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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": "espp (employee stock purchase plan) funds on mortgage loan application", "role": "user" }, { "content": "the problem is that you don't have the money now; so they can't know with 100% certainty that you will have it on settlement day. what happens if you don't file the paperwork in time? or you change your mind because you think the company stock is going to go through the roof next quarter? they would have to pull the funding for the loan. the seller would be upset, and could even file for damages if the deal falls through. it could even snowball because if they delay the sale then they can't buy the new place, which impacts another closing... frequently lenders want to see the money for the down payment long before settlement. they want to know the money is there, and it isn't a hidden loan. while you can point to the money in the espp, they would still like to see the money in a regular bank account. even if you do convince them to delay their evaluation you can count on being asked to prove the existence of the funds in the days before closing, or they will delay giving the loan.", "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 calculate ownership percentage for shared home ownership?", "role": "user" }, { "content": "it may clarify your thinking if you look at this as two transactions: i am an australian so i cannot comment on us tax laws but this is how the australian tax office would view the transaction. by thinking this way you can allocate the risks correctly, partnership tenancy two things should be clear - you will need a good accountant and a good lawyer - each.", "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": "why do stock or commodity prices sometimes rise suddenly just before market close?", "role": "user" }, { "content": "this is often the case where traders are closing out short positions they don't want to hold overnight, for a variety of reasons that matter to them. most frequently, this is from day traders or high-frequency traders settling their accounts before the markets close.", "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": "someone asks you to co-sign a loan. how to reject & say no nicely or politely?", "role": "user" }, { "content": "i'll take an alternate route: honesty + humor. say something like this with a smile and a laugh, like you know they're crazy, but they maybe don't know it yet. \"are you crazy? co-signing a loan can put us both in a lot of potential danger. first, you shouldn't get a loan that you can't afford/attain on your own, and second, i'd be crazy to agree to be liable for a loan that someone else can't get on their own. you want something bad enough, you get your credit rating in order, or you save up the money - that's how i bought (my car/house/trip to geneva). i'd be happy to point you in the right direction if you want to put a plan together.\" you're offering help, but not the kind that puts you in danger. declining to co-sign a loan can't damage your relationship with this person as much as failure to pay will.", "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 house swapping possible?", "role": "user" }, { "content": "another possibility that you might consider is to find a renter for your current place and move to your destination. if you have a lease for your renter, your mortgage company can consider that as income for approving the purchase of a new house. i did something similar when i purchased my current home, but i was also able to get approved without selling or renting the old place. there's no reason that someone couldn't create a house swapping site for longer-term than a week. it may not initially have as much demand as a 1 week swap, but there are no such existing services that i am aware of.", "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": "strategies for paying off my student loans", "role": "user" }, { "content": "considering i'm in a nearly identical situation, i'll speak to my personal strategy and maybe there's some value for you as well. you have ~$22k in loans, which you say you could pay off today. so, what i read is that you're sitting there with a $22k investment and want to know which investment to make: pay down debt, invest in yourself/start up, or some variation between those options. any investor worth his salt will ask a couple of questions: what is my risk, and what is my gain? paying off your student loans offers no financial risk at the cost of opportunity risk, and gains you returns of 3.4%, 6.8%, 3.4%, 4.5%, and 6.8%. those percentage gains are guaranteed and the opportunity risk is unknown. investing in a startup is inherently risky, with the potential for big payoffs. but with this investment, you are accepting a lot of risk for potentially some gain (it could be the next apple, it could also fail). so, with your situation (like mine), i'd say it's best to accept the easy investment for now and fully vet out your tech start up idea in the meantime.", "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 happened to home depot's stock in 1988?", "role": "user" }, { "content": "so a major problem with looking at historical stock data on these graphs is that they set the stock price based off of current market volumn. if i was to say look at majesco entertainment (cool) in june of 2016. it would say that the stock as trading between $5-6. in reality it was between .50-$1. but in august there was a 6:1 reverse split. so june's value based on todays current share count would be about $5-6 per one share. 1988 for home depot must have been a really bad year for them, and because of all the splits they've had over the years already screws that estimate of what one share is worth. there's a lot of variance in 1988, but you have to be looking at only 1988. 87 and 89 really screws the the chart's scale.", "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": "filing a corporation tax return online?", "role": "user" }, { "content": "when in doubt, you should always seek the advice of a professional tax preparer or your accountant. (many agents/accountants will gladly review your tax preparations to ensure you haven't missed something. that's quicker and cheaper than paying them to do it all.) having said that... this illinois resource has detailed information about s-corps: of relevance to your situation:", "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": "why does gold have value?", "role": "user" }, { "content": "gold has very useful physical properties for some engineering applications. even tiny amounts of gold can substantially improve products, so it can be worthwhile to pay high prices per ounce for gold. for example: gold can be \"beaten\" or electroplated to produce very thin shiny coatings. entire roofs (of famous buildings) have been covered with \"gold leaf\", at a cost that was small compared to the supporting structure. a very thin layer of electroplated gold provides better protection against corrosion than a much thicker layer of electroplated nickel. even if gold costs thousands of times more per ounce than nickel, it is cheaper to use gold as an anti-corrosion layer than nickel (for use in military-grade naval electronics). a thin layer of electroplated gold greatly increases the electrical current-carrying capacity of a thin copper wire.", "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": "why can robin hood offer trading without commissions?", "role": "user" }, { "content": "they make money off you by increasing the spread you buy and sell your stocks through them. so for example, if the normal spread for a stock was $10.00 for a buy and $10.02 for a sell, they might have a spread of $9.98 for the buy and $10.02 for the sell. so for an order of 1000 shares (approx. $10000) they would make $0.02 per share which would equal $20.00.", "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 you calculate the rate of return (ror) when buying and selling put options?", "role": "user" }, { "content": "ror for options you bought is fairly easy: (current value-initial cost)/initial cost gives you the actual return. if you want the rate of return, you need to annualize that number: you divide the return you got above by the number of days the investment was in place, and then multiply that number by the number of days in a year. (365 if you're using calendar days, about 255 if you're using trading days.) ror for options you sold is much more complex: the problem is that ror is basically calculating the size of your return relative to the capital it tied up to earn it. that's simple when you bought something; the capital tied up is the money you put up. it's more complex on a position like a short option, where the specific transaction in question generates cash when it's put on. the correct way to deal with this is to a) bundle your strategy (options, stock and collateral) into one ror where appropriate, and b) include any needed collateral to support the short option in the calculation. so, if you sell a \"cash-secured\" put, where you have to post the money that you'd need to take delivery of the shares if they were put to you, the initial cost is the total amount you'd need to put the trade on: in this case, it's the cash amount, less the premium you collected for selling the put. that's just one example. but the approach holds more broadly: if you're using covered calls, your original cost is the cost of the stock less the premium generated by the sale of the call.", "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 this stock have an intra-day range of more than 90% on 24aug2015?", "role": "user" }, { "content": "edit: it was system disruption or malfunctions august 24, 2015 2:12 pm edt pursuant to rule 11890(b) nasdaq, on its own motion, in conjunction with bats, and finra has determined to cancel all trades in security blackrock capital investment. (nasdaq: bkcc) at or below $5.86 that were executed in nasdaq between 09:38:00 and 09:46:00 et. this decision cannot be appealed. nasdaq will be canceling trades on the participants behalf. a person on reddit claimed that he was the buyer. he used robinhood, a $0 commission broker and start-up. the canceled trades are reflected on cta/utp and the current charts will differ from the one posted below. it is an undesired effect of the 5-minute trading halt. it is not \"within 1 hour of opening, bkcc traded between $0.97 and $9.5\". those trades only occurred for a few seconds on two occasions. one possible reason is that when the trading halt ended, there was a lot of market order to sell accumulated. refer to the following chart, where each candle represents a 10 second period. as you can see, the low prices did not \"sustain\" for hours. and the published halts.", "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 funds on preauthorization hold to paypal: can it be used for another transaction?", "role": "user" }, { "content": "imagine the following scenario: you have a credit limit of $1000 and you want to by a tablet from a store. it costs $600. you then walk next door and buy a tv for $600. you would expect that you would go over your limit and the second transaction will be rejected. as long as that hold is in place, you don't have access to those blocked funds. that makes sure that you can't promise to pay more than you have funds on the card. holds can get in the way if you are close to your credit limit. people run into this problem if they reserve a hotel room, rent a car, or purchase gasoline. the hold is set at a specific level to make sure you have enough funds for the typical transaction. this distance between vendors is not relevant. the bank is blocking funds based on a request from a vendor. they have to block the funds because you might use the multiple times in the same store. it is possible that the card company might release the hold based on the request by the vendor, but they generally don't. if this is a debit card linked to a bank account, the bank can have access to the overdraft system or a linked savings account. if is is a credit card they can decide to to increase your credit limit, and offer you what is essentially a loan. plus they can hit you with fees. but if the card is a prepaid debit card or gift card they don't want to allow you to go beyond your limit. if this is a card that you plan on recharging, you could put extra funds on the card to allow both the old hold and the new hold to co-exist.", "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": "why are u.s. treasury interest rates are so low vs. other nearly risk-free rates?", "role": "user" }, { "content": "as i'm sure you are reading in hull's classic, the basic valuation of bonds depends on the chance of entity defaulting on those bonds. let's start with just looking at the us. the united states has a big advantage over corporations in issuing debt as it also prints the same currency that the debt is denominated in. this makes it much easier not to default on your debt as you can always print more money to pay it. printing too much currency would cause inflation lowering the value of debt, but this would also lower the value of us corporate debt as well. so you can think of even the highest rated corporate bonds as having the same rate as government debt plus a little extra due to the additional default risk of the corporation. the situation with other aa rated governments is more complicated. most of those governments have debt denominated in their local currency as well so it may seem like they should all have similar rates. however, some governments have higher and some actually have lower rates than the united states. now, as above, some of the difference is due to the possible need of printing too much currency to cover the debt in crisis and now that we have more than one country to invest in the extra risk of international money flowing out of the country's bonds. however, the bigger difference between aa governments rates depends more on money flow, central banks and regulation. bonds are still mostly freely traded instruments that respond to supply and demand, but this supply and demand is heavily influenced by governments. central banks buy up large portions of the debt raising demand and lowering rates. regulators force banks to hold a certain amount of treasuries perhaps inflating demand. finally, to answer your question the united states has some interesting advantages partially just due to its long history of stability, controlled inflation and large economy making treasuries valuable as one of the lowest risk investments. so its rates are generally on the low end, but government manipulation can still mean that it is not necessarily the lowest.", "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 residents of smaller economies allocate their portfolio between domestic and foreign assets?", "role": "user" }, { "content": "we face the same issue here in switzerland. my background: institutional investment management, currency risk management. my thoughs are: home bias is the core concept of your quesiton. you will find many research papers on this topic. the main problems with a high home bias is that the investment universe in your small local investment market is usually geared toward your coutries large corporations. lack of diversification: in your case: the asx top 4 are all financials, actually banks, making up almost 25% of the index. i would expect the bond market to be similarly concentrated but i dont know. in a portfolio context, this is certainly a negative. liquidity: a smaller economy obviously has less large corporations when compared globally (check wikipedia / list_of_public_corporations_by_market_capitalization) thereby offering lower liquidity and a smaller investment universe. currency risk: i like your point on not taking a stance on fx. this simplifies the task to find a hedge ratio that minimises portfolio volatility when investing internationally and dealing with currencies. for equities, you would usually find that a hedge ratio anywhere from 0-30% is effective and for bonds one that ranges from 80-100%. the reason is that in an equity portfolio, currency risk contributes less to overall volatility than in a bond portfolio. therefore you will need to hedge less to achieve the lowest possible risk. interestingly, from a global perspective, we find, that the aud is a special case whereby, if you hedge the aud you actually increase total portfolio risk. maybe it has to do with the aud being used in carry trades a lot, but that is a wild guess. hedged share classes: you could buy the currency hedged shared classes of investment funds to invest globally without taking currency risks. be careful to read exactly what and how the share class implements its currency hedging though.", "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 should i be doing to protect myself from identity theft?", "role": "user" }, { "content": "every 90 days add an initial fraud alert to each of the 3 major credit bureaus.", "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": "monthly money transfers from us to puerto rico", "role": "user" }, { "content": "puerto rico: last i checked, the puerto rico banking system wasn't materially different than working within the us - though some continental us banks exclude us territories like guam and puerto rico or charge more when dealing with them. i'm not certain as to why. however, most banks don't see them any differently than a regular us bank. regarding wire transfers (wt): $35 for an ad-hoc wt within the us and puerto rico is for the most part average. wires cost money for the convenience of quick clearing and guaranteed funds. if you have a business/commercial account where you are doing this regularly and paying a monthly fee for a wt service, $10 - $15 each may be expected. i had a business account with us bank where i paid $15 a month for a wt transfer service and reoccurring template (always went to the same account - amex in this case) and the transfers were only $15 each. but, a wt as a general rule, especially when it's only a once a month thing from a personal account, will cost around $25 - $35 in the us and puerto rico. as others have said, you can simply mail a personal check just as you would in the us. many people choose to use money orders for puerto rico as they can be cashed at the post office (i believe there is an amount limit though). ach: if you want even easier, i would use ach. banks in puerto rico use this ach (automatic clearing house) system as we do in the continental us. it will take a little longer than wt, but as you said - this is fine. not all us banks offer free ach, but a number of them do. last i checked, citibank and usaa where among them. banks like, bac charges a small fee. much smaller than a wt! this post may be useful to you: what's the difference between wire transfer and ach?", "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 a subsidy?", "role": "user" }, { "content": "a subsidy is a payment made by a group (usually the state) to individuals or corporations in order to shift the balance if the rational economic decision for the individual would be detrimental to the group as a whole otherwise. for example, if there are different quality kinds of crops that can be planted, for example a gm maize that brings in high yields but can only be processed to high fructose corn syrup or a naturally bred corn that brings lower yields but tastes well enough for direct consumption, then if demand for both exceeds supply, the economic choice for the individual farmer is to plant the former. if the claims that hfcs contribute to obesity are founded, then it is in the public interest to produce less of it, and more alternative foods. given that a market rather than a planned economy is desired, this cannot be achieved by decree, but rather money is used as an incentive. in the long term, this investment may very well pay off through reduced health care costs, so it is a rational economic decision from the state's point of view. in a world where all actors make decisions that are fully in their self interest, in principle subsidies would not be needed as consumers would demand healthy rather than cheap foods, and market mechanisms would provide these.", "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 profit from anticipating a drop in value?", "role": "user" }, { "content": "to summarize, there are three basic ways: (3) is the truly dangerous one. if there is a lot of short interest in a stock, but for some reason the stock goes up, suddenly a lot of people will be scrambling to buy that stock to cover their short position -- which will drive the price up even further, making the problem worse. pretty soon, a bunch of smart rich guys will be poor guys who are suddenly very aware that they aren't as smart as they thought they were. eight years ago, such a \"short squeeze\", as it's called, made the price of vw quadruple in two days. you could hear the heinies howl from hamburg to haldenwanger. there are ways to protect yourself, of course. you can go short but also buy a call at a much higher price, thereby limiting your exposure, a strategy called a \"straddle\", but you also reduce your profit if you guessed right. it comes down to, as it always does, do you want to eat well, or to sleep 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": "a debt collector will not allow me to pay a debt, what steps should i take?", "role": "user" }, { "content": "send a well-documented payment to the original creditor. do it in such a way that you would have the ability to prove that you sent a payment if they reject it. should they reject it, demonstrate that to the credit reporting bureaus.", "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 pros and cons of investing in a closed-end fund?", "role": "user" }, { "content": "one advantage not pointed out yet is that closed-end funds typically trade on stock exchanges, whereas mutual funds do not. this makes closed-end funds more accessible to some investors. i'm a canadian, and this particular distinction matters to me. with my regular brokerage account, i can buy u.s. closed-end funds that trade on a stock exchange, but i cannot buy u.s. mutual funds, at least not without the added difficulty of somehow opening a brokerage account outside of my country.", "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": "why is the breakdown of a loan repayment into principal and interest of any importance?", "role": "user" }, { "content": "it's important because it shows that the amount you owe does not decrease linearly with each payment, and you gain equity as a correspondingly slower rate at the beginning of the loan and faster at the end. this has to be figured in when considering refinancing, or when you sell the place and pay off the mortgage. it also shows why making extra payments toward principal (if your loan permits doing so) is so advantageous -- unlike a normal payment that lowers the whole curve by a notch, reducing the length of time over which interest is due and thus saving you money in the long run. (modulo possible lost-opportnity costs, of course.)", "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 get bill collectors who call about people i know to stop calling me?", "role": "user" }, { "content": "if they really won't stop calling you, just waste their time. usually the best thing i do to telemarketers (the ones that constantly call even through i've told them to stop) is to say \"oh yes, i'm interested i'll just get a pen\" - put them on hold and keep them on hold. do it every time they call and soon they'll get the idea that you're a waste of 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": "how to diversify ira portfolio given fund minimum investments and ira contribution limits?", "role": "user" }, { "content": "there are fund of funds,e.g. life cycle funds or target retirement funds, that could cover a lot of these with an initial investment that one could invest into for a few years and then after building up a balance large enough, then it may make sense to switch to having more control.", "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": "us taxes - handling capital losses from previous years with current capital gains", "role": "user" }, { "content": "no one can advise you on whether to hold this stock or sell it. your carried losses can offset short or long term gains, but the long term losses have to be applied to offset long term gains before any remaining losses can offset short term gains. your question doesn't indicate how long you have to hold before the short term gains become long term gains. obviously the longer the holding period, the greater the risk. you also must avoid a wash sale (selling to lock in the gains/reset your basis then repurchasing within a month). all of those decisions hold risks that you have to weigh. if you see further upside in holding it longer, keep the investment. don't sell just to try to maximize tax 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": "is the bank on yourself a legitimate investment strategy, or a scam?", "role": "user" }, { "content": "i haven't read the book and have no intention of reading it. this definitely looks like a forced savings plan with \"whole life insurance\" as the theme – which is pretty bad for someone who is able to take care of his finances. it would be good for someone who is not very good with his finances and wants to be forced into savings, but then even for those people it would only help a little; there are enough clauses that would make things more bad for him. i.e. one can choose to take a loan, pay only interest etc. no book is going to help you build a savings habit. one has to realize and spend what is essential (it means not buying or doing tons of things) and putting quite a bit away for a rainy day. after this, comes investing wisely...", "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 sell a stock that i don't have, am i required to buy it before a certain amount of time?", "role": "user" }, { "content": "i don't actually have any of this stock. apparently, it's quite common strategy this is called naked short selling. it's not illegal per se, but there can be some major penalties so you should call your broker and ask them these questions. intentionally naked short selling is not looked upon favorably. they'll probably try to recommend you a safer shorting system by which:", "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 get into investing in stocks?", "role": "user" }, { "content": "start by paying down any high interest debt you may have, like credit cards. reason being that they ultimately eat into any (positive) returns you may have from investing. another good reason is to build up some discipline. you will need discipline to be a successful investor. educate yourself about investing. the motley fool is probably still a good place to start. i would also suggest getting into the habit of reading the wall street journal or at the very least the business section of the new york times. you'll be overwhelmed with the terminology at first, but stick with it. it is certainly worth it, if you want to be an investor. the investor's business daily is another good resource for information, though you will be lost in the deep end of the pool with that publication for sure. (that is not a reason to avoid getting familiar with it. though at first, it may very well be overkill.) save some money to open a brokerage account or even an ira. (you'll learn that there are some restrictions on what you can do in an ira account. though they shouldn't necessarily be shunned as a result. money placed in an ira is tax deductible, up to certain limits.) ????? profit! note: in case you are not familiar with the joke, steps 4 & 5 are supposed to be humorous. which provides a good time to bring up another point, if you are not having fun investing, then get out. put your money in something like an s&p 500 index fund and enjoy your life. there are a lot more things to say on this subject, though that could take up a book. come back with more questions as you learn about investing. edit: i forgot to mention drips and investment clubs. both ideas are suggested by the motley fool.", "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 in the u.s. what are vehicles to invest in international stocks?", "role": "user" }, { "content": "interactive brokers offers many foreign markets (19 countries) for us based investors. you can trade all these local markets within one universal account which is very convenient in my view. ib offering", "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 u.s estate tax applicable to joint brokerage account of non-us citizens if one party dies?", "role": "user" }, { "content": "if the brokerage account holds us assets, such as the stock of us companies, then it may be taxable under some conditions. the rules are complex and depend on the nationality of the individuals, because the results may be affected by tax treaties between the united states and whatever country the person is from.", "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": "relocating and buying a house simultaneously - how to handle pre-approval on fluctuating yearly income?", "role": "user" }, { "content": "assuming the numbers you gave are forecasted 2013 annual income, you should really use an average and give the lender 1 number, as long as you can provide documentation to back it up. lenders aren't as sophisticated as considering your monthly income fluctuations into their underwriting algorithm. if you're not tied down to your existing lender, i highly recommend you to shop around. there isn't an \"universal lending requirement\". you'll be surprised at how flexible they are. not as a recommendation to get around the rules, but just finding a lender that'll work with your situation. try personal finance forums such as fatwallet or slickdeal to find low-cost lenders: http://goo.gl/viojt", "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": "vanguard mutual funds diversification vs share class", "role": "user" }, { "content": "there's really no right or wrong answer here because you'll be fine either way. if you've investing amounts in the low 5 figures you're likely just getting started, and if your asset allocation is not optimal it's not that big a deal because you have a long time horizon to adjust it, and the expense ratio differences here won't add up to that much. a third option is vanguard etfs, which have the expense ratio of admiral shares but have lower minimums (i.e. the cost of a single share, typically on the order of $100). however, they are a bit more advanced than mutual funds in that they trade on the market and require you to place orders rather than just specifying the amount you want to buy. a downside here is you might end up with a small amount of cash that you can't invest, since you can initially only buy whole numbers of etfs shares. so what i'd recommend is buying roughly the correct number of etfs shares you want except for your largest allocation, then use the rest of your cash on admiral shares of that (if possible). for example, let's say you have $15k to invest and you want to be 2/3 u.s. stock, 1/6 international stock, and 1/6 u.s. bond. i would buy as many shares of vxus (international stock etf) and bnd (u.s. bond etf) as you can