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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": "online personal finance software that i can host myself", "role": "user" }, { "content": "i generally concur with your sentiments. mint.com has 'hack me' written all over it. i know of two major open source tools for accounting: gnucash and ledgersmb. i use gnucash, which comes close to meeting your needs: the 2.4 series introduced sql db support; mysql, postgres and sqlite are all supported. i migrated to sqlite to see how the schema looked and ran, the conclusion was that it runs fine but writing direct sql queries is probably beyond me. i may move it to postgres in the future, just so i can write some decent reports. note that while it uses html for reporting, there is no no web frontend. it still requires a client, and is not multi-user safe. but it's probably about the closest to what you what that still falls under the heading of 'personal finance'. a fork of sql ledger, this is postgresql only but does have a web frontend. all the open source finance webapps i've found are designed for small to medium busineses. i believe it should meet your needs, though i've never used it. it might be overkill and difficult to use for your limited purposes though. i know one or two people in the regional lug use ledgersmb, but i really don't need invoicing and paystubs.", "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": "hired with w-9, will i owe estimated tax quarterly?", "role": "user" }, { "content": "you must pay your taxes at the quarterly intervals. for most people the withholding done by their employer satisfies this requirement. however, if your income does not have any withholding (or sufficient), then you must file quarterly estimated tax payments. note that if you have a second job that does withhold, then you can adjust your w4 to request further withholding there and possibly reduce the need for estimated payments. estimated tax payments also come into play with large investment earnings. the amount that you need to prepay the irs is impacted by the safe harbor rule, which i am sure others will provide the exact details on.", "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 cashier's checks work and why are they good for scams?", "role": "user" }, { "content": "there are two different issues at play here, and they are completely separate from each other: a bank or cashier's check is \"safer\" than a regular personal or business check because it avoids problem #1. problem #2 exists with all kinds of paper checks. i assume the reason the warnings are about cashier's check moreso than personal checks, is simply because people already know to wait for personal checks to clear before handing over merchandise to the buyer. people are less likely to do that when receiving cashier's checks, but perhaps they still should if there is any doubt about the validity of the check. one could argue that a cashier's check actually provides a false sense of security due to this (to the receiver). on the flip side, if you are the payer, then a cashier's check could be thought of as more secure than a personal check because you don't have to reveal your bank account information to a stranger.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "what's the smartest way to invest money gifted to a child?", "role": "user" }, { "content": "i was in a similar situation with my now 6 year old. so i'll share what i chose. like you, i was already funding a 529. so i opened a custodial brokerage account with fidelity and chose to invest in very low expense index fund etfs which are sponsored by fidelity, so there are no commissions. the index funds have a low turnover as well, so they tend to be minimal on capital gains. as mentioned in the other answer, cds aren't paying anything right now. and given your long time to grow, investing in the stock market is a decent bet. however, i would steer clear of any insurance products. they tend to be heavy on fees and low on returns. insurance is for insuring something not for 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": "1099-b, box 5, how to figure out cost basis?", "role": "user" }, { "content": "for every document that the irs posts, there will be a correlating instructions page. this would be the instructions for the 1099-b, here. furthermore, as you will be reporting this on form 8949, as a substitute for previously used schedule d; instructions are here.this article explains that the best course of action is to donate the shares as the cost basis would switch to fmv (fair market value) of the assets today. but as this did not happen, i would recommend contacting the purchasing company directly. being a share holder, and by purchasing the shares from the source, the accounting department should still have recorded the date of purchase along with the price sold. it may take effort to prove who you are, but if their accounting records are well documented, this will not be an issue. if nothing else, claim a 100% capital gain on the entirety of the sale, and pay the tax. that is stated here.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "why are options created?", "role": "user" }, { "content": "at my soon to be legendary stock options cafe, i recently wrote an article \"betting on apple at 9 to 2.\" it described a trade in which a 35% move in a stock over a fixed time (2 years) would result in a 354% gain in one's bet. in this case, the options serve to create remarkable leverage for speculators. in general, option help provide liquidity and extend the nature of the risk/reward curve. there are option trades that range from conservative (e.g. a 'covered call') to wildly speculative, as the one i described above.", "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 i invest my roth ira besides stock market and mutual funds?", "role": "user" }, { "content": "in general, investors with a long period of time until they would need to withdraw the cash are best off holding mostly equities. while the dividends that equities would return are less than the interest you would get in peer-to-peer lending, over long periods of time not only do you get the dividends from equity investment but the value of the stock will grow faster than interest on loans. the higher returns from stocks, however, comes with more risk of big downturns. many people pull their investments out of stocks right after crashes which really hurts their long term returns. so, in order to get the benefit of investing in stocks you need to be strong enough to continue to hold the stocks through the crash and into the recovery. as for which stocks to invest in, generally it is best to invest in low-fee index funds/etfs where you own a broad collection of stocks so that if (when) any one stock goes bust that your portfolio does not take much damage. try to own both international and domestic stocks to get good diversification. the consensus recommends adding just a little bit of reits and bonds to your investments, but for someone at 25 it might not be worth it yet. warren buffett had some good thoughts on index 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": "how many days does bank of america need to clear a bill pay check", "role": "user" }, { "content": "this is based on my experience with chase and may not be applicable to other banks. as you mentioned chase as one of the banks you do business with hopefully this will be helpful to you. the money does come out of your account immediately. if the check isn't cashed in a certain amount of time, the check expires and you get the money credited back to your account. once you have made a bill payment online you can check on the status of your check by looking at your payment activity, finding the payment in question, and following the \"proof of payment\" link. there is will provide you with information on your payment which you can submit to your payee to prove when you submitted the payment, and which they can use to verify with the bank that you really did send the payment as you claimed. once the check is cashed, this page will also contain images of the front and back of the cashed check, so you can prove that the recipient really did cash it. you can see from this info that the check is being funded from a different account number than your own, which is good for security purposes since (per knuth, 2008) giving someone else your bank routing number and account number as found on your personal checks basically provides them with all they need to (fraudulently, of course) clean out your account.", "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 best way to save money from inflation and currency devaluation?", "role": "user" }, { "content": "generally speaking, so-called \"hard assets\" (namely gold or foreign currency), durable goods, or property that produces income is valuable in a situation where a nation's money supply is threatened. gold is the universal hard asset. if you have access to a decent market, you can buy gold as bullion, coins and jewelry. small amounts are valuable and easy to conceal. the problem with gold is that it is often marked up alot... i'm not sure how practical it is in a poor developing nation. a substitute would be a \"harder\" currency. the best choice depends on where you live. candidates would be the us dollar, euro, australian dollar, yen, etc. the right choice depends on you, the law in your jurisdiction, your means and other factors.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "are option contracts subject to mark to market rules", "role": "user" }, { "content": "if i sell a covered call, on stock i own 100%, there is no risk of a margin call. the stock goes to zero, i'm still not ask to send in more money. but, if bought on margin, margin rules apply. a naked put would require you to be able to buy the stock if put to you. as the price of the stock drops, you still need to be able to buy it at the put strike price. mark to market is just an expression describing how your positions are considered each day.", "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": "reinvesting earnings increases the book value of equity?", "role": "user" }, { "content": "the book value is total assets minus total liabilities and so if you increase the total assets without changing the total liabilities the difference gets bigger and thus higher. consider if a company had total assets of $4 and total liabilities of $3 so the book value is $1. now, if the company adds $2 to the assets, then the difference would be 4+2-3=6-3=3 and last time i checked 3 is greater than 1. on definitions, here are a couple of links to clarify that side of things. from investopedia: equity = assets - liabilities from ready ratios: shareholders equity = total assets – total liabilities or shareholders equity = share capital + retained earnings – treasury shares depending on what the reinvestment bought, there could be several possible outcomes. if the company bought assets that appreciated in value then that would increase the equity. if the company used that money to increase sales by expanding the marketing department then the future calculations could be a bit trickier and depend on what assumptions one wants to make really. if you need an example of the latter, imagine playing a game where i get to make up the rules and change them at will. do you think you'd win at some point? it would depend on how i want the game to go and thus isn't something that you could definitively say one way or the other.", "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 to do if a state and federal refund is denied direct deposit?", "role": "user" }, { "content": "it is not allowed to pay refunds to anyone other than the taxpayer. this is due to various tax return fraud schemes that were running around. banks are required to enforce this. if the direct deposit is denied, a check will be issued. in her name, obviously. what she does with it when she gets it is her business - but i believe that tax refund checks may not be just \"endorsed\", the bank will likely want to see her when you deposit it to your account, even if it is endorsed. for the same reason.", "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": "w8-ben for an indian citizen", "role": "user" }, { "content": "according to the form w-8ben instructions for part ii, line 10: line 10. line 10 must be used only if you are claiming treaty benefits that require that you meet conditions not covered by the representations you make on line 9 and part iii. for example, persons claiming treaty benefits on royalties must complete this line if the treaty contains different withholding rates for different types of royalties. in tax treaties, some of the benefits apply to every resident of a foreign country. other benefits only apply to certain groups of people. line 10 is where you affirm that you meet whatever special conditions are necessary in the treaty to obtain the benefit. if you are claiming that article 15 of the u.s.-india tax treaty, you could use line 10 to do this. it is important to remember that this form goes to the company paying you; it does not actually get sent to the irs. therefore, you can ask the company themselves if filling out line 9 only will result in them withholding nothing, or if they would need you to fill out line 10.", "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": "comparing the present value of total payment today and partial payments over 3 months", "role": "user" }, { "content": "its kind of a dumb question because no one believes that you can earn 8% in the short term in the market, but for arguments sake the math is painfully easy. keep in mind i am an engineer not a finance guy. so the first payment will earn you one month at 8%, the second, two. in effect three months at 8% on 997. you can do it that way because the payments are equal: 997 * (.08 /12) *3 = earnings ~= 20 so with the second method you pay: 997 * 3 - 20 = 2971", "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 an etf or mutual fund which tracks james o'shaugnessy's trending 25 stock strategy?", "role": "user" }, { "content": "funds can't limit themselves to a small number of stocks without also limiting themselves to a small amount of total investment. i think 25 companies is too small to be practical from their point of view.", "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 remodel or buy a bigger house?", "role": "user" }, { "content": "after a 6% commission to sell, you have $80k in equity. 20% down on a $400k house. 