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304023 | "ETF Creation and Redemption Process notes the process: While ETF trading occurs on an exchange like stocks, the process by which their shares are created is significantly different. Unless a company decides to issue more shares, the supply of shares of an individual stock trading in the marketplace is finite. When demand increases for shares of an ETF, however, Authorized Participants (APs) have the ability to create additional shares on demand. Through an ""in kind"" transfer mechanism, APs create ETF units in the primary market by delivering a basket of securities to the fund equal to the current holdings of the ETF. In return, they receive a large block of ETF shares (typically 50,000), which are then available for trading in the secondary market. This ETF creation and redemption process helps keep ETF supply and demand in continual balance and provides a ""hidden"" layer of liquidity not evident by looking at trading volumes alone. This process also works in reverse. If an investor wants to sell a large block of shares of an ETF, even if there seems to be limited liquidity in the secondary market, APs can readily redeem a block of ETF shares by gathering enough shares of the ETF to form a creation unit and then exchanging the creation unit for the underlying securities. Thus, the in-kind swap to the underlying securities is only done by APs so the outflow would be these individuals taking a large block of the ETF and swapping it for the underlying securities. The APs would be taking advantage of the difference between what the ETF's trading value and the value of the underlying securities." |
304081 | If you don't have the time or interest to manage investments, you need a financial advisor. Generally speaking, you're better served by an advisor who collects an annual fee based on a percentage of your account value. Advisors who are compensated based on transactions have a vested interest to churn your account, which is often not in your best interest. You also need to be wary of advisors who peddle expensive mutual funds with sales loads (aka kick-backs to the advisor) or annuities. Your advisor's compensation structure should be transparent as well. |
304304 | The trades after that date were Ex-DIV, meaning after 5 pm Dec 12, new trades did not include the shares that were to be spun out. The process is very orderly, no one pays $60 without getting the spinoff, and no one pays $30 but still gets it. The real question is why there's that long delay nearly three weeks to make the spinoff shares available. I don't know. By the way, the stock options are adjusted as well. Someone owning a $50 put isn't suddenly in the money on 12/13. Edit - (I am not a hoarder. I started a fire last night and realized I had a few Barron's in the paper pile) This is how the ABT quote appeared in the 12/24 issue of Barron's. Both the original quote, and the WI (when issued) for the stock less the spin off company. |
304851 | You are asking about what happens when an ETF/mutual fund company goes bankrupt. If you were asking about a bank account you would be asking about FDIC coverage. Investment funds are different, the closest thing to FDIC protection is provided by Securities Investors Protection Corporation (SIPC) SIPC was created under the Securities Investor Protection Act as a non-profit membership corporation. SIPC oversees the liquidation of member broker-dealers that close when the broker-dealer is bankrupt or in financial trouble, and customer assets are missing. In a liquidation under the Securities Investor Protection Act, SIPC and the court-appointed Trustee work to return customers’ securities and cash as quickly as possible. Within limits, SIPC expedites the return of missing customer property by protecting each customer up to $500,000 for securities and cash (including a $250,000 limit for cash only). SIPC is an important part of the overall system of investor protection in the United States. While a number of federal and state securities agencies and self-regulatory organizations deal with cases of investment fraud, SIPC's focus is both different and narrow: restoring customer cash and securities left in the hands of bankrupt or otherwise financially troubled brokerage firms. SIPC was not chartered by Congress to combat fraud. Although created under a federal law, SIPC is not an agency or establishment of the United States Government, and it has no authority to investigate or regulate its member broker-dealers. It is important to understand that SIPC is not the securities world equivalent of the Federal Deposit Insurance Corporation (FDIC), which insures depositors of insured banks. |
305179 | Since making loans isn't 'casino banking', I'm going to start a small, regional lending institution that just lends money to people to buy homes. I really want to open up home ownership to a larger group of people, maybe those who wouldn't qualify for traditional loans. I'm just not sure whether to call it Washington Federal or Countrywide Financial. |
305287 | Something very similar to this was extremely popular in the UK in the late 1980s. The practice has completely vanished since the early 2000s. Reading up on the UK endowment mortgage scandals will probably give you an excellent insight into whether you should attempt your plan. Endowment mortgages were provided by banks and at their peak were probably the most popular mortgage form. The basic idea was that you only pay the interest on your mortgage and invest a small amount each month into a low fee endowment policy. Many endowment policies were simply index tracking, and the idea being that by the end of your mortgage you would have built up a portfolio sufficient to pay off your mortgage, and may well have extra left over. In the late 1990s the combination of falling housing market and poor stock performance meant that many people were left with both the endowment less than their mortgage and their house in negative equity. |
305509 | Co-signing is not the same as owning. If your elderly lady didn't make any payments on the loan, and isn't on the ownership of the car, and there was no agreement that you would pay her anything, then you do not owe either her or her daughter any money. Also the loan is not affecting the daughter's credit, and the mother's credit is irrelevant (since she is dead). However you should be aware that the finance company will want to know about the demise of the mother, since they can no longer make a claim against her if you default. I would start by approaching the loan company, telling them about the mother's death, and asking to refinance in your name only. If you've really been keeping up the payments well this could be OK with them. If not I would find someone else who is prepared to co-sign a new loan with you, and still refinance. Then just tell the daughter that the loan her mother co-signed for has been discharged, and there is nothing for her to worry about. |
305604 | "No, Skiffbug is not English. Second, it's very clear that the type of method considered ""special"" by the tax code is clearly not labor, but capital gains and gains from ""carried interest"". If you actually take 3 seconds to read my comment, I am saying both should be treated in exactly the same way, and taxed at the same progressive scale." |
305676 | "In general there are two types of futures contract, a put and call. Both contract types have both common sides of a transaction, a buyer and a seller. You can sell a put contract, or sell a call contract also; you're just taking the other side of the agreement. If you're selling it would commonly be called a ""sell to open"" meaning you're opening your position by selling a contract which is different from simply selling an option that you currently own to close your position. A put contract gives the buyer the right to sell shares (or some asset/commodity) for a specified price on a specified date; the buyer of the contract gets to put the shares on someone else. A call contract gives the buyer the right to buy shares (or some asset/commodity) for a specified price on a specified date; the buyer of the contract gets to call on someone for shares. ""American"" options contracts allow the buyer can exercise their rights under the contract on or before the expiration date; while ""European"" type contracts can only be exercised on the expiration date. To address your example. Typically for stock an option contract involves 100 shares of a stock. The value of these contracts fluctuates the same way other assets do. Typically retail investors don't actually exercise their contracts, they just close a profitable position before the exercise deadline, and let unprofitable positions expire worthless. If you were to buy a single call contract with an exercise price of $100 with a maturity date of August 1 for $1 per share, the contract will have cost you $100. Let's say on August 1 the underlying shares are now available for $110 per share. You have two options: Option 1: On August 1, you can exercise your contract to buy 100 shares for $100 per share. You would exercise for $10,000 ($100 times 100 shares), then sell the shares for $10 profit per share; less the cost of the contract and transaction costs. Option 2: Your contract is now worth something closer to $10 per share, up from $1 per share when you bought it. You can just sell your contract without ever exercising it to someone with an account large enough to exercise and/or an actual desire to receive the asset or commodity." |
305742 | Wow, very amused by some of the answers. I will comment on those later. To directly answer your question, here is a link to a brochure that explains the three basic typs and is written in straightforward language. link text That is step one. Step 2 is a question, cheapest when, initially or for long term? Without a doubt term initially is the cheapest. However every 10 years or 20 years it increases in price. As the name term implies it is temporary. Coverage will end at some point, 75, or 80 depending upon plan design chosen. It is possible that if you choose Term you can outlive your coverage and all you have are a bunch of cancelled cheques. Young people with a mortgage, children and other debts should buy a lot of term as the mortgage will be paid off, the kids will no longer be dependent. These needs are temporary. However some needs are permanent. What about leaving a Legacy at Death to a Charity? Insurance is a good solution and can provide a tax deduction too. Term isn't a good fit. Or a business owner wishing to transfer his/her business at death to their children. Taxes will be due and permanent insurance such as Whole Life and Universal Life can be arranged to provide cash to pay tax whenever this happens. Let me ask you who received 10% in the last ten years on their equity portfolio. Almost zero people did. However a Whole Plan would have generated a guaranteed return of 3.0% plus a non-guaranteed return via dividends that the combined internal rate of return on a combined basis would be about 5.6% AFTER TAXES. Life a bond portfolio yield. (Internal rate of return is dependent on age at buying, years of investing. All insurance comany software can show you the internal rate of return.) IRR is essesntially: what is the return after tax that you must get to equal the equity or death benefit from a permanent insurance plan. Someone mentioned by Term and Invest the difference. That is what universal life is, Term and Invest the difference except the difference is growing tax sheltered.Outside investments with comparable risk are taxable! There is no easy answer for what type is right, often a combination is. The key question you should ask is How Much Is Enough? Then consider types based upon your needs and budget. Here is a link where you can calculate how much you need. I hope this helps a bit. |
