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fc59603ffb207c1f7547324e074b0107
|
Treatment of web domain ownership & reselling for tax purposes: Capital asset, or not?
|
[
{
"docid": "13159adef1a7b6b0dd306276c6d60960",
"text": "I must say that this is a question that you should hire a professional tax adviser (EA/CPA licensed in your State) to answer. It is way above our amateurs' pay-grade. That said, I'll tell you what I personally think on the issue. I'm not a licensed tax adviser, and nothing that I write here can be used in any way as a justification for any action. Read the full disclaimer in my profile. I believe you're right to treat those as assets. You bought them as an investment, and you intend to sell them for profit. Here the good news for you end. As we decided to define the domains as an asset, we need to decide what type of asset it is. I believe you're holding a Sec. 197 asset. This is because domain is essentially akin to franchise and trademark, and as such falls under the Sec. 197 definition. That means that your amortization period is 15 years. Your expenses related to these domains should also be amortized, on the same schedule. When you sell a domain, you can deduct the portion that you have not yet deducted from the amortization schedule from your proceeds. Keep in mind passive loss limitations, since losses from assets held as investment cannot offset Schedule C income.",
"title": ""
},
{
"docid": "577ee90d22f01183c39258d2162603c5",
"text": "As others have said, please talk to a professional adviser. From my quick research, domain names can only be amortized as 197 intangible if it's used for the taxpayer's business. For example, if Corp A pays $200,000 for corpa.com and uses that to point to their homepage, they can amortize it over 15 years as a 197 intangible. (Please refer to this IRS memo https://www.irs.gov/pub/irs-wd/201543014.pdf.) The above memo does not issue any guidance in your case, where domains are purchased for investment or resale. Regarding domain names, the U.S. Master Depreciation Guide (2016) by CCH says: Many domain names are purchased in a secondary market from third parties [...] who register names and resell them at a profit. These cost must be capitalized because the name will have a useful life of more than one year. The costs cannot be amortized because a domain name has no useful life. So your decision to capitalize is correct, but your amortization deductions may be challenged by the IRS. When you sell your domain, the gain will be determined by how you treat these assets. If you treat your domains as 197 intangibles, and thus had ordinary deductions through amortization, your gain will be ordinary. If you treated them as capital assets, your gain will be a capital gain. Very conceptually, and because the IRS has not issued specific guidelines, I think holding domain names for resale is similar to buying stock of a company. You can't amortize the investment, and when you sell, the gain or loss is a capital gain/loss.",
"title": ""
}
] |
[
{
"docid": "2a82b567373d7eaed263f4cc27b725f1",
"text": "It looks like fair-market value when you receive your virtual currency is counted as income. And you're also subject to self-employment tax on that income. Here's an FAQ from the IRS: Q-8: Does a taxpayer who “mines” virtual currency (for example, uses computer resources to validate Bitcoin transactions and maintain the public Bitcoin transaction ledger) realize gross income upon receipt of the virtual currency resulting from those activities? A-8: Yes, when a taxpayer successfully “mines” virtual currency, the fair market value of the virtual currency as of the date of receipt is includible in gross income. See Publication 525, Taxable and Nontaxable Income, for more information on taxable income.Q-9: Is an individual who “mines” virtual currency as a trade or business subject to self-employment tax on the income derived from those activities? A-9: If a taxpayer’s “mining” of virtual currency constitutes a trade or business, and the “mining” activity is not undertaken by the taxpayer as an employee, the net earnings from self-employment (generally, gross income derived from carrying on a trade or business less allowable deductions) resulting from those activities constitute selfemployment income and are subject to the self-employment tax. See Chapter 10 of Publication 334, Tax Guide for Small Business, for more information on selfemployment tax and Publication 535, Business Expenses, for more information on determining whether expenses are from a business activity carried on to make a profit. You'd of course be able to offset that income with the expense of mining the virtual currency, depreciation of dedicated mining equipment, electricity, not sure what else. Edit: Here's a good resource on filing taxes with Bitcoin: Filling in the 1040 Income from Bitcoins and all crypto-currencies is declared as either capital gains income or ordinary income, for example from mining. Income Ordinary income will be declared on either your 1040 (line 21 - Other Income) for an individual, or within your Schedule C, if you are self-employed or have sole-proprietor business. Capital Gains Capital gains income, or losses, are declared on Schedule D. Since there are no reported 1099 forms from Bitcoin exchanges, you will need to include your totals with Box C checked for short-term gains, and with Box F checked for long-term gains. Interesting notes from that article, your first example could actually be trickier than expected if you started mining before there was a Monero to USD exchange. Also, there can also be capital gains implications from using your virtual currency to buy goods, which sounds like a pain to keep track of.",
"title": ""
},
{
"docid": "91fb41385d3ed83338b90b32b5f44787",
"text": "I don't know that I can answer the question fully, but 2 points. The percent that represent capital gains certainly can't exceed 100. Did you mean 50% but the 500% is a typo? More important, funds held in retirement accounts have no issue with this, Cap Gains are meaningless within tax deferred accounts. I don't know the ratio of stocks held in these accounts vs outside, just that the 2011 year end total retirement account worth was $17 trillion. (That's 12 zeros) This strikes me as a high ratio, although more numbers digging is in order.",
"title": ""
},
{
"docid": "a09cd21f070cc0902cff893c3827266a",
"text": "\"Stocks (among other property) currently is allowed a \"\"stepped-up basis\"\" when valuing for estate tax purpose. From the US IRS web page: To determine if the sale of inherited property is taxable, you must first determine your basis in the property. The basis of property inherited from a decedent is generally one of the following: The fair market value (FMV) of the property on the date of the decedent's death. The FMV of the property on the alternate valuation date if the executor of the estate chooses to use alternate valuation. See the Instructions for Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return. If you or your spouse gave the property to the decedent within one year before the decedent's death, see Publication 551, Basis of Assets. Your question continues \"\"the person that died still has to pay taxes on their profits in the year they died, right?\"\" Yes. The estate would be subject to tax on realized gains/losses prior to death.\"",
"title": ""
},
{
"docid": "56f607bca64522b8754268ef2dbe932a",
"text": "Once the business is shut down, you'll need to show that the corporation is in bankruptcy and the amounts are unrecoverable. You can then report it as investment loss. I suggest talking to a tax adviser (EA/CPA licensed in your State), and maybe an attorney, on what the specific technical details are.",
"title": ""
},
{
"docid": "b240bf3f322d93678d50fc93a1738b58",
"text": "Capital losses from the sale of stocks can be used to offset capital gains from the sale of a house, assuming that house was a rental property the whole time. If it was your principal residence, the capital gains are not taxed. If you used it as both a rental and a principal residence, then it gets more complicated: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/rprtng-ncm/lns101-170/127/rsdnc/menu-eng.html",
"title": ""
},
{
"docid": "862b9445109a46967822a08ef1286be4",
"text": "Buying capital assets doesn't immediatley reduce a company's profits. They can get allowances for it but the assets are written down over a number of years Edit: two comments below mine were deleted which fairly called me out for amazon's high capital investment policy to which I reaponded: Fine I've had a few drinks. All I meant was capital doesn't directly reduce profits in most instances. Large investments like amazon would. You are right. But for Joe bloggs limited it doesn't. I had in mind the accountant the movie where one line Affleck says confuses capital and revenue and it stuck with me that a lot of people thought this. Didn't mean to have a go.",
"title": ""
},
{
"docid": "b45d5ec4b229bc9bf365f2b849ee8988",
"text": "\"-Alain Wertheimer I'm a hobbyist... Most (probably all) of those older items were sold both prior to my establishing the LLC This is a hobby of yours, this is not your business. You purchased all of these goods for your pleasure, not for their future profit. The later items that you bought after your LLC was establish served both purposes (perks of doing what you love). How should I go about reporting this income for the items I don't have records for how much I purchased them for? There's nothing you can do. As noted above, these items (if you were to testify in court against the IRS). \"\"Losses from the sale of personal-use property, such as your home or car, aren't tax deductible.\"\" Source Do I need to indicate 100% of the income because I can't prove that I sold it at a loss? Yes, if you do not have previous records you must claim a 100% capital gain. Source Addition: As JoeTaxpayer has mentioned in the comments, the second source I posted is for stocks and bonds. So at year begin of 2016, I started selling what I didn't need on eBay and on various forums [January - September]. Because you are not in the business of doing this, you do not need to explain the cost; but you do need to report the income as Gross Income on your 1040. Yes, if you bought a TV three years ago for a $100 and sold it for $50, the IRS would recognize you earning $50. As these are all personal items, they can not be deducted; regardless of gain or loss. Source Later in the year 2016 (October), I started an LLC (October - December) If these are items that you did not record early in the process of your LLC, then it is reported as a 100% gain as you can not prove any business expenses or costs to acquire associated with it. Source Refer to above answer. Refer to above answer. Conclusion Again, this is a income tax question that is split between business and personal use items. This is not a question of other's assessment of the value of the asset. It is solely based on the instruments of the IRS and their assessment of gains and losses from businesses. As OP does not have the necessary documents to prove otherwise, a cost basis of $0 must be assumed; thus you have a 100% gain on sale.\"",
"title": ""
},
{
"docid": "c1de1971a83164f2f91c1ca34eb3d445",
"text": "\"Selling an asset is not earning income. You are basically moving value from one asset (the laptop) to another (your bank account.) So you reduce the equity that is \"\"value of all my electronics\"\" and you increase the asset that is your bank account. In your case, you never entered the laptop in some category called \"\"value of all my electronics\"\" so you don't have that to make a double-entry against. The temptation is high to call it income as a result. Depending on the reason for all this double-entry book-keeping for personal finances, that may be fine. Or, you can create a category for balancing and use that, and realize the (negative) value of that account doesn't mean much.\"",
"title": ""
},
{
"docid": "5ee5f967f040a013fe5a5188ca5f7d40",
"text": "Capital gain distribution is not capital gain on sale of stock. If you have stock sales (Schedule D) you should be filing 1040, not 1040A. Capital gain distributions are distributions from mutual funds/ETFs that are attributed to capital gains of the funds (you may not have actually received the distribution, but you still may have gain attributed to you). It is reported on 1099-DIV, and if it is 0 - then you don't have any. If you sold a stock, your broker should have given you 1099-B (which is not the same as 1099-DIV, but may be consolidated by your broker into one large PDF and not provided separately). On 1099-B the sales proceeds are recorded, and if you purchased the stock after 2011 - the cost basis is also recorded. The difference between the proceeds and the cost basis is your gain (or loss, if it is negative). Fees are added to cost basis.",
"title": ""
},
{
"docid": "ccee1d130a4cefa6b31916dd78b4f0b3",
"text": "\"Appreciation of a Capital Asset is a Capital Gain. In the United States, Capital Gains get favorable tax treatment after being held for 12 months. From the IRS newsroom: Capital gains and losses are classified as long-term or short-term, depending on how long you hold the property before you sell it. If you hold it more than one year, your capital gain or loss is long-term. If you hold it one year or less, your capital gain or loss is short-term. The tax rates that apply to net capital gain are generally lower than the tax rates that apply to other income. For 2009, the maximum capital gains rate for most people is15%. For lower-income individuals, the rate may be 0% on some or all of the net capital gain. Special types of net capital gain can be taxed at 25% or 28%. The IRS defines a Capital Asset as \"\"most property you own\"\" with a list of exclusions found in Schedule D Instructions. None of the exclusions listed relate to Bond ETFs.\"",
"title": ""
},
{
"docid": "abe8b5b68a0c31cf7d1413d9103a608d",
"text": "\"The relevant IRS publication is 526, Charitable Contributions. The section titled \"\"Contributions you cannot deduct\"\" begins on page 6; item 4 reads: \"\"The value of your time or services.\"\" I read that to mean that, if the website you built were a product, you could deduct its value. I don't understand the legal distinction between goods and services I originally said that I believe that a website is considered a service. Whether a website is a service or a product appears to be much more controversial that I originally thought. I cannot find a clear answer. I'm told that the IRS has a phone number you can call for rulings on this type of question. I've never had to use it, so I don't know how helpful it is. The best I can come up with is the Instructions for Form 1120s, the table titled \"\"Principal Business Activity Codes,\"\" starting on page 39. That table suggests to me that the IRS defines things based on what type of business you are in. Everything I can find in that table that a website could plausibly fall under has the word \"\"service\"\" in its name. I don't really feel like that's a definitive answer, though. Almost as an afterthought, if you were able to deduct the value of the website, you would have to subtract off whatever the value of the advertisement is. You said that it's not much, but there's probably a simple way of estimating that.\"",
"title": ""
},
{
"docid": "29072a5d38bc60ace3fc0fbba2e862b9",
"text": "You're asking whether the shares you sold while being a US tax resident are taxable in the US. The answer is yes, they are. How you acquired them or what were the circumstances of the sale is irrelevant. When you acquired them is relevant to the determination of the tax treatment - short or long term capital gains. You report this transaction on your Schedule D, follow the instructions. Make sure you can substantiate the cost basis properly based on how much you paid for the shares you sold (the taxable income recognized to you at vest).",
"title": ""
},
{
"docid": "826d062a6cf54470248a68681ae46fc4",
"text": "\"Very interesting question. While searching i also found that some precious metal ETFs (including IAU) gains are taxed at 28% because IRS considers it \"\"collectible\"\", rather than the usual long term 15% for stocks and stock holding ETFs. As for capital gain tax you have to pay now my guess it's because of the following statement in the IAU prospectus (page 34): When the trust sells gold, for example to pay expenses, a Shareholder will recognize gain or loss ....\"",
"title": ""
},
{
"docid": "e042e3439f9834513f29dee86999b6e3",
"text": "Just a thought because this is a really good question: Would the buying and selling of blockchain based digital currency, using other blockchain based digital currencies, be subject to like kind treatment and exempt from capital gains until exchanged for a non-blockchain based good or service (or national currency) Suppose someone sells 1 bitcoin to buy 100 monero. Monero's price and bitcoin's price then change to where the 100 monero are 3 bitcoins. The person gets their bitcoin back and has 66.67 monero remaining. This scenario could be: Suppose someone sells 1 bitcoin at $1000 to buy 100 monero at $10. Bitcoin crashes 80% to $200 while monero crashes to only $6 per monero. $6 times 100 is $600 and if the person gets their bitcoin back (at $200 per bitcoi), they still lost money when measured in US Dollars if they move that bitcoin back to US dollars. In reading the IRS on bitcoin, they only care about the US dollar value of bitcoin or monero and in this example, the US dollar value is less. The person may have more bitcoins, but they still lost money if they sell.",
"title": ""
},
{
"docid": "0e34ecbd3447f887540ffe607a08ea58",
"text": "I think the key thing is flexibility - the money is not tied in with the offset mortgage. If you find a better investment, you can always take some of it out and put it towards that instead. Once it matures, if there is nothing good to reinvest in, then it can go back into the offset mortgage. Once you have had money in the offset account, even if you take it out, you have already (irreversibly) saved money on your mortgage. Right now you would be pressed to find an instant access ISA with a rate higher than 1.5%, so if you need immediate access, then the offset account seems good. On the other hand, for retirement, you might be saving longer term, and then you can get an ISA rate of 3%, currently, which may be better for a part of the money (or perhaps the upcoming Lifetime ISA with 25% yearly bonus may make sense for part of the money), if you do not need easy access to all of it. As Dilip says, this assumes you want safe investments.",
"title": ""
}
] |
fiqa
|
5da441999cfba9af78f378b7a571b06f
|
Why does it take so long to refund to credit card?
