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[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "does degiro charge per order or per transaction?", "role": "user" }, { "content": "an order is not a transaction. it is a request to make a transaction. if the transaction never occurs (e.g. because you cancel the order), then no fees should be charged. will i get the stamp duty back (the 0.5% tax i paid on the shares purchase) when i sell the shares? i'm not a uk tax expert, but accorging to this page is seems like you only pay stamp tax when you buy shares, and don't get it back when you sell (but may be responsible for capital gains taxes). that makes sense, because there's always a buyer and a seller, so if you got the tax back when you sold, the tax would effectively be transferred from the buyer to the seller, and the government would never collect anything.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "how can i determine if my rate of return is good for the market i am in?", "role": "user" }, { "content": "a good way to measure the performance of your investments is over the long term. 25-30% returns are easy to get! it's not going to be 25-30% in a single year, though. you shouldn't expect more than about 4% real (inflation-adjusted) return per year, on average, over the long term, unless you have reason to believe that you're doing a better job of predicting the market than the intellectual and investment might of wall street - which is possible, but hard. (pro tip: it's actually quite easy to outdo the market at large over the short term just by getting lucky or investing in risky askets in a good year. earning this sort of return consistently over many years, though, is stupidly hard. usually you'll wipe out your gains several years into the process, instead.) the stock market fluctuates like crazy, which is why they tell you not to invest any money you're likely to need sooner than about 5 years out and you switch your portfolio from stocks to bonds as you approach and enter retirement. the traditional benchmark for comparison, as others have mentioned, is the rate of return (including dividends) from the standard and poors 500 index. these are large stable companies which make up the core of larger united states business. (most people supplement these with some smaller companies and overseas companies as a part of the portfolio.)", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "non us-resident, need to file 83b election today with the irs - i have an ssn but it says valid for work only with dhs auth - is this ok?", "role": "user" }, { "content": "google that \"valid for work...\" phrase. you'll find that you have a ssn; it is valid for many purposes; it is valid for obtaining work, only when accompanied by dhs authorization. doesn't anyone know how to use commas anymore?", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "i'm self-employed with my own llc. how should i pay myself, given my situation?", "role": "user" }, { "content": "you're conflating llc with corporation. they're different animals. llc does not have \"s\" or \"c\" designations, those are just for corporations. i think what you're thinking about is electing pass through status with the irs. this is the easiest way to go. the company can pay you at irregular intervals in irregular amounts. the irs doesn't care about these payments. the company will show profit or loss at the end of the year (those payments to you aren't expenses and don't reduce your profit). you report this on your schedule c and pay tax on that amount. (your state tax authority will have its own rules about how this works.) alternatively you can elect to have the llc taxed as a corporation. i don't know of a good reason why someone in your situation would do this, but i'm not an accountant so there may be reasons out there. my recommendation is to get an accountant to prepare your taxes. at least once -- if your situation is the same next year you can use the previous year's forms to figure out what you need to fill in. the investment of a couple hundred dollars is worthwhile. on the question of buying a home in the next couple of years... yes, it does affect things. (pass through status? probably doesn't affect much.) if all of your income is coming from self-employment, be prepared for hassles when you are shopping for a mortgage. you can ask around, maybe you have a friendly loan officer at your credit union who knows your history. but in general they will want to see at least two years of self-employment tax returns. you can plan for this in advance: talk to a couple of loan officers now to see what the requirements will be. that way you can plan to be ready when the time comes.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "investment property refinance following a low appraisal?", "role": "user" }, { "content": "if i was you i would not borrow from my 401k and shred the credit card offer. both are very risky ventures, and you are already in a situation that is risky. doing either will increase your risk significantly. i'd also consider selling the rental house. you seem to be cutting very close on the numbers if you can't raise 17k in cash to refi the house. what happens if you need a roof on the rental, and an hvac in your current home? my assumption is that you will not sell the home, okay i get it. i would recommend either giving your tenant a better deal then the have now, or something very similar. having a good tenant is an asset.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "can i participate in trading facebook shares on their ipo day from any brokerage?", "role": "user" }, { "content": "yes. the real question is whether you should. you should consider your investment options, and take into the account that there's much more hype than value in many companies.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "finance, social capital ipoa.u", "role": "user" }, { "content": "(see also the question how many stocks i can exercise per stock warrant? and my comments there). clearly, at the prices you quote, it does not seem sensible to exercise your warrants at the moment, since you can still by \"units\" (1 stock + 1/3 warrant) and bare stock at below the $11.50 it would cost you to exercise your warrant. so when would exercising a warrant become \"a sensible thing to do\"? obviously, if the price of the bare stock (which you say is currently $10.12) were to sufficiently exceed $11.50, then it would clearly be worth exercising a warrant and immediately selling the stock you receive (\"sufficiently exceed\" to account for any dealing costs in selling the newly-acquired stock). however, looking more closely, $11.50 isn't the correct \"cut-off\" price. consider three of the units you bought at $10.26 each. for $30.78 you received three shares of stock and one warrant. for an additional $11.50 ($42.28 in total) you can have a total of four shares of stock (at the equivalent of $10.57 each). so, if the price of the bare stock rises above $10.57, then it could become sensible to exercise one warrant and sell four shares of stock (again allowing a margin for the cost of selling the stock). the trading price of the original unit (1 stock + 1/3 warrant) shouldn't (i believe) directly affect your decision to exercise warrants, although it would be a factor in deciding whether to resell the units you've already got. as you say, if they are now trading at $10.72, then having bought them at $10.26 you would make a profit if sold. curiously, unless i'm missing something, or the figures you quote are incorrect, the current price of the \"unit\" (1 stock + 1/3 warrant; $10.72) seems overpriced compared to the price of the bare stock ($10.12). reversing the above calculation, if bare stock is trading at $10.12, then four shares would cost $40.48. deducting the $11.50 cost-of-exercising, this would value three \"combined units\" at $28.98, or $9.66 each, which is considerably below the market price you quote. one reason the \"unit\" (1 stock + 1/3 warrant) is trading at $10.72 instead of $9.66 could be that the market believes the price of the bare share (currently $10.12) will eventually move towards or above $11.50. if that happens, the option of exercising warrants at $11.50 becomes more and more attractive. the premium presumably reflects this potential future benefit. finally, \"surely i am misunderstand the stock ipo's intent.\": presumably, the main intent of social capital was to raise as much money as possible through this ipo to fund their future activities. the \"positive view\" is that they expect this future activity to be profitable, and therefore the price of ordinary stock to go up (at least as far as, ideally way beyond) the $11.50 exercise price, and the offering of warrants will be seen as a \"thank you\" to those investors who took the risk of taking part in the ipo. a completely cynical view would be that they don't really care what happens to the stock price, but that \"offering free stuff\" (or what looks like \"free stuff\") will simply attract more \"punters\" to the ipo. in reality, the truth is probably somewhere between those two extremes.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "when paying estimated quarterly taxes, can i prorate the amount based on the irregular payment due dates?", "role": "user" }, { "content": "varying the amount to reflect income during the quarter is entirely legitimate -- consider someone like a salesman whose income is partly driven by commissions, and who therefore can't predict the total. the payments are quarterly precisely so you can base them on actual results. having said that, i suspect that as long as you show good intent they won't quibble if your estimate is off by a few percent. and they'll never complain if you overpay. so it may not be worth the effort to change the payment amount for that last quarter unless the income is very different.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "is 401k as good as it sounds given the way it is taxed?", "role": "user" }, { "content": "there are 3 options (option 2 may not be available to you) when you invest 18,000 in a traditional 401k, you don't pay taxes on the 18k the year you invest, but you pay taxes as you withdraw. there's a required minimum distribution required after age 70. if your income is low enough, you won't pay taxes on your withdrawals. otherwise, you pay as if it is income. however, you don't pay payroll tax (social security / medicare) on the withdrawals. you pay no tax until you withdraw. when you invest 18,000 in a roth 401k, you pay income tax on the 18,000 in the year it's invested, but you pay nothing after that. when you invest 18,000 in a taxable investment account, you pay income tax on that 18,000 in the year it's invested, you pay tax on dividends (even if they're re-invested), and then you pay capital gains tax when you withdraw. but remember, tax rules and tax rates are only good so long as congress doesn't change the applicable laws.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "how do i know when i am financially stable/ready to move out on my own?", "role": "user" }, { "content": "one major concern with moving out on your own is can you afford rent each month, be it an apartment or a house payment. you'll hear people say that anywhere from 25% to 40% of your monthly after-tax income should go to housing. 40% seems very high to me and quite risky. i'd go for closer to 30% of your monthly after-tax income and not any higher, but that's just my opinion. i had a friend that moved out of his parents house about the same time that i did. he bought himself a house, and then he immediately started looking for roommates to help pay for his house. it really was a good idea, and i wish that i'd been in a position to do the same, because i'm sure that it saved him a lot of money for the first couple of years. apart from that, my only advise would be to get a house if you can afford it. 1) interest rates are very low right now, and 2) if you're paying rent to someone (for an apartment or whatever) then you're just throwing your hard-earned money away. good luck!", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "fees aside, what factors could account for performance differences between u.s. large-cap index etfs?", "role": "user" }, { "content": "the \"ideal world\" index fund of any asset class is a perfect percentage holding of all underlying assets with immediate rebalancing that aligns to every change in the index weighting while trading in a fully liquid market with zero transaction costs. one finance text book that describes this is introduction to finance: markets, investments, and financial management, see chapter 11. practically, the transaction costs and liquidity make this unworkable. there are several deviations between what the \"ideal world algorithm\" (\"the algorithm\") says you should do and what is actually done. each of these items addresses a real-world solution to various costs of managing a passive index fund. (and they are good solutions.) however, any deviation from the ideal index fund will have a risk. an investor evaluating their choices is left to pick the lowest fees with the least deviation from the ideal index fund. (it is customary to ignore whether the results are in excess or deficit to the ideal). so your formula is: this is also described in the above book.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "how do amortization schedules work and when are they used?", "role": "user" }, { "content": "simply put, for a mortgage, interest is charged only on the balance as well. think of it this way - on a $100k 6% loan, on day one, 1/2% is $500, and the payment is just under $600, so barely $100 goes to principal. but the last payment of $600 is nearly all principal. by the way, you are welcome to make extra principal payments along with the payment due each month. an extra $244 in this example, paid each and every month, will drop the term to just 15 years. think about that, 40% higher payment, all attacking the principal, and you cut the term by 1/2 the time.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "mortgage or not?", "role": "user" }, { "content": "in addition to the other answers, i think you would also need to account for the increased utility and maintenance costs on the more expensive house. typically it is recommended to budget 1% to 4% the cost of the home per year for routine maintenance. while it likely won't cost that much every year, you will have those expensive items come up (e.g. roof, hvac) that come up periodically. the larger house will also cost more to heat/cool. depending on where you live could also have increased property taxes.