usually an increase in an asset. It may also be balanced by a decrease in equity. Likewise, increase in expenses will result in a decrease in retained earnings, which must also be balanced.", "title": "" }, { "docid": "1fec42beb84e2821dd90cd035446ea8d", "text": "Something like cost = a × avg_spreadb + c × volatilityd × (order_size/avg_volume)e. Different brokers have different formulas, and different trading patterns will have different coefficients.", "title": "" }, { "docid": "3b3c2b1d131d56194f84623d88452dd4", "text": "I'm a third-year PhD student in Finance at a state university in the Southeast. Accordingly, I do not have time write a detailed answer for you, because I am studying for a test. You can PM me sometime after Thursday, and I can give you my perspective.", "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": "faa8b56eb94acc86948a4221b8a79aa5", "text": "Assuming you were immersed in math with your CS degree, the book 'A Non-Random Walk Down Wall Street' by Andrew Lo is a very interesting book about the random walk hypothesis and it's application to financial markets and how efficient markets might not necessarily imply complete randomness. Lots of higher level concepts in the book but it's an interesting topic if you are trying to branch out into the quant world. The book isn't very specific towards algorithmic trading but it's good for concept and ideas. Especially for general finance, that will give you a good run down about markets and the way we tackle modern finance. A Random Walk Down Wall Street (which the book above is named after) by Burton Malkiel is also supposed to be a good read and many have suggested reading it before the one I listed above, but there really isn't a need to do so. For investing specifically, many mention 'The Intelligent Investor' by Benjamin Graham who is the role model for the infamous Warren Buffet. It's an older book and really dry and I think kind of out dated but mostly still relevant. It's more specifically about individual trading rather than markets as a whole or general markets. It sounds like you want to learn more about markets and finance rather than simply trading or buying stocks. So I'd stick to the Andrew Lo book first. --- Also, since you might not know, it would be a good idea to understand the capital asset pricing model, free cash flow models, and maybe some dividend discount models, the last of which isn't so much relevant but good foundations for your finance knowledge. They are models using various financial concepts (TVM is almost used in every case) and utilizing them in various ways to model certain concepts. You'd most likely be immersed in many of these topics by reading a math-oriented Finance book. Try to stay away from those penny stock trading books, I don't think I need to tell a math major (who is probably much smarter than I am) that you don't need to be engaging in penny stocks, but do your DD and come to a conclusion yourself if you'd like. I'm not sure what career path you're trying to go down (personal trading, quant firm analyst, regular analyst, etc etc) but it sounds like you have the credentials to be doing quant trading. --- Check out www.quantopian.com. It's a website with a python engine that has all the necessary libraries installed into the website which means you don't have to go through the trouble yourself (and yes, it is fucking trouble--you need a very outdated OS to run one of the libraries). It has a lot of resources to get into algorithmic trading and you can begin coding immediately. You'd need to learn a little bit of python to get into this but most of it will be using matplotlib, pandas, or some other library and its own personal syntax. Learning about alpha factors and the Pipeline API is also moderately difficult to get down but entirely possible within a short amount of dedicated time. Also, if you want to get into algorithmic trading, check out Sentdex on youtube. He's a python programmer who does a lot of videos on this very topic and has his own tool on quantopian called 'Sentiment Analyzer' (or something like that) which basically quantifies sentiment around any given security using web scrapers to scrape various news and media outlets. Crazy cool stuff being developed over there and if you're good, you can even be partnered with investors at quantopian and share in profits. You can also deploy your algorithms through the website onto various trading platforms such as Robinhood and another broker and run your algorithms yourself. Lots of cool stuff being developed in the finance sector right now. Modern corporate finance and investment knowledge is built on quite old theorems and insights so expect a lot of things to change in today's world. --- With a math degree, finance should be like algebra I back in the day. You just gotta get familiar with all of the different rules and ideas and concepts. There isn't that much difficult math until you begin getting into higher level finance and theory, which mostly deals with statistics anyways like covariance and regression and other statistic-related concepts. Any other math is simple arithmetic.", "title": "" }, { "docid": "70591461ef9fce7e7b32b7b259bf14f6", "text": "The quant aspect '''''. This is the kind of math I was wondering if it existed, but now it sounds like it is much more complex in reality then optimizing by evaluating different cost of capital. Thank you for sharing", "title": "" }, { "docid": "6f35493317b0fa9767a0827ede4a4505", "text": "I appreciate it. I didn't operate under selling the asset year five but other than that I followed this example. I appreciate the help. These assignments are just poorly laid out. Financial management also plays on different calculation interactions so it is difficult for me to easily identify the intent at times. Thanks again.", "title": "" }, { "docid": "3f974af98e04b2d8ee10c98b4d2c5712", "text": "I ended up writing a simulation in R. Here is my code: It produces a plot like this: This code assumes you have a lump sum and either wish to pay down a loan or invest it all immediately. Feedback welcome.", "title": "" }, { "docid": "8782dff9abb053f4a2d9a706b69d94c2", "text": "I'm not too worried about the math. I can't speak for the calculus, but I seriously doubt the statistics I will use will be more complicated than what I used in Econometrics. Where will calculus come into play? I haven't heard any of my finance major friends talk about using anything more than simple derivation.", "title": "" }, { "docid": "4cf40930621416f1a038cdfc953e9eb6", "text": "Average rates of return usually assume compounding, so your formula would be for annual compounding ,or for continuous compounding.", "title": "" } ]	fiqa
b4bd366a4248ea4851bea49e5639e07a	Is it worth it to re-finance my car loan?	[ { "docid": "1907a57fe43b6cf6cbaa2ac2986d6ec0", "text": "If you're a bit into the loan, then they're probably hoping that you'll take longer to pay off the loan. Is there a fee for refinancing the loan? If so, be sure to take that into account. A smart way to approach it (assuming that the fees are low or zero) would be to continue making the same payment you had been before the refinance. Then you'll end your loan ahead of schedule. (This assumes that there's no prepayment penalty.)", "title": "" }, { "docid": "942788075ab6b9367d6b775da27c8ac7", "text": "Seems like a good deal to me. You are paying less interest over the lifetime of the loan. And what I would do is take the difference between the new payments and the old, put it into a savings account each month, and when the savings account exceeds the balance of the loan pay it off.", "title": "" } ]	[ { "docid": "d9f4054961c225c6fdbe00d297ba5b9a", "text": "As well as paying 8% interest on your loan (i.e. $800/year), you're also wasting money on the car: depreciation, insurance etc. So it's worth a lot to you to get out of it. Set against that is the risk of having to borrow the $3000 you'll be taking from your emergency fund at a higher interest rate (say 30%?) for at most 6 months, which would only cost you $300-$400 even if it happens. You'll also be giving up a small amount of interest on the $3000, but at current interest rates that pretty much negligible. There is a small chance that an emergency would also cause the available credit on your credit cards to disappear, but in the short term that should be pretty unlikely. So I think the balance is overwhelmingly in favour of getting out of the loan as soon as you can.", "title": "" }, { "docid": "2a4e4589e77150edb6090a7c725d0b86", "text": "I am going to give advice that is slightly differently based on my own experiences. First, regarding the financing, I have found that the dealers do in fact have access to the best interest rates, but only after negotiating with a better financing offer from a bank. When I bought my current car, the dealer was offering somewhere around 3.3%, which I knew was way above the current industry standard and I knew I had good credit. So, like I did with my previous car and my wife's car, I went to local and national banks, came back with deals around 2.5 or 2.6%. When I told the dealer, they were able to offer 2.19%. So it's ok to go with the dealer's financing, just never take them at face value. Whatever they offer you and no matter how much they insist it's the best deal, never believe it! They can do better! With my first car, I had little credit history, similar to your situation, and interest rates were much higher then, like 6 - 8%. The dealer offered me 10%. I almost walked out the door laughing. I went to my own bank and they offered me 8%, which was still high, but better than 10%. Suddenly, the dealer could do 7.5% with a 0.25% discount if I auto-pay through my checking account. Down-payment wise, there is nothing wrong with a 35% down payment. When I purchased my current car, I put 50% down. All else being equal, the more cash down, the better off you'll be. The only issue is to weigh that down payment and interest rate against the cost of other debts you may have. If you have a 7% student loan and the car loan is only 3%, you're better off paying the minimum on the car and using your cash to pay down your student loan. Unless your student loan balance is significantly more than the 8k you need to finance (like a 20k or 30k loan). Also remember that a car is a depreciating asset. I pay off cars as fast as I can. They are terrible debt to have. A home can rise in value, offsetting a mortgage. Your education keeps you employed and employable and will certainly not make you dumber, so that is a win. But a car? You pay $15k for a car that will be worth $14k the next day and $10k a year from now. It's easy to get underwater with a car loan if the down payment is small, interest rate high, and the car loses value quickly. To make sure I answer your questions: Do you guys think it's a good idea to put that much down on the car? If you can afford it and it will not interfere with repayment of much higher interest debts, then yes. A car loan is a major liability, so if you can minimize the debt, you'll be better off. What interest rate is reasonable based on my credit score? I am not a banker, loan officer, or dealer, so I cannot answer this with much credibility. But given today's market, 2.5 - 4% seems reasonable. Do you think I'll get approved? Probably, but only one way to find out!", "title": "" }, { "docid": "8cc41e5f9dfa3cd2344fc7977f6f5230", "text": "There are several factors here. Firstly, there's opportunity cost, i.e. what you would get with the money elsewhere. If you have higher interest opportunities (investing, paying down debt) elsewhere, you could be paying that down instead. There's also domino effects: by reducing your liquid savings to or below the minimum, you can't move any of it into tax advantaged retirement accounts earning higher interest. Then there's the insurance costs. You are required to buy extra insurance to protect your lender. You should factor in the extra insurance you would buy vs the insurance required. Given that you can buy the car yourself, catastrophic insurance may not be necessary, or you may prefer a higher deductible than your lender will allow. If you're not sufficiently capitalized, you may need gap insurance to cover when your car depreciates faster than your loan is paid down. A 30 percent payment should be enough to not need it though. Finally, there's some value in having options. If you have the loan and the cash, you can likely pay it off without penalty. But it will be harder to get the loan if you don't finance it. Maybe you can take out a loan against the car later, but I haven't looked into the fees that might incur. If it's any help, I'm in the last stretch of a 3 year car loan. At the time paying in cash wasn't an option, and having done it I recognize that it's more complicated than it seems.", "title": "" }, { "docid": "7d7575fa2e1a32d1a5097cb24a3a190c", "text": "\"It all depends on your loan contract, and the way most are written, the 10 day thing will not help. However, assuming that the contract is written in such a way to allow this, the difference will be negligible. By \"\"saving money\"\" I assume you mean the amount of interest paid. There is really two ways of doing this. If you carry the loan to term paying the indicated amount on the due date you will pay $6,140 in interest. An increase of over 33% to the cost of the car. Yikes, that is a lot of money. You should seek to minimize your interest expense. One way to do this is to reduce your rate. Applying for a new loan that is at a more reasonable 6% and continuing to pay the ~285 per month will reduce the term to 59 months and only cost you $2,245 in interest. A large savings. Even better is to work a second job and earn an extra 1,000 per month. Then bundle it with your 285 payment and shoot that at the loan. This way you will only pay $965 in interest, and have it paid off in a year. Once you do that, you can stick $300/month or so in a savings account or other investment and pay for every other car in cash. Making choices like these leads to building wealth. So the question becomes do you want to spend the rest of your life on the hamster wheel of car payments, or do you want to spend one year in pain so you make smart choices in the future? The choice is yours.\"", "title": "" }, { "docid": "ef7053fffebc96b8ba633d6201f49f4d", "text": "Before we were married my wife financed a car at a terrible rate. I think it was around 20%. When trying to refinance it the remaining loan was much larger than the value of the car, so no one was interested in refinancing. I was able to do a balance transfer to a credit card around 10%. This did take on a bit of risk, which almost came up when the car was totaled in an accident. Fortunately the remaining balance was now less than the value of the car, otherwise I would have been stuck with a credit card payment and no vehicle.", "title": "" }, { "docid": "67c1f9a423ceb1f692cfb733a892d559", "text": "From personal experience (I financed a new car from the dealer/manufacturer within weeks of graduating, still on an F1-OPT):", "title": "" }, { "docid": "843bd070c05793eb9f6ca5f028f0c13c", "text": "Buying and selling cars a lot is something that makes money if you are a dealer but usually doesn't if you are not. The question to ask yourself is why you want to sell it. If it is because you are feeling poor and need money, it might make sense to sell it, particularly if you don't need it. But $12k or whatever is not a ton of money. If you do need a car and will have to replace it if you sell it then selling it is likely not a good idea. If it is because you want a nicer car and can afford to upgrade, then selling it is likely a good idea. The fact that you have had it for years and not paid off the loan tells me this situation is unlikely. You should think of the value of your car to you (and the potential cost of replacing it) and the amount of money you owe on it as two different things. The debt you have is a debt that you will need to pay no matter what you do with the car or how its value changes. The value of the car to you is pretty much a separate issue from how much you have outstanding in debt. If you want to sell the car to pay off the debt that is fine if you don't need the car or if you can get a suitable replacement car for MUCH less (which I find unlikely).", "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": "b792851016cf8ff3dd6156ff029a2333", "text": "\"So this has been bugging me for a while, because I am facing a similar dilemma and I don't think anyone gave a clear answer. I bought a 2012 kia soul in 2012. 36 months financing at 300/mo. Will be done with my car loan in 2015. I plan on keeping it, while saving the same amount of money 300/mo until I buy my next car. But, I also have an option of trading it in for the the next car. Question: should I trade it in in 2015. should I keep it for 2 years more? 3 years more, before I buy the next car? What makes most financial sense and savings. I tried to dig up some data on edmunds - the trade-in value and \"\"true cost to own\"\" calculator. The make and model of my car started in 2010, so I do not have historical data, as well as \"\"cost to own\"\" calculator only spans 5 years. So - this is what I came up with: Where numbers in blue are totally made up/because I don't have the data for it. Granted, the trade-in values for the \"\"future\"\" years are guesstimated - based on Kia Soul's trade-in values from previous years (2010, 2011, 2012) But, this is handy, and as it gets closer to 2015 and beyond, I can re-plug in the data where it is available and have a better understanding of the trade-in vs keep it longer decision. Hope this helps. If the analysis is totally off the rocker, please let me know - i'll adjust it/delete it. Thank you\"", "title": "" }, { "docid": "cd7306a60bf14d01085ce39d5567c46d", "text": "Two adages come to mind. Never finance a depreciating asset. If you can't pay cash for a car, you can't afford it. If you decide you can finance at a low rate and invest at a higher one, you're leveraging your capital. The risk here is that your investment drops in value, or your cash flow stops and you are unable to continue payments and have to sell the car, or surrender it. There are fewer risks if you buy the car outright. There is one cost that is not considered though. Opportunity cost. Since you've declared transportation necessary, I'd say that opportunity cost is worth the lower risk, assuming you have enough cash left after buying a car to fund your emergency fund. Which brings me to my final point. Be sure to buy a quality used car, not a new one. Your emergency fund should be able to replace the car completely, in the case of a total loss where you are at fault and the loss is not covered by insurance. TLDR: My opinion is that it would be better to pay for a quality, efficient, basic transportation car up front than to take on a debt.", "title": "" }, { "docid": "46e0fd4a0513b1e04e20f5ec1819ed82", "text": "Sometimes I think it helps to think of the scenario in reverse. If you had a completely paid off car, would you take out a title loan (even at 0%) for a few months to put the cash in a low-interest savings account? For me, I think the risk of losing the car due to non-payment outweighs the tens of dollars I might earn.", "title": "" }, { "docid": "ab26a4fd6f538c04bfc2f5b70df5e51d", "text": "Personally, I don't think that the interest from the car loan is worth the credit history you're building through it. There are other ways to build credit that don't require you to pay interest, like the credit card you mentioned (so long as you keep paying off the balance). So I'd go that route: ditch the auto loan and replace it with a line of consumer credit. Just be careful not to overspend because the card will likely have a higher interest rate than your loan.", "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": "582b9c82eec0476683fba7823cf950ac", "text": "\"Short answer: If you bought the car -- as opposed to leasing it -- there is no one to \"\"turn it in\"\" to. The reality of cars and car loans is this: The value of a car tends to fall rapidly the first couple of years, then more slowly after that. Like it might lose $2000 the first year, $1000 the second, $500 the third, etc. What you owe on a loan falls slowly at first, because a lot of your payment is going to interest, but then as time goes on you pay off the loan faster and faster. So you may pay off $1000 the first year, $1100 the second, etc. (I'm just making up numbers, depends on the value of the car, and the term and interest rate of the loan, but that's the general idea.) Combining these two things means that in the first few years after you buy a car, if you had a small or no down payment, you might well owe more on the car than it is worth. That's just how the numbers work out. If you keep the car long enough, eventually you hit a point where it is worth more than you owe. Keep it until you've paid off the loan and you owe $0 but the car is still worth SOMETHING, exactly how much depending on its condition and other factors. If you just use the car and pay off the loan, i.e. if you don't sell the car or refinance the loan or some such, then this doesn't matter very much. You make your loan payments, and you have use of the car. What difference does the book value of the car at any given moment matter to you? If the idea of owing more than the car is worth bothers you in principle, then in the future you could make a larger down payment. Or make extra payments on the loan the first couple of years to knock the principle down faster. That's about the only things you can do. Well, you could buy with cash so you owe zero and the car is always worth more than you owe. But given that you are where you are: If you just keep the car and keep driving it and keep paying the loan, then you are exactly where you thought you would be when you bought the car, right? I mean, the day you bought the car, you presumably weren't thinking that at some future date you could refinance at a lower rate. How would you know? So I think the easy answer is: Don't sweat it. Just enjoy the car and pay your bills.\"", "title": "" }, { "docid": "7be13fa59cf116fba48f6e48a8d156b8", "text": "\"First off learn from this: Never cosign again. There are plenty of other \"\"tales of woe\"\" outlined on this site that started and ended similarly. Secondly do what you can to get off of the loan. First I'd go back to her dad and offer him $1000 to take you off the loan and sign over the car. Maybe go up to $3000 if you have that much cash. If that doesn't work go to the bank and offer them half of the loan balance to take you off. You can sign a personal loan for that amount (maybe). Whatever it takes to get off the loan. If she has a new BF offer him the same deal as the dad. Why do you have to do this? Because you owned an asset that was once valued at 13K and is valued at (probably) less than 4K. Given that you have a loan on it the leverage works against you causing you to lose more money. The goal now is to cut your losses and learn from your mistakes. I feel like the goal of your post was to make your ex-gf look bad. It's more important to do some self examination. If she was such a bad person why did you date her? Why did you enter a business transaction with her? I'd recommend seeking counseling on why you make such poor choices and to help you avoid them in the future. Along these lines I'd also examine your goals in life. If your desire is to be a wealthy person, then why would you borrow money to buy a car? Seek to imitate rich people to become rich. Picking the right friends and mates is an important part of this. If you do not have a desire to be a wealthy person what does it matter? Losing 13K over seven months is a small step in the \"\"right\"\" direction.\"", "title": "" } ]	fiqa
