Datasets:

Marina-C

/

question-answer-Subject-Finance-Instruct

like 0

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "close to retirement & we may move within 7 years. should we re-finance our mortgage, or not?", "role": "user" }, { "content": "think of your mortgage this way - you have a $130k 16 year mortgage, at 6.75%. at 4%, the same payment ($1109 or so) will pay off the loan in 12.4 years. so, i agree with littleadv, go for a 15yr fixed (but still make the higher payment) or 10 yr if you don't mind the required higher payment. either way, a refinance is the way to go. edit - my local bank is offering me a 3.5% 15 yr loan with fees totaling $2500. for the op here, a savings of 3.25% or first year interest savings of $4225. 7 months to breakeven. it's important not to get caught up in trying to calculate savings 15-20 years out. what counts today is the rate difference and looking at it over the next 12 months is a start. if you break even to closing costs so soon, that's enough to make the decision.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 determine contractor hourly rate and employee salary equivalents?", "role": "user" }, { "content": "take $100,000 base salary, x 1.5 = $150,000 contractor salary, divide by 1,872 hours = $80/hr", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 should i trust investment banks' ratings?", "role": "user" }, { "content": "if there's indeed no reason to trust gs, i.e. those are just guides then the question is: why do investors seem to care? because there's a reason to trust. you're just reading the bottom line - the target price range. more involved investors read the whole report, including the description of the current situation, the premises for the analysis, the expectations on the firm's performance and what these expectations are based on, the analysis of how the various scenarios might affect the valuation, and the evaluation of chances of these scenarios to occur. you don't have to trust everything and expect it to be 100% correct, analysts are not prophets. but you do have an option of reading their reports and critically analyzing their conclusions. what you suspect gs of doing (\"i tend to believe those guys just want themselves a cheap buy price a few days before q2 earnings release\") is a criminal offence.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "bonds vs equities: crash theory", "role": "user" }, { "content": "diversify into leveraged short/bear etfs and then you can quit your job and yell at your boss \"f you i'm short your house!\" edit: this is a quote from greg lippmann and mentioned in the book \"the big short\"", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "what are the real risks in bio-technology companies?", "role": "user" }, { "content": "be wary of pump and dump schemes. this scheme works like this: when you observe that \"from time to time the action explodes with 100 or 200% gains and volumes exceeding one million and it then back down to $ 0.02\", it appears that this scheme was performed repeatedly on this stock. when you see a company with a very, very low stock price which claims to have a very bright future, you should ask yourself why the stock is so low. there are professional stock brokers who have access to the same information you have, and much more. so why don't they buy that stock? likely because they realize that the claims about the company are greatly exaggerated or even completely made up.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "why is there so much variability on interest rate accounts", "role": "user" }, { "content": "pay attention to nickel-and-dime charges (atm fees, low balance fees, limit on atm transactions per month, charge for human teller transaction, charge for paper statements or tax records). consider that a financial company will spend on the order of $100-500 to sign up a good customer. are you getting this in a cash bonus, competitive high interest rate, reasonable other gift, or advertising directed at your eyeballs? a variation in rates less than 1% easily fits into a marketing cost and there doesn't have to be any other magic to 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": "employer no longer withholds, how do i self administer 401k", "role": "user" }, { "content": "you can't be doing it yourself. only your employer can do it. if the employer doesn't provide the option - switch employers. the only way for you to do it yourself is if you're the employer, i.e.: self-employed.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 the best way to make and save money at 22 years old", "role": "user" }, { "content": "fantastic question to be asking at the age of 22! a very wise man suggested to me the following with regard to your net income i've purposely not included saving a sum of money for a house deposit, as this is very much cultural and lots of eu countries have a low rate of home ownership. on the education versus entrepreneur question. i don't think these are mutually exclusive. i am a big advocate of education (i have a b.eng) but have following working in the real world for a number of years have started an it business in data analytics. my business partner and i saw a gap in the market and have exploited it. i continue to educate myself now in short courses on running business, data analytics and investment. my business partner did things the otherway around, starting the company first, then getting an m.sc. other posters have suggested that investing your money personally is a bad idea. i think it is a very good idea to take control of your own destiny and choose how you will invest your money. i would say similarly that giving your money to someone else who will sometimes lose you money and will charge you for the privilege is a bad idea. also putting your money in a box under your bed or in the bank and receive interest that is less than inflation are bad ideas. you need to choose where to invest your money otherwise you will gain no advantage from the savings and inflation will erode your buying power. i would suggest that you educate yourself in the investment options that are available to you and those that suit you personality and life circumstances. here are some notes on learning about stock market trading/investing if you choose to take that direction along with some books for self learning.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 i can't view my debit card pre-authorized amounts?", "role": "user" }, { "content": "no money is stolen. they don't show you the hold for whatever reason (not so good a bank?), but the money is still yours. you just cannot use it, but it is still on your account. these holds usually go away after a week. in certain cases (like a security deposit) it may take up to 30 days. you can request from the merchant to cancel the hold if it is no longer necessary. they'll have to be proactive on that, and some merchants wouldn't want the hassle. it is however a known issue. when i was working in the banking industry, we would routinely receive these hold cancellation requests from merchants (hotels and car rentals).", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "the life cycle of money", "role": "user" }, { "content": "echoing johnf, and assuming you mean the physical, rather than abstract meaning of money? the abstract concept obviously isn't replaced (unless the currency is discredited, or like the creation of the euro which saw local currencies abandoned). the actual bits of paper are regularly collected, shredded (into itty-bitty-bits) and destroyed. coinage tends to last a lot longer, but it also collected and melted down eventually. depends on the country, though. no doubt, many people who took a gap year to go travelling in points diverse came across countries where the money is a sort of brown-grey smudge you hold with care in thick wadges. the more modern economies replace paper money on a dedicated cycle (around three years according to wikipedia, anyway).", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "credit card points from refund", "role": "user" }, { "content": "that transaction probably cost the merchant $0.50 + 3% or close to $5. they should have refunded your credit card so they could have recouped some of the fees. (i imagine that's why big-box retailers like home depot always prefer to put it back on your card than give you store credit) consider yourself lucky you made out with $0.15 this time. (had they refunded your card, the 1% of $150 credit would have gone against next month's reward) once upon a time folks were buying money from the us mint by the tens of thousands $ range and receiving credit card rewards, then depositing the money to pay it off.. they figured that out and put a stop to 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": "when will the u.k. convert to the euro as an official currency?", "role": "user" }, { "content": "in many countries in europe the prices shot through the roof, so it is not all positive. also the switching country gives out lot of monetary control that is not welcomed by many. i think that uk is not going to change to euro for a long long 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": "closing a credit card with an annual fee without hurting credit score?", "role": "user" }, { "content": "the two factors that will hurt you the most is the age of the credit account, and your available credit to debt ratio. removing an older account takes that account out of the equation of calculating your overall credit score, which can hurt significantly, especially if that is the only, or one of just a couple, of open credit lines you have available. reducing your available credit will make your current debt look bigger than what it was before you closed your account. going over a certain percentage for your debt to available credit can make you look less favorable to lenders. [as stated above, closing a credit card does remove it from the credit utilization calculation which can raise your debt/credit ratio. it does not, however; affect the average age of credit cards. even closed accounts stay on your credit report for ten years and are credited toward average age of cards. when the closed credit card falls off your report, only then, will the average age of credit cards be recalculated.] and may i suggest getting your free credit report from https://www.annualcreditreport.com . it's the only place considered 'official' to receive your free annual credit report as told by the ftc. going to other 3rd party sites to pull your credit report can risk your information being traded or sold. edit: to answer your second point, there are numerous factors that banks and creditors will consider depending on the type of card you're applying for. the heavier the personal rewards (cash back, flyer miles, discounts, etc.) the bigger the stipulation. some factors to consider are your income to debt ratio, income to available credit ratio, number of revolving lines of credit, debt to available credit ratio, available credit to debt ratio, and whether or not you have sufficient equity and/or assets to cover both your debt and available credit. they want to make sure that if you go crazy and max out all of your lines of credit, that you are capable of paying it all back in a sufficient amount of time. in other words, your volatility as a debt-consumer.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 should i walk away from my mortgage?", "role": "user" }, { "content": "very few people's credit is worth $100,000. the average homeowner's credit (family of four with good to very good credit) is worth about $30,000. this is a pure business decision. the bank knew the law when they extended the mortgage to you, and part of the amount they're charging you goes to cover the risk that you might opt to walk away. the mortgage was an agreement between you and the bank and it specified the penalty for you walking away. taking the agreed upon penalty for an action specifically contemplated in the agreement is also keeping the agreement.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 not pay in full upfront for a car?", "role": "user" }, { "content": "there many car loans at zero percent interest. finance the car at zero percent, then take your money and invest it. if you want to be super safe buy a cd the same length as the car loan. 5 years you will get 2%. if you still want safety and a better return take up a asset allocation strategy that moves your cash to risky assets when the market is performing well, then to cash, bonds, or cds when the market under-performs. now you have your car with a zero percent loan and you are making the return on the money instead of the car company.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "apr for a loan paid off monthly", "role": "user" }, { "content": "if your apr is quoted as nominal rate compounded monthly, the apr is 108.6 %. here is the calculation, (done in mathematica ). the sum of the discounted future payments (p) are set equal to the present value (pv) of the loan, and solved for the periodic interest rate (r). details of the effective interest rate calculation can be found here. http://en.wikipedia.org/wiki/effective_interest_rate#calculation", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 start investing for an immigrant?", "role": "user" }, { "content": "i am in a similar situation (sw developer, immigrant waiting for green card, no debt, healthy, not sure if i will stay here forever, only son of aging parents). i am contributing to my 401k to max my employer contribution (which is 3.5%, you should find that out from your hr). i don't have any specific financial goal in my mind, so beside an emergency fund (i was recommended to have at least 6 months worth of salary in cash) i am stashing away 10% of my income which i invest with a notorious robot-adviser. the rate is 80% stocks, 20% bonds, as i don't plan to use those funds anytime soon. should i go back to my country, i will bring with me (or transfer) the cash, and leave my investments here. the 401k will keep growing and so the investments, and perhaps i will be able to retire earlier than expected. it's quite vague i know, but in the situation we are, it's hard to make definite plans.