|
[
{
"docid": "213bfb9c6674440fc32a5733bc2f5010",
"text": "\"It's not usually apparent to the average consumer, but there's actually two stages to collecting a payment, and two ways to undo it. The particular combination that occurs may lead to long refund times, on top of any human delays (like Ben Miller's answer addresses). When you pay with a credit card, it is typically only authorized - the issuing bank says \"\"I'm setting this money aside for this transaction\"\", but no money actually changes hands. You'll typically see this on your statement as a \"\"pending\"\" charge. Only later, in a process called \"\"settlement\"\", does your bank actually send money to the merchant's bank. Typically, this process starts the same day that the authorization happens (at close of business), but it may take a few days to complete. In the case of an ecommerce transaction, the merchant may not be allowed to start it until they ship whatever you ordered. On the flip side, a given transaction can be voided off or money can be sent back to your card. In the first case, the transaction will just disappear altogether; in the second, it may disappear or you may see both the payment and the refund on your statement. Voids can be as fast as an authorization, but once a transaction has started settlement, it can't be voided any more. Sending money back (a \"\"refund\"\") goes through the same settlement process as above, and can take just as long. So, to specifically apply that to your question: You get the SMS when the transaction is authorized, even though no money has yet moved. The refund money won't show up until several days after someone indicates that it should happen, and there's no \"\"reverse authorize\"\" operation to let you or your bank know that it's coming.\"",
"title": ""
},
{
"docid": "64cd036c71b8081ea467e1e9221de6ba",
"text": "The holdup is from the merchant. To protect themselves, a merchant requires payment before giving you your purchased item/service. That is why you are charged immediately. When getting a refund, the same reason applies. The merchant needs to ensure that you are returning the correct item, or that it is still good, or that you are not trying to defraud the merchant in some way. Once the merchant processes that refund, it is all over for them, and they have no recourse later if they find out they were cheated. That is why they wait a while: the delay gives them time to discover any problems.",
"title": ""
}
] |
[
{
"docid": "22d806018b64100f766b4cb2237967d7",
"text": "That transaction probably cost the merchant $0.50 + 3% or close to $5. They should have refunded your credit card so they could have recouped some of the fees. (I imagine that's why big-box retailers like Home Depot always prefer to put it back on your card than give you store credit) Consider yourself lucky you made out with $0.15 this time. (Had they refunded your card, the 1% of $150 credit would have gone against next month's reward) Once upon a time folks were buying money from the US Mint by the tens of thousands $ range and receiving credit card rewards, then depositing the money to pay it off.. They figured that out and put a stop to it.",
"title": ""
},
{
"docid": "9954b7e63149a195ebd3ca8937109557",
"text": "They will credit your account and it will be applied to future purchases. If the credit card is not used for several months, they will send you a check or transfer it to your bank account. Some people on this site have actually considered sending money to the credit card company in advance, so that the amount that can be charged is temporarily inflated. Keep in mind they will eventually refund the money. Plus you will not earn interest on the refund.",
"title": ""
},
{
"docid": "78baeb01f4e7246bbd0c988371c2491f",
"text": "\"Personally, I would just dispute this one with your CC. I had a situation where a subscription I had cancelled the prior year was billed to me. I called up to have a refund issued, they couldn't find me in their system under three phone numbers and two addresses. The solution they proposed was \"\"send us your credit card statement with the charge circled,\"\" to which I responded \"\"there's no way in hell I'm sending you my CC statement.\"\" Then I disputed the charge with the CC bank and it was gone about two days later. I partially expect to have the same charge appear next year when they try to renew my non-existent subscription again. Now, whether or not this is a normal practice for the company, or just a call center person making a good-faith but insecure attempt to solve your problem is irrelevant. Fact of the matter is, you tried to resolve this with the merchant and the merchant asked for something that's likely outside the bounds of your CC Terms and Conditions; sending your entire number via email. Dispute it and move on. The dispute process exists for a reason.\"",
"title": ""
},
{
"docid": "7be1da953541e9ce40e4598da9a824e4",
"text": "\"Debit Cards have a certain processing delay, \"\"lag time\"\", before the transaction from the vendor completes with your bank. In the US it's typically 3 business days but I have seen even a 15 day lag from Panera Bread. I guess in the UK, payment processors have similar processing delays. A business is not obliged to run its payment processing in realtime, as that's very expensive. Whatever be the lag time, your bank is supposed to cover the payment you promised through your card. Now if you don't have agreements in place (for example, overdraft) with your bank, they will likely have to turn down payments that exceed your available balance. Here is the raw deal: In the end, the responsibility to ensure that your available balance is enough is upon you (and whether you have agreements in place to handle such situations) So what happened is very much legal, a business is not obliged to run its payment processing in realtime and no ethics are at stake. To ensure such things do not happen to me, I used to use a sub-account from which my debit card used to get paid. I have since moved to credit cards as the hassle of not overdrawing was too much (and overdraft fees from banks in the US are disastrous, especially for people who actually need such a facility)\"",
"title": ""
},
{
"docid": "6754dfd6483eae8339ab3e82202eee70",
"text": "\"For customer accounts that you have with a merchant, normally a positive balance in the account is what you owe the merchant. When you have a credit on the account or a negative balance, it usually means that it is an amount that the merchant owes you. This could be because you paid too much, or perhaps it is because the merchant is giving you a refund for some reason. However, it is always a possibility that this particular merchant is not using the terminology in the conventional way. If you aren't sure, the best thing to do is to ask the merchant directly by contacting their customer service department. Just judging from the screenshot you posted, it looks to me like they owe you some money. I suggest you click the \"\"Statement\"\" button; it looks like that will generate some type of statement that will instruct the merchant to send you a refund. But that is only a guess. Their customer service should be able to tell you what to do.\"",
"title": ""
},
{
"docid": "9f4c44d93e9656e5590d50d88174d087",
"text": "\"The preferred accounts are designed to hope you do one of several things: Pay one day late. Then charge you all the deferred interest. Many people think If they put $X a month aside, then pay just before the 6 months, 12 moths or no-payment before 2014 period ends then I will be able to afford the computer, carpet, or furniture. The interest rate they will charge you if you are late will be buried in the fine print. But expect it to be very high. Pay on time, but now that you have a card with their logo on it. So now you feel that you should buy the accessories from them. They hope that you become a long time customer. They want to make money on your next computer also. Their \"\"Bill Me Later\"\" option on that site as essentially the same as the preferred account. In the end you will have another line of credit. They will do a credit check. The impact, both positive and negative, on your credit picture is discussed in other questions. Because two of the three options you mentioned in your question (cash, debit card) imply that you have enough cash to buy the computer today, there is no reason to get another credit card to finance the purchase. The delayed payment with the preferred account, will save you about 10 dollars (2000 * 1% interest * 0.5 years). The choice of store might save you more money, though with Apple there are fewer places to get legitimate discounts. Here are your options: How to get the limit increased: You can ask for a temporary increase in the credit limit, or you can ask for a permanent one. Some credit cards can do this online, others require you to talk to them. If they are going to agree to this, it can be done in a few minutes. Some individuals on this site have even been able to send the check to the credit card company before completing the purchase, thus \"\"increasing\"\" their credit limit. YMMV. I have no idea if it works. A good reason to use the existing credit card, instead of the debit card is if the credit card is a rewards card. The extra money or points can be very nice. Just make sure you pay it back before the bill is due. In fact you can send the money to the credit card company the same day the computer arrives in the mail. Having the transaction on the credit card can also get you purchase protection, and some cards automatically extend the warranty.\"",
"title": ""
},
{
"docid": "6af3c71153cd6f76bcfda075408eb03d",
"text": "It is barely possible that this is Citi's fault, but it sounds more like it is on the Costco end. The way that this is supposed to work is that they preauthorize your card for the necessary amount. That reserves the payment, removing the money from your credit line. On delivery, they are supposed to capture the preauthorization. That causes the money to transfer to them. Until that point, they've reserved your payment but not actually received it. If you cancel, then they don't have to pay processing fees. The capture should allow for a larger sale so as to provide for tips, upsells, and unanticipated taxes and fees. In this case, instead of capturing the preauthorization, they seem to have simply generated a new transaction. Citi could be doing something wrong and processing the capture incorrectly. Or Costco could be doing a purchase when they should be doing a capture. From outside, we can't really say. The thirty days would seem to be how long Costco can schedule in advance. So the preauthorization can last that long for them. Costco should also have the ability to cancel a preauthorization. However, they may not know how to trigger that. With smaller merchants, they usually have an interface where they can view preauthorizations and capture or cancel them. Costco may have those messages sent automatically from their system. Note that a common use for this pattern is with things like gasoline or delivery purchases. If this has been Citi/Costco both times, I'd try ordering a pizza or some other delivery food and see if they do it correctly. If it was Citi both times and a different merchant the other time, then it's probably a Citi problem rather than a merchant problem.",
"title": ""
},
{
"docid": "0088551e56693f9713c06610f68b44f1",
"text": "You can't make your bank do a charge back. This function is to assist with straight up fraud, not a customer service mistake. (Think spoofed or stolen card or if a vendor intentionally acted fraudulently.) While you may believe what they did is fraud, your bank will require that you provide the vendor with the opportunity to rectify the situation themselves. Trying to call back and giving up after a long hold time won't meet their standards. If banks started letting anyone unhappy with a vendor start doing charge backs, they would be doing nothing else all day. The issues you're describing has not reached the threshold for the bank to authorize a charge back. Comcast has local and regional offices, and you could go in person to speak with someone. Maybe there isn't one near you. There are non-peak hours which wait times will be less. You'll just have to grin and bear it if you truly want the money back. Then, take your business elsewhere and post bad reviews online. Always keep in mind that when you eventually speak with someone, they will not be the person that messed up, and you should be overly nice and polite to them. I promise it will yield far better results than being surly and demanding. Another way to get Comcast's attention would be to file a complaint with the BBB. It might take longer, but I've had this work with big companies, usually with good results. Again, be nice to whomever contacts you. In reference to your recent duplicate question: Mastercard won't be able to help at all. They play no part in the transaction at all.",
"title": ""
},
{
"docid": "66c921cb4de75060ffdc0fb8e688a1c2",
"text": "\"While I agree with Ben a lot I feel like his answer is really poor here. You do not call a number to give your credit card information out for a refund. That is ridiculous. Just from his answer - he has had 5 cases of fraud lately - you should know that you shouldn't follow this advice. I personally don't ever give my credit card number over the phone, unless it is the very very very last resort. It is not just about money and safety but it is about time. Every time that you give your number out over the phone there is a chance that the employee on the other end (by either scam or legitimate business) will use or sell your info. So you need to determine if the time saved by doing a transaction over the phone is worth hours/days of your time if your card has a fraud issue. And note that fraud sometimes is easily negated, but if done smartly can be hard to prove via a quick call or email to card company. What should you do? Tell company that you will simply get the refund through your credit card company. And if we go back to time element... You fill out form on card website. Card company goes back to vendor and says - \"\"Why are you asking for card numbers via email?\"\" Card company either cancels vendor contract or more likely helps them understand the technology available so they don't have to do this. Therefore that quick form that you filled out will now keep this company from bugging you again. By going through their archaic \"\"systems\"\" you are enabling their behavior.\"",
"title": ""
},
{
"docid": "37f6597e2e6a4b22e125e518e9a4d00f",
"text": "Bank products have been pretty common with tax refunds as well, and they are also being heavily scrutinized for the same reasons. Refund Anticipation Loans (RALs) have been outlawed for future tax seasons due to lack of consumer protection. What is a bank product, you might ask? Rather than waiting 7-14 days for the a direct deposit from the IRS, a lot of places like H+R Block and Jackson Hewitt would offer a bank product to get you money quicker. For this service, they charge a fee (usually $99-$149) which is grossly overpriced for how little work it takes, but if your refund is several thousand dollars, you may not care. A Refund Anticipation Loan was the most predatory bank product, as it was an advance on your loan for the amount your expected refund. However, if there were any errors in your return and the IRS decided your refund was less than what your tax preparer calculated it to be, you were stuck with paying back the advance amount, leaving you to foot the bill for whatever errors your preparer may have made. These loans also had very high interest rates, since usually the people that wanted RALs were also the same people that rely upon cash advances. There are also Electronic Refund Checks (which ironically are paper checks for the consumer, not electronic deposits), direct deposits, and prepaid debit cards. Despite the fact that these same methods of refund payments are offered by the IRS themselves, preparers and banks alike sold these to collect fees for essentially no work. I'm not sure how similar these bank products for student loans are, but I wanted to shed some light on them anyways. Regardless of how badly you need money, **do not ever accept money through a bank product.** If it benefited you more, banks and preparers would not offer these. (Source: telemarketing at a tax preparation software company)",
"title": ""
},
{
"docid": "04ec40ba524d53671ccf2da3a8ecf9d8",
"text": "Your bank will convert it (taking a fee for that, of course). It might be delayed some days so it can clear (2-3 days).",
"title": ""
},
{
"docid": "e216b8086ba2920e1ff98ceb87590304",
"text": "Its not just late fees. The fees for going over your credit limit are exorbitant. To make things worse, they will rearrange the transactions you make during a day so that they can charge you more by making more of them fail.",
"title": ""
},
{
"docid": "bc28dfa716f66d5aff573a4d995cbf1a",
"text": "\"Executive summary: It sounds like the merchant just did an authorization then cancelled that authorization when you cancelled the order, so there was never an actual charge so you'll never see an actual refund and there's no money to \"\"claim\"\". More detail: From your second paragraph, it sounds like they just did an authorization but never posted the transaction. A credit card authorization is basically the merchant asking your credit card company \"\"Does sandi have enough credit to pay this amount and if so please reserve that amount for a bit.\"\" The authorization will decrease the total credit you have available on the card, but it's not actually a charge, so if your billing cycle ends, it won't show up on your statement. Depending on which company issued your credit card, you may be able to see the authorization online, usually labelled something like \"\"Pending transactions\"\". Even if your credit card company doesn't show pending transactions, you'll see a decrease in your available credit, however you shouldn't see an increase in your balance. The next step, and the only way the original merchant gets paid, is for the merchant to actually post a transaction to your card. Then it becomes a real charge that will show up on your next credit card statement and you'll be expected to pay it (unless you dispute the charge, but that's a different issue). If the charge is for the same amount as the authorization, the authorization will go away (it's now been converted to an actual charge). If the amounts are different, or the merchant never posts a transaction, the authorization will be removed by your credit card company automatically after a certain amount of time. So it sounds like you placed the order, the merchant did an authorization to make sure you could pay for it and to reserve the money, but then you cancelled the order before the merchant could post the transaction, so you were never really charged for it. The merchant then cancelled the authorization (going by the start of your third paragraph). So there was never an actual transaction posted, you were never charged, and you never really owed any money. Your available credit went down for a bit, but now should be restored to what it was before you placed the order. You'll never see an actual refund reflected on your credit card statement because there was no actual transaction.\"",
"title": ""
},
{
"docid": "dd8c7409b7e8aa91eec22d0b56fdad7b",
"text": "Each bank is different. Usually in my experience for newer credit card accounts, there is a specific number of days in a billing cycle (something like 28) and then a 20-25 day grace period. Older accounts usually have 30+ day billing cycles. Back in the 90's, many cards also had 30-40 day grace periods. The language specific to your card is in the card agreement.",
"title": ""
},
{
"docid": "b2ea0cf0c472d2cb95c2b6b9cdac798e",
"text": "\"They are right to ask for the money back because you were not entitled to that money. However, you may have a defense called \"\"laches\"\". Basically, you can try to show that because of the government's unreasonable delay in asking for the money back, in the meantime you relied on the assumption that it was your money in good faith, and spent it, and now to have to come up with the money that you assumed you wouldn't need would cause great harm to you.\"",
"title": ""
}
] |
fiqa
|
38f68f670f10ecfc324ae2e7568f7748
|
Do I need to write the date on the back of a received check when depositing it?