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "term loan overpayment options: applied to principal, or?", "role": "user" }, { "content": "it may have been the standard practice for a long time, and indeed it still is the common practice for my credit union to apply all excess payment directly to the principal. at the risk of sounding a little cynical, i will suggest that there is a profit motive in the move to not applying excess payments to principal unless directly instructed to do so. interest accrued isn't reduced until the principal is reduced, so it benefits the creditor to both have the money in advance and to not apply it to the principal. you should probably move forward with the expectation that all of your creditors are adversarial even if only in a passive-aggressive manner.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "cash flow implications of converting primary mortgaged residence to rental", "role": "user" }, { "content": "the rental income is indeed taxable income, but you reduce the taxable portion of it by deducting expenses (including mortgage interest, maintenance, insurance, hoa, real estate tax, and of course depreciation). due to the depreciation, you may end up breaking even, or having very little taxable income. note that when you sell the property, your basis is reduced by the depreciation you were allowed to deduct (even if you haven't deducted it for whatever reason), and also the personal residence exclusion might no longer be applicable - i.e.: you'll have to pay capital gains tax. you will not be able to deduct a loss though if you sell now, so it may be better to depreciate it as a rental, rather then sell at a loss that won't affect your taxes. also, consider the fact that the basis for the depreciation is not the basis you currently have in the property (because you're under water). you have to remember that when calculating the taxes. this is not a tax advice, and you should seek a professional help.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "how should my brother and i structure our real estate purchase?", "role": "user" }, { "content": "we’re buying the home right over $200,000 so that means he will only need to put down (as a ‘gift’) roughly $7000. i'm with the others, don't call this a gift unless it is a gift. i'd have him check with the bank that previously refused him a mortgage if putting both of you on a mortgage would allay their concerns. your cash flow would be paying the mortgage payment and if you failed to do so, then they could fall back on his. that may make more sense to them, even if they would deny each of you a loan on your own. this works for them because either of you is responsible for the whole loan. it works for him because he was already willing to be responsible for the whole loan. and your alternative plan makes you responsible for the whole loan, so this is just as good for you. at what percentage would you suggest splitting ownership and future expenses? typically a cash/financing partnership would be 50/50, but since it’s only a 3.5% down-payment instead of 20% is that still fair? surprisingly enough, a 3.5% down-payment that accumulates is about half the equity of a 20% down-payment. so your suggestion of a 25%-75% split makes sense if 20% would give a 50%-50% split. i expected it to be considerably lower. the way that i calculated it was to have his share increase by his equity share of the \"rent\" which i set to the principal plus interest payment for a thirty year loan. with a 20% down-payment, this would give him 84% equity. with 3.5%, about 40% equity. i'm not sure why 84% equity should be the equivalent of a 50% share, but it may be a side effect of other expenses. perhaps taking property taxes out would reduce the equity share. note that if you increase the down-payment to 20%, your mortgage payment will drop substantially. the difference in interest between 3.5% and 20% equity is a couple hundred dollars. also, you'll be able to eliminate any pmi payment at 20%. it could be argued that if he pays a third of the monthly mortgage payment, that that would give him the same 50% equity stake on a 3.5% down-payment as he would get with a 20% down-payment. the problem there is that then he is effectively subsidizing your monthly payment. if he were to stop doing that for some reason, you'd have what is effectively a 50% increase in your rent. it would be safer for you to handle the monthly payment while he handles the down-payment. if you couldn't pay the mortgage, it sounds like he is in a position to buy out your equity, rent the property, and take over the mortgage payment. if he stopped being able to pay his third of the mortgage, it's not evident that you'd be able to pick up the slack from him much less buy him out. and it's unlikely that you'd find someone else willing to replace him under those terms. but your brother could construct things such that in the face of tragedy, you'd inherit his equity in the house. if you're making the entire mortgage payment, that's a stable situation. he's not at risk because he could take over the mortgage if necessary. you're not at risk because you inherit his equity share and can afford the monthly payment. so even in the face of tragedy, things can go on. and that's important, as otherwise you could lose your equity in the house.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "looking for suggestions for relatively safe instruments if another crash were to happen", "role": "user" }, { "content": "one approach is to invest in \"allocation\" mutual funds that use various methods to vary their asset allocation. some examples (these are not recommendations; just to show you what i am talking about): a good way to identify a useful allocation fund is to look at the \"r-squared\" (correlation) with indexes on morningstar. if the allocation fund has a 90-plus r-squared with any index, it probably isn't doing a lot. if it's relatively uncorrelated, then the manager is not index-hugging, but is making decisions to give you different risks from the index. if you put 10% of your portfolio in a fund that varies allocation to stocks from 25% to 75%, then your allocation to stocks created by that 10% would be between 2.5% to 7.5% depending on the views of the fund manager. you can use that type of calculation to invest enough in allocation funds to allow your overall allocation to vary within a desired range, and then you could put the rest of your money in index funds or whatever you normally use. you can think of this as diversifying across investment discipline in addition to across asset class. another approach is to simply rely on your already balanced portfolio and enjoy any downturns in stocks as an opportunity to rebalance and buy some stocks at a lower price. then enjoy any run-up as an opportunity to rebalance and sell some stocks at a high price. the difficulty of course is going through with the rebalance. this is one advantage of all-in-one funds (target date, \"lifecycle,\" balanced, they have many names), they will always go through with the rebalance for you - and you can't \"see\" each bucket in order to get stressed about it. i.e. it's important to think of your portfolio as a whole, not look at the loss in the stocks portion. an all-in-one fund keeps you from seeing the stocks-by-themselves loss number, which is a good way to trick yourself into behaving sensibly. if you want to rebalance \"more aggressively\" then look at value averaging (search for \"value averaging\" on this site for example). a questionable approach is flat-out market-timing, where you try to get out and back in at the right times; a variation on this would be to buy put options at certain times; the problem is that it's just too hard. i think it makes more sense to buy an allocation fund that does this for you. if you do market time, you want to go in and out gradually, and value averaging is one way to do that.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "what mix of credit lines and loans is optimal for my credit score?", "role": "user" }, { "content": "please do not conflate number of credit cards with amount of debt. consider two scenarios, the latter scenario yields much better credit scoring. many recommendation sources suggest the following, although your credit score seems very important, it is only important when you have financial interactions (such as applying for credit or services) where the other party makes decisions based upon the score. you should only obtain loans and credit when you want and it makes sense based upon your needs; choosing to live your life to serve credit scoring agencies may not be your happy place.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "can a ceo short his own company?", "role": "user" }, { "content": "(yes, this should probably be a comment, not an answer ... but it's a bit long). i don't know what the laws are specifically about this, but my grandfather used to be on the board of a company that he helped to found ... and back in the 1980s, there was a period when the stock price suddenly quadrupled one of the officers in the company, knowing that the stock was over-valued, sold around a third of his shares ... and he got investigated for insider trading. i don't recall if he was ever charged with anything, but there were some false rumors spreading about the company at the time (one was that they had something that you could sprinkle on meat to reduce the cholesterol). i don't know where the rumors came from, but i've always assumed it was some sort of pump-and-dump stock manipulation, as this was decades before they were on the s&p 500 small cap. after that, the company had a policy where officers had to announce they were selling stock, and that it wouldn't execute for some time (1? 2 weeks? something like that). i don't know if that was the sec's doing, or something that the company came up with on their own.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "lost credit card replaced with new card and new numbers. credit score affected?", "role": "user" }, { "content": "the true answer is it depends because it is up to the credit card issuer to follow the right path when issuing a replacement credit card. http://www.bankrate.com/finance/credit-cards/will-replacement-card-hurt-my-score.aspx typically, issuers will transfer the account history to the new trade line, says barry paperno, the consumer operations manager at fico, the creator of the fico scoring formula. the new account should have the old open date, so you should retain your payment history, he says. the credit limit and balance should also stay the same. http://blog.credit.com/2014/02/lost-or-stolen-credit-card-hurt-your-credit-scores-76724/ how issuers report replacement cards we asked the major card issuers how they report replacement cards to credit reporting agencies: american express: the new card has the same open date and “member since” year as the previous card. the balance on the old account number is transferred to the new account number. all payment history transfers over. bank of america: all transactions and account history are transferred to the new account number when there is a card replacement or renewal. capital one: the new account number with all the original account data (original open date, etc.) is reported along with a notification to the bureaus that the new account number is replacing the old. the two tradelines can then be ‘merged’ into one, so that all the applicable payment history, balance, etc. is now under the new account number. chase: the original tradeline does not change. the history on the account remains, just the account number field is updated with the new account number. there is no “new” tradeline in this scenario.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "what does this statement regarding put options mean?", "role": "user" }, { "content": "the trader has purchased 1095 options, each of which is a contract which entitles him to sell 100 shares of cisco stock for $16 a share. he paid $71 for each contract (71 cents a share x 100) which is roughly $78k total. he will get $109,500 for each dollar below $16 cisco's stock is when he exercises it (he can buy the stock for the going rate and then sell it for $16 immediately), or he can sell the option itself to someone else for a similar gain (usually a little more, especially if the option has a long time until it expires). if the option expires when the stock is over $16/share, he gets nothing; i.e. the original $78k is lost. for reference, cisco's stock was trading at $17.14/share as of market close on march 18, 2010. the share price had recently been boosted by the recent news that they would be paying a quarterly dividend. it has been heading mostly downward since february 9, after they announced that they're not expecting profits to be as good as the analysts thought they would be: they claim that people aren't buying too much networking equipment just now, and they're also facing mounting competition from the likes of hp and juniper for switches, and aruba / hp / motorola for wireless devices. they may lose market share or need to cut prices, hurting profits. either way, there's certainly a real possibility of their stock going below $16 in the next few months, so people are willing to pay for those options. (disclosure: i work for aruba, who competes with cisco. i also own shares of aruba, possess assorted stock options and similar equity grants, and participate in the employee stock purchase program. i also own shares in cisco indirectly through various mutual funds and etfs.)", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "pay down on second mortage when underwater?", "role": "user" }, { "content": "there are programs out there which will let you refinance even when underwater, under the government's harp program. you are overpaying by nearly $7,000 per year compared to a refinance to 4.5%. a classic example of how the bubble hurt people who overextended themselves a bit as housing shot up. the bank risks a $50k loss if you default or short sell this property. i'd go in and sit down with a branch manager and ask what they can do to recast the loan to a lower rate as you are ready, wiling and able to keep the house and make your payments. good luck.