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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": "is there a formula to use to analyse whether an investment property is a good investment?", "role": "user" }, { "content": "i know of no generic formula for determining if an investment property is a good investment, besides the trivial formula. make sure your income is greater than your expenses, and hope the value of the property doesn't drop. some people will tell you to expect the monthly rent to be a fixed percentage of the purchase price, but that is a goal not a certainty. it is also impossible to estimate the difficulty renting the property, or how long the roof will last. taxes can't be predicted, as the value of the house increase, so do the property taxes, but you might not be able to increase the rent. you can't even predict the quality of the tenant. will they damage the property? or skip out early? you will need somebody who knows the local market to estimate the local conditions, and help you determine the estimated costs and income based on the actual property 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": "index fund that tracks gold and other commodities", "role": "user" }, { "content": "barclays offers an ipath etn (not quite an etf), djp, which tracks the total return of the dow jones-aig commodity index.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 fund and portfolio?", "role": "user" }, { "content": "oddly enough, in the usa, there are enough cost and tax savings between buy-and-hold of a static portfolio and buying into a fund that a few brokerages have sprung up around the concept, such as foliofn, to make it easier for small investors to manage numerous small holdings via fractional shares and no commission window trades. a static buy-and-hold portfolio of stocks can be had for a few dollars per trade. buying into a fund involves various annual and one time fees that are quoted as percentages of the investment. even 1-2% can be a lot, especially if it is every year. typically, a us mutual fund must send out a 1099 tax form to each investor, stating that investors share of the dividends and capital gains for each year. the true impact of this is not obvious until you get a tax bill for gains that you did not enjoy, which can happen when you buy into a fund late in the year that has realized capital gains. what fund investors sometimes fail to appreciate is that they are taxed both on their own holding period of fund shares and the fund's capital gains distributions determined by the fund's holding period of its investments. for example, if abc tech fund bought google stock several years ago for $100/share, and sold it for $500/share in the same year you bought into the abc fund, then you will receive a \"capital gains distribution\" on your 1099 that will include some dollar amount, which is considered your share of that long-term profit for tax purposes. the amount is not customized for your holding period, capital gains are distributed pro-rata among all current fund shareholders as of the ex-distribution date. morningstar tracks this as potential capital gains exposure and so there is a way to check this possibility before investing. funds who have unsold losers in their portfolio are also affected by these same rules, have been called \"free rides\" because those funds, if they find some winners, will have losers that they can sell simultaneously with the winners to remain tax neutral. see \"on the lookout for tax traps and free riders\", morningstar, pdf in contrast, buying-and-holding a portfolio does not attract any capital gains taxes until the stocks in the portfolio are sold at a profit. a fund often is actively managed. that is, experts will alter the portfolio from time to time or advise the fund to buy or sell particular investments. note however, that even the experts are required to tell you that \"past performance is no guarantee of future results.\"", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 source of funding to pay off debt?", "role": "user" }, { "content": "first of all a big thumbs up for ben's answer. a few small things you can do to help you on your way. hopefully you are not more in debt that 6 months of salary in debt because that is a really tough road. first thing you need to do is get some professional help. the national foundation for credit counseling (nfcc) offers free or low-cost debt counseling to help you through the process. visit them at nfcc.org or call 1-800-388-2227 to find a local affiliate office near you. you might want to only use cash for a while. if not and you have a credit card with no balance always use that card because it will be interest free. remember if you use credit cards as a payment system and not credit, you actually get free interest. if you roll even a penny over into the next statement you are paying interest day one of each purchase. pay credit cards with highest interest rate first an pay minimums to others this one i like the best. as you get money pay your credit card. you interest is being compounded daily. pay your cards when you have money, not when they are due. have a mindset that reminds how much something is really going to cost you if you plan on taking 3 years to get out of debt and you buy something for $100 that is really costs you $156.08 three years of compound 16% interest. 5b. conversely if you sell something for $100 on ebay that is like selling something for $156.08.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "living in my own rental property", "role": "user" }, { "content": "when you live in your own rental property, it no longer counts as your 'rental property'. it becomes your own living property and legally you cannot get tax benefits.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "live in oregon and work in washington: do i need to file oregon state taxes?", "role": "user" }, { "content": "yes. here's the answer to this question from oregon.gov: 3. i am moving into oregon. what income will be taxed by oregon? as an oregon resident, you are taxed on all income regardless of the source of the income. this includes, but is not limited to: you may need to pay estimated taxes if you don't have oregon withholding on 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": "can housing prices rise faster than incomes in the long run?", "role": "user" }, { "content": "when over the long term housing costs in a area rise faster than wages rise, the demographic of who lives in the area changes. the size and income parameters change. a region that was full of young singles is now populated with couples with adult children, that means that the businesses and amenities have to change. at a national level it isn't sustainable unless other items change. the portion of monthly income that can be safely allocated to housing would have to change. one adjustment could be the the lengthening of home loan periods, thus dropping the monthly payment. this has been seen with car loans, over the last few decades the length of loans has increased. in interesting related event could be the change in deduction of mortgage interest and property tax. if this was to change abruptly, there could be an abrupt change the estimated value of housing, because the calculus of affordability would change.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "impact of ein on taxation", "role": "user" }, { "content": "is it possible if (after getting ein) i change my llc type (disregarded entity or c type or s type or corporation or change in number of members) for tax saving ? you marked your question as \"real-estate\", so i'm guessing you're holding rental properties in your llc. that means that you will not be able to qualify for s-corp, only c-corp treatment. that in turn means that you'll be subject to double taxation and corporate tax rate. i fail to see what tax savings you're expecting in this situation. but yes, you can do it, if you so wish. i suggest you talk to a licensed tax adviser (ea/cpa licensed in your state) before you make any changes, because it will be nearly impossible to reverse the check-the-box election once made (for at least 5 years).", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "18 year old making $60k a year; how should i invest? traditional or roth ira?", "role": "user" }, { "content": "in asnwer to your questions: as @joetaxpayer said, you really should look into a solo 401(k). in 2017, this allows you to contribute up to $18k/year and your employer (the llc) to contribute more, up to $54k/year total (subject to irs rules). 401(k) usually have roth and traditional sides, just like ira. i believe the employer-contributed funds also see less tax burden for both you and your llc that if that same money had become salary (payroll taxes, etc.). you might start at irs.gov/retirement-plans/one-participant-401k-plans and go from there. roth vs. pre-tax: you can mix and match within years and between years. figure out what income you want to have when you retire. any year you expect to pay lower taxes (low income, kids, deductions, etc.), make roth contributions. any year you expect high taxes (bonus, high wage, taxable capital gains, etc.), make pre-tax payments. i have had a uniformly bad experience with target date funds across multiple 401(k) plans from multiple plan adminstrators. they just don't perform well (a common problem with almost any actively managed fund). you probably don't want to deal with individual stocks in your retirement accounts, so rather pick passively managed index funds that track various markets segments you care about and just sit on them. for example, your high-risk money might be in fast-growing but volatile industries (e.g. tech, aerospace, medical), your medium-risk money might go in \"total market\" or s&p 500 index funds, and your low-risk money might go in treasury notes and bonds. the breakdown is up to you, but as an 18 year old you have a ~50 year horizon and so can afford to wait out anything short of another great depression (and maybe even that). so you'd want generally you want more or your money in the high-risk high-return category, rebalancing to lower risk investments as you age. diversifying into real estate, foreign investments, etc. might also make sense but i'm no expert on those.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "tenant wants to pay rent with eft", "role": "user" }, { "content": "you can consider opening accounts either in paypal or google wallet. in this way, you link your bank information to these accounts and the only information you need to provide your tenant is your e-mail id. its safe and in this scenario -- just money transfer through bank account, there is no fee either for the sender (your tenant) or the receiver (you).", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "what is a junk bond?", "role": "user" }, { "content": "a \"junk bond\" is one that pays a high yield up front because there is a good chance that it could default. so the higher interest rate is necessary to try to compensate for the default junk bonds are used in leveraged buyouts (lbos) because such deals are inherently risky. \"normal\" companies may have 20%-30% debt and the rest equity, so that the company will have to lose 70%-80% of its value before the debtholders start losing money on \"normal\" bonds. but in an lbo, the company may have only 10%-20% equity and the rest debt. meaning that if it loses that small equity cushion, the value of the \"junk\" bonds will be impaired.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "pay off car or use money for down payment", "role": "user" }, { "content": "break the transactions into parts. go to your bank or credit union and get a loan commitment. when applying for loan get the maximum amount they will let you borrow assuming that you will no longer own the first car. take the car to a dealer and get a written estimate for selling the car. pick one that gives you an estimate that is good for a week or ten days. you now know a data point for the trade-in value. finally go to the dealer where you will buy the replacement car. negotiate the price, tell them you don't need financing and you will not be trading in the car. get all you can regarding rebates and other special incentives. once you have a solid in writing commitment, then ask about financing and trade in. if they beat the numbers you have regarding interest rate and trade-in value accept those parts of the deal. but don't let them change anything else. if you keep the bank financing the dealer will usually give you a couple of days to get a check. if you decide to ell the car to the first dealer do so as soon as you pick up the replacement car. if you try to start with the dealer you are buying the car from they will keep adjusting the rate, length of loan, trade-in value, and price until you have no idea if you are getting a good deal.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "higher returns from international markets?", "role": "user" }, { "content": "i went to morningstar's \"performance\" page for fusex (fideltiy's s&p 500 index fund) and used the \"compare\" tool to compare it with fosfx and fwwfx, as well as femkx (fidelity emerging markets fund). according to the data there, fosfx outperformed fusex in 2012, femkx outperformed fused in 2010, and fwwfx outperformed fusex in both 2010 and 2012. when looking at 10- and 15-year trailing returns, both femkx and fwwfx outperformed fusex. what does this mean? it means it matters what time period you're looking at. us stocks have been on an almost unbroken increase since early 2009. it's not surprising that if you look at recent returns, international markets will not stack up well. if you go back further, though, you can find periods where international funds outperformed the us; and even within recent years, there have been individual years where international funds won. as for correlation, i guess it depends what you mean by \"low\". according to this calculator, for instance, fosfx and fusex had a correlation of about 0.84 over the last 15 years. that may seem high, but it's still lower than, say, the 0.91 correlation between fusex and fslcx (fideltiy small cap). it's difficult to find truly low correlations among equity funds, since the interconnectedness of the global economy means that bull and bear markets tend to spread from one country to another. to get lower correlations you need to look at different asset classes (e.g., bonds). so the answer is basically that some of the funds you were already looking at may be the ones you were looking for. the trick is that no category will outperform any other over all periods. that's exactly what volatility means --- it means the same category that overperforms in some periods will underperform in others. if international funds always outperformed, no one would ever buy us funds. ultimately, if you're trying to decide on investments for yourself, you need to take all this information into account and combine it with your own personal preferences, risk tolerance, etc. anecdotally, i recently did some simulation-based analyses of vanguard funds using data from the past 15 years. over this period, vanguard's emerging markets fund (veiex) comes out far ahead of us funds, and is also the least-correlated with the s&p 500. but, again, this analysis is based only on a particular slice of time.