|
[
{
"docid": "3b492f20ffd670ec5f37f67561c177c5",
"text": "\"You do not need to write anything on the second line. There are a variety of helpful things that you can add, e.g.: For Deposit Only. This tells the bank to deposit the check into your account and ignore other signatures. Your account number. Especially useful when added to \"\"For Deposit Only\"\". A countersignature. This tells the bank to pay the check to someone other than you. Countersigned checks used to be much more common than they are now. Someone who didn't have a bank account might ask someone who did to cash a check for them. See also: Four ways to endorse a check which gives the correct format for endorsing a check in these ways.\"",
"title": ""
},
{
"docid": "2be0465c8f47c298571bd3e30b433808",
"text": "\"Changed to answer match the edited version of the question No, you do not need to write the date of your endorsement, but you can choose to do so if you want to. The bank stamp on the back will likely have the date and perhaps even the exact time when the check was deposited. The two lines are there in case you want to write something like \"\"For deposit only to Acct# uvwxyz\"\" above your signature (always a good idea if you are making the deposit by sending the paper check (with or without a deposit slip) by US mail or any other method that doesn't involve you handing the check to a bank teller). If you are wanting to get encash the check, that is, get cash in return for handing the check over to the bank instead of depositing the check in your account, then the rules are quite a bit different.\"",
"title": ""
},
{
"docid": "fd37e41c50ea2a8d652fddf4c8deb8b2",
"text": "\"Let me just add that while you don't need to write the date received on the back of the check, you could. Why? Let's say someone was late in paying you and you wanted to document the fact that they were late. I've had late-paying customers send me a check dated on the due date but really they just pre-dated the check and sent it 60 days past-due. So let's say I want to establish and document the pattern in case it becomes a future legal issue. When you deposit or cash a check, an image of the front and back is made and the person or company who issued the check will have those images stored as part of their transaction history. (It used to be that the original, physical, cancelled check was returned to the payer, but that was another era.) So write the date received on the back next to the endorsement, endorse the check, and take a photo of the front and back (along with the postmark on the envelope) to document that they are a late payer. This way, if it ever becomes a \"\"he said she said\"\" issue you can easily show they have a history of paying late. If the payer looks at their check images they'll see your received date note next to the endorsement. Granted, this is a lot of trouble for a unique situation. In 20+ years of running a business I've actually had the foresight to do this a handful of times with habitual offenders, and in (only) one case did it come in handy later on. But boy was I glad to have those photos when I needed them.\"",
"title": ""
}
] |
[
{
"docid": "41942b71a95f019b68ead8e85ef4acdc",
"text": "Just have the associate sign the back and then deposit it. It's called a third party cheque and is perfectly legal. I wouldn't be surprised if it has a longer hold period and, as always, you don't get the money if the cheque doesn't clear. Now, you may have problems if it's a large amount or you're not very well known at the bank. In that case you can have the associate go to the bank and endorse it in front of the teller with some ID. You don't even technically have to be there. Anybody can deposit money to your account if they have the account number. He could also just deposit it in his account and write a cheque to the business.",
"title": ""
},
{
"docid": "e5bd30df315f45d3433c7b6140119124",
"text": "\"I'm no accounting expert, but I've never heard of anyone using a separate account to track outstanding checks. Instead, the software I use (GnuCash) uses a \"\"reconciled\"\" flag on each transaction. This has 3 states: n: new transaction (the bank doesn't know about it yet), c: cleared transaction (the bank deducted the money), and y: reconciled transaction (the transaction has appeared on a bank statement). The account status line includes a Cleared balance (which should be how much is in your bank account right now), a Reconciled balance (which is how much your last bank statement said you had), and a Present balance (which is how much you'll have after your outstanding checks clear). I believe most accounting packages have a similar feature.\"",
"title": ""
},
{
"docid": "4fd0d70975a9e25e6f4df9b653ffceee",
"text": "\"I cannot answer the original question, but since there is a good deal of discussion about whether it's credible at all, here's an answer that I got from Bank of America. Note the fine difference between \"\"your account\"\" and \"\"our account\"\", which does not seem to be a typo: The payment method is determined automatically by our system. One of the main factors is the method by which pay to recipients prefer to receive payments. If a payment can be issued electronically, we attempt to do so because it is the most efficient method. Payment methods include: *Electronic: Payment is sent electronically prior to the \"\"Deliver By\"\" date. The funds for the payment are deducted from your account on the \"\"Deliver By\"\" date. *Corporate Check: This is a check drawn on our account and is mailed to the pay to recipient a few days before the \"\"Deliver By\"\" date. The funds to cover the payment are deducted from your account on the \"\"Deliver By\"\" date. *Laser Draft Check: This is a check drawn on your account and mailed to the pay to recipient a few days before the \"\"Deliver By\"\" date. The funds for the payment are deducted from your account when the pay to recipient cashes the check, just as if you wrote the check yourself. To determine how your payment was sent, click the \"\"Payments\"\" button in your Bill Pay service. Select the \"\"view payment\"\" link next to the payment. Payment information is then displayed. \"\"Transmitted electronically\"\" means the payment was sent electronically. \"\"Payment transaction number\"\" means the payment was sent via a check drawn from our account. \"\"Check number\"\" means the payment was sent as a laser draft check. Each payment request is evaluated individually and may change each time a payment processes. A payment may switch from one payment method to another for a number of reasons. The merchant may have temporarily switched the payment method to paper, while they update processing information. Recent changes or re-issuance of your payee account number could alter the payment method. In my case, the web site reads a little different: Payment check # 12345678 (8 digits) was sent to Company on 10/27/2015 and delivered on 10/30/2015. Funds were withdrawn from your (named) account on 10/30/2015. for one due on 10/30/2015; this must be the \"\"corporate check\"\". And for another, earlier one, due on 10/01/2015, this must be the laser draft check: Check # 1234 (4 digits) from your (named) account was mailed to Company on 09/28/2015. Funds for this payment are withdrawn from your account when the Pay To account cashes the check. Both payments were made based on the same recurring bill pay payment that I set up manually (knowing little more of the company than its address).\"",
"title": ""
},
{
"docid": "b08d9cfb180251cd9d2a024e09a96934",
"text": "If it doesn't seem that important, why bother blacking the name out? For the effort, it might cost you less in your time to have the checks reprinted. There's no way to know what all banks would do with a check that has a name crossed out, but most would ignore it. Most checks are processed automatically. Signatures are not verified, post-dated checks can usually still be deposited. Occasionally you'll have a bank or merchant reject a check, but don't expect that to be the norm.",
"title": ""
},
{
"docid": "bfd3eb0b7e5e8a780a7c355f643759a2",
"text": "\"Legally, a check just needs to have a certain list of things (be an instruction to one's bank to pay a specific amount of money to bearer or to a specific entity, have a date, have a signature, etc.) There are anecdotes around of a guy depositing a junk mail check and it accidentally qualifying as a real check (which he turned into a live show), or of writing a check on a door, cow, or \"\"the shirt off your back\"\". What kind of checks your bank will process is technically up to them. Generally, if you get your blank checks printed up by any reputable firm, they'll have similar information in similar places, as well as the MICR line (the account and routing number in magnetic ink on the bottom) to allow for bank to process the checks with automated equipment. As long as it's a standard size, has the MICR line, and has the information that a check needs, your bank is likely to be fine with it. So, there are some standards, but details like where exactly the name of the bank is, or what font is used, or the like, are up to whoever is printing the check. For details on what standards your bank requires in order to process your checks, you'd have to check with your bank directly. Though, it wouldn't surprise me if they just directed you to their preferred check printer provider, as they know that they accept their check format fine. Though as I said, any reputable check printer makes sure that they meet the standards to get processed by banks without trouble. Unless you're a business that's going to be writing a lot of checks and pay a lot of fees for the privilege, a bank is not likely to want to make exceptions for you for your own custom-printed octagonal checks written in ancient Vulcan.\"",
"title": ""
},
{
"docid": "3c3423be0fdb44cbd018bfe813fda469",
"text": "ACH transfers are reversible and traceable. So what's stopping them is the ease and the speed with which they would be caught. When you give a check - you have to provide some information to the payee so that they could cash it. You can't withhold the bank or the account number - how would they charge you? So it has to be on it, and if it is on it - it can be put on any other (fake) check. That is why checks come also with your signature, and are always available for you to inspect when they're cashed. If you notice something out of the ordinary (check you didn't give? ACH transfer you didn't authorize?) on your statement - it is your responsibility to notify the bank within X period of time (60 days, I think) of the statement, and it will be dealt with. So the best way to protect yourself would be to keep an eye on your account and verify that the transactions that you see are all authorized, and do it frequently. Keeping large amounts of cash on your checking account is never a good idea, regardless. Also, since checks are inherently unsafe - try to only give checks to people you trust, and use bill-pay or credit cards with anyone else.",
"title": ""
},
{
"docid": "a604457a8b2691dc2a260e9b318da026",
"text": "\"In general, a lack of endorsement (meaning nothing written by the receiver on the back of the check) is equivalent to it being endorsed \"\"as deposit only\"\" to a bank that the depositor has an account with. (See Uniform Commercial Code §4-205.) That is, the bank that receives a deposit without any endorsement promises to the banks that process the check along the line all the way back to your bank, that they properly deposited the money into the account of the entity that the check was made out to. With checks being processed with more and more automation, it's getting fairly common for there to be little writing needed on the check itself, as the digital copy gets submitted to the banking system for clearing. If you're concerned about there being some sort of fraud, that perhaps the entity that you're sending money to isn't the ones that should be getting it, or that they're not actually getting the money, or something like that, that's really an entirely different concern. I would expect that if you were saying that you paid something, and the payee said that you hadn't, that you would dispute the transaction with your bank. They should be able to follow the electronic trail to where the money went, but I suspect they only do so as part of an investigation (and possibly only in an investigation that involved law enforcement of some type). If you're just curious about what bank account number your deposit went into, then it just looks like you're the one trying to commit some sort of fraud (even if you're just being curious), and they don't have much incentive to try to help you out there.\"",
"title": ""
},
{
"docid": "05f2384f318fceeaea2560c1da8ccd3d",
"text": "\"If the answer were \"\"no,\"\" you still found the 'black swan' type exception that proves the answer to be \"\"yes,\"\" right? My experience is this - again just my experience, my bank - When by balance goes below $10, I have the account trigger an email. I wrote a check I forgot to register and subtract, so the email was sent and the account balance in fact showed negative. I transferred to cover the check and the next day, there was a history that didn't go negative, the evening deposit was credited prior to check clearing. I set up my bills on line. I set a transfer in advance for the same dollar amount as a bill that was due, e.g. $1000 transfer for a $1000 bill. I woke up to an email, and the account showed the bill was paid prior to the transfer. So one line showed going -$900, and the next line +$100 after transfer. Even though it's the same online process. Again, the next day the history re-ordered to look like I was never negative. But even on a day I know I'm having payments issued, I can never just ignore that email. The first time this happened, I asked the bank, and they said if the negative went until the next day, I'd get an overdraft/short balance notice. This is a situation to ask your bank how they handle this.\"",
"title": ""
},
{
"docid": "79cf9bb9c76a12e5bb6ccf3b1186e6be",
"text": "\"Firstly, it isn't so generous. It is a win-win, but the bank doesn't have to mail me a free box of checks with my new account, or offer free printing to compete for my business. They already have the infrastructure to send out checks, so the actual cost for my bank to mail a check on my behalf is pretty minimal. It might even save them some cost and reduce exposure. All the better if they don't actually mail a check at all. Per my bank Individuals and most companies you pay using Send Money will be mailed a paper check. Your check is guaranteed to arrive by the delivery date you choose when you create the payment. ... A select number of companies–very large corporations such as telecoms, utilities, and cable companies–are part of our electronic biller network and will be paid electronically. These payments arrive within two business days... So the answer to your question depend on what kind of bill pay you used. If it was an electronic payment, there isn't a realistic possibility the money isn't cashed. If your bank did mail a paper check, the same rules would apply as if you did it yourself. (I suppose it would be up to the bank. When I checked with my bank's support this was their answer.) Therefore per this answer: Do personal checks expire? [US] It is really up to your bank whether or not they allow the check to be cashed at a later date. If you feel the check isn't cashed quickly enough, you would have to stop payment and contact whoever you were trying to pay and perhaps start again. (Or ask them to hustle and cash the check before you stop it.) Finally, I would bet a dime that your bank doesn't \"\"pre-fund\"\" your checks. They are just putting a hold on the equivalent money in your account so you don't overdraw. That is the real favor they do for you. If you stopped the check, your money would be unfrozen and available. EDIT Please read the comment about me losing a dime; seems credible.\"",
"title": ""
},
{
"docid": "9c8011576a486a39fc265ddc0e755997",
"text": "I tried to find that out once, and learned 'theoretically never'. The reason is that the guy who gave you the check (name him guy-1) might have deposited a check from guy-2 a day before, and without that money, his check will bounce. Now guy-2 might have deposited a check from guy-3 a day before, and without that money, his check will bounce. Repeat for a while, and then bounce the check from guy-99, and it takes the banks months to unravel it. Yes, improbable. But. A friend working in a bank explained me that, he had seen chains of three and four unravel, which took 20+ days.",
"title": ""
},
{
"docid": "8632e74a64993d3efaae90929599b200",
"text": "\"In absence of complete information, I can only speculate that your phrases We both endorsed the cheque, and especially since the name on the cheque doesn't seem to be the name of the person I spoke with. mean that the check was payable to Jane Doe but was endorsed by someone you know as Wade Roe using language such as \"\"Pay to the order of user6344\"\" and then you endorsed it as something like \"\"For deposit only to Acct# 1234567890\"\" and gave it to the bank teller with a deposit slip for Acct# 1234567890. Presumably Wade Roe did not accompany you to the bank and the bank teller did not notice that the check was not endorsed to you by Jane Doe, or she did go with you to the bank but the teller did not check her ID when she endorsed the check. In any case, you, as a customer of the bank, are definitely on the hook in the sense that you in effect guaranteed the validity of Wade Roe's endorsement of the check payable to Jane Doe. You presented the check to the bank as a legitimate check that you were legitimately entitled to deposit in your account. In effect, if fraud was committed, you committed the fraud by depositing a bum check. As all the other answers have said, you need to go down to the bank and talk to a bank officer, preferably the manager, right away. Don't go to a teller (even though in many banks, the tellers have job titles like assistant vice-president.\"",
"title": ""
},
{
"docid": "b621ce2d0edac5bc21245dfd860b2257",
"text": "It probably doesn't matter since your credit and your checking are at the same institution, but I don't like to let my credit auto draft my checking. I always do it the other way around (and keep them at different places) I feel like there is more control when my money is gone that way.",
"title": ""
},
{
"docid": "06d8ab67711673601cf3eaaf45b9519a",
"text": "\"You can try writing on the back of the check, in the signature area, \"\"For deposit only to account xxxxxxxxx\"\", leaving room for the signature. This may or may not be legally binding, but it states your intnt and is in a form the bank will recognize.\"",
"title": ""
},
{
"docid": "ab4e544caa7e8c7379f2f5832b9df854",
"text": "\"Based on past case law, a check made payable to qualified charity and delivered (e.g., placed in the mail on 12/31 would count as delivered as it is out of the hands of the donor) would fall under the \"\"constructive receipt doctrine\"\". However, for non-charitable gifts (e.g., gifts to family members) it is the date the check is cashed (honored by the receiving bank). This is important as the annual gift exclusion is just that \"\"Annual\"\". Therefore, if I gift my child $14,000 by writing a check on 12/31/2014 but they deposit it on 1/3/2015 then I have used my annual gift exclusion for 2015 and not 2014. This means I could not gift them anything further in 2015. BTW the annual gift amount is for ALL gifts cash and non-cash. Most people don't seem to realize this. If I give $14,000 of cash to my child and then also give them Christmas gifts with a value of $1,000 I have exceeded my annual gift exclusion to that child. Usually there are ways around this issue as I can give $14,000 to each and every person I want and if married my spouse can do the same. This allows us to give $14,000 from each of us to each child plus $14,000 from each of us to their spouse if married and $14,000 from each of us to each of their children if they have any.\"",
"title": ""
},
{
"docid": "ffa2250acc63d88f31a6961a58f380b9",
"text": "I've been a landlord and also a tenant. I have been able to deposit money in an account, where I have the account number, and/or a deposit slip. In a foreign bank you can deposit by a machine if in the bank or someone is there for you and knows the account number. With regards to cashing a check in another country, it is up to the bank and the time is at least 14 to 21 business days, with a fee is added. As of a winning check, since its in your name, if you are in another country sign the check, for deposit only with a deposit slip and send it to your out of country bank by FedEx - you will have a tracking number, where as regular mail it might get there in 3 months. I hope by now you came to your solution.",
"title": ""
}
] |
fiqa
|
c63f36bce0258ac6cd52bb4d0264696e
|
What foreign exchange rate is used for foreign credit card and bank transactions?
|
[
{
"docid": "53b920a8744acc0df88502e7a62a2264",
"text": "A lot of questions, but all it boils down to is: . Banks usually perform T+1 net settlements, also called Global Netting, as opposed to real-time gross settlements. That means they promise the counterparty the money at some point in the future (within the next few business days, see delivery versus payment) and collect all transactions of that kind. For this example say, they will have a net outflow of 10M USD. The next day they will purchase 10M USD on the FX market and hand it over to the global netter. Note that this might be more than one transaction, especially because the sums are usually larger. Another Indian bank might have a 10M USD inflow, they too will use the FX market, selling 10M USD for INR, probably picking a different time to the first bank. So the rates will most likely differ (apart from the obvious bid/ask difference). The dollar rate they charge you is an average of their rate achieved when buying the USD, plus some commission for their forex brokerage, plus probably some fee for the service (accessing the global netting system isn't free). The fees should be clearly (and separately) stated on your bank statement, and so should be the FX rate. Back to the second example: Obviously since it's a different bank handing over INRs or USDs (or if it was your own bank, they would have internally netted the incoming USDs with the outgoing USDs) the rate will be different, but it's still a once a day transaction. From the INRs you get they will subtract the average FX achieved rate, the FX commissions and again the service fee for the global netting. The fees alone mean that the USD/INR sell rate is different from the buy rate.",
"title": ""
},
{
"docid": "9bd8b50e0104c813d5f4ea7078fcb107",
"text": "On Credit Cards [I am assuming you have a Visa or Master card], the RBI does not decide the rate. The rate is decided by Visa or Master. The standard Sheet rate for the day is used. Additionally SBI would mark it up by few paise [FX mark-up spread]. This is shown as mark-up fee. The rate of USD Vs INR changes frequently. On large value [say 1 million] trades even a paise off makes a huge difference and hence the rate is constantly changing [going up or down]. The rates offered to individuals are constant through out the day. They change from day to day and can go up for down. Recently in the past 6 months if you read the papers, Rupee has been going down and is at historic low. On a give day there are 2 rates; - Bank Buy Rate, ie the rate at which Bank will BUY USD from you. Say 61. So it will buy 100 USD and give you Rupees 6100. - Bank Sell rate, ie the rate at which Bank will SELL USD to you. Say 62. So if you want 100 USD, you need to give Bank 6200. The difference between this is the profit to bank.",
"title": ""
},
{
"docid": "47981e134fcaadbe72fce166491cb0fa",
"text": "In addition to the SELL rate on the statement transaction day, currency conversion fees of 0 - 3% is applied, depending on the card issuing bank.",
"title": ""
}
] |
[
{
"docid": "b36f4593a562c7419d44757c8d067e94",
"text": "I noticed the buy/sell board table. Where did you notice this. Generally for a pair of currencies, there is Unit associated along with direction. The Unit is generally constant. These are only revised when there is large devaluation of a particular currency. Buying Php for MYR 8.52, Selling MYR 8.98. So in this case the Unit of PHP is 100, so Bank is Buying 100 PHP from you [you are selling PHP] and will give you MYR 8.52. If you now want to buy 100 PHP [so the Bank is selling you], you have to pay MYR 8.98. So you loose MYR 0.46 Why are they selling it way beyond the exchange rate? Why is this? As explained above, they are not. Its still within the range. The quote on internet are average price. This means before going back to Philippines, I can buy a lot of peso that I can buy and exchange it for higher price right? Generally an individual cannot make money by buying in one currency and selling in other. There are specialist who try and find arbitrage between multiple pair of currencies and make money out of it. Its a continuous process, if they start making profit, the market will react and put pressure on a pair and the prices would move to remove the arbitrage.",