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "what are the opportunities/implications of having a designated clearing bank in my home country?", "role": "user" }, { "content": "for an individual there will not be much impact immediately. this arrangement will help corporates and banks settle payments more easily. - it would typically help companies dealing with yuan [buying or selling to china or countries that accept yuan as payment] to make payments at a cheaper cost & in less time. - in the near future it would make it easier for companies to invest more into china financial markets - it would also open up / create new market for derivatives and other allied products - it would also make singapore a market place for yuan outside china [and hong kong] resulting in more money and related product. in a related move this would make it easy for singapore central bank to invest in china. once the markets matures more, there could be some products for individuals.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "how to incentivize a real-estate broker to find me a cheap house", "role": "user" }, { "content": "having just gone through this process as a buyer via broker in israel, here are my thoughts: tl;dr: an incentive such as you are suggesting would not be particularly helpful. in this case, your best option is to spend your efforts shopping for a broker that you can trust. the rest: your main concern is that the broker will find you a place at the top of your budget and will not negotiate aggressively. the main person responsible for negotiation is you. you are paying for the property, and you are putting in bids: not your agent. the agent should advise you, but in the end should pass along your bids directly. the real problem is that you, as the buyer, generally do not have as close a feel for the pulse of the market as the broker, who should be quite aware of recent closings in the neighborhood. therefore, there are a few things that you can do to help arm yourself: at the end of the day, if you have decided to use a broker, you are making a large financial commitment to hire someone to find you the best place, and therefore it may be more important at this point to spend your efforts shopping around for the best broker, rather than trying to figure out how to outsmart her. you are correct: buyers' agents do have incentives to sell you on places that may not be right or good for you. for example: although your scheme may help a bit with the first concern, it will not help at all with the other two, which i assume to be much more likely problems in any event. instead, find recommendations for brokers from others. have the broker show you a few properties and put in some low bids to get a feel for how she handles them. discuss the properties together and try to assess if they really have your interests in mind. you are paying a lot for their service, and you should make sure, as much as possible, that they really are working honestly and in your best interest. a good broker who knows his market and is trying to help you can be a great asset in the opaque, cutthroat real estate market. הבל הבלים, הכל הבל. סוף דבר הכל נשמע, את האלוהים יירא ואת מצוותיו שמור כי זה כל האדם. good luck!", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "what is the meaning of closed short ,opened long ,scaled out and scaled in?", "role": "user" }, { "content": "opened long - is when you open a long position. long means that you buy to open the position, so you are trying to profit as the price rises. so if you were closing a long position you would sell it. closed short - is when you close out a short position. short means that you sell to open and buy back to close. with a short position you are trying to profit as the price falls. scaled out - means you get out of a position in increments as the price climbs (for long positions). scaled in - means you set a target price and then invest in increments as the stock falls below that price (for long positions).", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "options for dummies. can you explain how puts & calls work, simply?", "role": "user" }, { "content": "put options are contracts to sell. you pay me a fee for the right to put the stock (or other underlying security) in my hands if you want to. that happens on a specific date (the strike date) and a specified price (the strike price). you can decide not to exercise that right, but i must follow through and let you sell it to me if you want to. put options can be used by the purchaser to cap losses. for example: you purchase a put option for ge oct19 13.00 from me. on october 19th, you can make me let you sell your ge stock to me for $13.00 a share. if the price for ge has fallen to $12.00, that would be a good idea. if its now at $15.00 a share, you will probably keep the ge or sell it at the current market price. call options are contracts to buy. the same idea only in the other direction: you pay me a fee for the right to call the stock away from me. calls also have a strike date and strike price. like a put, you can choose not to exercises it. you can choose to buy the stock from me (on the strike date for the strike price), but i have to let you buy it from me if you want to. for example: you purchase a call option for ge oct19 16.00 option from me. on october 19th, you can buy my ge stock from me for $16.00 a share. if the current price is $17.50, you should make me let you buy if from me for $16.00. if its less than $16.00, you could by it at the current market price for less. commonly, options are for a block of 100 shares of the underlying security. note: this is a general description. options can be very complicated. the fee you pay for the option and the transaction fees associated with the shares affects whether or not exercising is financially beneficial. options can be very risky. you can loose all your money as there is no innate value in the option, only how it relates to the underlying security. before your brokerage will let you trade, there are disclosures you must read and affirm that you understand the risk.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "where is my dividend?", "role": "user" }, { "content": "your dividend should show up in one of a few methods: (1) cash in your trading account (2) a check mailed to you (3) a deposit to a linked bank account (4) as additional new shares in the stock, as the result of a drip setup.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "outstanding car bill, and i am primary but have not driven it for 2 years", "role": "user" }, { "content": "what can you do? pay the loan or face the debt collectors. the finance company don't care who now keeps the car, or who drives it. there's money outstanding on the loan, and your signature on the loan form. that's why co-signing a loan for someone else so often ends in tears.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "is it worth buying real estate just to safely invest money?", "role": "user" }, { "content": "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.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "where can one find intraday prices for mutual funds?", "role": "user" }, { "content": "look at morningstar holdings.it will list the top 25 holdings and their current price.this will give you a good idea of the intra-day price of the fund.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "what questions should i ask a mortgage broker when refinancing a condo in wisconsin?", "role": "user" }, { "content": "its a huuuuuuuuuuuge topic, and to answer your question in full will require a book, with a small booklet of legal advice attached to it. i'm not going to write it here, but i'll give you some very specific points to start your research with: arm/baloon - big no no. don't touch that. get rid of those you have any way you can, and then never ever do it again. that's the kind of crap that got us into the housing bubble mess to begin with. especially with the rates as low as now, the only future with arm/baloon is that you're going to pay more, way more, than your initial period payments. rates - the rates now are very low. they were even lower 12-24 months ago, but are still extremely low. make sure you get a fixed rate loan, in order to lock these rates in for the remainder of the loan. any arm loan will have higher rates in the future. so go with fixed rate. period - fixed rate loans are given for periods up to 30 years. the shorter the period, the lower the rate. however, at the level they're now, you're practically getting money for free (the apr is comparable to the inflation) even for 30 yr/fixed loans. pmi - private mortgage insurance - since you don't have much equity, the lender is likely to require you paying pmi. this is a significant amount of money you pay until you have at least 20% equity. it changes from lender to lender, so shop around and compare. government assistance - that's what the broker was referring to. there were programs allowing people refinance even under-water mortgages. check what programs are still available in your area. some banks will not refinance with less than 20% equity, but some government assistance programs may help you get a loan even if you don't have enough equity. closing fees and points - that's the money out of your pocket. shop around, these vary wildly. generally, credit unions, being non-profits, are cheaper on this item specifically, while comparable to big banks on everything else.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "wife sent to collections for ticket she paid ten years ago", "role": "user" }, { "content": "the first thing you should do is write a letter to the collection company telling them that you dispute all charges and demand, per section 809 of the fair debt collection practices act, that they immediately validate and confirm any and all debts they allege you owe. you should further request that that they only communicate with you by mail. section 809 requires them to examine the legal documents showing you allegedly owe a debt and they are required to send this to you. this all creates a useful paper trail. when you send the letter, be sure to send it as certified mail with a return receipt. from your description, it doesn't sound like this will do anything, but it's important you do it within 30 days of them contacting you. this is because the law allows them to assume the debt is valid if you don't do it within 30 days of their initial contact. i recommend you speak with an attorney. most states have a statute of limitation on debt of about 4 or 5 years. i don't know if that applies to courts though. whatever you do, be very careful of the language you use when speaking with them. always refer to it as \"the alleged debt,\" or \"the debt you allege i owe.\" you don't want them misconstruing your words later on. as far as proving you paid it, i would look through every scrap of paper i'd ever touched looking for it. if that proves fruitless, try going to the courthouse and looking through their records. if they're saying you didn't pay, that's a long shot, but still worth a try. you could also try bank records from that time, like if you have a visa statement showing $276.17 paid to the nevada court or something like that. if all else fails, the law allows you to send the collector a letter saying that you refuse to pay the debt. the collection company then legally must stop contacting you unless it's to tell you they are suing you or to tell you they won't contact you again. i strongly advise against this though. your best bet is going to be speaking with a qualified attorney. edit: you should also pull your credit reports to make sure this isn't being reported there. federal law gives you the right to have a free copy of each of your credit reports once every year. if it is being reported, send a certified letter with return receipt to each bureau which is reporting it telling them you dispute the information. they then are required to confirm the information. if they can't confirm it, they must remove it. if they do confirm it, you are legally entitled to put a statement disputing the information next to it on your credit report. i am not an attorney. this is not legal advise. you should consult an attorney who is licensed to practice law in your particular jurisdiction.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "is refinancing my auto loan just to avoid dealing with the lender that issued it a crazy idea?", "role": "user" }, { "content": "i’d say no, it’s not crazy. i did that even for a mortgage, because the bank tended to lose my checks or let them sit for some days, and then claim i paid late. they were known on the internet for their poor processing department, so i decided to avoid that monthly hassle with calling and arguing, and refinanced. compare the pain with the cost for refinancing, and if you think it’s worth it, change. you might even get a cheaper credit, and save on it.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "does the usa have a gold reserve?", "role": "user" }, { "content": "the us does have a gold reserve. the main reserves are held at fort knox but there is even more gold, mostly owned by other countries, stored in the basement of the new york federal reserve bank (think die hard 3). the united states bullion depository, often known as fort knox, is a fortified vault building located adjacent to fort knox, kentucky, used to store a large portion of united states official gold reserves and occasionally other precious items belonging or entrusted to the federal government. the united states bullion depository holds 4,578 metric tons (5046 tons) of gold bullion (147.2 million oz. troy). this is roughly 2.5% of all the gold ever refined throughout human history. even so, the depository is second in the united states to the federal reserve bank of new york's underground vault in manhattan, which holds 7,000 metric tons (7716 tons) of gold bullion (225.1 million oz. troy), some of it in trust for foreign nations, central banks and official international organizations. source: wikipedia", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "accounting entry for selling a covered call", "role": "user" }, { "content": "option contracts typically each represent 100 shares. so the 1 call contract you sold to open (wrote) grants the buyer of that option the right to purchase your 100 shares for $80.00 per share any time before the option expiration date. you were paid a gross amount of $100 (100 shares times $1.00 premium per share) for taking on the obligation to deliver should the option holder choose to exercise. you received credit in your account of $89.22, which ought to be the $100 less any trading commission (~$10?) and miscellaneous fees (regulatory, exchange, etc.) per contract. you did capture premium. however, your covered call write represents an open short position that, until either (a) the option expires worthless, or (b) is exercised, or (c) is bought back to close the position, will continue to show on your account as a liability. until the open position is somehow closed, the value of both the short option contract and long stock will continue to fluctuate. this is normal.