5% down will likely cost you pmi, and i don't know that you'll ever see a 3.14% rate. the realtor may very well have knowledge of the cost to finish a basement, but i don't ask my doctor for tax advice, and i'd not ask a realtor for construction advice. my basement flooring was $20/sqft for a gym quality rubber tile. you can also get $2/sqft carpet. i'd take the $15k number with a grain of salt until i got real bids. what's there now? poured cement? is there clearance to put in a proper subfloor and still have adequate ceiling height? there are a lot of details that you need to research to do it right. that said, the move to a bigger house impacts your ability to save to the extent that you are taking too large a risk. the basement finish, even if $20k, is just a bit more than the commission on your home. i like the idea of sticking it out. once the nanny is gone, enjoy the extra income, and use the money to boost your savings and emergency funds. as i read your question again, i suggest you cut the college funding in favor of the emergency fund. what good is a funded college account if you have no funds to sustain you through a period of unemployment? there's a lot to be gained in holding tight for these 3 years. it seems that what's too small for 5 would be spacious once the nanny is gone and the basement added. the cost of a too-big house is enormous over the long run. it's going to rise in value with inflation, but no more, and has all the added costs that you've mentioned. on a personal note, i'm in a large house, with a dining room that's used 2 or 3 times a year, and a living room (different from family room) that is my dog's refuge, but we never go in there. in hindsight, a house 2/3 the size would have been ideal. finishing the basement doesn't just buy you time, it eliminates the need for the larger house.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "how much more than my mortgage should i charge for rent?", "role": "user" }, { "content": "i think the mortgage must not be in the equation at all in order to determine how much to charge. of course you want to cover your mortgage but the renting price is determined only by how much the renter is willing to pay (offer and demand) and not your mortgage (some people don't even have a mortgage). in other words i think you should be charging a price based on similar rented houses.", "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 some long term investors so concerned about their entry price?", "role": "user" }, { "content": "because buying at discount provides a considerable safety of margin -- it increases the likelihood of profiting. the margin serves to cushion future adverse price movement. why is so much effort made to get a small percentage off an investment, if one is then willing to let the investment drop another 20% or more with the reason of being in it for the long term? nobody can predict the stock price. now if a long term investor happens to buy some stocks and the market crashes the next day, he could afford to wait for the stock prices to bounce back. why should he sells immediately to incur a definite loss, should he has confidence in the underlying companies to recover eventually? one can choose to buy wisely, but the market fluctuation is out of his/her control. wouldn't you agree that he/she should spend much efforts on something that can be controlled?", "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 significant danger to market orders as opposed to limit orders?", "role": "user" }, { "content": "the risk of market orders depends heavily on the size of the market and the exchange. on big exchange and a security which is traded in hue numbers you're likely that there are enough participants to give you a \"fair\" price. doing a market order on a security which is hardly dealed you might make a bad deal. in germany tradegate exchange and the sister company the bank tradegate ag are known to play a bit dirty: their market is open longer than frankfurt (xetra) and has way lower liquidity. so it can happen that not all sell or buy orders can be processes on the exchange and open orders are kept. then tradegate ag steps in with a new offer to full-fill these trades selling high or buying low. there is a german article going in details on wiwo.de either german or via google translate", "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 payment in goods count as income for tax purposes?", "role": "user" }, { "content": "the irs defines income quite specifically. on the topic what is taxable and nontaxable income, they note: you can receive income in the form of money, property, or services. this section discusses many kinds of income that are taxable or nontaxable. it includes discussions on employee wages and fringe benefits, and income from bartering, partnerships, s corporations, and royalties. bartering, or giving someone wages (or similar) in something other than currency (or some other specifically defined things, like fringe benefits), is taxed at fair market value: bartering bartering is an exchange of property or services. you must include in your income, at the time received, the fair market value of property or services you receive in bartering. for additional information, refer to tax topic 420 - bartering income and barter exchanges. bartering is more specifically covered in topic 420 - bartering income: you must include in gross income in the year of receipt the fair market value of goods or services received from bartering. generally, you report this income on form 1040, schedule c (pdf), profit or loss from business (sole proprietorship), or form 1040, schedule c-ez (pdf), net profit from business (sole proprietorship). if you failed to report this income, correct your return by filing a form 1040x (pdf), amended u.s. individual income tax return. refer to topic 308 for information on filing an amended return. more details about income in general beyond the above articles is available in publication 525, taxable and nontaxable income. it goes into great detail about different kinds of income. in your example, you'd have to calculate the fair market value of an avocado, and then determine how much cash-equivalent you were paid in. the irs wouldn't necessarily tell you what that value was; you'd calculate it based on something you feel you could justify to them afterwards. the way i'd do it would be to write down the price of avocados at each pay period, and apply a dollar-cost-averaging type method to determine the total pay's fair value. while the avocado example is of course largely absurd, the advent of bitcoins has made this much more relevant. publication 525 has this to say about virtual currency: virtual currency. if your employer gives you virtual currency (such as bitcoin) as payment for your services, you must include the fair market value of the currency in your income. the fair market value of virtual currency (such as bitcoin) paid as wages is subject to federal income tax withholding, federal insurance contribution act (fica) tax, and federal unemployment tax act (futa) tax and must be reported on form w-2, wage and tax statement. gold would be fundamentally similar - although i am not sure it's legal to pay someone in gold; assuming it were, though, its fair market value would be again the definition of income. similarly, if you're paid in another country's currency, the us dollar equivalent of that is what you'll pay taxes on, at the fair market value of that currency in us dollars.", "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": "reducing taxable income in us in december", "role": "user" }, { "content": "depending on the size of the donation, you may be able to reduce taxes further by donating appreciated assets, such as stock or fund shares that have gone up a lot. that lets you dodge the capital gains tax on redeeming the shares, and if you're donating to a tax-exempt organization they don't have to pay that tax either. and as @joetaxpayer has confirmed, you still get to deduct the current value of the donation, not just the basis value of those shares. so if you're donating anyway, this comes close to being free money in exchange for some slightly annoying paperwork. (yet another benefit of long-term investing!) of course folks in the top brackets sometimes set up their own tax-exempt foundations so they can decouple taking the tax break from deciding what to do with the donation.", "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 fund managers' average/minimum purchase price from form 13f the same?", "role": "user" }, { "content": "the gurufocus link is just reporting the high and low price of the quarter. price range (average) – the estimated trade prices. the average price is calculated from the time weighted average during the period. if no price range is shown, the trade prices are estimated trade prices, which are more accurate estimates. aapl: $420.05 - $549.03 ($467.26) the numbers for the high and low match what i found for aapl on yahoo finance. keep in mind their definition uses estimate 3 times.", "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 figure out if i will owe taxes", "role": "user" }, { "content": "your employer pays the expected (but estimated) taxes for you. so the chances are you don't own more; but that might be different if you have other sources of income that he doesn't know about (interest on savings or a side-job or whatever). also, you could have deductions that reduce the taxes you owe, which he again doesn't know, so you overpay. if you don't file, you don't get them back. most tax software companies offer free usage of their tool for standard filings, and you can use it to find out your tax situation, and then buy the tool only when you want to file. if you use one of those, you can type in all your data, and depending on the result, decide to buy it and file right away. note that if it turns out you owe taxes, you must file (and pay), but of course you can do it manually instead of buying the tool. if it turns out you get money back, it is your decision to file - you probably don't care for a small amount, but if you get 1000 $ back, you might want to file - again, buying the software of doing it manually.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "understanding the phrase afford to lose better", "role": "user" }, { "content": "it's a phrase that has no meaning out of context. when i go to las vegas (i don't go, but if i did) i would treat what i took as money i plan to lose. when i trade stock options and buy puts or calls, i view it as a calculated risk, with a far greater than zero chance of having the trade show zero in time. a single company has a chance of going bankrupt. a mix of stocks has risk, the s&p was at less than half its high in the 2008 crash. the money i had in the s&p was not money i could afford to lose, but i could afford to wait it out. there's a difference. we're not back at the highs, but we're close. by the way, there are many people who would not sleep knowing that their statement shows a 50% loss from a prior high point. those people should be in a mix more suited to their risk tolerance.", "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 lesser or no tax on assets?", "role": "user" }, { "content": "us federal tax law distinguishes many types of income. for most people, most of their income is \"earned income\", money you were paid to do a job. another category of income is \"capital gains\", money you made from the sale of an asset. for a variety of reasons, capital gains tax rates are lower than earned income tax rates. (for example, it is common that much of the gain is not real profit but inflation. if you buy an asset for $10,000 and sell it for $15,000, you pay capital gains tax on the $5,000 profit. but what if prices in general since you bought the asset have gone up 50%? then your entire profit is really inflation, you didn't actually make any money -- but you still have to pay a tax on the paper gain.) so if you make your money by investing in assets -- buying and selling at a profit -- you will pay lower taxes than if you made the same amount of money by receiving a salary from a job, or by running a business where you sell your time and expertise rather than an asset. but money made from assets -- capital gains -- is not tax free. it's just a lower tax. it might be that when combined with other deductions and tax credits this would result in you paying no taxes in a particular year. maybe you could avoid paying taxes forever if you can take advantage of tax loopholes. but for most people, making money from capital gains could result in lower taxes per dollar of income than someone doing more ordinary work. or it could result in higher taxes, if you factor in inflation, net present value of money, and so on. btw warren buffet's \"secretary\" is not a typist. she apparently makes at least $200,000 a year. http://www.forbes.com/sites/paulroderickgregory/2012/01/25/warren-buffetts-secretary-likely-makes-between-200000-and-500000year/#ab91f3718b8a. and side note: if warren buffet thinks he isn't paying enough in taxes, why doesn't he voluntarily pay more? the government has a web site where citizens can voluntarily pay additional taxes. in 2015 they received $3.9 million in such contributions. http://www.treasurydirect.gov/govt/reports/pd/gift/gift.