"title": ""
},
{
"docid": "ee44afaaeb77f2fed647ae241e8bd562",
"text": "I suggest opening a Credit Card that doesn't charge Foreign currency conversion fees. Here is the list of cards without such a fee, Bankrate's Foreign transaction fee credit card chart",
"title": ""
},
{
"docid": "8655b32a3c6f801bcb480e02ecae10e1",
"text": "\"Check whether you're being charged a \"\"Cash advance\"\" fee with your withdrawals, because it's being withdrawn from your credit card account. If that's happening to you, then having a positive balance on your credit card account will dramatically reduce the fees. Quoting from my answer to a similar question on Travel Stack Exchange: It turns out that even though \"\"Cash advance fee - ATM\"\" has \"\"ATM\"\" in it, it doesn't mean that it's being charged by the ATM you're withdrawing from. It's still being charged by the bank of your home country. And depending on your bank, that fee can be minimized by having a positive balance in your credit card account. This isn't just for cards specially marketed at globehoppers and globeshoppers (mentioned in an answer to a similar question), but even for ordinary credit cards: Help minimise and avoid fees An administrative charge of 2% of the value of the transaction will apply to each cash advance made on your card account, where your account has a negative (debit) balance after the transaction has been posted to it. A minimum charge of $2.50 and a maximum charge of $150 will apply in these circumstances. Where your account has a positive (credit) balance after the transaction has been posted to it, a charge of $2.50 will apply to the transaction. Any such charge will appear on your credit card statement directly below the relevant cash advance. A $2.50 charge if your account is positive, versus $20 if the account is negative? That's a bit of a difference!\"",
"title": ""
},
{
"docid": "f905cfa8cad48d9933b67a3b1b01235e",
"text": "The location that you are purchasing from is not really relevant. If you use either a Visa or MasterCard to make a payment in a foreign currency of any kind then your payment will automatically use Visa/MasterCard's FX platform. Whilst fees can vary between issuers, the fee is generally fixed at 2.5%. There are occasionally credit card issuers who have special deals to remove these fees, but they tend to come and go and availability will depend on your country of residence. The only real way to avoid the fee is to get access to a debit or credit card denominated in the currency you wish to use for your purchase. This is often achievable for USD or EUR, but much harder for smaller currencies. You would have to try contacting a bank in that country to see if they would open an account for you or attempting to purchase a pre-paid credit card online.",
"title": ""
},
{
"docid": "3a3ace553b8d5770299f9fc3f60b1b86",
"text": "I've done this for many years, and my method has always been to get a bank draft from my Canadian bank and mail it to my UK bank. The bank draft costs $7.50 flat fee and the mail a couple of dollars more. That's obviously quite a lot to pay on $100, so I do this only every six months or so and make the regular payments out of my UK account. It ends up being only a couple of percent in transaction costs, and the exchange rate is the bank rate.",
"title": ""
},
{
"docid": "3440392865922705522359d6a305d0c9",
"text": "I concur with the answers above - the difference is about the risk. But in this particular case I find the interest level implausible. 11% interest on deposits in USD seems very speculative and unsustainable. You can't guarantee such return on investment unless you engage in drug trade or some other illegal activity. Or it is a Ponzi scheme. So I would suspect that the bank is having liquidity problems. Which bank is it, by the way? We had a similar case in Bulgaria with one bank offering abnormal interest on deposits in EUR and USD. It went bust - the small depositors were rescued by the local version of FDIC but the large ones were destroyed.",
"title": ""
},
{
"docid": "cd0807d14ae67ad37d5284c750633bce",
"text": "Typically, withdrawing cash from an ATM once abroad gives you the best exchange rate, but check if your bank imposes ATM withdrawal fees. This works well for all major currencies, such as GBP, Euro, Yen, AUD. I've also withdrawn Croatian kunas, Brazilian reais and Moroccan dirhams without any trouble. In Southeast Asia, it may be a different story. Thai ATMs, for example, reportedly impose a surcharge of about $5.",
"title": ""
},
{
"docid": "d51b9616110f5402fe4bb70de5b97b68",
"text": "\"In my experience working at a currency exchange money service business in the US: Flat fees are the \"\"because we can\"\" fee on average. These can be waived on certain dollar values at some banks or MSBs, and sometimes can even be haggled. If you Google EURUSD, as an example, you also get something like $1.19 at 4pm, 9/18/2017. If you look at the actual conversion that you got, you may find your bank hit you with $1.30 or something close to convert from USD to Euro (in other words, you payed 10% more USD per Euro). And, if you sell your Euro directly back, you might find you only make $1.07. This spread is the real \"\"fee\"\" and covers a number of things including risk or liquidity. You'll see that currencies with more volatility or less liquidity have a much wider spread. Some businesses even go as far as to artificially widen the spread for speculators (see IQD, VND, INR, etc.). Typically if you see a 3% surcharge on international ATM or POS transactions, that's the carrier such as Visa or Mastercard taking their cut for processing. Interestingly enough, you also typically get the carrier-set exchange rate overseas when using your card. In other words, your bank has a cash EURUSD of $1.30 but the conversion you get at the ATM is Visa's rate, hence the Visa fee (but it's typically a nicer spread, or it's sometimes the international spot rate depending on the circumstances, due to the overhead of electronic transactions). You also have to consider the ATM charging you a separate fee for it's own operation. In essence, the fees exist to pad every player involved except you. Some cards do you a solid by advertising $0 foreign exchange fees. Unfortunately these cards only insulate you from the processing/flat fees and you may still fall prey to the fee \"\"hidden\"\" in the spread. In the grander scheme of things, currency exchange is a retail operation. They try to make money on every step that requires them to expend a resource. If you pay 10% on a money transaction, this differs actually very little from the mark-up you pay on your groceries, which varies from 3-5% on dry food, to 20% on alcohol such as wine.\"",
"title": ""
},
{
"docid": "260f08aa3ed67443f642e7942a91ec08",
"text": "It will cost the same no matter what currency you use, unless you have access to a deal with a currency exchange that gives you an especially favourable conversion rate for a particular currency. If the current exchange rates are US$1.70 to the £, CA$1.80 to the £ and HK$12.50 to the £, then £1, US$1.70, CA$1.80 and HK$12.50 are just four different ways of writing the same amount of money. So whether you pay in US$, CA$ or HK$ it's the same amount of money that you're paying.",
"title": ""
},
{
"docid": "ab25a613fdb672925f18ec5c484f974a",
"text": "Can't I achieve the exact same effect and outcome by exchanging currency now and put that amount of USD in a bank account to gain some interest, then make the payment from one year from now? Sure, assuming that the company has the money now. More commonly they don't have that cash now, but will earn it over the time period (presumably in Euros) and will make the large payment at some point in time. Using a forward protects them from fluctuations in the exchange rate between now and then; otherwise they'd have to stow away USD over the year (which still exposes them to exchange rate fluctuations).",
"title": ""
},
{
"docid": "074fefb0d464c1ed76289e41089e5ff8",
"text": "\"What you have is usually called a pre-paid credit card. You pay some money (Indian Rupees) to the credit card company, and then you can use the card to pay for purchases etc in foreign (non-Indian) currencies upto the remaining balance on the card. If a proposed charge exceeds the remaining balance, the transaction will be declined when you try to use the card. There might be multiple ways that the card is set up, e.g. it might be restricted to charge purchases denominated in US dollars alone, or you might be able to use it anywhere in the world (except India). The balance on the card might be denominated in INR, or in US$, say. In the latter case, the exchange rate at which your INR payment was converted into the $US balance is fixed and agreed to at the time of the original payment: you paid INR 70K (say) and the balance was set to US$ 1000 even though the exchange rate on the open market would have given you a few more US dollars. In the former case with the balance denominated in INR, a charge of US$ 100, say, would be converted to INR at a fixed agreed-upon rate, or at the current exchange rate that the Visa or MasterCard network is using, plus (typically) a 3% fee currency exchange fee, and your balance in INR will decrease accordingly. With all that as prologue, if you made a purchase from Walmart USA and later returned it for a credit, it should increase your credit card balance appropriately. You may be whacked with currency conversion fees along the way depending on how your card is set up, but with a US$-denominated card, a credit of US$100 should increase your card balance by US$100. So, that $US 100 can be spent on something else instead. In short, the card is your \"\"bank\"\" account. You cannot spend more than the remaining balance on the card just like you cannot withdraw more money from your bank account than you have in the account, and you can recharge your card by making more INR payments into it so as to increase the available balance. But it is like a current account in that you are unlikely to earn interest on the balance the way you do with a savings account. So what if you are back in India and have no further use of this card? Can you get your balance back as cash or deposit into your regular bank account? Call the Customer Help line, or read the card agreement you signed.\"",
"title": ""
},
{
"docid": "8bcdf4cca2c9f6777c2b69ade14f4138",
"text": "Current and past FX rates are available on Visa's website. Note that it may vary by country, so use your local Visa website.",
"title": ""
},
{
"docid": "12c783ab58e622f4b75a45d00cc7d18a",
"text": "There is a way I discovered of finding the current exchange rate before committing to buy, go to send payments, put in your own second email, pay 1gbp as the amount and it will give you the exchange rate and fees in your own currency, in my case euro, before you have to click on send payment",
"title": ""
},
{
"docid": "4bb4d41c48db1ec43b5a542e87f30065",
"text": "I think the one single answer is that the answer depends on the two countries involved and their banks' practices. To find that answer, you need to ask other expats from your country living in France and ask them for their experience. Note that most expats do not know what fees they are paying. For example, in the Philippines, the lowest fee charged still involves waiting 30 days to get your money. Specifically, I opened a US dollar savings account with the minimum of US $500 required (other rules are involved for opening a bank account), deposited a personal check drawn on my US bank account (no fee charged), and waited 30 calendar days to withdraw USD bills. The Philippines bank did not have a branch in the US, but had financial arrangements with US banks. After getting USD dollars in my hand, I walked to a nearby exchange business store (which usually offered a better daily rate than a bank, but a rate between the banks' buy and sell rates) and exchange the dollars for pesos. Note that years ago, banks did not give USD bills, when dollars were scarce in the Philippines. However, this process does not work in Thailand, due to bank rules against private individuals opening a USD account, with exceptions. And there are still fees involved. March 2017",
"title": ""
},
{
"docid": "f00758a8e973c9613c82d04f248c9dd3",
"text": "\"The other option apart from the above which I feel is quite good is \"\"Travel Card\"\" [also called Forex Card] issued in USD. These cards are like prepaid debit cards. They are available from almost quite a few Indian Banks like HDFC / ICICI / UTI. The limit for students is around 100 K USD per year. http://www.hdfcbank.com/personal/cards/prepaid_cards/forexplus_card/pre_forex_elg.htm The card can be reloaded by any amount [i think the minimum is USD 100] by visiting the Branch or certain Forex agents. There loading fee is INR 75. The Fx is typical Card Rate prevailing on the day. In US this card can be used as a credit card for almost everything [I have used this without any hassel]. Avoid using the card for blocking anything [at Hotel for room booking, or initial block at car rentals]. Although its mentioned that there is a withdrawl fees, i was never charged anything for withdrawls. The card comes with an internet based login to monitor account balance and transactions. Any unused funds can be withdrawn in India. The payment will be make in INR.\"",
"title": ""
}
] |
fiqa
|
a7031dbac7278519e2434d9f310e0f52
|
What do I do with a P11D Expenses & Benefits form?
|
[
{
"docid": "d3381ce2d3d30afc976df6a0006e9a85",
"text": "\"The P11D is a record of the total benefits you've received in a tax year that haven't been taxed in another way, a bit like the P60 is a record of the total pay and tax you've paid in a tax year. Note that travel for business purposes shouldn't be taxable, and if that's what's being reported on the P11D you may need to make a claim for tax relief to HMRC to avoid having to pay the tax. I'm not sure whether it's normal for such expenses to be reported there. HMRC will normally collect that tax by adjusting your tax code after the P11D is issued, so that more tax is taken off your future income. So you don't need to do anything, as it'll be handled automatically. As to how you know it's accurate, if you have any doubts you'd need to contact your former employer and ask them to confirm the details. In general you ought to know what benefits you actually received so should at least be able to figure out if the number is plausible. If your \"\"travel\"\" was a flight to the USA, then probably it was. If it was a bus ticket, less so :-) If you fill in a tax return, you'll also have to report the amount there which will increase the tax you owe/reduce your refund. You won't be charged twice even if your tax code also changes, as the tax return accounts for the total amount of tax you've already paid. For travel benefits, the exact treatment in relation to tax/P11Ds is summarised here.\"",
"title": ""
}
] |
[
{
"docid": "d3aa0e53873e068ee63eb8e1179eae2b",
"text": "\"I would suggest to get an authoritative response from a CPA. In any case it would be for your own benefit to have at least the first couple of years of tax returns prepared by a professional. However, from my own personal experience, in your situation the income should not be regarded as \"\"US income\"\" but rather income in your home country. Thus it should not appear on the US tax forms because you were not resident when you had it, it was given to you by your employer (which is X(Europe), not X(USA)), and you should have paid local taxes in your home country on it.\"",
"title": ""
},
{
"docid": "c93f3024d8d4bde48399c1dabe42032b",
"text": "\"I've done various side work over the years -- computer consulting, writing, and I briefly had a video game company -- so I've gone through most of this. Disclaimer: I have never been audited, which may mean that everything I put on my tax forms looked plausible to the IRS and so is probably at least generally right, but it also means that the IRS has never put their stamp of approval on my tax forms. So that said ... 1: You do not need to form an LLC to be able to claim business expenses. Whether you have any expenses or not, you will have to complete a schedule C. On this form are places for expenses in various categories. Note that the categories are the most common type of expenses, there's an \"\"other\"\" space if you have something different. If you have any property that is used both for the business and also for personal use, you must calculate a business use percentage. For example if you bought a new printer and 60% of the time you use it for the business and 40% of the time you use it for personal stuff, then 60% of the cost is tax deductible. In general the IRS expects you to calculate the percentage based on amount of time used for business versus personal, though you are allowed to use other allocation formulas. Like for a printer I think you'd get away with number of pages printed for each. But if the business use is not 100%, you must keep records to justify the percentage. You can't just say, \"\"Oh, I think business use must have been about 3/4 of the time.\"\" You have to have a log where you write down every time you use it and whether it was business or personal. Also, the IRS is very suspicious of business use of cars and computers, because these are things that are readily used for personal purposes. If you own a copper mine and you buy a mine-boring machine, odds are you aren't going to take that home to dig shafts in your backyard. But a computer can easily be used to play video games or send emails to friends and relatives and lots of things that have nothing to do with a business. So if you're going to claim a computer or a car, be prepared to justify it. You can claim office use of your home if you have one or more rooms or designated parts of a room that are used \"\"regularly and exclusively\"\" for business purposes. That is, if you turn the family room into an office, you can claim home office expenses. But if, like me, you sit on the couch to work but at other times you sit on the couch to watch TV, then the space is not used \"\"exclusively\"\" for business purposes. Also, the IRS is very suspicious of home office deductions. I've never tried to claim it. It's legal, just make sure you have all your ducks in a row if you claim it. Skip 2 for the moment. 3: Yes, you must pay taxes on your business income. If you have not created an LLC or a corporation, then your business income is added to your wage income to calculate your taxes. That is, if you made, say, $50,000 salary working for somebody else and $10,000 on your side business, then your total income is $60,000 and that's what you pay taxes on. The total amount you pay in income taxes will be the same regardless of whether 90% came from salary and 10% from the side business or the other way around. The rates are the same, it's just one total number. If the withholding on your regular paycheck is not enough to cover the total taxes that you will have to pay, then you are required by law to pay estimated taxes quarterly to make up the difference. If you don't, you will be required to pay penalties, so you don't want to skip on this. Basically you are supposed to be withholding from yourself and sending this in to the government. It's POSSIBLE that this won't be an issue. If you're used to getting a big refund, and the refund is more than what the tax on your side business will come to, then you might end up still getting a refund, just a smaller one. But you don't want to guess about this. Get the tax forms and figure out the numbers. I think -- and please don't rely on this, check on it -- that the law says that you don't pay a penalty if the total tax that was withheld from your paycheck plus the amount you paid in estimated payments is more than the tax you owed last year. So like lets say that this year -- just to make up some numbers -- your employer withheld $4,000 from your paychecks. At the end of the year you did your taxes and they came to $3,000, so you got a $1,000 refund. This year your employer again withholds $4,000 and you paid $0 in estimated payments. Your total tax on your salary plus your side business comes to $4,500. You owe $500, but you won't have to pay a penalty, because the $4,000 withheld is more than the $3,000 that you owed last year. But if next year you again don't make estimated payment, so you again have $4,000 withheld plus $0 estimated and then you owe $5,000 in taxes, you will have to pay a penalty, because your withholding was less than what you owed last year. To you had paid $500 in estimated payments, you'd be okay. You'd still owe $500, but you wouldn't owe a penalty, because your total payments were more than the previous year's liability. Clear as mud? Don't forget that you probably will also owe state income tax. If you have a local income tax, you'll owe that too. Scott-McP mentioned self-employment tax. You'll owe that, too. Note that self-employment tax is different from income tax. Self employment tax is just social security tax on self-employed people. You're probably used to seeing the 7-whatever-percent it is these days withheld from your paycheck. That's really only half your social security tax, the other half is not shown on your pay stub because it is not subtracted from your salary. If you're self-employed, you have to pay both halves, or about 15%. You file a form SE with your income taxes to declare it. 4: If you pay your quarterly estimated taxes, well the point of \"\"estimated\"\" taxes is that it's supposed to be close to the amount that you will actually owe next April 15. So if you get it at least close, then you shouldn't owe a lot of money in April. (I usually try to arrange my taxes so that I get a modest refund -- don't loan the government a lot of money, but don't owe anything April 15 either.) Once you take care of any business expenses and taxes, what you do with the rest of the money is up to you, right? Though if you're unsure of how to spend it, let me know and I'll send you the address of my kids' colleges and you can donate it to their tuition fund. I think this would be a very worthy and productive use of your money. :-) Back to #2. I just recently acquired a financial advisor. I can't say what a good process for finding one is. This guy is someone who goes to my church and who hijacked me after Bible study one day to make his sales pitch. But I did talk to him about his fees, and what he told me was this: If I have enough money in an investment account, then he gets a commission from the investment company for bringing the business to them, and that's the total compensation he gets from me. That commission comes out of the management fees they charge, and those management fees are in the same ballpark as the fees I was paying for private investment accounts, so basically he is not costing me anything. He's getting his money from the kickbacks. He said that if I had not had enough accumulated assets, he would have had to charge me an hourly fee. I didn't ask how much that was. Whew, hadn't meant to write such a long answer!\"",
"title": ""
},
{
"docid": "e24013fc2d8a69a7b3cba05a99e5eb8f",
"text": "When you enter your expected gross income into the worksheet - just enter $360000 and leave everything else as is. That should give you the right numbers. Same for State (form DE-4).",
"title": ""
},
{
"docid": "57cb61fd296cae857e0413a84e463426",
"text": "is it possible to file that single form aside from the rest of my return? Turbotax will generate all the forms necessary to file your return. I recommend you access these forms and file them manually. According to the IRS in order to report capital gains and losses you need to fill out Form 8949 and summarize them on Form 1040 D. Add these two forms to the stack that turbotax generates. Add the total capital gains to line 13 of the Form 1040 which turbotax generated, and adjust the totals on the form accordingly.",
"title": ""
},
{
"docid": "a7e3d7a58663bf7892905e74ddb6346a",
"text": "\"I'm mostly guessing based on existing documentation, and have no direct experience, so take this with a pinch of salt. My best understanding is that you need to file Form 843. The instructions for the form say that it can be used to request: A refund or abatement of a penalty or addition to tax due to reasonable cause or other reason (other than erroneous written advice provided by the IRS) allowed under the law. The \"\"reasonable cause\"\" here is a good-faith confusion about what Line 79 of the form was referring to. In Form 843, the IRC Section Code you should enter is 6654 (estimated tax). For more, see the IRC Section 6654 (note, however, that if you already received a CP14 notice from the IRS, you should cross-check that this section code is listed on the notice under the part that covers the estimated tax penalty). If your request is accepted, the IRS should issue you Notice 746, item 17 Penalty Removed: You can get more general information about the tax collection process, and how to challenge it, from the pages linked from Understanding your CP14 Notice\"",