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "what does inflation mean to me?", "role": "user" }, { "content": "inflation as defined in the general, has many impacts at a personal level. for example, you say that the reduction in the price of oil has no impact on you. that's absolutely not true, unless you're a hermit living off of the land. every box or can or jar of food you buy off the shelf of the grocery store has the price of oil baked into it, because it had to get there somehow. high fuel costs for trucks mean increased costs to put food on shelves, which mean increased prices for that food. even tobacco prices can affect you, because they affect what other people are spending. demand is always a significant factor in prices, particularly retail prices, and if people are spending more money on tobacco, they're probably spending less on other things - either buying less snacks, for example, or buying cheaper brands of those snacks. so the price of doritos may drop a bit (or not rise), for example. general inflation also tends to drive raises, particularly in industries with relatively small performance ties to raises. if inflation is 3%, wages need to raise 3% or so in order to keep up, on average; even if your personal cost-of-living went up 0%, or 5%, or 10%, the default wage inflation will be closer to that of the national average. any raise less than national average is effectively a pay cut (which is one reason why inflation is needed in a healthy economy). so your company probably has a cost-of-living raise everyone gets that's a bit less than inflation, and then good performers get a bump up to a bit more than inflation. you can read more on this topic for a more in-depth explanation. finally, inflation rates tend to be major factors in stock market movement. inflation that is too high, or too low, can lead to higher volatility; inflation that is \"right\" can lead to higher stability. an economy that has consistently \"right\" inflation (around 2-3% typically) will tend to have more stable stock market in general, and thus more reliable returns from that market. there are many other factors that lead to stock markets rising and falling, but inflation is one very relevant one, particularly if it's not in the \"right\" zone.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "does a us llc need to file taxes if owned by a foreign citizen?", "role": "user" }, { "content": "there is no such thing as double taxation. if you pay tax in the us, you can claim tax credits from india tax authority. for example, if you pay 100 tax in usa and your tax liability in india is 200, then you will only pay 100 (200 india tax liability minus 100 tax credits on foreign tax paid in the usa). this is always true and not depending on any treaty. if there is a treaty, the tax rate in the united states is set on the treaty and you can claim that final tax rate based upon that treaty. if you operate an llc, and the income is not derived from united states and you have no ties with the us and that llc is register to a foreign person (not company but a real human) then you will not have to submit tax return in the us... i advice you to read this: http://www.irs.gov/businesses/small/article/0,,id=98277,00.html", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "how to correctly track a covered call write (sell to open) in double-entry accounting?", "role": "user" }, { "content": "i think the issue you are having is that the option value is not a \"flow\" but rather a liability that changes value over time. it is best to illustrate with a balance sheet. the $33 dollars would be the premium net of expense that you would receive from your brokerage for having shorted the options. this would be your asset. the liability is the right for the option owner (the person you sold it to) to exercise and purchase stock at a fixed price. at the moment you sold it, the \"marked to market\" (mtm) value of that option is $40. hence you are at a net account value of $33-$40= $-7 which is the commission. over time, as the price of that option changes the value of your account is simply $33 - 2*(option price)*(100) since each option contract is for 100 shares. in your example above, this implies that the option price is 20 cents. so if i were to redo the chart it would look like this if the next day the option value goes to 21 cents, your liability would now be 2*(0.21)*(100) = $42 dollars. in a sense, 2 dollars have been \"debited\" from your account to cover your potential liability. since you also own the stock there will be a credit from that line item (not shown). at the expiry of your option, since you are selling covered calls, if you were to be exercised on, the loss on the option and the gain on the shares you own will net off. the final cost basis of the shares you sold will be adjusted by the premium you've received. you will simply be selling your shares at strike + premium per share (0.20 cents in this example)", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "can anyone else make an online payment for me?", "role": "user" }, { "content": "your relative in the us could buy a pre-paid visa (aka visa gift card) and give you the numbers on that to pay. they're available for purchase at many grocery/convenience stores. in most (all??) cases there'll be a fee of a several dollars charged in addition to the face value of the card. the biggest headache i can think of would be that pre-paid cards are generally only available in $25/50/100 increments; unless the current sat price matches one of the standard increments they'll have to buy the next card size up and then get the remaining money off it in a separate transaction. a grocery store would be one of the easier places for your relative to do this because cashiers there are used to splitting transactions across multiple payment sources (something not true at most other types of business) due to regularly processing transactions partially paid for via welfare benefits.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "started new job. rollover previous employer 401k to new 401k, ira or roth ira?", "role": "user" }, { "content": "you should never roll a 401(k) to a roth ira. if the intention is to do so, you are better off rolling to a traditional ira, and then converting. (per the comment below, i should add - if the 401(k) contained post tax money, this portion rolls to a roth, not a tradition ira. you then have the exercise of converting/recharacterizing just the tira money, as the roth stands aside) this preserves the ability to recharacterize back to a traditional ira. you might wish to do this if: the answers so far are great, but i'll add what i see missing -", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "what's the fuss about credit score / history?", "role": "user" }, { "content": "credit unions have long advocated their services based on the fact that they consider your \"character.\" unfortunately, they are then at a loss to explain how they determine the value of your character, other than to say that you're buddies & play pool together so they'll give you a loan. your credit history / score is as accurate a representation of your character in business dealings as can be meaningfully quantified. it tracks your ability to effectively use and manage debt, and your propensity to pay it back responsibly or default on obligations. while it isn't perfect, it is certainly one of the best means currently available for determining someone's trustworthiness when it comes to financial matters.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "latest china devaluation (24/08/2015) and the affect on house prices in uk", "role": "user" }, { "content": "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.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "how do i use investments to lower my taxes [us]?", "role": "user" }, { "content": "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.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "what is the benefit of investing in retirement plan versus investing directly in stocks yourself?", "role": "user" }, { "content": "because retirement account usually are tax effective vehicles - meaning you will pay less tax on any profits from your investments in a retirement account than you would outside. for example, in my country australia, for someone on say $60,000 per annum, if you make $10,000 profits on your investments that year you will end up paying 34.5% tax (or $3,450) on that $10,000 profits. if you made the same profits in a retirement account (superannuation fund) you would have only paid 15% tax (or $1,500) on the $10,000 profit. that's less than half the tax. and if you are on a higher income the savings would be even greater. the reason why you can't take the money out of a retirement account is purely because the aim is to build up the funds for your retirement, and not take it out at any time you want. you are given the incentive to pay less tax on any investment profits in order for you to save and grow your funds so that you might have a more comfortable retirement (a time when you might not be able to work any more for your money).", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "how does the purchase of shares on the secondary market benefit the issuing company?", "role": "user" }, { "content": "first, the stock does represent a share of ownership and if you have a different interpretation i'd like to see proof of that. secondly, when the ipo or secondary offering happened that put those shares into the market int he first place, the company did receive proceeds from selling those shares. while others may profit afterward, it is worth noting that more than a few companies will have secondary offerings, convertible debt, incentive stock options and restricted stock that may be used down the road that are all dependent upon the current trading share price in terms of how useful these can be used to fund operations, pay executives and so forth. third, if someone buys up enough shares of the company then they gain control of the company which while you aren't mentioning this case, it is something to note as some individuals buy stock so that they can take over the company which happens. usually this has more of an overall plan but the idea here is that getting that 50%+1 control of the company's voting shares are an important piece to things here.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "how can home buying be considered a sound investment with all of that interest that needs to be paid?", "role": "user" }, { "content": "the flaw in your reasoning is that you are assuming that renting a house is easy and automatic. who is going to manage the property? your parents? what are you going to do if the tenants burn the place down, start having drug parties there, or secretly have 6 cats who piss everywhere so noone will ever want to rent it again? what are you going to do when the house goes unrented for a year and you have to pay a year's worth of mortgage payments with no rental income? what are you going to do when some deadbeat decides to stop paying the rent, but won't move out, and when you try to evict him, he goes to court to stop you? you going to fly to nj to make the court appearances? unless you sell your existing house, or your parents buy you out, then you need to stay. you should not attempt to own two houses at once with one of the houses located not where you are at. that will not turn out well. also, just as an aside, 30-year mortgages are not an \"investment\"; they are a way to lose money. usually people get them because they want a big beautiful house that they cannot afford, so they borrow the money. that is not \"investing\", that is wasting money to live in luxurious circumstances. if you want to become wealthy, buy a property you can afford, not something that you have to string out payments for 30 years.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "how can one protect oneself from a dividend stock with decreasing price?", "role": "user" }, { "content": "an alternative options strategy to minimize loss of investment capital is to buy a put, near the money around your original buy price, with a premium less than the total dividend. the value of the put will increase if the stock price falls quickly. likely, a large portion of your dividend will go towards paying the option premium, this will however ensure that your capital doesn't drop much lower than your buy price. continued dividend distributions will continue to pay to buy future put options. risks here are if the stock does not have a very large up or down movement from your original buy price causing most of the dividend to be spent on insuring your position. it may take a few cycles, but once the stock has appreciated in value say 10% above buying price, you can consider either skipping the put insurance so you can pocket the dividend, or you can bu ythe put with a higher strike price for additional insurance against a loss of gains. again, this sacrifices much of the dividend in favor of price loss, and still is open to a risk of neutral price movement over time.