306149 | Fully Paid up Partly Paid up: A company may issue stock to you which is only partly paid up, for example, a company may issue a stock of face value 10 to you and ask you to pay 5 now and other 5 will be adjusted later by some other mechanism. This stock shall be partly paid up. Usually, these stocks are issued in different circumstances, for example as part payment for debentures, preference shares or other capital structuring. On the other hand for a fully paid up share no more money needs to be paid by you or no other adjustments need to be made. So, above, the company is issuing you with stocks for which you will need to pay no further money, they are fully paid for. Authorized Capital: Authorized capital of a company is the amount of money a company can raise by selling stock (not debt, equity). This number is registered when the company is incorporated, subsequently, this number can be revised upward by applying to the registrar of companies. Now, this means that at max. the company is authorized to raise this much capital and no more. However, a company may raise less than this, which is called Issued Capital. In your case, the company is raising its authorized capital by applying to the registrar of companies, though in this case they are looking at their full authorized capital to be issued capital, it was not necessary to do so. Increase of Authorized capital: The main benefit is that the company can get more money in form of equity and utilize the same, perhaps, for expansion of business etc., that is the primary benefit. Bonus Share: Usually, companies keep some surplus as reserve, this money comes out of the profit the company makes and is essentially money of the shareholders. This reserve surplus is maintained for situations, when the money may be required for exigencies. However, this surplus grows over a few years and the company usually the company plans for an expansion of business. However, this money cannot be just taken, as it belongs to the shareholder, so shareholders are issued extra equity in proportion to their current holding and this surplus is capitalized i.e. used as part of the company's equity capital. Bonus declaration does not add t o the value of the company and the share prices fall in proportion (but not quite) to the bonus. |
306280 | "There is a ten year statue of limitations on debt collection, bankruptcy, etc. The problem is, if you start paying, even say, $1, you ""acknowledge"" the debt and the clock starts again. Debt claims fall under the ""he said, she said,"" rubric. In debt restructuring situations, the debtor is taught to write all their creditors DENYING debts. Some percentage of those creditors won't have the paperwork to back up their claims. Others will, and can press their claims. Then a court decides. But in any event, a debt more than tens years old is a ""stale,"" debt. A court is likely to rule in your favor. Unless you ""acknowledge"" the debt." |
306430 | "Give me your money. I will invest it as I see fit. A year later I will return the capital to you, plus half of any profits or losses. This means that if your capital under my management ends up turning a profit, I will keep half of those profits, but if I lose you money, I will cover half those losses. Think about incentives. If you wanted an investment where your losses were only half as bad, but your gains were only half as good, then you could just invest half your assets in a risk-free investment. So if you want this hypothetical instrument because you want a different risk profile, you don't actually need anything new to get it. And what does the fund manager get out of this arrangement? She doesn't get anything you don't: she just gets half your gains, most of which she needs to set aside to be able to pay half your losses. The discrepancy between the gains and losses she gets to keep, which is exactly equal to your gain or loss. She could just invest her own money to get the same thing. But wait -- the fund manager didn't need to provide any capital. She got to play with your money (for free!) and keep half the profits. Not a bad deal, for her, perhaps... Here's the problem: No one cares about your thousands of dollars. The costs of dealing with you: accounting for your share, talking to you on the phone, legal expenses when you get angry, the paperwork when you need to make a withdrawal for some dental work, mailing statements and so on will exceed the returns that could be earned with your thousands of dollars. And then the SEC would probably get involved with all kinds of regulations so you, with your humble means and limited experience, isn't constantly getting screwed over by the big fund. Complying with the SEC is going to cost the fund manager something. The fund manager would have to charge a small ""administrative fee"" to make it worthwhile. And that's called a mutual fund. But if you have millions of free capital willing to give out, people take notice. Is there an instrument where a bunch of people give a manager capital for free, and then the investors and the manager share in the gains and losses? Yes, hedge funds! And this is why only the rich and powerful can participate in them: only they have enough capital to make this arrangement beneficial for the fund manager." |
306460 | No one can advise you on whether to hold this stock or sell it. Your carried losses can offset short or long term gains, but the long term losses have to be applied to offset long term gains before any remaining losses can offset short term gains. Your question doesn't indicate how long you have to hold before the short term gains become long term gains. Obviously the longer the holding period, the greater the risk. You also must avoid a wash sale (selling to lock in the gains/reset your basis then repurchasing within a month). All of those decisions hold risks that you have to weigh. If you see further upside in holding it longer, keep the investment. Don't sell just to try to maximize tax benefits. |
306482 | I second CrimsonX's advice to max out Roth then 401k. At your age in what sounds like a similar situation I did the same thing -- thankfully. It's easier to do when you're young and unencumbered. 10 years later with kids, house, changing from double to single income, job changes, etc, it's harder to max out retirement accounts. Not to mention that priorities change, e.g. saving for college. |
306533 | Stated plainly... it's a benefit. Companies are not required to offer you any compensation above paying you minimum wage. But benefits attract higher quality employees. I think a big part of it is that it is the norm. Employees want it because of the tax benefits. Employees expect it because almost all reputable companies of any significant size offer it. You could run a great company, but if you don't offer a 401k plan, you can scare away good potential employees. It would give a bad impression the same way that not offering health insurance would. |
306688 | Note that you're asking about withholding, not about taxing. Withholding doesn't mean this is exactly the tax you'll pay: it means they're withholding a certain amount to make sure you pay taxes on it, but the tax bill at the end of the year is the same regardless of how you choose to do the withholding. Your tax bill may be higher or lower than the withholding amount. As far as tax rate, that will be the same regardless - you're just moving the money from one place to the other. The only difference would be that your tax is based on total shares under the plan - meaning that if you buy 1k shares, for example, at $10, so $1,500 discounted income, if you go the payroll route you get (say) $375 withheld. If you go the share route, you either get $375 worth of stock (so 38 shares) withheld (and then you would lose out on selling that stock, meaning you don't get quite as much out of it at the end) or you would ask them to actually buy rather more shares to make up for it, meaning you'd have a slightly higher total gain. That would involve a slightly higher tax at the end of it, of course. Option 1: Buy and then sell $10000 worth, share-based withholding. Assuming 15% profit, and $10/share at both points, then buy/sell 1000 shares, $1500 in profit to take into account, 38 shares' worth (=$380) withheld. You put in $8500, you get back $9620, net $1120. Option 2: Buy and then sell $13500 worth, share based withholding. Same assumptions. You make about $2000 in pre-tax profit, meaning you owe about $500 in tax withholding. Put in $11475, get back $13000, net $1525. Owe 35% more tax at the end of the year, but you have the full $1500 to spend on whatever you are doing with it. Option 3: Buy and then sell $1000 worth, paycheck withholding. You get the full $10000-$8500 = $1500 up front, but your next paycheck is $375 lighter. Same taxes as Option 1 at the end of the year. |
306874 | The idea is old as dirt, and some millions of people had it before you. Credit card swipes cost you between 2.4 and 4.5%, depending on the cards, the provider, and the amounts, plus potentially a fixed small amount per swipe. Of course, a 2% cash back card cost more than 2% to swipe; and a 3% cash back card cost more than 3% to swipe; those guys are not morons. |
306893 | This answer will be US-centric but hopefully most of the information will be applicable to other jurisdictions: Generally speaking: |
306908 | As others have pointed out, post-tax dollars are what you'll use. Just as a quick note, as you'll be using post-tax dollars; in the past, I've refused to take contractor plans because they almost always are inferior to what I've been able to get off the private exchange ehealthinsurance. A few people have written excellent articles on Get Rich Slowly here and here about them in detail if you want more information. Generally, contractors (and sometimes employees) are offered a few plans (3-4), and this health exchange gives you a little more freedom to pick your plan, which in your situation may help. It isn't always cheaper, but depending on your needs, you may obtain a better deal. Forgot to add this: this option has also made switching jobs easy as well since I don't have to pay COBRA. While it depends on the situation, this can sometimes come out significantly cheaper. For instance, if I were to take the employer health plan next year, I would lose ~$450 a month, whereas the private exchange option is ~$300. But, if I were to switch jobs, decide to opt for self-employment, or a layoff, the COBRA would be even higher than ~$450. |
307203 | "This is the best tl;dr I could make, [original](http://www.governing.com/topics/finance/gov-cashless-businesses-poor-unbanked.html) reduced by 84%. (I'm a bot) ***** > Sweetgreen, a salad food chain, went cashless at locations this year in California, Illinois, Maryland, Pennsylvania, Virginia and Washington, D.C. Jetties, which serves salads and sandwiches throughout D.C., went cashless in 2015. > "We're not for or against cashless transactions. Our biggest concern isn't cash or not-cash, it's banked or not-banked," says David Rothstein of the Cities for Financial Empowerment Fund, a nonprofit that aims to provide low- and moderate-income people with financial stability. > An Amsterdam Falafel in Boston briefly went cashless last year but quickly halted the experiment and has no plans to go cashless at any of their locations, says Arianne Bennett, president and CEO of the fast-casual chain. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6oaesl/how_a_cashless_society_would_harm_the_poor/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ ""Version 1.65, ~170783 tl;drs so far."") | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr ""PM's and comments are monitored, constructive feedback is welcome."") | *Top* *keywords*: **cashless**^#1 **people**^#2 **bank**^#3 **account**^#4 **cash**^#5" |