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "paying off loans early, or is there some way to reduce extortionate interest charges?", "role": "user" }, { "content": "it really depends on the terms of your loan. for example, some loans have a pre-payment penalty. you will just have to ask your lender to know for sure. that said. in almost all cases, you can save considerable interest by making extra payments towards the principal. be careful though, some lenders require you to specifically mark the payment to be applied to the loan principal and if you don't designate it as such, they will just apply it as an early payment for future months and not reduce your balance until that future payment is due, which doesn't help at all. another option to reduce your total interest costs, though more common for larger loans like mortgages, is to split the payment into multiple parts and pay more than once a month instead of a single payment each month. this only works if they calculate interest daily and would be useless if they do it monthly. they key is knowing the terms of your loan. despite it not being in their best interest (pun intended), most lenders will work with you on a strategy to help you minimize the interest cost in the name of customer service.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "acquiring first office clothes", "role": "user" }, { "content": "sounds like you're a man, so you're in luck. our formalwear all looks similar enough that you can get by on a very short rotation. you can buy 1 pair of decent slacks in a versatile color like navy or grey with a pair of brown shoes with matching belt then have as little as 2 button down shirts (white and light blue). you can help keep the button downs clean by wearing an undershirt. this outfit can even overlap your interview outfit if you want to save more (especially if you want a good jacket/sport coat). the real key is to just not pick anything flashy and nobody will ever notice. you'll be running to the dry cleaners every single weekend, but you won't have much in terms of up-front costs. for women though i have no clue how they manage this stuff.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "shorting stocks and margin account minimum", "role": "user" }, { "content": "the margin money you put up to fund a short position ($6000 in the example given) is simply a \"good faith\" deposit that is required by the broker in order to show that you are acting in good faith and fully intend to meet any potential losses that may occur. this margin is normally called initial margin. it is not an accounting item, meaning it is not debited from you cash account. rather, the broker simply segregates these funds so that you may not use them to fund other trading. when you settle your position these funds are released from segregation. in addition, there is a second type of margin, called variation margin, which must be maintained while holding a short position. the variation margin is simply the running profit or loss being incurred on the short position. in you example, if you sold 200 shares at $20 and the price went to $21, then your variation margin would be a debit of $200, while if the price went to $19, the variation margin would be a credit of $200. the variation margin will be netted with the initial margin to give the total margin requirement ($6000 in this example). margin requirements are computed at the close of business on each trading day. if you are showing a loss of $200 on the variation margin, then you will be required to put up an additional $200 of margin money in order to maintain the $6000 margin requirement - ($6000 - $200 = $5800, so you must add $200 to maintain $6000). if you are showing a profit of $200, then $200 will be released from segregation - ($6000 + $200 = $6200, so $200 will be release from segregation leaving $6000 as required). when you settle your short position by buying back the shares, the margin monies will be release from segregation and the ledger postings to you cash account will be made according to whether you have made a profit or a loss. so if you made a loss of $200 on the trade, then your account will be debited for $200 plus any applicable commissions. if you made a profit of $200 on the trade then your account will be credited with $200 and debited with any applicable commissions.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 interpret a big ask size?", "role": "user" }, { "content": "yes, but it must be remembered that these conditions only last for instants, and that's why only hfts can take advantage of this. during 2/28/14's selloff from the invasion of ukraine, many times, there were moments where there was overwhelming liquidity on the bid relative to the ask, but the price continued to drop.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "whether to prepay mortgage or invest in stocks", "role": "user" }, { "content": "in all likelihood, the best thing you can do, if these really are your only two options (ie no other debt at all), paying-down your mortgage will shorten the term of the mortgage, and mean you spend less on your house in the long run. investing is should be a long-term activity - so yes, the likelihood is that, given a modest investment, it will gain at historical averages over the life of the investment vehicle. however, that is not a guarantee, and is an inherent risk. whereas paying-down a mortgage lowers your financial obligations and risk, investing increases your risk. i want to know how you got a 2.1% interest rate on a mortgage, though - the lowest i've seen anywhere is 3.25%.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "german stock exchange, etr vs fra", "role": "user" }, { "content": "i still can't understand why there is a price discrepancancy. there isn't. it's the same stock and price differences between such major exchanges will always be minimal. i think you simply haven't paid attention to the date range. it seems google finance only has data for fra:bmw reaching back to 2011, so if you try to look at the development of your investment since 2009, you're not getting comparable data.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "retirement savings vs. student loan payments", "role": "user" }, { "content": "you can play with the numbers all you like (and that's good), however, here is a different way to look at it. the debt you have is risk. it limits your choices and eats your cash flow. without the debt, you can invest at a much greater rate. it frees up you cash flow for all the things you might want to do, or decide in the future you might want to do. right now is the easiest time for you to focus on debt repayment. it sounds like you are not married and have no children. it is much easier now to cut back your lifestyle and concentrate on paying off this $50k of student debt. this will get harder as your responsibility increases. build up a small amount of cash for emergencies and put the rest at the debt. you can keep contributing to your 401k to the match if you want. this will give you 2 benefits: patience. when you actually do start investing, you will have a new appreciation for the money you are using. if you sacrifice to pay off $50k now, you wont look at money the same for the rest of your life. drive. if you see the debt as a barrier to achieving your goals, you will work harder to get out of debt. these are all things i would tell my 23 year-old self if i could go back in time. good luck!", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "dispute credit card transaction with merchant or credit card company?", "role": "user" }, { "content": "you should dispute the transaction with the credit card. describe the story and attach the cash payment receipt, and dispute it as a duplicate charge. there will be no impact on your score, but if you don't have the cash receipt or any other proof of the alternative payment - it's your word against the merchant, and he has proof that you actually used your card there. so worst case - you just paid twice. if you dispute the charge and it is accepted - the merchant will pay a penalty. if it is not accepted - you may pay the penalty (on top of the original charge, depending on your credit card issuer - some charge for \"frivolous\" charge backs). it will take several more years for either the european merchants to learn how to deal with the us half-baked chip cards, or the american banks to start issue proper chip-and-pin card as everywhere else. either way, until then - if the merchant doesn't know how to handle signatures with the american credit cards - just don't use them. pay cash. given the controversy in the comments - my intention was not to say \"no, don't talk to the merchant\". from the description of the situation it didn't strike me as the merchant would even bother to consider the situation. a less than honest merchant knows that you have no leverage, and since you're a tourist and will probably not be returning there anyway - what's the worst you can do to them? a bad yelp review? you can definitely get in touch with the merchant and ask for a refund, but i would not expect much to come out from 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": "options revisited: gold fever", "role": "user" }, { "content": "gold is incredibly volatile, i tried spreadbetting on it. during the month of its highest gain, month beginning to month end, i was betting it would go up - and i still managed to lose money. it went down so much, that my stop loss margin would kick in. don't do things with gold in the short term its a very small and liquid market. my advice with gold, actually buy some physical gold as insurance.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "is it worth it to buy turbotax premier over deluxe if i sold investments in a taxable account?", "role": "user" }, { "content": "i have found that using the online version can help determine the correct product. try deluxe online, you can upload the data from last year. when you get to the key forms see what happens if you don't switch. then switch to premiere. compare the results.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 send money from europe to usa eur - usd?", "role": "user" }, { "content": "paypal. or even western union or moneygram. despite their fees, there is a reason those companies are still in business.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 master limited partnership (mlp) & how is it different from plain stock?", "role": "user" }, { "content": "i own a few mlps that operate oil/gas pipelines (tse:ipl-un, nyse:bpt, nyse:apl), and i'm very happy with their performance. because they don't pay corporate tax mlps tend to pay higher dividends than most regular stocks. i pay h&r block to do my taxes, and they sort out all the arcane details.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 an ideal number of stock positions that i should have in my portfolio?", "role": "user" }, { "content": "there is no ideal number of stocks you should own. there are several factors you should consider though. first, how actively do you want to manage your portfolio. if you want to be very active then the number of stocks you own should be based on the amount of time you have to research the company, by reading sec filings and listening to conference calls, so you are not surprised when the company reports every quarter. if you don't want to be very active, then you are better off buying solid companies that have a good reputation and good history of performance. second, you should decide how much risk you are willing to take. if you have $10,000 that you can afford to lose, then you can put your money into more risky stocks or into fewer stocks, which could potentially have a higher return. if you want your $10,000 grow (or lose) with the market, better off, again, going with the good rep and history stocks or a variety of stocks. third, this goes along with your risk to some extent, but you should consider if you are looking for short term or long term gains? if you are looking to put your money in the market for the short term, you will probably be looking at fewer stocks with more money in each. if you are looking for long term, you will be around 5 stocks that you swap as they reach goals you set out for each stock. in my opinion, and i am not a financial expert, i like to stay at around 5 companies, mostly for the fact that it is about the ideal number of companies to keep track of.