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "are leverage/ko products the only reasonable way to trade stocks?", "role": "user" }, { "content": "there's no free lunch. here are some positions that should be economically equivalent (same risk and reward) in a theoretically-pure universe with no regulations or transaction costs: you're proposing to buy the call. if you look at the equivalent, stock plus protective put, you can quickly see the \"catch\"; the protective put is expensive. that same expense is embedded in the call option. see put-call parity on wikipedia for more: http://en.wikipedia.org/wiki/put%e2%80%93call_parity you could easily pay 10% a year or more for the protection, which could easily eat up most of your returns, if you consider that average returns on a stock index might be about 10% (nominal, not real). another way to look at it is that buying the long call and selling a put, which is a synthetic long position in the stock, would give you the put premium. so by not selling the put, you should be worse off than owning the stock - worse than the synthetic long - by about the value of the put premium. or yet another way to look at it is that you're repeatedly paying time value on the long call option as you roll it. in practical world instead of theory world, i think you'd probably get a noticeable hit to returns just from bid-ask and commissions, even without the cost of the protection. options cost more. digressing a bit, some practical complications of equivalency between different combinations of options and underlying are: anyway, roughly speaking, any position without the \"downside risk\" is going to have an annual loss built in due to the cost of the protection. occasionally the options market can do something weird due to supply/demand or liquidity issues but mostly the parity relationships hold, or hold closely enough that you can't profit once expenses are considered. update: one note, i'm talking about \"vanilla\" options as traded in the us here, i guess there are some somewhat different products elsewhere; i'm not sure exactly which derivatives you mean. all derivatives have a cost though or nobody would take the other side of the trade.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "do money markets fluctuate during market crashes?", "role": "user" }, { "content": "wikipedia has a solid article on money market funds which includes a section on \"breaking the buck\" when the money market fund fails to return its full dollar. money market funds smoothing out the daily (generally small) fluctuations of investing in short-term treasuries directly but have similar risk over longer periods. some funds can and have lost money in market crashes, though even the worst performers still returned 95+ cents on the dollar. while few investments are guaranteed and likely none in your retirement account, money-market funds are likely the choice you have with the least fluctuation and similar minimal risk to short term treasuries. however, a second important risk to consider is inflation. money market funds generally have returns similar or less than the inflation rate. while money markets funds help you avoid the fluctuations of the stock market the value of your retirement account falls behind the cost of goods over time. unless the investor is fairly old most financial professionals would recommend only a small portion of a retirement account be in money market instruments. vanguard also has a set of target retirement investment funds that are close to what many professionals would recommend. consulting a financial professional to discuss your particular needs is a good option as well.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "are stores that offer military discounts compensated by the government?", "role": "user" }, { "content": "this story is about military grocery stores - i.e.: grocery stores for military personnel on military bases. there are no discounts for military personnel in a regular grocery store. but they may have subsidised prices in grocery stores located inside a military installation, and these are those stores that the story is talking about.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "what are the marks of poor investment advice?", "role": "user" }, { "content": "my \"bad advice detector\" gets tingled by the following:", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "is there a country that uses the term dollar for currency without also using cents as fractional monetary units?", "role": "user" }, { "content": "going through the list of economies that currently use the dollar, all of them list cents as a fractional unit. in hong kong and taiwan, the 1/100 fractional unit is still called a cent, but it's no longer in circulation in coin form and only finds use in financial markets or electronic payments. in countries like malaysia, the word \"sen\" is used as the translation of the word \"cent\", even though the word for the actual currency, \"ringgit\", isn't a translation of the word \"dollar\". a similar situation occurs in panama. the local currency is called the balboa, and it's priced on par (1:1) with the us dollar. us banknotes are also accepted as legal tender, and panamanians sometimes use the terms balboa/dollar interchangeably. the 1/100 subdivision of the balboa is the centésimo, which is merely a translation of cent. like malaysia, the fractional unit is called \"cent\" (or a translation) but the main unit isn't merely a translation of the word \"dollar.\" on a historical note, the spanish dollar was subdivided into 8 reales in order to match the german thaler (the word that forms the basis for the english word \"dollar\").", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "is there a difference between managerial accounting and financial accounting?", "role": "user" }, { "content": "from wikipedia: managerial accounting is used primarily by those within a company or organization. reports can be generated for any period of time such as daily, weekly or monthly. reports are considered to be \"future looking\" and have forecasting value to those within the company.** financial accounting is used primarily by those outside of a company or organization. financial reports are usually created for a set period of time, such as a fiscal year or period. financial reports are historically factual and have predictive value to those who wish to make financial decisions or investments in a company. at my university, managerial accounting focused more on the details of how costs were managed in the company, the future of the business, etc. while the courses that were considered financial accounting were more from the point of view of a financial analyst or investor, like you said. the financial accountancy material covered analysis of financial statements and the associated investment decisions, among other things. these areas overlapped in areas like the production of financial statements, since the company also needs to consider how analysts will interpret these statements, and dividend policy, corporate tax accounting, etc. the wikipedia articles on managerial accounting and financial accounting may provide helpful information as well. disclaimer: i took an introductory accounting course in university and nothing more, so my knowledge of the course structures, even at my alma mater, is secondhand recollection at best. i'm sure there are more similarities and differences of which i'm unaware, and i would assume that forensic accountants, auditors, etc. dabble in both these areas and others.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "what types of etfs are taxed differently by the irs?", "role": "user" }, { "content": "investopedia laid out the general information of tax treatment on the etf fund structures as well as their underlying asset classes: http://www.investopedia.com/financial-edge/0213/how-tax-treatments-of-etfs-work.aspx", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "hearing much about dave ramsey. which of his works is best in describing his philosophy about money?", "role": "user" }, { "content": "his books: the total money makeover - this is a very step by step approach to what he teaches about how to handle money. financial peace - this is a more philosophical approach to the same topics. more idea and less application based. you can catch his radio show online for free - or an hour podcast each day in the itunes store - this is free. you can watch his tv show on hulu.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "dad paying for my new home in cash. how can i buy the house from him?", "role": "user" }, { "content": "you have four basic options.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "options price vs implied volatility - who drives who?", "role": "user" }, { "content": "currently, when \"implied volatility\" is spoken, the black-scholes-merton model is implied. this model has been shown to be deficient, thus the variance gamma model should be used. however, as nearly no one uses vg, it can be assumed that bs is still being implied. the bs formula has multiple variables. some are external to the underlying in question. the rest are internal. when all but one variable is known or assumed, the last variable can be calculated, so if one has the price of the underlying and all else except the volatility, the volatility can be calculated thus implied. if one selects an implied volatility, and all variables except the underlying price is known, the underlying price can be calculated. for the present, one uses the current price of the underlying to calculate the implied volatility. for future option prices, one assumes an implied volatility at a later date to calculate a possible price. for prices not at the money, the bs model is extremely imprecise. the vg model can better determine a potential future price.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "mortgage company withholding insurance proceeds", "role": "user" }, { "content": "fire insurance, as you have discovered, is a complete ripoff. most people pay fire insurance all their lives with no benefit whatsoever, and those such as yourself who are lucky enough to get a payout find that it is completely insufficient to replace their loss. i once computed the actual beneficial net present financial value of my fire insurance policy and it came out to $40 per month. the cost was $800 per month. that is typical. homeowners pay $500 to $800 per year for something that is worth $30 to $50 per year. ironically banks would actually make more money from mortgages if they did not require mortgagees to buy insurance, but nevertheless they insist on it. it is not about logic, but about fear and irrationality. when i paid off my mortgage and gained ownership of my home the first thing i did was cancel my fire insurance. i now invest the money i would have wasted on insurance, making money instead of losing it. being compelled to throw money down the toilet on fire insurance is one of the hidden costs of a homeowners mortgage in the united states. in your situation, the main option is to borrow the money to rebuild the house using the land as collateral, if the land is valuable enough. of course, you still owe the money for your original mortgage on your now (non-existent) home. so, to get a home, you will have to have the income to service two mortgages. a loan officer at a reputable bank can tell you whether you have the income necessary to support two mortgages. if you were maxed out on your original mortgage, then you may not have enough income and you are screwed. in that case you will have to go back to renting and gradually paying off your old mortgage. (if it were me, i would sue the insurance company pro se as a way to get the necessary money to rebuild the home, because insurance companies roll over like a $20 hooker when they get sued. juries hate insurance companies. but i am unusual in that i love courtrooms and suing people. most people are terrified of courtrooms though, so it may not be an option for you.)", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "what industries soar when oil prices go up?", "role": "user" }, { "content": "you can look at it from a fundamental perspective to see who benefits from rising oil prices. that's a high level analysis and the devil is in the details - higher oil prices may favour electric car producers for example or discount clothes retailers vs. branded clothes manufacturers. another approach it to use a statistical analysis. i have run a quick and dirty correlation of the various s&p sector indices against the oil prices (crude). based on the the results below, you would conclude that materials and energy stocks should perform well with rising oil prices. there again, it is a behaviour you would expect at the group level but it may not translate to each individual company within those groups (in particular in the materials sector where some would benefit and some would be detrimentally affected). you could get exposure to those sectors using etfs, such as xlb and xle in the us. or you could run the same analysis for each stock within the s&p 500 (or whatever index you are looking at) and create a portfolio with the stocks that are the most correlated with oil prices. this is calculated over 10 years of monthly returns after removing the market component from the individual sectors. the two important columns are:", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "how could usa defaulting on its public debt influence the stock/bond market?", "role": "user" }, { "content": "regarding the summer of 2011 crisis: there is no reason that the united states cannot continue borrowing like it is just based on a particular ratio: debt to gdp. the debt to gdp ratio right now is around 100%, or 1:1. this means the us gdp is around $14 trillion and its debt is also around $14 trillion. other countries have higher debt:gdp ratios japan - for instance - has a debt:gdp ratio of 220% regarding a selloff of stocks, dollars and bonds: you have to realize that selling pressure on the dollar will make the price of everything increase. so commodities and stocks will skyrocket proportionally. the stockmarket can selloff faster than the dollar though. and both markets have circuit breakers that can attempt to curb quick selloffs. effectiveness pending.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "debit card for minor (< 8 y.o.)", "role": "user" }, { "content": "it seems the age restriction for the capital one money account has been removed; i just read the entire terms and conditions and there's no minimum age requirement. i just finished opening capital one money accounts for a child who is <5 and a child <8. both now have activated debit cards and online access. their accounts are accessible via their card, but also appear under my online banking login, as they are joint accounts. it is possible to deposit cheques, but no cheques are issued for writing. debit card access is provided for atm withdrawals and purchases. and the design on the card is really nice; my son said it looks like the $100 bill.