get for $2500 each, then whatever is left over (~$10k) put into vtsax (u.s. stock admiral shares mutual 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": "why is gold not a good investment?", "role": "user" }, { "content": "i think what the person meant to say is that gold is not a one stop solution. there's nothing wrong with having gold in an otherwise diversified portfolio but you need to be aware about the potential downsides: the problem with gold is that its value nowadays depends mainly on investor confidence, or the lack of it (actual demand for gold cannot explain the rise in value gold had after the crisis). if people are afraid the world and currencies with it will go to hell, the gold price will go up. why? because if currencies seize to exist, gold will still be accepted. it can replace currencies. what many people tend to forget: let's consider the extreme example and currencies really cease to exist and all hell breaks lose. what good are gold bars at the bank, or even at home, for that matter? you'll be better off with gold coins to use in barter and to pay off marauders. but that's not about investing anymore, that's survivalism.", "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": "in india, what is the difference between dividend and growth mutual fund types?", "role": "user" }, { "content": "after searching a bit and talking to some investment advisors in india i got below information. so thought of posting it so that others can get benefited. this is specific to indian mutual funds, not sure whether this is same for other markets. even currency used for examples is also indian rupee. a mutual fund generally offers two schemes: dividend and growth. the dividend option does not re-invest the profits made by the fund though its investments. instead, it is given to the investor from time to time. in the growth scheme, all profits made by the fund are ploughed back into the scheme. this causes the nav to rise over time. the impact on the nav the nav of the growth option will always be higher than that of the dividend option because money is going back into the scheme and not given to investors. how does this impact us? we don't gain or lose per se by selecting any one scheme. either we make the choice to get the money regularly (dividend) or at one go (growth). if we choose the growth option, we can make money by selling the units at a high nav at a later date. if we choose the dividend option, we will get the money time and again as well as avail of a higher nav (though the nav here is not as high as that of a growth option). say there is a fund with an nav of rs 18. it declares a dividend of 20%. this means it will pay 20% of the face value. the face value of a mutual fund unit is 10 (its nav in this case is 18). so it will give us rs 2 per unit. if we own 1,000 units of the fund, we will get rs 2,000. since it has paid rs 2 per unit, the nav will fall from rs 18 to rs 16. if we invest in the growth option, we can sell the units for rs 18. if we invest in the dividend option, we can sell the units for rs 16, since we already made a profit of rs 2 per unit earlier. what we must know about dividends the dividend is not guaranteed. if a fund declared dividends twice last year, it does not mean it will do so again this year. we could get a dividend just once or we might not even get it this year. remember, though, declaring a dividend is solely at the fund's discretion; the periodicity is not certain nor is the amount fixed.", "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 you invest in real estate without using money?", "role": "user" }, { "content": "there is (almost) always money involved somewhere, but it doesn't have to come from you. it can be investors, credit cards, or even seller-financing (i've done all 3). examples: if you can find partners with the money to make the deals happen, then your job is to put the deal together. find the properties, negotiate the price, even get the property under contract (all without any obligation or cost on your part... yes it absolutely can be done). then your partners will fund the deal if it's good enough and their terms are met, etc. in some areas you can put a property on a credit card. if you find a house say for $25,000 that will rent for $300/month, and you can put it on a credit card (especially at zero percent for a year or something similar), then you can generate cashflow as a landlord without putting up any cash of your own on the purchase. of course there are many risks associated with landlording and i could tell you horror stories... but we're not addressing that here. you can negotiate a sale with an owner who agrees to finance the entire purchase for you. i once purchased 3 properties at once this way from a seller who financed the entire sale, all closing costs, everything, this way. of course they needed a lot of repair and such so i had to fund that another way, but at least the purchase itself cost me no money out of pocket. so these infomercials/courses are not inherently scams in the sense that what they are teaching is (usually... i'm sure there are exceptions) true. however they generally give you enough information to get into trouble, and not out. but that's what true learning is... it's getting into trouble and finding a way out that doesn't kill you. =) that's called experience, and you can't buy that for any 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 to help a financially self destructive person?", "role": "user" }, { "content": "you can't help people that don't want help, period. it just doesn't work, and you will waste your time and energy while making the other person mad. both sides end up in the same place they started except now they are frustrated with each other. in a normal situation i would advise to stop enabling her by giving her money, but the court has already decided that part. there is no reason that she can't provide for her children on us$50k per year. in all honesty it sounds like she has a mental health problem and needs to see a professional. you, as the ex-husband, are probably not the right person to tell her that, though. if you really want to help her and are still on good terms with some friends or family members she trusts you could ask them to help her get help. they probably see the same mess that you and your kids do, but might need a little encouragement to act. the other option is if you sued for custody, based on living conditions, the possibility of losing her children and the child support might provide a much needed incentive to clean up her act. you probably won't win over a couple of incidents of the power being turned off and you will be putting your kids in the uncomfortable situation of telling on their mother though.", "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 ach direct debit to prepaid card?", "role": "user" }, { "content": "this would be exactly the sort of product that a thief would want, if they had got ahold of some account numbers and wanted to steal the money from those accounts, in a way that would let them spend it as conveniently as possible. that should explain why i think it's unlikely that any such product exists.", "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 it to reconcile my checking/savings accounts every month?", "role": "user" }, { "content": "while it's wise, easier and safer to check your transactions online a few times a month, i opt to receive and file paper statements as a hard copy back up of account history. any reconciliation i perform is a quick glance to make sure the numbers sound right. it's probably a small waste of time and space, but it settles some of my paranoia (due to my training as a computer engineer) about failure of electronic banking systems. if someone tampers with bank records or a san explodes and wipes out a bunch of account data, then i will have years worth of paper statements to back up my numbers. having years worth of statements printed on the banks stationary will have better credibility in court than a .pdf or printout thereof that could have been doctored, in case i ever needed to take my bank to court. a little piece of mind for the price of a letter opener, a square foot file box and a couple of minutes a month.", "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 one start an investing club (as a company)?", "role": "user" }, { "content": "as for the letting the \"wise\" people only make the decisions, i guess that would be a bit odd in the long run. especially when you get more experienced or when you don't agree with their decision. what you could do, is make an agreement that always 3/4 (+/-) of the partners must agree with an investment. this promotes your involvement in the investments and it will also make the debate about where to invest more alive, fun and educational). as for the taxes i can't give you any good advice as i don't know how tax / business stuff works in the us. here in the netherlands we have several business forms that each have their own tax savings. the savings mostly depend on the amount of money that is involved. some forms are better for small earnings (80k or less), other forms only get interesting with large amounts of money (100k or more). apart from the tax savings, there could also be some legal / technical reasons to choose a specific form. again, i don't know the situation in your country, so maybe some other folks can help. a final tip if your also doing this for fun, try to use this investment company to learn from. this might come in handy later.", "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 normal for brokers to ask whether i am a beginner?", "role": "user" }, { "content": "in many places there are legal requirements to do so, essentially made to prevent brokers from selling high-risk products as if they were deposits with guaranteed safety of your funds. there also may be prohibitions on offering high-risk/high-return products to beginner customers, e.g. requiring accredited investor status claiming that yes, you really know how this works and are informed of the involved risks or you're not allowed to invest in that product. making untrue claims of being not a beginner may limit your options if your broker does cheat you in some manner, as it gives them a solid argument that you confirmed that you understand how their pump-and-dump scheme works and are yourself responsible for losing your money to them.", "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": "deciding between employee stock option and restricted stock", "role": "user" }, { "content": "there's no best strategy. options are just pieces of paper, and if the stock price goes below the strike price - they're worthless. stocks are actual ownership share, whatever the price is - that's what they're worth. so unless you expect the company stock prices to sky-rocket soon, rsu will probably provide better value. you need to do some math and decide whether in your opinion the stock growth in the next few years justifies betting on esop. you didn't say what country you're from, but keep in mind that stock options and rsus are taxed differently and that can affect your end result 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": "what is the incentive for a bank to refinance a mortgage at a lower rate?", "role": "user" }, { "content": "the big one is to keep you from refinancing it with someone else to get a better rate. there may also be some funny-money reasons having to do with being able to count this as a new sale.", "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 want to invest in gold. where do i go and buy it?", "role": "user" }, { "content": "i do not know anything about retail investing in india, since i am in the us. however, there are a couple of general things to keep in mind about gold that should be largely independent of country. first, gold is not an investment. aside from a few industrial uses, it has no productive value. it is, at best, a hedge against inflation, since many people feel more comfortable with what they consider \"real\" money that is not subject to what seems to be arbitrary creation by central banks. second, buying tiny amounts of gold as coin or bullion from a retail dealer will always involve a fairly significant spread from the commodity spot price. the spot price only applies to large transactions. retail dealers have costs of doing business that necessitate these fees in order for them to make a profit. you must also consider the costs of storing your gold in a way that mitigates the risk of theft. (the comment by nl7 is on this point. it appeared while i was typing this answer.) you might find this planet money piece instructive on the process, costs, and risks of buying gold bullion (in the us). if you feel that you must own gold as an inflation hedge, and it is possible for residents of india, you would be best off with some kind of gold fund that tracks the price of bullion.", "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": "buy home and leverage roommates, or split rent?", "role": "user" }, { "content": "it's doable, but there's a fair amount of risk involved. the biggest issue is that your roommates could move out. it's possible that they could have a falling out, get a job in a different city, or just move on. how difficult would it be to find another roommate? how many roommates can you lose and still afford to pay the mortgage, insurance, taxes, and all the rest of your living expenses? even if you you retain all of your roommates until the mortgage is paid off, there's still some risk involved. if you were to lose your job, could you continue to make mortgage payments? worst case scenario is that you could become unemployed for a time while home values in your state/city/neighborhood are crashing. last, the position on landlord has the potential to be lucrative, but also comes with a fair amount of responsibility. it will be a drain on your time to maintain the house and to make sure you always have tenants. i know you said that your roommates are good about paying on time, but are you willing to evict a friend because they won't/can't pay rent? it's easier to ask the landlord for an extension on rent when you're friends. all that being said, i think that this idea is worth considering. my recommendation is that you consider every aspect of it, and proceed cautiously if you choose to do so.", "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": "in-the-money vs out-of-the-money call options", "role": "user" }, { "content": "first, welcome to money.se. the selected page is awful. i don't know the value in listing different expirations at the same strike. usually, all the strikes are grouped by month, so i'd be looking at jan '15 across all strikes. \"in the money\" means the price of a stock is trading above the strike price, if a call, or below it, if a put. on 10/20 of some year, intel was trading at $23.34. the january $25 call strike was just $0.70, and april's was $1.82. these were out of the money. the $25 puts were \"in the money\" by $1.66 so you could have paid $1.90 for the jan $25 put, with $.24 of time premium. by november, the price rose and the put fell, to $.85, all time premium. as with stocks, the key thing is to only buy calls of stock that are going to go up. if a stock will fall, buy puts. curious, what was the class discussion just before the teacher gave you this image?", "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 people say 'interest rates are at all time low!