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "how to calculate tax amounts withheld on mixed pre-tax and roth 401(k) contributions, and match?", "role": "user" }, { "content": "when you adjust your investments the following will happen: initial condition: modified condition: this means that after this change you will note that the amount of federal tax you pay each month via withholding will go up. you are now contributing less pre-tax, so your taxable income has increased. if you make no other changes, then in april you will either have increased your refund by 6 months x the additional $25 a month, or decreased the amount you owe by the same amount. there is no change in the total 401k balance at the end of the year, other than accounting for how much is held pre-tax vs. roth post-tax. keep in mind that employer contributions must be pre-tax. the company could never guess what your tax situation is. they withhold money for taxes based on the form you fill out, but they have no idea of your family's tax situation. if you fail to have enough withheld, you pay the penalty — not the company. *the tax savings are complex because it depends on marital status, your other pre-tax amounts for medical, and how much income your spouse makes, plus your other income and deductions.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "when i ask a broker to buy stock, what does the broker do?", "role": "user" }, { "content": "here are a couple of articles that can help highlight the differences between a broker and an online investment service, which seems to be part of the question that you're asking. pay attention to the references at the end of this link. http://finance.zacks.com/online-investing-vs-personal-broker-6720.html investopedia also highlights some of the costs and benefits of each side, broke and online investment services. http://www.investopedia.com/university/broker/ to directly answer your question, a broker may do anything from using a website to making a phone call to submitting some other form of documentation. it is unlikely that he is talking directly to someone on the trading floor, as the volume traded there is enormous.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "clarification on options jargon regarding spreads", "role": "user" }, { "content": "yes. it seems to me you got it right. on my site, stock options cafe, my last post was an illustration of a bullish call spread. in this case, i bought a 50 call, and sold the 60 call. this is a debit order as i was paying money, not collecting a new premium.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 people buy new cars they can not afford?", "role": "user" }, { "content": "if everyone bought used cars, who would buy the new cars so that everyone else could buy them used? rental car companies? your rant expresses a misunderstanding of fundamental economics (as demand for used cars increases, so will prices) but economics is off-topic here, so let me explain why i bought a new car—that i am now in the 10th year of driving. when i bought the car i currently drive, i was single, i was working full-time, and i was going to school full-time. i bought a 2007 toyota corolla for about $16,500 cash out the door. i wanted a reliable car that was clean and attractive enough that i wouldn't be embarrassed in it if i took a girl out for dinner. i could have bought a much more expensive car, but i wanted to be real about myself and not give the wrong impression about my views on money. i've done all the maintenance, and the car is still very nice even after 105k miles. it will handle at least that many more miles barring any crashes. could i have purchased a nice used car for less? certainly, but because it was the last model year before a redesign, the dealer was clearly motivated to give me a good deal, so i didn't lose too much driving it off the lot. there are a lot of reasons why people buy new cars. i didn't want to look like a chump when out on a date. real-estate agents often like to make a good impression as they are driving clients to see new homes. some people can simply afford it and don't want to worry about what abuse a prior owner may have done. i don't feel defensive about my decision to buy a new car those years ago. the other car i've purchased in the last 10 years was a four year old used car, and it certainly does a good job for my wife who doesn't put too many miles on it. i will not rule out buying another new car in the future either. some times the difference in price isn't significant enough that used is always the best choice.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 banks encourage me to use online bill payment?", "role": "user" }, { "content": "it’s more convenient for both you and the bank; its much simpler to handle things electronically than it is to go through paperwork. also, its eco-friendly and by saying that they care about the environment, banks earn brownie points with environmentally-conscious customers.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 credit card payments work? what ensures the retailer charges the right amount?", "role": "user" }, { "content": "when you give your credit card number and authorize a merchant to charge your credit card, the merchant then gives the information to their merchant processor which in turns bills the bank that issued the card (it's a little more complex and it all happens instantly unless the merchant is using the very old fasion imprinting gizmos). it is possible for a merchant to attempt to charge you more than you authorized but if they do they risk a fine ($25-$50 for a chargeback) from their processor, the legitimate portion of the charge as well as increasing the processing fees charged by their processor or even the possibility of loosing their merchant account entirely and being permanently blacklisted by visa/mastercard. in short no legitimate business is going to intentionally over charge your credit card. there really isn't significant risk in using a reputable online retailer's order forms. there is the possibility that their database could be compromised but that risk is lower than the risk of having an employee steal your credit number when you give it to them in person. besides in the us at least the most you can legally be held liable for is $50 assuming you notice the discrepancy within 60 days of statement the charge appears on and most banks limit liability to $0. over the years i have had a number of different credit card numbers stolen and used fraudulently and i have never had to pay any fraudulent charges.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "can i deduct equipment expenses for a job i began overseas?", "role": "user" }, { "content": "a computer is a special case because the irs thinks that you might be using it for personal applications. you may need to keep a log, or be able to state that you also have another computer for non-business use. that said, if your schedule c shows a small profit then you don't need to itemize expenses, just state the total.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "which brokerages offer the best streaming quotes (tick level) for the best price?", "role": "user" }, { "content": "i have scottradeelite on my desktop. i have played around with it but no longer use it. the transactions that i make through scottrade are more dependent on my goals for the securities than what the market is doing at the moment. keep in mind that there will always be others out there with better access to price changes than you. they also will have better hardware. we cannot beat them at their game.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "where to request ach direct debit of funds from my own personal bank account?", "role": "user" }, { "content": "call wells fargo or go to a branch. tell them what you're trying to accomplish, not the vehicle you think you should use to get there. don't tell them you want to ach debit from your account of your money. tell them you apparently need a paperless transaction sent to this and that account at this and that bank. see if they offer a solution.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 asking for card details to refund over email", "role": "user" }, { "content": "personally, i would just dispute this one with your cc. i had a situation where a subscription i had cancelled the prior year was billed to me. i called up to have a refund issued, they couldn't find me in their system under three phone numbers and two addresses. the solution they proposed was \"send us your credit card statement with the charge circled,\" to which i responded \"there's no way in hell i'm sending you my cc statement.\" then i disputed the charge with the cc bank and it was gone about two days later. i partially expect to have the same charge appear next year when they try to renew my non-existent subscription again. now, whether or not this is a normal practice for the company, or just a call center person making a good-faith but insecure attempt to solve your problem is irrelevant. fact of the matter is, you tried to resolve this with the merchant and the merchant asked for something that's likely outside the bounds of your cc terms and conditions; sending your entire number via email. dispute it and move on. the dispute process exists for a 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": "should i pay off my student loan debts first or invest in an index fund?", "role": "user" }, { "content": "pay off the debt first. life circumstances change without notice, and starting any stage of life with a debt puts you at a disadvantage. luckily, your debt is small. please also consider accumulating a 6 month emergency fund before making investments. this will further protect you when life hands you a curveball.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 a cash account can someone trade all day on it?", "role": "user" }, { "content": "no, you cannot. the cash settlement period will lock up your cash depending on the product you trade. three business days for stocks, 1 business day for options, and you would need waaaaaay more than $5,000 to trade futures.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "condo purchase - tax strategies [us]", "role": "user" }, { "content": "if it's a rental, you will write off the losses via schedule e. you should read this document and its instructions to understand this fully. you will also take depreciation on the value of the building, not the land, over 27.5 years. if you don't understand this, search here, there are discussions that cover this. if it's not a rental, but your home or second home, you take the interest and real estate tax off you tax via schedule a, if you itemize. (i see the tag 'rental' but leave this line for sake of a complete answer.)", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 some time tested passive income streams?", "role": "user" }, { "content": "renting a house out using a management company is mostly passive income. earning affiliate income from companies that pay on a recurring basis is closer to passive 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": "how to calculate the number of months until a loan is paid off (given principal, apr and payment amount)?", "role": "user" }, { "content": "here is the derivation of the formula, with the loan is equal to the sum of the repayments discounted to present value.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "how do i fold side-income into our budget so my husband doesn't know?", "role": "user" }, { "content": "maybe you can just hang onto the cash and upgrade the things you buy for cash now a bit. buy the better cut of meat, the nicer pair of shoes, etc. since you have no trouble with bending the truth a bit.. if challenged, the shoes were \"on sale\". and no you must have lost the receipt. not that i'm advocating it, but the only time i notice my better half's shoe habit is when a garbage bag of the old ones goes out the door.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 time limit to cover an open short position? [duplicate]", "role": "user" }, { "content": "there are situations where you can be forced to cover a position, particular when \"reg sho\" (\"regulation sho\") is activated. reg sho is intended to make naked short sellers cover their position, it is to prevent abusive failure to delivers, where someone goes short without borrowing someone else's shares. naked shorting isn't a violation of federal securities laws but it becomes an accounting problem when multiple people have claims to the same underlying assets. (i've seen companies that had 120% of their shares sold short, too funny, fwiw the market was correct as the company was worth nothing.) you can be naked short without knowing it. so there can be times when you will be forced to cover. other people being forced to cover can result in a short squeeze. a risk. the other downside is that you have to pay interest on your borrowings. you also have to pay the dividends to the owner of the shares, if applicable. in shorter time frames these are negligible, but in longer time frames, such as closer to a year or longer, these really add up. let alone the costs of the market going in the opposite direction, and the commissions.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 all of the options when they expire?", "role": "user" }, { "content": "firstly \"most option traders don't want to actually buy or sell the underlying stock.\" this is completely utterly false perhaps the problem is that you are only familiar with the buy side of options trading. on the sell side of options trading, an options desk engages in delta hedging. when we sell an option to a client. we will also buy an appropriate amount of underlying to match the delta position of the option. during the life time of the option. we will readjust our hedge position whenever the delta changes (those who follow black scholes will know that normally that comes from (underlying) price changes). however, we lose money on each underlying change (we have to cross the bid-ask spread for each trade). that is why we lose money when there is volatility. that is why we are said to be \"short vega\" or \"short volatility\". so one way to think about \"buying\" options, is that you are paying someone to execute a specific trading strategy. in general, those who sell options, are also happy to buy options back (at a discount of course, so we make a profit). but when doing so, we need to unroll our hedging position, and that again incurs a cost (to us, the bank). finally. since this is \"money\" stackexchange rather than finance. you are most likely referring to \"warrants\" rather than \"options\", which are listed on stock exchanges. the exchange in most regions give us very specific and restrictive regulations that we must abide by. one very common one is that we must always list a price which we are willing to buy the warrants back at (which may not be an unreasonable spread from the sell price). since an option is a synthetically created investment instrument, when we buy back the option from the investor, we simply unwind the underlying hedging positions that we booked to synthesize the options with. source: i've worked 2 years on a warrant desk, as a desk developer.