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "understanding the nasdaq insider trading information", "role": "user" }, { "content": "usually insiders are in a better position than you to understand their business, but that doesn't mean they will know the future with perfect accuracy. sometimes they are wrong, sometimes life events force them to liquidate an otherwise promising investment, sometimes their minds change. so while it is indeed valuable information, as everything in fundamental analysis it must be taken with a grain of salt. automatic sell i think these refer to how the sell occurred. often the employees don't get actual shares but options or warrants that can be converted to shares. or there may be special predetermined arrangements regarding when and how the shares may be traded. since the decision to sell here has nothing to do with the prospects of the business, but has to do with the personal situation of the employee, it's not quite the same as outright selling due to market concerns. some people, for instance, are not interested in holding stock. part of their compensation is given in stock, so they immediately sell the stock to avoid the headache of watching an investment. this obviously doesn't indicate that they expect the company will go south. i think automatic sell refers to these sorts of situations, but your broker should provide a more detailed definition. disposition (non open market) these days people trade through a broker, but there's nothing stopping you from taking the physical shares and giving them to someone in exchange for say a stack of cash. with a broker, you only \"sell\" without considering who is buying. the broker then finds buyers for you according to their own system. if selling without a broker you can also be choosy with who is buying, and it's not like anybody can just call up the ceo and ask to buy some stock, so it's a non-open market. ultimately though it's still the insider selling. just on a different exchange. so i would treat this as any insider sell - if they are selling, they may be expecting the stock to become less valuable. indirect ownership i think this refers to owning an entity that in turn owns the asset. for instance ceo of xyz owns stock in acme, but acme holds shares of xyz. this is a somewhat complicated situation, it comes down to whether you think they sold acme because of the exposure to xyz or because of some other risk that applies only to acme and not xyz. generally speaking, i don't think you would find a rule like \"if insider transactions of so and so kinds > x then buy\" that provides guaranteed success. if such a rule was possible it would have been exploited already by the professionals. the more sensible option is to consider all data available to you and try to make a holistic evaluation. all of these insider activities can be bullish or bearish depending on many other factors.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "good book-keeping software?", "role": "user" }, { "content": "xero and waveaccounting can make things easy, but they also have their limitations. i've used both for short periods of time but found both of them to be lacking. while the \"ease\" is appealing, the ability to drill into the details and get good reports is the downfall of both of these accounting systems. quickbooks may seem like the easy answer here, but it really is the best for getting the power you want without getting too complicated.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "from facebook's perspective, was the fall in price after ipo actually an indication that it went well?", "role": "user" }, { "content": "@joe.e, i disagree with your logic. the ipo clearly didn't go well--not relative to other ipos. were it not for the stocks underwriters stepping in late in the trading day, facebook would likely have closed below their opening price. this story and others indicate that institution investors were given negative information by an analyst for the underwriters that other investors didn't have. this inside knowledge is certainly contributing to the drop in the stock. it's fair to argue that many individual investors were suckered into buying the stock at the ipo price because of this incomplete disclosure. it wouldn't surprise if what's happens has a negative impact on future trading volume, and creates reluctance to invest in the firm--which would certainly be an additional negative outcome beyond the dropping stock price. edit: dilip mentioned a lawsuit. here's a link to an article about it.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "how to map stock ticker symbols to isin (international securities identification number)?", "role": "user" }, { "content": "there is no simple way to convert an isin into a stock ticker symbol. the only way to even attempt to do so is to map the isin to a cusip or sedol or other national identifier and then map that identifier to a stock ticker symbol.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "do post-ipo 'insider' stock lockup periods still apply if you separate from the company", "role": "user" }, { "content": "there are quite a few regulations on \"insider trading\". blackouts are one of the means companies adopt to comply with \"insider trading\" regulations, mandating employees to refrain from selling/buying during the notified period. once you leave the employment: so unless there is an urgent need for you to sell/buy the options, wait for some time and then indulge in trade.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "how to reconcile a credit card that has an ongoing billing dispute?", "role": "user" }, { "content": "what i would prefer is top open a new category charges under dispute and park the amount there. it can be made as an account as well in place of a income or expenses category. this way your account will reconcile and also you will be able to track the disputes.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "saving/ investing a lump sum", "role": "user" }, { "content": "5 years is very short term, and since you are sure you'll need the money, investing it into the markets should probably not be done. you can toss it in ally bank for 1% or consider a 5 yr raise your rate cd a decent write-up on time horizons: http://www.investopedia.com/articles/investing/110813/using-time-horizons-investing.asp if you want to go the stock/bond route you can assess the benefits of using something like a vanguard target date fund, or a roboadvisor such as wealthfront or betterment. you need to assess whether you think you may move up your time horizon, say you want to buy a house in 4 years, or, if it is 5 years, are you ok with it being 6.5-7 if there is a market downturn.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "making your first million is easy! (??)", "role": "user" }, { "content": "i realize that \"a million dollars\" is a completely arbitrary figure, but it's one people fixate on. perhaps folks just meant it's getting easier because inflation has made it a far less lofty sum than when the word \"millionaire\" was coined. your point is correct - it' relatively easier as the 1 million dollar nowadays is no where as valuable as compared in the old days after the inflation adjustment. however the way to achieve that is easier said than done: the most possible way is to run your own business (assuming you will make profit). for most of the people running a job to earn a living - the job income is the biggest factor. being extremely frugal wouldn't help much if you don't maximize your income potential. earning a million dollar through investment? how much capitals are you able to invest in? 5k? 50k? 500k? i see no way to earn 1 million with 5k from investment, i wouldn't call it easy. this again depends on your income. with better income of course you could dedicate a larger portion to investment, without exposing too much risk and having to affect your way of life. (3) invest some part of your income over a long period of time and let the stock market do the work i'd say this is more geared towards beating the inflation and earn a few extra bucks instead of getting very rich (this is being very relative). just a word of cautions, the mindset of investment being the shortcut to wealth is very dangerous and often leads to speculative behavior.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "where to find turnover / average amount of time investors & mutual funds held stocks they purchased?", "role": "user" }, { "content": "you can make a rough calculation of the annual turnover rate of stocks by calculating the institutional investors holding of that stock. institutional investors are the only firms that are required to provide such data. the good this is they usually make the lion share of trading activity. on the other hand, this task might proof arduous a different ratio that could be used as a substitute share turnover which is calculated as: share turnover gives the number of shares traded as a fraction of the number of shares outstanding. for example, if you compare the results of stock turnover for three companies and the results came as follows: company a-share turnover: 1.5 times company b share turnover: 3 times company c share turnover: 0.3 times from the results, we can conclude that for a particular period, company c had the least activity and the number of shares traded for that period was only a small fraction of the shares outstanding while other traders of company c hold most shares and never trade them. if you make a cross sectional analysis of a list of businesses you intend to invest in, you could figure which one has the least number of rapidity in the shares traded.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "can my spouse be the primary signer on my car's loan?", "role": "user" }, { "content": "go to your local bank or credit union before talking to a dealership. ask them if putting both names on the loan makes a difference regarding rates and maximum loan you qualify for. ask them to run the loan application both ways. having both names on the loan helps build the credit of the spouse that has a lower score. you may find that both incomes are needed for a car loan if the couple has a mortgage or other joint obligations. the lender will treat the entire mortgage payment or rent payment as a liability against the person applying for the loan, they won't split the housing payment in half if only one name will be on the car loan. therefore sometimes the 2nd persons income is needed even if their credit is not as good. that additional income without a significant increase in liabilities can make a huge difference regarding the loan they can qualify for. once the car is in your possession, it doesn't matter who drives it. in general the insurance company will put both spouses as authorized drivers. note: it is almost always better to ask your bank or credit union about a car loan before going to the dealership. that gives you a solid data point regarding a loan, and removes a major complexity to the negotiations at the dealership.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "should i buy ~$2200 of a hot stock or invest elsewhere?", "role": "user" }, { "content": "forget investing, you need to focus on managing your debt. i would keep the 6k in a checking or savings account because you need that money in case of an emergency. if you save up more than 10k, use the excess to pay down the principal on your debt. worry about investing when you have a positive net worth.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "pay off credit cards in one lump sum, or spread over a few months?", "role": "user" }, { "content": "i have heard that it is better for your credit score to pay them down over time. will it make much of a difference? i have never heard that, however, the financial institutions (who are charging you an amount of interest which was at one time in the not so distant past classified and punishable in state criminal codes) really enjoy you thinking that way. you are clearly capable of doing the math yourself. while i don't know the exact numbers, i am totally confident that you will find in about 5 or 10 minutes (if that long) that eliminating debt of any kind in your life will pay an immediate return that beats the great majority of other investments in terms of risk/reward. after the immediate financial return, there is a quieter, subtler, and even greater long term benefit. basic principle: highest rates first perhaps this decision could be considered slightly less important than deciding not to smoke during your youth; but i would put it as a close second. you are already in a position where you can see the damage that your prior decisions (about financial debt) have produced. run the clock back to the time in your life when you were debt free. now, pay off that debt with the big check, and start from zero. now, turn on your psychic powers and predict the same amount of time, in the future, with the same amount of money (don't even try to adjust for inflation; just use flat dollars) without losing the money which you have given to the financial institutions during this previous part of your life. do you now see why the financial institutions want you to think about slowly paying them off instead of waking up tomorrow without owing them anything ?", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "credit report - not able to establish identity", "role": "user" }, { "content": "it looks like from their response, they would like you to send a copy of your social security card. your drivers license or passport will not help verify your social security number. another option you could try is to get your credit report from one of the other credit bureaus. you should be able to choose from experian, trans union, and equifax all on annualcreditreport.gov", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "avoiding sin stock: does it make a difference?", "role": "user" }, { "content": "yes, it does matter. you are right that lower demand for a stock will drive its price down. lower stock prices can hurt the company. take a look at fixee's answer to this question: a declining share price will make it hard to secure credit, attract further investors, build partnerships, etc. also, employees are often holding options or in a stock purchase plan, so a declining share price can severely dampen morale. in an extreme case, if share prices plummet too far, the company can be pressured to reverse-split the shares, and (eventually) take the company private. this recently happened to playboy. if you do not want to support a company, for whatever reason, then it is wise to avoid their stock.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "are underlying assets supposed to be sold/bought immediately after being bought/sold in call/put option?", "role": "user" }, { "content": "in the first case, if you wish to own the stock, you just exercise the option, and buy it for the strike price. else, you can sell the option just before expiration, it will be priced very close to its in-the-money value.