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": "what's a good free checking account?", "role": "user" }, { "content": "here's a hack for getting the \"free\" checking that requires direct deposit. some effort to set up, but once everything is in place, it's all autopilot. (if your transfer into savings is higher than your transfer out of savings, you'll build up a nice little stash over time.) i don't know if there are deposit amounts or frequencies that you must have to qualify for the free account, if these are public or secret, or if this works everywhere. if anyone else has experience using this kind of hack, please leave a comment.", "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 to do with $50,000?", "role": "user" }, { "content": "considered a down payment on a house? some illiquid assets? otherwise you are doing 'responsible' get rich slow (read: get rich old) type things. and this question only invites opinion based answer. you tried futures and don't want to take that kind of risk again with your $50,000, so thats 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": "using simple moving average in equity", "role": "user" }, { "content": "a shorter term ma would be used for short term changes in price whilst a long term ma would be used for longer term movements in price. a 200 day sma is widely used to determine the trend of the stock, simply a cross above the 200 day sma would mean the stock may be entering an uptrend and a cross below that the price may be entering a downtrend. if the price is continuosly going above and below in a short period of time it is usually range trading. then there are emas (expodential moving averages) and wmas (weighted moving averages) which give more emphasis to the latest price data than the earlier price data in the period chosen compared to a sma. mas can be used in many different ways, too many to list all here. the best way to learn about them is to read some ta books and articles about them, then choose a couple of strategies where you can use them in combination with a couple of other indicators that are complimentary with each other.", "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 account for a shared mortgage in quickbooks online?", "role": "user" }, { "content": "how you should record the mortgage payments depends on if you are trying to achieve correct accounting, according to the standards, or if you are just tracking everything for you and your friends. if you're just keeping track for personal reasons, i'd suggest that you set up your check (or journal entry, your preference) how you'd like it to be recorded. then, memorize that transaction. this allows you to use it as many times as you need to, without having to set it up each time. (also note: there is no way to record a transaction that decreases cash and increases equity.) if you're trying to keep track of everything according to accounting standards, which it should be if you've set up an official business, then you have a lot more tracking to do with each payment. mortgage payments technically do not affect the equity accounts of the owners. each mortgage payment should decrease the bank balance, increase interest expense and decrease the mortgage balance, not to mention tracking any escrow account you may have. the equity accounts would be affected if the owners are contributing funds to the bank account, but equity would increase at the time the funds are deposited, not when the mortgage payments are made. hope this helps!", "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 remove the movement of the stock market as a whole from the movement in price of an individual share?", "role": "user" }, { "content": "the portion of a stock movement not correlated with stocks in general is called alpha. i don't know of any online tools to graph alpha. keep in mind that a company like apple is so huge right now that any properly weighted index will have to correlate with it to some degree.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "tax deductions on empty property", "role": "user" }, { "content": "this doesn't sound very legal to me. real estate losses cannot generally be deducted unless you have other real estate income. so the only case when this would work is when that person has bunch of other buildings that do produce income, and he reduces that income, for tax purposes, by deducting the expenses/depreciation/taxes for the buildings that do not. however, depreciation doesn't really reduce taxes, only defers them to the sale. as mhoran_psprep said - all the rest of the expenses will be minimal.", "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 often do stocks become worthless?", "role": "user" }, { "content": "the only thing that makes a stock worthless is when the company goes out of business. note that bankruptcy, by itself, does not mean the company is closing. it could successfully restructure its affairs and come out of bankruptcy with a better outlook. being a small or unprofitable business may cause a company's to trade in the \"penny stock\" range, but there is still some value there. since most dying companies will pass through the penny stock phase, you may be able to track down what you're looking for by finding companies who have been (or are about to be) delisted. delisting is not death, it's just the point at which the company's shares no longer meet the qualifications to be traded on a particular exchange. if you find old stock certificates in your grandmother's sock drawer, they may be a treasure, or they may be worthless pieces of paper if the company changed its ownership and grandma didn't know about it.", "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 services provided to google employees taxed as income or in any way?", "role": "user" }, { "content": "these services and other employee perks are referred to as fringe benefits. an employee \"fringe benefit\" is a form of pay other than money for the performance of services by employees. any fringe benefit provided to an employee is taxable income for that person unless the tax law specifically excludes it from taxation. one example of taxable fringe benefit is award/prize money (to prevent someone from \"winning\" most of their salary tax-free.) cash awards are taxable unless given to charity. non-cash awards are taxable unless nominal in value or given to charity. a less intuitive example is clothing. clothing given to employees that is suitable for street wear is a taxable fringe benefit. your example possibly fits under de minims (low-cost) fringe benefits such as low-value birthday or holiday gifts, event tickets, traditional awards (such as a retirement gift), other special occasion gifts, and coffee and soft drinks working condition fringe benefits--that is, property and services provided to an employee so that the employee can perform his or her job. note that \"cafeteria plans\" in the source don't refer to cafeteria but allow employee choice between benefit options available.", "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 credit card transactions take up to 3 days to appear, yet debit transactions are instant?", "role": "user" }, { "content": "when you swipe your credit card, the terminal at the store makes a request of your bank, and your bank has only a few seconds to accept or reject the transaction. once the transaction is accepted by your bank, it appears in the pending transactions. at the end of the business day, the store submits all of the final transactions for the day to their bank in a batch, and the banks all trade transactions in a batch, and money is sent between banks. this is the process that takes a couple of days, and after this happens, you see the transaction move from your pending transactions into the regular transactions area. most of the time, the pending transaction and the final transaction are the same. however, there are cases where it is different. a couple of examples: with a credit account, the fact that the final amount is not known for a few days is no big deal: after all, you don't have any money in the account, and if you end up spending more than you have, the bank will happily let you take your time coming up with the money (at a steep cost, of course). with a debit card tied to your checking account, the transaction is handled the same way, as far is the store is concerned. however, your bank is not going to run the risk of you overdrawing your checking account. they also are not going to run the risk of you withdrawing money from your account that is needed to cover pending transactions. so they usually treat these pending transactions as final transactions, deducting the pending transaction from your account balance immediately. when the final transaction comes through, they adjust the transaction, and your balance goes up or down accordingly. this is one of the big drawbacks to using a debit card, in my opinion. if a bad pending transaction comes through, you are out this money until it gets straightened out.", "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 credit cards not viewed as credit until you miss one payment?", "role": "user" }, { "content": "first, a note of my personal experience: up until a year ago, my credit lines were composed exclusively of credit cards with perfect payment histories, and my credit score is fine. if you mean that credit cards have no impact on a person's credit score until they miss a payment, that is certainly not correct. fico's website identifies \"payment history\" as 35% of your fico score: the first thing any lender wants to know is whether you’ve paid past credit accounts on time. this is one of the most important factors in a fico® score. ... credit payment history on many types of accounts account types considered for payment history include: ... details on late or missed payments (\"delinquencies\") and public record and collection items fico® scores consider: how many accounts show no late payment a good track record on most of your credit accounts will increase your fico® scores. clearly, from the last item alone, we see that credit lines (a category which includes credit cards) with no late payments is a factor in computing your fico score, and certainly other credit bureaus behave similarly. possibly the banker was trying to explain some other point, like \"if you're careful not to spend more on your card than you have in the bank, you can functionally treat your credit card as a debit line,\" but did so in a confusing way.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "optimal way to use a credit card to build better credit?", "role": "user" }, { "content": "most business credit cards do not report to the personal credit report unless the person pays the card late. given that fact, any debt carried on these cards does not hurt the credit score if it is not reported. you can carry credit card debt on these cards without hurting your credit score. just apply for business credit cards now to start building this segment of your credit.", "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": "unusual real estate market with seemingly huge rental returns", "role": "user" }, { "content": "the way to resolve your dilemma is to consult the price-to-rent ratio of the property. according to smartasset.com: the price-to-rent ratio is a measure of the relative affordability of renting and buying in a given housing market. it is calculated as the ratio of home prices to annual rental rates. so, for example, in a real estate market where, on average, a home worth $200,000 could rent for $1000 a month, the price-rent ratio is 16.67. that’s determined using the formula: $200,000 ÷ (12 x $1,000). smartasset.com also goes on to give a table comparing different cities' price-to-rent ratio and then claim that the average price-to-rent ratio is currently 19.21. if your price-to-rent ratio is lower than 19.21, then, yes, your rents are more expensive than the average house. smartasset.com claims that a high price-to-rent ratio is an argument in favor of tenants \"renting\" properties while a low price-to-rent ratio favors people \"buying\" (either to live in the property or to just rent it out to other people). so let's apply the price-to-rent ratio formula towards the properties you just quoted. there's a specific house i could buy for 190 (perhaps even less) that rents for exactly 2000 / month. 190k/(2000 * 12) = 7.92 there's a house for sale asking 400 (been on the market 2 yrs! could probably get for 350) which rents for 2800 /month. (400k)/(2800*12) = 11.90 (350k)/(2800*12) = 10.42 one can quite easily today buy a house for 180k-270k that would rent out for 1700-2100 / month. lower bound: (180k)/(1700*12) = 8.82 upper bound: (270k)/(2100*12) = 10.71 even so, the rental returns here seem \"ridiculously high\" to me based on other markets i've noticed. considering how the average price-to-rent ratio is 19.21, and your price-to-rent ratio ranges from 7.92 to 11.90, you are indeed correct. they are indeed \"ridiculously high\". qualification: i was involved in real estate, and used the price-to-rent ratio to determine how long it would take to \"recover\" a person's investment in the property. keep in mind that it's not the only thing i care about, and obviously the price-to-rent ratio tends to downplay expenses involved in actually owning properties and trying to deal with periods of vacancy. there's also the problem of taking into account demand as well. according to smartasset.com, detroit, mi has the lowest price-to-rent ratio (with 6.27), which should suggest that people should buy properties immediately in this city. but that's probably more of a sign of people not wanting to move to detroit and bid up the prices of properties. edit: i should also say that just because the properties are \"ridiculously expensive\" right now doesn't mean you should expect your rents to decrease. rather, if rents keep staying at their current level, i'd predict that the property values will slowly increase in the future, thereby raising the price-to-rent ratio to 'non-ridiculous' mode.", "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 difference between speculating and investing?", "role": "user" }, { "content": "classic investing guru benjamin graham defines \"an investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return.\" he contrasts this with speculation which is anything else (no thorough analysis, no safety of principal, or no adequate return). the word \"adequate\" is important, since it contrasts adequate returns with those that are either lower than needed or higher than necessary to reach your goals.", "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": "s&p is consistently beating inflation?", "role": "user" }, { "content": "inflation and stock returns are completely different things the cpi tracks the changes in the prices of a basket of goods a consumer might buy, the s&p 500 tracks the returns earned by investors in the equity of large companies. the two are very different things, and not closely linked. example: a world without inflation consider a world in which there was no inflation. prices are fixed. should stocks return zero? certainly not. companies take raw materials and produce goods and services that have value greater than that of the raw materials. they create new wealth. this wealth becomes profit for the company, which then is passed on to the owners of the company (equityholders) either in the form of dividends or, more commonly, price increases. example: a world with no inflation and no economic growth note that i have not implied above that companies have to grow in order for returns to outperform inflation. total stock returns depend on the current and expected profit of the firm. firms can remain the same size and continually kick out profits. total returns will be positive in this environment even if there is no growth and no inflation. if the firms pay the money out as dividends, investors get a cash flow. if they retain these earnings, the value of the firm's equity increases. total returns take both types of income into account. technically the s&p 500 is not a total return index, but in our current legal and corporate culture environment, there is a preference for retaining profits rather than paying them out. this causes price increases. risk bearing in principle, if profit was assured, then investors would bid up stock prices so high that profit would have to compete with the risk-free rate, which often is close to inflation (like, right now). however, profit is not assured. firm profit swings around over time and constitutes a significant source of risk. we can think of the owners of the firm as being the bondholders and equityholders. these assets are structured such that