"title": ""
},
{
"docid": "39ac168cb11ea51d8e30d4aa282269e0",
"text": "Well you've got to think about the process, but first make sure the thing you want to pay for is actually a qualified dependent care expense. Here is a list of eligible expenses from a national FSA administrator. This process will tie up your money for some amount of time. Your deduction will come out like clockwork. But there is a time-delay of potentially months between your deduction and receipt of a reimbursement. Dependent care plans are money-in money-out. You can only file a reimbursement on funds that have actually been contributed, which is different than a medical FSA. Additionally, you can only file a claim on expenses that have actually been incurred. Dependent care FSA elections can be changed through the year on an as needed basis. This would add an administrivia burden to the person running your payroll, and if there is a payroll vendor in place, likely an actual cost. The administrator in this situation would likely be the company. In the formalities of employee benefits there must always be a named administrator. If your employer currently offers no benefits you should press healthcare first. Paying healthcare premiums pretax would likely save you more money and be less administration than this. Additionally, if your employer is paying for or reimbursing you for your individual health insurance that's currently illegal under the ACA.",
"title": ""
},
{
"docid": "3a00d5959b32ca0bc12b319ae14ed2da",
"text": "IRS pub 521 has all the information you need. Expenses reimbursed. If you are reimbursed for your expenses and you use the cash method of accounting, you can deduct your expenses either in the year you paid them or in the year you received the reimbursement. If you use the cash method of accounting, you can choose to deduct the expenses in the year you are reimbursed even though you paid the expenses in a different year. See Choosing when to deduct, next. If you deduct your expenses and you receive the reimbursement in a later year, you must include the reimbursement in your income on Form 1040, line 21 This is not unusual. Anybody who moves near the end of the year can have this problem. The 39 week time test also can be an issue that span over 2 tax years. I would take the deduction for the expenses as soon a I could, and then count the income in the later year if they pay me back. IF they do so before April 15th, then I would put them on the same tax form to make things easier.",
"title": ""
},
{
"docid": "f20fdd823286eba26d5f938c45710cd2",
"text": "Talk to a tax professional. The IRS really doesn't like the deduction, and it's a concept (like independent contractors) that is often not done properly. You need to, at a minimum, have records, including timestamped photographs, proving that: Remember, documentation is key, and must be filed and accessible for a number of years. Poor record keeping will cost you dearly, and the cost of keeping those records is something that you need to weigh against the benefit.",
"title": ""
},
{
"docid": "3bdd2e14dc990aa712c3092fbe817087",
"text": "I received a $2,000 bonus... Gross Income is income from whatever source derived, including (but not limited to) “compensation for services, including fees, commissions, fringe benefits, and similar items.” Adjusted Gross Income is defined as gross income minus adjustments to income. My question is, must I still report this money on my tax return and if so, how? Yes, and it would be on line 21 of your 1040 with supporting documentation. Are these legal fees deductible as an expense, and where would I list them? Yes, you would aggregate your deductible expenses and place these on your Schedule A. Instructions here. Good Luck. Edit: As Ben Miller pointed out in the comments, the deduction would be placed in either line 23 or 28 depending on the nature of the attorney (investment related or not).",
"title": ""
},
{
"docid": "91ffa5ed8478fc188d5928f275b34075",
"text": "What happened is that they do not track (and report) your original cost basis for 1099-B purposes. That is because it is an RSU. Instead, they just reported gross proceeds ($5200) and $0 for everything else. On your Schedule D you adjust the basis to the correct one, and as a comment you add that it was reported on W2 of the previous year. You then report the correct $1200 gain. You keep the documentation you have to back this up in case of questions (which shouldn't happen, since it will match what was indeed reported on your W2).",
"title": ""
},
{
"docid": "e316d41336ca3bda6eb126bcc4115790",
"text": "\"Can I use the foreign earned income exclusion in my situation? Only partially, since the days you spent in the US should be excluded. You'll have to prorate your exclusion limit, and only apply it to the income earned while not in the US. If not, how should I go about this to avoid being doubly taxed for 2014? The amounts you cannot exclude are taxable in the US, and you can use a portion of your Norwegian tax to offset the US tax liability. Use form 1116 for that. Form 1116 with form 2555 on the same return will require some arithmetic exercises, but there are worksheets for that in the instructions. In addition, US-Norwegian treaty may come into play, so check that out. It may help you reduce the tax liability in the US or claim credit on the US taxes in Norway. It seems that Norway has a bilateral tax treaty with the US, that, if I'm reading it correctly, seems to indicate that \"\"visiting researchers to universities\"\" (which really seems like I would qualify as) should not be taxed by either country for the duration of their stay. The relevant portion of the treaty is Article 16. Article 16(2)(b) allows you $5000 exemption for up to a year stay in the US for your salary from the Norwegian school. You will still be taxed in Norway. To claim the treaty benefit you need to attach form 8833 to your tax return, and deduct the appropriate amount on line 21 of your form 1040. However, since you're a US citizen, that article doesn't apply to you (See the \"\"savings clause\"\" in the Article 22). I didn't even give a thought to state taxes; those should only apply to income sourced from the state I lived in, right (AKA $0)? I don't know what State you were in, so hard to say, but yes - the State you were in is the one to tax you. Note that the tax treaty between Norway and the US is between Norway and the Federal government, and doesn't apply to States. So the income you earned while in the US will be taxable by the State you were at, and you'll need to file a \"\"non-resident\"\" return there (if that State has income taxes - not all do).\"",
"title": ""
},
{
"docid": "dd10d90ffdb55b8ff054948c6a6d2926",
"text": "\"You will be filing the exact same form you've been filing until now (I hope...) which is called form 1040. Attached to it, you'll add a \"\"Schedule C\"\" form and \"\"Schedule SE\"\" form. Keep in mind the potential effect of the tax and totalization treaties the US has with the UK which may affect your filings. I suggest you talk to a licensed EA/CPA who works with expats in the UK and is familiar with all the issues. There are several prominent offices you can find by Googling.\"",
"title": ""
},
{
"docid": "ac8916af592d24f229674bf1f89c93c2",
"text": "If this is something you plan to continue doing it would make sense to create it as it's own business entity and then to get non-profit status eg: 501c3. Otherwise I'm pretty sure you have to think of it as YOU receiving the money as a sole proprietor - and file a couple more tax forms at the end of the year. I think it's a Schedule C. So essentially if you bring in $10,000, then you spend that $10,000 as legit business expenses for your venture your schedule C would show no profit and wouldn't pay taxes on it. BUT, you do have to file that form. Operating this way could have legal implications should something happen and you get sued. Having the proper business entity setup could help in that situation.",
"title": ""
},
{
"docid": "2e01fae496d2dff9ca15ea734ad1f05d",
"text": "There is a tax advantage only for medical expenses exceeding 10% of your adjusted gross income (7.5% if over age 65). This limit means only a very few people can take advantage of the deduction. The expenses would be entered on Schedule A (itemized deductions) of form 1040. You don't have to send in the supporting documentation, but you have to keep it in your records to present if audited. Yes, a copay qualifies as an expense, but needs supporting documentation.",
"title": ""
},
{
"docid": "3eb73a2ca9245aa95108c276f11d1f16",
"text": "In a nutshell, throwing your taxable income in the trash does not remove it from your taxable income; you still have to report in your tax filing, and pay taxes as needed. Especially as you could at any time request your employer to write you a replacement check. I would expect them to start charging a fee for reprinting if you really annoy them by doing it dozens of times. If you want to avoid taxes on it, donate it to a deductible 501(c)3 organization; then it becomes neutral to your taxes.",
"title": ""
}
] |
fiqa
|
a3a36ab2711d3a7d97e618bb809d4d96
|
How do 'payday money' stores fund their 'buy now, pay later' loans?
|
[
{
"docid": "a5904cc24faa878de040793a1e14075b",
"text": "Payday loan companies basically are banks (although they are incredibly terrible ones). Banks make money in two ways: (1) They charge fees for services they provide (bank account fees, etc.); and (2) The interest rate differential: They borrow money from individuals and corporations (your savings account is essentially money you are loaning to the bank) for a small % paid to individuals, and then lend that money back to other people for a higher %. ie: You might earn 0.5% on your savings account, but then the bank takes that money and lends it to your neighbor for 2.5% as part of their mortgage. Payday loan companies make money in one way: They charge an enormous markup on money lent out to other people. The rates in some cases are so high (annualized interest rates of >1000% are not uncommon in countries without full regulation of this industry), that it barely matters where they get money from. They might get money from investors [who bought shares in the company, giving the company initial cash in the hope that they give dividends down the road], they might get money from other 'real' banks [who lend money just like they would lend money to any other business, with a regular interest rate], or they might have many from many other sources. They might even issue their debt publically, so that individuals could buy bonds from the company and receive a small amount of interest every year. The point is that the rates of return on the money leant by payday loan companies are so high, that the cost of where the money comes from is not terribly relevant.",
"title": ""
}
] |
[
{
"docid": "6b722f7ab18aa74ea0ca2f4cbd589dfb",
"text": "Of course its possible. Under what terms and with what fees depends on your bank/country regulations, but generally speaking - loaning is the major source of income for banks, especially short-term account overdrafts (which is essentially a loan, usually at a high rate). In the US you can (now, since the new regulations kicked in) instruct the bank not to pay checks/decline debit card purchases if you don't have sufficient funds on the account. Otherwise you can instruct them to pay (at their discretion) to avoid bouncing checks, and accept NSF fees (usually pretty high). Some banks provide overdraft lines of credit (then you won't have NSF fees, and will just pay interest when tapping into that line), others provide option to automatically withdraw the missing amount from a linked account (checking or credit card).",
"title": ""
},
{
"docid": "d2e8aa4caff5531411d25c10c83ca508",
"text": "Basically isn't this like if they loaned a bank 400b with 401b due tomorrow, and then the bank took the same loan the next day? Gross exaggeration I know, but I just want to make sure that is the way this works.",
"title": ""
},
{
"docid": "b10a6a9f11ddd5e980624a5df4c0c0f8",
"text": "Car dealers as well as boat dealers, RV dealers, maybe farm vehicle dealers and other asset types make deals with banks and finance companies to they can make loans to buyers. They may be paying the interest to the finance companies so they can offer a 0% loan to the retail customer for all or part of the loan term. Neither the finance company nor the dealer wants to make such loans to people who are likely to default. Such customers will not be offered this kind of financing. But remember too that these loans are secured by the asset - the car - which is also insured. But the dealer or the finance company holds that asset as collateral that they can seize to repay the loan. So the finance company gets paid off and the dealer keeps the profit he made selling the car. So these loans are designed to ensure the dealer nor the finance company looses much. These are called asset finance loans because there is always an asset (the car) to use as collateral.",
"title": ""
},
{
"docid": "588d7deabaf5f7eb299ccaad1bf4760c",
"text": "\"When is the best time to pay? At the end of each year? If you save $1,000 each month at 1% so as to pay $12,000 at EOY on a 4.75% loan, you've lost \"\"4.75% - 1% = 3.75%\"\" over that year. (And that's presuming you put the money in a \"\"high yield\"\" online savings account.) Thus, the best time to pay is as soon as you have the money. EDIT: This all assumes that you have an emergency fund (more than the bare minimum $1K), zero other debt with a higher rate than 4.75% and that you are getting the full company match from 401(k).\"",
"title": ""
},
{
"docid": "47b0e5018962cd5b091dffb879e6d7f5",
"text": "There is a strange puzzle today where savings account interest rates are not rising in-line with the Federal Funds rate. Either customers are apathetic to their alternative uses of cash, or banks have some-how formed a cartel to keep their cost of funding low. I'm leaning towards the former since bank customers today likely value readily accessible cash more than the interest rate they could earn by investing in money market mutual funds.",
"title": ""
},
{
"docid": "f71e16876c49a2516f62da64a0d1f7c0",
"text": "\"It's worth pointing out that most \"\"cash\"\" deals are actually debt financed, at least in part. A quick review of the 8K tells us they plan on debt financing the entire transaction with some senior notes and not use any of the 15B on their BS. This is fairly typical these days because debt is cheaper then the foregone interest on cash.\"",
"title": ""
},
{
"docid": "11cbec902d575e4489084f6cde2ddb91",
"text": "\"Most folks would loan out money for the purpose of being re-loaned. Depositing money in the bank, is loaning the bank money who will re-loan it. Buying bond based mutual funds is another way that it could be viewed that people are loaning money for the purpose of the money being re-loaned. The reason why banks always have money available for withdrawal, is because of the reserve. Fractional reserve banking in its simplest explanation, is that banks are allowed to take deposits and loan them out so long as they keep a set reserve. If the reserve rate is 10% (it's really much lower), and somebody deposits $100, then the bank is allowed to loan out $90, keeping $10 as a reserve. Now even with a reserve, a bank does run some risk of the deposits being withdrawn faster than the loans are paid back, this is called a run. What protects banks most from this, is that deposits, withdrawals, loans, and loan repayments, all happen at a fairly steady and predictable rate (short term), so banks are able to judge how many loans they should give out. Even when banks do see their reserve depleting, they have options. The first and most common, is simply getting a loan from another bank. The rule with the reserve, is that banks need to meet it at the end of the day, so banks will loan each other money overnight for the purpose of making up for the slight fluctuations that occur in a normal business day. If you have ever heard the Fed talking about the \"\"overnight rate\"\" they are talking about the rate banks loan each other money for the night. Another common way for banks to make up for a deficit in deposits, in a longer term solution,is to sell assets. Fairly rare for a bank to sell actual physical assets, but the loans they hold are assets, and they can sell them to other banks. Most banks will also hold some bonds that are available to sell. The major functions that allow a bank to be profitable would still apply to the OP's idea. The only real difference would be that commercial banks have direct access to the central banks, and the OP's idea would need to have a commercial bank to act as the middle man between the central bank.\"",
"title": ""
},
{
"docid": "37f1468d33edbdf2cc73c45e8868ae69",
"text": "\"Actually in Finland on some bank + debit/credit card + online retailer combinations you type in your card details as you normally do, but after clicking \"\"Buy\"\" you get directed to your own bank's website which asks you to authenticate yourself with online banking credentials. It also displays the amount of money and to which account it is being paid to. After authentication you get directed back to the retailer's website. Cannot say why banks in US haven't implemented this.\"",
"title": ""
},
{
"docid": "13579414bd19097f500ef210e2dfd057",
"text": "\"(Disclosure - PeerStreet was at FinCon, a financial blogger conference I attended last month. I had the chance to briefly meet a couple people from this company. Also, I recognize a number of the names of their financial backers. This doesn't guarantee anything, of course, except the people behind the scenes are no slackers.) The same way Prosper and Lending Club have created a market for personal loans, this is a company that offers real estate loans. The \"\"too good to be true\"\" aspect is what I'll try to address. I've disclosed in other answers that I have my Real Estate license. Earlier this year, I sold a house that was financed with a \"\"Hard Money\"\" loan. Not a bank, but a group of investors. They charged the buyer 10%. Let me state - I represented the seller, and when I found out the terms of the loan, it would have been a breach of my own moral and legal responsibility to her to do anything to kill the deal. I felt sick for days after that sale. There are many people with little credit history who are hard workers and have saved their 20% down. For PeerStreet, 25%. The same way there's a business, local to my area, that offered a 10% loan, PeerStreet is doing something similar but in a 'crowd sourced' way. It seems to me that since they show the duration as only 6-24 months, the buyer typically manages to refinance during that time. I'm guessing that these may be people who are selling their house, but have bad timing, i.e. they need to first close on the sale to qualify to buy the new home. Or simply need the time to get their regular loan approved. (As a final side note - I recalled the 10% story in a social setting, and more than one person responded they'd have been happy to invest their money at 6%. I could have saved the buyer 4% and gotten someone else nearly 6% more than they get on their cash.)\"",
"title": ""
},
{
"docid": "7a78128b1da5143d99ed854a17355031",
"text": "They also tranche their loans just like the bonds in the housing crisis, which freaked me the fuck out when I heard it. Asked one of the main Sofi guys presenting at an event (think he works with the 4 founders about his answer and he basically just said the quality of the loans going in will keep them save. It seemed like a semi complete answer, one that I would never know unless I got an inside look at how rigid their loan process is and if it holds up when they are having a low month of inflows.",
"title": ""
},
{
"docid": "4571505cd5e76a598b1090e109add091",
"text": "\"A lot of credit card companies these days uses what they call \"\"daily interest\"\" where they charge the interest rate for the number of days till you pay off what you spent. This allows them to make more money than the \"\"period billing\"\". The idea of credit, theoretically, is that there isn't really a day when you can borrow without paying interest - in theory\"",
"title": ""
},
{
"docid": "749eaaf9fc54104235fb924c6e220d06",
"text": "The short term loan that accept any credit score is really merchant cash advance. They call it loan because clients do have options to pay as direct deposit but most of the times they would make clients switch to their credit card terminals so they can get percentage of daily sales as payment as well as percentage from their partner credit card company. And that kind of payment (percentage of daily credit card sales) is merchant cash advance.",
"title": ""
},
{
"docid": "e6a21aae1590e3bc1adc26bba980101b",
"text": "\"Now store the money in -- okay here, think about a realistic worst case scenario. Not zombie attack or meteor mega-strike, but the kinds in which you are not entirely helpless: job loss stacked on top of the worst recession since the Great Depression, along with credit drying up so you can't just borrow your way through the hard times. Store the money in an account and investment which is relatively liquid, meaning you could extract cash value from it fairly easily in a worst case scneario. Safe -- essentially impossible to lose significant value in a worst case scenario. (or, you only count the part of its value that's sure to be there in a worst case.) If you're much too cool for an emergency fund, then sorry to waste your valuable time! For the rest of us, it's a planning tool. Even dot-coms do this: it's called a \"\"burn-rate\"\" and they know exactly how many more weeks their VC can fund operations. Of course in practicality, it may not go to X months of routine expenses. Most of it may get burned up in month 2 on a new transmission. You can't really predict this stuff, the \"\"X month\"\" paradigm is just an arm-wave. For the financially uneducated, it's also a training tool. In the US, school does not provide financial education. Most people get financial habits from their parents, and like most family lessons, they are deeply emotionally wired, even if they are unconscious of that fact. For instance, some people don't ask for the salaries they deserve, and spend lavishly until the checkbook is zero - they literally push money away. Suffice it to say, it's a challenge to get some people to even realize that savings is a thing, when they have never in their whole lives been able to hold onto more than $20 for more than a week. The concept of an emergency fund is a sellable way to break through that \"\"I can't save\"\" mental-block. So I can see where you might think the emergency fund is greasy kidstuff. Fair. But it's not just that, it's also a very practical planning tool.\"",
"title": ""
},
{
"docid": "70e04ae623489ace987557576c29b943",
"text": "Banks can't simply make loans in the void. This is how the cash flow works, generally: 1. Depositers *add* cash into the bank. The Bank now has cash. 10% of that cash is held on *reserve* per law. This cash is held on the balance sheet as an *asset* (cash) *and a liability* (demand deposits). 2. Someone requests a loan. The loan is funded from the non-reserved cash of these deposits. This results in a lessening of an asset (cash), and the creation of a new asset (loan). 3. Traditionally, as the debtor pays back the loan, the interest is distributed in some sort of split between the bank and the depositors. This means cash in from the loan and interest, and a liability (deposits) also go up. 4. Alternatively, while the above still happens, the bank can *securitize* the loan and sell that to investors. Investors then get access to the loan and its income, and the bank collects a fee. However, this means more cash on hand for the bank to originate additional loans without going near the reserve requirement. If a bank extends too many loans and its reserve is threatened, it must borrow either from the fed or from other banks. These loans must be paid back.",
"title": ""
},
{
"docid": "25acfc12627b8bc956a648b3eb673eb5",
"text": "So this method makes sense and is reasonable and possible. The money multiplier effect ends up capped by the fact that the bank can only lend a percent of its 'cash'. My issue understanding this is I've been told that banks actually don't hold 10% of the cash and lend the other 90% but instead hold the full 100% in cash and lend 900%. Is this accurate? The issue I see with it is that it becomes exponential growth that is uncapped. If the bank lends 900%, it has created this money from nothing, which by itself isn't different that the bank loaning 90% and keeping 10%. The issue comes because the next bank who gets that money deposited will treat that amount as cash as well, so they loan 900% of the 900%. And so on and so forth. How does the system prevent this from happening?",
"title": ""
}
] |
fiqa
|
0dbc6bfa8df28f346e7303c970d6d851
|
Can an unmarried couple buy a home together with only one person on the mortgage?