659d39d40a263741db6fcf023b148191	What's a good personal finance management web app that I can use in Canada?	[ { "docid": "1f4604ce91a2ff65c4323883bf474f40", "text": "Now, if you're still intrested, Mint.com works also for Canadian banks. Mint Canada", "title": "" }, { "docid": "31589514b8b0a6912d32a466d47f31f7", "text": "Yodlee will also work. I asked a similar question (and provided answers) here. Thrive, so far, is the best in my opinion. Their tech support is top notch and their UI is far superior to Yodlee's (which provides the backend for Mint).", "title": "" }, { "docid": "3bda3e210ba9b35e0f5b54f23bb862c4", "text": "I use MoneyStrands (formerly called Expensr), but mostly just to track expenses and look at reports on my spending habits. It has some really pretty charts, with the ability to drill down into categories and sub-categories, or graph monthly spending for any custom date range. It does a half-decent job of auto-categorizing the imported bank transactions, and you can set up additional rules for common vendors, but I still have to do some manual work after each import. It does a good job of integrating my credit cards, bank accounts, and I can even manually add cash transactions. It has some basic budgeting capabilities, but they're not very useful for someone who needs to carefully budget thier monthly spending. Another one I've heard about is mint.com, but it only supports American banks (last I heard, anyway).", "title": "" }, { "docid": "d6a9e0f25e6a651144af61739899b4ea", "text": "Here's a link with comparison of various online and offline PF software: http://personalfinancesoftwarereviews.com/compare-personal-finance-software/", "title": "" }, { "docid": "7678a2a417f6edd7cf3a34e5d79b8f75", "text": "Now, keep in mind I'm biased because I'm an engineer at this company, but FutureAdvisor.com provides advice on your savings and investments. We currently help users optimize their portfolios for retirement savings, but plan on rolling our more savings goals in the future.", "title": "" }, { "docid": "67e6df622dd88179304c2e78cbeab65a", "text": "CashBase has a web app, an iPhone app and an Android app, all sync'ed up. It doesn't integrate with banks automatically, but you can import bank statements as CSV. Disclosure: Filip is CashBase's founder.", "title": "" } ]	[ { "docid": "5055129e03954ba06bc3c85dc6e8e039", "text": "Just saw the update: Here's some ETFs for Canada from Vanguard.", "title": "" }, { "docid": "2a7deb3d6c5891fea008a3d261740e7d", "text": "\"Credit scores are not such a big deal in Canada as they are in the US and even some European countries. One reason for this: the Social Insurance Number (SIN number) isn't used for so many purposes like the Social Security Number (SSN) in the US. The SIN number isn't even required to get credit (but with some exceptions it is needed to open an interest-bearing savings account, so that the interest income can be reported). You can refuse to provide the SIN number to most private companies. Canada also has one of the highest per-capita immigration rates of any large country, so new arrivals are expected, and services are geared up for them. Most of the banks offer special deals for \"\"New Canadians\"\". You should get a credit card (even if just a secured credit card) through them with one of these offers to start a credit file anyway, but there's no need to actually use it much. Auto-paying a utility bill through the card, and paying it off in full each month, is one way to keep it active. No need to ever pay any interest. Most major apartment rental firms will expect a good proportion of their renters to be new to Canada, so should have procedures in place to deal with it (such as a higher deposit). You should not give them your SIN for a credit check, even when you're more established. Same for utilities, they can just charge a higher deposit if they can't credit check you. For private landlords, everything is negotiable (but see the laws link at the end of this answer). You will later need a credit rating for a mortgage on a house (if not paying cash), so it's worth getting that one token credit card. Useful for car rental also. Here's a fairly complete summary of the laws on renting in Canada, which includes the maximum deposits that can be asked for, and notice periods.\"", "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": "de18fec08e2cf256ee9a77dc22541ab7", "text": "If your requirements are hard (must have $1000/month, must have the same or bigger in capital at the end), stocks are a poor choice of investment. However, in many cases, people are willing to tolerate some level of risk to achieve the expected returns. You also do not mention inflation, which can take quite a lot out of your portfolio over the course of ten years. If we make some simplifying assumptions, you want to generate $12,000 a year. You can realistically expect the (whole) stock market, long term (i.e. over time periods substantially longer than 10 years), to return approximately 4 - 5% after factoring in inflation. That means an investment of $240,000 - $300,000 (the math is simplified somewhat here). If you don't care about inflation, you can up the percentage rather somewhat. According to this article, the S&P 500 returned an average of 11.31% from 1928 through 2010 (not factoring in inflation), which would require an investment of approximately $106,100. But! This opens you up to substantial risk. The stock market may go down 30% this year! According to the above article, the S&P returned only 3.54% from 2001 to 2010. Long-term, it goes up, but your investment case is really unsuited to investing in an index to the entire stock market given your requirements. You may be better suited investing primarily in stable bonds, or perhaps a mix of bonds and stocks. Alternatively, you may want to consider even more stable investments such as treasury notes. Treasury notes are all but guaranteed, but with a lousy rate of return. Heck, you could consider a GIC (that may be Canada-only) or even a savings account. There's also the possibility of purchasing an annuity, though almost everyone will advise against such. Personally, I'd go for a mutual fund which invested approximately 70% bonds and the rest in stocks over such a time period. Something like ING Direct's Streetwise Balanced Income Portfolio, if you were in Canada. It substantially lowers your expected return but also lowers your risk. I can't honestly say what the expected return there is; at this point, it's returned 4% per year (before inflation), but has been around only since the beginning of 2008. And to be clear, this is absolutely not free of risk.", "title": "" }, { "docid": "fc31334f740991c0099db5e9dec0d62d", "text": "TD now has crossborder banking so you can set up a no-fee no-interest USD account with Tdbank.com and transfer money and pay bills in the US. You just need a minimum balance of $100. I might try Paypal before going that route though.", "title": "" }, { "docid": "e7c1db1307ddf6bb11778febb7ef6e67", "text": "Mint.com is a web app with an iPhone (and Android) app. Also, You Need A Budget appears to support all three.", "title": "" }, { "docid": "80cd38443246f7d211761deb6020b2fc", "text": "\"I've just recently launched an open source wealth management platform - wealthbot.io ... \"\"Webo\"\" is mostly targeted at RIA's to help the manage multiple portfolios, etc. Take a look at the demo at demo.wealthbot.io, you'll also find links to github, etc. there. It's a rather involved project, but if you are looking for use cases of rebalancing, portfolio accounting, custodian integration, tax loss harvesting, and many other features available at some of the popular robo-advisors, you might find it interesting.\"", "title": "" }, { "docid": "4e78289e2a610f6650a2b07fc06b8b60", "text": "\"I ended up with YNAB. It worked quite well, and I highly recommend it. It does cost money, but I found it saved me far more than its cost in the first month alone, since I saved between $500 and $1000. And it's flexible; when you overspend on something you can flex your budget, rather than it breaking and you give up in frustration. Dropbox support has recently been added, \"\"cloudifying\"\" it and making it where the smartphone apps can be really useful. I use the iPhone app occasionally, having recently transitioned to an iPhone.\"", "title": "" }, { "docid": "20dc26fdf817c8a9093762d1cb56b384", "text": "\"Quicken for Mac will track stocks and mutual funds and allows you to set the \"\"home\"\" currency.\"", "title": "" }, { "docid": "500aba91d79281094dbadba775df5b7a", "text": "I'm using iBank on my Mac here and that definitely supports different currencies and is also supposed to be able to track investments (I haven't used it to track investments yet, hence the 'supposed to' caveat).", "title": "" }, { "docid": "fda5f5c4f7c382202bb5fab7941277f4", "text": "\"The Financial Consumer Agency of Canada (FCAC) has a page specifically about working with a financial planner or advisor. It's a good starting point if you are thinking about getting a financial professional to help you plan and manage your investments. In the \"\"Where To Look\"\" section on that page, FCAC refers to a handful of industry associations. I'll specifically highlight the Financial Planning Standards Council's \"\"Find a planner\"\" page, which can help you locate a Certified Financial Planner (CFP). Choose financial advice carefully. Prefer certified professionals who charge a set fee for service over advisors who work on commission to push investment products. Commission-based advice is seldom unbiased. MoneySense magazine published a listing last year for where to find a fee-only financial planner, calling it \"\"The most comprehensive listing of Canadian fee-only financial planners on the web\"\" — but do note the caveat (near the bottom of the page) that the individuals & firms have not been screened. Do your own due diligence and check references.\"", "title": "" }, { "docid": "37a1e67549592b0ff3bda0dcc97552a7", "text": "I don't know answers that would be specific to Canada but one of the main ETF funds that tracks gold prices is GLD (SPDR Gold Trust) another is IAU (iShares Gold Trust). Also, there are several ETF's that combine different precious metals together and can be traded. You can find a fairly decent list here on the Stock Encylopedia site.", "title": "" }, { "docid": "5685b1ded2c93079cd5e6b11fdc85535", "text": "I found that an application already exists which does virtually everything I want to do with a reasonable interface. Its called My Personal Index. It has allowed me to look at my asset allocation all in one place. I'll have to enter: The features which solve my problems above include: Note - This is related to an earlier post I made regarding dollar cost averaging and determining rate of returns. (I finally got off my duff and did something about it)", "title": "" }, { "docid": "f8bac368ca853f6b6e11ffa469ed47e9", "text": "Envudu (envudu.com) looks very promising, and I think what they are planning to put out will do essentially everything you want. It's a single prepaid card, but with a connected app. On the app you choose which budget category you're going to spend on next, and then swipe your card. Your purchase gets deducted from that category. There aren't a ton of details yet on their website (e.g., what happens if you try to swipe on a category that doesn't have the funds available?) and there is going to be a $20/year fee, but I think it meets all of your criteria, even though it's a single card--you'll just need to use a smartphone with it.", "title": "" }, { "docid": "ab5d1d5274c44cce8eee1cc4ef8c802d", "text": "The idea being that if / when the CAD recovers I could see a gain of ~30%. That is the big if, maybe the USD and CAD will return to their previous exchange rates, maybe the CAD will fall further, you just don't know. You should try to keep a diversified pool of investments, that may include some cash in various currencies but unless you think you will need the money in the next few years it should probablly be mostly in other things. If you do think you will need the money in the next few years it should probablly be in a currency that is stable relative to the things you are likely to need it for.", "title": "" } ]	fiqa
9189ffa2a5ebdc6a35c73a681a6234e0	How Should I Start my Finance Life and Invest?	[ { "docid": "a15d9b3e75f2df1225a2d4ab3dd55f90", "text": "The best way to start out is to know that even the experts typically under-perform the market, so you have no chance. Your best bet is to invest in diversified funds, either through something like Betterment or something like Vanguard's ETFs that track the markets. Buying individual stocks isn't typically a winning strategy.", "title": "" }, { "docid": "d41d8cd98f00b204e9800998ecf8427e", "text": "", "title": "" }, { "docid": "46d7b4eb501583133d585dab4a756353", "text": "I'd suggest looking at something like the Dummies series of books for this. Something like: Sometimes the books are combined into one big book. This would be the best bet. It's were I started. Every time I wondered something I just looked it up and learned. They are perfectly fine for the novice. Hope this helps.", "title": "" } ]	[ { "docid": "a12a08c1ab1f090461328b8bd919817b", "text": "\"Your questions seek answers to specifics, but I feel that you may need more general help. There are two things, I feel, that you need to learn about in the general category of personal finance. Your asking questions about investing, but it is not as important, IMHO, as how you manage your day-to-day operations. For example, you should first learn to budget. In personal finance often times \"\"living on a budget\"\" equates to poor, or low income. That is hardly the case. A budget is a plan on how to spend money. It should be refreshed each and every month and your income should equal your expenses. You might have in your budget a $1200 trip into the city to see a concert, hardly what a low income person should have in theirs. Secondly you need to be deliberate about debt management. For some, they feel that having a car payment and having student loans are a necessary part of life and argue that paying them off is foolish as you can earn more from investments. Others argue for zero debt. I fall in the later. Using and carrying a balance on high interest CCs and having high leases or car payments are just dumb. They are also easy to wander into unless you are deliberate. Third you need to prepare for emergencies. Engineers still get laid off and hurt where they are unable to work. They get sued. Having the proper insurance and sufficient reserves in the bank help prevent debt. Now you can start looking into investments. Start off slow and deliberate with investing. Put some in your company 401K or open some mutual funds on the side. You can read about them and talk with advisers, for free, at Fidelity and Vanguard. Read books from the library. Most of all don't get caught up in too much hype. Things like Forex, options, life insurance, gold/silver, are not investments. They are tools for sales people to make fat commissions off the ignorant. You are fortunate in that Engineers are very likely to retire wealthy. They are part of the second largest demographic of first generation rich. The first is small business owners. To start out I would read Millionaire Next Door and Stop Acting Rich. For a debt free approach to life, check out Financial Peace University (FPU) by Dave Ramsey (video course). His lesson on insurance is excellent. I am an engineer, and my wife a project manager we found FPU life changing and regretted not getting on board sooner. Along these lines we have had some turmoil, recently, that became little more than an inconvenience because we were prepared.\"", "title": "" }, { "docid": "732b1d87850d18987f69ce516b933752", "text": "\"This Stack Exchange site is a nice place to find answers and ask questions. Good start! Moving away from the recursive answer... Simply distilling personal finance down to \"\"I have money, I'll need money in the future, what do I do\"\", an easily digestible book with how-to, multi-step guidelines is \"\"I Will Teach You To Be Rich\"\". The author talks about setting up the accounts you should have, making sure all your bills are paid automatically, saving on the big things and tips to increase your take home pay. That link goes to a compilation page on the blog with many of the most fundamental articles. However, \"\"The World’s Easiest Guide To Understanding Retirement Accounts\"\" is a particularly key article. While all the information is on the free blog, the book is well organized and concise. The Simple Dollar is a nice blog with frugal living tips, lifestyle assessments, financial thoughts and reader questions. The author also reviews about a book a week. Investing - hoping to get better returns than savings can provide while minimizing risk. This thread is an excellent list of books to learn about investing. I highly recommend \"\"The Bogleheads' Guide to Investing\"\" and \"\"The Only Investment Guide You'll Ever Need\"\". The world of investment vehicles is huge but it doesn't have to be complicated once you ignore all the fads and risky stuff. Index mutual funds are the place to start (and maybe end). Asset allocation and diversification are themes to guide you. The books on that list will teach you.\"", "title": "" }, { "docid": "ddcd57afd6bc86c1fa0c5230b92e65dc", "text": "The simplest way is to invest in a few ETFs, depending on your tolerance for risk; assuming you're very short-term risk tolerant you can invest almost all in a stock ETF like VOO or VTI. Stock market ETFs return close to 10% (unadjusted) over long periods of time, which will out-earn almost any other option and are very easy for a non-finance person to invest in (You don't trade actively - you leave the money there for years). If you want to hedge some of your risk, you can also invest in Bond funds, which tend to move up in stock market downturns - but if you're looking for the long term, you don't need to put much there. Otherwise, try to make sure you take advantage of tax breaks when you can - IRAs, 401Ks, etc.; most of those will have ETFs (whether Vanguard or similar) available to invest in. Look for funds that have low expense ratios and are fairly diversified (ie, don't just invest in one small sector of the economy); as long as the economy continues to grow, the ETFs will grow.", "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": "391d43d1cf4f10b5872dc46e5f2045f0", "text": "Alright so you have $12,000 and you want to know what to do with it. The main thing here is, you're new to investments. I suggest you don't do anything quick and start learning about the different kinds of investment options that can be available to you with returns you might appreciate. The most important questions to ask yourself is what are your life goals? What kind of financial freedom do you want, and how important is this $12,000 dollars to you in achieving your life goals. My best advice to you and to anyone else who is looking for a place to put their money in big or small amounts when they have earned this money not from an investment but hard work is to find a talented and professional financial advisor. You need to be educated on the options you have, and keep them in lines of what risks you are willing to take and how important that principal investment is to you. Investing your money is not easy at all, and novices tend to lose their money a lot. The same way you would ask a lawyer for law advice, its best to consult a financial planner for advice, or so they can invest that money for you.", "title": "" }, { "docid": "c141d68ca0b0fec7fc97ce49d4665f8c", "text": "Congratulations on getting started in life! John Malloy's (American) research suggests that you should take some time to get used to living on your own, make some friends, and settle into your community. During this time, you can build up an emergency fund. If/when the stock markets do not seem to be in a bear market, you can follow user3771352's advice to buy stock ETFs. Do you hope to get married and have children in the next few years? If so, you should budget time and money for activities where you make new friends (both men and women). Malloy points out that many Americans meet their spouses through women's networks of friends.", "title": "" }, { "docid": "29a40af24f93fca95608892442b874f3", "text": "There are all sorts of topics in finance that take a lot of time to learn. You have valuation (time value of money, capital asset pricing model, dividend discount model, etc.), financial statement analysis (ratio analysis, free cash flow & discounted cash flow, etc.) , capital structure analysis(Modgliani & Miller theories of capital structure, weighted average cost of capital, more CAPM, the likes), and portfolio management (asset allocation, security selection, integrates financial statement analysis + other fields like derivatives, fixed income, forex, and commodity markets) and all sorts. My opinion of Investopedia is that there is a lot of wheat with the chaff. I think articles/entries are just user-submitted and there are good gems in Investopedia but a lot of it only covers very basic concepts. And you often don't know what you don't know, so you might come out with a weak understanding of something. To begin, you need to understand TVM and why it works. Time value of money is a critical concept of finance that I feel many people don't truly grasp and just understand you need some 'rate' to use for this formula. Also, as a prereq, you should understand basics of accrual accounting (debits & credits) and how the accounting system works. Don't need to know things like asset retirement obligations, or anything fancy, just how accounting works and how things affect certain financial statements. After that, I'd jump into CAPM and cost of capital. Cost of capital is also a very misunderstood concept since schools often just give students the 'cost of capital' for math problems when in reality, it's not just an explicit number but more of a 'general feeling' in the environment. Calculating cost of capital is actually often very tricky (market risk premium) and subjective, sometimes it's not (LIBOR based). After that, you can build up on those basic concepts and start to do things like dividend discount models (basic theory underlying asset pricing models) and capital asset pricing models, which builds on the idea of cost of capital. Then go into valuation. Learn how to price equities, bonds, derivatives, etc. For example, you have the dividend discount model with typical equities and perpetuities. Fixed income has things like duration & convexity to measure risk and analyze yield curves. Derivatives, you have the Black-Scholes model and other 'derivatives' (heh) of that formula for calculating prices of options, futures, CDOs, etc. Valuation is essentially taking the idea of TVM to the next logical step. Then you can start delving into financial modelling. Free cash flows, discounted cash flows, ratio analysis, pro forma projections. Start small, use a structured problem that gives you some inputs and just do calculations. Bonuses* would be ideas of capital structure (really not necessary for entry level positions) like the M&M theorems on capital structure (debt vs equity), portfolio management (risk management, asset allocation, hedging, investment strategies like straddles, inverse floaters, etc), and knowledge of financial institutions and banking regulations (Basel accords, depository regulations, the Fed, etc.). Once you gain an understanding of how this works, pick something out there and do a report on it. Then you'll be left with a single 'word problem' that gives you nothing except a problem and tells you to find an answer. You'll have to find all the inputs and give reasons why these inputs are sound and reasonable inputs for this analysis. A big part that people don't understand about projections and analysis is that inputs don't exist in plain sight. You have to make a lot of judgment calls when making these assumptions and it takes a lot of technical understanding to make a reasonable assumption--of which the results of your report highly depend on. As a finance student, you get a taste for all of this. I'm gonna say it's going to be hard to learn a lot of substantial info in 2 months, but I'm not exactly sure what big business expects out of their grunts. You'll mostly be doing practical work like desk jockey business, data entry, and other labor-based jobs. If you know what you're talking about, you can probably work up to something more specialized like underwriting or risk management or something else. Source: Finance degree but currently working towards starting a (finance related) company to draw on my programming background as well.", "title": "" }, { "docid": "b272698e1679609d91d03ae6740f5359", "text": "I started my career over 10 years ago and I work in the financial sector. As a young person from a working class family with no rich uncles, I would prioritize my investments like this: It seems to be pretty popular on here to recommend trading individual stocks, granted you've read a book on it. I would thoroughly recommend against this, for a number of reasons. Odds are you will underestimate the risks you're taking, waste time at your job, stress yourself out, and fail to beat a passive index fund. It's seriously not worth it. Some additional out-of-the box ideas for building wealth: Self-serving bias is pervasive in the financial world so be careful about what others tell you about what they know (including me). Good luck.", "title": "" }, { "docid": "95441942b8b50cf2a06698c919810714", "text": "Borrow money and start a business. Follow your business plan and invest in yourself and your entrepreneurship. If you mean invest in the market, do not borrow money. In your plan, you are willing to make payments right? There are lots of things you can do better, but borrowing money to invest in the market for a couple of years is not one of them. Investing is boring, saving is boring, and planning your financial future is boring. It takes a consistent effort and you aren't going to get rich quick.", "title": "" }, { "docid": "259db994dcd2e808930fe40d0f155490", "text": "\"The best advice I can give you is that you need to start on math now. I made the same mistake as OP and didn't realize that going up in finance would require as much math as it does. Granted, I was undergrad finance not marketing like him, so maybe it was a little better for me, but if you really want to do upper level finance do NOT skimp on math. It's easy to fall into the trap doing cal 2 your sophomore year and thinking \"\"I won't really need this\"\" and just doing the minimum to get through it. For undergrad, that's true. For Master's you'll need it. This happened to me, and I suffered a LOT because of it. Your professors in the master's program will likely give you a crash course in what you need to know, but you won't have a real understanding of it unless you took (and did really well in) those math classes beforehand. To answer your question, 1. Maybe. You should definitely take cal 1 early. Depending on how you can hold on to the information, cal 2 can wait a bit, so it's fresher when you start doing upper level finance your second half of junior year/senior year. 2. Upper level finance is a whole different beast from lower level finance. Same with economics. If you're not good at math, if you don't enjoy math, it might not be the best choice. I'm not good at math, and the undergrad finance wasn't too bad. However, the master's program was very very not fun. EDIT: YMMV, but I don't recommend going straight into the master's program straight out of undergrad. Work (in industry!) for a bit first. The jobs you need to a master's for won't hire you straight out of undergrad, so it'll be dead weight. Experience is what you need.\"", "title": "" }, { "docid": "32e71fb321d39a1fceb84c0481f32a5c", "text": "Put £50 away as often as possible, and once it's built up to £500, invest in a stockmarket ETF. Repeat until you retire.", "title": "" }, { "docid": "63edf1941f8f892ba7c319e07a6d3327", "text": "\"There are many questions and good answers here regarding investment choices. The first decision you need to make is how involved do you intend to be in investment activity. If you plan to be actively investing by yourself, you should look for questions here about making investment choices. If you intend to be a more passive investor, look for posts by \"\"Bogleheads\"\", who focus on broad-focused, low cost investments. This is the optimal choice for many people. If you are not comfortable managing investments at all, you need to figure out how to find a competent and reasonably priced financial advisor to meet with and guide your investment strategy. This advice generally costs about 1-2% of your total managed assets annually.\"", "title": "" }, { "docid": "89d0451472da336c5b36dca90f59adb4", "text": "Many good sources on YouTube that you can find easily once you know what to look for. Start following the stock market, present value / future value, annuities & perpetuities, bonds, financial ratios, balance sheets and P&L statements, ROI, ROA, ROE, cash flows, net present value and IRR, forecasting, Monte Carlo simulation (heavy on stats but useful in finance), the list goes on. If you can find a cheap textbook, it'll help with the concepts. Investopedia is sometimes useful in learning concepts but not really on application. Khan Academy is a good YouTube channel. The Intelligent Investor is a good foundational book for investing. There are several good case studies on Harvard Business Review to practice with. I've found that case studies are most helpful in learning how to apply concept and think outside the box. Discover how you can apply it to aspects of your everyday life. Finance is a great profession to pursue. Good luck on your studies!", "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": "416ef7846826a6105c8771f921f2ad33", "text": "\"You don't state a long term goal for your finances in your message, but I'm going to assume you want to retire early, and retire well. :-) any other ideas I'm missing out on? A fairly common way to reach financial independence is to build one or more passive income streams. The money returned by stock investing (capital gains and dividends) is just one such type of stream. Some others include owning rental properties, being a passive owner of a business, and producing goods that earn long-term royalties instead of just an immediate exchange of time & effort for cash. Of these, rental property is probably one of the most well-known and easiest to learn about, so I'd suggest you start with that as a second type of investment if you feel you need to diversify from stock ownership. Especially given your association with the military, it is likely there is a nearby supply of private housing that isn't too expensive (so easier to get started with) and has a high rental demand (so less risk in many ways.) Also, with our continued current low rate environment, now is the time to lock-in long term mortgage rates. Doing so will reap huge benefits as rates and rents will presumably rise from here (though that isn't guaranteed.) Regarding the idea of being a passive business owner, keep in mind that this doesn't necessarily mean starting a business yourself. Instead, you might look to become a partner by investing money with an existing or startup business, or even buying an existing business or franchise. Sometimes, perfectly good business can be transferred for surprisingly little down with the right deal structure. If you're creative in any way, producing goods to earn long-term royalties might be a useful path to go down. Writing books, articles, etc. is just one example of this. There are other opportunities depending on your interests and skill, but remember, the focus ought to be on passive royalties rather than trading time and effort for immediate money. You only have so many hours in a year. Would you rather spend 100 hours to earn $100 every year for 20 years, or have to spend 100 hours per year for 20 years to earn that same $100 every year? .... All that being said, while you're way ahead of the game for the average person of your age ($30k cash, $20k stocks, unknown TSP balance, low expenses,) I'm not sure I'd recommend trying to diversify quite yet. For one thing, I think you need to keep some amount of your $30k as cash to cover emergency situations. Typically people would say 6 months living expenses for covering employment gaps, but as you are in the military I don't think it's as likely you'll lose your job! So instead, I'd approach it as \"\"How much of this cash do I need over the next 5 years?\"\" That is, sum up $X for the car, $Y for fun & travel, $Z for emergencies, etc. Keep that amount as cash for now. Beyond that, I'd put the balance in your brokerage and get it working hard for you now. (I don't think an average of a 3% div yield is too hard to achieve even when picking a safe, conservative portfolio. Though you do run the risk of capital losses if invested.) Once your total portfolio (TSP + brokerage) is $100k* or more, then consider pulling the trigger on a second passive income stream by splitting off some of your brokerage balance. Until then, keep learning what you can about stock investing and also start the learning process on additional streams. Always keep an eye out for any opportunistic ways to kick additional streams off early if you can find a low cost entry. (*) The $100k number is admittedly a rough guess pulled from the air. I just think splitting your efforts and money prior to this will limit your opportunities to get a good start on any additional streams. Yes, you could do it earlier, but probably only with increased risk (lower capital means less opportunities to pick from, lower knowledge levels -- both stock investing and property rental) also increase risk of making bad choices.\"", "title": "" } ]	fiqa