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "investment / savings advice in uncertain economy", "role": "user" }, { "content": "$23,000 student loans at 4% this represents guaranteed loss. paying this off quickly is a conservative move, while your other investments may easily surpass 4% return, they are not guaranteed. should i just keep my money in my savings account since i want to keep my money available? or are there other options i have that are not necessarily long term may provide better returns? this all depends on your plans, if you're just trying to keep cash in anticipation of the next big dip, you might strike gold, but you could just as easily miss out on significant market gains while waiting. people have a poor track record of predicting market down-turns. if you are concerned about how exposed to market risk you are in your current positions, then you may be more comfortable with a larger cash position. savings/cds are low-interest, but much lower risk. if you currently have no savings (you titled the section savings, but they all look like retirement/investment accounts), then i would recommend focusing on that first, getting a healthy emergency fund saved up, and budgeting for your car/house purchases. there's no way to know if you'd be better off investing everything or piling up cash in the short-term. you have to decide how much risk you are comfortable with and act accordingly.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "over the long term, why invest in bonds?", "role": "user" }, { "content": "many folks use bonds to diversify their portfolio since bonds rise and fall in value at different times and for different reasons than stocks. bonds pay interest on a regular basis (usually monthly or quarterly) and so some people invest in bonds in order to match the interest payments to some regular expense they might have. the interest payment does not change (fixed income). for individual bonds, there is a maturity date at which you can expect to receive the face value of the bond (the issuer's creditworthiness is important here). you can make a little money on a bond by buying it when its value is lower than its face value and either selling later for a higher value, or waiting for it to mature. often the minimum investment for a single bond is high, so if you don't have a large enough amount, you can still get the performance of bonds through a bond fund. these do not mature, so you don't have a guarantee of a return of your investment. however, they have access to more bonds than retail investors, so the funds can keep your money more fully invested. if you don't need the income, you can reinvest the dividends and have a little extra capital growth this way.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "how to evaluate an annuity", "role": "user" }, { "content": "annuities are usually not good deals. commissions to the salesman can be as high as 9% of the initial premium. they're not scams, just not the best deals for most circumstances. basically, these things are a combination of an investment vehicle and multiple insurance policies, including permanent insurance. the 8.2% \"return\" is the total cash value of the account, which your heirs get if you die.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "do brokers execute every trade on the exchange?", "role": "user" }, { "content": "there are two terms that are related, but separate here: broker and market maker. the former is who goes and finds a buyer/seller to buy/sell shares from/to you. the latter (market maker) is a company which will agree to partner with you to complete the sale at a set price (typically the market price, often by definition as the market maker often is the one who determines the market price in a relatively low volumne listing). a market maker will have as you say a 'pool' of relatively common stock (and even relatively uncommon, up to a point) for this purpose. a broker can be a market maker (or work for one), also, in which case he would sell you directly the shares from the market maker reservoir. this may be a bad idea for you - the broker (while obligated to act in your interest, in theory) may push you towards stocks that the brokerage acts as a market maker for.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "are there any banks in europe that i can have an account without being in that country?", "role": "user" }, { "content": "it can be done, but i believe it would be impractical for most people - i.e., it would likely be cheaper to fly to europe from other side of the world to handle it in person if you can. it also depends on where you live. you should take a look if there are any branches or subsidiaries of foreign banks in your country - the large multinational banks most likely can open you an account in their sister-bank in another country for, say, a couple hundred euro in fees.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "how to calculate the rate of return on selling a stock?", "role": "user" }, { "content": "you probably want the internal rate of return (irr), see http://en.wikipedia.org/wiki/internal_rate_of_return which is the compound interest rate that would produce your return. you can compute it in a spreadsheet with xirr(), i made an example: https://spreadsheets.google.com/ccc?key=0avutw2htdqfydesxvlm0rfdrrk1qs1honurxzkvfn3c&hl=en you can also use a financial calculator, or there are probably lots of web-based calculators such as the ones people have mentioned.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "live in california but work for illinois-based company", "role": "user" }, { "content": "california and new york are very aggressive when it comes to revenue and taxes. as such, mere having an employee in these states creates a nexus and tax/filing liability for the company. @adam wood mentioned sales tax - that is correct. having an employee in the state of california will require collecting sales tax for ca, and if until now your employer didn't have to - that would be a good enough reason to refuse your request. in addition to sales taxes, there's also the issue of corporate filings (they will now have to file paperwork in ca and pay ca franchise taxes just because of you) and payroll taxes (which are pretty high in ca and ny). it will also subject the to ca/ny/wa labor laws, which are more liberal than in most of the other states. washington doesn't have personal income tax, but does have corporate income tax and sales tax, so i'm guessing the reasons to exclude this state are the same.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "tax intricacies of mlp in a roth ira", "role": "user" }, { "content": "you seem to have it right. unless you have a big position, having mlp shares in your ira will not cause you any tax hassles. your ira will get a schedule k from the mpl (which may be mailed to you), but you won't need to do anything with that unless you're over the ubi limit. last i checked, that was $1000, and you probably won't exceed that. ubi in principle needs to be evaluated every year, so it's not necessarily a \"one-time\" event. if your ira does go over the ubi limit, your ira (not you) needs to file a return. in that case, contact your custodian and tell them about the schedule k that you got. see also my answer here: tax consequences of commodity etf the question is about commodity etfs in iras, but the part of my answer about ubi applies equally well.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "what do the terms par value, purchase price, call price, call date, and coupon rate mean in the context of bonds?", "role": "user" }, { "content": "bonds are valued based on all of this, using the concept of the \"time value of money\". simply stated, money now is worth more than money later, because of what you can do with money between now and later. case in point: let's say the par value of a bond is $100, and will mature 10 years from this date (these are common terms for most bonds, though the u.s. treasury has a variety of bonds with varying par values and maturation periods), with a 0% coupon rate (nothing's paid out prior to maturity). if the company or government issuing the bonds needs one million dollars, and the people buying the bonds are expecting a 5% rate of return on their investment, then each bond would only sell for about $62, and the bond issuer would have to sell a par value of $1.62 million in bonds to get its $1m now. these numbers are based on equations that calculate the \"future value\" of an investment made now, and conversely the \"present value\" of a future return. back to that time value of money concept, money now (that you're paying to buy the bond) is worth more than money later (that you'll get back at maturity), so you will expect to be returned more than you invested to account for this time difference. the percentage of rate of return is known as the \"yield\" or the \"discount rate\" depending on what you're calculating, what else you take into consideration when defining the rate (like inflation), and whom you talk to. now, that $1.62m in par value may be hard for the bond issuer to swallow. the issuer is effectively paying interest on interest over the lifetime of the bond. instead, many issuers choose to issue \"coupon bonds\", which have a \"coupon rate\" determining the amount of a \"coupon payment\". this can be equated pretty closely with you making interest-only payments on a credit card balance; each period in which interest is compounded, you pay the amount of interest that has accrued, to avoid this compounding effect. from an accounting standpoint, the coupon rate lowers the amount of real monies paid; the same $1m in bonds, maturing in 10 years with a 5% expected rate of return, but with a 5% coupon rate, now only requires payments totalling $1.5m, and that half-million in interest is paid $50k at a time annually (or $25k semi-annually). but, from a finance standpoint, because the payments made in the first few years are worth more than the payments made closer to and at maturity, the present value of all these coupon payments (plus the maturity payout) is higher than if the full payout happened at maturity, and so the future value of the total investment is higher. coupon rates on bonds thus allow a bond issuer to plan a bond package in less complicated terms. if you as a small business need $1m for a project, which you will repay in 10 years, and during that time you are willing to tolerate a 5% interest rate on the outstanding money, then that's exactly how you issue the bonds; $1 million worth, to mature in 10 years and a 5% coupon rate. now, whether the market is willing to accept that rate is up to the market. right now, they'd be over the moon with that rate, and would be willing to buy the bonds for more than their face value, because the present value would then match the yield they're willing to accept (as in any market system, you as the seller will sell to the highest bidder to get the best price available). if however, they think you are a bad bet, they'll want an even higher rate of return, and so the present value of all coupon and maturity payments will be less than the par value, and so will the purchase price.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "how does the pension system work in poland?", "role": "user" }, { "content": "littleadv's answer gives a concise summary of the system as it stands now, but much more changed than just the portion of the mandatory contribution that was diverted to the private plan. in broad terms, the balances of your accounts and your future benefit won't change. it's only the source of these benefits that's changing. the bloomberg article describes the changes this way: the state will take over the amount of bonds that pension funds held as of end of sept. 3 and turn them into pension liabilities in the state-run social security system... the state will assume control of 51.5 percent of pension-fund assets, including bonds guaranteed by the government and “other non-stock assets” after the change, polish workers that held bonds in the private portion of their retirement portfolios will instead have more payments from the state-run pension system. the balances of your retirement portfolio and your future benefits shouldn't change, but the reality may depend on how the state pension system is managed and any future changes the government implements. the effect this change will have on future benefits isn't clear, because the change may simply delay the problem of high levels of outstanding sovereign debt, not solve it. the government stated that because increasing numbers of workers invested their money in private pension funds, less money went into the government's fund, which forced them to issue sovereign debt in order to cover the shortfall in their current pension liabilities. the government's recent cancellation of government bonds in the hands of private pensions will decrease their overall outstanding debt, but in exchange, the government is increasing its future pension liabilities. years down the road, the government may find that they need to issue more sovereign debt to cover the increased pension liabilities they're taking on today. in other words, they may find themselves back in the same situation years down the road, and it's difficult to predict what changes they might make at that time.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "finding out actual items bought via credit card issuer and not the store receipt?", "role": "user" }, { "content": "as a merchant i can tell you that the only thing the bank gets from me. is the total amount and a category for my business. no detail, not ever.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "what is market capitalization? [duplicate]", "role": "user" }, { "content": "market capitalization is the product of the current share price (the last time someone sold a share of the stock, how much?) times the number of outstanding shares of stock, summed up over all of the stock categories. assuming the efficient market hypothesis and a liquid market, this gives the current total value of the companies' assets (both tangible and intangible). both the emh and perfect liquidity may not hold at all times. beyond those theoretical problems, in practice, someone trying to buy or sell the company at that price is going to be in for a surprise; the fact that someone wants to sell that many stocks, or buy that many stocks, will move the price of the company stock.