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "visitor shopping in the us: would i get tax refund? would i have to pay anything upon departure?", "role": "user" }, { "content": "the us doesn't have a value added tax, which is the one usually refundable upon departing the country... so sales taxes you pay in this country stay in this country and you don't get a refund. just remember to treat the tax as an implied part of the price. (and be aware that state and local taxes may vary, so the total price may be higher in one place than in another. new york city adds a few percent on top of the state sales tax, for example.) if you aren't sure how much tax would be, don't be afraid to ask.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 purpose of endorsing a check?", "role": "user" }, { "content": "i actually had to go to the bank today and so i decided to ask. the answer i was given is that a check is a legal document (a promise to pay). in order to get your money from the bank, you need to sign the check over to them. by endorsing the check you are attesting to the fact that you have transferred said document to them and they can draw on that account.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "how do i account for 100 percent vendor discounts in gnucash 2.6.5", "role": "user" }, { "content": "the answer was provided to me at the gnucash chat by \"warlord\". the procedure is as follows: after doing this you will have:", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 find out what factors are making a stock's price rise?", "role": "user" }, { "content": "at any moment, the price is where the supply (seller) and demand (buyer) intersect. this occurs fast enough you don't see it as anything other than bid/ask. what moves it? news of a new drug, device, sandwich, etc. earning release, whether above or below expectations, or even dead-on, will often impact the price. every night, the talking heads try to explain the day's price moves. when they can't, they often report \"profit taking\" for a market drop, or other similar nonsense. some moves are simple random 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": "are there capital gains taxes or dividend taxes if i invest in the u.s. stock market from outside of the country?", "role": "user" }, { "content": "i believe that tax will be withheld (at 30%?) on dividends paid to non-residents. you can claim it back if your country has a tax treaty with the usa, but you will need to file. you probably also need to file a w-series withholding form (eg a w9-ben). interesting question. i would like to hear a more definitive 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": "rules for broker behavior with covered calls", "role": "user" }, { "content": "number 2 cannot occur. you can buy the call back and sell the stock, but the broker won't force that #2 choice. to trade options, you must have a margin account. no matter how high the stock goes, once \"in the money\" the option isn't going to rise faster, so your margin % is not an issue. and your example is a bit troublesome to me. why would a $120 strike call spike to $22 with only a month left? you've made the full $20 on the stock rise and given up any gain after that. that's all. the call owner may exercise at any time. edit: @jaydles is right, there are circumstances where an option price can increase faster than the stock price. options pricing generally follows the black-scholes model. since the op gave us the current stock price, option strike price, and time to expiration, and we know the risk free rate is <1%, you can use the calculator to change volatility. the number two scenario won't occur, however, because a covered call has no risk to the broker, they won't force you to buy the option back, and the option buyer has no motive to exercise it as the entire option value is time 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": "investment options in australia", "role": "user" }, { "content": "it depends on the exact level of risk that you want, but if you want to keep your risk close to zero you're pretty much stuck with the banks (and those rates don't look to be going up any time soon). if you're willing to accept a little more risk, you can invest in some index tracking etfs instead, with the main providers in australia being vanguard, street state and betashares. a useful tool for for an overview of the australian etf market is offered by stockspot. the index funds reduce your level of risk by investing in an index of the market, e.g. the s&p 200 tracked by stw. if the market as a whole rises, then your investment will too, even though within that index individual companies will rise and fall. this limits your potential rate of return as well, and is still significantly more risky than leaving your cash in an aussie bank (after all, the whole market can fall), but it might strike the right balance for you. if you're getting started, hsbc, nabtrade, commsec and westpac were all offering a couple of months of free trades up to a certain value. once the free trades are done, you'll do better to move to another broker (you can migrate your shares to the others to take advantage of their free trades too) or to a cheaper broker like cmc markets.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "effect of job change on in-progress mortgage application", "role": "user" }, { "content": "i just closed on a refi last week thursday. the app went to the lender mid to late may. the lender called my employer for an employment verification on the monday before closing. i would wait till after the loan funds to change jobs. fwiw, we signed on thursday afternoon, escrow had to fedex the originals to the lender on friday, lender should have received it on monday, we are still waiting to fund. i expect the loan to fund no later than tomorrow.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 my education loan or put it in the stock market?", "role": "user" }, { "content": "2.47% is a really, really good rate, doubly so if it's a fixed rate, and quadruply so if the interest is tax-deductible. that's about as close to \"free money\" as you're ever going to get. heck, depending on what inflation does over the next few years, it might even be cheaper than free. so if you have the risk tolerance for it, it's probably more effective to invest the money in the stock market than to accelerate your student loan payoff. you can even do better in the bond market (my go-to intermediate-term corporate bond fund is yielding nearly 4% right now.) just remember the old banker's aphorism: assets shrink. liabilities never shrink. you can lose the money you've invested in stocks or bonds, and you'll still have to pay back the loan. and, when in doubt, you can usually assume you're underestimating your risks. if you're feeling up for it, i'd say: make sure you have a good emergency fund outside of your investment money - something you could live on for six months or so and pay your bills while looking for a job, and sock the rest into something like the vanguard lifestrategy moderate growth fund or a similar instrument (vanguard's just my personal preference, since i like their style - and by style, i mean low fees - but definitely feel free to consider alternatives). you could also pad your retirement accounts and avoid taxes on any gains instead, but remember that it's easier to put money into those than take it out, so be sure to double-check the state of your emergency 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": "small investing for spending money?", "role": "user" }, { "content": "congrats on saving the money but unfortunately, you're looking for a 24% annual rate of return and that's not \"reasonable\" to expect. $200 per month, is $2,400 per year. $2,400/$10,000 is 24%. in a 1% savings account with spending of $200 per month spending you'll have about $7,882 at the end of the year. you'll earn about $90 of interest over the course of the year. i'm sure other people will have more specific opinions about the best way to deploy that money. i'd open a brokerage account (not an ira, just a regular plain vanilla brokerage account), break off $5,000 and put it in to a low fee no commission s&p index fund; which can lose value. put the rest in a savings account/checking account and just spend wisely.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "why is the stock market closed on the weekend?", "role": "user" }, { "content": "simply, most of the above given 'answers' are mere 'justifications' for a practice that has become anachronistic. it did make sense once in the past, but not any more. computers and networks can run non-stop 24/7; even though the same human beings cannot be expected to work 24/7, we have invented the beautiful concept of multiple shifts; banks may be closed during nights and weekends, but banking is never closed in the internet era; ...the answer must lie in the vested interests of a few stakeholder groups - or - it could just be our difficult to change habits.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 buy stock on the toronto stock exchange?", "role": "user" }, { "content": "you probably bought the cross listed westjet stock. if you wanted to buy shares on the tse, i'd suspect you'd have to find a way to open a brokerage account within canada and then you'd be able to buy the shares. however, this could get complicated to some extent as there could be requirements of canadian tax stuff like a social insurance number that may require some paperwork. in addition, you'd have to review tax law of both countries to determine how to appropriately report to each country your income as there are various rules around that. td waterhouse would be the canadian subsidiary of td ameritrade though i haven't tried to create a canadian brokerage account.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "how do i factor dividends and yield into the performance of a security?", "role": "user" }, { "content": "instead of a price chart can use a performance chart, which is usually expressed as a percentage increase from the original purchase price. to factor in the dividends, you can either add in all of your dividends to the final price, or subtract the accumulated dividends from your cost basis (the initial 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": "opening and funding an ira in three days - is this feasible?", "role": "user" }, { "content": "some banks and credit unions have ira accounts. they pay interest like a savings account or a cd but they are an ira. after the 15th you can roll them over into a ira at one of the big investment companies so you can get invest in an index or target retirement fund. but it is not too late. opening an account at one of the big companies takes ten minutes (you need to know your social security number and your bank account info) they can pull it out of your bank account. i helped my kid do the same thing this week. we went on-line tuesday night, and they pulled the money from his account on thursday morning. also know which type you want (roth or regular) before you start. also make sure you specify that the money is for 2013 not 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": "recovering over-contribution to social security between two employers?", "role": "user" }, { "content": "this is a common occurrence when somebody has multiple jobs in one year. the employer can't know if you have reached the annual limit. they know to stop when you have hit the maximum for their company, but don't have information on the other jobs. in fact the irs doesn't let them factor in the other jobs. they have to keep making their payment until you hit the max for their company. when you fill out the 1040 there will be a line that checks that the total social security amount for each person was not over the annual limit. the extra will be refunded when you file your taxes. in the future if this happens again you can adjust your withholding to minimize the overage. for the example given in the question to get the 4k extra sooner, increase the number of allowances on the w-4. you can under withhold federal income tax because you will over withhold social security tax.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "walking away from an fha loan", "role": "user" }, { "content": "one additional penalty is you will be put on the caivrs (\"cavers\") for your default on the fha mortgage which will preclude you from fha financing in the future. when purchasing the multifamily unit it is an fha requirement that you occupy one of the units. lastly, i would advise against fha due to elevated costs. conventional options have 95% financing options, and don't have mortgage insurance that lasts forever, like fha does.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "understanding the t + 3 settlement days rule", "role": "user" }, { "content": "the key word you forgot to include from slide 29 is: free-riding investopedia defines free-riding as: in the context of a brokerage firm, a free rider problem refers to a situation where a client has been allowed to purchase shares without actually paying for them, and then subsequently sells the shares (ideally for profit). the problem with this scenario is that the client, if allowed to free ride, can profit from a stock trade without actually using any of his or her own capital. this is illegal. i have not heard of any issues with this type of action being a problem with trading accounts in australia, nor have i been able to find any such rules on the asx website or any of by brokers websites. so i think this may be an issue in the usa but not australia. you should check the rules in any other countries you wish to trade in.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "credit balance on new credit card", "role": "user" }, { "content": "a credit balance means that you overpayed. that's nothing to worry about; it will just be used up by your next charges. note that this can have two reasons - either you really paid too much; or you paid off a charge that is still 'pending' - meaning it has not yet posted and is not considered in the amount you owe: most charges in restaurants for example are pending for a day or more, because the original charge is your bill without tip (they don't know the tip when the run the card!), and the merchant spends his weekends or evenings to type in the final amount (including tip) and post the pending charge. if this is the case, it will settle ('get posted') in a day or two, and then it will match up.