307517 | Paying off the student loans slower and investing the rest has some advantages - the interest is tax deductible (essentially lowering that 7% number), and it helps allow you to build up a liquid emergency fund which is more important to financial security than returns. |
307518 | "The stock market is not a zero-sum game. Some parts are (forex, some option trading), but plain old stock trading is not zero sum. That is to say, if you were to invest ""at random"", you would on average make money. That's because the market as a whole makes money - it goes up over time (6-10% annually, averaged over time). That's because you're not just gambling when you buy a stock; you're actually contributing money to a company (directly or indirectly), which it uses to fund activities that (on average) make money. When you buy Caterpillar stock, you're indirectly funding Caterpillar building tractors, which they then sell for a profit, and thus your stock appreciates in value. While not every company makes a profit, and thus not every stock appreciates in true value, the average one does. To some extent, buying index funds is pretty close to ""investing at random"". It has a far lower risk quotient, of course, since you're not buying a few stocks at random but instead are buying all stocks in an index; but buying stocks from the S&P 500 at random would on average give the same return as VOO (with way more volatility). So for one, you definitely could do worse than 50/50; if you simply sold the market short (sold random stocks short), you would lose money over time on average, above and beyond the transaction cost, since the market will go up over time on average. Secondly, there is the consideration of limited and unlimited gains or losses. Some trades, specifically some option trades, have limited potential gains, and unlimited potential losses. Take for example, a simple call option. If you sell a naked call option - meaning you sell a call option but don't own the stock - for $100, at a strike price of $20, for 100 shares, you make money as long as the price of that stock is under $21. You have a potential to make $100, because that's what you sold it for; if the price is under $20, it's not exercised, and you just get that $100, free. But, on the other hand, if the stock goes up, you could potentially be out any amount of money. If the stock trades at $24, you're out $400-100 = $300, right? (Plus transaction costs.) But what if it trades at $60? Or $100? Or $10000? You're still out 100 * that amount, so in the latter case, $1 million. It's not likely to trade at that point, but it could. If you were to trade ""at random"", you'd probably run into one of those types of situations. That's because there are lots of potential trades out there that nobody expects anyone to take - but that doesn't mean that people wouldn't be happy to take your money if you offered it to them. That's the reason your 16.66 vs 83.33 argument is faulty: you're absolutely right that if there were a consistently losing line, that the consistently winning line would exist, but that requires someone that is willing to take the losing line. Trades require two actors, one on each side; if you're willing to be the patsy, there's always someone happy to take advantage of you, but you might not get a patsy." |
307531 | In this situation I would recommend figuring out about what you would need to pay in taxes for the year. You have two figures (your salary and dependents) , but not others. Will you contribute to a 401K, do you itemize deductions, etc... If things are uncertain, I would figure my taxes as if I took the standard deduction. For argument's sake let's assume that comes out to $7300. I would then add $500 on to my total to cover potential increases in taxes/fees. You can adjust this up or down based on your ability to absorb having to pay or the uncertainty in your first calcuation. So now $7800, divide by 26 (the amount of paychecks you receive in a year) = $300 Then I would utilize a payroll calculator to adjust my exemptions and additional witholding so my federal withholding is as close as possible to this number. Or you can sit with your payroll department and do the same. |
308113 | Havoc P's answer is good (+1). Also don't forget the other aspects of business income: state filing fees, county/city filing fees, business licenses, etc. Are there any taxes you have to collect from your customers? If you expect to make more this year, then you should make estimated quarterly tax payments. The first one for 2011 is due around the same time as your federal income tax filing. |
308150 | "If I understand correctly, the Traditional IRA, if you have 401k with an employer already, has the following features: Actually, #1 and #2 are characteristics of Roth IRAs, not Traditional IRAs. Only #3 is a characteristic of a Traditional IRA. Whether you have a 401(k) with your employer or not makes absolutely no difference in how your IRAs are taxed for the vast majority of people. (The rules for IRAs are different if you have a very high income, though). You're allowed to have and contribute to both kinds of accounts. (In fact, I personally have both). Traditional IRAs are tax deferred (not tax-free as people sometimes mistakenly call them - they're very different), meaning that you don't have to pay taxes on the contributions or profits you make inside the account (e.g. from dividends, interest, profits from stock you sell, etc.). Rather, you pay taxes on any money you withdraw. For Roth IRAs, the contributions are taxed, but you never have to pay taxes on the money inside the account again. That means that any money you get over and above the contributions (e.g. through interest, trading profits, dividends, etc.) are genuinely tax-free. Also, if you leave any of the money to people, they don't have to pay any taxes, either. Important point: There are no tax-free retirement accounts in the U.S. The distinction between different kinds of IRAs basically boils down to ""pay now or pay later."" Many people make expensive mistakes in their retirement strategy by not understanding that point. Please note that this applies equally to Traditional and Roth 401(k)s as well. You can have Roth 401(k)s and Traditional 401(k)s just like you can have Roth IRAs and Traditional IRAs. The same terminology and logic applies to both kinds of accounts. As far as I know, there aren't major differences tax-wise between them, with two exceptions - you're allowed to contribute more money to a 401(k) per year, and you're allowed to have a 401(k) even if you have a high income. (By way of contrast, people with very high incomes generally aren't allowed to open IRAs). A primary advantage of a Traditional IRA is that you can (in theory, at least) afford to contribute more money to it due to the tax break you're getting. Also, you can defer taxes on any profits you make (e.g. through dividends or selling stock at a profit), so you can grow your money faster." |
308276 | The issuer pays (negative money in this case) to the holder. The person you sold your borrowed bond to gets this (negative) amount. The person who you lent you the bond is eligible for that (negative) payment, they were the original holder of the bond. When you return the bond you thus have to compensate the original holder. Now turn around the cash flows and you're there. The new holder pays the issuer, the original holder pays you. |
308289 | The forward curve for gold says little, in my opinion, about the expected price of gold. The Jan 16 price is 7.9% (or so) higher than the Jan 12 price. This reflects the current cost of money, today's low interest rates. When the short rates were 5%, the price 4 years out would be about 20% higher. No magic there. (The site you linked to was in German, so I looked and left. I'm certain if you pulled up the curve for platinum or silver, it would have the identical shape, that 7.9% rise over 4 years.) The yield curve, on the other hand, Is said to provide an indication of the direction of the economy, a steep curve forecasting positive growth. |
308809 | Problems with shorting 1. The price could become even more insanely high. 2. The stock you borrowed could be recalled leaving you sitting on a loss. 3. High borrowing costs. 4. Potentially limited loss potential e.g. when a takeover is announced, or when the company has a windfall, or fraudulently announces phony good news. Shorting could still be useful as a niche 10% of your portfolio; the risk is limited that way. Also high short interest tend to make me look a bit harder before buying. |
308962 | "I found this great resource at MarketWatch.com - a listing on online games that help parents teach kids about saving and finance, set up by age group. Here's an example of some of the content: For children six to nine: www.fleetkids.com, sponsored by the Fleet Bank, has great games -- like ""Buy lo, Sell hi"" and ""Chunka Change"" -- that teach kids about spending and saving. Kids can compete for prizes such as computers and backpacks for their schools." |
309037 | You are comparing a risk-free cost with a risky return. If you can tolerate that level of risk (the ups and downs of the investment) for the chance that you'll come out ahead in the long-run, then sure, you could do that. So the parameters to your equation would be: If you assume that the risky returns are normally distributed, then you can use normal probability tables to determine what risk level you can tolerate. To put some real numbers to it, take the average S&P 500 return of 10% and standard deviation of 18%. Using standard normal functions, we can calculate the probability that you earn more than various interest rates: so even with a low 3% interest rate, there's roughly a 1 in 3 chance that you'll actually be worse off (the gains on your investments will be less than the interest you pay). In any case there's a 3 in 10 chance that your investments will lose money. |
309134 | >Entire families living in a 2 bedroom apartment, for example. That's due to the fact that there isn't much land, same problem in hong kong. However, at the very least 80% of them live in public housing so at least they're not getting gouged on rentals. |
309235 | It depends on how much money it is going to save you, how secure your job is and how much risk is acceptable to you. The main problem with taking out a 401k loan for anything is that you have to pay it back within ~60 days of loosing your job which would be precisely when you need your savings the most and then you get the tough choice of using your savings to repay the 401k loan (assuming you have an emergency fund) or possibly not having enough money to live on until you find another job. If you don't have an emergency fund you are going to get stuck with a substantial tax bill 10% penalty plus taxes at your marginal rate. There are definitely advantages to avoiding PMI and you will probably get a pretty decent return on investment (mortgage interest rate + cost of PMI), but there are risks as well. |
309393 | "Maybe a bit off topic, but I suggest reading ""Rich Dad Poor Dad"" by Robert Kiyosaki. An investment is something that puts money to your pocket. If your properties don't put money to your pocket (and this seems to be the case), then they're not an investment. Instead, they drain money from you pocket. Therefore you should instead turn these ""investments"" into real investments. Make everything to earn some money using them, not to earn money somewhere else to cover the loses they create. If that's not possible, get rid of them and find something that ""puts money into your pocket""." |