4b0a7e891fd1dc0c49f9f3aecae15a11	Calculate Finance Rate, Interest Amount when we have below line Fees	[ { "docid": "f7907f479ca9dea88aa294511fa079ce", "text": "The equation for the payment is This board does not support Latex (the number formatting code) so the above is an image, the code is M is the payment calculated, n is the number of months or periods to pay off, and i is the rate per period. You can see that with i appearing 3 times in this equation, it's not possible to isolate to the form i=.... so a calculator will 'guess,' and use, say, 10%. It then raises or lowers the rate until the result is within the calculator's tolerance. I've observed that unlike other calculations, when you hit the button to calculate, a noticeable time lag occurs. I hope I haven't read too much into your question, it seemed to me this was what you asked.", "title": "" } ]	[ { "docid": "c7cf50b1d08c74636ecff24bf8c02aa3", "text": "These are the steps I'd follow: $200 today times (1.04)^10 = Cost in year 10. The 6 deposits of $20 will be one time value calculation with a resulting year 7 final value. You then must apply 10% for 3 years (1.1)^3 to get the 10th year result. You now have the shortfall. Divide that by the same (1.1)^3 to shift the present value to start of year 7. (this step might confuse you?) You are left with a problem needing 3 same deposits, a known rate, and desired FV. Solve from there. (Also, welcome from quant.SE. This site doesn't support LATEX, so I edited the image above.)", "title": "" }, { "docid": "f339181a8d572823cf74602bb8c2ac95", "text": "The number you are trying to calculate is called the Internal Rate of Return (IRR). Google Spreadsheets (and excel) both have an XIRR function that can do this for you fairly simply. Setup a spreadsheet with 1 column for dates, 1 column for investment. Mark your investments as negative numbers (payment to invest). All investments will be negative. Mark your last row with today's date and today's valuation (positive). All withdrawals will be positive, so you are pretending to withdrawal your entire account for the purpose of calculation. Do not record dividends or other interim returns unless you are actually withdrawing money. The XIRR function will calculate your internal rate of return with irregularly timed investments. Links: Article explaining XIRR function (sample spreadsheet in google docs to modify)", "title": "" }, { "docid": "1679ed0311b0aed45606aa58c7616453", "text": "You can get really nerdy with the EV calc, but I would just add that it's important to deduct any non-operating, non-consolidated assets in addition to the minority interest adjustment - e.g. unconsolidated subsidiaries, excess real estate, excess working capital, etc.", "title": "" }, { "docid": "3d5a8298c41dbfe1d3ded257f82ae06b", "text": "The Finance functions in spreadsheet software will calculate this for you. The basic functions are for Rate, Payment, PV (present value), FV (Future value), and NPER, the number of periods. The single calculation faces a couple issues, dealing with inflation, and with a changing deposit. If you plan to save for 30 years, and today are saving $500/mo, for example, in ten years I hope the deposits have risen as well. I suggest you use a spreadsheet, a full sheet, to let you adjust for this. Last, there's a strange effect that happens. Precision without accuracy. See the results for 30-40 years of compounding today's deposit given a return of 6%, 7%, up to 10% or so. Your forecast will be as weak as the variable with the greatest range. And there's more than one, return, inflation, percent you'll increase deposits, all unknown, and really unknowable. The best advice I can offer is to save till it hurts, plan for the return to be at the lower end of the range, and every so often, re-evaluate where you stand. Better to turn 40, and see you are on track to retire early, than to plan on too high a return, and at 60 realize you missed it, badly. As far as the spreadsheet goes, this is for the Google Sheets - Type this into a cell =nper(0.01,-100,0,1000,0) It represents 1% interest per month, a payment (deposit) of $100, a starting value of $0, a goal of $1000, and interest added at month end. For whatever reason, a starting balance must be entered as a negative number, for example - =nper(0.01,-100,-500,1000,0) Will return 4.675, the number of months to get you from $500 to $1000 with a $100/mo deposit and 1%/mo return. Someone smarter than I (Chris Degnen comes to mind) can explain why the starting balance needs to be entered this way. But it does show the correct result. As confirmed by my TI BA-35 financial calculator, which doesn't need $500 to be negative.", "title": "" }, { "docid": "e579c480f632018d2e79008cd1ccaa4b", "text": "Line one shows your 1M, a return with a given rate, and year end withdrawal starting at 25,000. So Line 2 starts with that balance, applies the rate again, and shows the higher withdrawal, by 3%/yr. In Column one, I show the cumulative effect of the 3% inflation, and the last number in this column is the final balance (903K) but divided by the cumulative inflation. To summarize - if you simply get the return of inflation, and start by spending just that amount, you'll find that after 20 years, you have half your real value. The 1.029 is a trial and error method, as I don't know how a finance calculator would handle such a payment flow. I can load the sheet somewhere if you'd like. Note: This is not exactly what the OP was looking for. If the concept is useful, I'll let it stand. If not, downvotes are welcome and I'll delete.", "title": "" }, { "docid": "ceb0296f8c154f411ec59378a46403a7", "text": "This depends on the loan calculation methodology. If it is on reducing balance then yes. Else not much difference", "title": "" }, { "docid": "1bbb638563f38eb0be7fee88e2c1c70a", "text": "The 1.140924% is calculated by taking 13.69%/12 = 1.140924%. Dividing this number by 100 gives you the answer 1.140924 / 100 = .01140924. When dealing with decimals it's important to remember the relationship between a decimal and a percent. 1% = .01 To return .01 to a percent you must multiple that number by 100. So .01 x 100 = 1% In order to get a decimal from a percent, which is what is used in calculations, you must divide by 100. So, here if we are trying to calculate how much interest you are paying each month we can do this: 9800 * .1369 = $1341.62 (interest you will pay that year IF the principal balance never changed) 1341.62 / 12 = ~111.81 Now, month two 9578.34 * .1369 = 1311.274746 1311.274746 / 12 = 109.28 In order to get your monthly payments (which won't change) for the life of the loan, you can use this formula: Monthly payment = r(PV) / (1-(1+r)^-n) Where: r= Interest Rate (remember if calculating monthly to do .1369/12) PV= Present Value of loan n=time of loan ( in your case 36 since we are talking monthly and 123 = 36) from here we get: [(.1369/12)9800]/(1-(1+.1369/12)^-36) = $333.467 when rounding is $333.47 As far as actual applied interest rate, I'm not even sure what that number is, but I would like to know once you figure out, since the interest rate you're being charged is most definitely 13.69%.", "title": "" }, { "docid": "418c1aba4dd73fbeabded92cc00ddb0c", "text": "The question is valid, you just need to work backwards. After how much money-time will the lower expense offset the one time fee? Lower expenses will win given the right sum of money and right duration for the investment.", "title": "" }, { "docid": "9a569aa1c64b6688f4f27726484078a5", "text": "For this, the internal rate of return is preferred. In short, all cash flows need to be discounted to the present and set equal to 0 so that an implied rate of return can be calculated. You could try to work this out by hand, but it's practically hopeless because of solving for roots of the implied rate of return which are most likely complex. It's better to use a spreadsheet with this capability such as OpenOffice's Calc. The average return on equity is 9%, so anything higher than that is a rational choice. Example Using this simple tool, the formula variables can easily be input. For instance, the first year has a presumed cash inflow of $2,460 because the insurance has a 30% discount from $8,200 that is assumed to be otherwise paid, a cash inflow of $40,000 to finance the sprinklers, a cash outflow of $40,000 to fund the sprinklers, a $400 outflow for inspection, and an outflow in the amount of the first year's interest on the loan. This should be repeated for each year. They can be input undiscounted, as they are, for each year, and the calculator will do the rest.", "title": "" }, { "docid": "4864753b99d7a96b7700b749d5cb8693", "text": "The solution to this problem is somewhat like grading on a curve. Use the consumption ratio multiplied by the attendance (which is also a ratio, out of 100 days) to calculate how much each person owes. This will leave you short. Then add together all of the shares in a category, determine the % increase required to get to the actual cost of that category, and increase all the shares by that %.", "title": "" }, { "docid": "01f802919d3d8a84192800cb0bda9181", "text": "A lease payment is composed of an interest portion (borrowed money) and depreciation amount (purchase - residual). The Monthly payment is then Monthly Interest Cost + Monthly Depreciation Cost The Money Factor is used to estimate the amount of interest due in a single month of a lease so you can figure out the monthly payment. If you are borrowing $100,000 then over the entire loan of repayment from a balance of $100,000 to a balance of $0, the average amount you owed was $50,000 (1/2 of principal). You are repaying this loan monthly (1/12 of a year) and percents are expressed as decimals (1/100). 6 * 1/2 (for principal) * 1/12 (for monthly) * 1/100 (to convert percentage from 6% to .06) = 6 * 1/2400. 2400 is the product of 3 consecutive conversion (1/2 * 1/12 * 1/100) to convert from an interest rate to a money factor. 6/2400 = Money factor of 0.0025 which can be multiplied against the total amount being borrowed to know what the monthly interest would roughly equal. Some Money Factor info: https://www.alphaleasing.com/resources/articles/MoneyFactor.asp", "title": "" }, { "docid": "ce67213c02975c72d0ddd432803db58a", "text": "1: Low fees means: a Total Expense Ratio of less than 0,5%. One detail you may also want to pay attention to whether the fund reinvests returns (Thesaurierender Fonds) which is basically good for investing, but if it's also a foreign-based fund then taxes get complicated, see http://www.finanztip.de/indexfonds-etf/thesaurierende-fonds/", "title": "" }, { "docid": "452f27da8e2c009b017c0b881ec4cf77", "text": "I have answered your question in detail here https://stackoverflow.com/questions/12396422/apr-calculation-formula The annuity formula in FDIC document is at first finding PVIFAD present value annuity due factor and multiplying it with annuity payment and then dividing it by an interest factor of (1+i) to reduce the annuity to an ordinary annuity with end of period payments They could have simply used PVIFA and multiplying it with annuity payment to find the present value of an ordinary annuity In any case, you should not follow the directions in FDIC document to find interest rate at which the present value of annuity equals the loan amount. The method they are employing is commonly used by Finance Professors to teach their students how to find internal rate of return. The method is prone to lengthy trial and error attempts without having any way of knowing what rate to use as an initial guess to kick off the interest rate calculations So this is what I would suggest if you are not short on time and would like to get yourself familiar with numerical methods or iterative techniques to find internal rate of return There are way too many methods at disposal when it comes to finding interest rates some of which include All of the above methods use a seed value as a guess rate to start the iterative calculations and if results from successive calculations tend to converge within a certain absolute Error bound, we assume that one of the rates have been found as there may be as many rates as the order of the polynomial in this case 36 There are however some other methods that help find all rates by making use of Eigenvalues, but for this you would need a lengthy discourse of Linear Algebra One of the methods that I have come across which was published in the US in 1969 (the year I was born :) ) is called the Jenkins Traub method named after the two individuals who worked jointly on finding a solution to all roots of a polynomial discarding any previous work on the same subject I been trying to go over the Jenkins Traub algorithm but am having difficulty understanding the complex nature of the calculations required to find all roots of the polynomial In summary you would be better of reading up on this site about the Newton Raphson method to find IRR", "title": "" }, { "docid": "b26146f4690f6340fd7e29cdd4f8fd28", "text": "Here's the purely mathematical answer for which fees hurt more. You say taking the money out has an immediate cost of $60,000. We need to calculate the present value of the future fees and compare it against that number. Let's assume that the investment will grow at the same rate either with or without the broker. That's actually a bit generous to the broker, since they're probably investing it in funds that in turn charge unjustifiable fees. We can calculate the present cost of the fees by calculating the difference between: As it turns out, this number doesn't depend on how much we should expect to get as investment returns. Doing the math, the fees cost: 220000 - 220000 * (1-0.015)^40 = $99809 That is, the cost of the fees is comparable to paying nearly $100,000 right now. Nearly half the investment! If there are no other options, I strongly recommend taking the one-time hit and investing elsewhere, preferably in low-cost index funds. Details of the derivation. For simplicity, assume that both fees and growth compound continuously. (The growth does compound continuously. We don't know about the fees, but in any case the distinction isn't very significant.) Fees occur at a (continuous) rate of rf = ln((1-0.015)^4) (which is negative), and growth occurs at rate rg. The OPs current principal is P, and the present value of the fees over time is F. We therefore have the equation P e^((rg+rf)t) = (P-F) e^(rg t) Solving for F, we notice that the e^rg*t components cancel, and we obtain F = P - P e^(rf t) = P - P e^(ln((1-0.015)^4) t) = P - P (1-0.015)^(4t)", "title": "" }, { "docid": "50c29401d0ad5c19a05ba7f906e56cbe", "text": "I was typing up a long response and lost it to a backspace.. so, I apologize but I don't intend on rewriting it all. You'll have to use a method called bootstrapping to get the forward rates. Essentially you're looking at the spot rate today, and the forward rates, then filling in what must be the rate to make them equal out in the end. Sorry I'm not more help!", "title": "" } ]	fiqa
8232ca8d23997cbc7bf14ee759c8255a	Advantage of Financial Times vs. free news sources for improving own knowledge of finance?	[ { "docid": "953998066744ca70bd3d52152d186a3a", "text": "\"If you are interested in a career in algorithmic trading, I strongly encourage you to formally study math and computer science. Algorithmic trading firms have no need for employees with financial knowledge; if they did, they'd just be called \"\"trading\"\" firms. Rather, they need experts in machine learning, statistical modeling, and computer science in general. Of course there are other avenues of employment at an algorithmic trading firm, such as accounting, clearing, exchange relations, etc. If that's the sort of thing you're interested in, again you'll probably want a formal education in those areas as opposed to just reading about finance in the news. If you edit your question or add a comment below with information about your particular background, I could perhaps advise you in a bit more detail. ::edit:: Given your comment, I would say you have a fine academic background for the industry. When hiring mathematicians, firms care most about the ease with which you can explore and extract features from massive datasets (especially time series) regardless of what the dataset might represent. An intelligent firm will not care whether you arrive at their doorstep with zero finance knowledge; they will want to teach you everything from scratch anyway. Nonetheless, some domain knowledge could be helpful, but you're not going to get \"\"more\"\" of it from reading any mass market news source, whether you have to pay for it or not. That's because Some non-mass-market news sources in the industry are These are subscription-only and actually discuss real information that real professional investors care about. They are loaded with industry jargon, they're extremely opinionated, and (in my opinion) they're useless. I can't imagine trying to learn about the industry from them, but if you want to spend money for news in order to be exposed to the innards of the industry, then either of these is far better than the Financial Times. Despite requiring a subscription, the Financial Times still does not cover the technical details of professional trading. Instead of trying to learn from news, then, I would suggest some old favorites: and, above all else, Read everything in the navigation box on the right side under Financial Markets and Financial Instruments.\"", "title": "" }, { "docid": "17cf758f8e2e0a11647bb7e31b985214", "text": "I recommend using Morning Brew. They email you a free daily newsletter with the top financial news stories and earnings events. I have subscribed to the Wall Street Journal and Financial Times before. Morning Brew basically covers all of the headlines you would see on those sites.", "title": "" } ]	[ { "docid": "5b00300f2a333c26c62eefd7a6367917", "text": "When you look at the charts in Google Finance, they put the news on the right hand side. The time stamp for each news item is indicated with a letter in the chart. This often shows what news the market is reacting to. In your example: Clicking on the letter F leads to this Reuters story: http://www.reuters.com/article/2011/02/04/usa-housing-s-idUSWAT01486120110204", "title": "" }, { "docid": "86b61a90ea52490a30f14b30e5b529ea", "text": "I really want people to answer this. I need to build my general macro repertoire and good news is key. I was getting the Bridgewater Dailies at my last job and they are fantastic. Unfortunately they are super expensive and only businesses can afford them. I read a lot of the general economics output of major banks which is free on their websites. I also read a selection of blogs which have an economics/macro tilt, but tend to be a lot of opinion and academic stuff. This is what I've been reading recently: [Krugman](http://krugman.blogs.nytimes.com/) [Marginal Revolution](http://marginalrevolution.com/) [Project Syndicate](http://www.project-syndicate.org/) [Noah Smith](http://noahpinionblog.blogspot.jp/) [The Upshot](http://www.nytimes.com/upshot/) I also read Reuters for economics news generally since there is no paywall. Hope this helps, and I really hope there is more quality free stuff out there that I've missed.", "title": "" }, { "docid": "b2d27d9aa0824213fa71520c93956ae6", "text": "I'm not familiar enough with finance in any capacity to know what the difference is between financial services or a finance department (beyond what you said); my familiarity of the industry extends to trading, rating, and financial law enforcement. But at a glance on mobile, that looks like pretty much exactly what I was looking for. I have no connect to the industry, but habe been on a Wall St media binge lately, and like to understand powerful/influencial sectors of society anyways. Thanks.", "title": "" }, { "docid": "fe2b4964c94e8abe07e89dd3184434d5", "text": "A lot of business sites are subscription only. Financial Times is the most obvious example. The Economist is the other. At least The Economist is making a very strong, healthy profit. A lot of other businesses work on a Freemium model, most obviously Bloomberg. The Bloomberg Terminal costs 24k a year to lease, and it has a stronghold on the financial community. But you can get tons of Bloomberg news and data on their site/channel for free. Why? Because having that wide public reach adds value to Bloomberg--they have access to a lot of industry insiders who exchange tips etc. for the ability to leak info to the public, etc. It's a smart business model and works very well. There are other models that work equally well, but I think a lot of people don't really realize this.", "title": "" }, { "docid": "b4a2c069e2edc99ea7564268e3c15177", "text": "ZeroHedge is the best, although it appeals to a particular audience (highly educated economics/business folks with a very negative view of government). They pull articles from all over the web, so you get a really good aggregator with maybe 20 articles/day of high quality work. Bloomberg I read if there's a good topic. That pops up on facebook for me and I read probably 10/day. Wall Street Journal is great if you want mainstream (read: delayed) business news. Most of the things that are truly news are long-term in nature and you'd read about them on ZeroHedge far before the WSJ. I used to read Dealbook a lot, although I've gotten away from it lately due to the lack of mergers & acquisitions activity. Lastly, I used to have a blogroll of maybe 5-10 investment blogs with truly great writers/thinkers, but alas, most have stopped writing now. sorry about the delay. forgot I saw your question.", "title": "" }, { "docid": "77ecf212f4efc907eee18d547f3912ca", "text": "No career advice or homework help (unless your homework is some kind of big project and you need an explanation on a concept). I want to see financial news, legislation concerning the markets and regulation, self posts about financial concepts, opinion articles about finance from reputable sources, etc.", "title": "" }, { "docid": "f7c88a34a19c3733628f3d876b4824f0", "text": "My two cents: I, like many people in finance, got into it for the money. However, I like many other people, found myself liking it for intrinsic reasons once I got into it. I genuinely enjoy learning about financial theory, economics, understanding how global markets work, following the different story lines for the EU/US/Asian economies, working on financial models, reading the WSJ, keeping up to date on new earning releases, analyzing investments, learning about companies/industries, etc. But I never would have found out that I liked these things unless I had chosen to study them and the only reason I chose to study them in the first place was because I wanted to make money. I'd take an intro finance class and see if it seems like something that could grow on you.", "title": "" }, { "docid": "a1e602cc8a0a180de687772c277a3c8b", "text": "Depends what you mean by business world and finance world. NYTimes Sunday business section is a good start - mostly for large business. The Only Investment Guide You'll Ever Need by Andrew Tobias for how to invest your personal money - and you'll see why no one who says they can predict the market is accurate for very long. INC Magazine for running a small company", "title": "" }, { "docid": "86b35b25f883dbda4f6626fba74a404f", "text": "Yes, there are very lucrative opportunities available by using financial news releases. A lot of times other people just aren't looking in less popular markets, or you may observe the news source before other people realize it, or may interpret the news differently than the other market participants. There is also the buy the rumor, sell the news mantra - for positive expected information (opposite for negative expected news), which results in a counterintuitive trading pattern.", "title": "" }, { "docid": "29a40af24f93fca95608892442b874f3", "text": "There are all sorts of topics in finance that take a lot of time to learn. You have valuation (time value of money, capital asset pricing model, dividend discount model, etc.), financial statement analysis (ratio analysis, free cash flow & discounted cash flow, etc.) , capital structure analysis(Modgliani & Miller theories of capital structure, weighted average cost of capital, more CAPM, the likes), and portfolio management (asset allocation, security selection, integrates financial statement analysis + other fields like derivatives, fixed income, forex, and commodity markets) and all sorts. My opinion of Investopedia is that there is a lot of wheat with the chaff. I think articles/entries are just user-submitted and there are good gems in Investopedia but a lot of it only covers very basic concepts. And you often don't know what you don't know, so you might come out with a weak understanding of something. To begin, you need to understand TVM and why it works. Time value of money is a critical concept of finance that I feel many people don't truly grasp and just understand you need some 'rate' to use for this formula. Also, as a prereq, you should understand basics of accrual accounting (debits & credits) and how the accounting system works. Don't need to know things like asset retirement obligations, or anything fancy, just how accounting works and how things affect certain financial statements. After that, I'd jump into CAPM and cost of capital. Cost of capital is also a very misunderstood concept since schools often just give students the 'cost of capital' for math problems when in reality, it's not just an explicit number but more of a 'general feeling' in the environment. Calculating cost of capital is actually often very tricky (market risk premium) and subjective, sometimes it's not (LIBOR based). After that, you can build up on those basic concepts and start to do things like dividend discount models (basic theory underlying asset pricing models) and capital asset pricing models, which builds on the idea of cost of capital. Then go into valuation. Learn how to price equities, bonds, derivatives, etc. For example, you have the dividend discount model with typical equities and perpetuities. Fixed income has things like duration & convexity to measure risk and analyze yield curves. Derivatives, you have the Black-Scholes model and other 'derivatives' (heh) of that formula for calculating prices of options, futures, CDOs, etc. Valuation is essentially taking the idea of TVM to the next logical step. Then you can start delving into financial modelling. Free cash flows, discounted cash flows, ratio analysis, pro forma projections. Start small, use a structured problem that gives you some inputs and just do calculations. Bonuses* would be ideas of capital structure (really not necessary for entry level positions) like the M&M theorems on capital structure (debt vs equity), portfolio management (risk management, asset allocation, hedging, investment strategies like straddles, inverse floaters, etc), and knowledge of financial institutions and banking regulations (Basel accords, depository regulations, the Fed, etc.). Once you gain an understanding of how this works, pick something out there and do a report on it. Then you'll be left with a single 'word problem' that gives you nothing except a problem and tells you to find an answer. You'll have to find all the inputs and give reasons why these inputs are sound and reasonable inputs for this analysis. A big part that people don't understand about projections and analysis is that inputs don't exist in plain sight. You have to make a lot of judgment calls when making these assumptions and it takes a lot of technical understanding to make a reasonable assumption--of which the results of your report highly depend on. As a finance student, you get a taste for all of this. I'm gonna say it's going to be hard to learn a lot of substantial info in 2 months, but I'm not exactly sure what big business expects out of their grunts. You'll mostly be doing practical work like desk jockey business, data entry, and other labor-based jobs. If you know what you're talking about, you can probably work up to something more specialized like underwriting or risk management or something else. Source: Finance degree but currently working towards starting a (finance related) company to draw on my programming background as well.", "title": "" }, { "docid": "15a8d776bf4427047a8a551633407a1b", "text": "\"You need to understand how various entities make their money. Once you know that, you can determine whether their interests are aligned with yours. For example, a full-service broker makes money when you buy and sell stocks. They therefore have in interest in you doing lots of buying, and selling, not in making you money. Or, no-fee financial advisors make their money through commissions on what they sell you, which means their interests are served by selling you those investments with high commissions, not the investments that would serve you best. Financial media makes their money through attracting viewers/readers and selling advertising. That is their business, and they are not in the business of giving good advice. There are lots of good investments - index funds are a great example - that don't get much attention because there isn't any money in them. In fact, the majority of \"\"wall street\"\" is not aligned with your interests, so be skeptical of the financial industry in general. There are \"\"for fee\"\" financial advisors who you pay directly; their interests are fairly well aligned with yours. There is a fair amount of good information at The Motley Fool\"", "title": "" }, { "docid": "b8284a304ec0a33537118b3160d64bd4", "text": "Imagine an internet where the best content was behind a pay wall while the buzzfeed, gawker, and even yahoo were free. You can get your standard journalism plus clickbait for free, but you could also support the greatest content on the web while providing it greater power by generating it revenue. All by choice, of course. If you don't want a premium product, the best journalism and well constructed opinion pieces, don't pay for it. Of course freemium, such as the way the economist is currently, i.e. 3 free articles a week (or something like that), is the best way to attract new customers. But I strongly feel that the best journalism is worth more than the clickbait garbage despite that I won't click an irrelevant ad simple because I feel the article is better crafted. This, I would be willing to pay more for it even on the internet.", "title": "" }, { "docid": "fc630ecd66dc499dc67deceaf82681ed", "text": "\"In addition to the information in the other answer, I would suggest looking at an economic calendar. These provide the dates and values of many economic announcements, e.g. existing home sales, durable orders, consumer confidence, etc. Yahoo, Bloomberg, and the Wall Street Journal all provide such calendars. Yahoo provides links to the raw data where available; Bloomberg and the WSJ provide links to their article where appropriate. You could also look at a global economic calendar; both xe.com and livecharts.co.uk provide these. If you're only interested in the US, the Yahoo, Bloomberg, and WSJ calendars may provide a higher signal-to-noise ratio, but foreign announcements also affect US markets, so it's important to get as much perspective as possible. I like the global economic calendars I linked to above because they rate announcements on \"\"priority\"\", which is a quick way to learn which announcements have the greatest effect. Economic calendars are especially important in the context of an interview because you may be asked a follow-up question. For example, the US markets jumped in early trading today (5/28/2013) because the consumer confidence numbers exceeded forecasts (from the WSJ calendar, 76.2 vs 2.3). As SRKX stated, it's important to know more than the numbers; being able to analyze the numbers in the context of the wider market and being aware of the fundamentals driving them is what's most important. An economic calendar is a good way to see this information quickly and succinctly. (I'm paraphrasing part of my answer to another question, so you may or may not find some of that information helpful as well; I'm certainly not suggesting you look at the website of every central bank in the morning. That's what an economic calendar is for!)\"", "title": "" }, { "docid": "ef08f8282500399d92fa6386732c2dcf", "text": "as someone who made a fair attempt at understanding money subjects, I'd like some more writing from you. I took high school level Marketing; Business economics; commercial law. it took six months on top of my previous High school ( with high level maths). during those months I got medium grades, and failed in- can you believe it - marketing. I had a go at The intelligent investor. I made it to page 96. But honestly I felt like I needed a lot of background in order for me to understand it. English is my second language. Sure I can understand words like liability vs assets. but to this day i still can't remember the difference between a bull and bearish market. I know its about risk assesment on a national/ global level. So who honestly gave finance a go but got their ass kicked. What would you say? any books?", "title": "" }, { "docid": "058ffccf654e98b93d5ef8a7a883bb9e", "text": "It depends what you mean by financial knowledge. Often you will work in a group focused on some aspect of the company's business. As an example, I work for a company and my group works on econometric models. Although I have a degree in finance, I don't encounter or talk about corporate or personal finance. I do talk about investing with a friend, but in general, our group is focused on one aspect of finance and economics for the company. From another direction, often financial companies will offer financial literacy training through HR and benefits programs where you can improve your knowledge of finance outside of your groups focus. In the end, you will learn the most by persuing new knowledge through reading on current financial literature. I hope this helps. Edit: If you add some specifics to what you would like to learn about I may be able to point you in the right direction.", "title": "" } ]	fiqa
d9d5299e81f940da6b6acd35ca849882	Google Finance: Input Parameters For Simple Moving Averages	[ { "docid": "0db7d44640b17675cb5829dc42672209", "text": "The difference is that for the one year time frame the data is represented based on daily data and the SMA is 20 days, whilst for the 5 year timeframe the data is automatically represented as weekly data with the SMA represented by 20 weeks not 20 days anymore. This happens due to daily data on this chart being too much data to represent over a 5 year period so the data defaults to weekly data over such a long period. If the chart is represented as weekly data then any indicators will also have to be represented in weekly data. If you use a more sophisticated charting program you can actually select to see daily or weekly data over longer periods such as 5 years or more.", "title": "" }, { "docid": "481b8423ba7e31615b1775bafe7d3029", "text": "I looked at this a little more closely but the answer Victor provided is essentially correct. The key to look at in the google finance graph is the red labled SMA(###d) would indicate the period units are d=days. If you change the time axis of the graph it will shift to SMA(###m) for period in minutes or SMA(###w) for period in weeks. Hope this clears things up!", "title": "" } ]	[ { "docid": "52e41eaf6ab2a990bfe7c69d2d688a11", "text": "There are lots of good answers on here already. There are actually lots of answers for this question. Lots. I have years of experience on the exchange feed side and there are hundreds and thousands of variables. All of these variables are funneled into systems owned by large financial institutions (I used to manage these - and only a few companies in the world do this so not hard to guess who I work for). Their computers then make trades based on all of these variables and equations. There are variables as whacky as how many times was a company mentioned in an aggregate news feed down to your basic company financials. But if there is a way to measure a company (or to just guess) there is an equation for it plugged into a super computer at a big bank. Now there are two important factors on why you see this mad dash in the morning: Now most of the rest of the day is also automated trades but by the time you are an hour into market open the computers for the most part have fulfilled their calendar buys. Everyone else's answer is right too. There is futures contracts that change, global exchange info changes, options expiring, basic news, whatever but all of these are amplified by the calendar day changing.", "title": "" }, { "docid": "50c29401d0ad5c19a05ba7f906e56cbe", "text": "I was typing up a long response and lost it to a backspace.. so, I apologize but I don't intend on rewriting it all. You'll have to use a method called bootstrapping to get the forward rates. Essentially you're looking at the spot rate today, and the forward rates, then filling in what must be the rate to make them equal out in the end. Sorry I'm not more help!", "title": "" }, { "docid": "f40ce647ec1934ec570d35784baa2775", "text": "James Roth provides a partial solution good for stock picking but let's speed up process a bit, already calculated historical standard deviations: Ibbotson, very good collection of research papers here, examples below Books", "title": "" }, { "docid": "5b5c6f5d4b26bd4c954cdb1558e22cf8", "text": "\"I could not figure out a good way to make XIRR work since it does not support arrays. However, I think the following should work for you: Insert a column at D and call it \"\"ratio\"\" (to be used to calculate your answer in column E). Use the following equation for D3: =1+(C3-B3-C2)/C2 Drag that down to fill in the column. Set E3 to: =(PRODUCT(D$3:D3)-1)*365/(A3-A$2) Drag that down to fill in the column. Column E is now your annual rate of return.\"", "title": "" }, { "docid": "8f399907f2221e4bdc9aefb8c11cf52c", "text": "This is from Google Finance right now.", "title": "" }, { "docid": "593f6298656a2b96117729003a4e30dd", "text": "You bought 1 share of Google at $67.05 while it has a current trading price of $1204.11. Now, if you bought a widget for under $70 and it currently sells for over $1200 that is quite the increase, no? Be careful of what prices you enter into a portfolio tool as some people may be able to use options to have a strike price different than the current trading price by a sizable difference. Take the gain of $1122.06 on an initial cost of $82.05 for seeing where the 1367% is coming. User error on the portfolio will lead to misleading statistics I think as you meant to put in something else, right?", "title": "" }, { "docid": "dfa2ffd7e6e3892c85d2adf7481d1bdf", "text": "\"I am trying to set up a formula that will find interest-rate behind first pencil sheets at car dealerships. I am not a car finance expert so I need someone who is intimate with how these loans really work. The points of data I get at first pencil are: 1) Amount Financed 2) Period 3) Monthly Payment The data I need to extrapolate: 1) Rate in percentile so that I can compare to my bank's offer. I have tried this and many other stock \"\"find rate\"\" formulas with no accurate results: R=(A/P^(1/n)-1)n\"", "title": "" }, { "docid": "64e8a098d6ef3e03a3f2c464e91a5ec2", "text": "As you point out, the moving average is just MA(k)t = (Pt-1 + … + Pt-k )/k and is applied in technical analysis (TA) to smooth out volatile (noise) price action. If it has any logic to it, you might want to think in terms of return series (Pt - Pt-1 / Pt-1) and you could hypothesize that prices are in fact predictable and will oscillate below and above a running moving average. Below is a link to a study on MA trading rules, published in the Journal of Finance, with the conclusion of predictive power and abnormal returns from such strategies. As with any decision made upon historical arguments, one should be aware of structural changes and or data mining. Simple technical trading rules and the stochastic properties of stock returns Brock, W., J. Lakonishok and B. Le Baron, 1992, Simple technical trading rules and the stochastic properties of stock returns, Journal of Finance, 47, 1731-64. MA rules betterthan chance in US stock market, 1897-1986 I don't know whether you are new to TA or not, but a great commercial site, with plenty of computer-generated signals is FinViz.", "title": "" }, { "docid": "202984fdfca72013590d80a373c28d40", "text": "\"P/E is Price divided by Earnings Per Share (EPS). P/E TTM is Price divided by the actual EPS earned over the previous 12 months - hence \"\"Trailing Twelve Month\"\". In Forward P/E is the \"\"E\"\" is the average of analyst expectations for the next year in EPS. Now, as to what's being displayed. Yahoo shows EPS to be 1.34. 493.90/1.34 = P/E of 368.58 Google shows EPS to be 0.85. 493.40/0.85 = P/E of 580.47 (Prices as displayed, respectively) So, by the info that they are themselves displaying, it's Google, not Yahoo, that's displaying the wrong P/E. Note that the P/E it is showing is 5.80 -- a decimal misplacement from 580 Note that CNBC shows the Earnings as 0.85 as well, and correctly show the P/E as 580 http://data.cnbc.com/quotes/BP.L A quick use of a currency calculator reveals a possible reason why EPS is listed differently at yahoo. 0.85 pounds is 1.3318 dollars, currently. So, I think the Yahoo EPS listing is in dollars. A look at the last 4 quarters on CNBC makes that seem reasonable: http://data.cnbc.com/quotes/BP.L/tab/5 those add up to $1.40.\"", "title": "" }, { "docid": "3dccc75bc4b29bf2cb80a8c9dff15b95", "text": "\"My answer is Microsoft Excel. Google \"\"VBA for dummies\"\" (seriously) and find out if your brokerage offers an 'API'. With a brief understanding of coding you can get a spreadsheet that is live connected to your brokers data stream. Say you have a spreadsheet with the 1990 value of each in the first two columns (cells a1 and b1). Maybe this formula could be the third column, it'll tell you how much to buy or sell to rebalance them. then to iterate the rebalance, set both a2 and b2 to =C1 and drag the formula through row 25, one row for each year. It'll probably be a little more work than that, but you get the idea.\"", "title": "" }, { "docid": "de1433f15a5657ab6d10c2427bdd38b9", "text": "As @littleadv and @DumbCoder point out in their comments above, Bloomberg Terminal is expensive for individual investors. If you are looking for a free solution I would recommend Yahoo and Google Finance. On the other side, if you need more financial metrics regarding historic statements and consensus estimates, you should look at the iPad solution from Worldcap, which is not free, but significantly cheaper then Bloomberg and Reuters. Disclosure: I am affiliated with WorldCap.", "title": "" }, { "docid": "420f4726f5eff4d17dbcf18d85d62d3b", "text": "Google Finance and Yahoo Finance have been transitioning their API (data interface) over the last 3 months. They are currently unreliable. If you're just interested in historical price data, I would recommend either Quandl or Tiingo (I am not affiliated with either, but I use them as data sources). Both have the same historical data (open, close, high, low, dividends, etc.) on a daily closing for thousands of Ticker symbols. Each service requires you to register and get a unique token. For basic historical data, there is no charge. I've been using both for many months and the data quality has been excellent and API (at least for python) is very easy! If you have an inclination for python software development, you can read about the drama with Google and Yahoo finance at the pandas-datareader group at https://github.com/pydata/pandas-datareader.", "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": "96ffe6a551593b9b69ec6a68d6a2175b", "text": "You may refer to project http://jstock.sourceforge.net. It is open source and released under GPL. It is fetching data from Yahoo! Finance, include delayed current price and historical price.", "title": "" }, { "docid": "e0fd5f580d29bb7dc0d3a235d31ffdf2", "text": "\"All of these frameworks, Markowitz, Mean/CVaR, CARA, etc sit inside a more general framework which is that \"\"returns are good\"\" and \"\"risk/lack of certainty in the returns is bad\"\", and there's a tradeoff between the two encoded as some kind of risk aversion number. You can measure \"\"lack of certainty in returns\"\" by vol, CVaR, weighted sum of higher moments, but even sector/region concentration. Similarly do I want more \"\"returns\"\" or \"\"log returns\"\" or \"\"sqrt returns\"\" in the context of this tradeoff? You don't need any formal notion of utility at that point - and I don't know what formal ideas of utility beyond \"\"I want more returns and less risk\"\" really buys you. The Sharpe ratio only really gets its meaning because you've got some formal asset-pricing notion of utility. In my view the moment that you're putting constraints on the portfolio (e.g. long only, max weights, don't deviate too much from the benchmark ...) - really you're operating in this more general framework anyway and you're not in \"\"utility-land\"\" anymore.\"", "title": "" } ]	fiqa
22832638a186e902feb04ea728240bd6	How does Yahoo finance adjust stock data for splits and dividends?	[ { "docid": "fc995ec5e7c0691a5351985999c81cc2", "text": "For stock splits, let's say stock XYZ closed at 100 on February 5. Then on February 6, it undergoes a 2-for-1 split and closes the day at 51. In Yahoo's historical prices for XYZ, you will see that it closed at 51 on Feb 6, but all of the closing prices for the previous days will be divided by 2. So for Feb 5, it will say the closing price was 50 instead of 100. For dividends, let's say stock ABC closed at 200 on December 18. Then on December 19, the stock increases in price by $2 but it pays out a $1 dividend. In Yahoo's historical prices for XYZ, you will see that it closed at 200 on Dec 18 and 201 on Dec 19. Yahoo adjusts the closing price for Dec 19 to factor in the dividend.", "title": "" }, { "docid": "26e829b6a7db54e5cf3756d79e49b8d8", "text": "Should be noted that pacoverflow's answer is wrong. Yahoo back-adjusts all the previous (not current or future) values based on a cumulative adjustment factor. So if there's a dividend ex-date on December 19, Yahoo adjusts all the PREVIOUS (December 18 and prior) prices with a factor which is: 1 - dividend / Dec18Close", "title": "" }, { "docid": "df3614b753ae87a1a270d904003756f7", "text": "\"Yahoo's \"\"Adj Close\"\" data is adjusted for splits, but not for dividends. Despite Yahoo's webpage's footnote saying *Close price adjusted for dividends and splits. we can see empirically that the \"\"Adj Close\"\" is only adjusted for splits. For example, consider Siemens from Jan 27, 2017 to Mar 15, 2017: The Adj Close adjusts for splits: On any particular day, the \"\"Adj Close\"\" is equal to the \"\"Close\"\" price divided by the cumulative product of all splits that occurred after that day. If there have been no splits after that day, then the \"\"Adj Close\"\" equals the \"\"Close\"\" price. Since there is a 2-for-1 split on Mar 14, 2017, the Adj Close is half the Close price for all dates from Jan 27, 2017 to Mar 13, 2017. Note that if Siemens were to split again at some time in the future, the Adj Close prices will be readjusted for this future split. For example, if Siemens were to split 3-for-1 tomorrow, then all the Adj Close prices seen above will be divided by 3. The Adj Close is thus showing the price that a share would have traded on that day if the shares had already been split in accordance with all splits up to today. The Adj Close does not adjust for dividends: Notice that Siemens distributed a $1.87 dividend on Feb 02, 2017 and ~$3.74 dividend on Jan 30, 2017. If the Adj Close value were adjusted for these dividends then we should expect the Adj Close should no longer be exactly half of the Close amount. But we can see that there is no such adjustment -- the Adj Close remains (up to rounding) exactly half the Close amount: Note that in theory, the market reacts to the distribution of dividends by reducing the trading price of shares post-dividend. This in turn is reflected in the raw closing price. So in that sense the Adj Close is also automatically adjusted for dividends. But there is no formula for this. The effect is already baked in through the market's closing prices.\"", "title": "" } ]	[ { "docid": "b4230bc9749d09b9fad10599e79b40ef", "text": "\"I don't have anything definitive, but in general positions in a company are not affected materially by what is called a corporate action. \"\"Corp Actions\"\" can really be anything that affects the details of a stock. Common examples are a ticker change, or exchange change, IPO (ie a new ticker), doing a split, or merging with another ticker. All of these events do not change the total value of people's positions. If a stock splits, you might have more shares, but they are worth less per share. A merger is quite similar to a split. The old company's stock is converted two the new companies stock at some ratio (ie 10 shares become 1 share) and then converted 1-to-1 to the new symbol. Shorting a stock that splits is no different. You shorted 10 shares, but after the split those are now 100 shares, when you exit the position you have to deliver back 100 \"\"new\"\" shares, though dollar-for-dollar they are the same total value. I don't see why a merger would affect your short position. The only difference is you are now shorting a different company, so when you exit the position you'll have to deliver shares of the new company back to the brokerage where you \"\"borrowed\"\" the shares you shorted.\"", "title": "" }, { "docid": "cee5b473a5787ba655090a61d7f23e5f", "text": "Many brokerages offer automatic dividend reinvestment. It is very infrequent that these dividends are exactly a whole share. So, if you have signed up for automatic dividend reinvestment, many brokerages will reinvest your dividends and assign to you a fractional share. I can't speak for how these shares work with regards to voting, but I can say that the value of these fractional holdings does change with stock price as if one genuinely could hold a fraction of a share.", "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": "4cf53539bda07f5efe80c4aa08b8b8f3", "text": "The dividend quoted on a site like the one you linked to on Yahoo shows what 1 investor owning 1 share received from the company. It is not adjusted at all for taxes. (Actually some dividend quotes are adjusted but not for taxes... see below.) It is not adjusted because most dividends are taxed as ordinary income. This means different rates for different people, and so for simplicity's sake the quotes just show what an investor would be paid. You're responsible for calculating and paying your own taxes. From the IRS website: Ordinary Dividends Ordinary (taxable) dividends are the most common type of distribution from a corporation or a mutual fund. They are paid out of earnings and profits and are ordinary income to you. This means they are not capital gains. You can assume that any dividend you receive on common or preferred stock is an ordinary dividend unless the paying corporation or mutual fund tells you otherwise. Ordinary dividends will be shown in box 1a of the Form 1099-DIV you receive. Now my disclaimer... what you see on a normal stock quote for dividend in Yahoo or Google Finance is adjusted. (Like here for GE.) Many corporations actually pay out quarterly dividends. So the number shown for a dividend will be the most recent quarterly dividend [times] 4 quarters. To find out what you would receive as an actual payment, you would need to divide GE's current $0.76 dividend by 4 quarters... $0.19. So you would receive that amount for each share of stock you owned in GE.", "title": "" }, { "docid": "7978a163ea6fbead1bd037bcc1a14902", "text": "I also searched for some time before discovering Market Archive, which AFAIK is the most affordable option that basically gives you a massive multi-GB dump of data. I needed sufficient data to build a model and didn't want to work through an API or have to hand-pick the securities to train from. After trying to do this on my own by scraping Yahoo and using the various known tools, I decided my time was better spent not dealing with rate-limiting issues and parsing quirks and whatnot, so I just subscribed to Market Archive (they update the data daily).", "title": "" }, { "docid": "3dccc75bc4b29bf2cb80a8c9dff15b95", "text": "\"My answer is Microsoft Excel. Google \"\"VBA for dummies\"\" (seriously) and find out if your brokerage offers an 'API'. With a brief understanding of coding you can get a spreadsheet that is live connected to your brokers data stream. Say you have a spreadsheet with the 1990 value of each in the first two columns (cells a1 and b1). Maybe this formula could be the third column, it'll tell you how much to buy or sell to rebalance them. then to iterate the rebalance, set both a2 and b2 to =C1 and drag the formula through row 25, one row for each year. It'll probably be a little more work than that, but you get the idea.