almost all the profit risk is born by equityholders. we can therefore think of equityholders as being compensated for bearing the risk that would otherwise be born by bondholders. because equityholders are bearing risk, stock prices must be low enough that stocks have a positive expected return (above the risk-free rate, which is presumably not significantly below inflation). this is true for the same reason that insurance premiums are positive--people have to be compensated for bearing risk. see my answer to this question for a discussion of why risk means we should expect stock prices to increase indefinitely (even if inflation halts). the s&p is not a measure of firm size or value the s&p measures the return earned by investors, not the size of us companies. true, if constituent companies grow and nothing else changes, the index goes up, but if a company shrinks a lot, it gets dropped out, rather than dragging the index down. by the way, please note that dollars \"put into\" equities are not stuck somewhere. they are passed on to the seller, who then uses it to buy something (even if this is a new equity issuance and the seller is the firm itself). the logic that growth of firms somehow sucks money out of usage is incorrect.", "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 have no exemptions or deductions, just a simple paycheck, do i have to file taxes?", "role": "user" }, { "content": "you are not required to file a tax return in canada if you have no taxable income. if you do not file a return you may be requested to by canada revenue agency, and then you'll need to file one. there are hundreds of thousands of canadian residents who do not file tax returns. the minister who overlooks the cra may assess any amount of taxes on any resident whether they file a return or not. there are penalties for failing to file a return or filing late. the penalties are based on a percentage of the taxes owed. if you owe no taxes, then the penalties are meaningless.", "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 difference between a check and a paycheck?", "role": "user" }, { "content": "a paycheck is simply a check for your salary. it's just like a rent check, or a birthday check, or a grocery check... i've had \"paychecks\" that were personal checks from the owner of the business, i've had ones that are printed in the office i worked in and signed right there, and i've had paychecks that are printed through a third party company and mailed to me (my favorite, of course, is to forgo the \"paycheck\" entirely and get direct deposit :) ). really, they're all just checks. although that's a little disingenuous, because banks are often slightly more trusting of paychecks. however, this has little to do with it being a \"paycheck,\" per se, and more to do with the fact that they see you getting the same check for (roughly) the same amount on a regular basis; having seen you get a paycheck for the same amount from the same company for the last 12 months, there is less risk of the check bouncing or being returned unpaid, so you can often get banks to waive their hold policy and just give you the money.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "company stock listed in multiple exchanges?", "role": "user" }, { "content": "it doesn't matter which exchange a share was purchased through (or if it was even purchased on an exchange at all--physical share certificates can be bought and sold outside of any exchange). a share is a share, and any share available for purchase in new york is available to be purchased in london. buying all of a company's stock is not something that can generally be done through the stock market. the practical way to accomplish buying a company out is to purchase a controlling interest, or enough shares to have enough votes to bind the board to a specific course of action. then vote to sell all outstanding shares to another company at a particular fixed price per share. market capitalization is an inaccurate measure of the size of a company in the first place, but if you want to quantify it, you can take the number of outstanding shares (anywhere and everywhere) and multiply them by the price on any of the exchanges that sell it. that will give you the market capitalization in the currency that is used by whatever exchange you chose.", "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 a online only bank protect itself against fraud?", "role": "user" }, { "content": "there are cyber security and reporting standards which financial service provider (banks and financial services where customers deposit and/or transact fiat currency) you can find a comprehensive list on wikipedia under cyber security standards depending on the geographic location there might be local govt requirements such as reporting issues, data security etc. concerning point 1. we have to differ between a fraudulent customer and an attacker on the banks infrastructure. fraudulent customers / customers that have been compromised by third parties are identified with but not limited to credit scores and merchant databases or data from firms specialized in \"fraud prevention\". attackers (criminals that intend to steal, manipulate or spy on data) are identified/prevented/recorded by but not limited to ids solutions and attacker databases. for firms that get compensation by insurances the most important thing is the compilant with law and have records of everything, they rather focus on recording data to backtrack attackers than preventing attacks. concerning point 2. for you as customer the local law and deposit insurance are the most important things. banks are insured and usually compensate customers on money theft. the authentication and pin / tan methods are most crucial but standard - these authentication methods consist of one password and one offline part such as a tan from a paperletter or a rsa generator or card reader. wrapup: financial institutions have to comply with local law and meet international standards. banks use highly advanced intrusion detection and fraud prevention which logically must be based on databases. for the average joe customer there is seldom high risk to lose deposits even if the attackers gains full access to the bank account but this depends a lot on the country you reside in. concerning targeted attacks:", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "buying a foreclosed property", "role": "user" }, { "content": "like most other things, this is \"sometimes,\" but not always true. sometimes banks will be willing to sell at a discount, sometimes they will hold out for \"full price.\" but if you want a discount, this is a good place to \"look.\"", "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 any downside to using temporary credit card numbers with subscription services?", "role": "user" }, { "content": "you're knowingly providing a payment method which has insufficient funds to meet the terms of the contract, because you are too lazy to comply with the contract. that's unethical and fraudulent behavior. will you get in trouble? i don't know. i'd suggest getting acquainted with an electronic calendar that can remind you to do things.", "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 hedge properly against inflation and other currency risks?", "role": "user" }, { "content": "i apply what you term 'money' to the word 'commodity'. and i agree with littleadv, you are just selling us your perspective on (such things as) precious metals. what i want you to think about is these truths: when used as currency gold just has two values: utility value and currency value. i hold it is better to separate the two. there is not enough gold in the earth to represent the value in aggregate economies of the world. trying to go back to the gold standard would only induce an unimaginable hyperinflation in gold. recent years shows that gold does not retain value. see the linked chart.", "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 handle missing w2 from failed direct deposit only company?", "role": "user" }, { "content": "yes, there's a way. i actually wrote a blog post about it. its a new service from the irs which allows you pulling your account online. irs also has an instruction page just for this case here.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "how to calculate how much house i can afford?", "role": "user" }, { "content": "fundamentals: then remember that you want to put 20% or more down in cash, to avoid pmi, and recalculate with thatmajor chunk taken out of your savings. many banks offer calculators on their websites that can help you run these numbers and figure out how much house a given mortgage can pay for. remember that the old advice that you should buy the largest house you can afford, or the newer advice about \"starter homes\", are both questionable in the current market. =========================== added: if you're willing to settle for a rule-of-thumb first-approximation ballpark estimate: maximum mortgage payment: rule of 28. your monthly mortgage payment should not exceed 28 percent of your gross monthly income (your income before taxes are taken out). maximum housing cost: rule of 32. your total housing payments (including the mortgage, homeowner’s insurance, and private mortgage insurance [pmi], association fees, and property taxes) should not exceed 32 percent of your gross monthly income. maximum total debt service: rule of 40. your total debt payments, including your housing payment, your auto loan or student loan payments, and minimum credit card payments should not exceed 40 percent of your gross monthly income. as i said, many banks offer web-based tools that will run these numbers for you. these are rules that the lending industy uses for a quick initial screen of an application. they do not guarantee that you in particular can afford that large a loan, just that it isn't so bad that they won't even look at it. note that this is all in terms of mortgage paymennts, which means it's also affected by what interest rate you can get, how long a mortgage you're willing to take, and how much you can afford to pull out of your savings. also, as noted, if you can't put 20% down from savings the bank will hit you for pmi. standard reminder: unless you explect to live in the same place for five years or more, buying a house is questionable financially. there is nothing wrong with renting; depending on local housing stock it may be cheaper. houses come with ongoung costs and hassles rental -- even renting a house -- doesn't. buy a house only when it makes sense both financially and in terms of what you actually need to make your life pleasant. do not buy a house only because you think it's an investment; real estate can be a profitable business, but thinking of a house as simultaneously both your home and an investment is a good way to get yourself into trouble.", "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": "online transaction - money taken out late", "role": "user" }, { "content": "when processing credit/debit cards there is a choice made by the company on how they want to go about doing it. the options are authorization/capture and sale. for online transactions that require the delivery of goods, companies are supposed to start by initially authorizing the transaction. this signals your bank to mark the funds but it does not actually transfer them. once the company is actually shipping the goods, they will send a capture command that tells the bank to go ahead and transfer the funds. there can be a time delay between the two actions. 3 days is fairly common, but longer can certainly be seen. it normally takes a week for a gas station local to me to clear their transactions. the second one, a sale is normally used for online transactions in which a service is immediately delivered or a point of sale transaction (buying something in person at a store). this action wraps up both an authorization and capture into a single step. now, not all systems have the same requirements. it is actually fairly common for people who play online games to \"accidentally\" authorize funds to be transferred from their bank. processing those refunds can be fairly expensive. however, if the company simply performs an authorization and never issues a capture then it's as if the transaction never occurred and the costs involved to the company are much smaller (close to zero) i'd suspect they have a high degree of parents claiming their kids were never authorized to perform transactions or that fraud was involved. if this is the case then it would be in the company's interest to authorize the transaction, apply the credits to your account then wait a few days before actually capturing the funds from the bank. depending upon the amount of time for the wait your bank might have silently rolled back the authorization. when it came time for the company to capture, then they'd just reissue it as a sale. i hope that makes sense. the point is, this is actually fairly common. not just for games but for a whole host of areas in which fraud might exist (like getting gas).", "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 we buy a house, or wait?", "role": "user" }, { "content": "some highly pessimistic things worth noting to go alongside all the stability and tax break upside that homes generally provide: negative equity is no joke and basically the only thing that bankrupts the middle classes consistently en masse. the uk is at the end of a huge housing bull run where rents are extremely cheap relative to buying (often in the 1% range within the m25), brexit is looming and interest rates could well sky rocket with inflation. borrowing ~500k to buy a highly illiquid asset you might have to fire sale in case of emergency/job loss etc for 300k in a few years when lots of (relatively) cheap rental housing is available to rent risk free, could be argued to be a highly lopsided and dangerous bet vs the alternatives. locking in 'preferential' mortgage rates can be a huge trap: low interest rates generally increase asset values. if/when they rise, assets fall in value as the demand shrinks, making you highly exposed to huge losses if you need to sell before it is paid off. in the case of housing this can be exceptionally vicious as the liquidity dramatically dries up during falls, meaning fire sales become much more severe than they are for more liquid assets like stock. weirdly and unlike most products, people tend to buy the very best house they can get leverage for, rather than work out what they need/want and finding the best value equivalent. if a bank will lend you £20 a day to buy lunch, and you can just afford to pay it, do you hunt out the very best £20 lunch you can every day, or do you make some solid compromises so you can save money for other things etc? you seem to be hunting very close to the absolute peak amount you can spend on these numbers. related