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "advice for a college student interested in investment opportunities.", "role": "user" }, { "content": "put it in a vanguard fund with 80% vti and 20% vxus. that's what you'll let set for 10-15 years. for somebody that is totally new to investing, use \"play money\" in the stock market. it's easy for young people to get dreams of glory and blow it all on some stock tip they've seen on twitter.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "reporting software subscriptions", "role": "user" }, { "content": "generally prepaid services should be capitalized over the period prepaid. but if it is up to a year - you can just expense them. as to the technicalities - you can contact intuit support, but you should be able to put it in the same area where you put all your other business expenses. if you're a sole proprietor - that would be schedule c.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 high should i set my kickstarter funding goal in order to have $35,000 left over?", "role": "user" }, { "content": "i think you might be missing something important here. if you are running a business, then any expenses that your business incurs are deductible. yes, kickstarter would report the full amount. the irs requires them to report everything that you raised. however, the kickstarter and amazon fees would be a business expense. your cost on the backer rewards are deductible business expenses as well. legal fees, accounting fees: deductible. money that you spend on equipment may not be deductible all in one year; you may have to depreciate it over multiple years. this is where the accountant that you are paying accounting fees to will come in handy. people who do an ios app kickstarter campaign for $5000 might have a few things going on that you don't:", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 possible to borrow money to accrue interest, and then use that interest to pay back the borrower + fees?", "role": "user" }, { "content": "there are many flaws with your idea. say i want to borrow $225,000.00 to accrue interest on a 1.20% apy account. i promise ... that i cannot withdraw nor touch the account by legal contract. if you break the contract and lose the money, the lender is out the money. they can take you to court and will win, but if you don't have the money, then they don't get paid. (you can't squeeze water out of a rock even if a judge orders you to.) by sharing the interest with me on a loan, they keep a percentage that they'd normally get... if you're \"investing\" the money at 1.2%, and the lender gets some amount less than that, then they are getting much less than they \"normally\" get. lenders typically get somewhere from 5-15% on loans. the money can also be used to fund a stock/trading account. regardless of whether i profit, i pay interest on the loan and split the profit shares 24/7. how can the lender lose with legal enforcing? again, if you lose the money, no amount of legal enforcing can force you to pay money that you don't have. even if you go to jail for fraud the lender still doesn't get paid. simply, no bank would ever agree to this.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 benefit, long term, to life insurance for a youngish, debt, and dependent free person?", "role": "user" }, { "content": "as others have said, if you don't have dependents, there's little need for life insurance. if you can't think of any obvious beneficiary for an insurance policy, than you probably don't need one. \"dependents\" here should be understood broadly. it wouldn't necessarily be limited to wife and children. if you're the only support for your handicapped cousin, for example, you might want to provide for him. but i take it from your question that you have no such special case. of course even if you have no dependents now, you might pick some up in the future. and if and when that does happen, your medical situation may have changed, making it difficult to get life insurance. but if you have no immediate plans so that any such even is likely to be far away, a serious alternative to consider would be to invest the money you would have paid in insurance premiums. then if someday you do acquire dependents, you have a pot of money set aside to provide for them in case something happens to you. if it's not enough and you can get insurance at that time, then great, but if you can't get insurance, at least there's something. if you never do acquire dependents, you can consider that pot of money part of your retirement fund.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "possibility of donations in an educational site", "role": "user" }, { "content": "you can have a way for people to pay, i.e. some kind of payment gateway. run as business: best create a company and get the funds there. this would be treated as income of the website and would be taxed accordingly. one can deduct expenses for running the website, etc. run as charity: register as one, however the cause should be considered as charitable one by the tax authorities. only then the donations would be tax free.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 standard check format in the usa?", "role": "user" }, { "content": "nope, anything is that has the required information is fine. at a minimum you need to have the routing number, account number, amount, \"pay to\" line and a signature. the only laws are that it can't be written on anything illegal, like human skin, and it has to be portable, not carved on the side of a building ( for example) https://www.theguardian.com/notesandqueries/query/0,5753,-20434,00.html http://www.todayifoundout.com/index.php/2013/12/people-actually-cash-big-novelty-checks-even-possible/ that said, the micr line and standard sizes will make things eaiser for they bank, but are hardly required. you could write your check on notebook paper so long as it had the right information, and the bank would have to \"cash it\". keep in mind that a check is an order to the bank to give your money to a person and nothing more. you could write it out in sentence form. \"give bill $2 from account 12344221 routing number 123121133111 signed _________\" and it would be valid. in practice though, it would be a fight. mostly the bank would try to urge you to use a standard check, or could hold the funds because it looks odd, till they received the ok from \"the other bank\". but.... if you rant to fight that fight....", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "do banks give us interest even for the money that we only had briefly in our account?", "role": "user" }, { "content": "ditto @michaelborgwardt just to get concrete: i just checked one bank in india and they say they are paying 4% on savings accounts. i don't know what you're getting or if 4% is typical in india, but it's at least an example. so if the bank pays interest based on average daily balance, and you left the money in the bank for a week, you'd get 4%/52 = .077%. so on rs 95,000 that would be rs 73. i live in the us where typical interest on a savings account today is about 1%. so an equivalent amount of money -- i think that would be about $1,500 -- would get 1/52 of 1%, or 29 cents. don't leave the lights turned on while you do the calculations -- you'll spend more on the electricity than you make on the interest. :-) ** addendum ** this suddenly reminds me ... i read a news story a few years ago about a man who was expecting a tax refund check from the irs of a few hundred dollars, and when the check arrived it was for several million. well obviously it was a mistake. but he came up with the clever idea: deposit the check in an interest-bearing account. promptly contact the irs, inform them of the mistake, and ask how and where to go about returning the money. hope that it takes at least a few days for them to figure everything out. then keep the interest accumulated on the several-million dollars for the time that he had the money. and as he contacted them immediately about the error, they can't say he was trying to hide anything. it was a nice try, but it didn't work. they demanded he send them the interest as well as the principle.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "why does my checking/savings account offer a higher interest rate than a standalone savings account?", "role": "user" }, { "content": "the key is that you need to use your debit card to earn the higher interest rate. the bank can offer a higher interest rate on accounts connected with a debit card because: they earn additional income through debit card fees charged towards account holders, among other things. they offer the higher interest rate specifically to encourage people to use their debit cards. by offering a joint checking/savings account that requires you to use your debit card, the bank is assuming that you'll keep more money in your account than you would in a standard checking-only account. your higher balance translates into more money the bank can loan out or invest, which usually leads to higher profit for them. businesses pay fees to the bank to accept debit cards. these fees represent another source of profit for the bank. the more you use your debit card, the more the bank earns in fees, so the bank encourages you to use your debit card more frequently through incentives like a higher interest rate or waiving fees on your account if you use your card enough. plus, since it's likely that an individual who maintains a fairly high balance in an account linked to a debit card is going to spend more (simply because they can spend more), banks will sometimes waive fees on the consumer side for balances over a certain amount.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 market transaction cost calculation", "role": "user" }, { "content": "an order is your command to the broker to, say, \"sell 100 shares of aapl\". an executed order (or partially executed order) is when all (or some) of that command is successfully completed. a transaction is an actual exchange of shares for money, and there may be one or more transactions per executed order. for example, the broker might perform all of the following 5 transactions in order to do what you asked: on the other hand, if the broker cannot execute your order, then 0 transactions have taken place. the fee schedule you quote is saying that no matter how many transactions the broker has to perform in order to fill your order -- and no matter what the share prices are -- they're only going to charge you $0.005 per share ($0.50 in this example of 100 shares), subject to certain limits. however, as it says at the top of the page you linked, our fixed pricing for stocks, etfs (exchange traded products, or etps) and warrants charges a fixed amount per share or a set percent of trade value, and includes all ib commissions, exchange and most regulatory fees with the exception of the transaction fees, which are passed through on all stock sales. certain transaction fees are passed through to the client. the transaction fee you included above is the sec fee on sales. many (but not all) transaction fees do depend on the prices of the shares involved; as a result they cannot be called \"fixed\" fees. for example, if you sell 100 shares of aapl at $150 each, but if you sell 100 shares of amzn at $940 each, so the broker will charge you the same $0.50 on either of those orders, but the sec will charge you more for the expensive amzn shares than for the cheaper aapl shares. the reason this specific sec fee mentions aggregate sales rather than trade value is because this particular sec fee applies only to the seller and not to the buyer. so they could have written aggregate trade value, but they probably wanted to highlight to the reader that the fee is only charged on sells.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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/reviewing personal health insurance plans for the self-employed", "role": "user" }, { "content": "i was in your situation a few years ago and i discovered something that worked perfectly for me - a local health insurance broker. i met with her, discussed my needs, reviewed the options with her, then acted. she received a commission from the insurer, so it cost me nothing. i would certainly follow a similar approach again.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "investing in stocks with gross income (not yet taxed) cash from contract work?", "role": "user" }, { "content": "in most jurisdictions, you want to split the transactions. why? because you want to report capital gains on your investment income, and this will almost always be taxed at a lower rate than employment income. see wikipedia's article for more information about capital gains. in canada, you pay tax on 50% of your realized capital gains. there are also ways to shelter your gains from tax; in canada, tfsa, in the us, i believe these are 'roth' accounts. i actually think you have to split the transactions, at least in canada and the u.s., though i'm not absolutely sure. regardless, you want to do so if you plan on making money with your investments. if you plan on making a loss, please contact me as i'm happy to accept the money you are planning on throwing away.