\"", "title": "" }, { "docid": "dc791ff7f4a2e648915913f2f2bc62ae", "text": "Yup. What I wanted to know was where they are pulling it up from. Have casually used Google finance for personal investments, but they suck at corp actions. Not sure if they provide free APIs, but that would probably suck too! :D", "title": "" }, { "docid": "cd44af0ba38fa7d68265e7bc6603f04d", "text": "According to Active Equity Management by Zhou and Jain: When a stock pays dividend, the adjusted price in Yahoo makes the following adjustment: Let T be the ex-dividend date (the first date that the buyers of a stock will not receive the dividend) and T-1 be the last trading day before T. All prices before T are adjusted by a multiplier (C_{T-1} - d_T)/C_{T-1}, where C_{T-1} is the close price at T-1 and d_T is the dividend per share. This, of course means that the price before T decreases.", "title": "" }, { "docid": "fd1c51438c9aaf8e14aa77f9887fc3c7", "text": "This is just a shot in the dark but it could be intermarket data. If the stock is interlisted and traded on another market exchange that day then the Yahoo Finance data feed might have picked up the data from another market. You'd have to ask Yahoo to explain and they'd have to check their data.", "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": "dd99ef5267bc2cb10f23ee1f62bc9f82", "text": "I've never seen a dividend, split or other corporate action during the day, but I have seen trade suspended a few times when something big happened. The market opening price is not in general the same as the close of the previous day. It can gap up or down and does frequently. I don't know of an api to find out if the dividend was cash or stock, but stock dividends are a lot less common.", "title": "" }, { "docid": "835aea544af9ee19eb114bf793e8f425", "text": "\"I keep spreadsheets that verify each $ distribution versus the rate times number of shares owned. For mutual funds, I would use Yahoo's historical data, but sometimes shows up late (a few days, a week?) and it isn't always quite accurate enough. A while back I discovered that MSN had excellent data when using their market price chart with dividends \"\"turned on,\"\" HOWEVER very recently they have revamped their site and the trusty URLs I have previously used no longer work AND after considerable browsing, I can no longer find this level of detail anywhere on their site !=( Happily, the note above led me to the Google business site, and it looks like I am \"\"back in business\"\"... THANKS!\"", "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": "0abcd449cae2ed7664022837ddd01ced", "text": "\"Google's RSI is using a 10 period on 2 minute bars - i.e. it is based upon the last 20 minutes of data. Yahoo's RSI is using a 14 period lookback on an undetermined timeframe (you could maybe mouse-over and see what incremental part of the chart is giving) and given the \"\"choppier\"\" price chart, probably 30 second or 1 minute bars. Given the difference in both the period specified and the periodicity of the charts - you should expect different results.\"", "title": "" }, { "docid": "1ca4aa43255f1b1f575ff0e602651839", "text": "\"Remember that in most news outlets journalists do not get to pick the titles of their articles. That's up to the editor. So even though the article was primarily about ETFs, the reporter made the mistake of including some tangential references to mutual funds. The editor then saw that the article talked about ETFs and mutual funds and -- knowing even less about the subject matter than the reporter, but recognizing that more readers' eyeballs would be attracted to a headline about mutual funds than to a headline about ETFs -- went with the \"\"shocking\"\" headline about the former. In any case, as you already pointed out, ETFs need to know their value throughout the day, as do the investors in that ETF. Even momentary outages of price sources can be disastrous. Although mutual funds do not generally make transactions throughout the day, and fund investors are not typically interested in the fund's NAV more than once per day, the fund managers don't just sit around all day doing nothing and then press a couple buttons before the market closes. They do watch their NAV very closely during the day and think very carefully about which buttons to press at the end of the day. If their source of stock price data goes offline, then they're impacted almost as severely as -- if less visibly than -- an ETF. Asking Yahoo for prices seems straightforward, but (1) you get what you pay for, and (2) these fund companies are built on massive automated infrastructures that expect to receive their data from a certain source in a certain way at a certain time. (And they pay a lot of money in order to be able to expect that.) It would be quite difficult to just feed in manual data, although in the end I suspect some of these companies did just that. Either they fell back to a secondary data supplier, or they manually constructed datasets for their programs to consume.\"", "title": "" } ]	fiqa
af882f058733cea220ef36d5600f9580	Money Saved on finance charges	[ { "docid": "d8d93091dc67ea4428fab885a4701634", "text": "Avoiding a cost (interest) isn't quite the same as income. There is no entry, nothing for you to consider for this avoided interest. What you do have is an expense that's no longer there, and you can decide to use that money elsewhere each month.", "title": "" } ]	[ { "docid": "cfe8e9dcb52bd41dc17b6d7e41bd1ca0", "text": "Probably not. A debit of 50K in your Bank statement does not mean that its invested into tax saving instrument. This question is best answered by the finance department of your company. Practise vary from organization to organization.", "title": "" }, { "docid": "a5c55a0be58149978b91ecb8eba52a1b", "text": "To get a good estimate, go here or other similar sites and see. But basically, yes, you can save yourself a whole lot of money just by paying extra every month. One note though, do make sure you are specifying that you want the money to go towards principal, not escrow or toward prepaying interest.", "title": "" }, { "docid": "6af47f17f6fd97f28d4f350a19f7d229", "text": "The answer to question 1 is yes, you can always reduce your loan when you remortgage by introducing additional funds. There is some possibility a (relatively) small charge might be applicable for managing the marginally more complex transfer, but it shouldn't be too much.. The answer to question 2 is NONE of your over payment amounts would have gone on interest, but you MIGHT incur penalty charges. Interest is only charged on the outstanding loan amount (i.e. £100K initially, reducing to £85K over 2 years in your example) at the interest rate determined by your mortgage agreement - there is no 'paying off interest' as such. Over payments are essentially all capital payments, reducing the principal/loan amount, so no additional interest would be paid if you opted for over payments. If you used your £10K to made the over payments throughout the 2 year fixed period you would in fact have paid LESS interest by the end of the 2 years, because you would be reducing the loan amount at a quicker rate, and thus the interest you pay each month (based on the lower outstanding loan at that time) would be lower. BUT... over payments might have attracted over payment penalties (typically a percentage of the amount you pay) and these penalties often mean it's not worth doing. Most fixed term mortgages have such penalties, but it depends on the agreement, and many mortgages also allow you to make over payments up to a certain amount each year before you get hit. Edit (additional suggestion): If the example you provide is one based on what you expect might happen to you over the next couple of years, something you could CONSIDER is an offset mortgage. Here your £10K that you accumulate reduces your interest through the 2 years, but you keep it in savings where you can access it if you need to. Accessing it will then cause a corresponding rise in interest payments, but to no higher level than you would have been paying if you had nothing in the savings in the first place. You usually pay a slightly higher interest rate for these sort of mortgage, so it's impossible to know if it would be more economical, and how appropriate it would be for you in other respects depends on many factors.", "title": "" }, { "docid": "74084c4b8cc6c6fa4d9e432f6e43764e", "text": "It really depends on the terms of your loan. For example, some loans have a pre-payment penalty. You will just have to ask your lender to know for sure. That said. In almost all cases, you can save considerable interest by making extra payments towards the principal. Be careful though, some lenders require you to specifically mark the payment to be applied to the loan principal and if you don't designate it as such, they will just apply it as an early payment for future months and not reduce your balance until that future payment is due, which doesn't help at all. Another option to reduce your total interest costs, though more common for larger loans like mortgages, is to split the payment into multiple parts and pay more than once a month instead of a single payment each month. This only works if they calculate interest daily and would be useless if they do it monthly. They key is knowing the terms of your loan. Despite it not being in their best interest (pun intended), most lenders will work with you on a strategy to help you minimize the interest cost in the name of customer service.", "title": "" }, { "docid": "faf9f9e338f01e03d85205250f7a0f20", "text": "\"You're looking at the \"\"wrong\"\" credit. Here's the Wikipedia article about the bookkeeping (vs the Finance, that you've quoted) term.\"", "title": "" }, { "docid": "e31d8c3f836d3ec8d604107df90b5081", "text": "For the purpose of personal finance, treating $500 as Interest Expense is sufficient. For business accounting, it involves making the $500 a contra-liability and amortizing it as interest expense over the course of life of the loan.", "title": "" }, { "docid": "c2e80c349518ee93dd52768ec917fa84", "text": "I would take each of these items and any others and consider how you would count it as an expense in the other direction. If you have an account for parking expenses or general transportation funds, credit that account for a refund on your parking. If you have an account for expenses on technology purchases, you would credit that account if you sell a piece of equipment as you replace it with an upgrade. If you lost money (perhaps in a jacket) how would you account for the cash that is lost? Whatever account would would subtract from put a credit for cash found.", "title": "" }, { "docid": "84a58fcc7c13404d5abcb07c7a8c7219", "text": "IRS Publication 502: Medical expenses are the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part or function of the body. Loan interest and fees do not meet this definition. Your loan interest and fees are a cost of the payment method you chose (a loan), not a cost of medical treatment. The IRS makes clear where loan interest is deductible. Publication 936 discusses home mortgage interest deductions, and Publication 970 specifically discusses student loan interest deductions. Considering Publication 502's definition of a medical expense, combined with the absence of a publication discussing medical expense loan interest deductions, one must conclude that medical loan interest and fees are not deductible.", "title": "" }, { "docid": "1d799c3133fcb24c4d751bc73e760e3d", "text": "\"Lachlan has $600 cash and a car worth $500. That's $1,100. The new car is priced at $21,800. Lachlan needs a loan for $20,700. However, the finance company insists that the buyer must pay a 10% deposit, which is $2,180. Lachlan only has $1,100, so no loan. The car dealer wants to make a sale, so suggests some tricks. The car dealer could buy Lachlan's old banger for $1,500 instead of $500, and sell the new car for $22,800 instead of $21,800. Doesn't make a difference to the dealer, he gets the same amount of cash. Now Lachlan has $600 cash and $1,500 for his car or $2,100 in total. He needs 10% of $22,800 as deposit which is $2,280. That's not quite there but you see how the principle works. Lachlan is about $200 short. So the dealer adds $1,200 to both car prices. Lachlan has $600 cash and a car \"\"worth\"\" $1,700, total $2,300. The new car is sold for $23,000 requiring a $2,300 deposit which works out exactly. How could we have found the right amount without guessing? Lachlan had $1,100. The new car costs $21,800. The dealer increases both prices by x dollars. Lachlan has now $1,100 + x deposit. The car now costs $21,800 + x. The deposit should be 10%, so $1,100 + x = 10% of ($21,800 + x) = $2,180 + 0.1 x. $1,100 + x = $2,180 + 0.1 x : Subtract $1,100 x = $1,080 + 0.1 x : Subtract 0.1 x 0.9 x = $1,080 : Divide by 0.9 x = $1,080 / 0.9 = $1,200 The dealer inflates the cost of the new car and the value of the old car by $1,200. Now that's the theory. In practice I don't know how the finance company feels about this, and if they would be happy if they found out.\"", "title": "" }, { "docid": "6724e21772c00e77a51192829255d57e", "text": "So hopefully you are not spending the money before you make it. If you are, you are asking for trouble. If not the solution is easy. If you use a spreadsheet for tracking have a item in your checking account running total that is simply CC to pay. Lets say you just got paid, and your balance is like this: You can then do virtual withdrawals for each category In this case you have 70 left to spend. Whoops the car gets a flat which costs you 5 that you put on the card and you also pay your rent by CC. Then your spreadsheet should look like this: You still have the 70 left to spend, and when the CC bill comes due you are free to write the check.", "title": "" }, { "docid": "68951b4c12af986332c0bdd35a0d268e", "text": "This will not result in any finance charges: I wouldn't recommend cutting it quite so close, but as long as you pay the full balance as shown on each statement by the due date shown on that same statement, you won't incur a finance charge. Of course this only applies in the case of ordinary purchases that have a grace period.", "title": "" }, { "docid": "ff8f7a486adf61b296339b15fb9d2700", "text": "Thanks for that, it did help. I think my issue is I don't work in finance itself, I'm a lawyer, and 'capital' generally has a very specific meaning in English company law, where it refers exclusively to shareholder capital. I realise capital in finance terms includes both debt and equity investment.", "title": "" }, { "docid": "a2d54102c2d480f7adc795284fb66e01", "text": "So if someone would invest 14000 credits on 1st April 2016, he'd get monthly dividend = ((14000 ÷ 14) × 0.0451) × (1 - 1.42 ÷ 100) = 44.459 credits, right? One would get ((14000 ÷ 14) × 0.0451) = 45.1 is what you would get. The expenses are not to be factored. Generally if a scheme has less expense ratio, the yield is more. i.e. this has already got factored in 0.0451. If the expense ratio was less, this would have been 0.05 if expense ration would have been more it would have been 0.040. Can I then consider the bank deposit earning a higher income per month than the mutual fund scheme? As the MIP as classified as Hybrid funds as they invest around 30% in equities, there is no tax on the income. More so if there is a lock-in of 3 years. In Bank FD, there would be tax applicable as per tax brackets.", "title": "" }, { "docid": "459f2b37e547afbe10ef09522529d1d6", "text": "The best way is to retain the charge slips. After you are done for the month you can discard them. Alternatively if you are using any of the personal finance tool or a simple XLS to track exepnses, it would be easy to figure out what you actually spent and what was not yours.", "title": "" }, { "docid": "06db9794964fa3e19362d98a36016b50", "text": "You first compute your Ordinary Income (which includes Dividends, since they are taxed as OI), then you apply the standard tax bracket function to it, which is a piecewise linear function f() such that TAX = f(INCOME). It can be found at About.com. You can transform this into NET_INCOME = g(INCOME) = INCOME - TAX = INCOME - f(INCOME). Presumably g() is what you want to graph. I've actually graphed it before: Not too interesting, even on a LogLog scale. More interesting is the marginal tax rate, which is the derivative of f(), or the negative of the derivative of g(): ST (straight tax) shows what the marginal tax rate would look like if f() was just f(x)=kx or f(x)=kx+c, i.e. a straight/flat tax. The net tax rate (f(x)/x) actually gets more interesting if you also include [federal subsidies/deductions](Src: http://fbheron.org/wp-content/uploads/2014/03/fedassistance_ft.jpg) as a negative tax: Capital Gains are taxed separately and have (almost) nothing to do with this function. Corporate tax is not payed by you (although the burden of the tax [technical term] may fall upon you). Sorry I couldn't simplify; taxes are just complicated.", "title": "" } ]	fiqa
9e544280d1709d37b778655023e585b2	Relative Strength Index: Yahoo vs Google Finance	[ { "docid": "0abcd449cae2ed7664022837ddd01ced", "text": "\"Google's RSI is using a 10 period on 2 minute bars - i.e. it is based upon the last 20 minutes of data. Yahoo's RSI is using a 14 period lookback on an undetermined timeframe (you could maybe mouse-over and see what incremental part of the chart is giving) and given the \"\"choppier\"\" price chart, probably 30 second or 1 minute bars. Given the difference in both the period specified and the periodicity of the charts - you should expect different results.\"", "title": "" }, { "docid": "51b119949722b2a428b636acee721e2d", "text": "Look at the 'as of'. Google's as of is 11:27 whil Yahoo's is 11:19. Given the shape of the Google curve, it looks to me that Yahoo's may well drop that much in the next 8 minutes. In fact, looking at it now, Yahoo's algorithm showed it as about 30 at 11:24, before going back up again some. It may not have been identical to Google's, but it was certainly close.", "title": "" } ]	[ { "docid": "745af972c291ab920e3b2690a6d0ef9d", "text": "Yes, it depends on the fund it's trying to mirror. The ETF for the S&P that's best known (in my opinion) is SPY and you see the breakdown of its holdings. Clearly, it's not an equal weighted index.", "title": "" }, { "docid": "77709d67eb01b6301a7a4f77c3b801a8", "text": "\"I went to Morningstar's \"\"Performance\"\" page for FUSEX (Fideltiy's S&P 500 index fund) and used the \"\"compare\"\" tool to compare it with FOSFX and FWWFX, as well as FEMKX (Fidelity Emerging Markets fund). According to the data there, FOSFX outperformed FUSEX in 2012, FEMKX outperformed FUSED in 2010, and FWWFX outperformed FUSEX in both 2010 and 2012. When looking at 10- and 15-year trailing returns, both FEMKX and FWWFX outperformed FUSEX. What does this mean? It means it matters what time period you're looking at. US stocks have been on an almost unbroken increase since early 2009. It's not surprising that if you look at recent returns, international markets will not stack up well. If you go back further, though, you can find periods where international funds outperformed the US; and even within recent years, there have been individual years where international funds won. As for correlation, I guess it depends what you mean by \"\"low\"\". According to this calculator, for instance, FOSFX and FUSEX had a correlation of about 0.84 over the last 15 years. That may seem high, but it's still lower than, say, the 0.91 correlation between FUSEX and FSLCX (Fideltiy Small Cap). It's difficult to find truly low correlations among equity funds, since the interconnectedness of the global economy means that bull and bear markets tend to spread from one country to another. To get lower correlations you need to look at different asset classes (e.g., bonds). So the answer is basically that some of the funds you were already looking at may be the ones you were looking for. The trick is that no category will outperform any other over all periods. That's exactly what volatility means --- it means the same category that overperforms in some periods will underperform in others. If international funds always outperformed, no one would ever buy US funds. Ultimately, if you're trying to decide on investments for yourself, you need to take all this information into account and combine it with your own personal preferences, risk tolerance, etc. Anecdotally, I recently did some simulation-based analyses of Vanguard funds using data from the past 15 years. Over this period, Vanguard's emerging markets fund (VEIEX) comes out far ahead of US funds, and is also the least-correlated with the S&P 500. But, again, this analysis is based only on a particular slice of time.\"", "title": "" }, { "docid": "366110afc6c37433dbbd7d11fa1dd8a6", "text": "If you use Google Finance, you will get incorrect results because Google Finance does not show the dividend history. Since your requirement is that dividends are re-invested, you should use Yahoo Finance instead, downloading the historical 'adjusted' price.", "title": "" }, { "docid": "ea277e4ed379486c09e3bbc1d31fd249", "text": "Your analysis is correct. The income statement from Google states that LinkedIn made $3.4 million in 2010 - the same number you backed into by using the P/E ratio. As you point out, the company seems overvalued compared to other mature companies. There are companies, however, that posts losses and still trade on exchanges for years. How should these companies be valued? As other posters have pointed out there are many different ways to value a company. Some investors may be speculating on substantial growth. Others may be speculating on IPO hype. Amazon did not make a profit until 2003. Its stock had been around for years before that and even split many times. If you bought the stock in 1998 and still have it you would be doing quite well.", "title": "" }, { "docid": "5c815a65729347e19e3babaa7c24b264", "text": "What a pointless list! It's ranked by total short interest outstanding. That's completely meaningless. For instance, a $1 billion company with $1 billion in shorts (meaning the market thinks it's bankrupt) would be ranked much better than a $100 billion company with $1.1 billion in short interest. tl;dr: pure and utter bullshit", "title": "" }, { "docid": "9764ba3afd9210806de741e49eaf845a", "text": "\"Google Docs spreadsheets have a function for filling in stock and fund prices. You can use that data to graph (fund1 / fund2) over some time period. Syntax: =GoogleFinance(\"\"symbol\"\", \"\"attribute\"\", \"\"start_date\"\", \"\"num_days\|end_date\"\", \"\"interval\"\") where: This analysis won’t include dividends or distributions. Yahoo provides adjusted data, if you want to include that.\"", "title": "" }, { "docid": "f2b2cd5d67aa4c7040942dcefbcbc302", "text": "The biggest issue with Yahoo Finance is the recent change to the API in May. The data is good quality, includes both dividend/split adjusted and raw prices, but it's much more difficult to pull the data with packages like R quantmod than before. Google is fine as well, but there are some missing data points and you can't unadjust the prices (or is it that they're all unadjusted and you can't get adjusted? I can't recall). I use Google at home, when I can't pull from Bloomberg directly and when I'm not too concerned with accuracy. Quandl seems quite good but I haven't tried them. There's also a newer website called www.alphavantage.co, I haven't tried them yet either but their data seems to be pretty good quality from what I've heard.", "title": "" }, { "docid": "5b00300f2a333c26c62eefd7a6367917", "text": "When you look at the charts in Google Finance, they put the news on the right hand side. The time stamp for each news item is indicated with a letter in the chart. This often shows what news the market is reacting to. In your example: Clicking on the letter F leads to this Reuters story: http://www.reuters.com/article/2011/02/04/usa-housing-s-idUSWAT01486120110204", "title": "" }, { "docid": "d94213b22892d8c0384ec8dfa260408f", "text": "On Monday, the 27th of June 2011, the XIV ETF underwent a 10:1 share split. The Yahoo Finance data correctly shows the historic price data adjusted for this split. The Google Finance data does not make the adjustment to the historical data, so it looks like the prices on Google Finance prior to 27 June 2011 are being quoted at 10 times what they should be. Coincidentally, the underlying VIX index saw a sudden surge on the Friday (24 June) and continued on the Monday (27 June), the date that the split took effect. This would have magnified the bearish moves seen in the historic price data on the XIV ETF. Here is a link to an article detailing the confusion this particular share split caused amongst investors. It appears that Google Finance was not the only one to bugger it up. Some brokers failed to adjust their data causing a lots of confusion amongst clients with XIV holdings at the time. This is a recurring problem on Google Finance, where the historic price data often (though not always) fails to account for share splits.", "title": "" }, { "docid": "a5c828411013510f191bb0f58be880db", "text": "I'm not 100% familiar with the index they're using to measure hedge fund performance, but based on the name alone, comparing market returns to market neutral hedge fund returns seems a bit disingenuous. That doesn't mean the article is wrong, and they have a point about the democratization of data, but still.", "title": "" }, { "docid": "fbcdc4709a26a75edae1f33af053105b", "text": "This didn't answer his question. Also, while I agree with you that the Dow is meaningless (and your explanation why). In the investment industry, we don't only focus on the S&P Index.. Many have a specific benchmark they aim to outperform that matches their investment strategy (i.e. Russell Mid Cap Value, Russell 3000, etc.).", "title": "" }, { "docid": "4e7195e30b812e86bb2533302a952026", "text": "I agree with @Turukawa that the x-axes need to be the same to make a direct comparison. However, the graphs you linked make me think of introductory calculus: If you time averaged plots, speculative investments (gold, housing) seem to have many large concave up time periods and the dow jones has many concave down sections. Using the concavity test: If the first derivative tells you about the rate of change, the second derivative tells you about the rate of change of rate of change. Remember back to Physics 101: 1st derivative is velocity & second derivative is acceleration. It would be interesting to have the same time scales for your plots & compare these accelerations between the two. I suspect the more volatile investments would have larger (in magnitude) accelerations during boom/bust cycles than less speculative investments.", "title": "" }, { "docid": "5c90ee4ba274fd55bd125b0bc0623285", "text": "On closer look, it appears that Google Finance relies on the last released 10-k statement (filing date 10/30/2013), but outstanding shares as of last 10-Q statement. Using these forms, you get ($37,037M / 5.989B ) = $6.18 EPS. I think this is good to note, as you can manually calculate a more up to date EPS value than what the majority of investors out there are relying on.", "title": "" }, { "docid": "c83ab56176a53cc349d933f86728f74c", "text": "\"I use Google Finance too. The only thing I have problem with is dividend info which it wouldn't automatically add to my portfolio. At the same time, I think that's a lot to ask for a free web site tool. So when dividend comes, I manually \"\"deposit\"\" the dividend payment by updating the cash amount. If the dividend comes in share form, I do a BUY at price 0 for that particular stock. If you only have 5 stocks, this additional effort is not bad at all. I also use the Hong Kong version of it so perhaps there maybe an implementation difference across country versions. Hope this helps. CF\"", "title": "" }, { "docid": "d3b2860b2a0cb99380d086fe2d4ba081", "text": "Still working on exact answer to question....for now: (BONUS) Here is how to pull a graphical chart with the required data: Therefore: As r14 = the indicator for RSI. The above pull would pull Google, 6months, line chart, linear, large, with a 50 day moving average, a 200 day exponential moving average, volume, and followed up with RSI. Reference Link: Finance Yahoo! API's", "title": "" } ]	fiqa