to above, at that level of mortgage/salary you have very little margin for error if either of you lose jobs etc. houses are much more expensive to maintain/trade than most people think. you spend ~2-5% every time you buy and sell, and you can easily spend 2-20k+ a year depending what happens just keeping the thing watertight, paid for, liveable and staying up. you need to factor this in and be pessimistic when you do. most people don't factor in these costs to the apparent 'index' rise in house values and what they expect to sell for in x years. in reality no buy and hold investor can ever realise even close to the quoted house price returns as they are basically stocks you have to pay 5% each time you buy or sell and then 1-20% percent a year to own - they have to rise dramatically over time for you to even break even after all the costs. in general you should buy homes to make memories, not money, and to buy them at prices that don't cause you sleepless nights in case of disasters.", "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": "expiring 401(k) stock option and liquidation implications", "role": "user" }, { "content": "it might go down a bit, or it might not. that is nearly impossible to predict, as the relative volumes are unknown, and the exact procedure is also unknown (they might do the selling over a longer period, or as a buy back, or immediately, or...) however, why would you want to wait at all? it is generally not a great idea to put your savings into the company you work for ('all eggs in one basket' - when it goes down, you lose your job and your savings), so the best approach is to pick a good day in the next weeks and sell the stock and invest into something more neutral.", "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 18. how to build good monthly income at my 20's?", "role": "user" }, { "content": "market rate of return averages about 8% annually (sometimes more, sometimes less or negative). to get 30k monthly -- even taking that as pretax -- you're talking about 360k yearly. divide that by 0.08 and you need to have savings of 4.5 million--- and really you should double that for safety.. tl;dr: forget it. added thought: if you really have $20k/month coming in, you really have no business asking the internet for advice. hire a professional financial advisor (not a broker, someone who is paid a flat fee for their expertise and has no incentives to give you less-than-optimal advice). . the money they will save/make for you will more than pay for their hire.", "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 giving my girlfriend money for her mortgage closing costs and down payment considered fraud?", "role": "user" }, { "content": "sheesh, are people kidding here? it's a gift. it's not fraud. just keep in mind that, because it's a gift, you cannot get it \"back\" if you break up--you are giving it to her. if you happen to get married at some point in the future, you will then own part of the apartment, but that is a completely separate matter. give her the money, don't expect it back. ever.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "what is the best credit card for someone with no credit history", "role": "user" }, { "content": "consider getting yourself a gas card. use it for a year. make your payments on time. then reapply for a credit card.", "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 stories of turning a few thousands into millions by trading stocks real?", "role": "user" }, { "content": "the short answer is yes, it is possible to do what these classes claim, however, it is highly unlikely. for every person they can show you that got rich using whatever so called method they are teaching, there are hundreds of people that didn't that they aren't telling you about. what i would recommend is invest in a well diversified portfolio. if you have a higher tolerance for risk then you can make some of that portfolio out of higher risk/reward investments. maybe you pick the next apple or google or netflix or whatever but that portion of your portfolio should be money that you can afford to lose in case you pick duds.", "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 this mortgage advice good, or is it hooey?", "role": "user" }, { "content": "that makes no sense at all. they try to compare and that's exactly the same as comparing apples versus oranges. mortgage is long-term loan, so for the first many years the huge part of the payment will go to repaying interest, so that ratio 1 will indeed be something like 20% or more despite the fact that the interest rate on the mortgage is much lower - something around 6%. heloc will have the interest rate of 6%, but it will have the same structure so that you have equal payments, so if you compute that ratio 1 it will be very close to that of the mortgage. the bottom line is - if helocs were that great noone would apply for mortgages. you should stick to making extra payments towards the principal on the mortgage.", "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": "dollar-cost averaging: how often should one use it? what criteria to use when choosing stocks to apply it to?", "role": "user" }, { "content": "dollar cost averaging is a great strategy to use for investment vehicles where you can't invest it in a lump sum. a 401k is perfect for this. you take a specific amount out of each paycheck and invest it either in a single fund, or multiple funds, or some programs let you invest it in a brokerage account so you can invest in virtually any mutual fund or stock. with annual or semi-annual re-balancing of your investments dollar cost averaging is the way to invest in these programs. if you have a lump sum to invest, then dollar cost averaging is not the best way to invest. imagine you want to invest 10k and you want to be 50% bonds and 50% stocks. under dollar cost averaging you would take months to move the money from 100% cash to 50/50 bonds/stocks. while you are slowly moving towards the allocation you want, you will spend months not in the allocation you want. you will spend way too long in the heavy cash position you were trying to change. the problem works the other way also. somebody trying to switch from stocks to gold a few years ago, would not have wanted to stay in limbo for months. obviously day traders don't use dollar cost averaging. if you will will be a frequent trader, dca is not the way to go. no particular stock type is better for dca. it is dependent on how long you plan on keeping the investment, and if you will be working with a lump sum or not. edit: there have be comments regarding dca and 401ks. when experts discuss why people should invest via a 401k, they mention dca as a plus along with the company match. many participants walk away with the belief that dca is the best strategy. many articles have been written about how to invest an inheritance or tax refund, many people want to use dca because they believe that it is good. in fact in the last few years the experts have begun to discourage ever using dca unless there is no other way.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "my brokerage statement shows adjusted due to previous wash sale disallowed loss what does this mean?", "role": "user" }, { "content": "summary of accepted answer: your \"loss\" will not count as a loss (to the irs). which means no tax deduction for a \"short-term capital loss\" (on that sale). instead, the irs simply pretends like you had paid less for the stock to begin with.", "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": "first 401k portfolio with high expense ratios - which funds to pick? (24yo)", "role": "user" }, { "content": "if it was me, i would withdraw money from savings and be debt free today. i would then pour the $500 into building back your savings. then of course, never again carry a balance on your cc. at your age msfrx is a losing game. you can handle the volatility of better performing funds, i would have zero in there. if it was me, i would do something totally different then you are doing: keep in mind you are doing very good as is. the best way to win with money is to make good moves overtime, and given your debt level, savings, and willingness to contribute to a 401k your moves are pretty darn good. keep in mind you will probably want to start saving a down payment for a house. this should be done outside of your 401k. overall good 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": "calculating profits for a private fund", "role": "user" }, { "content": "one way i heard of, from a friend who ran a similar fund as yours, is to calculate $days of investment and divide the investment as accordingly. for example, if i invested 10$ for 10 days and you have invested 20$ for 5 days. at the end of the 10th day my $day = 10*10=100, while your $day=20*5=100. if the investement has grown to 100$, the i should get $100/(100+100)*100=$50, you also should get the same. this i guess is equitable, you could try dividing the corpus with above method. it consideres the amount invested as well as the time invested for. i think by the above method, you could also handle the inbetween withdrawals.", "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 peter lynch talking about the dividend adjusted peg ratio in this quote?", "role": "user" }, { "content": "essentially, yes, peter lynch is talking about the peg ratio. the price/earnings to growth (peg) ratio is where you take the p/e ratio and then divide that by the growth rate (which should include any dividends). a lower number indicates that the stock is undervalued, and could be a good buy. lynch's metric is the inverse of that: growth rate divided by the p/e ratio. it is the same idea, but in this case, a higher number indicates a good value for buying. in either case, the idea behind this ratio is that a fairly priced stock will have the p/e ratio equal the growth rate. when your growth rate is larger than your p/e ratio, you are theoretically looking at an undervalued stock.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "what are a few sites that make it easy to invest in high interest rate mutual funds?", "role": "user" }, { "content": "if you want a ~12% rate of return on your investments.... too bad. for returns which even begin to approach that, you need to be looking at some of the riskiest stuff. think \"emerging markets\". even funds like vanguard emerging markets (etf: vwo, mutual fund, veiex) or fidelity advisor emerging markets income trust (faemx) seem to have yields which only push 11% or so. (but inflation is about nil, so if you're used to normal 2% inflation or so, these yields are like 13% or so. and there's no tax on that last 2%! yay.) remember that these investments are very risky. they go up lots because they can go down lots too. don't put any money in there unless you can afford to have it go missing, because sooner or later you're likely to lose something half your money, and it might not come back for a decade (or ever). investments like these should only be a small part of your overall portfolio. so, that said... sites which make investing in these risky markets easy? there are a good number, but you should probably just go with vanguard.com. their funds have low fees which won't erode your returns. (you can actually get lower expense ratios by using their brokerage account to trade the etf versions of their funds commission-free, though you'll have to worry more about the actual number of shares you want to buy, instead of just plopping in and out dollar amounts). you can also trade vanguard etfs and other etfs at almost any brokerage, just like stocks, and most brokerages will also offer you access to a variety of mutual funds as well (though often for a hefty fee of $20-$50, which you should avoid). or you can sign up for another fund providers' account, but remember that the fund fees add up quickly. and the better plan? just stuff most of your money in something like vti (vanguard total stock market index) instead.", "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": "determining the basis for capital gain [duplicate]", "role": "user" }, { "content": "if you make money in currency speculation (as in your example), that is a capital gain. a more complicated example is if you were to buy and then sell stocks on the mexican stock exchange. your capital gain (or loss) would be the difference in value in us dollars of your stocks accounting for varying exchange rates. it's possible for the stocks to go down and for you to still have a capital gain, and vice versa.", "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 you sell stocks/commodities for any price you wish (either direct or market)?", "role": "user" }, { "content": "you answered your own question \"whether someone buys is a different thing\". you can ask any price that you want. (or given an electronic brokerage, you can enter the highest value that the system was designed to accept.) the market (demand) will determine whether anyone will buy at the price you are asking. a better strategy if you want to make an unreasonable amount of money is to put in a buy order at an unreasonably low price and hope a glitch causes a flash crash and allows you to purchase at that price. there may be rules that unravel your purchase after the fact, but it has a better chance of succeeding than trying to sell at an unreasonably high 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": "can one use dollar cost averaging to make money with something highly volatile?", "role": "user" }, { "content": "that doesn't sound like dollar cost averaging. that sounds like a form of day trading. dollar cost averaging is how most people add money to their 401k, or how they add money to some ira accounts. you are proposing a form of day trading.