\" which interest rate are they actually referring to?", "role": "user" }, { "content": "as sean pointed out they usually mean libor or the ffr (or for other countries the equivalent risk free rate of interest). i will just like to add on to what everyone has said here and will like to explain how various interest rates you mentioned work out when the risk free rate moves: for brevity, let's denote the risk free rate by rf, the savings account interest rate as rs, a mortgage interest rate as rmort, and a term deposit rate with the bank as rterm. savings account interest rate: when a central bank revises the overnight lending rate (or the prime rate, repo rate etc.), in some countries banks are not obliged to increase the savings account interest rate. usually a downward revision will force them to lower it (because they net they will be paying out = rf - rs). on the other hand, if rf goes up and if one of the banks increases the rs then other banks may be forced to do so too under competitive pressure. in some countries the central bank has the authority to revise rs without revising the overnight lending rate. term deposits with the bank (or certificates of deposit): usually movements in these rates are more in sync with rf than rs is. the chief difference is that savings account offer more liquidity than term deposits and hence banks can offer lower rates and still get deposits under them --consider the higher interest rate offered by the term deposit as a liquidity risk premium. generally, interest rates paid by instruments of similar risk profile that offer similar liquidity will move in parallel (otherwise there can be arbitrage). sometimes these rates can move to anticipate a future change in rf. mortgage loan rates or other interests that you pay to the bank: if the risk free rate goes up, banks will increase these rates to keep the net interest they earn over risk free (= δr = rmort - rf) the same. if rf drops and if banks are not obliged to decrease loan rates then they will only do so if one of the banks does it first. p.s:- wherever i have said they will do so when one of the banks does it first, i am not referring to a recursion but merely to the competitive market theory. under such a theory, the first one to cut down the profit margin usually has a strong business incentive to do so (e.g., gain market share, or eliminate competition by lowering profit margins etc.). others are forced to follow the trend.", "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": "free/open source unix software that pulls info from all my banks/brokers/credit cards?", "role": "user" }, { "content": "as far as i can tell there are no \"out-of-the-box\" solutions for this. nor will moneydance or gnucash give you the full solution you are looking for. i imaging people don't write a well-known, open-source, tool that will do this for fear of the negative uses it could have, and the resulting liability. you can roll-you-own using the following obscure tools that approximate a solution: first download the bank's csv information: http://baruch.ev-en.org/proj/gnucash.html that guy did it with a perl script that you can modify. then convert the result to ofx for use elsewhere: http://allmybrain.com/2009/02/04/converting-financial-csv-data-to-ofx-or-qif-import-files/", "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 something is coming into my account will it be debit or credit in my account?", "role": "user" }, { "content": "it sounds like you're mixing a simple checkbook register with double-entry bookkeeping. do you need a double-entry level of rigor? otherwise, why not have two columns, one for income (like a paycheck) and one for expenses (like paying a cable bill)? then add up both columns and then take the difference of the sums to get your increase or decrease for the time period. if you want to break up income and expenses further, then you can do that too.", "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": "in what circumstances will a bank waive the annual credit card fee?", "role": "user" }, { "content": "see if the bank has other credit cards they offer. many banks have multiple ones: some cards have great benefits, others do not; some cards have high rates, some do not; some cards are secured, some do not. if they have a card that you like ask them to switch you to the card you want. they should be able to do so very easily. your card number will change, but they will treat it is a replacement so that your credit score will not take a hit during the switch. it may be possible to get them to waive the annual fee, but most won't because each card type they offer are separate products so they only allow you to pick one of their options. if they don't have a card to your liking apply for a card from anther bank that has the benefits and annual fees (zero) that you are looking for. it may be that the new card will start with a lower limit, but it will increase over time, especially as you shift more of your business to the new card. when you cancel the old card before the next year rolls around you will take a small short hit to your credit score, but that is ok.", "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": "ways to trade the euro debt crisis", "role": "user" }, { "content": "short the pound and other english financial items. because the english economy is tied to the eu, it will be hit as well. you might prefer this over euro denominated investments, since it's not exactly clear who your counterpart is if the euro really crashes hard. meaning suppose you have a short position euro's versus dollars, but the clearing house is taken down by the crash.", "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 deduct the full value of illiquid stock donation out of ordinary income if i put it into a private foundation?", "role": "user" }, { "content": "contributions of restricted stock to a donor-advised fund or other public charity may be deductible at fair market value on the date of contribution, but valuation discounts can apply if restrictions are not lifted prior to gifting. a qualified appraisal may be required to substantiate the fair market 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": "is sipc coverage on cash as strong as fdic?", "role": "user" }, { "content": "for cash, sipc insurance is similar to fdic insurance. your losses are not covered, but you're covered in case of fraud. since your cash is supposed to be in a trust account and not commingled with brokerage's funds, in case of bankruptcy you would still have your cash unless there was fraud.", "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": "401k - shift from agressive investment to money market", "role": "user" }, { "content": "i can understand your fears, and there is nothing wrong with taking action to protect yourself from them. how much income do you need in retirement? for arguments sake, lets say you need to pull 36k per year from your 401k or 3k per month. lets also assume that you current contribute (with any match) 1,000 per month. please adjust to your actual numbers accordingly. one option would be to pull out 48k right now and put it in a money market. with your contributions, i would then put half into the money market and half into more aggressive investments. in 10 years, you would have about 110k in your money market account. you could live off of that for three years. if the market does crash, this should give you plenty of time to recover. taking this option opens you to another risk, which is being beat up by inflation or lack of growth on a nice pile of cash. my time frame is not that different then yours (i am about 12 years away), but am still all in stocks. having 48k and more with not opportunity for growth frightens me more than any temporary stock market crash. having said that i think it would be a horrible mistake to get completely out of stocks. many of those destroyed in 2008 also missed 2012 through 2014 which were awesome years. so do some. set aside a year or three of income in something nice and safe. maybe one year of income in money market, one in bonds and preferred stocks, and one in blue chips.", "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": "taxes and withholding on unpaid salary", "role": "user" }, { "content": "as others have said, make sure you can and do file your taxes on a cash basis (not accrual). it sounds like it's very unlikely the company is going to issue you a 1099 for invoices they never paid you. so you just file last year's taxes based on your income, which is the money you actually received. if they do pay you later, in the new year, you'll include that income on next year's tax return, and you would expect a 1099 at that time. side note: not getting paid is unfortunately common for consultants and contractors. take the first unpaid invoice and sue them in small claims court. after you win (and collect!), tell them you'll sue them for each unpaid invoice in turn until they pay you in full. (you might need to break up the lawsuits like that to remain under the small claims limit.)", "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 bad practice to invest in stocks that fluctuate by single points throughout the day?", "role": "user" }, { "content": "yes. there are several downsides to this strategy: you aren't taking into account commissions. if you pay $5 each time you buy or sell a stock, you may greatly reduce or even eliminate any possible gains you would make from trading such small amounts. this next point sounds obvious, but remember that you pay a commission on every trade regardless of profit, so every trade you make that you make at a loss also costs you commissions. even if you make trades that are profitable more often than not, if you make quite a few trades with small amounts like this, your commissions may eat away all of your profits. commissions represent a fixed cost, so their effect on your gains decreases proportionally with the amount of money you place at risk in each trade. since you're in the us, you're required to follow the sec rules on pattern day trading. from that link, \"finra rules define a “pattern day trader” as any customer who executes four or more “day trades” within five business days, provided that the number of day trades represents more than six percent of the customer’s total trades in the margin account for that same five business day period.\" if you trip this rule, you'll be required to maintain $25,000 in a margin brokerage account. if you can't maintain the balance, your account will be locked. don't forget about capital gains taxes. since you're holding these securities for less than a year, your gains will be taxed at your ordinary income tax rates. you can deduct your capital losses too (assuming you don't repurchase the same security within 30 days, because in that case, the wash sale rule prevents you from deducting the loss), but it's important to think about gains and losses in real terms, not nominal terms. the story is different if you make these trades in a tax-sheltered account like an ira, but the other problems still apply. you're implicitly assuming that the stock's prices are skewed in the positive direction. remember that you have limit orders placed at the upper and lower bounds of the range, so if the stock price decreases before it increases, your limit order at the lower bound will be triggered and you'll trade at a loss. if you're hoping to make a profit through buying low and selling high, you want a stock that hits its upper bound before hitting the lower bound the majority of the time. unless you have data analysis (not just your intuition or a pattern you've talked yourself into from looking at a chart) to back this up, you're essentially gambling that more often than not, the stock price will increase before it decreases. it's dangerous to use any strategy that you haven't backtested extensively. find several months or years of historical data, either intra-day or daily data, depending on the time frame you're using to trade, and simulate your strategy exactly. this helps you determine the potential profitability of your strategy, and it also forces you to decide on a plan for precisely when you want to invest. do you invest as soon as the stock trades in a range (which algorithms can determine far better than intuition)? it also helps you figure out how to manage your risk and how much loss you're willing to accept. for risk management, using limit orders is a start, but see my point above about positively skewed prices. limit orders aren't enough. in general, if an active investment strategy seems like a \"no-brainer\" or too good to be true, it's probably not viable. in general, as a retail investor, it's foolish to assume that no one else has thought of your simple active strategy to make easy money. i can promise you that someone has thought of it. trading firms have quantitative researchers that are paid to think of and implement trading strategies all the time. if it's viable at any scale, they'll probably already have utilized it and arbitraged away the potential for small traders to make significant gains. trust me, you're not the first person who thought of using limit orders to make \"easy money\" off volatile stocks. the fact that you're asking here and doing research before implementing this strategy, however, means that you're on the right track. it's always wise to research a strategy extensively before deploying it in the wild. to answer the question in your title, since it could be interpreted a little differently than the body of the question: no, there's nothing wrong with investing in volatile stocks, indexes, etc. i certainly do, and i'm sure many others on this site do as well. it's not the investing that gets you into trouble and costs you a lot of money; it's the rapid buying and selling and attempting to time the market that proves costly, which is what you're doing when you implicitly bet that the distribution of the stock's prices is positively skewed. to address the commission fee problem, assuming a fee of $8 per trade ... and a minimum of $100 profit per sale commissions aren't your only problem, and counting on $100 profit per sale is a significant assumption. look at point #4 above. through your use of limit orders, you're making the implicit assumption that, more often than not, the price will trigger your upper limit order before your lower limit order. here's a simple example; let's assume you have limit orders placed at +2 and -2 of your purchase price, and that triggering the limit order at +2 earns you $100 profit, while triggering the limit order at -2 incurs a loss of $100. assume your commission is $5 on each trade. if your upper limit order is triggered, you earn a profit of 100 - 10 = 90, then set up the same set of limit orders again. if your lower limit order is triggered this time, you incur a loss of 100 + 10 = 110, so your net gain is 90 - 110 = -20. this is a perfect example of why, when taking into account transaction costs, even strategies that at first glance seem profitable mathematically can actually fail. if you set up the same situation again and incur a loss again (100 + 10 = 110), you're now down -20 - 110 = -130. to make a profit, you need to make two profitable trades, without incurring further losses. this is why point #4 is so important. whenever you trade, it's critical to completely understand the risk you're taking and the bet you're actually making, not just the bet you think you're making. also, according to my \"algorithm\" a sale only takes place once the stock rises by 1 or 2 points; otherwise the stock is held until it does. does this mean you've removed the lower limit order? if yes, then you expose yourself to downside risk. what if the stock has traded within a range, then suddenly starts declining because of bad earnings reports or systemic risks (to name a few)? if you haven't removed the lower limit order, then point #4 still