c2ab3875b49673a295fb57d5b4369723	Canadian personal finance software with ability to export historical credit card transactions?	[ { "docid": "f87c338f0c7d65983f10fcf7c1043cc8", "text": "Yodlee is the back-end which communicates with the banks, and Mint just provide a pretty layer on top. You can sign up for an account with Yodlee directly, which may give you the flexibility you need.", "title": "" }, { "docid": "763b586d811fa6556c94d509dafdbe69", "text": "\"Yodlee and Mint are good solutions if you don't mind your personal financial information being stored \"\"in the cloud\"\". I do, so I use Quicken. Quicken stores whatever you give to it for as long as you want: so the only question is how to get the credit card transactions you want into it? All my financial institutions allow me to view my credit card statements for a year back, and download them in a form Quicken can read. So you can have a record of your transactions from a year ago right now, and in a year you will have two year's worth.\"", "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": "b1bdb3370adf99f1ab0f40a9875ad800", "text": "I use http://moneydance.com/ it has Mac, Windows and Linux versions and works well for my needs.", "title": "" }, { "docid": "198cba582cbd5efbc4acd1da63d19d23", "text": "You could try looking for a UK implementation of http://www.yodlee.com/ : Google tells me that http://www.lovemoney.com/ ( http://www.yodlee.com/2010_1_20.html ) is one such service. I use ANZ money manager - an Australian implementation of Yodlee and find it very useful. I wouldn't use Yodlee directly though (http://money-watch.co.uk/7197/uk-pfm-tool-review-yodlee-moneycenter) those T&Cs don't sound great.", "title": "" }, { "docid": "c86cf4c13b5cedf554d0964b7b378467", "text": "\"I use \"\"Money Manager Ex\"\" which is a Windows application I use on PC to log my transactions and for simple statistic. They have two versions, simple standlone application and self-hosted web app.\"", "title": "" }, { "docid": "8acc504cb209517ea0de61366d0ec50e", "text": "Not sure you are going to find anything like this in Excel - with the automatic lookup in specific. Microsoft has a template available; but it looks to be a pretty busy page. Why not look at other software? If you have a PC, Quicken and Microsoft Money are of course the big guns. You don't mention why you switched away from MS Money... There are many other packages as well. The one that I use (but have no other financial interest in) is Moneydance as it was the best on Mac at the time I was looking. It also runs on Windows and Linux.", "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": "faef59d5875f40e992a989808dd55827", "text": "Systems to research that may help you out: Less Accounting and Wave are great because they can import data from banks / credit cards. I know you said your bank doesn't export it but it seems like something as a small business you would want.", "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": "402ec271c613a3c843f3a94542cfd8ec", "text": "\"Parts of what you want are possible, but taken as a whole, you're out of luck. First of all, there is no master database of every cardholder in the country. The only way to check if information is correct is to ask the issuing bank. The AVS system is a way to automate doing so, but it's possible to call the bank directly and verbally verify the address. That means you're subject to the whims of what the issuing bank chooses to support. Banks that are part of the Visa and MasterCard networks generally only verify the numeric parts (address, apartment number, zipcode). AmEx can also verify the cardholder name. But if the bank doesn't have support for validating something, you can't validate it. Separately, there is a \"\"verify-only\"\" transaction which some processors support, which will do exactly what you want: Return AVS values without ever charging the card. However, processors require you to have the \"\"approved merchant account\"\" you don't want to have to have. Without being a merchant, you shouldn't have access to other people's credit cards anyway. Would you really want anyone in the country to be able to verify anyone else's address whenever they want? In short, whatever purpose you have for wanting this probably falls into one of three categories:\"", "title": "" }, { "docid": "46bc1213fb52a6c9ecdc1047f6d59daa", "text": "For double entry bookkeeping, personal or small business, GnuCash is very good. Exists for Mac Os.", "title": "" }, { "docid": "9e73b8c9ad91cf3c650c89a14d2f62db", "text": "Quicken has tools for this, but they have some quirks so i hesitate to actually recommend it on that basis.", "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": "668cecf9dd78bc8eeb8ac981a1655342", "text": "Take a look at http://en.wikipedia.org/wiki/Comparison_of_accounting_software, in particular the rows with a market focus of 'personal'. This is probably one of the more complete lists available, and shows if they are web-based (like Mint) or standalone (like Quicken or Microsoft Money).", "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": "f30604cdaf6d233b808313a4423f3974", "text": "I currently use Moneydance on my Mac. Before that I had used Quicken on a PC until version 2007. It is pretty good, does most simple investment stuff just fine. It can automatically download prices for regular stocks. Mutual funds I have to input by hand.", "title": "" }, { "docid": "82b9b92a9cd236b37a2eb01f8a3d5dfb", "text": "The best way to answer this question is to try. GnuCash is free, so setting it up and giving it a go shouldn't be too hard. After all, what really matters is how helpful the program is for your purposes. One aspect of personal finance that stops me from jumping to GnuCash/KMyMoney/MoneyDance is the ability to download transactions from my financial institutions. Last time I checked, the process was somewhat involved and support was limited for a handful of banks. Because of that, I decided to stick with MS Money (and once Microsoft dropped the ball, with Quicken). I am sure things are better these days, but I am still not comfortable with trusting my finances to something new and unproven. I still remember how painful it was several years ago, when some bug in MS Money caused occasional mess-up of the reconciliation state for the American Express credit cards.", "title": "" } ]	fiqa
f1f2b66c33b01356936eb4ae6b6304b4	US Dollar Index: a) where are long term charts; also b) is it available on Google Finance by any chance?	[ { "docid": "9a75ef672f18664183b4a36f7caf546b", "text": "a) the quick answer to your correlation is quantitative easing. basically the central bank has been devaluing the US dollar, making the prices of all goods increase (including stocks.) the stock market appear to have recovered from 2009 lows but its mainly an illusion. anyway the QE packages are very known when the correlation is not there, that means other meaningful things are happening such as better corporate earnings and real growth. b) the thinkorswim platform has charts for dollar futures, symbol /dx", "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": "3ffd7588e47bdcfbf842058ec577af8f", "text": "\"Answering this question is weird, because it is not really precise in what you mean. Do you want all stocks in the US? Do you want a selection of stocks according to parameters? Do you just want a cool looking graph? However, your possible misuse of the word derivative piqued my interest. Your reference to gold and silver seems to indicate that you do not know what a derivative actually is. Or what it would do in a portfolio. The straightforward way to \"\"see\"\" an efficient frontier is to do the following. For a set of stocks (in this case six \"\"randomly\"\" selected ones): library(quantmod) library(fPortfolio) library(PerformanceAnalytics) getSymbols(c(\"\"STZ\"\", \"\"RAI\"\", \"\"AMZN\"\", \"\"MSFT\"\", \"\"TWX\"\", \"\"RHT\"\"), from = \"\"2012-06-01\"\", to = \"\"2017-06-01\"\") returns <- NULL tickerlist <- c(\"\"STZ\"\", \"\"RAI\"\", \"\"AMZN\"\", \"\"MSFT\"\", \"\"TWX\"\", \"\"RHT\"\") for (ticker in tickerlist){ returns <- cbind(returns, monthlyReturn(Ad(eval(as.symbol(ticker))))) } colnames(returns) <- tickerlist returns <- as.timeSeries(returns) frontier <- portfolioFrontier(returns) png(\"\"frontier.png\"\", width = 800, height = 600) plot(frontier, which = \"\"all\"\") dev.off() minvariancePortfolio(returns, constraints = \"\"LongOnly\"\") Portfolio Weights: STZ RAI AMZN MSFT TWX RHT 0.1140 0.3912 0.0000 0.1421 0.1476 0.2051 Covariance Risk Budgets: STZ RAI AMZN MSFT TWX RHT 0.1140 0.3912 0.0000 0.1421 0.1476 0.2051 Target Returns and Risks: mean Cov CVaR VaR 0.0232 0.0354 0.0455 0.0360 https://imgur.com/QIxDdEI The minimum variance portfolio of these six assets has a mean return is 0.0232 and variance is 0.0360. AMZN does not get any weight in the portfolio. It kind of means that the other assets span it and it does not provide any additional diversification benefit. Let us add two ETFs that track gold and silver to the mix, and see how little difference it makes: getSymbols(c(\"\"GLD\"\", \"\"SLV\"\"), from = \"\"2012-06-01\"\", to = \"\"2017-06-01\"\") returns <- NULL tickerlist <- c(\"\"STZ\"\", \"\"RAI\"\", \"\"AMZN\"\", \"\"MSFT\"\", \"\"TWX\"\", \"\"RHT\"\", \"\"GLD\"\", \"\"SLV\"\") for (ticker in tickerlist){ returns <- cbind(returns, monthlyReturn(Ad(eval(as.symbol(ticker))))) } colnames(returns) <- tickerlist returns <- as.timeSeries(returns) frontier <- portfolioFrontier(returns) png(\"\"weights.png\"\", width = 800, height = 600) weightsPlot(frontier) dev.off() # Optimal weights out <- minvariancePortfolio(returns, constraints = \"\"LongOnly\"\") wghts <- getWeights(out) portret1 <- returns%%wghts portret1 <- cbind(monthprc, portret1)[,3] colnames(portret1) <- \"\"Optimal portfolio\"\" # Equal weights wghts <- rep(1/8, 8) portret2 <- returns%%wghts portret2 <- cbind(monthprc, portret2)[,3] colnames(portret2) <- \"\"Equal weights portfolio\"\" png(\"\"performance_both.png\"\", width = 800, height = 600) par(mfrow=c(2,2)) chart.CumReturns(portret1, ylim = c(0, 2)) chart.CumReturns(portret2, ylim = c(0, 2)) chart.Drawdown(portret1, main = \"\"Drawdown\"\", ylim = c(-0.06, 0)) chart.Drawdown(portret2, main = \"\"Drawdown\"\", ylim = c(-0.06, 0)) dev.off() https://imgur.com/sBHGz7s Adding gold changes the minimum variance mean return to 0.0116 and the variance stays about the same 0.0332. You can see how the weights change at different return and variance profiles in the picture. The takeaway is that adding gold decreases the return but does not do a lot for the risk of the portfolio. You also notice that silver does not get included in the minimum variance efficient portfolio (and neither does AMZN). https://imgur.com/rXPbXau We can also compare the optimal weights to an equally weighted portfolio and see that the latter would have performed better but had much larger drawdowns. Which is because it has a higher volatility, which might be undesirable. --- Everything below here is false, but illustrative. So what about the derivative part? Let us assume you bought an out of the money call option with a strike of 50 on MSFT at the beginning of the time series and held it to the end. We need to decide on the the annualized cost-of-carry rate, the annualized rate of interest, the time to maturity is measured in years, the annualized volatility of the underlying security is proxied by the historical volatility. library(fOptions) monthprc <- Ad(MSFT)[endpoints(MSFT, \"\"months\"\")] T <- length(monthprc) # 60 months, 5 years vol <- sd(returns$MSFT)sqrt(12) # annualized volatility optprc <- matrix(NA, 60, 1) for (t in 1:60) { s <- as.numeric(monthprc[t]) optval <- GBSOption(TypeFlag = \"\"c\"\", S = s, X = 50, Time = (T - t) / 12, r = 0.001, b = 0.001, sigma = vol) optprc[t] <- optval@price } monthprc <- cbind(monthprc, optprc) colnames(monthprc) <- c(\"\"MSFT\"\", \"\"MSFTCall50\"\") MSFTCall50rets <- monthlyReturn(monthprc[,2]) colnames(MSFTCall50rets) <- \"\"MSFTCall50rets\"\" returns <- merge(returns, MSFTCall50rets) wghts <- rep(1/9, 9) portret3 <- returns%%wghts portret3 <- cbind(monthprc, portret3)[,3] colnames(portret3) <- \"\"Equal weights derivative portfolio\"\" png(\"\"performance_deriv.png\"\", width = 800, height = 600) par(mfrow=c(2,2)) chart.CumReturns(portret2, ylim = c(0, 4.5)) chart.CumReturns(portret3, ylim = c(0, 4.5)) chart.Drawdown(portret2, main = \"\"Drawdown\"\", ylim = c(-0.09, 0)) chart.Drawdown(portret3, main = \"\"Drawdown\"\", ylim = c(-0.09, 0)) dev.off() https://imgur.com/SZ1xrYx Even though we have a massively profitable instrument in the derivative. The portfolio analysis does not include it because of the high volatility. However, if we just use equal weighting and essentially take a massive position in the out of the money call (which would not be possible in real life), we get huge drawdowns and volatility, but the returns are almost two fold. But nobody will sell you a five year call. Others can correct any mistakes or misunderstandings in the above. It hopefully gives a starting point. Read more at: https://en.wikipedia.org/wiki/Modern_portfolio_theory https://en.wikipedia.org/wiki/Option_(finance) The imgur album: https://imgur.com/a/LoBEY\"", "title": "" }, { "docid": "8c755610386012c509020b65c42c3891", "text": "\"Yes, there is a very good Return vs Risk graph put out at riskgrades.com. Look at it soon, because it will be unavailable after 6-30-11. The RA (return analysis) graph is what I think you are looking for. The first graph shown is an \"\"Average Return\"\", which I was told was for a 3 year period. Three period returns of 3, 6 and 12 months, are also available. You can specify the ticker symbols of funds or stocks you want a display of. For funds, the return includes price and distributions (total return), but only price movement for stocks - per site webmaster. I've used the graphs for a few years, since Forbes identified it as a \"\"Best of the Web\"\" site. Initially, I found numerous problems with some of the data and was able to work with the webmaster to correct them. Lately though, they have NOT been correcting problems that I bring to their attention. For example, try the symbols MUTHX, EDITX, AWSHX and you'll see that the Risk Grades on the graphs are seriously in error, and compress the graph results and cause overwriting and poor readability. If anyone knows of a similar product, I'd like to know about it. Thanks, George\"", "title": "" }, { "docid": "ee13d447ca63a0e4424994931d061598", "text": "https://www.hussmanfunds.com/wmc/wmc171009m.png >The following charts will provide a sense of where the U.S. equity market currently stands. The first chart shows our margin-adjusted CAPE, which as noted above has a correlation of about -0.89 with actual subsequent market returns across U.S. market cycles since the 1920’s. https://www.hussmanfunds.com/wmc/wmc171009.htm It will turn, downside potential is historic.", "title": "" }, { "docid": "96ffe6a551593b9b69ec6a68d6a2175b", "text": "You may refer to project http://jstock.sourceforge.net. It is open source and released under GPL. It is fetching data from Yahoo! Finance, include delayed current price and historical price.", "title": "" }, { "docid": "3aeef25d59c01d9382647746f9d7cada", "text": "\"I would make this a comment but I am not allowed apparently. Unless your continent blows up, you'll never lost all your money. Google \"\"EUR USD\"\" if you want news stories or graphs on this topic. If you're rooting for your 10k USD (but not your neighbors), you want that graph to trend downward.\"", "title": "" }, { "docid": "55f332da2bc6737a330b520c90586811", "text": "The portion of a stock movement not correlated with stocks in general is called Alpha. I don't know of any online tools to graph alpha. Keep in mind that a company like Apple is so huge right now that any properly weighted index will have to correlate with it to some degree.", "title": "" }, { "docid": "477ff98da46062514eaec62de026fd63", "text": "Center for Research in Security Prices would be my suggestion for where to go for US stock price history. Major Asset Classes 1926 - 2011 - JVL Associates, LLC has a PDF with some of the classes you list from the data dating back as far as 1926. There is also the averages stated on a Bogleheads article that has some reference links that may also be useful. Four Pillars of Investing's Chapter 1 also has some historical return information in it that may be of help.", "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": "6f8f4f0e86dfd43dd70b7d48f6ee9d1f", "text": "A number of places. First, fast and cheap, you can probably get this from EODData.com, as part of a historical index price download -- they have good customer service in my experience and will likely confirm it for you before you buy. Any number of other providers can get it for you too. Likely Capital IQ, Bloomberg, and other professional solutions. I checked a number of free sites, and Market Watch was the only that had a longer history than a few months.", "title": "" }, { "docid": "2011683a7282591b7487b02e7d336fa2", "text": "I think it depends where you live in the world, but I guess the most common would be: Major Equity Indices I would say major currency exchange rate: And have a look at the Libors for USD and EUR. I guess the intent of the question is more to see how implicated you are in the daily market analysis, not really to see if you managed to learn everything by heart in the morning.", "title": "" }, { "docid": "dc791ff7f4a2e648915913f2f2bc62ae", "text": "Yup. What I wanted to know was where they are pulling it up from. Have casually used Google finance for personal investments, but they suck at corp actions. Not sure if they provide free APIs, but that would probably suck too! :D", "title": "" }, { "docid": "105d56c81f6e2fbc365e6571b8b8d301", "text": "you could try [FRED](http://research.stlouisfed.org/fred2/graph/?g=HO7), or maybe try the CME and ICE's websites for some decent data.. haven't looked just suggestions - pretty sure the symbol for the Libor futures is EM, you could approximate from that so long as it's not a doctoral thesis", "title": "" }, { "docid": "e5488cb152533b6023509b909b183eec", "text": "If you're interested in slower scale changes, one option is to use indexes that value a common commodity in different currencies such as the Big Mac Index. If a Big Mac costs more in AUD but stays the same in USD, then AUD have gone up.", "title": "" }, { "docid": "21f7f766f152e5ee0c687d0465e8f0be", "text": "\"It's required by law. 12 USC 1759 (b) requires that membership in a credit union be limited to one or more groups with a \"\"common bond\"\", or to people within a particular geographic area. For lots more gory details on how this is interpreted and enforced, you can read the manual given to credit unions by the National Credit Union Administration, which is their regulatory agency.\"", "title": "" } ]	fiqa
7460c6b71d0f14e0acb2c1883bf99349	What is the value in using the “split transaction” feature present in some personal finance management tools?	[ { "docid": "23364edf63997b4d8e4a60c3cec083d8", "text": "\"Split transactions are indispensable to anybody interested in accurately tracking their spending. If I go to the big-box pharmacy down the road to pick up a prescription and then also grab a loaf of bread and a jug of milk while there, then I'd want to enter the transaction into my software as: I desire entering precise data into the software so that I can rely on the reports it produces. Often, I don't need an exact amount and estimated category totals would have been fine, e.g. to inform budgeting, or compare to a prior period. However, in other cases, the expenses I'm tracking must be tracked accurately because I'd be using the total to claim an income tax deduction (or credit). Consider how Internet access might be commingled on the same bill with the home's cable TV service. One is a reasonable business expense and deduction for the work-at-home web developer, whereas the other is a personal non-deductible expense. Were split transaction capability not available, the somewhat unattractive alternatives are: Ignore the category difference and, say, categorize the entire transaction as the larger or more important category. But, this deliberately introduces error in the tracked data, rendering it useless for cases where the category totals need to be accurate, or, Split the transaction manually. This doesn't introduce error into the tracked data, but suffers another problem: It makes a lot of work. First, one would need to manually enter two (or more) top-level transactions instead of the single one with sub-amounts. Perhaps not that much more work than if a split were entered. Worse is when it comes time to reconcile: Now there are two (or more) transactions in the register, but the credit card statement has only one. Reconciling would require manually adding up those transactions from the register just to confirm the amount on the statement is correct. Major pain! I'd place split transaction capability near the top of the list of \"\"must have\"\" features for any finance management software.\"", "title": "" } ]	[ { "docid": "0eadff1bdec0fa49ee8e33f7037d3e4f", "text": "\"The S&P 500 is an index. This refers to a specific collection of securities which is held in perfect proportion. The dollar value of an index is scaled arbitrarily and is based off of an arbitrary starting price. (Side note: this is why an index never has a \"\"split\"\"). Lets look at what assumptions are included in the pricing of an index: All securities are held in perfect proportion. This means that if you invest $100 in the index you will receive 0.2746 shares of IBM, 0.000478 shares of General Motors, etc. Also, if a security is added/dropped from the list, you are immediately rebalancing the remaining money. Zero commissions are charged. When the index is calculated, they are using the current price (last trade) of the underlying securities, they are not actually purchasing them. Therefore it assumes that securities may be purchased without commission or other liquidity costs. Also closely related is the following. The current price has full liquidity. If the last quoted price is $20 for a security, the index assumes that you can purchase an arbitrary amount of the security at that price with a counterparty that is willing to trade. Dividends are distributed immediately. If you own 500 equities, and most distributed dividends quarterly, this means you will receive on average 4 dividends per day. Management is free. All equities can be purchased with zero research and administrative costs. There is no gains tax. Trading required by the assumptions above would change your holdings constantly and you are exempt from short-term or long-term capital gains taxes. Each one of these assumptions is, of course, invalid. And the fund which endeavors to track the index must make several decisions in how to closely track the index while avoiding the problems (costs) caused by the assumptions. These are shortcuts or \"\"approximations\"\". Each shortcut leads to performance which does not exactly match the index. Management fees. Fees are charged to the investor as load, annual fees and/or redemptions. Securities are purchased at real prices. If Facebook were removed from the S&P 500 overnight tonight, the fund would sell its shares at the price buyers are bidding the next market day at 09:30. This could be significantly different than the price today, which the index records. Securities are purchased in blocks. Rather than buying 0.000478 shares of General Motors each time someone invests a dollar, they wait for a few people and then buy a full share or a round lot. Securities are substituted. With lots of analysis, it may be determined that two stocks move in tandem. The fund may purchase two shares of General Motors rather than one of General Motors and Ford. This halves transaction costs. Debt is used. As part of substitution, equities may be replaced by options. Option pricing shows that ownership of options is equivalent to holding an amount of debt. Other forms of leverage may also be employed to achieve desired market exposure. See also: beta. Dividends are bundled. VFINX, the largest S&P 500 tracking fund, pays dividends quarterly rather than immediately as earned. The dividend money which is not paid to you is either deployed to buy other securities or put into a sinking fund for payment. There are many reasons why you can't get the actual performance quoted in an index. And for other more exotic indices, like VIX the volatility index, even more so. The best you can do is work with someone that has a good reputation and measure their performance.\"", "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": "f23b2797867eb8b76bf95504624c9fbc", "text": "\"A Bloomberg terminal connected to Excel provides the value correcting splits, dividends, etc. Problem is it cost around $25,000. Another one which is free and I think that takes care of corporate action is \"\"quandl.com\"\". See an example here.\"", "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": "adbd26a148ea4692bd89917533e0a3ab", "text": "\"First of all, it's quite common-place in GnuCash (and in accounting in general, I believe) to have \"\"accounts\"\" that represent concepts or ideas rather than actual accounts at some institution. For example, my personal GnuCash book has a plethora of expense accounts, just made up by me to categorize my spending, but all of the transactions are really just entries in my checking account. As to your actual question, I'd probably do this by tracking such savings as \"\"negative expenses,\"\" using an expense account and entering negative numbers. You could track grocery savings in your grocery expense account, or if you want to easily analyze the savings data, for example seeing savings over a certain time period, you would probably want a separate Grocery Savings expense account. EDIT: Regarding putting that money aside, here's an idea: Let's say you bought a $20 item that was on sale for $15. You could have a single transaction in GnuCash that includes four splits, one for each of the following actions: decrease your checking account by $20, increase your expense account by $20, decrease your \"\"discount savings\"\" expense account by $5, and increase your savings account (where you're putting that money aside) by $5.