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "passing money through a different account to avoid cash pay-in fees", "role": "user" }, { "content": "let me do the math. .6% * (not large) = really tiny. since \"not large\" = \"small\" , etc. i suggest that even a small chance that you need to explain this to anyone in the future is a sign to avoid the risk. yes, there are times that it's illegal. a real estate office may not deposit escrow funds into anything but a segregated escrow account. in your case, even if legal, it messes up 'the books' and can cost you more in grief than the 'tiny amount' saves you in cash.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "what did benjamin graham mean by earnings stability in the intelligent investor?", "role": "user" }, { "content": "yes - this is exactly what it means. no losses (negative earnings). with today's accounting methods, you might want to determine whether you view earnings including or excluding extraordinary items. for example, a company might take a once-off charge to its earnings when revising the value of a major asset. this would show in the \"including\" but not in the \"excluding\" figure. the book actually has a nice discussion in chapter 12 \"things to consider about per-share earnings\" which considers several additional variables to consider here too. note that this earnings metric is different from \"stock selection for the defensive investor\" which requires 10 years. ps - my edition (4th edition hardback) doesn't have 386 pages so your reference isn't correct for that edition. i found it on page 209 in chapter 15 \"stock selection for the enterprising investor\".", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 default on my private student loans if i was an international student?", "role": "user" }, { "content": "what are the consequences if i ignore the emails? if you ignore the emails they will try harder to collect the money from you until they give up. unlike what some other people here say, defaulting on a loan is not a crime and is not the same as stealing. there is a large number of reasons that can make someone unable to pay off a loan. lenders are aware of the risk associated with default; they will try to collect the debt but at the end of the day if you don't have money/assets there is not much they can do. as far as immigration goes, there is nothing on a ds-160 form that asks you about bankruptcies or unpaid obligations. i doubt the consular officer will know of this situation, but it is possible. it is not grounds for visa ineligibility however, so you will be fine if everything else is fine. the only scenario in which unpaid student loans can come up relevant in immigration to the us is if and when you apply for us citizenship. one of the requirements for citizenship is having good moral character. having a large amount of unpaid debt constitutes evidence of a poor moral character. but it is very unlikely you'd be denied citizenship on grounds of that alone. i got a social security number when i took up on campus jobs at the school and i do have a credit score. can they get a hold of this and report to the credit bureaus even though i don't live in america? yes, they probably already have. how would this affect me if i visit america often? does this mean i would not ever be able to live in america? no. see above. you will have a hard time borrowing again. will they know when i come to america and arrest me at the border or can they take away my passport? no. unpaid debt is no grounds for inadmissibility, so even if the cbp agent knows of it he will not do anything. and again, unpaid debt is not a crime so you will not be arrested.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 invest for the long-term rather than buy and sell for quick, big gains?", "role": "user" }, { "content": "there are people (well, companies) who make money doing roughly what you describe, but not exactly. they're called \"market makers\". their value for x% is somewhere on the scale of 1% (that is to say: a scale at which almost everything is \"volatile\"), but they use leverage, shorting and hedging to complicate things to the point where it's nothing like a simple as making a 1% profit every time they trade. their actions tend to reduce volatility and increase liquidity. the reason you can't do this is that you don't have enough capital to do what market makers do, and you don't receive any advantages that the exchange might offer to official market makers in return for them contracting to always make both buy bids and sell offers (at different prices, hence the \"bid-offer spread\"). they have to be able to cover large short-term losses on individual stocks, but when the stock doesn't move too much they do make profits from the spread. the reason you can't just buy a lot of volatile stocks \"assuming i don't make too many poor choices\", is that the reason the stocks are volatile is that nobody knows which ones are the good choices and which ones are the poor choices. so if you buy volatile stocks then you will buy a bunch of losers, so what's your strategy for ensuring there aren't \"too many\"? supposing that you're going to hold 10 stocks, with 10% of your money in each, what do you do the first time all 10 of them fall the day after you bought them? or maybe not all 10, but suppose 75% of your holdings give no impression that they're going to hit your target any time soon. do you just sit tight and stop trading until one of them hits your x% target (in which case you start to look a little bit more like a long-term investor after all), or are you tempted to change your strategy as the months and years roll by? if you will eventually sell things at a loss to make cash available for new trades, then you cannot assess your strategy \"as if\" you always make an x% gain, since that isn't true. if you don't ever sell at a loss, then you'll inevitably sometimes have no cash to trade with through picking losers. the big practical question then is when that state of affairs persists, for how long, and whether it's in force when you want to spend the money on something other than investing. so sure, if you used a short-term time machine to know in advance which volatile stocks are the good ones today, then it would be more profitable to day-trade those than it would be to invest for the long term. investing on the assumption that you'll only pick short-term winners is basically the same as assuming you have that time machine ;-) there are various strategies for analysing the market and trying to find ways to more modestly do what market makers do, which is to take profit from the inherent volatility of the market. the simple strategy you describe isn't complete and cannot be assessed since you don't say how to decide what to buy, but the selling strategy \"sell as soon as i've made x% but not otherwise\" can certainly be improved. if you're keen you can test a give strategy for yourself using historical share price data (or current share price data: run an imaginary account and see how you're doing in 12 months). when using historical data you have to be realistic about how you'd choose what stocks to buy each day, or else you're just cheating at solitaire. when using current data you have to beware that there might not be a major market slump in the next 12 months, in which case you won't know how your strategy performs under conditions that it inevitably will meet eventually if you run it for real. you also have to be sure in either case to factor in the transaction costs you'd be paying, and the fact that you're buying at the offer price and selling at the bid price, you can't trade at the headline mid-market price. finally, you have to consider that to do pure technical analysis as an individual, you are in effect competing against a bank that's camped on top of the exchange to get fastest possible access to trade, it has a supercomputer and a team of whizz-kids, and it's trying to find and extract the same opportunities you are. this is not to say the plucky underdog can't do well, but there are systematic reasons not to just assume you will. so folks investing for their retirement generally prefer a low-risk strategy that plays the averages and settles for taking long-term trends.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 inflation a good or bad thing? why do governments want some inflation?", "role": "user" }, { "content": "sensitive topic ;) inflation is a consequence of the mismatch between supply and demand. in an ideal world the amount of goods available would exactly match the demand for those goods. we don't live in an ideal world. one example of oversupply is dollar stores where you can buy remainders from companies that misjudged demand. most recently we've seen wheat prices rise as fires outside moscow damaged the harvest and the russian government banned exports. and that introduces the danger of inflation. inflation is a signal, like the pain you feel after an injury. if you simply took a painkiller you may completely ignore a broken leg until gangrene took your life. governments sometimes \"ban\" inflation by fixing prices. both the zimbabwean and venezuelan governments have tried this recently. the consequence of that is goods become unavailable as producers refuse to create supply for less than the cost of production. as crimonsx pointed out, governments do desperately want to avoid deflation as much as they want to avoid hyperinflation. there is a \"correct\" level and that has resulted in the monetary policy called \"inflation targetting\" where central banks attempt to manage inflation into a target range (usually around 2% to 6%). the reason is simply that limited inflation drives investment and consumption. with a guaranteed return on investment people with cash will lend it to people with ideas. consumers will buy goods today if they fear that the price will rise tomorrow. if prices fall (as they have done during the two decades of deflation in japan) then the result is lower levels of investment and employment as companies cut production capacity. if prices rise to quickly (as in zimbabwe and venezuela) then people cannot save enough or earn enough and so their wealth is drained away. add to this the continual process of innovation and you see how difficult it is to manage inflation at all. innovation can result in increased efficiency which can reduce prices. it can also result in a new product which is sufficiently unique to allow predatory pricing (the apple iphone, new types of medicines, and so on). the best mechanism we have for figuring out where money should be invested and who is the best recipient of any good is the price mechanism. inflation is the signal that investors need to learn how best to manage their efforts. we hide from it at our peril.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "responsible investing - just a marketing trick?", "role": "user" }, { "content": "you are correct that, barring an equity capital raise, your money doesn't actually end up in the company. however, interest in their stock can help a company in other ways; management/board members hopefully own shares or options themselves, thus knowing that \"green\" policies are favorable for the stock price (as your fund might buy shares) can be quite an incentive for them to go green(er). companies with above average company share performance are also often viewed as financially healthy and so creditors tend to charge lower interest for companies with good share performance. lastly, a high share price makes a company difficult to take over (as all those shares have to be acquired) and at the same time makes it easier for the company to perform takeovers themselves as they can finance such acquisitions by issuing more of their own shares. there is also the implication that money flowing towards such green companies is money flowing out of/away from polluting companies, for these \"dirty\" companies the inverse of the previous points can hold true. of course on the other hand there is quite an argument to be made that large enough \"green\" funds should actually buy substantial positions in companies with poor environmental records and steer the company towards greener policies but that might be a hard sell to investors.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "investing in income stocks for dividends - worth it?", "role": "user" }, { "content": "is it worth it? you state the average yield on a stock as 2-3%, but seem to have come up with this by looking at the yield of an s&p500 index. not every stock in that index is paying a dividend and many of them that are paying have such a low yield that a dividend investor would not even consider them. unless you plan to buy the index itself, you are distorting the possible income by averaging in all these \"duds\". you are also assuming your income is directly proportional to the amount of yield you could buy right now. but that's a false measure because you are talking about building up your investment by contributing $2k-$3k/month. no matter what asset you choose to invest in, it's going to take some time to build up to asset(s) producing $20k/year income at that rate. investments today will have time in market to grow in multiple ways. given you have some time, immediate yield is not what you should be measuring dividends, or other investments, on in my opinion. income investors usually focus on yoc (yield on cost), a measure of income to be received this year based on the purchase price of the asset producing that income. if you do go with dividend investing and your investments grow the dividends themselves on a regular basis, it's not unheard of for yoc to be north of 6% in 10 years. the same can be true of rental property given that rents can rise. achieving that with dividends has alot to do with picking the right companies, but you've said you are not opposed to working hard to invest correctly, so i assume researching and teaching yourself how to lower the risk of picking the wrong companies isn't something you'd be opposed to. i know more about dividend growth investing than i do property investing, so i can only provide an example of a dividend growth entry strategy: many dividend growth investors have goals of not entering a new position unless the current yield is over 3%, and only then when the company has a long, consistent, track record of growing eps and dividends at a good rate, a low debt/cashflow ratio to reduce risk of dividend cuts, and a good moat to preserve competitiveness of the company relative to its peers. (amongst many other possible measures.) they then buy only on dips, or downtrends, where the price causes a higher yield and lower than normal p/e at the same time that they have faith that they've valued the company correctly for a 3+ year, or longer, hold time. there are those who self-report that they've managed to build up a $20k+ dividend payment portfolio in less than 10 years. check out dividend growth investor's blog for an example. there's a whole world of dividend growth investing strategies and writings out there and the commenters on his blog will lead to links for many of them. i want to point out that income is not just for those who are old. some people planned, and have achieved, the ability to retire young purely because they've built up an income portfolio that covers their expenses. assuming you want that, the question is whether stock assets that pay dividends is the type of investment process that resonates with you, or if something else fits you better. i believe the op says they'd prefer long hold times, with few activities once the investment decisions are made, and isn't dissuaded by significant work to identify his investments. both real estate and stocks fit the latter, but the subtypes of dividend growth stocks and hands-off property investing (which i assume means paying for a property manager) are a better fit for the former. in my opinion, the biggest additional factor differentiating these two is liquidity concerns. post-tax stock accounts are going to be much easier to turn into emergency cash than a real estate portfolio. whether that's an important factor depends on personal situation though.