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "making higher payments on primary residence mortgage or rental?", "role": "user" }, { "content": "pay down the lower balance on the rental property. generally speaking, you are more likely to need/want to sell the rental house as business conditions change or if you need the money for some other purpose. if you pay down your primary residence first, you are building equity, but that equity isn't as liquid as equity in the rental. also, in the us, you cannot deduct the interest on a rental property, so the net interest after taxes that you're paying on the rental narrows the gap between the 4.35% loan and the 5% 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": "what happens to bank account of non-resident alien who falls out of status?", "role": "user" }, { "content": "nothing happens. a bank is a business; your relationship with the bank doesn't change because your visa or immigration status changes. money held in the account is still held in the account. interest paid on the account is still taxable. and so on. if the account is inactive long enough, abandoned account rules may apply, but that still has nothing to do with your status.", "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 everyday people profit from unexpected world events?", "role": "user" }, { "content": "the nyse is not the only exchange in the world (or even the only one in the usa). amazingly, the london stock exchange works on london time, the shanghai exchange works on shanghai time and the australian stock exchange works on sydney time. in addition futures exchanges work overnight.", "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": "unmarried couple splitting up with joint ownership of home", "role": "user" }, { "content": "because you're not married, its a partnership agreement, and unless there's a written contract, either the two of you agree on how to handle the home, or it's off to court you go. if you were both supposed to pay for the home, and he failed to for a a while, that would put him in breach of contract which i would think gives you a good position in court. on the other hand, if you are at all concerned about your safety from this louse, remember, he knows exactly where the house 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": "how can i use real estate investments to manage my wealth?", "role": "user" }, { "content": "real estate is considered to be its own asset class and one that should be at least a part of a well-diversified portfolio. one of the key ways investors can make money in real estate is to become a landlord of a rental property. flippers try to buy undervalued real estate, fix it up, and sell it for a profit. real estate investment trusts (reits) provide indirect real estate exposure without the need to own, operate, or finance properties.", "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 prepayment penalties for mortgages normal?", "role": "user" }, { "content": "mortgages with a prepayment penalty usually do not charge points as a condition of issue. the points, usually in the range 1%-3% of the amount borrowed, are paid from the buyer's funds at the settlement, and are effectively the prepayment penalty. once upon a time (e.g. 30 years ago), in some areas, buyers had a choice of this last option usually had a higher interest rate than the first two. it was advantageous for a buyer to accept this option if the buyer was sure that the mortgage would indeed be paid off in a short time, e.g. because a windfall of some kind (huge bonus, big inheritance, a killing in the stock market, a successful ipo) was anticipated, where the higher interest charged for only a few years did not make much of a difference. taking this third option and hanging on to the mortgage over the full 15 or 20 or 25 or 30 year term would have been a very poor choice. i do not know if all three options are still available in the current mortgage market. the irs treats points for original morttgages and points for re-financed mortgages differently for the purposes of schedule a deductions. points paid on an original mortgage are deductible as mortgage interest in the year paid, whereas points paid on a refinance must be amortized over the life of the loan so that the mortgage interest deduction is the sum of the interest paid in the monthly payments plus a fraction of the points paid for the refinance. the undeducted part of the points get deducted in the year that the mortgage is paid off early (or refinanced again). prepayment penalties are, of course, deductible as mortgage interest in the year of the prepayment.", "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 risks from using mint.com?", "role": "user" }, { "content": "with mint you are without a doubt telling a third party your username and password. if mint gets compromised, or hires a bad actor, technically there isn't anything to stop shenanigans. you simply must be vigilant and be aware of your rights and the legal protections you have against fraud. for all the technical expertise and careful security they put in place, we the customers have to know that there is not, nor will there ever be, a perfectly secure system. the trade off is what you can do for the increased risk. and when taken into the picture of all the other* ways you banking information is exposed, and how little you can do about it, mint.com is only a minor increase in risk in my opinion. *see paypal, a check's routing numbers, any e-commerce site you shop at, every bank that has an online facing system, your hr dept's direct deposit and every time you swipe your debit / credit card somewhere. these are all technically risks, some of which are beyond your control to change. short of keeping your money in your mattress you can't avoid risk. (and then your mattress catches fire.)", "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": "malaysian real estate: how to know if the market is overheated or in a bubble?", "role": "user" }, { "content": "i don't buy the \"house prices will always increase due to the increased cost of raw materials\" argument. in a lot of countries you will find that the cost of (re)building a property is substantially lower than its perceived sale value. if it wasn't, there would be no incentive for developers to take the risk of buying the land and building houses on it. say the cost of building the house is 50% of the sale price (which might already be generous). materials probably account for half of the building cost so you've got 25% tail wagging 75% dog? i'd start to worry if people buy property as a get rich quick scheme, which seems to be what you're describing.", "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 isn't money spent on necessities deductible from your taxes?", "role": "user" }, { "content": "you could debate the \"why\"s of tax policy endlessly. there are lots of things in tax law that i think are bad ideas, and probably a few here and there that i think are good ideas. i am well aware that there are things that i think are good ideas that others think are bad ideas and vice versa. to your specific point: i suppose you could say that having a place to live is a necessity. but most people do not live in the absolute minimum necessary to give them a place to sleep and protection from the weather. you could survive with a one-room apartment with a bed on one side and a toilet and some minimal cooking facilities on the other. most people have considerably more than that. at some point that's luxury and not necessity. and if you want to push it, you could live in a cardboard box under a bridge, you don't need a house or apartment to survive. personally i think it's absurd that as a home-owner i get a deduction for my mortgage interest, while if someone were to rent an identical house with a monthly rental equal to exactly the same amount that i am paying on my mortgage, he would receive no deduction. the stated goal of that one was to encourage home ownership. but people who own homes are generally richer than those who rent, so the net result is that the poor are paying higher taxes to help subsidize the homes of the rich. and then the rich congratulate themselves on how they are giving these tax breaks to help make housing more affordable for poor people. to reiterate @keshlam, tax laws only makes sense when understood politically. yes, some people have fine ideas about what is fair and just. others simply want tax breaks that benefit their business or people with tough financial situations that just happen by chance to resemble their own. many of the people with noble ideas have little concept of what the implications of the policies they push are. many of the ideas that some people view as worthy and noble, others view as frivolous, counter-productive, or even evil. then you mash all these competing groups and interest together and see what comes out.", "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": "401(k) lump sum distribution limited because of highly compensated employees?", "role": "user" }, { "content": "it's legal. in fact, they are required to do this, assuming you are in fact a hce (highly compensated employee) to avoid getting in trouble with the irs. i'm guessing they don't provide documentation for the same reason they don't explain to you explicitly what the income thresholds are for social security taxes, etc - that's a job for your personal accountant. here's the definition of a hce: an individual who: owned more than 5% of the interest in the business at any time during the year or the preceding year, regardless of how much compensation that person earned or received, or for the preceding year, received compensation from the business of more than $115,000 (if the preceding year is 2014; $120,000 if the preceding year is 2015, 2016 or 2017), and, if the employer so chooses, was in the top 20% of employees when ranked by compensation. there are rules the restrict distributions from plans like 401ks. for example, treasury reg 1.401a(4)-5(b)(3) says that a plan cannot make a distribution to a hce if that payment reduces the asset value of the plan to below 110% of the value of the plan's current liabilities. so, after taking account all distributions to be made to hces and the asset value of the plan, everyone likely gets proportionally reduced so that they don't run afoul of this rule. there are workarounds for this. but, these are options that the plan administrators may take, not you. i suppose if you were still employed there and at a high enough level, a company accountant would have discussed these options with you. note, there's a chance there's some other limitation on hces that i'm missing which applies to your specific situation. your best bet, to understand, is simply ask. your money is still there, you just can't get it all this 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": "how does spot-futures arbitrage work in the gold market?", "role": "user" }, { "content": "you're missing the cost-of-carry aspect: the cost of carry or carrying charge is the cost of storing a physical commodity, such as grain or metals, over a period of time. the carrying charge includes insurance, storage and interest on the invested funds as well as other incidental costs. in interest rate futures markets, it refers to the differential between the yield on a cash instrument and the cost of the funds necessary to buy the instrument. so in a nutshell, you'd have to store the gold (safely), invest your money now, i.e. you're missing out on interests the money could have earned until the futures delivery date. well and on top of that you need to get the gold shipped to london or wherever the agreed delivery place is. edit: forgot to mention that of course there are arbitrageurs that make sure the futures and spot market prices don't diverge. so the idea isn't that bad as i might have made it sound but being in the arbitrage business myself i should disclaim that profits are small and arbitraging is highly automated, so before you spot a $1 profit somewhere between any two contracts, you can be quite sure it's been taken by an arbitrageur already.", "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 effect does a company's earnings have on the price of its stock?", "role": "user" }, { "content": "no, the stock market is not there for speculation on corporate memorabilia. at its base, it is there for investing in a business, the point of the investment being, of course, to make money. a (successful) business earns money, and that makes it valuable to its owners since that money can be distributed to them. shares of stock are pieces of business ownership, and so are valuable. if you knew that the business would have profit of $10,000,000 every year, and would distribute that to the owners of each of its 10,000,000 shares each year, you would know to that each share would receive $1 each year. how much would such a share be worth to you? if you could instead put money in a bank and get 5% a year back, to get $1 a year back you would have to put $20 into the bank. so maybe that share of stock is worth about $20 to you. if somebody offers to sell you such a share for $18, you might buy it; for $23, maybe you pass up the offer. but business is uncertain, and how much profit the business will make is uncertain and will vary through time. so how much is a share of a real business worth? this is a much harder call, and people use many different ways to come up with how much they should pay for a share. some people probably just think something like \"apple is a good company making money, i'll buy a share at whatever price it is being offered at right now.\" others look at every number available, build models of the company and the economy and the risks, all to estimate what a share might be worth, more or less. there is no indisputable value for a share of a successful business. so, what effect does a company's earnings have on the price of its stock? you can only say that for some of the people who might buy or sell shares, higher earnings will, all other thing being equal, have them be willing to spend more to buy it or demand more when selling it. but how much more is not quantifiable but depends on each person's approach to the problem. higher earnings would tend to raise the price of the stock. yet there are other factors, such as people who had expected even higher earnings, whose actions would tend to lower the price, and people who are ok with the earnings now, but suspect trouble for the business is appearing on the horizon, whose actions would also tend to lower the price. this is why people say that a stock's price is determined by supply and demand.", "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": "first time consultant, doubts on taxation", "role": "user" }, { "content": "1.if the compensation that i receive is over 10 lakhs, how much would be deducted as tax no tax will be deducted by the company. you have to calculate the tax and pay in advance by yourself. there are quite a few banks that give you online facility to pay your tax. there is no service tax. otherwise the tax slabs are right. the current budget has slightly revised the tax brackets. 2.so are these the right taxes and % that need to be paid? if not do let me know the correct deductions. yes. revised brackets for financial year 2014-2015 are nil for first 2.5 lakhs. other brackets are unchanged. 4.what others legal options i have to decrease the tax liability? as an employee of my ex company i had once taken an fd (that reduced my tax) the options are same as salaried, i.e. you can claim exemption under 80c or on interest of housing loan, etc. as a consultant certain expenses can also be deducted. you should also talk to a ca who can help you with this as there will be some paperwork involved.", "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": "settling before t+3?", "role": "user" }, { "content": "it is possible but unlikely. securities firms would prefer never to settle externally; rather, they prefer to wait until the liabilities can be netted. they are forced to make and take payment in three business days. the reason why is because settlement is costly in the same way as any other business would prefer to build trade credit instead of taking or making payment rapidly. the only circumstance where a financial firm would wish to take full delivery is when a counterparty is no longer trusted to be solvent.