309672 | I filed all my tax returns when I was abroad so they know how much I made (just not how much I saved). I smell problems here. If you were compliant wrt to your filings, you must have filed FBAR forms and form 8938. Even if you were below the threshold for form 8938, you will probably be above it when you move back to the US - the threshold for people living in the US is much lower. Do I still need to declare it, even though I might not intend to use this money to help my kids through college? I believe so. Here's what they want: Nothing there suggests that it is only limited to the accounts in the US or to the money you intend to use to help your kids through college. |
309684 | See if there are any favorable tax treaties between your two countries. (check US state department - or find the nearest PWC, Deloitte, KPMG, these are global auditing firms that deal with international tax and compliance) A tax treaty could have possible goodies such as a lower more favorable tax or even a tax credit from. For instance, if you paid 28% tax in the US then your new country will give you a credit on the taxes owed to them. The point of tax treaties are to prevent double taxation, but in the effort to do so they often create their own new tax rates for transfers between countries. You'll be better off just paying the 28% US income tax on your 401k distribution. And using the post-tax money as you please. US citizens are on the hook for income tax several years after they leave the US. |
309758 | If you had an agreement with your friend such that you could bring back a substantially similar car, you could sell the car and return a different one to him. The nature of shares of stock is that, within the specified class, they are the same. It's a fungible commodity like one pound of sand or a dollar bill. The owner doesn't care which share is returned as long as a share is returned. I'm sure there's a paragraph in your brokerage account terms of service eluding to the possibility of your shares being included in short sale transactions. |
309923 | Selling one fund and buying another will incur capital gains tax on the sale for the amount of the gain. I'm not aware of any sort of exemption available due to you moving out of the country. However, long-term capital gains for low-tax-bracket taxpayers is 0%. As long as your total income including the gains fits within the 15% regular tax bracket, you don't pay any long-term capital gains. Options for you that I see to avoid taxes are: Note that even if you do sell it all, it's only the amount of gains that would take your income over the 15% normal tax bracket that would be taxed at the long-term rate of 15%, which may not end up being that much of a tax hit. It may be worth calculating just how bad it would be based on your actual income. Also note that all I'm saying here is for US federal income taxes. The state you most recently lived in may still charge taxes if you're still considered a resident there in some fashion, and I don't know if your new home's government may try to take a cut as well. |
310056 | "The current mortgaged owner would typically not have the right to sell any portion of the house without approval from the bank. The bank doesn't ""own"" the house through the mortgage, but they do have a series of rights that, in some cases, look similar to ownership. Remember that a mortgage is just a loan that uses a house as collateral, to reduce the risk to the lender in the event of default. If it was just a personal loan, without collateral, then there would be a much higher risk of default (and therefore the interest rate would be closer to 20% than 2%). But because the loan was taken with collateral, that collateral can't be sold without the bank's permission. If the bank allowed this to happen, then one risk would be exactly as you say - that the mortgagee stops paying the bank, and the bank no longer is able to recover the full value of the loan on selling the remaining 50% of the house owed as collateral." |
310081 | As mbhunter said, extra payments of principal don't affect your taxes (except to the extent that you'll pay less interest, because the amount you owe interest on - the total balance/principal - is smaller). If you want to reduce your taxes, you might pay into an IRA instead. |
310112 | "The first consideration for the banking part of your portfolio is safety. In the United States that is FDIC protection, or the equivalent for a Credit Union. The second consideration is does it have the level of service you need. For this I mean the location of branches, ATMs, or its online services meet your needs for speed, accuracy, and ability to access or move the money as you need. The rest are then balanced on the extras. For your situation those extras include the ability to make free trades. For other it might be a discount on their mortgage. For others it is free checking. In your current situation if the first two things are met, and you are using those extra benefits then don't change. For me the free trades wouldn't be a benefit, so any major degradation in the safety and service would cause me to leave. Keep in mind that free services exist to entice you to make a deposit: which they can then make money by lending it out; or they offer a free service to entice you to use a service they can charge you to use. All Free services come with a cost. I earned a completely paltry $3.33 YTD over the last 9 months on my savings at my bank presumably in exchange for these ""free"" trades. Without knowing how much you had deposited in your savings account there is no way to know how much you could have made at the bank across the street. But with the low rates of the last decade there is not big money to be made off the emergency savings of a typical american family." |
310326 | "The short answer is that the exchange of the stock in exchange for the elimination of a debt is a taxable exchange, and gains or losses are possible for the stock investor as well as the bank. The somewhat longer answer is best summarized as noting that banks don't usually accept stocks as collateral, mostly because stock values are volatile and most banks are not equipped to monitor the risk involved but it is very much part of the business of stock brokers. In the USA, as a practical matter I only know of stock brokerages offering loans against stock as part of the standard services of a ""margin account"". You can get a margin account at any US stock broker. The stockholder can deposit their shares in the margin account and then borrow around 50% of the value, though that is a bit much to borrow and a lower amount would be safer from sudden demands for repayment in the form of margin calls. In a brokerage account I can not imagine a need to repay a margin loan if the stocks dividends plus capital appreciation rises in value faster than the margin loan rate creates interest charges... Trouble begins as the stock value goes down. When the value of the loan exceeds a certain percentage of the stock value, which can depend on the stock and the broker's policy but is also subject to federal rules like Regulation T, the broker can call in the loan and/or take initiative to sell the stock to repay the loan. Notice that this may result in a capital gain or loss, depending on the investor's tax basis which is usually the original cost of the stock. Of course, this sale affects the taxes of the investor irregardless of who gets the money." |
310361 | It has to do with return. I don't know if Canada has a matching feature on retirement accounts, but in the US many companies will match the first X% you put in. So for me, my first $5000 or so is matched 100%. I'll take that match over paying down any debt. Beyond that, of course it's a simple matter of rate of return. Why save in the bank at 2% when you owe at 10-18%? One can make this as simple or convoluted as they like. My mortgage is a tax deduction so my 5% mortgage costs me 3.6%. I've continued to invest rather than pay the mortgage too early, as my retirement account is with pre-tax dollars. So $72 will put $100 in that account. Even in this last decade, bad as it was, I got more than 3.6% return. |
310601 | Not really. You can have two bonds that have identical duration but vastly different convexity. Pensions and insurance portfolio managers are most common buyers as they're trying to deal with liability matching and high convexity allows them to create a barbell around their projected liabilities. |
310639 | For local retailers you will need to visit the store. For national retail chains you will need to get in contact with their purchasing departments. Either way, have a solid product with a good presentation. A lot of cold calls and sales presentations are ahead of you so master your elevator pitch as well as your 10-15 minute presentation. Best of luck to you! |
310683 | It depends on what your investment goals are. Are you investing for the short-term or the long-term? What was your reason for investing in these stocks in the first place? Timing short-term fluctuations in the market is very difficult, so if that's your goal, I wouldn't count on being able to sell and buy back in at exactly the right time. Rather, I think you should think about what your investment rationale was in the first place, and whether or not that rationale still holds. If it does, then hold on to the stocks. If it doesn't, then sell. |
310837 | "I look for buying a call option only at the money, but first understand the background above: Let's suppose X stock is being traded by $10.00 and it's January The call option is being traded by $0.20 with strike $11.00 for February. (I always look for 2% prize or more) I buy 100 stocks by $10.00 each and sell the option, earning $0.20 for each X stock. I will have to deliver my stocks by $11.00 (strike value agreed). No problem for me here, I took the prize plus the gain of $1.00. (continuing from item 3) I still can sell the option for the next month with strike equal or higher than that I bought. For instance, I can sell a call option of strike $10.00 and it might be worth to deliver stocks by $10.00 and take the prize. (continuing from item 3) Probably, it won't be possible to sell a call option with strike at the price that I paid for the stock, but that's not a problem. At the end of the option life (in February), the strike was $11.00 but the stock's price is $8.00. I got the $0.20 as prize and my stocks are free for trade again. I'll sell the call option for March with strike $9.00 (taking around 2% of prize). Well, I don't want to sell my stocks by $9.00 and make loss, right? But I'm selling the call option anyway. Then I wait till the price of the stock gets near the strike value (almost ATM) and I ""re-buy"" the option sold (Example: [StockX]C9 where C means month = March) and sell again the call option with higher strike to April (Example [StockX]D10, where D means month = April) PS.: At item 9 there should be no loss between the action of ""re-buy"" and sell to roll-out to the next month. When re-buying it with the stock's price near the strike, option value for March (C9) will be lower than when selling it to April (D10). This isn't any rule to be followed, this is just a conservative (I think they call it hedge) way to handle options and stocks. Few free to make money according to your goals and your style. The perfect rule is the one that meet your expectation, don't take the generalized rules too serious." |