stands. however, i never specified that the trades have to be done within the same day. let the investor open up 5 brokerage accounts at 5 different firms (for safeguarding against being labeled a \"pattern day trader\"). each account may only hold 1 security at any time, for the span of 1 business week. how do you control how long the security is held? you're using limit orders, which will be triggered when the stock price hits a certain level, regardless of when that happens. maybe that will happen within a week, or maybe it will happen within the same day. once again, the bet you're actually making is different from the bet you think you're making. can you provide some algorithms or methods that do work for generating some extra cash on the side, aside from purchasing s&p 500 type index funds and waiting? when i purchase index funds, it's not to generate extra liquid cash on the side. i don't invest nearly enough to be able to purchase an index fund and earn substantial dividends. i don't want to get into any specific strategies because i'm not in the business of making investment recommendations, and i don't want to start. furthermore, i don't think explicit investment recommendations are welcome here (unless it's describing why something is a bad idea), and i agree with that policy. i will make a couple of points, however. understand your goals. are you investing for retirement or a shorter horizon, e.g. some side income? you seem to know this already, but i include it for future readers. if a strategy seems too good to be true, it probably is. educate yourself before designing a strategy. research fundamental analysis, different types of orders (e.g., so you fully understand that you don't have control over when limit orders are executed), different sectors of the market if that's where your interests lie, etc. personally, i find some sectors fascinating, so researching them thoroughly allows me to make informed investment decisions as well as learn about something that interests me. understand your limits. how much money are you willing to risk and possibly lose? do you have a risk management strategy in place to prevent unexpected losses? what are the costs of the risk management itself? backtest, backtest, backtest. ideally your backtesting and simulating should be identical to actual market conditions and incorporate all transaction costs and a wide range of historical data. get other opinions. evaluate those opinions with the same critical eye as i and others have evaluated your proposed strategy.", "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 ok to just report to 1 credit bureau instead of all 3", "role": "user" }, { "content": "the reason you would want to report to all three is because lenders don't usually query all three. thus, it may be that your negative mark will be missed by a future lender because that lender didn't query the agency you chose to report to. generally, it is cheaper to report to more agencies than to query more agencies, and since those reporting are also those querying, it is in their best interest to continue reporting to all agencies, and expecting others to do the same. each agency calculates the score independently based on the information reported to that agency. thus only reporting a negative item to experian will mean that transunion and equifax scores for the same person will be higher.", "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": "why doesnt every company and individual use tax-havens to pay less taxes?", "role": "user" }, { "content": "there are tax free bonds in the united states. they are for things like public housing and other urban projects. they are tax free for everyone but only rich people buy them. why? the issue is that the tax free nature of the bond is included in its yield. so rather than yielding say a 5% return, they figure that the owner is getting 20% off due to not paying taxes. as a result, they only give a 4% return but are as risky as a 5% return investment. net result, only rich people invest in tax free bonds. \"rich\" is defined here to mean people paying a 20% tax on long term investment returns. or take the state and local tax (salt) deduction, which has been in the news recently. again, it is technically open to everyone. but there is also a standard deduction that is open to everyone. for the typical family, state and local taxes might be 5% of income. so for a family making $100k a year, that's $5k. the same family can take a $13k or so standard deduction instead of itemizing. so why would they take the smaller deduction? as a practical matter, two groups take the salt deduction. people rich enough to pay more than $13k in state and local taxes and people who also take the mortgage interest deduction. so it helps a lot of people who are rich quite a bit. and it helps a few middle class people some. but if you are lower middle class with a $30k mortgage on a tiny house and paying 4% interest, then that's only $1200 a year. add in property taxes of $3000 and salt of $2.8k and that's only $7k. even if the person gives $3k to charity, the $13k deduction is a lot better and requires less paperwork. contrast that with someone who has $500k mortgage at 3.6% interest. that's $18k in interest alone. add in a salt of $7k and property taxes of $50k, and there's $75k of itemized deductions, much better than $13k. now a $7k donation to charity is entirely deductible. and even after the mortgage interest deduction goes away, the other $64k remains.", "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 stock prices likely drop off a little bit on a given friday afternoon?", "role": "user" }, { "content": "it is called the monday effect or the weekend effect. there are a number of similar theories including the october effect and january effect. it's all pretty much bunk. if there were any truth to traders would be all over it and the resulting market forces would wipe it out. personally, i think all technical analysis has very little value other than to fuel conversations at dinner parties about investments. you might also consider reading about market efficiency to see further discussion about why technical approaches like this might, but probably don't work.", "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": "asset allocation when retirement is already secure", "role": "user" }, { "content": "you will hear a lot about diversifying your portfolio, which typically means having a good mix of investment types, areas of investments, etc. i'd like to suggest that you should also diversify your sources. sad to say but the defined benefit pension is not a rock solid, sure fire source of security in your retirement planning. companies go bankrupt, government agencies are reorganized, and those hitherto-untouchable assets are destroyed overnight. so, treat your new investment strategy as if you were starting over, and invest accordingly, for example, aggressively for a few years, then progressively safer as you get older. there are other strategies too, depending on factors like your taste for risk: you might prefer to be conservative until you reach some safety threshold to reach \"certain safety\" and then start making riskier investments. you may also consider different investment vehicles and techniques such as index funds, dollar cost averaging, and so 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 can this be enough to fund a scholarship in perpetuity?", "role": "user" }, { "content": "the trinity study looked at 'safe' withdrawal rates from retirement portfolios. they found it was safe to withdraw 4% of a portfolio consisting of stocks and bonds. i cannot immediately find exactly what specific investment allocations they used, but note that they found a portfolio consisting largely of stocks would allow for the withdrawal of 3% - 4% and still keep up with inflation. in this case, if you are able to fund $30,000, the study claims it would be safe to withdraw $900 - $1200 a year (that is, pay out as scholarships) while allowing the scholarship to grow sufficiently to cover inflation, and that this should work in perpetuity. my guess is that they invest such scholarship funds in a fairly aggressive portfolio. most likely, they choose something along these lines: 70 - 80% stocks and 20 - 30% bonds. this is probably more risky than you'd want to take, but should give higher returns than a more conservative portfolio of perhaps 50 - 60% stocks, 40 - 50% bonds, over the long term. just a regular, interest-bearing savings account isn't going to be enough. they almost never even keep up with inflation. yes, if the stock market or the bond market takes a hit, the investment will suffer. but over the long term, it should more than recover the lost capital. such scholarships care far more about the very long term and can weather a few years of bad returns. this is roughly similar to retirement planning. if you expect to be retired for, say, 10 years, you won't worry too much about pulling out your retirement funds. but it's quite possible to retire early (say, at 40) and plan for an infinite retirement. you just need a lot more money to do so. $3 million, invested appropriately, should allow you to pull out approximately $90,000 a year (adjusted upward for inflation) forever. i leave the specifics of how to come up with $3 million as an exercise for the reader. :) as an aside, there's a memorial and traffic safety fund which (kindly and gently) solicited a $10,000 donation after my wife was killed in a motor vehicle accident. that would have provided annual donations in her name, in perpetuity. this shows you don't need $30,000 to set up a scholarship or a fund. i chose to go another way, but it was an option i seriously considered. edit: the trinity study actually only looked at a 30 year withdrawal period. so long as the investment wasn't exhausted within 30 years, it was considered a success. the trinity study has also been criticised when it comes to retirement. nevertheless, there's some withdrawal rate at which point your investment is expected to last forever. it just may be slightly smaller than 3-4% per year.", "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": "why do stock prices of retailers not surge during the holidays?", "role": "user" }, { "content": "your explanation is nearly perfect and not \"hand wavy\" at all. stock prices reflect the collective wisdom of all participating investors. investors value stocks based on how much value they expect the stock to produce now and in the future. so, the stability of the stock prices is a reflection of the accuracy of the investors predictions. investor naivity can be seen as a sequence of increasingly sophisticated stock pricing strategies: if investors were able to predict the future perfectly, then all stock prices would rise at the same constant rate. in theory, if a particular investor is able to \"beat the market\", it is because they are better at predicting the future profits of companies (or they are lucky, or they are better at predicting the irrational behavior of other investors......)", "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 constitutes illegal insider trading?", "role": "user" }, { "content": "you have to read some appeals court cases see scholar.google.com , as well as sec enforcement actions on sec.gov to get an understanding of how the sec operates. http://www.sec.gov/spotlight/insidertrading/cases.shtml there are court created guidelines for how insider trading would be proven there is no clear line, but it is the \"emergency asset injunctions\" (freezing your assets if you nailed a suspiciously lucrative trade) you really want to avoid, and this is often times enforced/reported by the brokers themselves since the sec does not have the resources to monitor every account's trading activities. there are some thin lines, such as having your lawyer file a lawsuit, and as soon as it is filed it is technically public so you short the recipient's stock. or having someone in a court room updating you on case developments as soon as possible so you can make trades (although this may just be actually public, depending on the court). but the rules create the opportunities also consider that the united states is the most strict country in this regard, there are tons of capital markets and the ideals or views of \"illegal insider trading\" compared to \"having reached a level of society where you are privileged to obtain this information\" vary across the board contains charts of countries where an existing insider trading prohibition is actually enforced: http://repository.law.umich.edu/cgi/viewcontent.cgi?article=1053&context=articles https://faculty.fuqua.duke.edu/~charvey/teaching/ba453_2005/bd_the_world.pdf finally, consider some markets that don't include equities, as trading on an information advantage is only applicable to things the sec regulates, and there are plenty of things that agency doesn't regulate. so trying to reverse engineer the sec may not be the most optimal use of energy", "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": "yahoo finance - data inconsistencies between historic and current data", "role": "user" }, { "content": "you might have better luck using quandl as a source. they have free databases, you just need to register to access them. they also have good api's, easier to use than the yahoo api's their wiki database of stock prices is curated and things like this are fixed (www.quandl.com/wiki ), but i'm not sure that covers the london stock exchange. they do, however, have other databases that cover the london stock exchange.", "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 borrow in order to improve a home i just bought?", "role": "user" }, { "content": "it depends on your equity(assets - liabilities). if you have a lot of equity, banks will be happy to lend you money because they now they can always seize your assets. if you don't have a lot of equity another option is to go to hard money lenders. they charge high rates and some of them lend-to-own, but is an option. and consider what pete said, you might be a little optimistic.", "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 options are available for a home loan with poor credit but a good rental history?", "role": "user" }, { "content": "why not just do an fha loan? the minimum credit score is 580, and you can sometimes even go lower than that. another alternative is to consider a rent-to-own agreement with his landlord, since it sounds like if he doesn't buy he'd continue renting there anyway.", "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": "deducting last years (undocumented) side business loss", "role": "user" }, { "content": "you should speak to a good tax adviser. the less documentation you have the more problems irs are going to cause you. generally you can deduct business losses (in the year they occurred, which is 2011), but you have to show that that was a valid business, not just a way to reduce your tax bill with personal expenses. thus lack of documentation reduces your ability to prove that you're entitled to the deduction. the burden of proof is generally on you. you can not deduct it from 2012 taxes, but you can still amend 2011. keep in mind though that amended returns have higher chance of audit, and a significant business loss on a business that only existed that year is a major red flag which will raise the probability of an audit to very high percentage. theoretically, if the business was real and just failed - you can definitely deduct this. but practically, lack of documentation may cause too big a problem, and a tax adviser might suggest you giving it up if he doesn't think you have a real chance to convince the