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "opportunity to buy illinois bonds that can never default?", "role": "user" }, { "content": "if you give money to a person or entity, and they don't have the ability to pay you back, it doesn't matter if they are legally required to pay 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": "can a shareholder be liable in case of bankruptcy of one of the companies he invested in?", "role": "user" }, { "content": "not normally, for a limited liability company anyway. in extreme circumstances a court may \"lift the veil\" of incorporation and treat shareholders as if they were partners. if you are an office bearer or a director that is found to have breached duties/responsibiities then that is another matter. dim views can be taken of shonky arrangents for companies formed for activites not of a bona fide business nature too.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "can after-hours trading affect options pricing?", "role": "user" }, { "content": "there is a white paper on \"the weekend effect of equity options\" it is a good paper and shows that (for the most part) option values do lose money from friday to monday. which makes sense because it is getting closer to expiration. of course this not something that can be counted on 100%. if there is some bad news and the stock opens down on a monday the puts would have increased and the calls decreased in value. article summary (from the authors): \"we find that returns on options on individual equities display markedly lower returns over weekends (friday close to monday close) relative to any other day of the week. these patterns are observed both in unhedged and delta-hedged positions, indicating that the effect is not the result of a weekend effect in the underlying securities. we find even stronger weekend effects in implied volatilities, but only after an adjustment to quote implied volatilities in terms of trading days rather than calendar days.\" \"our results hold for puts and calls over a wide range of maturities and strike prices, for both equally weighted portfolios and for portfolios weighted by the market value of open interest, and also for samples that include only the most liquid options in the market. we find no evidence of a weekly seasonal in bid-ask spreads, trading volume, or open interest that could drive the effect. we also find little evidence that weekend returns are driven by higher levels of risk over the weekend. \"the effect is particularly strong over expiration weekends, and it is also present to a lesser degree over mid-week holidays. finally, the effect is stronger when the ted spread and market volatility are high, which we interpret as providing support for a limits to arbitrage explanation for the persistence of the effect.\" - christopher s. jones & joshua shemes you can read more about this at this link for memphis.edu", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "assessing risk, and identifying scams in alternative investments", "role": "user" }, { "content": "10 to 20% return on investment annually. \"when i hear that an investment has a 10%+ return on it i avoid it because...\". in my opinion, and based on my experience, 10% annually is not an exageration. i start to ask questions only if one talks about return of 30% annually or more. these kind of returns are possible, but very rare. what sort of things do we need to look out for with alternative investment? first the quality of the website and the documentation provided. then the resume of the founders. who are those guys? i check their linkedin profile. if they have none, i am out. a linkedin profile is a minimum if you manage an investment company. i also look for diversification and this is the case with yieldstreet. how do we assess the risks associated with alternative investments? i would never put more than 10% of my capital in any investment, alternative ones included. i also try to find financial information on the promoter itself. in yieldstreet case check the legal advisor. i remember an international fraud case i analyse. the promoter i investigated had seven small trust involved: in british virgin islands, in panama, in holland, in portugal, in the united states and canada plus a banking account in switzerland and the biggest shareholding company in the isle of man. no need to talk about what happened after. the investors were all non residents in the juridictions involved and no legal recourse were possible. they lost everything. these promoters regularly change juridictions to avoid detection. as far as yieldstreet is concerned, what i read and checked seems interesting. thanks for your question. i will check it out myself more. i am also a very cautious investor. to evaluate alternative investments is difficult , but no need to be afraid or to avoid them. we are accredited investors after all.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "ghana scam and direct deposit scam?", "role": "user" }, { "content": "it's a scam. here's someone who paid \"josie\" 2000 pounds and lost it all here's a google search result list of how this softcore porn actor, josie ann miller, is being used as the face and name of scams", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "understanding stock market terminology", "role": "user" }, { "content": "one of the most useful ways to depict open, high, low, close, and volume is with a candlestick chart. i like to use the following options from stockcharts.com: http://stockcharts.com/h-sc/ui?s=spy&p=d&yr=0&mn=3&dy=0&id=p57211761385", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "table of how many years it takes to make a specified return on the stock market?", "role": "user" }, { "content": "well depends but \"on average\" the stock market has historically returned somewhere around 10% per year. note, this can vary wildly from year to year see http://en.wikipedia.org/wiki/s%26p_500#market_statistics so it would be roughly 2.8 years to get your 30% if you happen to get the average market return for those 3 years, but the chances of that happening exactly are slim to none. you could end up with +50% or -30% over that ~3 year period of time - so the calculation doesn't do you that much good for that short period of time, but if you are talking a span of 30 years then you could plan using that as a very rough ballpark. good rule of thumb is you shouldn't put any money in the stock market you think you will need anytime in the next 5 years. formula to figure out total gain would be principal x (1+ rate of return) ^ 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": "what could cause a stock to trade below book value?", "role": "user" }, { "content": "the key to evaluating book value is return on equity (roe). that's net profit divided by book value. the \"value\" of book value is measured by the company's roe (the higher the better). if the stock is selling below book value, the company's assets aren't earning enough to satisfy most investors. would you buy a cd that was paying, say two percentage points below the going rate for 100 cents on the dollar? probably not. you might be willing to buy it only by paying 2% less per year, say 98 cents on the dollar for a one year cd. the two cent discount from \"book value\" is your compensation for a low \"interest\" rate.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 call spread and how does it work?", "role": "user" }, { "content": "a bullish (or 'long') call spread is actually two separate option trades. the a/b notation is, respectively, the strike price of each trade. the first 'leg' of the strategy, corresponding to b, is the sale of a call option at a strike price of b (in this case $165). the proceeds from this sale, after transaction costs, are generally used to offset the cost of the second 'leg'. the second 'leg' of the strategy, corresponding to a, is the purchase of a call option at a strike price of a (in this case $145). now, the important part: the payoff. you can visualize it as so. this is where it gets a teeny bit math-y. below, p is the profit of the strategy, k1 is the strike price of the long call, k2 is the strike price of the short call, t1 is the premium paid for the long call option at the time of purchase, t2 is the premium received for the short call at the time of sale, and s is the current price of the stock. for simplicity's sake, we will assume that your position quantity is a single option contract and transaction costs are zero (which they are not). p = (t2 - max(0, s - k2)) + (max(0, s - k1) - t1) concretely, let's plug in the strikes of the strategy nathan proposes, and current prices (which i pulled from the screen). you have: p = (1.85 - max(0, 142.50 - 165)) - (max(0, 142.50 - 145)) = -$7.80 if the stock goes to $150, the payoff is -$2.80, which isn't quite break even -- but it may have been at the time he was speaking on tv. if the stock goes to $165, the payoff is $12.20. please do not neglect the cost of the trades! trading options can be pretty expensive depending on the broker. had i done this trade (quantity 1) at many popular brokers, i still would've been net negative pnl even if nflx went to >= $165.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "self-employed individual 401k self, match, and profit sharing contribution limits?", "role": "user" }, { "content": "it seems i can make contributions as employee-elective, employer match, or profit sharing; yet they all end up in the same 401k from my money since i'm both the employer and employee in this situation. correct. what does this mean for my allowed limits for each of the 3 types of contributions? are all 3 types deductible? \"deductible\"? nothing is deductible. first you need to calculate your \"compensation\". according to the irs, it is this: compensation is your “earned income,” which is defined as net earnings from self-employment after deducting both: so assuming (numbers for example, not real numbers) your business netted $30, and $500 is the se tax (half). you contributed $17.5 (max) for yourself. your compensation is thus 30-17.5-0.5=12. your business can contribute up to 25% of that on your behalf, i.e.: $4k. total that you can contribute in such a scenario is $21.5k. whatever is contributed to a regular 401k is deferred, i.e.: excluded from income for the current year and taxed when you withdraw it from 401k (not \"deducted\" - deferred).", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "questrade - what happens if i buy u.s. stock with canadian money?", "role": "user" }, { "content": "i don't believe from reading the responses above that questrade is doing anything 'original' or 'different' much less 'bad'. in rrsps you are not allowed to go into debt. so the costs of all trades must be covered. if there is not enough usd to pay the bill then enough cad is converted to do so. what else would anyone expect? how margin accounts work depends on whether the broker sets up different accounts for different currencies. some do, some don't. the whole point of using 'margin' is to buy securities when you don't have the cash to cover the cost. the result is a 'short' position in the cash. short positions accrue interest expense which is added to the balance once a month. every broker does this. if you buy a us stock in a usd account without the cash to cover it, you will end up with usd margin debt. if you buy us stock in an account that co-mingles both usd and cad assets and cash, then there will be options during the trade asking if you want to settle in usd or cad. if you settle in cad then obviously the broker will convert the necessary cad funds to pay for it. if you settle in us funds, but there is no usd cash in the account, then again, you have created a short position in usd.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "lease vs buy car with cash?", "role": "user" }, { "content": "a lease is a rental plain and simple. you borrow money to finance the expected depreciation over the course of the lease term. this arrangement will almost always cost more over time of your \"ownership.\" that does not mean that a lease is always a worse \"deal.\" cars are almost always a losing proposition; save for the oddball porsche or ferrari that is too scarce relative to demand. you accept ownership of a car and it starts to lose value. new cars lose value faster than used cars. typically, if you were to purchase the car, then sell it after 3 years, the total cost over those three years will work out to less total money than the equivalent 36 month lease. but, you will have to come up with a lot more money down, or a higher monthly payment, and/or sell the car after 36 months (assuming the pretty standard 36 month lease). with this in mind, some cars lease better than others because the projected depreciation is more favorable than other brands or models. personally, i bought a slightly used car certified pre-owned with a agreeable factory warranty extension. my next car i may lease. late model cars are getting so unbelievably expensive to maintain that more and more i feel like a long term rental has merit. just understand that for the convenience, for the freeing up of your cash flow, for the unlikelihood of maintenance, to not bother with resale or trading the car in, a lease will cost a premium over a purchase over the same time frame.