\"", "title": "" }, { "docid": "1ca480847c8abfafbf8136bc97e2d5e0", "text": "I would investigate mint.com further. Plenty of people have written off using them because Intuit purchased them, but that seems like cutting of your nose to spite your face. I think mint.com is worth it for its Trends functionality alone, not to mention its automatic categorization of your purchases, reminders when bills are due, notifications of increased credit card interest rates, and overdraft notices. I don't think mint.com schedules bills & deposits, but it tracks stocks & mutual fund investments and compares your portfolio returns against Dow Jones, S&P 500, or NASDAQ if you wish. I'm not sure I see the advantage of manual transaction entry, but you can add cash or check transactions manually. As I mentioned earlier, automated categorization is a great feature. In addition, you can tag certain transactions as reimbursable or tax-related. If the primary feature you're interested in is stock quotes, maybe something like Yahoo Finance or Google Finance will be enough.", "title": "" }, { "docid": "c77a68279487ce6f60e828bd58592174", "text": "> “Any time you split a portfolio up — whether it be a credit portfolio or a trading book portfolio — you lose the benefits of diversification that allow you to reduce the capital you hold against it,” said Mr Austen. > Just to amplify this a little. Banks like diversification but you can only diversify within a reporting entity. At the moment, most banks have a single EU wide reporting entity so thay are free to combine trade and credit exposures. With a mandated split, they will be forced to split the pot between the UK and the EU entities as each must look healthy.", "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": "" }, { "docid": "74a1089bb1d601ec2114c0ed79ffc620", "text": "I still don't see the point of this software; rebalancing frequently is a waste of money (through fees). If you invest in index funds, you don't have to rebalance at all--effectively, the fund is doing it for you, and since they can generally trade more efficiently than individual investors can, that's a win. The Coverdell ESA is a great example. There's a maximum contribution amount, just as there are for almost any tax-exempt account. A decent financial adviser could help you plan how much to contribute to which accounts, at what time, and when you can/should start to withdraw from them.", "title": "" }, { "docid": "3bbda03f837541c501058d5c2e9831a5", "text": "Given your needs, GNUcash will do swimmingly. I've used it for the past 3 years and while it's a gradual learning process, it's been able to resolve most stuff I've thrown at it. Schedule bills and deposits in the calendar view so I can keep an eye on cash flow. GNUcash has scheduled payments and receipts and reconcilation, should you need them. I prefer to keep enough float to cover monthly expenses in accounts rather than monitor potential shortfalls. Track all my stock and mutual fund investments across numerous accounts. It pulls stock, mutual and bond quotes from lots of places, domestic and foreign. It can also pull transaction data from your brokers, if they support that. I manually enter all my transactions so I can keep control of them. I just reconcile what I entered into Quicken based on the statements sent to me. I do not use Quicken's bill pay There's a reconciliation mode, but I don't use it personally. The purpose of reconcilation is less about catching bank errors and more about agreeing on the truth so that you don't incur bank fees. When I was doing this by hand I found I had a terrible data entry error rate, but on the other hand, the bayesian importer likes to mark gasoline purchases from the local grocery store as groceries rather than gas. I categorize all my expenditures for help come tax time. GNUcash has accounts, and you can mark expense accounts as tax related. It also generates certain tax forms for you if you need that. Not sure what all you're categorizing that's helpful at tax time though. I use numerous reports including. Net Worth tracking, Cash not is retirement funds and total retirement savings. Tons of reports, and the newest version supports SQL backends if you prefer that vs their reports.", "title": "" }, { "docid": "d0635c74f875d15a57b2671500a2f318", "text": "Most corporations have a limit on the number of shares that they can issue, which is written into their corporate charter. They usually sell a number that is fewer than the maximum authorized number so that they have a reserve for secondary offerings, employee incentives, etc. In a scrip dividend, the company is distributing authorized shares that were not previously issued. This reduces the number of shares that it has to sell in the future to raise capital, so it reduces the assets of the company. In a split, every share (including the authorized shares that haven't been distributed) are divided. This results in more total shares (which then trade at a price that's roughly proportional to the split), but it does not reduce the assets of the company.", "title": "" }, { "docid": "6f35493317b0fa9767a0827ede4a4505", "text": "I appreciate it. I didn't operate under selling the asset year five but other than that I followed this example. I appreciate the help. These assignments are just poorly laid out. Financial management also plays on different calculation interactions so it is difficult for me to easily identify the intent at times. Thanks again.", "title": "" }, { "docid": "6c73d4e4bfea0767338957eb4d31e95b", "text": "In theory, if a company has 1m shares at $10 and does a 10 for 1 split, then the day after it has 10m shares at $1 (assuming no market move). So both the price and the number of share change, keeping the total value of the company unchanged. Regarding your BIS, I suspect that the new number of shares has not been reported yet because it's an ETF (the number of shares in issue changes everyday due to in/out flows). Your TWX example is not ideal either because there was a spin off on the same day as the stock split so you need to separate the two effects. Some studies have documented a positive stock split effect - one of the suggested reasons is that the stock becomes more liquid after the split. But other studies have rejected that conclusion, so you can probably safely consider that on average it will not have a material effect.", "title": "" }, { "docid": "bbe8039b3fc01785c7082c1a3f785444", "text": "In older days the merchants and their merchant banks[or service providers] would take funds in their currency. Say in this case USD. When the charge hits the issuer bank, the merchant and merchant bank gets there USD and were happy. The user would get charged in local currency Shekel in this case. The rate applied by his bank [and card provider, Visa/Master also take a cut] is the standard shelf rate to individuals. When business growing and banking becoming more sophisticated, lots of Merchant Banks and Merchants have created a new business, if you offer Shekel to all users then you have lots of Shekel that you can convert into USD. So in this model, the Merchant makes some more profit from Fx spread, the Merchant Bank makes good money in Fx. Your Bank [and card network] loose out. You stand to gain because you potentially get a better rate. All this theory is good. But the rates are moving and its quite difficult to find out if the rates offered directly by EI AI would be better than those offered by your bank. I have no experience in this example, but I have tried this with large shops, buy 2 items one charge in GBP and other in local currency around 2-3 times spread over a year. The difference in rate was close to identical, at times better or worse in range of .02%", "title": "" }, { "docid": "1d63cd0299ab297fd07d4a648063b2e1", "text": "\"If it could, it seems yet to be proven. Long Term Capital Management was founded by a bunch of math whizzes and they seem to have missed something. I'd never suggest that something has no value, but similar to the concept that \"\"if time travel were possible, why hasn't anyone come back from the future to tell us\"\" I'd suggest that if there were a real advantage to what you suggest, someone would be making money from it already. In my opinion, the math is simple, little more than a four function calculator is needed.\"", "title": "" } ]	fiqa
109345038a4a5787bdb2f41ff8a2ae86	What are some good, easy to use personal finance software? [UK]	[ { "docid": "b490bab61c836b4b45405bf78db7ab16", "text": "Update: I am now using another app called toshl and I am very satisfied with it. In fact, I am a paying customer. It is web based, but it has clients for iPhone, Android and Windows Phone as well. Another one, I tried is YNAB. Did you consider trying an online app? I am using Wesabe and I am happy with it. I found it much better these web-based ones because I can access my data from anywhere.", "title": "" }, { "docid": "282f7837d0a479b69a571c897a726ac4", "text": "\"I'm a big fan of Mint. I tried Wesabe prior to mint and at the time (about a year ago) it was lacking the integration of many of my accounts, so I had to go with Mint by necessity. Since then, Mint has gotten better almost monthly. I can do almost everything I want, and the budgeting tools (which would address your \"\"6 months out\"\" forecast desires) and deal alerts (basically tells you if you can get a better interest rate on savings/credit card/etc) are really helpful. Highly recommended!\"", "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": "bdcc8808bdf896f1396ddc7bb2e6a235", "text": "CashBase has a web app, an iPhone app and an Android app, all sync'ed up. It doesn't integrate with banks automatically, but you can import bank statements as CSV. Disclaimer: I'm CashBase's founder.", "title": "" }, { "docid": "f51522968380e03f0345200ec838358a", "text": "+1 for YNAB. I used to use MS Money until it was decommissioned. I used that to historically record my spending and investing, and plot my net worth. Whilst YNAB will do that, it is actually geared towards forward planning much more so. In this area, it is fantastic. I like that there are mobile apps for it too.", "title": "" }, { "docid": "f3fb55b249e74529b3114a50bc42edb6", "text": "My Finances is a personal finance app for iPhone and iPad. The app uses iCloud to sync the data between your devices if you want to. Otherwise the data is only local and won't be synced to any server. Spoiler: I'm the developer and my opinion may be biased.", "title": "" } ]	[ { "docid": "7c30e030994a0056aa4467e006942217", "text": "You might check out Thrive. They're almost a carbon copy of Mint from the last I checked, but with some additional and (I think) more useful metrics. For instance, they seemed to help more to plan for future expenses in addition to keeping tabs on individual budgets the way Mint does. Everything is automated in the same way as Mint, though I'm not sure their breadth is as far-reaching now since Mint was bought out by Intuit. Nevertheless, whenever I've had a question on Thrive, I shoot it to the devs and I get a very personal and courteous response within the day. So it depends on what you're looking for: Mint can almost guarantee any US bank will be accessible through their site, however Thrive will work much harder to gain your favor.", "title": "" }, { "docid": "82b9b92a9cd236b37a2eb01f8a3d5dfb", "text": "The best way to answer this question is to try. GnuCash is free, so setting it up and giving it a go shouldn't be too hard. After all, what really matters is how helpful the program is for your purposes. One aspect of personal finance that stops me from jumping to GnuCash/KMyMoney/MoneyDance is the ability to download transactions from my financial institutions. Last time I checked, the process was somewhat involved and support was limited for a handful of banks. Because of that, I decided to stick with MS Money (and once Microsoft dropped the ball, with Quicken). I am sure things are better these days, but I am still not comfortable with trusting my finances to something new and unproven. I still remember how painful it was several years ago, when some bug in MS Money caused occasional mess-up of the reconciliation state for the American Express credit cards.", "title": "" }, { "docid": "535fe2de4b0d7b8130a5c2fd22865b52", "text": "MoneyStrands is a site very similar to Mint, but does not force you to link bank accounts. You can create manual accounts and use all features of the site without linking to banks.", "title": "" }, { "docid": "cd78bc9c9eaffdab15fa29d6837f52a5", "text": "I can personally recommend MoneyWell. I've been using it for about a month now, and version 1.5 that was just released is a great upgrade from the previous version. The developer was very responsive during the open beta period, and from what I understand an iPhone version is in the works. (and no, I don't work for the publisher!) That aside, I've used a few other packages. I tried out iBank, which was fairly nice, but the account downloading functionality left a lot to be desired. I come from a MS Money background, and I am used to a seamless, reliable download scheme, and iBank's was (unfortunately) neither. Otherwise the interface was very nice. I had settled on MoneyDance before I found MoneyWell, and it's a pretty nice package. Unfortunately it's a Java application and doesn't adhere to most OSX interface practices. While the account downloading is substantially better than iBank's, the ugly interface made moving away from it fairly easy once I found something that had feature parity.", "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": "763b586d811fa6556c94d509dafdbe69", "text": "\"Yodlee and Mint are good solutions if you don't mind your personal financial information being stored \"\"in the cloud\"\". I do, so I use Quicken. Quicken stores whatever you give to it for as long as you want: so the only question is how to get the credit card transactions you want into it? All my financial institutions allow me to view my credit card statements for a year back, and download them in a form Quicken can read. So you can have a record of your transactions from a year ago right now, and in a year you will have two year's worth.\"", "title": "" }, { "docid": "0b9356353617057df4141fe06695ce80", "text": "I use MoneyStrands.com to manage my spending. It's a lot like Mint, but provides support for more banks, and works with most Canadian financial institutions. I can't really compare them fairly though, since I didn't bother with Mint after learning that they don't care about Canadians. If your bank isn't supported by MoneyStrands, or you don't want to trust an online webiste with your account login, you can create accounts for manually uploaded files. It just means you have to log into your bank yourself, download the transactions as QFX, OFX, CSV or other supported formats, and then upload the files to the appropriate account in MoneyStrands. I love the expense tracking and reporting that MoneyStrands offers, but like Mint, their budgeting feature is seriously lacking. Fortunately I don't need to budget month-to-month, I just use it to see how much I spend on various categories, to help create annual budgets and decide how much I can invest or use for a vacation.", "title": "" }, { "docid": "0f820dec5af9c8fd7db64f09fbdd2671", "text": "I'm just a sole trader who doesn't have much money which is why I'm looking at budget stuff. It's not like I'm a big business just being really tight. I need advice on this, not to get down-voted. I need one that is cheap or free but I would prefer that I can upload my own files and I would like to connect my own domain to it.", "title": "" }, { "docid": "fd5a1b84940c079a7c2f75cafa6f8904", "text": "Buxfer is a personal-finance web app which you might like. It's not open-source. But at least none of your complaints about financeworks.intuit.com apply to Buxfer. Buxfer offers a piece of software you can download to your own PC, called Firebux. This macro-recording software provides automation that helps you download statements and upload them to Buxfer. So you never have to give Buxfer any of your bank or brokerage usernames or passwords. Buxfer and Firebux are both free of charge. Wesabe, another personal-finance web app, also used to offer data-uploader software, but Wesabe has now gone out of business.", "title": "" }, { "docid": "f0caf721b73d61349849ec09fa64db2f", "text": "Uh, Quicken is virtually identical to MS Money. If you liked money and don't want to change, use that.", "title": "" }, { "docid": "69cf8dd1edd15c82c9b485d2c2f25334", "text": "Some to manage day to day expenses, bills, and to save money. I already a system in place for investments and retirement. I was just wanting to know if there was a good app to help with these things instead of having to use a pen and paper to figure this stuff out when I am on the go away from my computer.", "title": "" }, { "docid": "d6a9e0f25e6a651144af61739899b4ea", "text": "Here's a link with comparison of various online and offline PF software: http://personalfinancesoftwarereviews.com/compare-personal-finance-software/", "title": "" }, { "docid": "e398e303fb3180307362ca764a3a80b9", "text": "\"As your financial situation becomes more complex, it becomes increasingly more difficult to keep track of everything with a simple spreadsheet. It is much easier to work with software that is specifically designed for personal finances. A good program will allow you to keep track of as many accounts as you want. A great program will completely separate the different account balances (location of the money) from the budget category balances (purpose of the money). Let me explain: When you set up the software, you will enter in all of your different bank accounts with their balances. Perhaps you have three savings accounts and two checking accounts. It doesn't matter. When you are done entering those, the software will total them up, and the next job you have is assigning this money into different budget categories: your spending plan. For example, you might put some of it into a grocery category, some into an entertainment category, some will be assigned to pay your next car insurance bill, and some will be an emergency fund. (These categories are completely customizable, and your budget can be as broad or as detailed as you wish.) When you deposit your paycheck, you assign that new income into budget categories as well. It doesn't matter at this point which accounts your money are located in; the only thing that matters is that you own this money and you have access to it. Now, you might want to use a certain account for a certain budget category, but you are not required to do so. (For example, your grocery category money will probably be in your checking account, since you will be spending from it regularly. Your emergency fund will hopefully be in an account that earns a little higher interest.) Once you take this approach, you might find you don't need as many bank accounts as you thought you did, because the software does the job of separating your money into different \"\"accounts\"\" for different purposes. I've written before about the different categories of personal finance software. YNAB, Mvelopes, and EveryDollar are three examples of software that will take this approach of separating the concepts of the bank account and the budget category.\"", "title": "" }, { "docid": "b30aed3b8b3704d3ea740b6a90195a5a", "text": "\"It comes down to the resolution you want to have on your personal finances. A package like GNUCash allows you to easily answer questions like \"\"Exactly how much do I spend on interest per month/year/decade.\"\" Same with pretty much any other expense, liability or asset you have whether it be taxes, utilities, your home equity or your net worth. The other tools you mention are nice, and certainly convenient, but they tend to lump things together in broad strokes and omit many categories altogether (taxes). Ultimately by having such a fine grained accounting tool, you can target small or large things to better budget your money. Another thing a package like GNUCash provides is a single, private place to consolidate all of your finances. This is nice for things like net worth and asset accounts that you might not want to give a company access to. Finally, GNUcash in particular helps normal people think like accountants. Rather than lump everything into 'income' and 'expenses', once you start using GNUCash you'll start thinking in terms of equity, liabilities, net-worth and assets in addition to income and expenses. This gives me a much more accurate view of my finances and helps me better target areas for improvement. In short, it helps me to see the broader picture which helps me to keep my eye on the prize - which of course is to not have to worry about money at all.\"", "title": "" }, { "docid": "0f1bca174e10f914463e5c7ddcf1433e", "text": "\"Yes. The simplest option to track your spending over time is to familiarize yourself with the \"\"Reports\"\" menu on the toolbar. Take a look specifically at the \"\"Reports > Income/Expense > Income Statement\"\" report, which will sum up your income and spending over a time frame (defaults to the current year). In each report that you run, there is an \"\"Options\"\" button at the top of the screen. Open that and look on the \"\"General\"\" tab, you'll be able to set the time frame that the report displays (if you wanted to set it for the 2 week block since your last paycheck, for example). Other features you're going to want to familiarize yourself with are the Expense charts & statements, the \"\"Cash Flow\"\" report, and the \"\"Budgeting\"\" interface (which is relatively new), although there is a bit of a learning curve to using this last feature. Most of the good ideas when it comes to tracking your spending are independent of the software you're using, but can be augmented with a good financial tracking program. For example, in our household we have multiple credit cards which we pay in full every month. We selected our cards on specific benefits that they provide, such as one card which has a rotating category for cash back at certain business types. We keep that card set on restaurants and put all of our \"\"eating out\"\" expenses on that card. We have other cards for groceries, gas, etc. This makes it easy to see how much we've spent in a given category, and correlates well with the account structure in gnucash.\"", "title": "" } ]	fiqa
b67727c90bf7a81cc7b44ad8fb17fb24	For a car, would you pay cash, finance for 0.9% or lease for 0.9%?	[ { "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": "80a3dfcc280d42c75783d1b8681fd3b8", "text": "If you want the new car, pay cash for it. Here's why: By paying cash for the car, you immediately save $2,500 off the price of the car. That is not insignificant, it's 8.3% off. By paying cash, you'll never be upside down on the car, and you can sell the car anytime you want. You said that all you need to do is beat the 0.9% interest rate with your investment to come out ahead. That doesn't take into account the discount you would have gotten by paying cash. $30,000 invested for 5 years at 1.6% (rough estimate) would get you $2,500 (the discount), so the rate you need to beat to come out ahead is actually 2.5%. Still doable, but it is much less of a sure thing on a 5 year investment, and much less worth the trouble. New cars are an expensive luxury. If you are wealthy enough, a new car certainly can be appropriate for you. However, if you don't like the idea of paying $30k in cash all at once, that is a strong indication that perhaps the new car is a luxury you aren't in a position to buy at this time. Borrowing the money and paying for it over time makes it psychologically easier to over spend on transportation.", "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": "e6bf0329cade75454187b0320816ddc2", "text": "\"One part of the equation that I don't think you are considering is the loss in value of the car. What will this 30K car be worth in 84 months or even 60 months? This is dependent upon condition, but probably in the neighborhood of $8 to $10K. If one is comfortable with that level of financial loss, I doubt they are concerned with the investment value of 27K over the loan of 30K @.9%. I also think it sets a bad precedent. Many, and I used to be among them, consider a car payment a necessary evil. Once you have one, it is a difficult habit to break. Psychologically you feel richer when you drive a paid for car. Will that advantage of positive thinking lead to higher earnings? Its possible. The old testament book of proverbs gives many sound words of advice. And you probably know this but it says: \"\"...the borrower is slave to the lender\"\". In my own experience, I feel there is a transformation that is beyond physical to being debt free.\"", "title": "" } ]	[ { "docid": "01f802919d3d8a84192800cb0bda9181", "text": "A lease payment is composed of an interest portion (borrowed money) and depreciation amount (purchase - residual). The Monthly payment is then Monthly Interest Cost + Monthly Depreciation Cost The Money Factor is used to estimate the amount of interest due in a single month of a lease so you can figure out the monthly payment. If you are borrowing $100,000 then over the entire loan of repayment from a balance of $100,000 to a balance of $0, the average amount you owed was $50,000 (1/2 of principal). You are repaying this loan monthly (1/12 of a year) and percents are expressed as decimals (1/100). 6 * 1/2 (for principal) * 1/12 (for monthly) * 1/100 (to convert percentage from 6% to .06) = 6 * 1/2400. 2400 is the product of 3 consecutive conversion (1/2 * 1/12 * 1/100) to convert from an interest rate to a money factor. 6/2400 = Money factor of 0.0025 which can be multiplied against the total amount being borrowed to know what the monthly interest would roughly equal. Some Money Factor info: https://www.alphaleasing.com/resources/articles/MoneyFactor.asp", "title": "" }, { "docid": "a3d8fefc639c7cb5e3c2ba260f5dd1fd", "text": "\"I'm going to ignore your numbers to avoid spending the time to understand them. I'm just going to go over the basic moving parts of trading an upside down car against another financed car because I think you're conflating price and value. I'm also going to ignore taxes, and fees, and depreciation. The car has an acquisition cost (price) then it has a value. You pay the price to obtain this thing, then in the future it is worth what someone else will pay you. When you finance a car you agree to your $10,000 price, then you call up Mr. Bank and agree to pay 10% per year for 5 years on that $10,000. Mr. Banker wires over $10,000 and you drive home in your car. Say in a year you want a different car. This new car has a price of $20,000, and wouldn't you know it they'll even buy your current car from you. They'll give you $7,000 to trade in your current car. Your current car has a value of $7,000. You've made 12 payments of $188.71. Of those payments about $460 was interest, you now owe about $8,195 to Mr. Banker. The new dealership needs to send payment to Mr. Banker to get the title for your current car. They'll send the $7,000 they agreed to pay for your car. Then they'll loan you the additional $1,195 ($8,195 owed on the car minus $7,000 trade in value). Your loan on the new car will be for $21,195, $20,000 for the new car and $1,195 for the amount you still owed on the old car after the dealership paid you $7,000 for your old car. It doesn't matter what your down-payment was on the old car, it doesn't matter what your payment was before, it doesn't matter what you bought your old car for. All that matters is how much you owe on it today and how much the buyer (the dealership) is willing to pay you for it. How much of this is \"\"loss\"\" is an extremely vague number to derive primarily because your utility of the car has a value. But it could be argued that the $1,195 added on to your new car loan to pay for the old car is lost.