310973 | Now I'm trying to decide whether to find a managed fund, or use Vanguard ETFs. With a new trading account I can keep at least the initial move free of transaction charges, but ongoing additions would cost me the standard fee. I may want to move half of those funds into a mortgage deposit in a year. (maybe?) Most ETFs, like the stock market, exhibit significant volatility and, over short periods of time, substantial down-side risk. In other words, there is a significant chance that the value of your investment will be worth substantially less in a year from now. The likelihood of this being the case in, say, 10 years from now is much lower, and vanishingly small for a diversified portfolio. If you aren't confident you'll at least have the option of keeping most of your money invested for over a year, consider that the stock market may not be right for you, at least not as an investment vehicle. Regarding the things you'd like to learn; as the commenter said - that's a huge topic and I think you need to clarify your questions. |
311011 | What are your goals in life? If one of them is to appear wealthy then buying a high price import is a great place to start. You certainly have the salary for it (congratulations BTW). If one of your goals is to build wealth, then why not buy a ~5000 to ~6000 car and have a goal to zero out that student loan by the end of the year? You can still contribute to your 401k, and have a nice life style living on ~60K (sending 30 to the student loan). Edit: I graduated with a CS degree in '96 and have been working in the industry since '93. When I started, demand was like it is now, rather insane. It probably won't always be like that and I would prepare for some ups and downs in the industry. One of the things that encouraged me to lead a debt free lifestyle happened in 2008. My employer cut salaries by 5%...no big deal they said. Except they also cut support pay, bonuses, and 401K matching. When the dust cleared my salary was cut 22%, and I was lucky as others were laid off. If you are in debt a 22% pay cut hurts bad. |
311117 | If it's money you can lose, and you're young, why not? Another would be motifinvesting where you can invest in ideas as opposed to picking companies. However, blindly following other investors is not a good idea. Big investors strategies might not be similar to yours, they might be looking for something different than you. If you're going to do that, find someone with similar goals. Having investments, and a strategy, that you believe in and understand is paramount to investing. It's that belief, strategy, and understanding that will give you direction. Otherwise you're just going to follow the herd and as they say, sheep get slaughtered. |
311214 | To follow up on Quid's comment, the share classes themselves will define what level of dividends are expected. Note that the terms 'common shares' and 'preferred shares' are generally understood terms, but are not as precise as you might believe. There are dozens/hundreds of different characteristics that could be written into share classes in the company's articles of incorporation [as long as those characteristics are legal in corporate law in the company's jurisdiction]. So in answering your question there's a bit of an assumption that things are working 'as usual'. Note that private companies often have odd quirks to their share classes, things like weird small classes of shares that have most of the voting rights, or shares with 'shotgun buyback clauses'. As long as they are legal clauses, they can be used to help control how the business is run between various shareholders with competing interests. Things like parents anticipating future family infighting and trying to prevent familial struggle. You are unlikely to see such weird quirks in public companies, where the company will have additional regulatory requirements and where the public won't want any shock at unexpected share clauses. In your case, you suggested having a non-cumulative preferred share [with no voting rights, but that doesn't impact dividend payment]: There are two salient points left related to payout that the articles of incorporation will need to define for the share classes: (1) What is the redemption value for the shares? [This is usually equal to the cost of subscribing for the shares in the first place; it represents how much the business will need to pay the shareholder in the event of redemption / recall] (2) What is the stated dividend amount? This is usually defined at a rate that's at or a little above a reasonable interest rate at the time the shares are created, but defined as $ / share. For example, the shares could have $1 / share dividend payment, where the shares originally cost $50 each to subscribe [this would reflect a rate of payment of about 2%]. Typically by corporate law, dividends must be paid to preferred shares, to the extent required based on the characteristics of the share class [some preferred shares may not have any required dividends at all], before any dividends can be paid to common shares. So if $10k in dividends is to be paid, and total preferred shares require $15k of non-cumulative dividends each year, then $0 will be paid to the common shares. The following year, $15k of dividends will once again need to be paid to the preferred shares, before any can be paid to the common shares. |
311442 | The simplest way is just to compute how much money you'd have to have invested elsewhere to provide a comparable return. For example, if you assume a safe interest rate of 2.3% per year, you would need to have about $520,000 to get $1,000/month. |
311495 | >Not to mention that Japan has a very good savings rate. Remember they buy a lot of bonds with their savings, Japanese bonds. This shows up as debt on the ledger. People really need to learn about government debt in general. |
311630 | Just for op's reference. A deferred wage entry would be something along the lines of the following scenario: you contract with a worker to perform some work at some point in the future, you would then book deferred wages for the amount to liabilities and deferred labor for that amount to assets, which would increase both and leave equity unchanged. |
311642 | Emergency funds, car funds etc tend to have to be accessible quickly (which tends to rule out CDs unless you have the patience to work something like a monthly CD ladder, an I don't) and you'll want your principal protected. The latter pretty much rules out any proper investment (ETFs, mutual funds, stock market directly, Elbonian dirt futures etc). It's basically a risk-vs-return calculation. Not much risk, not much return but at least you're not losing from a nominal standpoint). Another consideration is that you normally aren't able to decide freely if and when you want to pull money out of an emergency fund. If it is an emergency, waiting three weeks to see if the stock market goes up a little further isn't an option so you might end up having to take a hit that would be irrelevant if you were investing long term but might hurt badly because you're left with no choice. I'd stick that sort of money into a money market account and either add to it if necessary to keep up with inflation or make sure that my non-retirement investments over and above these funds are performing well, as those will and should become a far bigger part of your wealth in the longer run. |
311688 | The DLOM maybe different if the bond is more or less marketable than the equity. However, the ratio itself would be the same. So while this might affect the interest at which you are willing to lend, it would not affect the intrinsic value of the firm. |
311782 | If so, are there ways to reduce the amount of taxes owed? Given that it's currently December, I suppose I could sell half of what I want now, and the other half in January and it would split the tax burden over 2 years instead, but beyond that, are there any strategies for tax reduction in this scenario? One possibility is to also sell stocks that have gone down since you bought them. Of course, you would only do this if you have changed your mind about the stock's prospects since you bought it -- that is, it has gone down and you no longer think it will go up enough to be worth holding it. When you sell stocks, any losses you take can offset any gains, so if you sell one stock for a gain of $10,000 and another for a loss of $5,000, you will only be taxed on your net gain of $5,000. Even if you think your down stock could go back up, you could sell it to realize the loss, and then buy it back later at the lower price (as long as you're not worried it will go up in the meantime). However, you need to wait at least 30 days before rebuying the stock to avoid wash sale rules. This practice is known as tax loss harvesting. |
311786 | "Do you need the capital? If you not, are you considering taking it to help you grow faster? To lower your downside risk? In terms of deal structure start with your financial model and evaluate your payback period and IRR... Think if you were investor how much of a split would you need to compensate the risk you are taking. Generally the investor will want to get 100% of their original investment paid back plus a annual 8% ""preferred"", return and after they are made whole 80% of proceeds, but I've seen restaurant deals at 50/50 splits and no preferred return. I'd try to ensure you get a salary and/or management fee. Make sure you retain control and rights! Don't sign anything without legal review." |
311951 | "This is the best tl;dr I could make, [original](https://www.newyorker.com/news/john-cassidy/a-new-way-to-learn-economics) reduced by 86%. (I'm a bot) ***** > A group of economists from both sides of the Atlantic, part of a project called CORE Econ, has put together a new introductory economics curriculum, one that is modern, comprehensive, and freely available online. > In many countries, groups of students demanded an overhaul in how economics was taught, with less emphasis on free-market doctrines and more emphasis on real-world problems. > In his highly popular "Principles of Economics," Harvard's N. Gregory Mankiw begins by listing a set of ten basic principles, which include "Rational people think at the margin," "Trade can make everybody better off," and "Markets are usually a good way to organize economic activity."" ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6zkgmk/a_new_way_to_learn_economics/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ ""Version 1.65, ~208302 tl;drs so far."") | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr ""PM's and comments are monitored, constructive feedback is welcome."") | *Top* *keywords*: **economic**^#1 **students**^#2 **CORE**^#3 **more**^#4 **curriculum**^#5" |
312038 | But virtually all Americans pay some form of tax, whether it's sales, payroll, state income, or property tax. I'm glad you mentioned this. When you say something like Romney only paid 14% taxes, I will point you to this as well. |
312248 | "You obviously pay your taxes in Switzerland and are employed (judging from your comments on your maximum possible contribution to the 3. Säule). Under these circumstances, your best best may well be to pay into the occupational pension system (""Einkauf in die 2. Säule""). Essentially, you can add funds to your pension plan to match non-existent employer contributions from times you spent studying etc. The 2. Säule is usually defensively invested in bonds, so it's not a completely secure investment. In addition, it's a pretty fixed investment, since you can only get your money out if you buy a house or leave Switzerland for good. However, your entire payment into the 2. Säule is tax deductible, so the tax effect in itself should be a very attractive bit of ""interest"". Your pension plan can inform you about the maximum possible Einkauf." |