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 the reserve bank determines the interest rates, do they take the house prices into account?", "role": "user" }, { "content": "the central banks sets various rate for lending to banks and paying interest to banks on excess funds. apart from these the central banks also sets various other ratios that either create more liquidity or remove liquidity from market. the cpi is just one input to the central bank to determine rate, is not the only deciding criteria. the cpi does not take into account the house price or the cost of renting in the basket of goods. one of the reasons could be that cpi contains basic essentials and also the fact that it should be easily mesurable over the period of time. for example retail price of a particular item is easily mesurable. the rent is not easily mesurable.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "in what category would i put a loan i took to pay an expense", "role": "user" }, { "content": "a loan is most generally a liability, a part of the balance sheet. expenses & income are part of the income statement. income is the net of revenues after expenses. the interest is an expense on the income statement, but the loan itself does not reside there unless if it is defaulted and forgiven. then it would become a revenue or contra-expense, depending on the methodology. the original purpose of the income statement is to show the net inflows of short term operational accruals which would exclude new borrowing and repaid loans. the cash flow statement will better show each cash event such as borrowing debt, repaying debt, or paying off a bill. to show how a loan may have funded a bill, which in theory it directly did not because an entity, be it a person or business, is like a single tank of water with multiple pipes filling and multiple pipes extracting, so it is impossible to know which exact inflow funded which exact outflow unless if there is only one inflow per period and one outflow per the same period. that being said, with a cash flow statement, the new loan will show a cash inflow when booked under the financing portion, and paying a bill will show a cash outflow when booked under the operating portion. with only those two transactions booked and an empty balance sheet beforehand, it could be determined that a new loan funded a bill payment.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 explain quick price changes early in the morning", "role": "user" }, { "content": "you may simply be asking why stocks 'gap up' or 'gap down' when the stock market opens. this is because the price adjusts to news that occurred while the exchanges were closed overnight. perhaps asian stocks crashed, or perhaps a news story was released in the new york times about some major company. there are thousands of factors that affect market sentiment, and the big gaps that happen at the open of every trading day is the price of the stocks catching up to those factors.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "how much (paper) cash should i keep on hand for an emergency?", "role": "user" }, { "content": "no cash is necessary for most people. in the modern day in the us there is no need to keep paper currency around for emergencies; any sort of emergency that knocked out all of the ability to use plastic (atms, credit cards, etc.) for an extended period of time and knocked your bank out of service would be of the level that cash might not have any value either. your $100 of cash for natural disasters is likely more than enough, and even that i wouldn't necessarily consider a vital thing in this day where even a major natural disaster probably isn't going to have too much impact on the financial sector outside of the immediate area (that you should be exiting quickly). keep however much cash around that you need for day to day cash expenses, and that should be enough. the level of emergency that would suggest cash being needed would probably need more than you'd actually want to keep around, anyway - i.e., a complete collapse of the american or world financial system would imply you need months' worth of cash. that's just not feasible, nor is it practical financially. you should have your emergency fund making at least a bit of interest - 1% or so isn't hard to get right now, and in the near future that may increase substantially if interest rates go up. it also would make you a substantial theft target if it were known you had months' worth of cash around the house (i.e., thousands of dollars). safes don't necessarily give you sufficient protection unless you've got a very good safe - commercial ones are only as safe as the ability to crack them and/or transport them is. now, if you find yourself regularly out at 2am and run out of cash, and you live somewhere that atms don't exist, and you find yourself needing to pay cab drivers from time to time after a drunk bender... then i'd keep at least one cab's worth of cash at home.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 good rule of thumb for how much i should have set aside as emergency cash?", "role": "user" }, { "content": "first you should maintain a monthly expense and find out the burn rate. there would be certain expenses that are annual but mandatory [school fees, insurance premium, property taxes, etc]. so the ideal emergency fund depending on your industry should be 3 month to 6 months plus your mandatory yearly payments, more so if they come together. for example most of my annual payments come out in may and i bank on the bonus payout in april to cater to this spike in expense. so if i were to lose a job in march, my emergency funds would be sufficient for routine expenses, if i don't provision for additional funds second you need to also figure out the reduced rate of monthly burn and ideally the emergency funds should be for 3 months of normal burn and 6 months of reduced burn.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 stop-loss as risk management: is it safe?", "role": "user" }, { "content": "a stop-loss does not guarantee a sale at the given price; it just automatically triggers an unlimited sale as soon as the market reaches the limit. depending on the development, your sale could be right at, slightly under, or deeply under the stop-loss limit you gave - it could even be it is never executed, if there are no further deals. the point is that each sell needs a partner that buys for that price, and if nobody is buying, no sale happens, no matter what you do (automated or manually) - your stop loss cannot 'force' a sale. stop-loss works well for minor corrections in liquid shares; it becomes less useful the less liquid a share is, and it will not be helpfull for seldomly traded shares.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "as a total beginner, how do i begin to understand finance & stocks?", "role": "user" }, { "content": "your understanding of the stock market is absolutely correct theoretically. however there is a lot more to it. a stock on a given day is effected by a lot of factors. these factors could really be anything. for example, if you are buying a stock in an agricultural company and there was no rainfall this year, there is a big chance that your stock will lose value. there is also a chance that a war breaks out tomorrow and due to all the government spending on the war, the economy collapses and effects the prices of stocks. why does this happen? this happens because bad rainfall or war can get people to lose confidence in a stock market. on the other hand gdp growth and low unemployment rates can make people think positive and increase the demand in a stock driving the prices up. the main factor in the stock market is sentiment(how people perceive certain news). this causes a stock to rise or fall even before the event actually happens. (for example:- weather pundits predicted good rainfall for next year. that news is already known to people, so if the weather pundit was correct, it might not drive the prices up. however, if the rainfall was way better than people expected it to be it would drive the price up and vice versa. these are just examples at a basic level. there are a lot of other factors which determine the price of the stock. the best way to look at it(in my personal opinion) is the way warren buffet puts it, i.e. look at the stock as a business and see the potential growth over a long period of time. there will be unexpected events, but in the long run, the business must be profitable. there are various ways to value a company such as price to earnings ratios, peg ratios, discounted cash flows and you can also create your own. see what works best for you and record your success/failure ratio before you actually put money in. 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": "is it sensible to redirect retirement contributions from 401(k) towards becoming a landlord?", "role": "user" }, { "content": "here are the issues, as i see them - it's not that i don't trust banks, but i just feel like throwing all of our money into intangible investments is unwise. banks have virtually nothing to do with this. and intangible assets has a different meaning than you assume. you don't have to like the market, but try to understand it, and dislike it for a good reason. (which i won't offer here). do your 401(k) accounts offer company match? when people start with \"we'd like to reduce our deposits\" that's the first thing we need to know. last - you plan to gain \"a few hundred dollars a month.\" i bet it's closer to zero or a loss. i'll return to edit, we have recent posts here that reviewed the expenses to consider, and i'd bet that if you review the numbers, you've ignored some of them. \"a few hundred\" - say it's $300. or $4000/yr. it would take far less work and risk to simply save $100k in your retirement accounts to produce this sum each year. the investment may very well be excellent. i'm just offering the flip side, things you might have missed. edit - please read the discussion at how much more than my mortgage should i charge for rent? the answers offer a good look at the list of expenses you need to consider. in my opinion, this is one of the most important things. i've seen too many new re investors \"forget\" about so many expenses, a projected monthly income reverts to annual losses.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "clear example of credit card balance 55 days interest-free trick?", "role": "user" }, { "content": "well, i answered a very similar question \"credit card payment date\" where i showed that for a normal cycle, the average charge isn't due for 40 days. the range is 35-55, so if you want to feel good about the float just charge everything the day after the cycle closes, and nothing else the rest of the month. why is this so interesting? it's no trick, and no secret. by the way, this isn't likely to be of any use when you're buying gas, groceries, or normal purchases. but, i suppose if you have a large purchase, say a big tv, $3000, this will buy you extra time to pay. it would be remiss of me to not clearly state that anyone who needs to take advantage of this \"trick\" is the same person who probably shouldn't use credit cards at all. those who use cards are best served by charging what they can afford to pay at that moment and not base today's charges on what paychecks will come in by the due date of the credit card bill.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "what resources can i use to try and find out the name of the manager for a given fund?", "role": "user" }, { "content": "the fund prospectus is a good place to start.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 would a bank take a lower all cash offer versus a higher offer via conventional lending?", "role": "user" }, { "content": "@op: it's all about risk. with a cash buyer the decision is left up to one person. with a financed buyer it adds another approval process (the lender). it's another opportunity for the deal to fall through. if the bank is the lender then there's even more risk. they've already taken back the property once and incurred cost and they're setting themselves up to do it all over again. the discount price can depend on a lot of factors. maybe it's a bad area and they need to get rid of it. maybe the appraisals for the area are low because of foreclosures and they know it will be hard for a buyer to get a loan. lots of reasons as to what price they'd take. @shawn: every deal has contingencies unless it's a foreclosure bought at auction. even if you are getting a steal from the bank in terms of price you're always going to have an inspection period. if a buyer doesn't need an inspection then he will just go to an auction and buy a property for an even cheaper 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": "what is a formula for calculating equity accumulated while repaying car loan?", "role": "user" }, { "content": "by the sounds of things, you're not asking for a single formula but how to do the analysis... and for the record you're focusing on the wrong thing. you should be focusing on how much it costs to own your car during that time period, not your total equity. formulas: i'm not sure how well you understand the nuts and bolts of the finance behind your question, (you may just be a pro and really want a consolidated equation to do this in one go.) so at the risk of over-specifying, i'll err on the side of starting at the very beginning. any financial loan analysis is built on 5 items: (1) # of periods, (2) present value, (3) future value, (4) payments, and (5) interest rate. these are usually referred to in spreadsheet software as nper, pv, fv, pmt, and rate. each one has its own excel/google docs function where you can calculate one as a function of the other 4. i'll use those going forward and spare you the 'real math' equations. layout: if i were trying to solve your problem i would start by setting up the spreadsheet up with column a as \"period\". i would put this label in cell a2 and then starting from cell a3 as \"0\" and going to \"n\". 