irs. definitely don't do that without a professional advice. it is worth fighting for, its quite a loss, but don't do it on your own as you will definitely lose.", "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 use an nre or nro account to transfer money from india to the us? any reports needed?", "role": "user" }, { "content": "nre is better. it's a tax free account, exempt from income tax. nre account is freely repatriable (principal and interest earned) while the nro account has restricted repatriability", "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 trust the motley fool?", "role": "user" }, { "content": "hmm.. hey bro, not personal, but is what comes to mind: i guess my answer will be highly down voted... =p", "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 deal with the credit card debt from family member that has passed away?", "role": "user" }, { "content": "first, when a debt collector says, \"it's to your advantage to give me money now\", i'd take that with a grain of salt. my ex-wife declared bankruptcy and when debt collectors couldn't find her, they somehow tracked me down and told me that i should tell her that it would be to her advantage to pay off this debt before the bankruptcy went through. that was total nonsense of course. the whole point of bankruptcy is to not have to pay the debt. why would you pay it just before it was wiped off the books? (now that i think of it, i'm surprised that they didn't tell me that i should pay her debts.) as others have noted, this would be controlled by state law. but in general, when someone dies any debts are payed from the assets of the estate, and then whatever is left goes to the heirs. if nothing is left or the debts exceed the assets, then the heirs get nothing, but they don't have to pay somebody else's debts. i don't see how you could \"put the house under your name\". if he left the house to you in his will, then after any debts are settled in accordance with state law, the house would transfer to you. but you can't just decide to put the house in your name outside of the legal inheritance process. if you could, then people could undermine a will at any time by just deciding to take an asset left to someone else and \"put it in their name\". or as in this case, people could undermine the rights of creditors by transferring all assets to themselves before debts were paid. even if there's some provision in your state for changing the name on a deed prior to probate to facilitate getting mortgages and taxes paid or whatever, i would be quite surprised if this allowed you to shelter assets from legitimate creditors. it would be a gaping loophole in inheritance law. frankly, if your father's debts are more than the value of his assets, including the value of the house, i suspect you will not be able to keep the house. it will be sold to pay off the creditors. i would certainly talk to a lawyer about this as there might be some provision in the law that you can take advantage of. i'll gladly yield on this point to anyone with specific knowledge of new jersey inheritance law.", "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 investing in a company support it?", "role": "user" }, { "content": "as others have said, it simply makes you a part owner. even if you have ethical objections to a company's behavior, i'd argue that investing in it and using the proxy votes to influence the company's decisions might be even more ethical than not investing.", "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 happens with the long buyer of a stock when somebody else's short fails (that is, unlimited loss bankrupts short seller)", "role": "user" }, { "content": "unless i am missing something subtle, nothing happens to the buyer. suppose alice wants to sell short 1000 shares of xyz at $5. she borrows the shares from bob and sells them to charlie. now charlie actually owns the shares; they are in his account. if the stock later goes up to $10, charlie is happy; he could sell the shares he now owns, and make a $5000 profit. alice still has the $5000 she received from her short sale, and she owes 1000 shares to bob. so she's effectively $5000 in debt. if bob calls in the loan, she'll have to try to come up with another $5000 to buy 1000 shares at $10 on the open market. if she can't, well, that's between her and bob. maybe she goes bankrupt and bob has to write off a loss. but none of this has any effect on charlie! he got the shares he paid for, and nobody's going to take them away from him. he has no reason to care where they came from, or what sort of complicated transactions brought them into alice's possession. she had them, and she sold them to him, and that's the end of the story as far as he's concerned.", "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 an american in my mid 20's. is there something i should be doing to secure myself financially?", "role": "user" }, { "content": "first of all, make sure you have an emergency fund. ideally this should be at least 6 months of living expenses in an easily accessible place. do you have any credit card debt, school debt, or other debt? work towards becoming debt free, especially of higher interest debt and debt on things that are only depreciating (cars, for example). if you have extra income, consider putting it towards debt. if you currently have access to a 403b, you should begin investing immediately. if not, look into a roth ira. the community has provided suggestions for good places to get one. with a roth ira you take post-tax income money and invest it into this retirement account and when you reach retirement age you get it and all the interest as tax-free income. you can't withdraw the principal until retirement age. you should put up to the legal limit into a retirement account - if you can't do this at first work towards this goal. after an emergency fund, becoming debt free, and fully funding your retirement, save for goals such as a house or other things you are working towards. the exact order of doing these things might vary, but in general you need the emergency fund first.", "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 get into investing stocks [duplicate]", "role": "user" }, { "content": "spend your first 50 euros on research materials. warren buffett got started as a boy by reading every book in the library of congress on investing and stock market analysis. you can research the company filings for canadian companies at http://www.sedar.com, u.s companies at http://www.edgar.com, and european companies at https://www.gov.uk/government/organisations/companies-house. find conflicting arguments and strategies and decide for yourself which ones are right. the motley fool http://www.fool.ca offers articles on good stocks to add to your portfolio and why, as well as why not. they provide a balanced judgement instead of just hype. they also sell advice through their newsletter. in canada the globe & mail runs a daily column on screening stocks. every day they present a different stock-picking strategy and the filters used to reach their end list. they then show how much that portfolio would have increased or decreased as well as talking about some of the good & bad points of the stocks in the list. it's interesting to see over time a very few stocks show up on multiple lists for different strategies. these ones in my opinion are the stocks to be investing in. while the globe's stock picks focus on canadian and us exchanges, you might find the strategies worthwhile. you can subscribe to the digital version at http://www.theglobeandmail.com once you have your analytical tools ready, pick any bank or stock house that offers a free practice account. use that account and their screening tools to try out your strategies and see if you can make money picking stocks. my personal stock-picking strategy is to look for companies with: - a long uninterrupted history of paying dividends, - that are regularly increased, - and do not exceed the net profit per share of the company - and whose share price has a long history of increasing these are called unicorn companies, because there are so very few of them. another great read is, \"do stocks outperform treasury bills?\" by hendrik bessembinder. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2900447 in this paper the author looks at the entire history of the u.s. stock universe and finds that less than 4% of stocks are responsible for 100% of the wealth creation in the u.s. stock market. he discusses his strategies for picking the winners, but it also suggests that if you don't want to do any research, you could pick pretty much any stock at random, short it, and wait. i avoid mutual funds because they are a winner only for the fellas selling them. a great description on why the mutual fund industry is skewed against the investor can be found in a book called \"the rrsp secret\" by greg habstritt. \"unshakeable\" by tony robbins also discusses why mutual funds are not the best way to invest in stocks. the investor puts up 100% of the money, takes 100% of the risk, and gets at best 30% of the return. rich people don't invest like 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 exactly is the profit and loss of a portfolio?", "role": "user" }, { "content": "when we 'delta-hedge', we make the value of a portfolio 0. no - you make the risk relative to some underlying 0. the portfolio does have a value, but if whatever underlying you're hedging against changes slightly the value of your portfolio should not change. but, what is the derivative of a portfolio? it's the instantaneous rate of change of the portfolio) relative to some underlying phenomenon. with a portfolio of many stocks, there's not one single factor that drives the value of your portfolio. you have sensitivity to each underlying stock (price and volatility), interest rates, the market as a whole, etc. for simplicity, we might imagine a portfolio that has holdings in .... a call .... a stock .... and a bank account (to borrow and lend money). you will have a delta relative to the stock and a delta relative to the underlying instrument on the option, etc. those can only be aggregated for each factor (e.g. if the call is an option on the same stock) theta is the only one you can calculate for the portfolio as a whole - it will be the aggregate theta of all of your positions (since change in time is constant across all investments). all of the others are not aggregatable since they are measuring sensitivities to different phenomena.", "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 should a 21 year old do with 60,000 ($91,356 usd) inheritance?", "role": "user" }, { "content": "the above answers are great. i would only add to the \"rainy day\" part, that even though the cash provides a good cushion, \"a stormy day\" could mean even losing those emergency savings to the unignorable randomness that governs the world economy. though unlikely, what happened to the russian ruble and the latest decision of the swiss cental bank are just two recent reminders that uncertainty must be treated as a constant. i would therefore advise you to invest some of the money in land capable of agriculture. how expensive is land over there in the uk?", "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 term that better describes a compound annual growth rate (cagr) when it is negative?", "role": "user" }, { "content": "same question had popped up in our office,and we got an answer from one of the senior colleague. he said that we can call it carc (compounded annual rate of change).", "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": "why is the money withdrawn from traditional ira taxed at the ordinary income tax rate?", "role": "user" }, { "content": "you are missing something very significant. the money in a traditional ira (specifically, a deductible traditional ira; there is not really any reason to keep a nondeductible traditional ira anymore) is pre-tax. that means when you pay tax on it when you take it out, you are paying tax on it for the first time. if you take ordinary money to invest it in stocks, and then pay capital gains tax on it when you take it out, that is post-tax money to begin with -- meaning that you have already paid (income) tax on it once. then you have to pay tax again on the time-value growth of that money (i.e. that growth is earned from money that is already taxed). that means you are effectively paying tax twice on part of that money. if that doesn't make sense to you, and you think that interest, capital gains, etc. is the first time you're paying tax on the money because it's growth, then you have a very simplistic view of money. there's something called time value of money, which means that a certain amount of money is equivalent to a greater amount of money in the future. if you invest $100 now and end up with $150 in the future, that $150 in the future is effectively the same money as the $100 now. let's consider a few examples. let's say you have $1000 of pre-tax income you want to invest and withdraw a certain period of time later in retirement. let's say you have an investment that grows 100% over this period of time. and let's say that your tax rate now and in the future is 25% (and for simplicity, assume that all income is taxed at that rate instead of the tax bracket system). and capital gains tax is 15%. you see a few things: traditional ira and roth ira are equivalent if the tax rates are the same. this is because, in both cases, you pay tax one time on the money (the only difference between paying tax now and later is the tax rate). it doesn't matter that you're paying tax only on the principal for the roth and on the principal plus earnings for traditional, because the principal now is equivalent to the principal plus earnings in the future. and you also see that investing money outside fares worse than both of them. that is because you are paying tax on the money once plus some more. when you compare it against the roth ira, the disadvantage is obvious -- in both cases you pay income tax on the principal, but for roth ira you pay nothing on the earnings, whereas for the outside stock, you pay some tax on the earnings. what may be less obvious is it is equally disadvantageous compared to a traditional ira; traditional and roth ira are equivalent in this comparison. 