312349 | Making the company isn't what the fuss is about. Charging yourself 'fees' through that company so that you don't how to pay out the director whose contract is on the *net* of profits is what the fuss is about. I'm surprised that with millions of dollars on the line they don't sue, setting a precedent for these sham fees for all studios. |
312361 | I would suggest talking to your parents about potentially co-signing on the loan with you. Just make sure that you are the primary holder of the loan. Sure, there is some risk for your parents, but they know you better than anyone so let them make the decision if they want to help you or not. If for some reason they can't help you, such as they've declared bankruptcy, then following the other answers' advice is the way to go. |
312406 | This is the chart going back to the first full year of this fund. To answer your question - yes, a low cost ETF or Mutual fund is fine. Why not go right to an S&P index? VOO has a .05% expense. Why attracted you to a choice that lagged the S&P by $18,000 over this 21 year period? (And yes, past performance, yada, yada, but that warning is appropriate for the opposite example. When you show a fund that beat the S&P short term, say 5 years, its run may be over. But this fund lagged the S&P by a significant margin over 2 decades, what makes you think this will change? |
312540 | Yeah it's called the Fed buying shit mortgages that the banks invented to make money, then got bailed out on 100 cents on the dollar for, and with an underhanded deal that the banks will then buy Treasury bills with the magically prestidigitated money the Fed creates out of nothing that the banks receive in order to prop up federal debt prices, and thus keep interest rates down, so the dollar can limp along a little while longer until the bottom drops out because they are out of ways to keep the money cheap because at some point government debt will become massively discounted no matter what they do. Only, how does this bizarre circlejerk process end? It ends with consumption ramped up consuming things for a large war, is how it ends. Edit: I'm wasted. Fuck you. |
312600 | If you hold stock in a traditional IRA and sell a covered call against that stock, the premium received for writing that call belongs to the IRA just as would any other gain, dividend, or interest. It is not a contribution but simply adds to the balance in the IRA. The nature of the gain (capital or ordinary) is not relevant since all parts of the IRA balance are treated the same when funds are (eventually) withdrawn. |
312626 | Use your line of credit (LOC) to purchase more investments (non RRSP). That way, all of your LOC interest use to purchase those investments becomes tax deductible. Then use the money from your tax return to pay down the LOC. |
313012 | "You are not the only one with this problem. When Intuit changed their pricing and services structure in 2015 a lot of people got angry, facing larger fees and having to go through an annoying upgrade just to get the same functionality (such as Schedule D, capital gains). You have several options: (1) Forget Turbo Tax and just use paper forms. That is what I do. Paper is reliable. (2) Use forms mode in Turbo Tax. Of course, that may be even more complicated than simply filing out paper forms. (3) Use a different service. If your income is below $64,000 the IRS has a free electronic filing service. Other online vendors have full taxes services for less than Turbo Tax. (4) Add the amount to ordinary income. Technically, as long as you report the income, you cannot be penalized, so if you add the capital gain to your ordinary income, then you have paid taxes on the income. Even if they send you a letter, you can send an answer that you added it to ordinary income and that will satisfy them. Of course you pay a higher rate on your $26 if you do that. (5) If you are in the 15% or below income bracket you are exempt from capital gains, and you can omit it. Don't believe the nervous Nellies who say the IRS will burn your house down if you don't report $26 in capital gains. Penalties are assessed on the percentage of TAXES you did not pay (0.5% penalty per month). Since 0.5% of $0 is $0 your penalty is $0. The IRS knows this. The IRS does not send out assessment letters for $0. (6) Even if you are above the 15% bracket, there is likelihood it is still a no-tax situation (see 5 above). (7) Worst case scenario: you are making a million dollars per year and you omit your $26 capital gains from your return. The IRS will send you an assessment letter for about $10. You can then send them a separate check or money order to pay it. In all honesty I have omitted documented tax items, like taxable interest, that the IRS knows about many times and never gotten an assessment letter. Once I made a serious math error on my return and they sent me an assessment letter, which I just paid, end of story. And that was for a lot more than $26. The technical verbiage for something like this in IRS lingo is CP-2000, underreported income. As you can see from this official IRS web page, basically what they do is guess how much they think you owe and send you a bill. Then you pay it. If you do so in time, you don't even get a 0.5% interest penalty on your $6.75 owed or whatever it is. (8) Go hog wild. As long as you are risking an assessment on your $26, why not go hog wild and just let the IRS compute all your taxes for you? Make a copy of your income statements, then mail them to the IRS with a letter that says, ""Hi, I am Mr. Odinson, my SSN is XXX-XX-XXXX. My address is XYZ. I am unable to compute my taxes due to a confused state of mind. I am hereby requesting a tax assessment for the 2016 tax year."" Make sure you sign and date the letter. In all probability they will compute the full assessment and send you a bill (or refund)." |
313135 | "You gave your own answer - the 80% is positions, not contracts. Most actors on the option market have no interest in the underlying asset. They want ""just"" exposure to its price movement. It makes more sense to close your position than to be handed over bushels of wheat or whatever." |
313372 | "There are a few other items that you should be aware of when getting options: The strike price is usually determined by an independent valuation of the common shares (called a 409a valuation). This should give you a sense on what the options are worth. Obviously you are hoping that the value becomes many multiple of that. There are two kinds in the US: Non-quals (NQO) and Incentive Stock Options (ISOs). The big difference is that when you exercise Non-quals, you have to pay the tax on the difference between the ""fair"" market value on the shares and what you paid for them (the strike price). This is important because if the company is private, you likely can not sell any shares until it is public. With ISOs, you don't pay any tax (except AMT tax) on the gain until you actually sell the shares. You should know what kind your getting. Some plans allow for early exercise, essentially allowing you to buy the shares early (and given back if you leave before they vest) which helps you establish capital gains treatment earlier as well as avoid AMT if you have ISOs. This is really complicated direction and you would want to talk to a tax professional. And always a good idea to know how many total shares outstanding in the Company. Very few people ask this question but it is helpful for you to understand the overall value of the options." |
313391 | Your capital gain is about $40K, which (assuming your total income is under $250K) is taxed at 15% long term capital gains rate. Additional depreciation recapture of approximately $5K is taxed at 25%. So this gives us rough estimate of $7250 tax. This is Federal tax, AZ rates are somewhere between 2% and 4%, so you'll be looking at some $1.6K additional tax to AZ. If you have accumulated rental losses or other expenses, it will lower the total amount of your gain (and, accordingly, the taxes). This is all very rough estimates, and you shouldn't rely on this but verify on your own or with a professional. I suggest using professional services because while being costly, they will probably save you more in taxes than you'll have to pay them because of the knowledge of what exactly of your expenses can be deducted and how to calculate the cost basis correctly. (edit from JoeT - the home exclusion requires occupancy for 2 of prior 5 years. For the OP, the prorated $125k exclusion 'might' cover the gain, it depends when the increase in value occurred, if the gain was during the time rented, it's taxable, I believe.) |
313397 | Get answers from your equivalent of the IRS, or a local lawyer or accountant who specializes in taxes. Any other answer you get here would be anectdotal at best. Never good to rely on legal or medical advice from internet strangers. |
313414 | I'm going to have to take you to task for this post. If someone is incapable of determining the implied current P/E in the IPO price then they should not be buying stocks. You cannot blame Wall Street for the greed and stupidity of the public. |
313437 | I have been careful here to cover both shares in companies and in ETFs (Exchange Traded Funds). Some information such as around corporate actions and AGMs is only applicable for company shares and not ETFs. The shares that you own are registered to you through the broker that you bought them via but are verified by independent fund administrators and brokerage reconciliation processes. This means that there is independent verification that the broker has those shares and that they are ring fenced as being yours. The important point in this is that the broker cannot sell them for their own profit or otherwise use them for their own benefit, such as for collateral against margin etc.. 1) Since the broker is keeping the shares for you they are still acting as an intermediary. In order to prove that you own the shares and have the right to sell them you need to transfer the registration to another broker in order to sell them through that broker. This typically, but not always, involves some kind of fee and the broker that you transfer to will need to be able to hold and deal in those shares. Not all brokers have access to all markets. 2) You can sell your shares through a different broker to the one you bought them through but you will need to transfer your ownership to the other broker and that broker will need to have access to that market. 3) You will normally, depending on your broker, get an email or other message on settlement which can be around two days after your purchase. You should also be able to see them in your online account UI before settlement. You usually don't get any messages from the issuing entity for the instrument until AGM time when you may get invited to the AGM if you hold enough stock. All other corporate actions should be handled for you by your broker. It is rare that settlement does not go through on well regulated markets, such as European, Hong Kong, Japanese, and US markets but this is more common on other markets. In particular I have seen quite a lot of trades reversed on the Istanbul market (XIST) recently. That is not to say that XIST is unsafe its just that I happen to have seen a few trades reversed recently. |
313525 | "There are several brokerages which have lower minimum deposits (often $500) and allow purchase of index ETFs. I won't name them to avoid advertising. The best way to find out is to go to your bank, and ask to see a financial advisor. Then explain your difficulty to the advisor (who should caution you about the issues with investing such a small amount) and ask for advice on where to find a suitable broker. Also, sometimes banks offer services where you can buy shares of a fund through your bank account. This is probably not ""as good"" as the brokerage (performance may be not as good, fees may come out higher), but especially for small amounts and for convenience, this may be easier. Again, you should inquire at your institution." |