|
[
{
"docid": "239eefd27af2f242572ffc8aa02b5f83",
"text": "It is highly unlikely that this would be approved by a mortgage underwriter. When the bank gives a loan with a security interest in a property (a lien), they are protected - if the borrower does not repay the loan, the property can be foreclosed on and sold, and the lender is made whole for the amount of the loan that was not repaid. When two parties are listed on the deed, then each owns an UNDIVIDED 50% share in the property. If only one party has pledged the property as surety against the loan, then in effect only 50% of the property is forecloseable. This means that the bank is unable to recoup its loss. For a (fictional, highly simplified) concrete example, suppose that the house is worth $100,000 and Adam and Zoe are listed on the deed, but Adam is the borrower for a $100,000 mortgage. Adam owes $100,000 and has an asset worth $50,000 (which he has pledged as security for the loan), while Zoe owes nothing and has an asset worth $50,000 (which is entirely unencumbered). If Adam does not pay the mortgage, the bank would only be able to foreclose on his $50,000 half of the property, leaving them exposed to great risk. There are other legal and financial reasons, but overall I think you'll find it very difficult to locate a lender who is willing to take that kind of risk. It's very complicated and there is absolutely no up-side. Also - speaking from experience (from which I was protected because of the bank's underwriting rules) and echoing the advice offered by others on this site: don't bother trying. Commingling assets without a contract (either implicit by marriage or explicit by, well a contract) is going to get you in trouble.",
"title": ""
},
{
"docid": "897b8449942ba103ae50e8cf868afa70",
"text": "\"I will expand on Bacon's comment. When you are married, and you acquire any kind of property, you automatically get a legal agreement. In most states that property is owned jointly and while there are exceptions that is the case most of the time. When you are unmarried, there is no such assumption of joint acquisition. While words might be said differently between the two parties, if there is nothing written down and signed then courts will almost always assume that only one party owns the property. Now unmarried people go into business all the time, but they do so by creating legally binding agreements that cover contingencies. If you two do proceed with this plan, it is necessary to create those documents with the help of a lawyer. Although expensive paying for this protection is a small price in relation to what will probably be one of the largest purchases in your lives. However, I do not recommend this. If Clayton can and wants to buy a home he should. Emma can rent from Clayton. That rent could any amount the two agree on, including zero. If the two do get married, well then Emma will end up owning any equity after that date. If they stay together until death, it is likely that she (or her heirs) will own half of it anyway. Also if this house is sold, the equity pass into larger house they buy after marriage, then that will be owned jointly. If they do break up, the break up is clean and neat. Presumably she would have paid rent anyway, so nothing is lost. Many people run into trouble having to sell at a bad time in a relationship that coincides with a weak housing market. In that case, both parties lose. So much like Bacon's advice I would not buy jointly. There is no upside, and you avoid a lot of downside. Don't play \"\"house\"\" by buying a home jointly when you are unmarried.\"",
"title": ""
},
{
"docid": "d5e93075e5b363f36d9be5f797b3e6b3",
"text": "In this case can the title of the home still be held by both? Yes, it is possible to have additional people on title that are not on the mortgage. Would the lender (bank) have any reservations about this since a party not on the mortgage has ownership of the property? Possibly, but there is a very simple way to avoid this. Clayton could simply purchase the home himself, and add Emma to the title after closing by recording a quitclaim deed. The lender can't stop that, and from their point of view it's actually better, since they have two people to go after in the case of default. (But despite it being better they often make it difficult to purchase Tip, when you have an attorney draft the quitclaim document, have them draft the reverse document too. (Emma relinquishing the property back to Clayton.) There is usually no extra charge for this and then you have it if you need it. For example, you may need to file the reverse forms if you want to refinance. As a side note, I agree with Grade 'Eh' Bacon's and Pete B.'s in recommending that Clayton and Emma do not do this. Once they are married the property will either be automatically jointly owned, or a spouse can be added to the title easily, and until they are married there are no pros but many cons to doing this. Reasons not to do it: As a side note, in a comment it was proposed: ...suppose Clayton loves Emma so much that he wants her name to be on the house... I understand the desire to do this from an emotional point of view, but realize this does not make sense from a financial point of view.",
"title": ""
},
{
"docid": "024f190b764183dc722c34c4360e0f90",
"text": "The mortgage and title of the house would be under both your names equally. When I applied for a mortgage with my girlfriend, I was the primary applicant because of my credit score and she was the secondary because of her income (she makes more). When all was said and done, it was explained to us that the mortgage was ours equally and so was the house, and that I didn't hold more ownership than her over either. We were approved quickly and hassle free. This is our first house too. This is in Florida.",
"title": ""
},
{
"docid": "dbf8d5a2db71f056ab85223ef6589783",
"text": "I did that. What is allowed changes over time, though — leading up to the crisis, lenders would approve at the flimsiest evidence. In particular, my SO had only been in the country a couple years and was at a sweet spot where lack of history was no longer counting against her. Running the numbers, the mortgage was a fraction of a percent cheaper in her name than in mine. Even though she used a “stated income” (self reported, not backed by job history) of the household, not just herself. The title was in her name, and would have cost money to have mine added later so we didn’t. This was in Texas, which is a “community property” state so after marriage for sure everything is “ours”.",
"title": ""
},
{
"docid": "7ce55e9bf0dbb378da0165acec00aef8",
"text": "It's not typically possible for someone to jointly own the house, who is not also jointly liable for the mortgage. This doesn't matter however, because it is possible for two people to get a mortgage together, where only one person's income is assessed by the lender. If that person could get a mortgage of that amount on their own, then the couple should also be able to get the same mortgage. Source: My wife and I got a mortgage like this. She is self-employed, rather than meet the very high requirements for proving her self-employment income, we simply said that we only wanted my income to be taken into consideration.",
"title": ""
},
{
"docid": "d1f4b4fa488a4712895fd0f96f48d5f0",
"text": "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.",
"title": ""
},
{
"docid": "0c2838624733017e3b4fd0b74a966f5d",
"text": "There is no issue whatsoever, getting a mortgage this way as an unmarried couple. This is very similar to what I did while my wife and I were engaged. We we're on the title as joint tenants. I would expect them to have her as a signee to the mortgage. She won't be able to claim 50% ownership and make things hard on the lender. The title will be contingent on the mortgage being paid. What will be harder is if you guys decide to split. It's not at all uncommon for unmarried couples to buy a house together. Find a broker and get their advice.",
"title": ""
}
] |
[
{
"docid": "b239ecbe22ac4293f7f0df722ed82b8e",
"text": "You cannot deduct. Even if you could, unless you also hold the mortgage, it's unlikely that you would have sufficient deductions to exceed the standard deduction for a married couple.",
"title": ""
},
{
"docid": "9bcc0c9036c690555368b96512ef7ed8",
"text": "\"A Tweep friend asked me a similar question. In her case it was in the larger context of a marriage and house purchase. In reply I wrote a detail article Student Loans and Your First Mortgage. The loan payment easily fit between the generally accepted qualifying debt ratios, 28% for house/36 for all debt. If the loan payment has no effect on the mortgage one qualifies for, that's one thing, but taking say $20K to pay it off will impact the house you can buy. For a 20% down purchase, this multiplies up to $100k less house. Or worse, a lower down payment percent then requiring PMI. Clearly, I had a specific situation to address, which ultimately becomes part of the list for \"\"pay off student loan? Pro / Con\"\" Absent the scenario I offered, I'd line up debt, highest to lowest rate (tax adjusted of course) and hack away at it all. It's part of the big picture like any other debt, save for the cases where it can be cancelled. Personal finance is exactly that, personal. Advisors (the good ones) make their money by looking carefully at the big picture and not offering a cookie-cutter approach.\"",
"title": ""
},
{
"docid": "21f52f29dbe899c34e4170287fea73f2",
"text": "It is possible. You'll have to call the bank and ask what documentation is required, I'm pretty sure they'll want notarized authorization by all partners, at least.",
"title": ""
},
{
"docid": "9eba7b4b42d5fbc2ded2082e426640d5",
"text": "\"That is called \"\"substitution of collateral.\"\" And yes, it can be done, but only with consent of the lender. The \"\"best case\"\" for this kind of maneuver is if the second house is larger and more valuable than the first. Another possibility is that you have two mortgages on the first house and none on the second, and you want to move the second mortgage on the first house to the second one, effectively making it a \"\"first\"\" mortgage. In these instances, the lender has a clear incentive to allow a substitution of collateral, because the second one is actually better than the first one. The potential problem in your case, is if the second house were more expensive than the first house, you could not use the sale proceeds of the first house as to buy the second house without borrowing additional money. In that case, a possible solution would be to go back to the lender on your first house for a larger mortgage, with the proceeds of that mortgage being used to retire the earlier mortgage. Depending on your credit, payment record, etc. they might be willing to do this.\"",
"title": ""
},
{
"docid": "68922f8b7da11e444b92f686b6ced412",
"text": "Unlike others who have answered the question - I have done this. Here is my experience - your mileage and friendship may vary: I bought a condo years ago with a longtime childhood friend. We did it for all the reasons you mentioned - sick of renting and not building equity, were both young, single professionals who had the money. The market crashed we have both since married and moved on to own other properties with our spouses. Now we rent out the condo as selling in the current market is not doable.. It's not an ideal situation but that is because of the real estate market - not who I bought with. You need to discuss very openly all of the following scenarios, as well as others I can't think of right now I am sure: If you aren't both 100% in sync with these questions then do not do it. I never understand why some people would buy with a girlfriend/boyfriend but not a good personal friend. You're more likely to have a falling out with your significant other then a long time close friend. My advice, have honest, open conversations, about all possible scenarios. If you feel necessary put somethings down into some sort of legal agreement - with us it was not, and still isn't necessary.",
"title": ""
},
{
"docid": "e807732a034e0d32a4c0fe25c7b8cd02",
"text": "If someone owns a house that is not paid off...can someone buy it by taking another mortgage? Yes, but I'm not sure why you think the buyer would need to take another mortgage to buy it. If someone sells their home for X dollars, then the buyer needs X dollars to buy the house. How they get that money (use cash, take out a mortgage) is up to them. During the closing process, a portion of the funds generated from the sale are diverted to pay off the seller's loan and any leftover funds after closing are pocketed by the seller. What kind of offer would be most sensible? I assume that in this case the current owner of the house would want to make a profit. The amount that the house is sold for is determined by the market value of their home, not by the size of the mortgage they have left to pay off. You make the same offer whether they own their home or have a mortgage.",
"title": ""
},
{
"docid": "419c9242f195bf26a718bf4e307dc73d",
"text": "You are thinking about this very well. With option one, you need to think about the 5 D's in the contract. What happens when one partner becomes disinterested, divorced (break up), does drugs (something illegal), dies or does not agree with decisions. One complication if you buy jointly, and decide to break up/move, on will the other partner be able to refinance? If not the leaving person will probably not be able to finance a new home as the banks are rarely willing to assume multiple mortgage risks for one person. (High income/large down payment not with standing.) I prefer the one person rents option to option one. The trouble with that is that it sounds like you are in better position to be the owner, and she has a higher emotional need to own. If she is really interested in building equity I would recommend a 15 year or shorter mortgage. Building equity in a 30 year is not realistic.",
"title": ""
},
{
"docid": "c5c182f9a317adac4162135e9842a282",
"text": "i would recommend that you establish a landlord/tenant relationship instead of joint ownership (ie 100% ownership stake for one of you vs 0% for the other). it is much cleaner and simpler. basically, one of you can propose a monthly rent amount and the other one can chose to be either renter or landlord. alternatively, you can both write down a secret rental price offer assuming you are the landlord, then pick the landlord who wrote down the smaller rental price. if neither of you can afford the down payment, then you can consider the renter's contribution an unsecured loan (at an agreed interest rate and payment schedule). if you must have both names on the financing, then i would recommend you sell the property (or refinance under a single name) as quickly as possible when the relationship ends (if not before), pay the renter back any remaining balance on the loan and leave the landlord with the resulting equity (or debt). in any case, if you expect the unsecured loan to outlive your relationship, then you are either buying a house you can't afford, or partnering on it with someone you shouldn't.",
"title": ""
},
{
"docid": "533849b422ef3b33e57bd133c162eba5",
"text": "\"With regard to worries about ownership: I'll point you towards this - The Cohabitants Rights Bill currently in First Reading at the House of Lords. Without a date for even the second reading yet. In short the Bill is attempting to redress is the lack of rights when a non-married relationship ends when compared to married relationships; that is that one of the \"\"cohabitants\"\" can end up with basically nothing that they don't have their name on. So currently you're in the clear and (Part 2) Section 6.2.a says the Bill cannot be used retroactively against you if your relationship is over before it becomes law (I expect with Brexit etc, this Bill isn't a high priority - it's been a year since the first reading). Section 6.2.a: This Part does not apply to former cohabitants where the former cohabitants have ceased living together as a couple before the commencement date; However, if you're still together if/when this Bill becomes Law then basically all of (Part 1) Section 2 may be relevant as it notes the conditions you will fall into this bill: Section 2.1.a: live together as a couple and Section 2.2.d: have lived together as a couple for a continuous period of three years or more. and the \"\"have lived together\"\" at that point counts from the start of your cohabitation, not the start of the Bill being law: Section 2.4.a: For the purposes of subsection (2)(d), in determining the length of the continuous period during which two people have lived together as a couple - any period of the relationship that fell before the commencement date (of the Bill) is to be taken into account If you have kids at some point, you'd also fall under 2.2.a through 2.2.c too. After that, the financial parity decided upon by the court depends on a whole bunch of conditions as outlined in the Bill, but Section 8.1.b is pretty clear: Section 8.1.b: (b)the court is satisfied either— (i)that the respondent has retained a benefit; or (ii)40that the applicant has an economic disadvantage, as a result of qualifying contributions the applicant has made I'm not qualified to say whether your partner helping to pay off your mortgage in lieu of paying rent herself would count as just paying rent or giving you an economic benefit. Sections 12, 13, and 14 discuss opt-outs, also worth a read. The a major disclaimer here in that Bills at this early stage have the potential to be modified, scrapped and/or replaced making this info incorrect. As an additional read, here's an FT article from Feb 2016 discussing this lack of rights of a cohabitant which should alleviate any current concerns.\"",
"title": ""
},
{
"docid": "bd89b818d5702284369797b5fbfb8462",
"text": "A simple and low-interest loan is probably the least likely to cause acrimony, aside from a direct gift. You seem to be describing an equity stake in their house, where some portion of the appreciation in value accrues to you (relative to your initial investment). An equity stake in their house probably doesn't make much sense. You sound as though you're not going to do any of the work aside from the contribution of money. Equity might make sense as a way to reward you for efforts, such as home design or renovation, that increase the value of the home. You probably don't want to be in a position where you are together improving the property and your payback only comes when she sells for more money. What if you have different ideas of how to do it? She has to live there and may want improvements for her needs rather than for buyers. What if she asks you to pay for a portion of the improvement costs or resents you not offering? What if she doesn't want to sell for some reason, so your money is locked up with her family choices? Renovations can often be stressful, so these decisions may be made at difficult times. Either a gift or a low-interest family loan may be simpler for your needs. You can just set the loan terms you want, say payoff over 10 years or a deferred payment schedule. If she gets in trouble, you could perhaps delay or forgive payments. I don't know the UK tax consequences of a loan of this nature, if any. As a general proposition, it's best to set clear and simple expectations at the beginning, and avoid agreements that require multiple decisions to be made consensually in the future, possibly during a time of stress.",
"title": ""
},
{
"docid": "1d298504aedaf9c53964353fee7c3c41",
"text": "\"Personally I would advise only buying what you can afford without borrowing money, even if it means living in a tent. Financially, that is the best move. If you are determined to borrow money to buy a house, the person with income should buy it as sole owner. Split ownership will create a nightmare if any problems develop in the relationship. Split ownership has the advantage that it doubles the tax-free appreciation deduction from $250,000 to $500,000, but in your case my sense is that that is not a sufficient reason to risk dual ownership. Do not charge your \"\"partner\"\" rent. That is crazy.\"",
"title": ""
},
{
"docid": "5ca0c78419f78426e0ab28fd31691ec3",
"text": "Congrats! Make sure you nail down NOW what happens to the house should you eventually separate. I know lots of unmarried couples who have stayed together for decades and look likely to do so for life; I've also seen some marriages break up that I wouldn't have expected to. Better to have this discussion NOW. Beyond that: Main immediate implications are that you have new costs (taxes, utilities, maintenance) and new tax issues (mortgage interest and property tax deductability) and you're going to have to figure out how to allocate those between you (if there is a between; not sure whether unmarried couples can file jointly these days).",
"title": ""
},
{
"docid": "928f578d51d5e2b352fe5022b90e524e",
"text": "If they own the old house outright, they can mortgage it to you. In many jurisdictions this relieves you of the obligation to chase for payment, and of any worry that you won't get paid, because a transfer of ownership to the new owner cannot be registered until any charge against a property (ie. a mortgage) has been discharged. The cost of to your friends of setting up the mortgage will be less than the opulent interest they are offering you, and you will both have peace of mind. Even if the sale of the old house falls through, you will still be its mortgagee and still assured of repayment on any future sale (or even inheritance). Complications arise if the first property is mortgaged. Although second mortgages are possible (and rank behind first mortgages in priority of repayment) the first mortgagee generally has a veto on the creation of second mortgages.",
"title": ""
},
{
"docid": "ba18ba31775842e53398358765bef09d",
"text": "Construction loans have an entirely set of rules and factors than mortgages and that's hard to reconcile into one instrument. Also, I'm guessing the bank would be a bit shy about giving a commitment to a home loan before they have any information about how the construction process is going. There would have to be a ton of contingencies put into mortgage and they probably can't account for everything.",
"title": ""
},
{
"docid": "8f92ce53db50ec532e8395af9da6f0bb",
"text": "I think you are running into multiple problems here: All these together look like a high risk to a bank, especially right now with companies being reluctant to hire full-time employees. Looking at it from their perspective, the last thing they need right now is another potential foreclosure on their books. BTW, if it is a consolation, I had to prove 2 years of continuous employment (used to be a freelancer) before the local credit union would consider giving me a mortgage. We missed out on a couple of good deals because of that, too.",
"title": ""
}
] |
fiqa
|
ea0143701d6106f318e08c15c42fa960
|
Why would a person not want to purchase a Personal Liability (Umbrella) insurance policy?