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "evaluating stocks useless?", "role": "user" }, { "content": "is evaluating stocks just a loss of time if the stock is traded very much? not at all! making sound investment decisions based on fundamental analysis of companies will help you to do decide whether a given company is right for you and your risk appetite. investing is not a zero-sum game, and you can achieve a positive long-term (or short-term, depending on what you're after) outcome for yourself without compromising your ability to sleep at night if you take the time to become acquainted with the companies that you are investing in. how can you ensure that your evaluation is more precise than the market ones which consists of the evaluation of thousands of people and professionals? for the average individual, the answer is often simply \"you probably cannot\". but you don't have to set the bar that high - what you can do is ensure that your evaluation gives you a better understanding of your investment and allows you to better align it with your investment objectives. you don't have to beat the professionals, you just have to lose less money than you would by paying them to make the decision for you.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "if i invest in securities denominated in a foreign currency, should i hedge my currency risk?", "role": "user" }, { "content": "no. this is too much for most individuals, even some small to medium businesses. when you sell that investment, and take the cheque into the foreign bank and wire it back to the usa in us dollars, you will definitely obtain the final value of the investment, converted to us$. thats what you wanted, right? you'll get that. if you also hedge, unless you have a situation where it is a perfect hedge, then you are gambling on what the currencies will do. a perfect hedge is unusual for what most individuals are involved in. it looks something like this: you know foreigncorp is going to pay you 10 million quatloos on dec 31. so you go to a bank (probably a foreign bank, i've found they have lower limits for this kind of transaction and more customizable than what you might create trading futures contracts), and tell them, \"i have this contract for a 10 million quatloo receivable on dec 31, i'd like to arrange a fx forward contract and lock in a rate for this in us$/quatloo.\" they may have a credit check or a deposit for such an arrangement, because as the rates change either the bank will owe you money or you will owe the bank money. if they quote you 0.05 us$/quatloo, then you know that when you hand the cheque over to the bank your contract payment will be worth us$500,000. the forward rate may differ from the current rate, thats how the bank accounts for risk and includes a profit. even with a perfect hedge, you should be able to see the potential for trouble. if the bank doesnt quite trust you, and hey, banks arent known for trust, then as the quatloo strengthens relative to the us$, they may suspect that you will walk away from the deal. this risk can be reduced by including terms in the contract requiring you to pay the bank some quatloos as that happens. if the quatloo falls you would get this money credited back to your account. this is also how futures contracts work; there it is called \"mark to market accounting\". trouble lurks here. some people, seeing how they are down money on the hedge, cancel it. it is a classic mistake because it undoes the protection that one was trying to achieve. often the rate will move back, and the hedger is left with less money than they would have had doing nothing, even though they bought a perfect hedge.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "how can i avoid international wire fees or currency transfer fees?", "role": "user" }, { "content": "i faced something similar for travel or work reasons, and as for me i preferred wire transfer over credit card withdrawals because my bank has huge fees. my thoughts so far are: the fee can vary a lot for credit card. as for me, i can expect 5% fees on foreign withdrawals. but i considered changing bank and i think a gold (or premium) card might be a good idea as well. the idea is you pay a big subscription (100 euros or so) but have no fee. the total of withdrawal fees could easily (if you stay long abroad) reach this amount. there are also banks like hsbc that offer low fees on withdrawals abroad, you can ask them. the problem is that you cannot really withdraw huge amounts to lower the fee (since you carry this cash in the street). for wire transfers the total fee is usually $50 or more (i had a fee from distant bank, a fee for change and a fee in my home bank). but the amount is unlimited (or high enough to be of little matter) and i needed to do this once per year or so. so i guess it could be interesting if you have enough savings to only transfer money every couple of months or so. i think western union is also involved this profitable business. i never used it because the fees are pretty high, but maybe it is useful for not too big amounts frequently transfered. actually, have you considered a loan? it's a very random idea but maybe you can use a loan as a swap and then transfer money when you have enough to reimburse it all. but the question is very interesting, i think the business is pretty huge due to globalization. it is expensive because some people can make a lot of money out of it.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "choosing which espp stocks to sell?", "role": "user" }, { "content": "the difference would be taxes... lets say you have two lots, one with a 10 dollar gain, and one with a 20 dollar gain. and lets say you decide to sell one lot this year, and the other lot in 10 years. and, lets say that it turns out the stock price is exactly the same in ten years as it is when you sell the first lot. in all likelyhood, you'll have more income, and therefore you are likely to be in a different marginal tax rate. if you believe that you're more likely to pay more taxes in 10 years, then sell the lot with the higher gain now. if you believe you're more likely to pay more taxes now, then sell the lot with the lower gain now.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "gold futures' margin", "role": "user" }, { "content": "the initial and overnight margin requirements are set by the exchanges (who calculate them using the standard portfolio of analysis of risk, or 'span' system), and positions are market to market according to these at the end of the trading session. to find these margin requirements you will need to consult the website of the exchange on which the contract you are trading is issued (i.e. if you're trading on the london metal exchange it's no good looking at the chicago mercantile exchange's margin requirements as a previous answer suggests!). however, for positions entered and exited within the same day, the daytrade margin rate will apply. this is set by your broker rather than the exchange, and can be as little as 10% of the exchange requirement. you can find a useful comparison of different margin types and requirements in the article i have published here: understanding margin for futures trading.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "should i learn to do my own tax?", "role": "user" }, { "content": "i would advise against \"pencil and paper\" approach for the following reasons: you should e-file instead of paper filing. although the irs provides an option of \"fillable forms\", there's no additional benefit there. software ensures correctness of the calculations. it is easy to make math errors, lookup the wrong table it is easy to forget to fill a line or to click a checkbox (one particular checkbox on schedule b cost many people thousands of dollars). software ask you questions in a \"interview\" manner, and makes it harder to miss. software can provide soft copies that you can retrieve later or reuse for amendments and carry-overs to the next year, making the task next time easier and quicker. you may not always know about all the available deductions and credits. instead of researching the tax changes every year, just flow with the interview process of the software, and they'll suggest what may be available for you (lifetime learners credit? who knows). software provides some kind of liability protection (for example, if there's something wrong because the software had a bug - you can have them fix it for you and pay your penalties, if any). it's free. so why not use it? as to professional help later in life - depending on your needs. i'm fully capable of filling my own tax returns, for example, but i prefer to have a professional do it since i'm not always aware about all the intricacies of taxation of my transactions and prefer to have a professional counsel (who also provides some liability coverage if she counsels me wrong...). some things may become very complex and many people are not aware of that (i've shared the things i learned here on this forum, but there are many things i'm not aware of and the tax professional should know).", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "buying a car - advice needed", "role": "user" }, { "content": "i would actually disagree with mrchrister on this. you can afford yourself the car in this price range paid cash. i don't know how exactly you spend your income, but from my experience, in expensive california, saving $20k a year from $70k income with $800/mo rent is feasible. having a loan on your credit report which is paid on time and in full will definitely help you rebuilding your credit. your calculations re the costs of the loan are based on the assumption that you're going to keep the loan for the whole period. don't do that. see #1 - you can repay this loan much quicker than the 3 years it should originally have been. 6 months of the loan which is then paid off will do marvels to your credit report and credit score. yes, it is going to cost you some, but in your particular case i would argue that its worth it. you're an adult now, you need credit cards, you'll need a mortgage at some point, you need to rent a place to live - all these require a good credit report. just waiting, as mrchrister suggests, will help, but much much slower. having said that, a seller that \"cannot discuss the terms over the phone\" is most likely a dishonest person. once you're there and in front of him it is harder for you to verify information, resist signing papers, and negotiating.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "what tax laws apply to meetup group income?", "role": "user" }, { "content": "in the united states tax law, a group of people who are neither an individual nor an incorporated entity is called \"partnership\". here's the irs page on partnerships. income derived by such a \"meetup.com\" group is essentially a partnership income with the group members being the partners. however, as you can see from the questions in the comments, the situation can become significantly more complex if this partnership is not managed properly.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "indie software developers - how do i handle taxes?", "role": "user" }, { "content": "the \"hire a pro\" is quite correct, if you are truly making this kind of money. that said, i believe in a certain amount of self-education so you don't follow a pro's advice blindly. first, i wrote an article that discussed marginal tax rates, and it's worth understanding. it simply means that as your income rises past certain thresholds, the tax rate also will change a bit. you are on track to be in the top rate, 33%. next, solo 401(k). you didn't ask about retirement accounts, but the combined situations of making this sum of money and just setting it aside, leads me to suggest this. since you are both employer and employee, the solo 401(k) limit is a combined $66,500. seems like a lot, but if you are really on track to make $500k this year, that's just over 10% saved. then, whatever the pro recommends for your status, you'll still have some kind of social security obligation, as both employer and employee, so that's another 15% or so for the first $110k. last, some of the answers seemed to imply that you'll settle in april. not quite. you are required to pay your tax through the year and if you wait until april to pay the tax along with your return, you will have a very unpleasant tax bill. (i mean it will have penalties for underpayment through the year.) this is to be avoided. i offer this because often a pro will have a specialty and not go outside that focus. it's possible to find the guy that knows everything about setting you up as an llc or sole proprietorship, yet doesn't have the 401(k) conversation. good luck, please let us know here how the pro discussion goes for you.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "does financing a portfolio on margin affect the variance of a portfolio?", "role": "user" }, { "content": "variance of a single asset is defined as follows: σ2 = σi(xi - μ)2 where xi's represent all the possible final market values of your asset and μ represents the mean of all such market values. the portfolio's variance is defined as σp2 = σiwi2σi2 where, σp is the portfolio's variance, and wi stands for the weight of the ith asset. now, if you include the borrowing in your portfolio, that would classify as technically shorting at the borrowing rate. thus, this weight would (by the virtue of being negative) increase all other weights. moreover, the variance of this is likely to be zero (assuming fixed borrowing rates). thus, weights of risky assets rise and the investor's portfolio's variance will go up. also see, cml at wikipedia.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "how can i buy shares of oil? i'm told it's done through etfs. how's that related to oil prices per barrel?", "role": "user" }, { "content": "while we're not supposed to make direct recommendations, and i am in no way advising anything, uso an etf that buys light sweet crude oil futures with the intention of mirroring the price movements of oil.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "funding an ira or roth ira", "role": "user" }, { "content": "and on the last sentence, it doesn't matter when or where the money was earned (money is fungible, so there's generally not even any way to tell), but you do have to have sufficient earned income (that's basically money you earn from working, not from dividends and interest or selling stock and the like) in the contribution year to cover the ira contribution.", "role": "assistant" } ]