313885 | Would you borrow money at 3% just to leave it in a savings account? That's effectively what you're doing by not paying of your student loans. I would pay of all of the student loans, and consider putting a little toward the car loan. If you do run into an emergency you still have your $2K/month to help build your savings back up. |
313923 | Pay the 401(k) loan back as soon as possible. To be clear, the money from your 401(k) loan is no longer invested and working for you. It doesn't make sense to pull money out of your 401(k) investments and then invest it in something else. If you want to invest for retirement, pay back the loan and invest that money inside your 401(k). If you leave your job, the 401(k) loan needs to be paid back in full, or else taxes and penalties will apply. If you have put the funds in an IRA, they won't be available to you should you need to pay back the loan early. Instead of making a monthly payment to the 401(k) loan, pay off the loan and then make a monthly investment to an IRA. |
314008 | "I'm assuming the question is about how to compare two ETFs that track the same index. I'd look at (for ETFs -- ignoring index funds): So, for example you might compare SPY vs IVV: SPY has about 100x the volume. Sure, IVV has 2M shares trading, so it is liquid ""enough"". But the bigger volume on SPY might matter to you if you use options: open interest is as much as 1000x more on SPY. Even if you have no interest in options, the spreads on SPY are probably going to be slightly smaller. They both have 0.09% expense ratios. When I looked on 2010-9-6, SPY was trading at a slight discount, IVV was at a slight premium. Looking for any sort of trend is left as an exercise to the reader... Grab the prospectus for each to examine the rules they set for fund makeup. Both come from well-known issuers and have a decent history. (Rather than crazy Uncle Ed's pawn shop, or the Central Bank of Stilumunistan.) So unless you find something in the SPY prospectus that makes you queasy, the higher volume and equal expense ratios would seem to suggest it over IVV. The fact that it is at a (tiny) discount right now is a (tiny) bonus." |
314056 | This question is indeed rather complicated. Let's simplify it a little bit. Paying down your mortgage makes sense if your expected return in the rest of your portfolio is less than the cost of the mortgage. In many cases, people may also decide to pay down their mortgage because they are risk-averse and do not like carrying debt. There's no tax benefit to doing so, though; Canada doesn't generally allow you to write off mortgage interest, unlike the U.S. As to keeping money in the corporation or not, I'm not going to address that. I don't have a firm enough understanding of corporate taxation. Canadian Couch Potato advises treating all of your investment assets as one large portfolio. That is what you are trying to do here. However, let's consider a different approach. If you do not have enough money to max out your RRSP or TFSA, you may choose to keep your TFSA for an emergency fund, where the money is kept highly liquid. Keep your cash in an interest-bearing TFSA, or perhaps invest it in the money market, inside your TFSA. Then, use your RRSP for the rest of your investment money, split according to your investment goals. This is not the most tax-efficient approach, but it is nice and simple. But you are looking for the most tax-efficient approach. So, let's assume you have enough to more than max out your TFSA and RRSP contributions, and all of your investments are going toward your retirement, which is at least a decade away. Because you are not taxed on your investment income from RRSPs (until you withdraw the money) or TFSA, it makes sense to hold the least tax-efficient investments there. Tax-advantaged investments such as Canadian equities should be held in your investment accounts outside of TFSA and RRSPs. Again, the Canadian Couch Potato has a great article on where to put your investment assets. That article covers interest, dividends, foreign dividends, and capital gains, as well as RRSPs, RESPs, and TFSAs. That article recommends holding Canadian equities in a taxable account, REITs in a tax-sheltered account (TFSA or RRSP), bonds, GICs, and money-market funds in a tax-sheltered account (as these count as interest). The article goes into rather more detail than this, and is worth checking out. It mentions the 15% withholding tax on US-listed ETFs, for example. In addition to that website, I recommend the following three books: The above three resources strongly advocate passive indexed investments, which I like but not everyone agrees with. All three specifically discuss tax implications, which is why I include them here. |
314279 | You're creating more liabilities for yourself in the future, although yes this could definitely be a profitable move for you. However, some small mistakes you made, from what I can see using the tools at Hargreaves Lansdown. The first, is that the government relief would only be 20%, not 60%. The second is that the tax relief goes directly into the SIPP, it's not something you get given back to you in cash. In order for this to be worthwhile, you need to be sure that you can make a post-tax gain of more than 3.4% on this money per year - which should be very feasible. It sounds like you have enough security that you could afford to take this risk. |
314300 | If you have been putting savings away for the longer term and have some extra funds which you would like to take some extra risk on - then I say work yourself out a strategy/plan, get yourself educated and go for it. If it is individual shares you are interested then work out if you prefer to use fundamental analysis, technical analysis or some of both. You can use fundamental analysis to help determine which shares to buy, and then use technical analysis to help determine when to get into and out of a position. You say you are prepared to lose $10,000 in order to try to get higher returns. I don't know what percentage this $10,000 is of the capital you intend to use in this kind of investments/trading, but lets assume it is 10% - so your total starting capital would be $100,000. The idea now would be to learn about money management, position sizing and risk management. There are plenty of good books on these subjects. If you set a maximum loss for each position you open of 1% of your capital - i.e $1,000, then you would have to get 10 straight losses in a row to get to your 10% total loss. You do this by setting stop losses on your positions. I'll use an example to explain: Say you are looking at a stock priced at $20 and you get a signal to buy it at that price. You now need to determine a stop price which if the stock goes down to, you can say well I may have been wrong on this occasion, the stock price has gone against me so I need to get out now (I put automatic stop loss conditional orders with my broker). You may determine the stop price based on previous support levels, using a percentage of your buy price or another indicator or method. I tend to use the percentage of buy price - lets say you use 10% - so your stop price would be at $18 (10% below your buy price of $20). So now you can work out your position size (the number of shares to buy). Your maximum loss on the position is $2 per share or 10% of your position in this stock, but it should also be only 1% of your total capital - being 1% of $100,000 = $1,000. You simply divide $1,000 by $2 to get 500 shares to buy. You then do this with the rest of your positions - with a $100,000 starting capital using a 1% maximum loss per position and a stop loss of 10% you will end up with a maximum of 10 positions. If you use a larger maximum loss per position your position sizes would increase and you would have less positions to open (I would not go higher than 2% maximum loss per position). If you use a larger stop loss percentage then your position sizes would decrease and you would have more positions to open. The larger the stop loss the longer you will potentially be in a position and the smaller the stop loss generally the less time you will be in a position. Also as your total capital increases so will your 1% of total capital, just as it would decrease if your total capital decreases. Using this method you can aim for higher risk/ higher return investments and reduce and manage your risk to a desired level. One other thing to consider, don't let tax determine when you sell an investment. If you are keeping a stock just so you will pay less tax if kept for over 12 months - then you are in real danger of increasing your risk considerably. I would rather pay 50% tax on a 30% return than 25% tax on a 15% return. |
314455 | didn't pay the extra underpayment penalty on the grounds that it was an honest mistake. You seem to think a penalty applies only when the IRS thinks you were trying to cheat the system. That's not the case. A mistake (honest or otherwise) still can imply a penalty. While you can appeal just about anything, on any grounds you like, it's unlikely you will prevail. |
314556 | Do you know how SoFi's business model works? They're usually pretty conservative with their loans and refinancing. But I guess if they were looking to expand into riskier loans then it sounds like they've got some red tape that'd hold them back. Thank you for the explanation, much appreciated. |
314691 | "You should absolutely have a contract between you and your client stipulating the quid-pro-quos of the arrangement. They get the product, you get the money. First off, this contract should specify what you must do, and what they must do, for the contract to be ""satisfied"". This isn't necessarily just product for money; your client may be under deadlines to approve the product in various stages of work in process. Depending on the product, the client may be required to provide starting materials (like existing logos/slogans for advertising/marketing graphics), information on or access to computer systems (for software or infrastructure consulting, or accounting auditing), etc. Second, if you provide a tangible product like graphics or software, the contract should clearly state that ""intellectual property transfers on satisfaction of contract""; they don't own what you have made until they have accepted it and paid you accordingly. If they try to stiff you by taking what you made them and using it before you've been paid, you can take them to the cleaner's for copyright violations. Third, you should structure a payment schedule; don't do too much for free. You can get the money in thirds, for instance; a third up front, a third at some defined halfway point and a third on final delivery and acceptance. Lastly, you should stipulate that the client is responsible for all expenses incurred by you as a result of their failure to pay as stipulated, up to and including attorney's fees. Definitely have a lawyer draft these agreements; contract law is a many-layered area of law with hundreds of years of case law and slightly different nuances in every state. A competent lawyer will know things that can and can't be stipulated in a contract, and if you try to do it alone you'll wish you hadn't when the contract's tossed out by a judge because of some technicality. If they refuse to pay, get the lawyer on the phone and file suit. A well-written contract drafted by a competent lawyer, which you have lived up to on your end, will give your client no loopholes to slip through. As far as recovering damages, it shouldn't matter whether he's in the U.S. or not; if he does business in the U.S. then he very probably has money in banks that have to listen to U.S. courts (or at least court orders)." |