|
[
{
"docid": "619411647736891896ac3c26e0bed10c",
"text": "\"This article has a section titled \"\"Do you need an umbrella policy to cover your personal liability risks?\"\" that says: If you have young children, for example, you might need a policy because they have lots of friends. These little tikes might get into some mischief and hurt themselves at your home. If so, you’re at risk of being sued. Do you have people over often? Do you drive like a maniac or a Parisian? Do you have firearms on your premises? Do you have gardeners and housekeepers on the grounds? All these are reasons why you might want to own an umbrella policy. Although many people in the US are homeowners, parents, drivers, etc., not everyone falls into these categories. For some people, as low as the premiums for such a policy might be, the expected cost outweighs the expected benefit. The cost of a lawsuit may be extremely high, but someone may feel that the chance of a lawsuit being filed against them is low enough to be safely ignored and not worth insuring against. I'm probably not a great example, but I'll use my own situation anyway. Even though a liability policy probably wouldn't cost me too much, I'm almost certain that I wouldn't derive any benefit from it. I live alone without children (or firearms, pet tigers, gardeners, etc.) in a 520 sq. ft. apartment, so the probability that something bad would happen to someone on the small bit of property that I rent and that they would file a sizable lawsuit against me is small enough that I choose to ignore it.\"",
"title": ""
},
{
"docid": "1837651d08056accb28bde3581e2eb92",
"text": "\"The two questions inherent in any decision to purchase an insurance plan is, \"\"how likely am I to need it?\"\", and \"\"what's the worst case scenario if I don't have it?\"\". The actuary that works for the insurance company is asking these same questions from the other end (with the second question thus being \"\"what would we be expected to have to pay out for a claim\"\"), using a lot of data about you and people like you to arrive at an answer. It really boils down to little more than a bet between you and the insurance company, and like any casino, the insurer has a house edge. The question is whether you think you'll beat that edge; if you're more likely than the insurer thinks you are to have to file a claim, then additional insurance is a good bet. So, the reasons you might decide against getting umbrella insurance include: Your everyday liability is low - Most people don't live in an environment where the \"\"normal\"\" insurance they carry won't pay for their occasional mistakes or acts of God. The scariest one for most is a car accident, but when you think of all the mistakes that have to be made by both sides in order for you to burn through the average policy's liability limits and still be ruined for life, you start feeling better. For instance, in Texas, minimum insurance coverage levels are 50/100/50; assuming neither party is hurt but the car is a total loss, your insurer will pay the fair market value of the car up to $50,000. That's a really nice car, to have a curbside value of 50 grand; remember that most cars take an initial hit of up to 25% of their sticker value and a first year depreciation of up to 50%. That 50 grand would cover an $80k Porsche 911 or top-end Lexus ES, and the owner of that car, in the U.S. at least, cannot sue to recover replacement value; his damages are only the fair market value of the car (plus medical, lost wages, etc, which are covered under your two personal injury liability buckets). If that's a problem, it's the other guy's job to buy his own supplemental insurance, such as gap insurance which covers the remaining payoff balance of a loan or lease above total loss value. Beyond that level, up into the supercars like the Bentleys, Ferraris, A-Ms, Rollses, Bugattis etc, the drivers of these cars know full well that they will never get the blue book value of the car from you or your insurer, and take steps to protect their investment. The guys who sell these cars also know this, and so they don't sell these cars outright; they require buyers to sign \"\"ownership contracts\"\", and one of the stipulations of such a contract is that the buyer must maintain a gold-plated insurance policy on the car. That's usually not the only stipulation; The total yearly cost to own a Bugatti Veyron, according to some estimates, is around $300,000, of which insurance is only 10%; the other 90% is obligatory routine maintenance including a $50,000 tire replacement every 10,000 miles, obligatory yearly detailing at $10k, fuel costs (that's a 16.4-liter engine under that hood; the car requires high-octane and only gets 3 mpg city, 8 highway), and secure parking and storage (the moguls in Lower Manhattan who own one of these could expect to pay almost as much just for the parking space as for the car, with a monthly service contract payment to boot). You don't have a lot to lose - You can't get blood from a turnip. Bankruptcy laws typically prevent creditors from taking things you need to live or do your job, including your home, your car, wardrobe, etc. For someone just starting out, that may be all you have. It could still be bad for you, but comparing that to, say, a small business owner with a net worth in the millions who's found liable for a slip and fall in his store, there's a lot more to be lost in the latter case, and in a hurry. For the same reason, litigious people and their legal representation look for deep pockets who can pay big sums quickly instead of $100 a month for the rest of their life, and so very few lawyers will target you as an individual unless you're the only one to blame (rare) or their client insists on making it personal. Most of your liability is already covered, one way or the other - When something happens to someone else in your home, your homeowner's policy includes a personal liability rider. The first two \"\"buckets\"\" of state-mandated auto liability insurance are for personal injury liability; the third is for property (car/house/signpost/mailbox). Health insurance covers your own emergency care, no matter who sent you to the ER, and life and AD&D insurance covers your own death or permanent disability no matter who caused it (depending on who's offering it; sometimes the AD&D rider is for your employer's benefit and only applies on the job). 99 times out of 100, people just want to be made whole when it's another Average Joe on the other side who caused them harm, and that's what \"\"normal\"\" insurance is designed to cover. It's fashionable to go after big business for big money when they do wrong (and big business knows this and spends a lot of money insuring against it), but when it's another little guy on the short end of the stick, rabidly pursuing them for everything they're worth is frowned on by society, and the lawyer virtually always walks away with the lion's share, so this strategy is self-defeating for those who choose it; no money and no friends. Now, if you are the deep pockets that people look for when they get out of the hospital, then a PLP or other supplemental liability insurance is definitely in order. You now think (as you should) that you're more likely to be sued for more than your normal insurance will cover, and even if the insurance company thinks the same as you and will only offer a rather expensive policy, it becomes a rather easy decision of \"\"lose a little every month\"\" or \"\"lose it all at once\"\".\"",
"title": ""
},
{
"docid": "e48a26da3c0a0c63bdae93575ef5466c",
"text": "You only need umbrella policy for large amounts of liability protection (I think they usually start with $1M). So if you don't have and don't expect to have assets at such a high value - why would you need the insurance? Your homeowners/renters/car/travel insurance should be enough, and you still need to have those for umbrella since its on top of the existing coverage, not instead. Many people just don't have enough assets to justify such a high coverage.",
"title": ""
}
] |
[
{
"docid": "43bfcb307ebfd5d196bfaafbe1c6da53",
"text": "If someone recommends a particular investment rather than a class of investments, assume they are getting a commission and walk away. If someone recommends whole life insurance as an investment vehicle, walk away. Find someone whose fiduciary responsibility is explicitly to you as their client. That legally obligated them to consider your best interests first. It doesn't guarantee they are good, but it's done protection against their being actively evil.",
"title": ""
},
{
"docid": "e986d00b1b65c89f70aea126b6dfa7a3",
"text": "\"You are kind of thinking of this correctly, but you will and should pay for insurance at some point. What I mean by that is that, although the insurance company is making a profit, that removing the risk for certain incidents from your life, you are still receiving a lot of value. Things that inflict large losses in your life tend to be good insurance buys. Health, liability, long term care, long term disability and property insurance typically fall into this category. In your case, assuming you are young and healthy, it would be a poor choice to drop the major medical health insurance. There is a small chance you will get very sick in the next 10 years or so and require the use of this insurance. A much smaller chance than what is represented by the premium. But if you do get very sick, and don't have insurance, it will probably wipe you out financially. The devastation could last the rest of your life. You are paying to mitigate that possibility. And as you said, it's pretty low cost. While you seem to be really good at numbers it is hard to quantify the risk avoidance. But it must be considered in your analysis. Also along those lines is car insurance. While you may not be willing to pay for \"\"full coverage\"\" it's a great idea to max out your personal liability if you have sufficient assets.\"",
"title": ""
},
{
"docid": "f8c7c147d3aff7133b59201bcddfcdd5",
"text": "\"Sales tactics for permanent insurance policies can get pretty sleazy. Sending home a flier from school is a way for an insurance salesperson to get his/her message out to 800 families without any effort at all, and very little advertising cost (just a ream of paper and some toner). The biggest catchphrases used are the \"\"just pennies per day\"\" and \"\"in case they get (some devastating medical condition) and become uninsurable.\"\" Sure, both are technically true, but are definitely used to trigger the grown ups' insecurities. Having said that (and having been in the financial business for a time, which included selling insurance policies), there is a place for insurance of children. A small amount can be used to offset the loss of income for the parents who may have to take extended time away from work to deal with the event of the loss of their child, and to deal with the costs of funeral and burial. Let's face it, the percentage of families who have a sufficiently large emergency fund is extremely small compared to the overall population. Personally, I have added a child rider to my own (term) insurance policies that covers any/all of my children. It does add some cost to my premiums, but it's a small cost on top of something that is already justifiably in place for myself. One other thing to be aware of: if you're in a group policy (any life insurance where you're automatically accepted without any underwriting process, like through a benefit at work, or some other club or association), the healthy members are subsidizing the unhealthy ones. If you're on the healthy side, you might consider foregoing that policy in favor of getting your own policy through an insurance company of your choice. If you're healthy, it will always be cheaper than the group coverage.\"",
"title": ""
},
{
"docid": "3491f61b38a6415470586610f3170495",
"text": "\"One reason is because car insurance is mandated. Mandated insurance means the government is forcing people to purchase it, which also means that everyone must have the opportunity to purchase it at a reasonable cost, even if the insurer would normally not choose to insure them. In mandated industries, risk pools are formed which means that as a whole, lower risk members partially subsidize higher risk members. In mandated industries that have a large risk variance, the insurance system would break down if everyone was charged their \"\"fair share\"\" because high risk members would be unable to afford a policy. (This is even more prominent with health insurance than car insurance because the difference in risk is vastly greater.) On a positive note, perhaps you may get a warm and fuzzy feeling knowing that you are helping out others \"\"in need\"\".\"",
"title": ""
},
{
"docid": "7288244b1e70bb0b665ab9461c33d128",
"text": "While I can't say how it is in the Philippines, my wife the insurance broker leads me to believe that individual insurance is more expensive than group coverages in the US almost always. So much so that people will go to great extents to form any sort of business just to insure themselves. If however it is cheaper, can't you simply opt out of your employer's plan? If you can opt out, will your employer give you any of the money they aren't paying for your insurance? If you can't opt out, or if you paycheck doesn't grow, I can't see why you would want additional coverage especially at such a young age. Should you lose your job in the near future and you worry about, go get the insurance then. EDIT One big advantage is if you get personal insurance, you might need to get an exam to qualify, and it is likely the younger you are the better you will qualify. But again, you already have insurance that covers you so I would advise keeping the group policy is probably better.",
"title": ""
},
{
"docid": "1370c5e19e8cb80afba418a4da199a96",
"text": "Not to pick your words apart, but I'm used to the word laddering as used with CDs or bonds, where one buys a new say, 7 year duration each year with old money coming due and, in effect, is always earning the longer term rate, while still having new funds available each year. So. The article you link suggests that there's money to be saved by not taking a long term policy on all the insurance you buy. They split $250K 30 year / $1M 20 year. The money saved by going short on the bigger policy is (they say) $11K. It's an interesting idea. Will you use the $11K saved to buy a new $1M 10 year policy in 20 years, or will you not need the insurance? There are situations where insurance needs drop, e.g. 20 years into my marriage, college fully funded as are retirement accounts. I am semi-retired and if I passed, there's enough money. There are also situations where the need runs longer. The concept in the article works for the former type of circumstance.",
"title": ""
},
{
"docid": "9656dbde9bcf9ceff0f8dccdca838802",
"text": "Depending on your perspective of it, I can see reasons for and against this idea. Only with the benefit of hindsight can one say how wise or unwise it is to do so. Earlier in my career, I invested and lost it all. Understand if you do buy when would you be able to sell, do you have to have an account with the underwriter, what fees may there be in having such an account, and would there be restrictions on when you could sell.",
"title": ""
},
{
"docid": "91661f1933fc8339c681374e1d9834ac",
"text": "Since insurance is priced for profit, the price will be more than the price of a new phone multiplied against the chance of loss and payout. Otherwise insurance would not be offered since there was no money to be made by the insurance company. The idea of insurance is that you are pooling your risk with everyone else. You all definitely pay a little (insurance premium) instead of any of you maybe paying a lot (when a phone is destroyed). The question is not whether it is a good investment (almost surely no), but whether the loss at a random time would be too crippling to be absorbed by you when it happened. If you can afford a new phone without financial difficulty if it were destroyed then you should generally not buy insurance. One other factor could be that although you are in the same risk pool as everyone else (everyone pays the same rate), but your situation has a higher risk than most, insurance can be a better deal, though the better investment over time would be to correct the risky situation instead of buying insurance. This could be that you have a habit of losing things, live in an area where phones are stolen often, have pets that destroy your belongings, etc. Statistically, you will come out ahead not buying insurance, but you are accepting an unknown outcome.",
"title": ""
},
{
"docid": "90e5c075808444b3079a84d19def23ea",
"text": "\"There is an economic, a social and a psychological side to the decision whether to buy insurance or not, and if yes, which one. Economically, as you say already in your question, an insurance is on average a net loss for the insured. The key word here is \"\"average\"\". If you know that there are many cancer cases in your family buy health insurance by all means; it's a sound investment. If you are a reckless driver make sure you have extensive coverage on your liability insurance. But absent such extra risks: Independently of somebody's wealth insurance should be limited to covering catastrophic events. What is often overlooked is that the insurance by all means should really cover those catastrophic events. For example the car liability minimums in many states are not sufficient. The typical upper middle class person could probably pay the 15k/30k/10k required in Arizona with a loan on their house; but a really catastrophic accident is simply not covered and would totally ruin that person and their family. Insuring petty damage is a common mistake: economically speaking, all insurances should have deductibles which are as high as one could afford to pay without feeling too much pain. That \"\"pain\"\" qualification has an economical and a social aspect. Of course any risk which materialized is an economical damage of some kind; perhaps now I can't buy the PS4, or the diamond ring, or the car, or the house, or the island which had caught my eye. I could probably do all these things, just perhaps without some extras, even if I had paid for insurance; so if I don't want to live with the risk to lose that possibility I better buy insurance. Another economical aspect is that the money may not be available without selling assets, possibly on short notice and hence not for the best price. Then an insurance fee takes the role of paying for a permanent backup credit line (and should not be more expensive than that). The social aspect is that even events which wouldn't strictly ruin a person might still force them to, say, sell their Manhattan penthouse (no more parties!) or cancel their country club membership. That is a social pain which is probably to be avoided. Another socioeconomic aspect is that you may have a relationship to the person selling you the insurance. Perhaps he buys his car at your dealership? Perhaps he is your golf buddy? Then the insurance may be a good investment. It is only borderline bad to begin with; any benefits move the line into the profit zone. The psychological aspect is that an insurance buys peace of mind, and that often seems to be the most important benefit. A dart hits the flat screen? Hey, it was insured. Junior totals the Ferrari? Hey, it was insured. Even if the house burns down having fire insurance will be a consolation.\"",
"title": ""
},
{
"docid": "237ac6e2a6adcc9579322678030523b6",
"text": "Another fun fact: only ~10% of property southern California is covered by earthquake insurance. Why? Same reason as here. 1) It is a difficult to measure the risk. Think: Texas has experienced 3 100-year floods in 18 months. This amount of rain could have caused a wide range of different outcomes (anywhere from tens of millions to tens of billions in damage) depending on location, soil saturation, structural integrity of dams, wind direction, drainage/sewage systems, etc. Insurers who have covered these types of disasters before have paid out more in claims then they took in premiums. 2) It is expensive. Yes, you can reinsure but most of the reinsures won't take this type of risk in their property portfolio in such a soft market that has persisted for roughly a decade. Consumers don't want to pay for the coverage because it is expensive even with government backstops. The smart money would be in investing in resiliency programs (infrastructure) that would mitigate damage to sensitive areas which would in turn drive down premiums. But that requires governments, citizens, and businesses to engage in long run thinking and execution. Some areas have discussed these types of plans (New Orleans comes to mind) but most of our coastlines need to have plans like this in place given sea level rises, high concentrations of valuable assets on shorelines, and warmer oceans having the potential to generate more intense storms. tl;dr this is not a new problem. It is nobody's fault but everybody's responsibility. Fuck nature, man",