401(k)s and iras have a fundamental tax benefit compared to normal money investment, because they allow money to be taxed only one time. no matter how low the capital gains tax rate it, it is still worse because it is a tax on time-value growth from money that is already taxed.", "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 own x% of company a, and a buys company b, do i own x% of b?", "role": "user" }, { "content": "no, thanks to the principle of corporate personhood. the legal entity (company c) is the owner and parent of the private company (sub s). you and c are separate legal entities, as are c and s. this principle helps to legally insulate the parties for purposes such as liability, torts, taxes, and so forth. if company c is sued, you may be financially at stake (i.e. your investment in c is devalued or made worthless) but you are not personally being sued. however, the litigant may attach you as an additional litigant if the facts of the suit merit it. but without legal separateness of corporations, then potentially all owners and maybe a number of the employees would be sued any time somebody sued the business - which is messy for companies and messy for litigants. it's also far cleaner for lenders to lend to unified business entities rather than a variety of thousands of ever-shifting shareholders. note that this is a separate analysis that assumes the companies are not treated as partnerships or disregarded entities (tax nothings) for tax purposes, in which case an owner may for some purposes be imputed to own the assets of c. i've also ignored the consolidated tax return, which would allow c and s to file a type of corporate joint return that for some purposes treats them similarly to common entity. for the simplest variation of your question, the answer is no. you do not own the assets of a corporation by virtue of owning a few of its shares. edit: in light of your edit to include fb and whatsapp, and the wrinkle about corporate books. if sub s is 100% owned by company c, then you do not have any inspection rights to s because you are not a shareholder. you also do not have virtual corporation inspection rights through company c. however, if a person has inspection rights to company c, and sub s appears on the books and financial records of c, then your c rights will do the job of seeing s information. however, facebook is a public company, so they will make regular public filings and disclosures that should at least partly cover whatsapp. so i hedge and clear my throat by averring that my securities training is limited, but i believe that the sec filings of a public company will as a practical matter (maybe a matter of law?) moot the inspection rights. at the very least, i suspect you'd need a proper purpose (under dgcl, for example), to demand the inspection, and they will have already made extensive disclosures that i believe will be presumptively sufficient. i defer to more experienced securities experts on that question, but i don't believe inspection rights are designed for public companies.", "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 countries where citizens are free to use any currency?", "role": "user" }, { "content": "wikipedia has a list of countries which ban foreign exchange use by its citizens. it's actually quite short but does include india and china. sometimes economic collapse limits enforcement. for example, after the collapse of the zimbabwean dollar (and its government running out of sufficient foreign exchange to buy the paper necessary to print more), the state turned a blind eye as the us dollar and south african rand became de facto exchange. practicality will limit the availability of foreign exchange even in free-market economies. the average business can't afford to have a wide range of alternative currencies sitting around. businesses which cater to large numbers of addled tourists sometimes offer one or two alternative currencies in the hopes of charging usurous rates of exchange. even bureaux de change sometimes require you to order your \"rarer\" foreign exchange in advance. so, while it may be legal, it isn't always feasible.", "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 certificates of deposit worth it compared to investing in the stock market?", "role": "user" }, { "content": "of course cds are worth it compared to the stock market. in fact, most institutional investors are envious of the cds you have access to as an individual investor that are unavailable to them. you just need to be competent enough to shop around for the best rates and understand your time horizon. there are several concepts to understand here: banks give out cds with competitive rates projecting future interest rates. so while the federal funds rate is currently extremely low, banks know that in order to get any takers on their cds they have to factor in the public expectation that rates will rise, so if you lock in a longer term cd you get a competitive rate. institutional investors do not have access to fdic insured cds and the closest analog they participate in are the auctions and secondary markets of us treasuries. these two types of assets have equivalent default (non-)risk if held to maturity: backed by the full faith and credit of the u.s. here are the current rates (as of question's date) taken from vanguard that i can get on cds versus treasuries (as an individual investor). notice that cds outperform treasuries across any maturity timescale! for fixed-income and bond allocations, institutional investors are lining up for buying treasuries. and yet here you are saying \"cds are not worth it.\" might want to rethink that. now going into the stock market as an investor with expectations of those high returns you quote, means you're willing to stay there for the long-term (at least a decade) and stay the course during volatility to actually have any hope of coming up with the average rate of return. even then, there's the potential downside of risk that you still lose principal after that duration. so given that assumption, it's only fair to compare against >= 10 year cds which are currently rated at 2 percent apy. in addition, cds can be laddered -- allowing you to lock-in newer (and potentially higher) rates as they become available. you essentially stagger your buyin into these investments, and either reinvest upon the stilted maturity dates or use as income. also keep in mind that while personal emergencies requiring quick access to cash can happen at any time, the most common scenario is during the sudden change from a bull market into a recession -- the time when stocks plummet. if you need money right away, selling your stocks at these times would lock in severe losses, whereas with cds you still won't lose principal with an early exit and the only penalty is usually a sacrifice of a few months of potential interest. it's easy to think of the high yields during a protracted bull market (such as now), but personal finance has a huge behavioral component to it that is largely ignored until it's too late. one risk that isn't taken care of by either cds or treasuries is inflation risk. all the rates here and in the original question are nominal rates, and the real return will depend on inflation (or deflation). there are other options here besides cds, treasuries, and the stock market to outpace inflation if you'd like to hedge that risk with inflation protection: series i savings bonds and tips.", "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": "0% apr first 12 months on new credit card. can i exceed that 30% rule of thumb and not hurt my credit score?", "role": "user" }, { "content": "your utilization ratio history is irrelevant to its impact on your credit score. if you run up 80% of your utilization in january, then pay it back to 10% in march, your score in march will reflect the new reduced ratio with no memory of the 80% utilization last month. with that said, don't go around overspending just because you have 0% apr for a little bit. spend what you would spend with cash.", "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 financially advantageous and safe to rent out my personal car?", "role": "user" }, { "content": "i'm going to address a couple of extra issues over and above mhoran_psprep's great answer. insurance a lot of the jobs you describe require that you have additional insurance over and above what you currently have, normally insurance that lets you drive for payment. you should insist that anyone you rent to has this insurance. if not, you may find yourself liable and uninsured. also you should be aware of this story: \"quebec uber drivers have cars seized, fined up to $7,500\".", "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": "why an inner suburbs small apartment considered a risky investment", "role": "user" }, { "content": "the banks see small apartments as a higher risk because usually very small apartments are harder to sell, especially during a falling market when there is an oversupply of these apartments. the price of small apartments will also fall a lot quicker in a falling market. regarding yield vs capital growth - the emphasis here is manly on high yielding properties in small country towns with small populations. how many properties can you buy with cash? properties with good growth will enable you to build equity quicker and enable you to build a larger portfolio. in my opinion you need a combination of good yield and reasonable growth, because without yield you cannot replace your earned income with passive income, but without growth you can't expand your portfolio. so a combination of good yield with reasonable growth will give the best outcome.", "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": "any specific examples of company valuations according to value investing philosophy?", "role": "user" }, { "content": "buffet is in a different league from other value investors. he looks for stable companies with no debt and good management. then he looks to deeply understand the industries of candidate companies, and looks for companies that are not in commodity businesses or sell commodities that can be bought for 25% of the valuation that he believes reflects the true value of the company. deeply understanding the market is really the key. consider the burlington northern santa fe railroad, which buffet purchased last year. railroads benefit from higher oil prices, as they can transport cargo much cheaper than trucks. they also tend to have natural monopolies in the regions they operate in. buffet bought the railroad just as production of oil and natural gas in north dakota started picking up. since pipeline capacity between north dakota and refineries in texas/oklahoma is very limited, the railroad is making alot of money transporting crude.", "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": "filing taxes on stocks", "role": "user" }, { "content": "you need to submit an updated return. the problem is that once three years have passed you can't update the return to get any kind of refund, but if they are going after you for the sale price of the stocks, not knowing the cost, your goal is to show them there was no gain, and in fact you'd have had the loss if you were aware of the account. this is less than ten years back, so the broker should be able to give you the statements pretty easily.", "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": "why will the bank only loan us 80% of the value of our fully paid for home?", "role": "user" }, { "content": "i am going to add just one more item to what are some very well thought out answers. the element of \"cash out\" if you are taking out 80% of the value of the home that you already own free and clear the bank considers this a \"cash out\" transaction - meaning you would effectively walk away from closing with a check for 80% of your home's value. so in a hypothetical situation you have a $200,000 home value - you would be handed a check for $160,000 with which you could do anything that you wanted. granted, you are likely going to do something responsible with it and purchase another home - but (big but) the bank can't control what you do with it and that is the part they don't like - and therefore they treat these types of transactions with a higher degree of scrutiny. it is all about control - if the property you are downsizing to fits their rules for lending they may actually loan you a higher loan to value on that purchase than they would on your \"cash out\" refinance transaction on your current home. with the purchase loan the money you get goes immediately to the purchase of a new home. in the \"cash out\" transaction it goes to a check with which you could do anything you want . . . and then not pay the loan back . . . i know no one here would do that - but there are some folks that would . . . and this is one of the reasons \"cash out\" loans are not nearly as easy as they once were to get. http://www.justice.gov/usao/az/mortgagefraud.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": "where do online stock brokers get their real-time data from?", "role": "user" }, { "content": "as another answer started, this information comes straight from an exchange and generally costs a fortune . . . however things change: iex, a new exchange, recently opened and they are offering real time bid/ask data for free. here's the api description: https://www.iextrading.com/developer/ this data should be good for active securities, but for securities less actively traded the numbers might be stale.", "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": "extra cash - go towards mortgage, or stock?", "role": "user" }, { "content": "it's six of one a half dozen of another. investing the cash is a little more risky. you know exactly what you'll get by paying down your mortgage. if you have a solid emergency fund it's probably most advisable to pay down your mortgage. if your mortgage is 3% and your investment makes 3.5% you're talking about a taxable gain of 0.5% on the additional cash. is that worth it to you? sure, the s&p has been on a tear but remember, past results are not a guarantee of future performance.", "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": "taking out a loan to pay down a mortgage", "role": "user" }, { "content": "you have the 2 properties, and even though the value of property b is less than the amount you owe on it hopefully you have some equity in propery a. so if you do have enough equity in property a, why don't you just go to the one lender and get both property a and b refinanced under the same mortgage. this way hopefully the combined equity in both properties would be enough to cover the full amount of the loan, and you have the opportunity to refinance at favourable rate and terms. sounds like you are in the usa with an interest rate of 3.25%, i am in australia and my mortgage rates are currently between 6.3% to 6.6%.", "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 paying down a mortgage be considered an investment?", "role": "user" }, { "content": "your mortgage represents a negative cash flow of $x for n months. the typical mortgage prepayment doesn't reduce your next payment, but does reduce the length of the mortgage. if you look at the amortization table of a 30 year loan, you might see a payment of $1000 but only $50 going to principal. so if on day one you send an extra $51 or so to the bank, you find that in 30 years you just saved that $1000 payment. in effect, it was a long term bond or cd, yielding the post tax rate of the mortgage. say your loan were 7%. at 7%, money doubles every 10 years or so. 30 years is 3 doubles or 8x. if i were to offer you $1000 and ask for $7500 in 30 years, you might accept it, with an agreement to buy me out if you refinanced. for me, that would be an investment. just like buying a bond. in fact, there is a real return, as you see the cash flow at the end. the payments 'not made' are your payback. those who insist it's not an investment are correct in the strict sense of the word's definition, but pedantic for the fact in practice, the prepayment is a choice to be considered alongside other investment choices. when i have a mortgage, i am the mortgagor, the bank, the mortgagee. same as a company issuing a bond, the bank holds my bond and i'm making payments to them. they hold my bond as an investment. there is no question of that. in fact, they package these and sell them as cmos, groups of mortgages. a pre-payment is me buying back the last coupon on my mortgage. i fail to see the distinction between me 'buying back' $10k in future coupons on my own loan or me investing $10k in someone else's loans. the real question for me is whether this makes sense when rates are so low. at 4%, i'd say it's a matter of prioritizing any high rate debt and any other investments that might yield more. but even so, it's an investment yielding 4%. over the years, i've developed the priorities of where to put new money - the priorities are debatable. i have my opinion, and my reasons to back them up. in general, it's a balance between risk and return. in my opinion, there's something wrong with ignoring a dollar for dollar match on the 401(k) in most circumstances. others seem to prefer being 100% debt free before saving at all. there's a balance that might be different for each individual. as i started, the mortgage is a fixed return, with no chance to just get it back if needed. if your cash savings is pretty high, and the choice is a .001% cd or prepay a 4% mortgage, i'd use some funds to pay it down. but not to the point you have no liquid reserves.", "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 $100,000 usd per month, no idea what to do with it", "role": "user" }, { "content": "your #1 problem is the government both in it's form as a taxation outfit and as a 'law and order' outfit. you'd be very surprised at how fast a bank seizes your bank account in response to a court order. purchase 100 mexican 50 peso gold (1.2 oz/ea). these coins are cheap (lowest cost to get into) and will not be reportable on sale to taxing authorities. that money is out of the banking system and legal system(s). do not store them in a bank! you need to find a tax strategist, probably a former irs agent / cpa type. with the rest remaining money... there's an old saying, don't fight the fed. as well as \"the trend is your friend\". so, the fed wants all savers fully invested right now (near 0 interest rates). when investing, i find that if you do exactly opposite what you think is the smart thing, that's the best thing. therefore, it follows: 1) don't fight the fed 2) do opposite of smart 3) do: fight the fed (and stay 100% out of the market and in cash) we're looking like japan so could remain deflationary for decades to come. cash is king...", "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 a normal amount of money to spend per week on food/entertainment/clothing?", "role": "user" }, { "content": "i'll start with a question... is the 63k before or after taxes? the short answer to your question on how much is reasonable is: \"it depends.