5 year loans will give you the highest purchase value w lowest payments, so n=60 months... but you also said 48 months so do whatever you want. then i would set up two tables side-by-side with 7 columns each. (yes, seven.) starting in c2, label the cells/columns as: \"rate\", \"car value\", \"loan balance\", \"payment\", \"paid to interest\", \"principal\", and \"accumulated equity\". then select and copy cells c2:i2 as the next set of column headers beginning in k2. (i usually skip a column to leave space because i'm ocd like that :) ) numbers: now you need to set up your initial set of numbers for each table. we'll do the older car in the left hand table and the newer one on the right. let's say your rate is 5% apr. put that in cell c1 (not c3). then in cell c3 type =c$1/12. car value $12,000 in cell d3. then type \"down payment\" in cell e1 and put 10% in cell d1. and last, in cell e3 put the formula =d3*(1-d$1). this should leave you with a value for the first month in the rate, car value, and loan balance columns. now select c1:e3 and paste those to the right hand table. the only thing you will need to change is the \"car value\" to $20,000. as a check, you should have .0042 / 12,000 / 10,800 on the left and then .0042 / 20,000 / 18,000 on the right. formulas again: this is where spreadsheets become amazing. if we set up the right formulas, you can copy and paste them and do this very complicated analysis very quickly. payment the excel formula for payment is =pmt(rate, nper, pv, fv). fv is usually zero. so in cell f3, type the formula =pmt(c3, 60, e3, 0). obviously if you're really doing a 48 month (4 year) loan then you'll need to change the 60 to 48. you should be able to copy the result from cell f3 to n3 and the formula will update itself. for the 60 months, i'm showing the 12k car/10.8k loan has a pmt of $203.81. the 20k/18k loan has a pmt of 339.68. interest the easiest way to calculate the interest is as =e3*c3. that's (outstanding loan balance) x (periodic interest rate). put this in cell g4, since you don't actually owe any interest at period 0. principal if you pay pmt each month and x goes to interest, then the amount to principal is \"pmt - x\". so in h4 type =-f3 - g3. the 'minus' in front of f3 is because excel's pmt function returns a negative amount. if you want to, feel free to type \"=-pmt(...)\" for the formula that's actually in f3. it's your call. i get 159 for the amount to principal in period 1. accumulated equity as i mentioned in the comment, your \"equity\" comes from your initial loan-to-value and the accumulated principal payments. so the formula in this cell should reflect that. there are a variety of ways to do this... the easiest is just to compare your car's expected value to your loan balance every time. in cell i3, type =(d3-e3). that's your initial equity in the car before making any payments. copy that cell and paste it to i4. you'll see it updates to =(d4-e3) automatically. (right now that is zero... those cells are empty, but we're getting there) the important thing is that as jb king pointed out, your equity is a function of accumulated principal and equity, which depreciates. this approach handles those both. finishing up the copy-and-paste formulas i know this is long, but we're almost done. rate // period 1 in cell c4 type =c3. payment // period 1 in cell f4 type =f3. loan balance // period 1 in cell e4 type =e3-h4. your loan balance at the end of period is reduced by the principal you paid. i get 10,641. car value // period 1 this will vary depending on how you want to handle depreciation. if you ignore it, you're making a major error and it's not worth doing this entire analysis... just buy the prettiest car and move on with life. but you also don't have to get it scientifically accurate. go to someplace like edmunds.com and look up a ballpark. i'm using 4% depreciation per year for the old (12k) car and 7% for the newer car. however, i pulled those out of my ass so figure out what's a better ballpark. in g1 type \"depreciation\" and then put 4% in h1. in o1 type \"depreciation\" and then 7% in p1. now, in cell d4, put the formula =d3 * (1-(h$1/12)). paste formulas to flesh out table as a check, your row 4 should read 1 / .0042 / 11,960 / 10,641 / 203.81 / 45 / 159 / 1,319. if so, you're great. copy cells c4:i4 and paste them into k4:q4. these will update to be .0042 / 19,883 / 17,735 / 339.68 / 75 / 265 / 2,148. if you've got that, then copy c4:q4 and paste it to c5:c63. you've built a full amortization table for your two hypothetical loans. congratulations. making your decision i'm not going to tell you what to decide, but i'll give you a better idea of what to look at. i would personally make the decision based on total cost to own during that time period, plus a bit of \"x-factor\" for which car i really liked. look at period 24, in columns i and q. these are your 'equities' in each car. if you built the sheet using my made-up numbers, then you get \"old car equity\" as 4,276. \"new car equity\" is 6,046. if you're only looking at most equity, you might make a poor financial decision. the real value you should consider is the cost to own the car (not necessarily operate it) during that time... total cost = (ending equity) - (payment x 24) - (upfront cash). for your 'old' car, that's (4,276) - (203.81 * 24) - (1,200) = -1,815.75 for the 'new' car, that's (6,046) - (339.68 * 24) - (2,000) = -4,106.07. is one good or bad? up to you to decide. there are excel formulas like \"cumprinc\" that can consolidate some of the table mechanics, but i assumed that if you're here asking you would have gotten stuck running some of those. here's the spreadsheet: https://docs.google.com/spreadsheet/ccc?key=0ah0wee0qx65vdhpcnvpwuzlfyjlty2vrnllxos1cwue#gid=1", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "f-1 visa expired - unable to repay private student loan. what to do?", "role": "user" }, { "content": "as an international student, the tuition is sky high. typically, most students take loans for education and start paying it back once they get a job. if you have exhausted your opt period and have not got h1b, your options are either to go for further education(hint: phd), you can hope to cover living expense by part-time on campus job. this will give you additional time to look for a job and try for h1b 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": "i have a million dollars of disposable income. what should i do to best benefit the economy?", "role": "user" }, { "content": "at first, i thought this might be too broad. there are of course thousands of things that you can do with your money to \"help the economy\". but i think that there is room to discuss some broad strokes without trying to list a thousand details. regular investing (as you are now) helps the economy in that companies obtain money by selling their stock. they can then use that money to fund expansion, etc. these things can help the economy permanently. of course, they can also use the money to pay executive bonuses, which don't help the economy so much. similarly, just spending money does not normally help the economy. unless we are in a recession, it is mildly harmful to spend wastefully. money that could be going to support long term improvements in production instead is used to buy a luxury that doesn't terribly interest you. i.e. if you don't want a bigger house or a more luxurious car don't buy it to \"stimulate\" the economy. many charitable donations have the same problem. they help short term consumption somewhere. and of course the charity starts asking you for more money. many charities waste most of a donation trying to get another one from the same person or family. sir john maynard keynes proposed that the best thing that people could do to help the economy is to invest in things that cause economic activity in turn. he was mostly talking about things like roads, bridges, and dams that are out of the investing range of most people, so he wanted governments to do it, particularly during a recession. so we are looking for ways to invest in durable improvements that will support economic activity in the future. a million dollars is a small amount for many things, but there are some activities that work. i'm going to list a few examples, but there are certainly others: fund microfinance. basically loan your million dollars to people who need a small amount of money. these programs often allow you to determine the initial recipient and then that person determines the next recipient. a million dollars can finance hundreds if not thousands of these loans. they may be in the united states or in a developing country. set up a scholarship. my recommendation would be to find an existing scholarship with a few recipients and ask them to add one a year for the million dollars. a million dollars should typically produce about a scholarship a year in returns after inflation. of course, that's just regular inflation. education inflation is higher. solar prize. fund a program that gives out one solar installation every year or five to a family that owns a house, is struggling to pay utilities, and makes a compelling case. basically, whenever the investment grows enough to support it, make a new prize. buy something that will help other people make money. this is just six ideas off the top of my head. the goal here is to create something lasting that will promote economic activity. so a program that loans money forward. or a scholarship or free textbook, particularly in a stem field. a small piece of infrastructure that helps people move around to work or spend their money. solar is a bit of a stretch here, but it can be justified if you believe that an investment now is an investment in moving towards the future. the key thing here is to make your money do double duty. by spending your money during a recession or investing during the rest of the business cycle, you can get some value for your money. but even better is if that spending has a societal return as well. microfinance, scholarships, and infrastructure do that. there is the immediate spending, plus there is the effect of the spending. a business is established. a mind is trained and working at a high income job. people can move, work, and spend their own 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": "buying a home - brokerage fee", "role": "user" }, { "content": "that sounds like a particularly egregious version of exclusivity. however, the way that you could handle that is to include a \"contingency\" in your purchase agreement stating that your offer is contingent upon the seller paying the brokerage fee. the argument against this, and something your broker might use to encourage you not to do so, is that it makes your offer less attractive to the buyer. if they have two offers in hand for the same price, one with contingencies and one without, they will likely take the no-contingency offer. in my area, right now, house offers are being made without very common contingencies like a financing contingency (meaning you can back out if you can't finance the property) or an inspection contingency. so, if your market is really competitive, this may not work. one last thought is that you could also use this to negotiate with your broker. simply say you're only sign this expecting that any offer would have such a contingency. if it's untenable in your current market, it will likely cause your broker to move on. either way, i'd say you should push back and potentially talk to some other brokers. a good broker is worth their weight in gold, and a bad one will cost you a boat load. and if you're in seattle, i'll introduce you to literally the best one in the world. :-)", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 would a company with a bad balance sheet be paying dividends?", "role": "user" }, { "content": "while ford and the other auto makers have a bad few years, some companies want to have a cash dividend. it appeals to certain investors. others have tried to avoid dividends: microsoft didn't start until ~2003; apple only from mid 80's until mid 90's.; google never has had a cash dividend. the desire to keep the dividend, or even to increase it, make some companies continue the practice; even when it doesn't make complete sense. here is a list of stocks that have increased their dividend for the last 25+ years: http://www.dividend.com/dividend-stocks/25-year-dividend-increasing-stocks.php some have had good years, others bad years, in the last 25+ 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": "i cosigned for a friend who is not paying the payment", "role": "user" }, { "content": "if the bank is calling your employer, the federal fair debt collection practices act (fdcpa) limits where and when debt collectors can contact consumer debtors. in many cases, debt collectors that contact debtors at work are violating the fdcpa. http://www.nolo.com/legal-encyclopedia/a-debt-collector-calling-me-work-is-allowed.html", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "where can i see the detailed historical data for a specified stock?", "role": "user" }, { "content": "yahoo finance's historical prices section allows you to look up daily historical quotes for any given stock symbol, you don't have to hit a library for this information. your can choose a desired time frame for your query, and the dataset will include high/low/close/volume numbers. you can then download a csv version of this report and perform additional analysis in a spreadsheet of your choice. below is twitter report from ipo through yesterday: http://finance.yahoo.com/q/hp?s=twtr&a=10&b=7&c=2013&d=08&e=23&f=2014&g=d", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 strategy to qualify stock options with near expiry date for long term capital gain tax?", "role": "user" }, { "content": "according to page 56 of the 2015 irs publication 550 on investment income and expenses: wash sales. your holding period for substantially identical stock or securities you acquire in a wash sale includes the period you held the old stock or securities. it looks like the rule applies to stocks and other securities, including options. it seems like the key is \"substantially identical\". for your brokerage / trading platform to handle these periods correctly for reporting to irs, it seems best to trade the same security instead of trying to use something substantially identical.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "my mother's name is on my car title, how can i protect my ownership of the car in the event of her death?", "role": "user" }, { "content": "it's her car. unlike what ross said in the comments she can't sign it over to you--she doesn't own it yet. the best you'll be able to do is have her leave it to you in her will--but beware that you very well might need to refinance the loan at that point.