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "what tax can i expect on us stocks in a uk isa?", "role": "user" }, { "content": "non-resident aliens to the us do not pay capital gains on us products. you pay tax in your home country if you have done a taxable event in your country. http://www.investopedia.com/ask/answers/06/nonusresidenttax.asp#axzz1mqdut9ru but if you hold dividends, you are subject to us dividend tax. the uk-us treaty should touch on that 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": "trading when you work for a market participant", "role": "user" }, { "content": "there is normally a policy at the organisation that would restrict trades or allow trades under certain conditions. this would be in accordance with the current regulations as well as institutions own ethical standards. typical i have seen is that technology roles are to extent not considered sensitive, ie the employees in this job function normally do not access sensitive data [unless your role is analyst or production support]. an employee in exempt roles are allowed to trade in securities directly with other broker or invest in broad based mutual funds or engage a portfolio management services from a reputed organisation. it is irrelevant that your company only deals with amounts > 1 million, infact if you were to know what stock the one million is going into, you may buy it slightly earlier and when the company places the large order, the stock typically moves upwards slightly, enough for you to make some good money. that is not allowed. but its best you get hold of a document that would layout the do' and don't in your organisation. all such organisation are mandated to have a written policy in this regard.", "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 are open-end funds traded?", "role": "user" }, { "content": "i assume that mutual funds are being discussed here. as bryce says, open-ended funds are bought from the mutual fund company and redeemed from the fund company. except in very rare circumstances, they exist only as bits in the fund company's computers and not as share certificates (whether paper or electronic) that can be delivered from the selling broker to the buying broker on a stock exchange. effectively, the fund company is the sole market maker: if you want to buy, ask the fund company at what price it will sell them to you (and it will tell you the answer only after 4 pm that day when a sale at that price is no longer possible unless you committed to buy, say, 100 shares and authorized the fund company to withdraw the correct amount from your bank account or other liquid asset after the price was known). ditto if you want to sell: the mutual fund company will tell you what price it will give you only after 4 pm that day and you cannot sell at that price unless you had committed to accept whatever the company was going to give you for your shares (or had said \"send me $1000 and sell as many shares of mine as are needed to give me proceeds of $1000 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": "should you always max out contributions to your 401k?", "role": "user" }, { "content": "the compound interest argument is a good one. while you are young, it is important to save, since time is on your side for compounding of interest. i think the 401k is a good idea, but not for all of your savings. think about saving a percentage of your income, but put it in a couple places. your roth is also a great thing, since you'll be able to remove money without paying tax again. the 401k (tax deferred) is a good idea if your company matches any of it (free money!), and because it lowers your taxable income now, and it's taken out of your check before you see it, so you don't miss it. it's still important to save other money that you can have for ready cash (unexpected dead car, for example, or medical bills, or what have you.) i find that i don't want to be managing my investments from minute to minute, or doing my own trades (i'd rather do other things), so i have a mix (roth, 401k, cash savings) of automated contributions for savings, and i think hard before buying new stuff. the point is to save, and if possible, try to save at least 10% of your income.", "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": "the doctor didn't charge the health insurance in time, am i liable?", "role": "user" }, { "content": "the hospital likely has a contract with your insurance company which makes them obligated to bill the insurance before billing you! i had a similar occurrence that was thrown out when my insurance company provided a copy of a contract with the hospital to the judge. so if there is an agreement they must file with the insurance in timely manner.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "1099 versus corporation to corporation for payments?", "role": "user" }, { "content": "do not mix personal accounts and corporate accounts. if you're paid as your self person - this money belongs to you, not the corporation. you can contribute it to the corporation, but it is another tax event and you should understand fully the consequences. talk to a tax adviser (ea/cpa licensed in your state). if they pay to you personally (1099) - it goes on your schedule c, and you pay se taxes on it. if they pay to your corporation, the corporation will pay it to you as salary, and will pay payroll taxes on it. generally, payroll through corporation will be slightly more expensive than regular schedule c. if you have employees/subcontractors, though, you may earn money which is not from your own performance, in which case s-corp may be an advantage.", "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": "homeowners: how can you protect yourself from a financial worst-case scenario?", "role": "user" }, { "content": "i am lucky enough to have chosen a flexible mortgage that allows me to change payment amounts at certain, very lenient intervals (to a minimum amount). so when i was laid off, the first thing i did was call my bank to lower my payments to a level that allowed me some breathing room, at my new, lower income. if and when my family's income increases, i'll re-adjust my payments to a higher amount. but if you're concerned about the \"what if\"s in this economy, i'd definitely choose a mortgage that allows for flexibility so that you don't lose your house if you don't have to, particularly if your situation is temporary.", "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 good way to save money on car expenses?", "role": "user" }, { "content": "can you tell i'm having fun with this question? here's another great list, from finally frugal, which includes the above items, but also these gems: avoid idling. now, this just annoys me. walking past a line of idling cars at the transit center waiting for their human 'pickup', makes me crazy! it makes me want to knock on the window, shake my finger, and give 'em a piece of my mind. i don't do it, because i don't have a death wish. turn the car off when you're not driving it. combine trips. i used to be one of those people who would run to target, go home, remember something i needed at the grocery store and go out for that, come home again, then run out to the library. all of these places are within a two mile radius of my house. making lists before leaving the house has helped me to group my errands within one trip, meaning fewer back and forth trips. slow down. your parents were right. slow is better. not only is it safer to drive the speed limit, you'll be increasing your car's efficiency and reducing the amount of fuel your vehicle uses.", "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": "clarifications on pfic rules", "role": "user" }, { "content": "answers: 1: no, sections 1291-1298 of the irc were passed in the reagan adminstration. 2: not only can a foreign company like a chocolate company fall afoul of the definition of pfic because of the \"asset test\", which you cite, but it can also be called a pfic because of the \"income test\". for example, i have shares in a development-stage canadian biotech which is considered a pfic because it has no income at all, except for a minor amount of bank interest on its working capital. this company is by no means \"passive\" (it has run 31 clinical trials in over 1100 human research subjects, burning $250m of investor's money in the process) nor is it an \"investment company\", but the stupid irs considers it to be a \"passive foreign investment company\"! the irs looks at it and sees only the bank account, and assumes it is a foreign shell corporation set up to shield the bank interest from them. 3: yes, a foreign mutual fund is exactly what congress intended to be a pfic when passed irc 1291-1298. (biotechs, candy factories, ect got nailed as innocent bystanders.) note that if you hold a us mutual fund then every year you'll get a form 1099 in the mail. the 1099 will report your share of the mutual fund's own income and capital gains, which you must report on your taxes. (you can also have capital gains from selling your shares of the mutual fund, but that's a different thing.) now suppose that there was no pfic law. then the us investors in the mutual fund would do better if the mutual fund were in a foreign country, for two reasons: a) the fund would no longer distribute 1099's. that means the shareholders wouldn't have to pay tax every year on their proportions of the fund's own income/gains. the money that would have sooner gone to the irs can sit around for years earning interest. b) the fund could return profits to shareholders exclusively through capital gains rather than dividends, thus ensuring that all of the investors' income on the fund would be taxed at <15%-20% rather than up to 39%. the fund could do this by returning cash to shareholders exclusively through buybacks. however, the us mutual fund industry doesn't want to move the industry to canada, and it only takes a few newspaper articles about a foreign loophole to make congress spring to action. 4) it depends. if you have a pedigreed qef election in place (as i do for my biotech shares) then form 8621 takes a few minutes by hand. however, this requires both the company and the investor to fully cooperate with congress's vision for pfics. the company cooperates by providing a so-called \"pfic annual information sheet\", which replaces the 1099 form for a us mutual fund. the investor cooperates by having a \"qef election\" in place for each and every tax year in which he held the stock and by reporting the numbers from the pfic annual information sheet on his return. (note that the qef election persists once made, until revoked. there are subtleties here that i am glossing over, since \"deemed sale\" elections and other means may be used to modify a share's holding period to come into compliance.) note that there is software coming out to handle pfics, and that the software makers will already run their software to make your form 8621 for $75 or so. i should also warn you that the blogs of tax accountants and tax lawyers all contradict each other on the basic issue of whether you can take capital losses on pfics for which you have no form 8621 elections. (see section 2.3 of my notes http://tinyurl.com/mh9vlnr for commentary on this mess.) i do not know if the software people will tell you which elections are best made on form 8621, though, or advise you if it's time to simply dump your investment. the professional software is at 8621.com, and the individual 8621 preparation is at http://expattaxtools.com/?page_id=242. btw, in case you're interested, i wrote up a very careful analysis of how to deal with the pfic situation for the small biotech i invested in in certain cases. it is posted http://tinyurl.com/mh9vlnr. (for tax reasons it was quite fortunate that the share price dipped to near an all-time low on jan 1, 2015, making the (next) 2015 tax year ripe for a so-called \"deemed sale\" election. this was only possible because the company provides the necessary \"pfic annual information statements\", which your chocolate factory may or may not do.)", "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 tires and keep car for 12-36 months, or replace car now?", "role": "user" }, { "content": "i don't see how anyone could give you a hard-and-fast formula, unless they know where to get some applicable statistics. because several factors here are not a straight calculation. if you don't replace the tires but keeping driving the car, what is the increased probability that you will get into an accident because of the bald tires? how much will bald tires vs new tires affect the selling price of the car? presumably the longer you drive the car after getting new tires, the less increase this will give to the market value of the car. what's the formula for that? if you keep the car, what's the probability that it will have other maintenance problems? etc. that said, it's almost always cheaper to keep your current car than to buy a new one. even if you have maintenance problems, it would have to be a huge problem to cost more than buying a new car. suppose you buy a $25,000 car with ... what's a typical new car loan these days? maybe 5 years at 5%? so your payments would be about $470 per month. if you compare spending $1000 for new tires versus paying $470 per month on a new car loan, the tires are cheaper within 3 months. the principle is the same if you buy with cash. to justify buying a new car you have to factor in the value of the pleasure you get from a new car, the peace of mind from having something more reliable, etc, mostly intangibles.", "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": "net cash flows from selling the bond and investing", "role": "user" }, { "content": "investopedia has a good explanation of the term shorting which is what this is. in the simplest of terms, someone is borrowing the bond and selling it with the intent to replace the security and any dividends or coupons in the end. the idea is that if a bond is overvalued, one may be able to buy it back later for a cheaper price and pocket the difference. there are various rules about this including margin requirements to maintain since there is the risk of the security going up in price enough that someone may be forced into a buy to cover in the form of a margin call. if one can sell the bond at $960 now and then buy it back later for $952.38 then one could pocket the difference. part of what you aren't seeing is what are other bonds doing in terms of their prices over time here. the key point here is that brokers may lend out securities and accrue interest on loaned securities for another point here.