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 if change manufacturing of a product not change the price for the buyer?", "role": "user" }, { "content": "in highly developed and competitive industries companies tread a continuous and very fine line between maximising shareholder profits by keeping prices up while making products as cheaply as possible, vs competitors lowering prices when they work out a way to make equivalents cheaper. in the short run you will quite often see companies hold onto large portions of efficiency savings (particularly if they make a major breakthrough in a specific manufacturing process etc) by holding old prices up, but in the long run competition pretty quickly lowers prices as the companies trying to keep high margins and prices get ruthlessly undercut by smaller competitors happy to make a bit less.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 my estimated taxes. 1099 misc + self employment", "role": "user" }, { "content": "one way to do these sorts of calculations is to use the spreadsheet version of irs form 1040 available here. this is provided by a private individual and is not an official irs tool, but in practice it is usually accurate enough for these purposes. you may have to spend some time figuring out where to enter the info. however, if you enter your self-employment income on schedule c, this spreadsheet will calculate the self-employment tax as well as the income tax. an advantage is that it is the full 1040, so you can also select the standard deduction and the number of exemptions you are entitled to, enter ordinary w-2 income, even capital gains, etc. of course you can also make use of other tax software to do this, but in my experience the \"excel 1040\" is more convenient, as most websites and tax-prep software tend to be structured in a linear fashion and are more cumbersome to update in an ad-hoc way for purposes like tax estimation. you can do whatever works for you, but i would recommend taking a look at the excel 1040. it is a surprisingly useful tool.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "income tax form in india for freelancing", "role": "user" }, { "content": "itr1 or itr2 needs to be filed. declare the income through freelancing in the section \"income from other sources\"", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 judge loan availability?", "role": "user" }, { "content": "it sounds like your current loan is in your name. as such, you are responsible for paying it. not your family, you. it also sounds like the loan payments are regularly late. that'll likely drastically affect your credit rating. given what you've said, it doesn't surprise me that you were declined for a credit card. with the information on your credit report, you are a poor risk. assuming your family is unable to pay loan on time (and assuming you aren't willing to do so), you desperately need to get your name off the loan. this may mean selling the property and closing out the loan. this won't be enough to fix your credit, though. all that will do is stop making your credit worse. it'll take a few years (five years in canada, not sure how many years in india) until this loan stops showing up on your credit report. that's why it is important to do this immediately. now, can a bank give you a loan or a credit card despite bad credit? yes, absolutely. it all depends on how bad your credit is. if the bank is willing to do so, they'll most likely charge a higher interest rate. but the bank may well decide not to give you a loan. after all, your credit report shows you don't make your loan payments on time. you may also want to request your own copy of your credit report. you may have to pay for this, especially if you want to see your score. this could be valuable information if you are looking to fix your finances, and may be worth the cost. if you are sure it's just this one loan, it may not be necessary. good luck! edit: in india cibil is the authority that maintains records. getting to know you exact score will help. cibil offers it via transunion. the non-payment will keep appearing on your record for 3 years. as you don't have any loans, get a credit card from a bank where you have fixed deposits / ppf account as it would be easier to get one. it can then help you build the 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": "what should i do with the change in my change-jar?", "role": "user" }, { "content": "are you in an occupation that regularly collects change or is this change left in your pocket at the end of the day? here in the us it is typically worth it to invest in some automatic coin counters if you are in an occupation that regularly collects coins. in your case you can collect the little baggies from the bank, use your coin counters and then make a deposit. here is an example of us coin counters. if it is just pocket change then in the morning, make it a habit of taking some with you. this way you are less likely to break larger bills. also if you are making a deposit at the bank, add some change to the deposit without making it to annoying.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "taxes, ordinary income, and adjusted cost basis for rsus", "role": "user" }, { "content": "the sale of shares on vesting convolutes matters. in a way similar to how reinvested dividends are taxed but the newly purchased fund shares' basis has to be increased, you need to be sure to have the correct per share cost basis. it's easy to confuse the total rsu purchase with the correct numbers, only what remained. the vesting stock is a taxable event, ordinary income. you then own the stock at that cost basis. a sale after that is long or short term and the profit is the to extent it exceeds that basis. the fact that you got these shares in 2013 means you should have paid the tax then. and this is part two of the process. of course the partial sale means a bit of math to calculate the basis of what remained.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "how do you quantify investment risk?", "role": "user" }, { "content": "the question is: how do you quantify investment risk? as michael s says, one approach is to treat investment returns as a random variable. bill goetzmann (yale finance professor) told me that if you accept that markets are efficient or that the price of an asset reflects it's underlying value, then changes in price represent changes in value, so standard deviation naturally becomes the appropriate measure for riskiness of an asset. essentially, the more volatile an asset, the riskier it is. there is another school of thought that comes from ben graham and warren buffett, which says that volatility is not inherently risky. rather, risk should be defined as the permanent loss of capital, so the riskiness of an asset is the probability of a permanent loss of capital invested. this is easy to do in casino games, based on basic probability such as roulette or slots. but what has been done with the various kinds of investment risks? my point is saying that certain bonds are \"low risk\" isn't good enough; i'd like some numbers--or at least a range of numbers--and therefore one could calculate expected payoff (in the statistics sense). or can it not be done--and if not, why not? investing is more art than science. in theory, a triple-a bond rating means the asset is riskless or nearly riskless, but we saw that this was obviously wrong since several of the aaa mortgage backed securities (mbs) went under prior to the recent us recession. more recently, the current threat of default suggests that bond ratings are not entirely accurate, since us treasuries are considered riskless assets. investors often use bond ratings to evaluate investments - a bond is considered investment grade if it's bbb- or higher. to adequately price bonds and evaluate risk, there are too many factors to simply refer to a chart because things like the issuer, credit quality, liquidity risk, systematic risk, and unsystematic risk all play a factor. another factor you have to consider is the overall portfolio. markowitz showed that adding a riskier asset can actually lower the overall risk of a portfolio because of diversification. this is all under the assumption that risk = variance, which i think is bunk. i'm aware that wall street is nothing like roulette, but then again there must be some math and heavy economics behind calculating risk for individual investors. this is, after all, what \"quants\" are paid to do, in part. is it all voodoo? i suspect some of it is, but not all of it. quants are often involved in high frequency trading as well, but that's another note. there are complicated risk management products, such as the aladdin system by blackrock, which incorporate modern portfolio theory (markowitz, fama, sharpe, samuelson, etc) and financial formulas to manage risk. crouhy's risk management covers some of the concepts applied. i also tend to think that when people point to the last x number of years of stock market performance, that is of less value than they expect. even going back to 1900 provides \"only\" 110 years of data, and in my view, complex systems need more data than those 40,500 data points. 10,000 years' worth of data, ok, but not 110. any books or articles that address these issues, or your own informed views, would be helfpul. i fully agree with you here. a lot of work is done in the santa fe institute to study \"complex adaptive systems,\" and we don't have any big, clear theory as of yet. conventional risk management is based on the ideas of modern portfolio theory, but a lot of that is seen to be wrong. behavioral finance is introducing new ideas on how investors behave and why the old models are wrong, which is why i cannot suggest you study risk management and risk models because i and many skilled investors consider them to be largely wrong. there are many good books on investing, the best of which is benjamin graham's the intelligent investor. although not a book on risk solely, it provides a different viewpoint on how to invest and covers how to protect investments via a \"margin of safety.\" lastly, i'd recommend against the gods by peter bernstein, which covers the history of risk and risk analysis. it's not solely a finance book but rather a fascinating historical view of risk, and it helps but many things in context. hope it 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 did historical high tax rates work in practice?", "role": "user" }, { "content": "i remember in the 19th and early 20th century was the problem of trusts set up by the wealthy to avoid taxes (hence the term \"anti-trust\") that's not what antitrust means. the trusts in that case were monopolies that used their outsized influence to dominate customers and suppliers. they weren't for tax evasion purposes. trusts were actually older than a permanent income tax. antitrust law was passed around the same time as a permanent income tax becoming legal. prior to that income taxes were temporary taxes imposed to pay for wars. the primary ways to evade taxes was to move expenses out of the personal and into businesses or charities. the business could pay for travel, hotels, meals, and expenses. or a charity could pay for a trip as a promotion activity (the infamous safari to africa scheme). charities can pay salaries to employees, so someone could fund a charity (tax deductible) and then use that money to pay people rather than giving gifts. if you declare your house as a historical landmark, a charity could maintain it. subscribe to magazines at the office and set them in the waiting room after you read them. use loyalty program rewards from business expenses for personal things. sign up for a benefit for all employees at a steep discount and pay everyone a little less as a result. barter. you do something for someone else (e.g. give them a free car), and they return the favor. call it marketing or promotion (\"trump is carried away from his eponymous tower in a sparkling new mercedes benz limousine.\"). another option is to move income and expenses to another tax jurisdiction that has even fewer laws about it. where the united states increasingly cracked down on personal expenses masquerading as business expenses, many jurisdictions would be happy just to see the money flow through and sit in their banks briefly. tax policy is different now than it was then. many things that would have worked then wouldn't work now. the irs is more aggressive about insisting that some payments be considered income even if the organization writes the check directly to someone else. it's unclear what would happen if united states tax rates went back to the level they had in the fifties or even the seventies. would tax evasion become omnipresent again? or would it stay closer to current levels. the rich actually pay a higher percentage of the overall income taxes now than they did in the forties and fifties. and the rich in the united states pay a higher percentage of the taxes paid than the rich in other countries with higher marginal rates. some of this may be more rich people in the us than other countries, but tax policy is part of that too. high income taxes make it hard to become rich.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 on dip when earnings fail?", "role": "user" }, { "content": "what is cheap? a stock may fall from $20 per share to $10 per share, but it may have gone from making a $100m profit last year to a $100m loss this year. so now at $10 per share it may still be considered expensive. you need to be very careful when to consider that a stock is cheap or not, you'll have to look at more than just the share 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": "is it true that income tax was created to finance troops for world war i?", "role": "user" }, { "content": "income tax was seen as a way to exploit the revenues available from the rapidly expanding ranks of people with mid to high incomes. it was initially targeted at the very wealthy. previously, most federal revenues came from excise taxes and tariffs, both of which have many negative economic effects, leave the government with limited revenue generating ability and bring a host of international and domestic political problems. since the successful implementation of the income tax required a constitutional amendment, it is very unlikely that anyone at the time seriously considered the income tax a temporary measure.