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "i'm halfway through a 5-year purchase financing deal on my car. it's expensive. can i sell it and get a cheaper car?", "role": "user" }, { "content": "you say \"it's expensive\". i'm going to interpret this as \"the monthly payments are too high\". basically, you need to get your old loan paid off, presumably by selling the car you have now. this is the tough part. if you sold the car now, how much would you get for it? you can use kelley blue book to figure out what the car is roughly worth. that's not a guarantee that it will actually sell for that much. look in your local classifieds to see what similar cars are selling for. (keep in mind that you will usually get less for your old car if you trade it in versus sell it yourself.) now, if you owe more than your car is worth, you're in a really tight spot. if you don't get enough money when you sell it, you are still stuck with the remainder of the loan. in that case, it is usually best to just stick with the car you have, and be more cautious about payments and loan length the next time you finance a car. penalties: most car loans don't have any kind of early repayment penalty. however, you should check your loan paperwork just to make sure.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 examples of unsecured loans", "role": "user" }, { "content": "unsecured loan is any loan that you don't provide an asset as a collateral for. auto loans are usually secured - by the auto. if you don't pay off the car, it will be repossessed. credit cards are a good example, personal/business loans are also usually unsecured, and you've pretty much covered it. majority of loans, especially for large amounts, are usually given for a specific purpose (usually purchase of a large asset) and are secured.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "interactivebrokers: how to calculate overnight commissions for cfd?", "role": "user" }, { "content": "i have found a good explanation here: http://www.contracts-for-difference.com/financing-charge.html financing is calculated by taking the overall position size, and multiplying it by (libor + say 2%) and then dividing by 365 x the amount of days the position is open. for instance, the interest rate applicable for overnight long positions may be 6% or 0.06. to calculate how much it would cost you to hold a long position for x number of days you would need to make this 'pro rata' meaning that you would need to divide the 0.06 by 365 and multiply it by x days and then multiply this by the trade size. so for example, for a trade size of $20,000, held for 30 days, the interest cost would be about $98.6. it is important to note that due to financing, long positions held for extended periods can reduce returns.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "why is tax loss harvesting helpful for passive investing?", "role": "user" }, { "content": "your assertion that you will not be selling anything is at odds with the idea that you will be doing tax loss harvesting. tax loss harvesting always involves some selling (you sell stocks that have fallen in price and lock in the capital losses, which gives you a break on your taxes). if you absolutely prohibit your advisor from selling, then you will not be able to do tax loss harvesting (in that case, why are you using an advisor at all?). tax loss harvesting has nothing to do with your horizon nor the active/passive difference, really. as a practical matter, a good tax loss harvesting plan involves mechanically selling losers and immediately putting the money in another stock with more-or-less similar risk so your portfolio doesn't change much. in this way you get a stable portfolio that performs just like a static portfolio but gives you a tax benefit each year. the irs officially prohibits this practice via the \"wash sale rule\" that says you can't buy a substantially identical asset within a short period of time. however, though two stocks have similar risk, they are not generally substantially similar in a legal sense, so the irs can't really beat you in court and they don't try. basically you can't just buy the same stock again. the roboadvisor is advertising that they will perform this service, keeping your portfolio pretty much static in terms of risk, in such a way that your tax benefit is maximized and you don't run afoul of the irs.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "what do these options trading terms mean?", "role": "user" }, { "content": "with stocks, you can buy or sell. if you sell first, that's called 'shorting.' as in \"i think linkedin is too high, i'm going to short it.\" with options, the terminology is different, the normal process is to buy to open/sell to close, but if you were shorting the option itself, you would first sell to open, i.e you are selling a position to start it, effectively selling it short. eventually, you may close it out, by buying to close. options trading is not for the amateur. if you plan to trade, study first and be very cautious.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "how much does it cost to build a subdivision of houses on a large plot of land?", "role": "user" }, { "content": "a bank may not like loaning money to you for this. that is one snag. you listed 500,000-600,000$ for a monster of a house (3000 sqft is over three times the average size of homes a hundred years ago). add in the price of the land at 60k (600k divided ten ways). where i live, there is a 15% vat tax on new homes. i can't find out if california imposes a vat tax on new homes. anyway, returning back to the topic, because of the risk of loaning you 660k for a piece of land and construction, the bank may only let you borrow half or less of the final expected cost (not value). another huge snag is that you say in a comment to quid \"i came up with this conclusion after talking to someone who had his property built in early 2000s in bay area for that average price\". let's apply 3% inflation over 15 years to that number of 200$/sqft. that brings the range for construction costs to 780k-930k. even at 2% inflation 670k-810k. edit: op later expanded the question making it an inquiry on why people don't collaborate to buy a plot of land and build their homes. \"back in the day\" this wasn't all that atypical! for example, my pastor's parents did just this when he was a young lad. apart from the individual issues mentioned above, there are sociological challenges that arrive. examples: these are the easy 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": "should i use an investment professional?", "role": "user" }, { "content": "ask yourself the same question for furniture making. would you feel more comfortable sitting in a chair that you made yourself versus one that you bought from a furniture store? how about one that you bought from ikea and assembled? for an experienced, competent furniture maker, you might be able to make an equivalent chair for less money and be highly confident. for a \"diy\" builder, you might be less confident but be willing to take more of a risk with the possibility of making a good chair for less money (and gain experience on what not to do next time). the same applies to investing - if you are highly confident in your own abilities, diy investing may work better for you. for the \"general population\", however, relying on experts to do the hard work (and paying a little more for their services) is probably a better option and gives you more confidence. as for the second quote, i'm note sure there's a causality there. if anything, i think it's the other way around - people who have more money saved for retirement are more likely to use investment advisors.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "supply & demand - how price changes, buy orders vs sell orders [duplicate]", "role": "user" }, { "content": "yes for every order there is a buyer and seller. but overall there are multiple buyers and multiple sellers. so every trade is at a different price and this price is agreed by both buyer and seller. related question will help you understand this better. how do exchanges match limit orders?", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 brokerage firms make money?", "role": "user" }, { "content": "regarding \"interest on idle cash\", brokerage firms must maintain a segregated account on the brokerage firm's books to make sure that the client's money and the firm's money is not intermingled, and clients funds are not used for operational purposes. source. thus, brokerage firms do not earn interest on cash that is held unused in client accounts. regarding \"exchanges pay firm for liquidity\", i am not aware of any circumstances under which an exchange will pay a brokerage any such fee. in fact, the opposite is the case. exchanges charge participants to transact business. see : how the nyse makes money similarly, market makers do not pay a broker to transact business on their behalf. they charge the broker a commission just like the broker charges their client a commission. of course, a large broker may also be acting as market maker or deal directly with the exchange, in which case no such commission will be incurred by the broker. in any case, the broker will pay a commission to the clearing house.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "what investments work for these goals?", "role": "user" }, { "content": "assuming this will be a taxable account (since you want to pull income off of it, although this will lower wealth growth), you could open a brokerage account at some place like vanguard (free on their etfs) and look at tax efficient index fund etfs (such as total stock market or their 500 fund), including some international (foreign tax credit is nice in taxable) and muni funds for the (tax advantaged) income, although cds are likely better for the income at this point.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "long(100%)-short(-100%) investment explanation", "role": "user" }, { "content": "if you mean the percentages of long/short positions within a mutual fund or etf, then it's a percentage of the total value of the fund portfolio. in that case, positions of 50% in x, -50% in y are not the same as 100% in x, -100% in y. if the long and short positions are both for the same asset, then, as d stanley mentions, all that matters is the net position. if you're equally long and short x, then the net position is always 0%.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 have to pay the internet installation charges for my home's company internet?", "role": "user" }, { "content": "of course you don't have to pay them - you just might not like the result. as a matter of law - given that i am not a lawyer - i am not aware of any requirement for a company to pay employees business-related expenses. an example might be having a cell phone, and according to this article companies aren't required to pay for you to have a cell phone even if they require you have one and use it as part of your employment. the primary areas where law does exist relates to company uniforms with a logo (in a very limited number of us states) and necessary personal safety equipment (in california and maybe only few other states). all other tool requirements for a job are not prohibited by law, so long as they are not illegally discriminatory (such as requiring people of a certain race or sex to buy something but no one else, etc). so a company can require all sorts of things, from having an internet connection to cell phone to laptop to specialty tools and equipment of all sorts, and they are even allowed to deduct the cost of some things from your pay - just so long as you still get paid minimum wage after the deductions. with all that said, the company's previous payments of fees and willingness to pay a monthly internet fee does not obligate them to pay other fees too, such as moving/installation/etc. they may even decide to no longer provide internet service at their expense and just require you to provide it as a condition of employment. you can insist on it with your employer, and if you don't have an employment contract that forbids it they can fire you or possibly even deduct it from your pay anyway (and this reason might not be one that allows you to collect unemployment insurance benefits - but you'd need to check with an expert on that). you can refuse to pay at&t directly, and they can cancel the internet service - and your employer can then do the same as in the previous condition. or you can choose to pay it - or ask your employer to split the cost over a few checks if it is rather high - and that's about it. like the cost of anything else you have to pay - from your own food to your computer, clothes, etc - it's best to just consider it your own \"cost of doing business\" and decide if it's still in your interest to keep working there, and for something to consider in future pay negotiations! you may also qualify for an itemized employee business expense deduction from the irs, but you'll need to read the requirements carefully and get/keep a receipt for such expenses.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "how much of each stock do index funds hold?", "role": "user" }, { "content": "yes, it depends on the fund it's trying to mirror. the etf for the s&p that's best known (in my opinion) is spy and you see the breakdown of its holdings. clearly, it's not an equal weighted index.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 liquidity and trading positions larger than the daily volume?", "role": "user" }, { "content": "you definitely cannot be guaranteed to get the bid or ask if you are selling more than are available/desired at those prices. what prices you do get depends on who is watching that contract and how willing they are to trade with you. this question is not much different from the question of whether you can easily get into or out of a large position in an illiquid small stock easily. you can get out quickly if you are willing to take pennies on the dollar, or you may get a reasonable price if you take a long time to get out of (or into) your position. you can't normally do both. in general taking large positions in illiquid assets is not something people want to do without lining up a buyer/seller beforehand. instead see if you can achieve your objective with liquid 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": "what us taxes are due for us stock bought via espp when i was in usa and sold after i returned to india?", "role": "user" }, { "content": "from an indian tax point of view, you can bring back all the assets acquired during the period you were nri back to india tax free. subject to a 7 years period. i.e. all the assets / funds / etc should be brought back to india within 7 years. it would still be treated as there are certain conditions / paperwork. please consult a ca.