314745 | He didn't lock in a growth rate of 4%. He locked in a yield of 4%. That's the amount the bond pays in interest on his original investment each year. If he just spends that money the bond will continue to pay 4% each year, but there's no growth. In order to get growth he has to reinvest the interest as it comes in; if he puts it into bonds, the return on that new money, and hence the growth, depends on the prevailing interest rate at the time that the interest is paid. That interest rate can be higher or lower than the original 4%; there's no connection between the two. |
314806 | Here's my view, as a 38yr old NZer who grew up in Auckland: When you purchase a residential property, whether or not you intend to live in it, you're essentially counting on the possibility that one of the following will occur: This report by the NZ Royal Society (going by memory from a presentation I attended) predicts ongoing population growth in NZ, mainly driven by immigration, and mostly in Auckland. Building of new housing isn't keeping up with population growth, so my bet would be that the property values, especially in Auckland, are going to continue to climb. Other factors that might influence your decision are things only you can know, such as where you might be likely to settle down, how much risk you're willing to take, how much capability you have to look after a rental property, and how much knowledge you have about the property market. Bear in mind that government schemes and world events may change the outlook for number of houses being built and immigration levels, both of which heavily affect property values. My personal view is that the government isn't doing nearly enough to provide affordable housing for our young adults in NZ. Not only that; the govt is essentially responsible for the problem in the first place, as zoning rules for local authorities artificially inflate land prices which prevent the building of affordable houses. Furthermore, foreign investment in rental properties is unregulated and unmeasured. Both these problems could be resolved with appropriate legislation, though central city prices are unlikely to be relieved as much as other areas simply because prices are also inflated due to the desirability to live centrally. The problem is a severe one, and high housing prices for even the smallest dwellings are going to make inequality, and the social problems that go with it, far worse. I'd like to see new cities or towns being planned and built from scratch, such as Pegasus and Canberra. |
315017 | It depends on the bank - In some cases(mine included :) ) the bank allowed for this but Emma had to sign on a document waiving the rights for the house in case the bank needs to liquidate assets in to recover their mortgage in case of delays or non-payment of dues in time. This had to be signed after taking independent legal advice from a legal adviser. |
315086 | Is the business an S-Corp, LLC or Sole Prop? I am going to guess based on the question that it is an LLC that you never closed with the state and you live in a state (NY) that charges a fee for having an LLC in the state in which case you owe those fees to the state. I am not aware of any taxes on the mere existence of a business by the IRS. I think you are going to find out that the are no taxes owed to the IRS for this nonexistent activity. |
315205 | "Depends on your account. If you have a margin account, then you can ""withdraw"" the margin, and it will get paid off/settled on T+3. However if it's a cash account then you will most likely need to wait. Call your broker and ask, each broker has different rules." |
315304 | "You're supposed to be filling form 433-A. Vehicles are on line 18. You will fill there the current fair value of the car and the current balance on the loans. The last column is ""equity"", which in your case will indeed be a negative number. The ""value"" is what the car is worth. The ""equity"" is what the car is worth to you. IRS uses the ""equity"" value to calculate your solvency. Any time you fill a form to the IRS - read the instructions carefully, for each line and line. If in doubt - talk to a professional licensed in your state. I'm not a professional, and this is not a tax advice." |
315345 | The price of a share of a mutual fund is its Net Asset Value (nav). Before the payout of dividends and capital gain distribution, the fund was holding both stock shares and cash that resulted from dividends and capital gains. After the payout, a share only holds the stock. Therefore once the cash is paid out the NAV must drop by the same amount as was paid out per share. Thus of course assumes no other activity or valuation changes of the underlying assets. Regular market activity will obscure what the payout does to the NAV. |
315552 | Sounds you need to read up on S corp structures. I think this would benefit you if you generate income even after you physically stopped working which is incomes from membership fees, royalties % of customer revenue, middle man etc... Under the Scorp, you as the sole member must earn a wage that fair and at current market value. You pay social security and Medicare on this wage. The interesting thing here is that an Scorp can pay out earning dividends without having to pay payroll taxes but the catch is that you, as the sole employee must earn a fair wage. As for paying the other member you may want to look into 1099 contract work plus a finders fee. The 1099 hourly wage does not require you to pay Medicare and SS. The common fee I'm used to is 5% of gross invoice. Then you would pay her an hourly wage. The company then bills these hours multiplied by 2 or 3 (or whatever you think is fair) to the client. Deduct expenses from this and that's your profit. Example. Contractor brings Client A which is estimated as a 100 hour project with $100 cost in supplies and requires 2 hours of your time @ $40/hr. You quote 100 hours @ $50 to client, client agrees and gives you down payment. You then present the contract work to your contractor, they complete the work in 100 hours and bill you at $25. You pay your contractor 2500 plus the 5% ($250) and your company earns $2070 (5000 - 2500 - 100-80) And you'll earn $80 minus the payroll tax. Then at the end of the quarter or year or however you want to do earning payouts your LLC- Scorp will write you a check for $2070 or whatever earning % you want to take. This is then taxed at your income tax bracket. One thing to keep in mind is what is preventing this other person from becoming your competition? A partnership would be great motivation to try and bring in as much work under the LLC. But if you start shafting people then they'll just keep the work and cut you out. |
315568 | A cautionary tale: About 25 years ago I decided that I should try my hand at investing in some technology companies. I was in the computer biz but decided that I might suffer from myopia there, so I researched some medical startups. And I did some reasonably good research, given the available resources (the Internet was quite primitive). I narrowed things down to 4-5 companies, studying their technology plans, then researched their business plans and their personnel. In the end I picked a drug company. Not only did it have a promising business plan, but it had as it's CEO a hotshot from some other company, and the BOD was populated buy big names from tech companies and the like. AND the company had like $2 of cash for every $1 of outstanding share value, following their recent IPO. So I sold a bit of stock I had in my employer and bought like $3000 worth of this company. Then, taking the advice I'd seen several places, I forgot about it for about 6 months. When I went back to look their stock value had dropped a little, and the cash reserves were down about 20%. I wasn't too worried. 6 months later the cash was down 50%. Worrying a little. After I'd had the stock for about 2 years the stock price was about 10% of what I'd paid. Hardly worth selling, so I hung on for awhile longer. The company was eventually sold to some other company and I got maybe $50 in stock in the new company. |
315666 | First I'd like to echo msemack's answer. Start by maxing out your 401K and IRA contributions. Not a lot of people just starting their career have the luxury of doing much more outside of that. Here are some additional tips that I learned when I was just getting started: |
315833 | Here's some advice: Never go into business with a friend. Thats a rule that's as old as time. It already seems to me that you're encountering some disparity issues financially. This is a bad idea, man. Stop now, while you still can! |
315925 | "That works for something like consulting where you are advising the client on specific things but for accounting jobs like Tax and Audit work which have been very commoditized it's expected to only bill the client for ""productive hours"" because the project only has a set budget and we need to get the work done. My work hours is seen as a cost to my team because my project needs to make money which the partner/manager/senior are all responsible for keeping man hours down. (Again that's hours chargeable to the client wasted hours in the day don't count). And then on top of that we need to hit a certain number of chargeable client hours per week. It's an annoying balance" |
316286 | Yes, provided you're not over the IRA deductibility limit as well. – JoeTaxpayer♦ Aug 4 at 18:02 Note that if you get refunded for excess contributions, it usually happens in the following year, in which case it doesn't affect the year where these contributions occured -- rather, the refund counts as taxable income in the year you received the refund. – user102008 Aug 11 at 8:11 |
316359 | In my experience, you don't need to endorse a check with a signature to deposit it into your account. You do if you are exchanging the check for cash. Businesses usually have a stamp with their account number on them. Once stamped, those checks are only able to be deposited into that account. Individuals can do the same. I have had issues depositing insurance and government checks in the past that had both my and my wife's name on them. Both of us had to endorse the check to be able to deposit them. I think this was some kind of fraud prevention scheme, so that later one of us couldn't claim they didn't know anything about the check. |
316388 | NO Even worse, most BTL(buy to let) lenders will not lend if you are going to be living in the property. There are very few lenders that will touch something like this. It is likely you will also need to use bridging for the time the building work takes at something like 1.5% per month! Try posting the question to http://www.propertytribes.com/ as there are a few UK mortgage experts on that site. |
316645 | "Say we are in 'normal times.' Passbook rates are 5% or so. Longer rates, 6-7%. I offer you a product with these terms, for $10,000 I will return a ""Guaranteed"" $10,000 in 6 years and based on the stock market, 1% for every 2% the S&P is up beyond 10% at maturity. As the seller of this product, I take $6666, and buy a fixed investment, 6 years at 7% in treasuries will return the $10000. Really. I then take the $3334 and buy out of the money calls on the S&P each year to capture the gains, if any, and to deliver on my promise. This is one example of a structured deposit offering. They can have nearly any terms one can imagine. Tied to any product. S&P, Crude Oil, Gold. Whatever." |