\"", "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": "ba1fbcb5b6de5bf4d70c78c1731ee206", "text": "I don't see how anyone could give you a hard-and-fast formula, unless they know where to get some applicable statistics. Because several factors here are not a straight calculation. If you don't replace the tires but keeping driving the car, what is the increased probability that you will get into an accident because of the bald tires? How much will bald tires vs new tires affect the selling price of the car? Presumably the longer you drive the car after getting new tires, the less increase this will give to the market value of the car. What's the formula for that? If you keep the car, what's the probability that it will have other maintenance problems? Etc. That said, it's almost always cheaper to keep your current car than to buy a new one. Even if you have maintenance problems, it would have to be a huge problem to cost more than buying a new car. Suppose you buy a $25,000 car with ... what's a typical new car loan these days? maybe 5 years at 5%? So your payments would be about $470 per month. If you compare spending $1000 for new tires versus paying $470 per month on a new car loan, the tires are cheaper within 3 months. The principle is the same if you buy with cash. To justify buying a new car you have to factor in the value of the pleasure you get from a new car, the peace of mind from having something more reliable, etc, mostly intangibles.", "title": "" }, { "docid": "0f91a9b488625fc14dbb4fe82bc2da20", "text": "\"The optimal down payment is 100%. The only way you would do anything else when you have the cash to buy it outright is to invest the remaining money to get a better return. When you compare investments, you need to take risk into account as well. When you make loan payments, you are getting a risk free return. You can't find a risk-free investment that pays as much as your car loan will be. If you think you can \"\"game the system\"\" by taking a 0% loan, then you will end up paying more for the car, since the financing is baked into the sales [price in those cases (there is no such thing as free money). If you pay cash, you have much more bargaining power. Buy the car outright (negotiating as hard as you can), start saving what you would have been making as a car payment as an emergency fund, and you'll be ahead of the game. For the inflation hedge - you need to find investments that act as an inflation hedge - taking a loan does not \"\"hedge\"\" against inflation since you'll still be paying interest regardless of the inflation rate. The fact that you'll be paying slightly less interest (in \"\"real\"\" terms) does not make it a hedge. To answer the actual question, if your \"\"reinvestment rate\"\" (the return you can get from investing the \"\"borrowed\"\" cash) is less than the interest rate, then the more you put down, the greater your present value (PV). If your reinvestment rate is less than the interest rate, then the less you put down the better (not including risk). When you incorporate risk, though, the additional return is probably not worth the risk. So there is no \"\"optimal\"\" down payment in between those mathematically - it will depend on how much liquid cash you need (knowing that every dollar that you borrow is costing you interest).\"", "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": "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": "556dfadb5cf3e316cfebe3430444715d", "text": "Instead of going to the dealership and not knowing if you will be able to get a loan or what the interest rate might be, go to a local credit union or bank first, before you go car shopping, and talk to them about what you would need for your loan. If you can get approval for a loan first, then you will know how much you can spend, and when it comes time for negotiation with the dealer, he won't be able to confuse you by changing the loan terms during the process. As far as the dealer is concerned, it would be a cash transaction. That having been said, I can't recommend taking a car loan. I, of course, don't know you or your situation, but there are lots of good reasons for buying a less expensive car and doing what you can to pay cash for it. Should you choose to go ahead with the loan, I would suggest that you get the shortest loan length that you can afford, and aim to pay it off early.", "title": "" }, { "docid": "908bb1c1bfc0b6588872a25b38b982be", "text": "I think you are a little confused. If you have 10.000€ in cash for a car, but you decide instead to invest that money and take out a loan for the car at 2,75% interest, you would have to withdraw/sell 178€ each month from your investment to make your loan payment. If you made exactly 2,75% on your investment, you would be left with 0€ in your investment when the loan was paid off. If your investment did better than 2,75%, you would come out ahead, and if your investment did worse than 2,75%, you would have lost money on your decision. Having said all that, I don't recommend borrowing money to buy a car, especially if you have that amount of cash set aside for the car. Here are some of the reasons: Sometimes people feel better about spending large amounts of money if they can pay it off over time, rather than spending it all at once. They tell themselves that they will come out ahead with their investments, or they will be earning more later, or some other story to make themselves feel better about overspending. If getting the loan is allowing you to spend more money on a car than you would spend if you were paying cash, then you will not come out ahead by investing; you would be better off to spend a smaller amount of money now. I don't know where you are in the world, but where I come from, you cannot get a guaranteed investment that pays 2,75%. So there will be risk involved; if the next year is a bad one for your investment, then your investment losses combined with your withdrawals for your car payments could empty your investment before the car is paid off. Conversely, by skipping the 2,75% loan and paying cash for your car, you have essentially made a guaranteed 2,75% on this money, comparatively speaking. I don't know what the going rate is for car loans where you are, but often car dealers will give you a low loan rate in exchange for a higher sales price. As a result, you might think that you can easily invest and beat the loan rate, but it is a false comparison because you overpaid for the car.", "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": "2d1f550144d06e304037346ce25ed698", "text": "I might be missing something, but I always understood that leasing is about managing cash-flow in a business. You have a fixed monthly out-going as opposed to an up-front payment. My accountant (here in Germany) recommended: pay cash, take a loan (often the manufactures offer good rates) or lease - in that order. The leasing company has to raise the cash from somewhere and they don't want to make a loss on the deal. They will probably know better than I how to manage that and will therefore be calculating in the projected resale value at the end of the leasing period. I can't see how an electric car would make any difference here. These people are probably better informed about the resale value of any type of car than I am. My feeling is to buy using a loan from the manufacturer. The rates are often good and I have also got good deals on insurance as a part of that package. Here in Germany the sales tax (VAT) can be immediately claimed back in full when the loan deal is signed.", "title": "" }, { "docid": "12262c326568149698533a3c185be27c", "text": "If a shop offers 0% interest for purchase, someone is paying for it. e.g., If you buy a $X item at 0% interest for 12 months, you should be able to negotiate a lower cash price for that purchase. If the store is paying 3% to the lender, then techincally, you should be able to bring the price down by at least 2% to 3% if you pay cash upfront. I'm not sure how it works in other countries or other purchases, but I negotiated my car purchase for the dealer's low interest rate deal, and then re-negotiated with my preapproved loan. Saved a good chunk on that final price!", "title": "" }, { "docid": "1d799c3133fcb24c4d751bc73e760e3d", "text": "\"Lachlan has $600 cash and a car worth $500. That's $1,100. The new car is priced at $21,800. Lachlan needs a loan for $20,700. However, the finance company insists that the buyer must pay a 10% deposit, which is $2,180. Lachlan only has $1,100, so no loan. The car dealer wants to make a sale, so suggests some tricks. The car dealer could buy Lachlan's old banger for $1,500 instead of $500, and sell the new car for $22,800 instead of $21,800. Doesn't make a difference to the dealer, he gets the same amount of cash. Now Lachlan has $600 cash and $1,500 for his car or $2,100 in total. He needs 10% of $22,800 as deposit which is $2,280. That's not quite there but you see how the principle works. Lachlan is about $200 short. So the dealer adds $1,200 to both car prices. Lachlan has $600 cash and a car \"\"worth\"\" $1,700, total $2,300. The new car is sold for $23,000 requiring a $2,300 deposit which works out exactly. How could we have found the right amount without guessing? Lachlan had $1,100. The new car costs $21,800. The dealer increases both prices by x dollars. Lachlan has now $1,100 + x deposit. The car now costs $21,800 + x. The deposit should be 10%, so $1,100 + x = 10% of ($21,800 + x) = $2,180 + 0.1 x. $1,100 + x = $2,180 + 0.1 x : Subtract $1,100 x = $1,080 + 0.1 x : Subtract 0.1 x 0.9 x = $1,080 : Divide by 0.9 x = $1,080 / 0.9 = $1,200 The dealer inflates the cost of the new car and the value of the old car by $1,200. Now that's the theory. In practice I don't know how the finance company feels about this, and if they would be happy if they found out.\"", "title": "" }, { "docid": "a9a633681e25df3cae2e62691e152a14", "text": "Which to do is determined by how you like to consume cars. If you don't drive a lot and like to get a new car every 2-3 years, leasing is often the better choice. If you drive a lot or want to keep a car longer than 3 years, you're normally better buying.", "title": "" }, { "docid": "2d4a2434b917c695a858e55da2c51ba9", "text": "\"The COBRA idea is interesting but I am not sure it will be cheaper than Obamacare - health insurance is just insanely expensive; best for him to discreetly ask HR before leaping. The \"\"good\"\" news is that in two years, he should be eligible for Medicare, which should be a better option. So as Dave said, go with Obamacare or COBRA depending on cost and other factors (doctors in network, etc.) and wait for Medicare to kick in. Also, given that his income is going to go very low really soon, he will be eligible for Obamacare low-income subsidies, which will reduce the bill even further. Further, if you get a Silver or Bronze Obamacare plan, you can stash away $3,300 in a Health Savings Account (HSA) tax free, which should further help with expenses. I am sorry your dad is having to leave his job of 30+ years because of some new jerk. However, I hope that the advice you get here will help you find good options for your dad.\"", "title": "" } ]	fiqa
7a56e69d19e1438c780bfd053a7fbd65	Organizing Expenses/Income/Personal Finance Documents (Paperless Office)	[ { "docid": "afbad616ddab631737a1ca4a87b3fadc", "text": "\"If you're curious, here are my goals behind this silly madness You said it... The last two words, I mean...:-) If you're auditing your statements - why do you need to keep the info after the audit? You got the statement for last month, you verified that the Starbucks charge that appears there is the same as in your receipts - why keeping them further? Done, no $10 dripping, throw them away. Why do you need to keep your refrigerator owner's manual? What for? You don't know how to operate a refrigerator? You don't know who the manufacturer is to look it up online in case you do need later? Read it once, mark the maintenance details in your calendar (like: TODO: Change the water filter in 3 months), that's it. Done. Throw it away (to the paper recycle bin). You need the receipt as a proof of purchase for warranty? Make a \"\"warranty\"\" folder and put all of them there, why in expenses? You don't buy a refrigerator every months. That's it, this way you've eliminated the need to keep monthly expenses folders. Either throw stuff away after the audit or keep it filed where you really need it. You only need a folder for two months at most (last and current), not for 12 months in each of the previous 4 years.\"", "title": "" }, { "docid": "39efebb7c6e866b8c97268e70ed69f1e", "text": "I'm trying to organize my financial papers as well. I have a Fujitsu ScanSnap and it's tearing through my papers like a hot knife through butter (i.e. awesome). Here's how I'm addressing organizing the paper. I'm organizing mine a little bit organically. Here are the main parts: So anyway, all that to say that it's not necessary to organize the files to the hilt. If you want to, that's fine too, but it's a tradeoff: up-front organization for possibly some time savings later. The search function available is decreasing the advantage of organizing your files carefully. If throwing all of your files in a digital pile makes your skin crawl, then I won't force you otherwise, but I'm not worried about it for the time being. What you're doing with the other tracking sounds fine to me. Others may have different insights there.", "title": "" }, { "docid": "687a9fe7feea04c21e0ab8350e4c4e13", "text": "If it was me, I would organize something along these lines. in large part because down the road when it comes time to purge stuff like small receipts, utility bills etc, you'll be doing it per year, at the 7 year point or something similar. Year first Under that major categories such as Mortgage, Utilities, Credit, Major Purchases, Home Improvement, Other I'd do a monthly breakdown for Other since it's likely to have a lot of little stuff, and bulking it up by month helps to organize it. But I'd not bother with that for the other items, since there's going to be limited items in each one. If you are scanning stuff on a regular basis, and using a decent naming convention for the receipts, then you could easily sort by date, or name, within any of the larger categories to see for example, all the electric bills. in order. You might also want to look at a cloud service such as DOXO as an alternative to storing this stuff at home (they also work with a number of companies to do electronic billing etc) In terms of retention, if you are a homeowner, save anything related to your mortgage and anything that goes towards the house, even little maintenance stuff, and any improvements, as all of that goes against the cost basis of the house when you sell. Generally, after 7 years, you are unlikely to need anything in the way of small receipts, utility bills, etc. in any case, be sure you have regular backups offsite, either by storing stuff in the cloud such as doxo, or via a regular backup service such as carbonite. you don't want to lose all your records to a house fire, natural disaster, or having your computer stolen etc.", "title": "" } ]	[ { "docid": "4efe3b6f3a0061cc7ef113178030e772", "text": "According to TurboTax, it is perfectly legal to final as an individual with zero income. But, alas, according to Entities, by the IRS, you must file as a partnership or a corporation even if you have zero income. As for my two cents, I can only see it being advantageous for filing on expense purposes, but as you have no income, the point is mute. Hope it all goes over well as the forms are due March 15.", "title": "" }, { "docid": "d6a720487b2ba826b237a83dc0981618", "text": "I would suggest at least getting a personal card that you only use for business expenses, even if you don't opt for a business card. It makes it very clear that expenses on that card are business expenses, and is just more professional. The same goes for a checking account, if you have one of those. It makes it easier to defend if you are ever audited, and if you use an accountant or tax preparer.", "title": "" }, { "docid": "2f7d80c8936796bc8a5836c0edf04f0a", "text": "Your list seems fairly complete. Try tracking a few months of actual expenses. You could do this with an Excel Spreadsheet. Personally, I pay for most things electronically and/or with a credit card (which I pay off in full every month). I use Mint.com to catalogue my transactions and get an instant snapshot of where I've been spending my money.", "title": "" }, { "docid": "b4510cf6016c180b947eab26ae6b837c", "text": "\"Here's a very basic MySQL query I put together that does what I want for income/expense report. Basically it reports the same info as the canned income/expense report, but limits it those income/expenses associated with a particular account (rental property, in my case). My main complaint is the output \"\"report\"\" is pretty ugly. And modifying for a different rental property requires changing the code (I could pass parameters etc). Again, the main \"\"issue\"\" in my mind with GnuCash income/expense report is that there is no filter for which account (rental property) you want income/expenses for, unless you set up account tree so that each rental property has its own defined incomes and expenses (i.e. PropertyA:Expense:Utility:electric). Hopefully someone will point me to a more elegant solution that uses the report generator built into GnuCash. THanks! SELECT a2.account_type , a4.name, a3.name, a2.name, SUM(ROUND(IF(a2.account_type='EXPENSE',- s2.value_num,ABS(s2.value_num))/s2.value_denom,2)) AS amt FROM ( SELECT s1.tx_guid FROM gnucash.accounts AS a1 INNER JOIN gnucash.splits AS s1 ON s1.account_guid = a1.guid WHERE a1.name='Property A' ) AS X INNER JOIN gnucash.splits s2 ON x.tx_guid = s2.tx_guid INNER JOIN gnucash.accounts a2 ON a2.guid=s2.account_guid INNER JOIN gnucash.transactions t ON t.guid=s2.tx_guid LEFT JOIN gnucash.accounts a3 ON a3.guid = a2.parent_guid LEFT JOIN gnucash.accounts a4 ON a4.guid = a3.parent_guid WHERE a2.name <> 'Property A' # get all the accounts associated with tx in Property A account (but not the actual Property A Bank duplicate entries. AND t.post_date BETWEEN CAST('2016-01-01' AS DATE) AND CAST('2016-12-31' AS DATE) GROUP BY a2.account_type ,a4.name, a3.name, a2.name WITH ROLLUP ; And here's the output. Hopefully someone has a better suggested approach!\"", "title": "" }, { "docid": "f2001e382087977d58faadeb8485548a", "text": "I'm not familiar with Gnucash, but I can discuss double-entry bookkeeping in general. I think the typical solution to something like this is to create an Asset account for what this other person owes you. This represents the money that he owes you. It's an Accounts Receivable. Method 1: Do you have/need separate accounts for each company that you are paying for this person? Do you need to record where the money is going? If not, then all you need is: When you pay a bill, you credit (subtract from) Checking and debit (add to) Friend Account. When he pays you, you credit (subtract from) Friend Account and debit (add to) Checking. That is, when you pay a bill for your friend you are turning one asset, cash, into a different kind of asset, receivable. When he pays you, you are doing the reverse. There's no need to create a new account each time you pay a bill. Just keep a rolling balance on this My Friend account. It's like a credit card: you don't get a new card each time you make a purchase, you just add to the balance. When you make a payment, you subtract from the balance. Method 2: If you need to record where the money is going, then you'd have to create accounts for each of the companies that you pay bills to. These would be Expense accounts. Then you'd need to create two accounts for your friend: An Asset account for the money he owes you, and an Income account for the stream of money coming in. So when you pay a bill, you'd credit Checking, debit My Friend Owes Me, credit the company expense account, and debit the Money from My Friend income account. When he repays you, you'd credit My Friend Owes Me and debit Checking. You don't change the income or expense accounts. Method 3: You could enter bills when they're received as a liability and then eliminate the liability when you pay them. This is probably more work than you want to go to.", "title": "" }, { "docid": "e7ecc10268766997672000064e46af68", "text": "\"Not knowing anything about your situation or what makes it so complex, I would have to agree with the other commenters. If your accountant screws up your business goes under, but at least your personal finances are safe from that and you'll recover (unless all your wealth is tied up in your business). If your virtual assistant uses your personal information to take all your money, ruin your credit, or any number of other things, you're going to spend a loooong time trying to get things \"\"back to normal\"\". If the few hours per month spent managing your finances is starting to add up, I might suggest looking into other ways to automate and manage them. For instance, are all of your bills (or as many as you can) e-bills that can be issued electronically to your bank? Have you set up online bill pay with your bank, so that you can automatically pay all the bills when they arrive? Have you tried using any number of online services (Mint, Thrive, your bank's \"\"virtual wallet/portfolio\"\") to help with budget, expense tracking, etc.? Again, I don't know your exact situation, but hopefully some of these suggestions help. Once I started automating my savings and a lot of my bill paying, it gave me a lot of peace of mind.\"", "title": "" }, { "docid": "9ab1ec05f4e7fd0f7cefbed8358144d4", "text": "Shred it all. You might want to keep a record going back at most a year, just in case. But just in case of what? What is a good idea is to have an electronic record. It's a good practice to know how your spending changes over time. Beyond that, it's just a fire hazard. The thing is, I know I'm right in the above paragraph, but I'm a hypocrite: I have years' worth of paper records of all kinds. I need to get rid of it. But I have grown attached. I have trucked this stuff around in move after move. I have a skill at taking good care of useless things. I've even thought of hiring somebody to scan it all in for me, so that I can feel safe shredding all this paper without losing any of the data. But that's insane!", "title": "" }, { "docid": "46bc1213fb52a6c9ecdc1047f6d59daa", "text": "For double entry bookkeeping, personal or small business, GnuCash is very good. Exists for Mac Os.", "title": "" }, { "docid": "25d8a6bc03bcee11387a8f0d2e9c1679", "text": "\"As others have said, the decision is a very personal one. Personally, I think you have a good idea. For those of us that thrive in structured systems having a detailed breakdown and distribution of assets is a great idea. I recommend going one step further however. Instead of having a single \"\"Necessities\"\" account have a division here. 1 account for \"\"Bills\"\" and another for \"\"Living Expenses.\"\" Your Bills account should recieve the funds to pay your monthly expenses such as Rent, Utilities, Insurance. Living Expenses is for day to day spending. I recommend this because your Bills are generally a fairly fixed expense. Keeping your flexible spending separate allows you to manage it more carefully and helps prevent overspending. I keep my Living Expenses in cash and divide it up by the number of days before my next check. Every day I put my portion of the Living Expenses in my wallet. This way I know that I can spend as much money in my wallet and still be fine for the rest of the pay period. I also know that if I want to go out to a nice dinner on Friday, it would be helpful if I have money left over at the end of the day Monday through Thursday.\"", "title": "" }, { "docid": "e1e8de1e86545e7b11ad859682abc36d", "text": "\"What you are describing is a Chart of Accounts. It's a structure used by accountants to categorise accounts into sub-categories below the standard Asset/Liability/Income/Expense structure. The actual categories used will vary widely between different people and different companies. Every person and company is different, whilst you may be happy to have a single expense account called \"\"Lunch\"\", I may want lots of expense accounts to distinguish between all the different restaurants I eat at regularly. Companies will often change their chart of accounts over time as they decide they want to capture more (or less) detail on where a particular type of Expense is really being spent. All of this makes any attempt to create a standard (in the strict sense) rather futile. I have worked at a few places where discussions about how to structure the chart of accounts and what referencing scheme to use can be surprisingly heated! You'll have to come up with your own system, but I can provide a few common recommendations: If you're looking for some simple examples to get started with, most personal finance software (e.g. GnuCash) will offer to create an example chart of accounts when you first start a session.\"", "title": "" }, { "docid": "d2ecc077203c74417c448dd706889ea5", "text": "hledger is a free software, cross-platform double-entry accounting tool I've been working on for a while. It has command-line and web-based interfaces to your local data, and some other interesting features. There's also ledger (http://wiki.github.com/jwiegley/ledger/) which is command-line only. These are.. different, but worth a look for some folks.", "title": "" }, { "docid": "77eace4c4744e927720c62b309b3214e", "text": "Certainly sounds worthwhile to get a CPA to help you with setting up the books properly and learning to maintain them, even if you do it yourself thereafter. What's your own time worth?", "title": "" }, { "docid": "adacca83dbfb4de58aba2e034d7e2a54", "text": "It sounds like you're mixing a simple checkbook register with double-entry bookkeeping. Do you need a double-entry level of rigor? Otherwise, why not have two columns, one for income (like a paycheck) and one for expenses (like paying a cable bill)? Then add up both columns and then take the difference of the sums to get your increase or decrease for the time period. If you want to break up income and expenses further, then you can do that too.", "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": "3ab074c9108274b749a78047bc2eec8f", "text": "\"Journal entry into Books of company: 100 dr. expense a/c 1 200 dr. expense a/c 2 300 dr. expanse a/c 3 // cr. your name 600 Each expense actually could be a total if you don´t want to itemise, to save time if you totaled them on a paper. The paper is essentually an invoice. And the recipts are the primary documents. Entry into Your journal: dr. Company name // cr. cash or bank You want the company to settle at any time the balce is totaled for your name in the company books and the company name in your books. They should be equal and the payment reverses it. Or, just partially pay. Company journal: dr. your name // cr. cash or bank your journal: dr. cash or bank // cr. company name Look up \"\"personal accounts\"\" for the reasoning. Here is some thing on personal accounts. https://books.google.com/books?id=LhPMCgAAQBAJ&pg=PT4&dq=%22personal+account%22+double+entry&hl=es-419&sa=X&redir_esc=y#v=onepage&q=%22personal%20account%22%20double%20entry&f=false\"", "title": "" } ]	fiqa

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