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "how could strike price for new shares be higher than the market price", "role": "user" }, { "content": "berkshire hathaway issues first ever-negative coupon security from back in 2002 had this part: the warrants will give the holder the right to purchase either shares of the company's class a or class b common stock at the holder’s option. the initial exercise price represents a 15% premium over the closing price of the class a shares on the nyse on may 21, 2002. the notes will pay holders a 3.0% interest rate per annum and holders will pay 3.75% installment payments per annum on the warrants. the warrant payments due from holders will be greater than the coupon on the senior notes, effectively making squarz the first negative coupon security. berkshire hathaway will use the net proceeds from the issuance for general corporate purposes, including possible acquisitions, none of which are pending. this would be an example where the strike price was 15% higher than the closing price yet the security sold well.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "when is the best time to put a large amount of assets in the stock market?", "role": "user" }, { "content": "i have been considering a similar situation for a while now, and the advice i have been given is to use a concept called \"dollar cost averaging\", which basically amounts to investing say 10% a month over 10 months, resulting in your investment getting the average price over that period. so basically, option 3.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 are shares used, and what are they, physically?", "role": "user" }, { "content": "if you are particularly interested in the share certificate artifacts themselves, there is a collection hobby in paper share certificates and bonds, called scripophily. this can include both active share certificates (for instance, think about giving your kid or grandkid a frameable paper share of hasbro, disney or mcdonalds?), inactive certificates from famous bankruptcies or famous companies of the past, or just the visual interest in scrollwork and engraved vignettes.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 pay more than 20% down on a home?", "role": "user" }, { "content": "i'd stick with 20% down. truth is - we don't know enough about you. are you single and staying that way? how is your retirement savings doing? as others asked, any other debt? you can put 20% down, take a breath and see how it's going. i did just that, the 20%. we then had a baby, and 5 nanny-years to pay for. when she was gone, all that money went to the mortgage, and after refinancing (with no points no closing) we have 7 years to go. just under 20 years beginning to end. during that time we've saved for college (just about fully funded) and for retirement (both with matched 401(k) accounts). remember, if you lose your job, a house with a lower mortgage means nothing when there's still the next payment due. but that cushion of cash can be handy.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "how do i calculate the dwelling coverage i need from the information i have?", "role": "user" }, { "content": "you can't compare the different quotes unless they have the same numbers to work with. the big companies should use similar models to come up with values for the contents. in many cases they will assume some standard values for things like appliances. yes you have a stove, but unless it is commercial grade they won't care when giving you a quote. if you have very expensive items you may need a rider to cover them. there is not relationship between the county assessment and the cost to rebuild. the insurance doesn't cover the land. you have to make sure that all quotes include the same riders: cost to put you in a motel, flood insurance... and the same deductibles. your state may have an insurance office that can help answer your question. here is the one for virginia.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 mutual fund prices have opening gaps? might my order to be filled at a higher price?", "role": "user" }, { "content": "mutual funds don't work like stocks in that way. the price of a mutual fund is set at the end of each day and doesn't fluctuate during the day. so no matter when you put in your order, it will be filled at the end of the day at whatever the closing price is for that day. here is some good information on that there is no continuous pricing of fund shares throughout the trading day. when an investor places an order to buy or sell a fund's shares, the order is executed based on the nav calculated at the end of that trading day, regardless of what time during the day the order was placed. on the other hand, if the investor were to check the price of his or her fund shares halfway through the business day, the price quoted would be the previous day's nav because that was the last time the fund calculated and reported the value. -http://www.finweb.com/investing/how-mutual-funds-are-priced.html", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "when does selling (writing) options count for tax purposes?", "role": "user" }, { "content": "generally speaking, you realize options gains or losses for (us) tax purposes when you close out the option position, or when it expires so in your example, if you're discussing an equity option, you'd realize the gain or loss next year, assuming you don't close it out prior to year end. but options tax treatment can get messy fast: still, if you have no other stock or option positions in the underlying during or within 30 days of the establishment of the naked put, and assuming the option isn't assigned, you won't realize any gains or losses until the year in which the option is closed or expires.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 have i never seen a stock split?", "role": "user" }, { "content": "you haven't seen one because you haven't looked for one properly. you can set a google alert for stock split and get information about major issues splitting their stocks quite regularly, as well as a daily dose of recommendations from people without a say in the matter for big companies to split their stock. stock splits are announced in advance by company management.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "what should i do with my money?", "role": "user" }, { "content": "my advice would be to invest that 50k in 25% batches across 4 different money markets. batch 1: lend using a peer-to-peer account - 12.5k the interest rates offered by banks aren't that appealing to investors anymore, at least in the uk. peer to peer lending brokers such as zopa provide 5% to 6% annual returns if you're willing to hold on to your investment for a couple of years. despite your pre-conceptions, these investments are relatively safe (although not guaranteed - i must stress this). zopa state on their website that they haven't lost any money provided from their investors since the company's inception 10 years ago, and have a safeguard trust that will be used to pay out investors if a large number of borrowers defaulted. i'm not sure if this service is available in australia but aim for an interest rate of 5-6% with a trusted peer-to-peer lender that has a strong track record. batch 2: the stock market - 12.5k an obvious choice. this is by far the most exciting way to grow your money. the next question arising from this will likely be \"how do i pick stocks?\". this 12.5k needs to be further divided into 5 or so different stocks. my strategy for picking stock at the current time will be to have 20% of your holdings in blue-chip companies with a strong track record of performance, and ideally, a dividend that is paid bi-anually/quarterly. another type of stock that you should invest in should be companies that are relatively newly listed on the stock market, but have monopolistic qualities - that is - that they are the biggest, best, and only provider of their new and unique service. examples of this would be tesla, worldpay, and just-eat. moreover, i'd advise another type of stock you should purchase be a 'sin stock' to hedge against bad economic times (if they arise). a sin stock is one associated with sin, i.e. cigarette manufacturers, alcohol suppliers, providers of gambling products. these often perform good while the economy is doing well, but even better when the economy experiences a 2007-2008, and 2001-dotcom type of meltdown. finally, another category i'd advise would be large-cap energy provider companies such as exxon mobil, bp, duke energy - primarily because these are currently cheaper than they were a few months ago - and the demand for energy is likely to grow with the population (which is definitely growing rapidly). batch 3: funds - 12.5k having some of your money in funds is really a no-brainer. a managed fund is traditionally a collection of stocks that have been selected within a particular market. at this time, i'd advise at least 20% of the 12.5k in emerging market funds (as the prices are ridiculously low having fallen about 60% - unless china/brazil/india just self destruct or get nuked they will slowly grow again within the next 5 years - i imagine quite high returns can be had in this type of funds). the rest of your funds should be high dividend payers - but i'll let you do your own research. batch 4: property - 12.5k the property market is too good to not get into, but let's be honest you're not going to be able to buy a flat/house/apartment for 12.5k. the idea therefore would be to find a crowd-funding platform that allows you to own a part of a property (alongside other owners). the uk has platforms such as property partner that are great for this and i'm sure australia also has some such platforms. invest in the capital city in areas as close to the city's center as possible, as that's unlikely to change - barring some kind of economic collapse or an asteroid strike. i think the above methods of investing provide the following: 1) diversified portfolio of investments 2) hedging against difficult economic times should they occur and the only way you'll lose out with diversification such as this is if the whole economic system collapses or all-out nuclear war (although i think your investments will be the least of your worries in a nuclear war). anyway, this is the method of investing i've chosen for myself and you can see my reasoning above. feel free to ask me if you have any questions.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "do stock prices drop due to dividends?", "role": "user" }, { "content": "the paragraph talks about dividends given by mutual funds. say a fund has nav of $ 10, as the value of the underlying security grows, the value of the fund would also grow, lets say it becomes $ 12 in 2 months. now if the mutual fund decides to pay out a dividend of $ 1 to all unit holder, then post the distribution of dividend, the value of the fund would become to $ 11. thus if you are say investing on 1-april and know that dividends of $1 would be paid on 5-april [the divided distribution date is published typically weeks in advance], if you are hoping to make $1 in 5 days, that is not going to happen. on 6-april you would get $1, but the value of the fund would now be $11 from the earlier $12. this may not be wise as in some countries you would ending up paying tax on $1. even in shares, the concept is similar, however the price may get corrected immediately and one may not actually see it going down by $1 due to market dynamics.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "why does blackrock's xin page show xin as having only 1 holding?", "role": "user" }, { "content": "on blackrock's xin page under key facts it says the number of holdings as 1. looking at the top 10 holdings shows efa as the number 1 holding with a 101% weighting. xin is \"ishares msci eafe index etf (cad-hedged)\", so it takes the underlying component and hedges it to cad. the underlying component is an etf itself, efa, so they only need to hold that one component (since that is the msci eafe index etf). how is it possible to hold over 100%? take a look at the full list of holdings. while efa is the only underlying security (e.g. etf, stock, bond, et.c), the remaining holdings (looks to be 133 remaining holdings) are cash positions. some of those positions are negative for hedge purposes. because of this, the total value of the portfolio is less than the position of efa itself (since total value is efa plus a bunch of negative entries); because the total value is less than efa itself, efa has a > 100% weighting.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "where can i invest for the short term and protect against inflation?", "role": "user" }, { "content": "your goals are mutually exclusive. you cannot both earn a return that will outpace inflation while simultaneously having zero-risk of losing money, at least not in the 2011 market. in 2008, a 5+% cd would have been a good choice. here's a potential compromise... sacrifice some immediate liquidity for more earnings. say you had $10,000 saved: in this scheme, you've diversified a little bit, have access to 50% of your money immediately (either through online transfer or bringing your bonds to a teller), have an implicit us government guarantee for 50% of your money and low risk for the rest, and get inflation protection for 75% of your money.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "how to know if two etfs are 'substantially identical' according to wash sale rules?", "role": "user" }, { "content": "nobody knows for sure what \"substantially identical\" means because the irs hasn't officially defined it. until they do so, it would come down to the decision of an auditor or a tax court. the rule of thumb that i have always heard is if the funds track the same index, they are probably substantially identical. i think most people wouldn't consider any pair of agg, cmf, and nyf to be substantially identical, so you should be safe with your tax-loss harvesting strategy.