\" it depends on a lot more than where you live, it depends on what you want... do you want to pay down debt? do you want to save? are you trying to buy a house? those will influence how much you \"can\" (should let yourselves) spend. it also depends on your actual salary... just because i spend 5% of my salary on something doesn't mean bonkers to you if you're making 63,000 and i'm only making 10,000. i also have a lot of respect for you trying to take this on. it's never easy. but i would also recommend you start by trying to see what you can do to track how much you are actually spending. that can be hard, especially if you mostly use cash. once you're tracking what you spend, i still think you're coming at this a bit backwards though... rather than ask 'how much is reasonable' to spend on those other expenses, you basically need to rule out the bigger items first. this means things like taxes, your housing, food, transportation, and kid-related expenses. (i've got 2.5 kids of my own.) i would guess that you're listing your pre-tax salaries on here... so start first with whatever it costs you to pay taxes. i'm a us citizen living in berlin, haven't filed uk taxes, but uktaxcalculators.co.uk says that on 63,000 a year with 3 deductions your net earnings will actually be 43,500. that's 3,625/month. then what does it cost you each month for rent/utilities/etc. to put a house over your family's head? the rule of thumb they taught in my home-economics class was 35-40%, but that's not for europe... you'll know what it costs. let's say its 1,450 a month (40%) for rent and utilities and maybe insurance. that leaves 2,175. the next necessity after housing is food. my current food budget is about 5-6% of my after-tax salary. but that may not compare... the cost to feed a family of 3 is a fairly fixed number, and our salaries aren't the same. as i said, i am a us expat living in berlin, so i looked at this cost of living calculator, and it looks like groceries are about 7-10% higher there around cardiff than here in germany. still, i spend about 120 € per week on food. that has a fair margin in it for splurging on ice cream and a couple brewskies. it feeds me (i'm almost 2m and about 100 kilos) and my family of four. let's say you spend 100£ a week on groceries. for budgeting, that's 433£ a month. (52 weeks / 12 months == 4.333 weeks/month) but let's call it 500£. that leaves 1,675. from here, you'll have to figure out the details of where your own money is going--that's why i said you should really start tracking your expenses somehow... even just for a short time. but for the purposes of completing the answers to your questions, the next step is to look at saving before you try spending anything else. a nice target is to aim for 10% of your after-tax pay going into a savings account... this is apart from any other investments. let's say you do that, you'll be putting away 363£ per month. that leaves 1,300£. as far as other expenses... you need some money for transport. you haven't mentioned car(s) but let's say you're spending another 500£ there. that would be about enough to cover one with the petrol you need to get around town. that leaves 800£ as far as a clothing budget and entertainment, i usually match my grocery budget with what i call \"mad money\". that's basically money that goes towards other stuff that i would love to categorize, but that my wife gets annoyed with my efforts to drill into on a regular basis. that's another 500£, which leaves 300£. you mentioned debts... assuming that's a credit card at around 20% interest, you probably pay 133£ a month just in interest... (20% = 0.20 / 12 = 0.01667 x 8,000 = 133) plus some nominal payment towards principal. so let's call it 175£. that leaves you with 125£ of wiggle room, assuming i have even caught all of your expenses. and depending on how they're timed, you are probably feeling a serious squeeze in between paychecks. i recognize that you're asking specific questions, but i think that just based on the questions you need a bit more careful backing into the budget. and you really need to track what you're spending for the time being, until you can say... right, we usually spend about this much on x... how can we cut it out? from there the basics of getting your financial house in order are splattered across the interwebs. make a budget... stick to it... pay down debts... save. develop goals and mini incentives/rewards as a way to make sure your change your psyche about following a budget.", "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 can you adjust for (and re-allow) a disallowed year-end (december) wash-sale loss?", "role": "user" }, { "content": "disallowed losses are created when you buy a stock */- 30 days of a sale at a loss. when you sell and have no shares left, the loss is taken. you can't have no shares and leftover disallowed loss.", "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": "us stock market - volume based real-time alert", "role": "user" }, { "content": "tdameritrade offers this service for free using 3rd party company markit. from markit's site, below is their guarantee. http://www.markit.com/product/markit-on-demand markit on demand delivers an average of two million alerts per day through various technology platforms and via multiple channels, including email, instant messages, wireless, rss and facebook. investors can subscribe to their alerts of choice, and markit on demand guarantees that they will receive an alert within five minutes of the event trigger for all price and volume alerts", "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 tax rate for selling stocks?", "role": "user" }, { "content": "assuming that taxes were withheld when you received the options, you would now only owe tax on the profit from the sale of the stock. the cost basis would be whatever you bought the stock for (the strike price of the options in this case), and the profit will be the total amount received from the sale minus the total cost of those shares. since you bought the stock more than one year ago, you will get taxed at the long-term capital gains rate of 15% (unless you are in the 39.6% tax bracket, in which case the rate is 20%). as with all tax advice on this site, you need to check with a tax specialist when you actually file, but that should give you a rough indication of what your tax liability is.", "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 the poor consider investing as a means to becoming rich?", "role": "user" }, { "content": "definitions are in order: these definitions are important. someone making 1,000,000 a year who spends all of it is poor. someone who makes 500k, spends 450k a year and has three million in stocks and a paid-for million dollar home may be rich but they can't retire. they need another seven to eight million to retire. someone with a million dollars in assets who makes 40k a year through their job, can be financially independent and retire. this last example is important. in the millionaire next door the authors share their discovery that the average millionaire accumulated their wealth with just a working income of around 50k (the book is a bit dated so the number should be elevated if you adjust for inflation). finance independent is a strange thing to wrap your head around and people with high incomes often fall victim to misunderstanding it. when figuring out how much a person needs to accumulate for their \"nest egg\", their working income is not a direct variable. their spending and savings rate are. a doctor making 500k, who spends 450k needs to work for 51 years if they are planning to keep spending 450k/year (adjusted for inflation) forever. someone making 60k starting at age 21 who saves 18k (30%), could retire at 49. someone with a truly low income and poor, say 30k and under and living in a old developed nation, investing will help them a bit. say they save 10% of their income, by the time they reach 65 (the typical age federal retirement pensions begin), they'll have enough money to live off of in perpetuity and in comfort. they'll actually have a higher retirement income than income while they were working. but, it is challenging at those levels to save 10% of your net income. events like your car randomly deciding to break down one day can destroy an entire year's saving.", "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 $1,000+ per monthwhat should i do with it?", "role": "user" }, { "content": "excellent responses so far. because i am a math guy, i wanted to stress the power of compounding. it's great that you are thinking about saving and your future when you are so young. definitely be displined about your saving and investing. you would be surprised how just a small amount can compound over the years. for example, if you were to start with $5000 and contribute $100 per month. assuming that you can get 5% ror (hard in today's world but shouldn't be down the road), your final principal after 28 years (when you are 50 years old) will be over $90,000, which of only $38,000 is what you contributed yourself. the rest is interest. you can play with the numbers here: http://www.math.com/students/calculators/source/compound.htm", "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 one typically exit (close out) a large, in-the-money long put option position?", "role": "user" }, { "content": "the question is, how do i exit? i can't really sell the puts because there isn't enough open interest in them now that they are so far out of the money. i have about $150k of funds outside of this position that i could use, but i'm confused by the rules of exercising a put. do i have to start shorting the stock? you certainly don't want to give your broker any instructions to short the stock! shorting the stock at this point would actually be increasing your bet that the stock is going to go down more. worse, a short position in the stock also puts you in a situation of unlimited risk on the stock's upside – a risk you avoided in the first place by using puts. the puts limited your potential loss to only your cost for the options. there is a scenario where a short position could come into play indirectly, if you aren't careful. if your broker were to permit you to exercise your puts without you having first bought enough underlying shares, then yes, you would end up with a short position in the stock. i say \"permit you\" because most brokers don't allow clients to take on short positions unless they've applied and been approved for short positions in their account. in any case, since you are interested in closing out your position and taking your profit, exercising only and thus ending up with a resulting open short position in the underlying is not the right approach. it's not really a correct intermediate step, either. rather, you have two typical ways out: sell the puts. @quantycuenta has pointed out in his answer that you should be able to sell for no less than the intrinsic value, although you may be leaving a small amount of time value on the table if you aren't careful. my suggestion is to consider using limit orders and test various prices approaching the intrinsic value of the put. don't use market orders where you'll take any price offered, or you might be sorry. if you have multiple put contracts, you don't need to sell them all at once. with the kind of profit you're talking about, don't sweat paying a few extra transactions worth of commission. exercise the puts. remember that at the other end of your long put position is one (or more) trader who wrote (created) the put contract in the first place. this trader is obligated to buy your stock from you at the contract price should you choose to exercise your option. but, in order for you to fulfill your end of the contract when you choose to exercise, you're obligated to deliver the underlying shares in exchange for receiving the option strike price. so, you would first need to buy underlying shares sufficient to exercise at least one of the contracts. again, you don't need to do this all at once. @petergum's answer has described an approach. (note that you'll lose any remaining time value in the option if you choose to exercise.) finally, i'll suggest that you ought to discuss the timing and apportioning of closing out your position with a qualified tax professional. there are tax implications and, being near the end of the year, there may be an opportunity* to shift some/all of the income into the following tax year to minimize and defer tax due. * be careful if your options are near expiry!  options typically expire on the 3rd friday of the month.", "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": "why does an option lose time value faster as it approaches expiry", "role": "user" }, { "content": "nl7 is right and his b-s reference, a good one. time decay happens to occur in a way that 2x the time gives an option 1.414x (the square root of 2) times the value, so half the time means about .707 of the value. this valuation model should help the trader decide on exactly how far out to go for a given 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": "historical stock data starting from 1900", "role": "user" }, { "content": "good day! did a little research by using oldest public company (dutch east india company, voc, traded in amsterdam stock exchange) as search criteria and found this lovely graph from http://www.businessinsider.com/rise-and-fall-of-united-east-india-2013-11?ir=t : why it is relevant? below the image i found the source of data - global financial data. i guess the answer to your question would be to go there: https://www.globalfinancialdata.com/index.html hope this helps and good luck in your search!", "role": "assistant" } ]