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "how can we determine how much income our savings could generate if we purchase an annuity?", "role": "user" }, { "content": "annuity calculation formulas can be found here. http://en.wikipedia.org/wiki/annuity_(finance_theory). in addition, as suggested in the comments, there are many sites that have calculators. having said that, a simple financial mechanism that is followed by many is to invest a portion of the fund in regular income instruments, for example govt. or corporate bonds that pay a regular coupon/interest and some in diversified instruments like gold, stock etc. the exact proportion is dependent on may factors, like mortality, inflation, lifestyle, health care requirements, other expenses. the regular income provides the day to day expenses on a monthly/yearly basis, while the other instruments hedge against inflation and provide growth.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "options vs stocks which is more profitable", "role": "user" }, { "content": "nearly 3 years ago, i wrote an article, betting on apple at 9 to 2 which described a bet in which a 35% move in the stock returned 354% on the option trade. leverage works both ways, no move, or a slight move down, and the bet would have been lost. while i find this to be entertaining, i don't call it investing. with $2-$3k, i recommend paper trading first, and if you enter option trades, no one trade should be more than 20% of this money. if you had $50k in betting money, no position over 10%.", "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 a mutual fund did really well last year, then statistically speaking, is it likely going to do bad this year?", "role": "user" }, { "content": "nearly all long-lived active funds underperform the market over the long run. the best they can hope for in almost all cases is to approximate the market return. considering that the market return is ~9%, this fund should be expected to do less well. in terms of predicting future performance, if its average return is greater than the average market return, its future average return can be expected to fall.", "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 i value personal use television for donation?", "role": "user" }, { "content": "i used turbotax last year. it had a section for donations where it figured out the amounts of the irs approved values for a donation. you would need to know the size of the television and the current condition it is in. he's a screenshot - though it's not from the tv section. https://turbotax.intuit.com/tax-tools/tax-tips/taxes-101/video--how-to-estimate-the-value-of-clothing-for-irs-deductions/inf13870.html+&cd=8&hl=en&ct=clnk&gl=us turbotax offers a free online tool called itsdeductible that does the same thing (though i haven't tried it). unfortunately, i don't have the current one with tv's to give you the range of amounts that apply to yours. --i am not affiliated with turbotax and did not receive it for free for a review.", "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 i handle student loans when leaving university and trying to buy a house?", "role": "user" }, { "content": "concise answers to your questions: depends on the loan and the bank; when you \"accelerate\" repayment of a loan by applying a pre-payment balance to the principal, your monthly payment may be reduced. however, standard practice for most loan types is that the repayment schedule will be accelerated; you'll pay no less each month, but you'll pay it off sooner. i can neither confirm nor deny that an internship counts as job experience in the field for the purpose of mortgage lending. it sounds logical, especially if it were a paid internship (in which case you'd just call it a \"job\"), but i can't be sure as i don't know of anyone who got a mortgage without accruing the necessary job experience post-graduation. a loan officer will be happy to talk to you and answer specific questions, but if you go in today, with no credit history (the student loan probably hasn't even entered repayment) and a lot of unknowns (an offer can be rescinded, for instance), you are virtually certain to be denied a mortgage. the bank is going to want evidence that you will make good on the debt you have over time. one $10,000 payment on the loan, though significant, is just one payment as far as your credit history (and credit score) is concerned. now, a few more reality checks: $70k/yr is not what you'll be bringing home. as a single person without dependents, you'll be taxed at the highest possible withholdings rate. your effective tax rate on $70k, depending on the state in which you live, can be as high as 30% (including all payroll/ss taxes, for a 1099 earner and/or an employee in a state with an income tax), so you're actually only bringing home 42k/yr, or about $1,600/paycheck if you're paid biweekly. to that, add a decent chunk for your group healthcare plan (which, as of 2014, you will be required to buy, or else pay another $2500 - effectively another 3% of gross earnings - in taxes). and even now with your first job, you should be at least trying to save up a decent chunk o' change in a 401k or ira as a retirement nest egg. that student loan, beginning about 6 months after you leave school, will cost you about $555/mo in monthly payments for the next 10 years (if it's all stafford loans with a 50/50 split between sub/unsub; that could be as much as $600/mo for all-unsub stafford, or $700 or more for private loans). if you were going to pay all that back in two years, you're looking at paying a ballpark of $2500/mo leaving just $700 to pay all your bills and expenses each month. with a 3-year payoff plan, you're turning around one of your two paychecks every month to the student loan servicer, which for a bachelor is doable but still rather tight. your mortgage payment isn't the only payment you will make on your house. if you get an fha loan with 3.5% down, the lender will demand pmi. the city/county will likely levy a property tax on the assessed value of land and building. the lender may require that you purchase home insurance with minimum acceptable coverage limits and deductibles. all of these will be paid into escrow accounts, managed by your lending bank, from a single check you send them monthly. i pay all of these, in a state (texas) that gets its primary income from sales and property tax instead of income, and my monthly payment isn't quite double the simple p&i. once you have the house, you'll want to fill the house. nice bed: probably $1500 between mattress and frame for a nice big queen you can stretch out on (and have lady friends over). nice couch: $1000. tv: call it $500. that's probably the bare minimum you'll want to buy to replace what you lived through college with (you'll have somewhere to eat and sleep other than the floor of your new home), and we're already talking almost a month's salary, or payments of up to 10% of your monthly take-home pay over a year on a couple of store credit cards. plates, cookware, etc just keeps bumping this up. yes, they're (theoretically) all one-time costs, but they're things you need, and things you may not have if you've been living in dorms and eating in dining halls all through college. the house you buy now is likely to be a \"starter\", maybe 3bed/2bath and 1600 sqft at the upper end (they sell em as small as 2bd/1bt 1100sqft). it will support a spouse and 2 kids, but by that point you'll be bursting at the seams. what happens if your future spouse had the same idea of buying a house early while rates were low? the cost of buying a house may be as little as 3.5% down and a few hundred more in advance escrow and a couple other fees the seller can't pay for you. the cost of selling the same house is likely to include all the costs you made the seller pay when you bought it, because you'll be selling to someone in the same position you're in now. i didn't know it at the time i bought my house, but i paid about $5,000 to get into it (3.5% down and 6 months' escrow up front), while the sellers paid over $10,000 to get out (the owner got married to another homeowner, and they ended up selling both houses to move out of town; i don't even know what kind of bath they took on the house we weren't involved with). i graduated in 2005. i didn't buy my first house until i was married and pretty much well-settled, in 2011 (and yes, we were looking because mortgage rates were at rock bottom). we really lucked out in terms of a home that, if we want to or have to, we can live in for the rest of our lives (only 1700sqft, but it's officially a 4/2 with a spare room, and a downstairs master suite and nursery/office, so when we're old and decrepit we can pretty much live downstairs). i would seriously recommend that you do the same, even if by doing so you miss out on the absolute best interest rates. last example: let's say, hypothetically, that you bite at current interest rates, and lock in a rate just above prime at 4%, 3.5% down, seller pays closing, but then in two years you get married, change jobs and have to move. let's further suppose an alternate reality in which, after two years of living in an apartment, all the same life changes happen and you are now shopping for your first house having been pre-approved at 5%. that one percentage point savings by buying now, on a house in the $200k range, is worth about $120/mo or about $1440/yr off of your p&i payment ($921.42 on a $200,000 home with a 30-year term). not chump change (over 30 years if you had been that lucky, it's $43000), but it's less than 5% of your take-home pay (month-to-month or annually). however, when you move in two years, the buyer's probably going to want the same deal you got - seller pays closing - because that's the market level you bought in to (low-priced starters for first-time homebuyers). that's a 3% commission for both agents, 1% origination, 0.5%-1% guarantor, and various fixed fees (title etc). assuming the value of the house hasn't changed, let's call total selling costs 8% of the house value of $200k (which is probably low); that's $16,000 in seller's costs. again, assuming home value didn't change and that you got an fha loan requiring only 3.5% down, your down payment ($7k) plus principal paid (about another $7k; 6936.27 to be exact) only covers $14k of those costs. you're now in the hole $2,000, and you still have to come up with your next home's down payment. with all other things being equal, in order to get back to where you were in net worth terms before you bought the house (meaning $7,000 cash in the bank after selling it), you would need to stay in the house for 4 and a half years to accumulate the $16,000 in equity through principal payments. that leaves you with your original $7,000 down payment returned to you in cash, and you're even in accounting terms (which means in finance terms you're behind; that $7,000 invested at 3% historical average rate of inflation would have earned you about $800 in those four years, meaning you need to stick around about 5.5 years before you \"break even\" in tvm terms). for this reason, i would say that you should be very cautious when buying your first home; it may very well be the last one you'll ever buy. whether that's because you made good choices or bad is up to you.", "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 some countries' currencies weaker?", "role": "user" }, { "content": "the answer from littleadv perfectly explains that the mere exchange ratio doesn't say anything. still it might be worth adding why some currencies are \"weak\" and some \"strong\". here's the reason: to buy goods of a certain country, you have to exchange your money for currency of that country, especially when you want to buy treasuries of stocks from that country. so, if you feel that, for example, japanese stocks are going to pick up soon, you will exchange dollars for yen so you can buy japanese stocks. by the laws of supply and demand, this drives up the price. in contrast, if investors lose faith in a country and withdraw their funds, they will seek their luck elsewhere and thus they increase the supply of that currency. this happened most dramatically in recent time with the icelandic krona.", "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": "shouldn't a roth ira accumulate more than 1 cent of interest per month?", "role": "user" }, { "content": "the term 'interest' tends to be used loosely when discussing valuation of stocks. especially when referring to iras which are generally the purvey of common-folk who aren't in the finance industry. often it is used colloquially to include: using this definition (which is what i'm guessing your ira calculator is doing), your stock would have increased in value by a total of $26 over the course of 10 months. still not terribly good (only a couple percent increase), but certainly not a couple cents.", "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 safe to accept money in the mail?", "role": "user" }, { "content": "the us postal service to my recollection recommends only mailing cash or items with cash-like characteristics using registered mail service. registered mail is expensive and a pain in the butt for everyone, as it requires an audit trail for each individual who touches the mailing. if you're doing a lot of business and word gets out that you're accepting cash payments via the mail, you'll probably attract unwanted attention from the tax authorities as well. it's fairly unusual.", "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": "stock spread: wide vs. narrow?", "role": "user" }, { "content": "the point is that the bid and ask prices dictate what you can buy and sell at (at market, at least), and the difference between the two, or spread, contributes implicitly to your gains or losses. for example, say your $1 stock actually had a bid of $0.90 and an ask of $1.10; i.e. say that $1 was the last price. you would have to buy the stock at the ask price of $1.10, but now you can only sell that stock at the bid price of $0.90. thus, you would need to make at least that $0.20 spread before you can make a profit.", "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 much in cash equivalents should i keep in the bank? [duplicate]", "role": "user" }, { "content": "in personal finance circles this is called an emergency fund. there are many opinions about how big it needs to be but most seem to come in around 3-6 months worth of your average expenses. any more than that and you're going to loose money to inflation, less and you will start having problems if you get laid off or have a medical issue.", "role": "assistant" } ]