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "will anything happen to me if the amt is not re-established before 2011?", "role": "user" }, { "content": "according to pages 6 & 7 of the instructions for form 1040 in 2009 amt was only temporarily patched for the year. congress can't politically afford to drastically cut amt exemptions by 30 to 40%, and may even retroactively change it, if it isn't passed by the end of the year (despite the constitution forbidding ex post facto laws) : what’s new for 2009 ... alternative minimum tax (amt) exemption amount increased. the amt exemption amount has increased to $46,700 ($70,950 if married filing jointly or a qualifying widow(er); $35,475 if married filing separately)... what’s new for 2010 ... alternative minimum tax (amt) exemption amount. the amt exemption amount is scheduled to decrease to $33,750 ($45,000 if married filing jointly or a qualifying widow(er); $22,500 if married filing separately). so, if you are married, and several regular tax deductions push your income below the amt exemption amount of $45,000, it's quite possible you would be required to pay amt, even if you didn't last year. there is a work sheet for amt in the instructions for line 43, but the irs also provides an amt calculator. according to page 146 (e-8) of the instructions for form 1040 amt is paid as: the smallest amount you are allowed to report as your taxable income (form 1040, line 43). it is also the smallest amount you are allowed to report as your alternative minimum taxable income (amti) on form 6251, line 29. if the [amt calculation] is larger than your taxable income would otherwise be, enter the amount from column (c) on form 1040, line 43 [or ...] form 6251, line 29. as always, congress finds ways to further complicate things by making a few credits and losses deductible against the absolute minimum you're expected to pay taxes on, making the amt a misnomer.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 prevents investors from buying high yield stocks and selling them as soon as their dividend is paid out?", "role": "user" }, { "content": "this investment strategy may have tax advantages. in some countries, income received from dividends is taxed as income, whereas profits on share trades are capital gains. if you have already exceeded your tax-free income limit for the year, but not your capital gains tax allowance, it may be preferable to make a dealing profit rather than an investment income. these arrangements are called a bed-and-breakfast.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "list of investments from safest to riskiest?", "role": "user" }, { "content": "with every caveat that rick said plus many many more lets have some fun. one common way to measure risk is volatility of returns roughly how much the value of your asset jumps around. interestingly, the following ordering is fairly similar for many other common measures of risk. the first three on the list would be mostly interchangeable. generally, putting your money in \"cash\" investments has no real day-to-day price variability and the main risk is that the bank won't give you your money back at the end. money market funds are last as they can \"break the buck\". to get a feel for the next few on the list i'm using previous 360 day volatility numbers for representative broad indices (asof 2014-10-27). while these volatility values can move around quite a bit, the order is actually remarkably stable. hedge funds might seem out of place here, but remember that hedge funds can hold be long and short at the same time and this can cancel out daily variation. however, hedge funds do have plenty of risks that may not be well accounted for by this measure. for derivatives i'll refer to back to rick's answer. this is a measure for broad investment in these categories your particular investment in long-term capital management or argentine bonds may vary. it is important to note that your return on your investment generally grows as you go toward more risky investments down this list as people generally expect to be rewarded in the long term for risky investments.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 cash loss over time?", "role": "user" }, { "content": "while it is a true loss, as you've determined, is not a cash cost, per se. a cash cost would be a decrease in cash holdings. inflation does not take your cash balance; it devalues it, so it is an accrued loss. central banks are extremely lazy in determining inflation, so the highest resolution available at a public level is monthly. in the united states, there is a small project that tries to calculate daily inflation rates and seems to do a decent job, but unless if you are a customer of a particular financial institution, you will suffer a lag. the small project refuses to make the data public in real time or even allow outside analysis. in the uk, the office for national statistics is responsible for consumer inflation statistics. the methodology is not readily available, but considering the name, it is most likely an inferior laspeyres index instead of the optimal fisher index as it is in the us. to calculate the accrued cost due to inflation, simply multiply the amount of money held by the price index value at the beginning of the time held and divide by the price index value at the end of the time held. for example, to determine the amount of value lost since march 2014, multiply the money held by the price index value for march 2014 and divide by june 2014.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "lump sum annuity distribution do i owe estate tax?", "role": "user" }, { "content": "if you are the beneficiary of an annuity, you might receive a single-sum distribution when the annuity owner dies. the amount of this death benefit might be the current cash value of the annuity or some other amount based upon contract riders that the owner purchased. the tax on death benefits depends on a number of factors. death benefits are taxed as normal income. unlike other investments, the named beneficiary of a non-qualified annuity does not get a step-up in tax basis to the date of death. however, that doesn't mean the beneficiary will have to pay taxes on the full amount. because the purchaser of the annuity made the investment with after-tax dollars, only the amount attributable to investment income is taxed, but it will be taxed as ordinary income and not enjoy any special capital gains treatment. when there is a death benefit that exceeds the value of the account, that additional amount is also taxed as ordinary income. taxes on annuities depend on several circumstances: for more information on distribution of inherited annuities and taxes - go to annuities hq-- http://www.annuitieshq.com/articles/distribution-options-inherited-annuity/ they go into details that could help you even more. one thing that annuities hq points out is if you take the lump sum payout, you may be pushed into a higher tax bracket. along with doing research i would also contact a financial advisor!", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "w-4 and withholding taxes for self-employed spouse", "role": "user" }, { "content": "with your income so high, your marginal tax rate should be pretty easy to determine. you are very likely in the 33% tax bracket (married filing jointly income range of $231,450 to $413,350), so your wife's additional income will effectively be taxed at 33% plus 15% for self-employment taxes. rounding to 50% means you need to withhold $19,000 over the year (or slightly less depending on what business expenses you can deduct). you could use a similar calculation for ca state taxes. you can either just add this gross additional amount to your withholdings, or make an estimated tax payment every quarter. any difference will be made up when you file your 2017 taxes. so long as you withhold 100% of your total tax liability from last year, you should not have any underpayment penalties.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 a big purchase over $2500. i have the money to cover it. should i get a loan or just place it on credit?", "role": "user" }, { "content": "you want to know if you should pay cash or use a credit card like cash? there are so many benefits to the card, like purchase protection, cash back, and postponed payments, that there needs to be a really good reason to pay cash. if you are concerned about the 10% threshold, ask your credit card company to raise your limit. if you are indifferent, let the merchant decide for you by asking for a discount if you pay cash. the biggest reason is that credit cards, when handled shrewdly, make your money work for you by keeping it in less liquid / higher interest investments like inflation-adjusted t-bills. you will still be able to access it by using the credit card to float large expenses without liquidating at a loss. investment accounts like schwab one are great for this since you can \"borrow\" cash at a low interest rate against your securities, until your security sale clears.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 exactly does a country devalue its currency?", "role": "user" }, { "content": "does some official tell the foreign exchange the the new exchange rate for the yuan is 0.98 * the current exchange rate? for china (and other countries with fixed/controlled exchange rates) - that's exactly how it happens. does it just print more? this is the way to go for fully convertible currencies (like the usd, eur, gbp, and handful of others, there're about 20 in the world). flood the market and as with any commodity - flooding the market leads to a price drop. obviously \"just print more\" is much harder to do than picking up the phone and saying \"now you're buying/selling dollars at this price and if you don't i'll have you executed\".", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 smart is it really to take out a loan right now?", "role": "user" }, { "content": "i think it's smart. it's the same game, just stiffer regulations, so your lender will ask more from you. buy if you... if someone has been saving for years and years and still can't put 20% down, i think they're taking a significant risk. buy something where your mortgage payment is around one week's salary at most. try to buy only what you can afford to live in if you lost your job and couldn't find work for 3-6 months. you might want to do a 30-yr fixed instead of a 15-yr if you're worried about cash-flow.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 robinhood stock broker make money?", "role": "user" }, { "content": "disclosure: i don't have an iphone, so i don't use robinhood. that being said, i have a less \"they're-out-to-get-ya\" view of what they're doing. as a small business owner (2 businesses), employees cost the most. if you can create a solid business with few (or no) employees and let robots run it, you will drastically reduce your costs. joe polish said it similarly with sales letters, something along the lines of they never complain about a headache, need to take a year off to discover themself, or just need a personal day. robots are the same; they do not have human limits. most simple trading can be done and maintained by well written code and ai, there's very little need for humans to do anything other than build it. think about the efficiency of bitcoin versus all the central banks combined; how many people are employed by central banks? robinhood states that they are using technology in these ways to minimize costs and they're using a system that doesn't need physical branches (this doesn't mean they will never have them, just that they don't need them). robinhood does not indicate that they allow everything to happen for free; only stock trading. i worked for a large trading firm once and observed that stock trading wasn't the bulk of where they made their money anyway; trading options, futures, index funds, etc are where the big money was and robinhood says nothing about those being free. like the cqm mentioned too, they'll be charging for margin as well. in a way, the individual stock trader is dead; many people - including this forum - prefer index funds, so more than likely, robinhood will strike up a deal with an index fund company or create their own (this is just easy, passive income with an expense ratio). in this category, the markets are their playground, but they do need to attract enough people to their platform, thus free stock trading is a good way to do it. as for selling your information for advertising, that is always a possibility, but they have quite a few other options that would be good for most investors (index funds, affiliating with financial fund companies, etc) where they can start before ever needing to dip their toe in selling information. this isn't to say they won't do it, but that there are few other options they have. the major concern i have for robinhood is ongoing security. just building it and letting it run kind of assumes that there won't be major compromises in the future and as ai evolves, superior ai might be able to crush older ai.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "commencing a pension from an smsf", "role": "user" }, { "content": "no. disclaimer - as a us educated fellow, i needed to search a bit. i found an article 7 common smsf pension errors. it implied that there are minimum payments required each year as with our us retirement accounts. these minimums are unrelated to the assets within the account, just based on the total value. the way i read that, there would be a point where you'd have to sell a property or partial interest to be sure you have the cash to distribute each year. i also learned that unlike us rules, which permit a distribution of stock as part of a required minimum distribution, in australia, the distribution must be in cash (or a deposited check, of course.)", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "1.4 million cash. what do i do?", "role": "user" }, { "content": "for what it's worth, the distribution i'm currently using is roughly ... with about 2/3 of the money sitting in my 401(k). i should note that this is actually considered a moderately aggressive position. i need to phone my advisor (not a broker, so they aren't biased toward things which are more profitable for them) and check whether i've gotten close enough to retirement that i should readjust those numbers. could i do better? maybe, at higher risk and higher fees that would be likely to eat most of the improved returns. or by spending far more time micromanaging my money than i have any interest in. i've validated this distribution using the various stochastic models and it seems to work well enough that i'm generally content with it. (as i noted in a comment elsewhere, many of us will want to get up into this range before we retire -- i figure that if i hit $1.8m i can probably sustain my lifestyle solely on the income, despite expected inflation, and thus be safely covered for life -- so this isn't all that huge a chunk of cash by today's standards. cue daffy duck: \"i'm rich! i'm wealthy! i'm comfortably well off!