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "how much financial information should a buyer give an estate agent?", "role": "user" }, { "content": "my guess is they are fishing for business for their in-house finance person. in the uk, all the estate agency chains (and many of the smaller outfits) have financial advice firms they are affiliated with, often to the extent that a desk in each branch will be for 'the finance guy' (it's usually a guy). the moment you show any sign of not quite having the finances for a place you like, they will offer you a consultation with the finance guy, who \"will be able to get you a deal\". on commission, of course. what you need to say with regards to financing is (delete as applicable) \"i am a cash buyer\" / \"i have an agreement in principle\". and that's it. they do not 'need' to know any more, and they are under obligation to pass your offer on to the vendor.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 if a company i have stock in is bought out?", "role": "user" }, { "content": "i've seen many buyouts in my own portfolio, including the company i worked for. there have been several different scenarios: the terms of the deal are subject to the deal -- frankly whatever makes sense to the buyer and that is accepted by the seller. so sometimes brokers charge reorganization fees. check into those for your broker. i've not seen one in a while, but my brokerage account is substantial, and often that's a perk they offer higher-value accounts. also watch out for taxes. the transaction where my employer was bought by another publicly traded company -- we got bit because the irs treated it as a taxable transaction, and all our rsus were effectively sold and then repurchased. so we ended up with a big tax bill (capital gains) without any cash to offset the big tax bill. i suspect its because my old employer was a us based company, whereas the new company is not.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 index funds really as good as experts claim?", "role": "user" }, { "content": "simply put, you cannot deterministically beat the market. if by being informed and following all relevant news, you can arrive at the conclusion that company a will likely outperform company b in the future, then having a stocks should be better than having b stocks or any (e.g., index based) mix of them. but as the whole market has access to the very same information and will arrive at the same conclusion (provided it is logically sound), \"everybody\" will want a stocks, which thus become expensive to the point where the expected return is average again. your only options of winning this race are to be the very first to have the important information (insider trade), or to arrive at different logical conclusions than the rest of the world (which boils down do making decisions that are not logically sound - good luck with that - or assuming that almost everybody else is not logically sound - go figure).", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "wage earners of age 60 with dependents: what life insurance, if any, should they buy?", "role": "user" }, { "content": "the problem above is actually a pretty good list of the concerns around life insurance. while there is no correct answer to the question as posed, this will vary among different wscs, there is a simpler way to think about insurance in general that may make finding what is right answer for you easier. buying life insurance, like almost all insurance, is on average a money losing purchase. this is simply because the companies selling wouldn't offer it if they couldn't expect to make money on it. think about buying insurance (a warranty) on a new cell phone, maybe if you are particularly prone to damaging cell phones it can be in your favor, but for most of the people that buy it will lose money on average. people, of course, still buy insurance anyway to protect themselves from unlikely but very bad consequences. the big reason to make this trade off is if the loss will have big lasting consequences. to stay with our cell phone example having to replace a cell phone, at least for me, would be annoying but not a catastrophic event. for myself, the protection is not worth the warranty cost, but that is not true for everyone. life insurance is a pretty extreme case of this, but i find the best question to ask is \"if you (you and your spouse) were to die will your dependents lives become so much worse that you really dislike the idea of not being insured?\" for some working seniors, they already have enough saved to bridge their kids/spouse to adulthood/old-age that insurance makes no sense. for some, their children/husband/wife would be destitute and insurance is an obvious choice and an easy price to pay even if it is very high. the example you suggest seems on the border and good questions to ask are: thinking about those questions may help you understand if the protection offers is worth the cost.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "does the irs reprieve those who have to commute for work?", "role": "user" }, { "content": "no. regular w2 employees cannot deduct housing or transportation costs related to their employment. however, in the us, many employers offer parking and/or transit fsa programs which are usually collectively referred to a commuter benefits fsa programs, this is particularly common among larger employers with locations in major metropolitan cities. under commuter benefits fsas employees can defer up to $255 per month from their gross pay, tax-free, for parking and/or transit expenses. eligible expenses include things like bus and train passes or parking at a train or bus station. these are money-in/money-out arrangements so expenses can only be claimed against contributions that have been made, unlike a health fsa. though, like a health fsa, contributions are subject to use-it or lose-it provisions. these programs must be sponsored by the employer for an employee to take advantage of them though. some jurisdictions mandate that employers above a certain threshold must offer commuter 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": "iraqi dinars. bad investment, or worst investment?", "role": "user" }, { "content": "iraq is a us vassal/puppet state. i'm not sure what 500 south vietnamese dong were worth in 1972, but today the paper currency is worth $10 in mint condition. i'd suggest blackjack or craps as an alternate \"investment\".", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 evidence exists for claiming that you cannot beat the market?", "role": "user" }, { "content": "will the investor beat the benchmark for a given period will follow a bernoulli distribution -- each period is a coin toss, and heads mean the investor beat the market for that period. i can't prove the negative that there is no investor ever whose probability function p = 1, but you can statistically expect a number of individual investors with p ~ 0.5 to have a sequence of many heads in a row, as a function of the total population. by example, my father explained investment scams and hot-hand theory to me this way when i was younger: imagine an investor newsletter which mails out to a mailing list of 1024 prospects (or alternately, a field of 1024 amateur investor bloggers in a challenge). half the letters or bloggers state aapl will go up this week, half that aapl will go down this week. in the newsletter case, next week ignore the people we got wrong. in the blogger case, they're losers, so we don't pay attention to them. next week, similar split: half newsletters or bloggers claim goog go up, half goog go down. this continues for a 10 week cycle. now, in week 10: the newsletter has a prospect they have hit correct 10x in a row: how much will he pay for a subscription? or, one amateur investor blogger has been on a 10 week winning streak and wins the challenge, so of course let's give her a cnbc show after jim cramer. no matter what, next week, this newsletter or investor is shooting 50-50. how do you know this person is not the statistically expected instance backed up by a pyramid of 1023 bernoulli distribution losers? alternately, if you think you're going to be the winner, you've got a 1/1024 shot.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a 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 have a small capital investment in us if i am out of the country?", "role": "user" }, { "content": "for $100 you better just hold it in mexico. the cost of opening an account could eat 10% or more of your capital easily, and that won't be able to buy enough shares of an etf or similar investment to make it worthwhile.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "explanations on credit cards in canada", "role": "user" }, { "content": "i think it's worth pointing out explicitly that the biggest difference between a credit card (us/canada) and a debit card (like your french carte de crédit) is that with a credit card, it's entirely possible to not pay the bill or to pay only the \"minimum payment\" when asked. this results in you owing significantly more money due to interest, which can snowball into higher and higher levels of debt, and end up getting rapidly out of control. this is the reason why you should always pay off the entire balance every month, as attested to in the other answers; it's not uncommon to find people in the us with thousands of dollars of debt they can't pay off from misuse of credit cards.", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "does a falling dollar mean doom for real estate?", "role": "user" }, { "content": "a falling $aud would be beneficial to exporters, and thus overall good for the economy. if the economy improves and exporters start growing profits, that means they will start to employ more people and employment will increase - and with higher employment, employees will become more confident to make purchases, including purchasing property. i feel the falling $aud will be beneficial for the economy and the housing market. however, what you should consider is that with an improving economy and a rising property market, it will only be a matter of time before interest rates start rising. with a lower $aud the rba will be more confident in starting to increase interest rates. and increasing interest rates will have a dampening effect on the housing market. you are looking to buy a property to live in - so how long do you intend to live in and hold the property? i would assume at least for the medium to long term. if this is your intention then why are you getting cold feet? what you should be concerned about is that you do not overstretch on your borrowings! make sure you allow a buffer of 2% to 3% above current interest rates so that if rates do go up you can still afford the repayments. and if you get a fixed rate - then you should allow the buffer in case variable rates are higher when your fixed period is over. regarding the doomsayers telling you that property prices are going to crash - well they were saying that in 2008, then again in 2010, then again in 2012. i don't know about you but i have seen no crash. sure when interest rates have gone up property prices have levelled off and maybe gone down by 10% to 15% in some areas, but as soon as interest rates start falling again property prices start increasing again. it's all part of the property cycle. i actually find it is a better time to buy when interest rates are higher and you can negotiate a better bargain and lower price. then when interest rates start falling you benefit from lower repayments and increasing property prices. the only way there will be a property crash in australia is if there was a dramatic economic downturn and unemployment rates rose to 10% or higher. but with good economic conditions, an increasing population and low supplies of newly build housing in australia, i see no dramatic crashes in the foreseeable future. yes we may get periods of weakness when interest rates increase, with falls up to 15% in some areas, but no crash of 40% plus. as i said above, these periods of weakness actually provide opportunities to buy properties at a bit of a discount. edit in your comments you say you intend to buy with a monthly mortgage repayment of $2500 in place of your current monthly rent of $1800. that means your loan amount would be somewhere around $550k to $600k. you also mention you would be taking on a 5 year fixed rate, and look to sell in about 2 years time if you can break even (i assume that is break even on the price you bought at). in 2 years you would have paid $16,800 more on your mortgage than you would have in rent. so here are the facts: a better strategy:", "role": "assistant" } ]

[ { "content": "as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.", "role": "system" }, { "content": "is gold really an investment or just a hedge against inflation?", "role": "user" }, { "content": "over on quantitative finance stack exchange, i asked and answered a more technical and broader version of this question, should the average investor hold commodities as part of a broadly diversified portfolio? in short, i believe the answer to your question is that gold is neither an investment nor a hedge against inflation. although many studies claim that commodities (such as gold) do offer some diversification benefit, the most credible academic study i have seen to date, should investors include commodities in their portfolios after all? new evidence, shows that a mean-variance investor would not want to allocate any of their portfolio to commodities (this would include gold, presumably). nevertheless, many asset managers, such as pimco, offer funds that are marketed as \"real return\" or \"inflation-managed\" and include commodities (including gold) in their portfolios. pimco has also commissioned some research, strategic asset allocation and commodities, claiming that holding some commodities offers both diversification and inflation hedging benefits.", "role": "assistant" } ]