\" -- $2m, these days, is \"comfortably well off.\")", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "do i need to invest to become millionaire?", "role": "user" }, { "content": "if your take-home salary after taxes etc is 35k / year, and you say you will be able to save at most 40% of that, you will need to find something that pays 2.75% to reach one million in 40 years*. however, these numbers can chance dramatically depending on your specific circumstances. if you're just starting your career, 40 years of saving is not impossible. if you're in the middle or nearing the end, you will have dramatically less time to achieve your goals. *40% of 35000 is 14000 saved per year, at an interest of 2.75% compounded annually, you will reach 1000000 after roughly 40 years.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "are spot market ,regular market and ready market same in stock trading if not then what is the difference?", "role": "user" }, { "content": "so, the term \"ready market\" simply means that a market exists in which there are legitimate buy/sell offers, meaning there are investors willing to own or trade in the security. a \"spot market\" means that the security/commodity is being delivered immediately, rather at some predetermined date in the future (hence the term \"futures market\"). so if you buy oil on the spot market, you'd better be prepared to take immediate delivery, where as when you buy a futures contract, the transaction doesn't happen until some later date. the advantage for futures contract sellers is the ability to lock in the price of what they're selling as a hedge against the possibility of a price drop between now and when they can/will deliver the commodity. in other words, a farmer can pre-sell his grain at a set price for some future delivery date so he can know what he's going to get regardless of the price of grain at the time he delivers it. the downside to the farmer is that if grain prices rise higher than what he sold them for as futures contracts then he loses that additional money. that's the advantage to the buyer, who expects the price to rise so he can resell what he bought from the farmer at a profit. when you trade on margin, you're basically borrowing the money to make a trade, whether you're trading long (buying) or short (selling) on a security. it isn't uncommon for traders to pledge securities they already own as collateral for a margin account, and if they are unable to cover a margin call then those securities can be liquidated or confiscated to satisfy the debt. there still may even be a balance due after such a liquidation if the pledged securities don't cover the margin call. most of the time you pay a fee (or interest rate) on whatever you borrow on margin, just like taking out a bank loan, so if you're going to trade on margin, you have to include those costs in your calculations as to what you need to earn from your investment to make a profit. when i short trade, i'm selling something i don't own in the expectation i can buy it back later at a lower price and keep the difference. for instance, if i think apple shares are going to take a steep drop at some point soon, i can short them. so imagine i short-sell 1000 shares of aapl at the current price of $112. that means my brokerage account is credited with the proceeds of the sale ($112,000), and i now owe my broker 1000 shares of aapl stock. if the stock drops to $100 and i \"cover my short\" (buy the shares back to repay the 1000 i borrowed) then i pay $100,000 for them and give them to my broker. i keep the difference ($12,000) between what i sold them for and what i paid to buy them back, minus any brokerage fees and fees the broker may charge me for short-selling. in conclusion, a margin trade is using someone else's money to make a trade, whether it's to buy more or to sell short. a short trade is selling shares i don't even own because i think i can make money in the process. i 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 a freelancer get a credit card? (india)", "role": "user" }, { "content": "i don't know about india, but here in the us banks, and more friendly institutions such as credit unions, use to offer the option of a 'secured' credit card where the card was secured by placing a lock on money in a savings account equal to the credit limit on the card. so for example, if you had $1500 in savings, you could have them lock say $1000, which you would not be able to withdraw from savings, in return for a credit card account with a credit limit of $1000. typically you still earned interest on the full amount of the savings, you were just limited to having to maintain a minimum balance in that account of $1000.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 issues with registering an llc in a foreign state?", "role": "user" }, { "content": "no, there are no issues. when you form the corp in de, you pick a business there to serve as your \"agent\" (essentially someone who knows to get in contact with you). the \"agent\" will notify you about taxes and any mail you get, but besides the fee they charge you for being the agent, you should file all the taxes directly with de (franchise tax is easy to file on the web) instead of going through the agent and paying a surcharge. when your llc files taxes, you'll do so in de and then the llc will issue you a federal and state k1. you'll file taxes where you reside and use the federal k1, but i think you might have to file de state taxes (unsure about this part, feel free to edit or comment and i'll correct).", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 record a written put option in double-entry accounting?", "role": "user" }, { "content": "because you've sold something you've received cash (or at least an entry on your brokerage statement to say you've got cash) so you should record that as a credit in your brokerage account in gnucash. the other side of the entry should go into another account that you create called something like \"open positions\" and is usually marked as a liability account type (if you need to mark it as such). if you want to keep an accurate daily tally of your net worth you can add a new entry to your open positions account and offset that against income which will be either negative or positive depending on how the position has moved for/against you. you can also do this at a lower frequency or not at all and just put an entry in when your position closes out because you bought it back or it expired or it was exercised. my preferred method is to have a single entry in the open positions account with an arbitrary date near when i expect it to be closed and each time i edit that value (daily or weekly) so i only have the initial entry and the current adjust to look at which reduces the number of entries and confusion if there are too many.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "transfer from credit to debit", "role": "user" }, { "content": "as revised, the answer is still that you're asking the wrong question. if your father wants to make money available on your debit card, all he has to do is deposit the money into your checking account. where he gets that money from -- as an amex cash advance, by selling your bicycle for you, or simply out of one of his own bank accounts -- is irrelevant.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 negotiate a lower salary to be placed in a lower tax bracket?", "role": "user" }, { "content": "no. in a marginal tax system, only additional dollars that push you into a higher bracket are taxed at that higher rate. if you would pay 15% on $73800, then when you earn over $73800, you will still only pay 15% of the $73800, plus 25% of the extra amount over $73800. as far as a marginal income tax affects things, you cannot decrease your net income by increasing your salary. (there can be other potential reasons to keep your income down besides income taxes, as asked in this question, but as the answer there suggests, these often aren't great reasons either.) as far as i know, every income tax system that has differing tax rates works this way. that is, i'm not aware of any country with an income tax system where you can decrease your net earnings by moving into a higher bracket.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "pay off credit card debt or earn employer 401(k) match?", "role": "user" }, { "content": "a matching pension scheme is like free money. no wait, it actually is free money. you are literally earning 100% interest rate on that money the instant you pay it in to the account. that money would have to sit in your credit card account for at least five years to earn that kind of return; five years in which the pension money would have earned an additional return over and above the 100%. mathematically there is no contest that contributing to a matching pension scheme is one of the best investment there is. you should always do it. well, almost always. when should you not do it?", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "how should one structure a portfolio given the possibility that a total stock market index might decline and not recover for a long time?", "role": "user" }, { "content": "here are a few things that you could try. but note that they are all capable of failing. they will just reduce the chance of you personally having a lost decade. first a quibble: john bogle advocates a total stock market index (something like vanguard's vtsmx) instead of an s&p fund, as the latter represents \"only\" 85% or so of the us market's total capitalization. smaller companies behave slightly differently than members of the s&p, so this might provide a small help. bogle also advocates holding some bonds in addition to equities. i'll expand on that below. account for dividends. just because the value of the index is the same as its value 10 or 20 years ago doesn't necessarily mean that decade was lost. the companies in the s&p are currently paying out an annualized dividend of about 2%. even if the actual value of the index doesn't change, you're still getting that 2% per year. include bonds. as i mentioned above, bogle recommends holding some bonds. i have seen two common rules. one is to never have less than 20% of your total holdings in bonds, and never have more than 80% of your total holdings in bonds. the other popular rule is to hold your age in bonds. for example, i'm about 30, so i should keep about 30% of my holdings in bonds. regardless of the split, rebalance periodically to keep yourself at that split. what effect would holding bonds have on a lost decade? to make the math easy, let's say you split your holdings evenly between an s&p fund and 10 year treasuries. coincidentally, 10 year t-notes have the same 2% yield as the s&p dividends. if you're getting that on half your holdings, and nothing on the other half, you're netting 1% per year. not great, but not totally lost. to illustrate the effect of rebalancing, use my example of a 70/30 stock/bond split. the s&p lost about 50% of its value from its peak to the bottom of the market in early 2008. if you only held stock, you would need the market to increase in value by 100% in order for you to recover that value. if 30% of your holdings are in bonds, and you rebalance at exactly the bottom of the stock market, you only need the stock index to increase in value by about 80% from the bottom in order to make you whole again. i mention those two to emphasize that your investment return is not just a function of the price of a stock index. dollar cost average. it's rare that you will actually face the situation of putting (say) $100,000 into the market all at once, let it sit for 10-20 years, then take it all out at once. the situation you face is closer to putting about $1000 into the market every month for 100 months. if you do that, then you're getting a different price for each purchase you make. your actual return will be a weighted average of the return from each of those purchases. but note that this could help or hurt you. using the chart victor showed in his answer, if your lost decade is from one peak to the next peak, your average price will be below the price you would have entered and left at. so this helps. but if your lost decade is from trough to trough, then your average price is higher than the start and end price, so this has hurt you. those are the two extreme cases, and the general case will be somewhere in between. and you can use these regular purchases to help you carry out your regular rebalancing. foreign equities. since you mention the s&p500 specifically, i assume that you are in the united states. the us equities is approximately 45% of the world equities market. so even if the s&p500 has a lost decade, it's unlikely that the rest of the world will also have a lost decade at the same time. for comparison, the tokyo stock exchange is the third largest in the world (behind the us's nyse and nasdaq); the market cap of the tse is less than 20% that of the combined market cap of the nyse and the nasdaq, which puts it at about 10% of the world's market cap. when the nikkei had its lost decades, no one else had a lost decade. note that buying foreign equities is more expensive than buying domestic, and it exposes you to fluctuations in the exchange rate of the currencies. but the benefit of diversification probably outweighs those downsides. and obviously it's easier to diversify away from japan than it is to diversify away from the united states. but there are people who advocate holding exactly the market weight of every country in the world.", "role": "assistant" } ]