"title": ""
},
{
"docid": "c66ba9f4f3ff61ebd2e8c6b23ade1366",
"text": "One of the more subtle disadvantages to large credit card purposes purchases (besides what the other answer mentions), is that it makes you less prepared for emergencies. If you carry a large balance on your credit card with the idea that your income can easily handle the payments to beat the no-interest period, you never know when you'll have an unexpected emergency and you'll end up having to pay less, miss the deadline and end up paying huge interest. Even if you are fastidious about saving and budgeting, what if your family comes under a large financial burden (just as one possible example)?",
"title": ""
},
{
"docid": "9f2487f643a187dfc1e4bd144bd1b541",
"text": "If the child can take over the life insurance when they wish to get a mortgage or have their own children, there may be a case for buying insurance for the child in the event that your child's health is not good enough for them to get cover at that time. However I don’t think this type of insurance is worth having.",
"title": ""
},
{
"docid": "de4fcb8ec22d7cad3076d944c5a39ab5",
"text": "Another reason to buy insurance, though not applicable in this case, is that the insurance company is a big buyer of services and will be able to buy any services covered under the policy much more cheaply than you will. So they can charge you less than your expected payouts if you were uninsured and still make a profit. This particularly applies to things like medical and veterinary insurance.",
"title": ""
},
{
"docid": "fb9010f18a4e49aa74aab3af0e2b48b8",
"text": "\"The general answer to any \"\"is it worth it\"\" insurance question is \"\"no,\"\" because the insurance company is making a profit on the insurance.* To decide if you want the insurance, you need to figure out how much you can afford to pay if something happens, how much they cover, and how badly you want to transfer your risk to them. If you won't have trouble coming up with the $4000 deductible should you need to, then don't get this extra insurance. * I did not mean to imply that insurance is always a bad idea or that insurance companies are cheating their customers. Please let me explain further. When you buy any product from a business, that business is making a profit. And there is nothing wrong with that at all. They are providing a service and should be compensated for their efforts. Insurance companies also provide a service, but unlike other types of businesses, their product is monetary. You pay them money now, and they might pay you money later. If they pay you more money then you spent, you came out ahead, and if you spend more money then they give you, it was a loss for you. In order for the insurance company to make a profit, they need to bring in more money than they pay out. In fact, they need to bring in a lot more money then they pay out, because in addition to their profit, they have all the overhead of running a business. As a result, on average, you will come out behind when you purchase insurance. This means that when you are on the fence about whether or not to purchase any insurance product, the default choice should be \"\"no.\"\" On average, you are financially better off without insurance. Now, that doesn't mean you should never buy insurance. As mentioned by commenter @xiaomy, insurance companies spread risk across all of their customers. If I am in a situation where I have a risk of financial ruin in a certain circumstance, I can eliminate that risk by purchasing insurance. For example, I have term life insurance, because if I were to pass away, it would be financially catastrophic for my family. (I'm hoping that the insurance company makes 100% profit on that deal!) I also continue to buy expensive health insurance because an unexpected medical event would be financially devastating. However, I always decline the extended warranty when I buy a $300 appliance, because I don't have any trouble coming up with another $300 in the unlikely event that it breaks, and I would rather keep the money than contribute to the profits of an insurance company unnecessarily. In my original answer above, I pointed out how you would determine whether or not to purchase this particular insurance product. This product pays out a bunch of relatively small amounts for certain events, up to a limit of $4000. Would this $4000 be hard for you to come up with if you needed to? If so, get the insurance. But if you are like me and have an emergency fund in place to handle things like this, then you are financially better off declining this policy.\"",
"title": ""
},
{
"docid": "82379ac03993b758aa664cb67d6905ad",
"text": "\"The size terminology for lumber is based on the rough cut dimensions from the mill, not the actual size of the board at Home Depot. There's post finishing done to 2x4's, etc from the big box stores. It's been that way for 50 years. If a couple of hipsters got their feelings hurt because they didn't know what they were doing, tell them to watch a youtube video about lumber before screwing up a home improvement project. They wouldn't have the slightest idea what to do with an actual rough cut 1x6 anyway. They'd get home with it, and if by some miracle they managed to plane it, they'd realize they're left with a 3/4\"\"x5 3/4\"\" board, just like you get from Home Depot. Grow up, pansies.\"",
"title": ""
}
] |
fiqa
|
4df9bec5757a0c6289d33675299d4649
|
Is it a gift or not?
|
[
{
"docid": "3ad06d0a2649f4a8c86f4a6155520bba",
"text": "There are a few things that this question prompts -",
"title": ""
},
{
"docid": "3954998d54c5ceb0df39d934a45d24c1",
"text": "Part of 'consideration', I imagine, would be the obligation of either party to follow through on an agreement, not only fair market value. Look at the thought experiment from the opposite perspective. If you did not pay him $150 (maybe just $50 or even $0), would you be breaking a contractual obligation to him? If he left after 2 hours because he forgot about a family event and did not finish your move, would he be breaking a contractual obligation to you even if you gave him $150? It seems it can be considered a gift (Update: in all cases) There was no agreement of what either party viewed as full consideration in a mutual exchange. To put it another way: From your examples, there is no evidence that the performance of either party hinged on receiving mutual consideration from the other. More Updates from comments: Patterns Matter Similarly to how the IRS may determine W2 employee vs independent contractor, patterns do matter. If your friend has a pattern of helping people move in exchange for tens of thousands of dollars in gifts every year, the IRS would view that in a different light. A waitress/waiter has a pattern of accepting 'gifts' of tips in exchange for good service as a part of their established job duties. If you gifted your friend with $150/week when they watched your kids every Monday-Wednesday, that would be different. You are establishing a pattern, and I would suggest you may be establishing mutual consideration. In that case, consult a professional if you are worried. Amounts Matter This is why the gift tax exemption was created. The IRS does not care about the amounts in question here. It is too much of a burden to track and account for transactions that are this questionable and this small. You gift your friend with a $20k car? Now you need to pay attention. Consult your CPA. You gift your friend $1k for helping build your new deck? The IRS does not care. Intent Matters Even in the first case, it is not necessarily true that your friend considers $150 to be mutual consideration for his services. Would he open a business where he offers that rate to the general public? I doubt it. He intends to gift you services out of his own free will, not because there will be an equitable exchange of value. The intent of both parties is to give a gift. There is no evidence that would suggest otherwise to the IRS, it seems, even if they cared in the first place.",
"title": ""
},
{
"docid": "e317b5e2b2e5a1f5942b077e393b2c65",
"text": "\"The IRS definition of gift you quoted has \"\"full consideration ... received in return\"\". If your friend's help is not contingent upon your monetary offer (as is the case in all your scenarios I believe?), then it shouldn't be viewed as consideration in return of your money, right?\"",
"title": ""
}
] |
[
{
"docid": "e7416d510ca61428b034926cf72ad7b2",
"text": "\"Appears to be a hypothetical question and not really worth answering but... Must it be explained.. no, not until audited. It's saying that for everything reported on a tax return, people have to include an explanation for everything, which you do not, unless you want to make some type of 'disclosure' which is a different matter. Must it be reported.. Yes, based on info presented. All income is taxable unless \"\"specifically exempted\"\" per the US Tax code or court cases. Gift vs Found Income... it's not 'found' income as someone gave (gifted) the money to him. Generally, gifts received are not taxable and don't have to be reported.\"",
"title": ""
},
{
"docid": "bc69b5becafdd5a0acf8cdec4b066be4",
"text": "a. Depends on whether it is a gift (no tax, but need to file gift tax form against his lifetime exclusion) or a loan (in which case he needs to charge fair market interest, which he can forgive as a gift with no gift tax form, but for which will need to pay tax on the forgiven income. b. This is a definite possibility. Probably depends on the specific lender, but I would imagine this might be questioned, especially if there is an expectation of paying him back. c. Relationships. I would always avoid mixing family and finances in this way. Do you want your family gatherings to be tainted by owing him money? What if you fall on hard times? What if you go on a nice vacation instead of paying him back faster?",
"title": ""
},
{
"docid": "fb7402a0c252a922705eff1a0d2f4e71",
"text": "\"I worked in the service industry for over 10 years and this came up every now and again. Mostly in hypothetical situations. I'm not a tax expert, but my general understanding is that it is viewed as income by the IRS if you performed a service of any kind in exchange for the money. In other words, if you waited on the table, and they left you a gift for doing so, it is taxable. You'll probably also find that if you pool tips with other employees or have to tip out the bartenders, cooks or dishwashers, they'll generally agree with the IRS that you clearly received a tip and want their fair share. While the concept of \"\"gifting\"\" money to others in a situation like this is intriguing, especially in the service industry, it really doesn't meet the definition of a gift in the eyes of the IRS. For it to truly be a gift, the person would have had to intend to gift you the money even if they hadn't come into your restaurant at all that night. That clearly is not the case here.\"",
"title": ""
},
{
"docid": "577e71f18a181d82dd8514aef826d53e",
"text": "\"When you say \"\"donate\"\", it usually assumes charitable donation with, in this context, tax benefit. That is not what happens in your scenario. Giving someone money with the requirement of that someone to spend that money at your shop is not donation. It is a grant. You can do that, but you won't be able to deduct this as charitable donation, but the money paid to you back would be taxable income to you. I respectfully disagree with Joe that its a wash. It is not. You give them money that you cannot deduct as an expense (as it is not business expense) or donation (as strings are attached). But you do give them the money, it is no longer yours. When they use the money to pay you back - that same money becomes your taxable income. End result: you provide service, and you're the one paying (taxes) for it. Why would you do that?\"",
"title": ""
},
{
"docid": "6bca2d910c31dc208916b2043ea172e7",
"text": "Parents are eminently capable of gifting to their children. If it's a gift call it a gift. If it's not a gift, it's either a loan or a landmine for some future interpersonal familial interaction (parent-child or sibling-sibling). I an concerned by some phrasing in the OP that it is partially down this path here. If it's a loan, it should have the full ceremony of a loan: written terms and a payment plan (which could fairly be a 0% interest, single balloon payment in 10 years or conditional on sale of a house or such; it's still not a gift).",
"title": ""
},
{
"docid": "bc225e44fd80343c0a866212368b4b58",
"text": "The money was sent from my US bank to my father in India Your father can receive unlimited amount of money as GIFT from you. There is no tax implication on this transaction. Related question After 3 years, my father received a note from the income tax dept. asking him to pay income taxes. Possibly because the income does not match and there maybe high value transactions. This should be replied preferably with the help of CA. Now, the CA is asking him to pay tax in the money I transferred. Is that correct? This is incorrect. Please change the CA and get someone competent. If not, what should I or he do in this case? Get guidance from another CA. Your father can establish that this was convenience and show evidence of transfer from you [need bank statements from your bank and Indian bank]. Property registration payments receipts, etc. Or he can also show this as Gift. If required get a gift deed created.",
"title": ""
},
{
"docid": "d64f746c5d5b41bec65f707a0054fb13",
"text": "(a) you give away your money - gift tax The person who receives the gift doesn't owe any tax. If you give it out in small amounts, there will be no gift tax. It could have tax and Estate issues for you depending on the size of the gift, the timing, and how much you give away in total. Of course if you give it away to a charity you could deduct the gift. (b) you loan someone some money - tax free?? It there is a loan, and and you collect interest; you will have to declare that interest as income. The IRS will expect that you charge a reasonable rate, otherwise the interest could be considered a gift. Not sure what a reasonable rate is with savings account earning 0.1% per year. (c) you pay back the debt you owe - tax free ?? tax deductible ?? The borrower can't deduct the interest they pay, unless it is a mortgage on the main home, or a business loan. I will admit that there may be a few other narrow categories of loans that would make it deductible for the borrower. If the loan/gift is for the down payment on a house, the lender for the rest of the mortgage will want to make sure that the gift/loan nature is correctly documented. The need to fully understand the obligations of the homeowner. If it is a loan between family members the IRS may want to see the paperwork surrounding a loan, to make sure it isn't really a gift. They don't look kindly on loans that are never paid back and no interest collected.",
"title": ""
},
{
"docid": "17299afec6fb8f94e38f7bee72aadc43",
"text": "\"Yes, it is, under some circumstances (basically, a piece of paper saying \"\"John Doe borrowed Josh Shoe 100 USD\"\" is not enough). Usually, the paper should include: This is the case for Czech Republic, I believe it's similar for other countries as well. Remember that without the repair date, you have very complicated position forcing the person to give you the money back. As well, there's a withdrawal of rights, i.e. after X years after the \"\"repair date\"\", you cannot force the person to give you the money. You have to send the case to the court in some period after the \"\"repair date\"\", if you don't have the money yet.\"",
"title": ""
},
{
"docid": "8578a04e5c03da87b37aa92eaae6b8ea",
"text": "No. You will already have paid taxes on the gift you give to your wife, so there will be no tax savings.",
"title": ""
},
{
"docid": "b941bee9339eba902aae32a50f75393e",
"text": "Omg, the answer is easy. Tell the TRUTH, and nothing is fraud. Down payment gifts are SOP's, and every lender works with that. EACH lender has their own rules. Fannie May and Freddie Mac could care less, and FHA and VA backed loans allow for full gifting unless the buyer's credit is below the standard 620, then 3.5% must come from the buyer. Standard bank loans want to know the source of the down payment for ONE REASON ONLY: to know if the buyer is taking ON A NEW DEBT! The only thing you will need do is sign a legal document stating the entire down payment is a gift. That way the bank knows their lendee isn't owing a new substantial debt, and that there aren't two lenders on the house, because should she default, the bank will have to pay you back first off the resale. Get it? They just want to know how many hands are in the fire.",
"title": ""
},
{
"docid": "4e558dd105c55cfe2bf640bea41e97a7",
"text": "I know the money isn't taxable when I send it to my parents Yes this is right they send it to their nephew as it will count as a gift No this is incorrect Yes. Refer to Income Tax guide on relations exempt under gifts. Gifts received from relatives are not charged to tax. Relative for this purpose means: (a) Spouse of the individual; (b) Brother or sister of the individual; (c) Brother or sister of the spouse of the individual; (d) Brother or sister of either of the parents of the individual; (e) Any lineal ascendant or descendent of the individual; (f) Any lineal ascendant or descendent of the spouse of the individual; (g) Spouse of the persons referred to in (b) to (f). Friend is not a relative as defined in the above list and hence, gift received from friends will be charged to tax (if other criteria of taxing gift are satisfied). Even if you assumption were true, i.e. your dad gives it to his brother and his brother gives it to his son ... But if this is done sequentially and soon one after the other, is it taxable? The intent is important. One can do it immediately or after few years; if the intent is established that this was done to evade taxes, then you will have to pay the tax as well as penalty.",
"title": ""
},
{
"docid": "ac8ac0733c5f41a16cb86551c86d6d89",
"text": "There might be some US tax implications depending on the amount of gift. See more here: http://en.wikipedia.org/wiki/Gift_tax_in_the_United_States",
"title": ""
},
{
"docid": "dbb37eee9e3fb8c574d99323f3cd9dc9",
"text": "\"You're right about your suspicions. I'm not a professional (I suggest you talk to a real one, a one with CPA, EA or Attorney credentials and license in your State), but I would be very cautious in this case. The IRS will look at all the facts and circumstances to make a claim, but my guess would be that the initial claim would be for this to be taxable income for your husband. He'd have to prove it to be otherwise. It does seem to be related to his performance, and I doubt that had they not known him through his employment, they'd give him such a gift. I may be wrong. So may be an IRS Revenue Officer. But I'd bet he'd think the same. Did they give \"\"gifts\"\" like that to anyone else? If they did - was it to other employees or they gave similar gifts to all their friends and family? Did those who gave your husband a gift file a gift tax return? Had they paid the gift tax? Were they principles in the partnership or they were limited partners (i.e.: not the ones with authority to make any decision)? Was your husband instrumental in making their extraordinary profit, or his job was not related to the profits these people made? These questions are inquiring about the facts and circumstances of the transaction. Based on what he can find out, and other potential information, your husband will have to decide whether he can reasonably claim that it was a gift. Beware: unreasonable claims lead to equally unreasonable penalties and charges. IRS and your State will definitely want to know more about this transaction, its not an amount to slide under the radar. This is not a matter where you can rely on a free opinions written by amateurs who don't know the whole story. You (or, rather, your husband) are highly encouraged to hire a paid professional - a CPA, EA (enrolled agent) or tax attorney with enough experience in fighting gift vs income characterization issues against the IRS (and the State, don't forget your State). An experienced professional may be able to identify something in the facts and the circumstances of the situation that would lead to reducing the tax bill or shifting it to the partners, but it is not something you do on your own.\"",
"title": ""
},
{
"docid": "dde6d3d89969be28d244d2d179f90a25",
"text": "First, the recipient is not responsible for any gift tax, the giver pays the tax. The gift is not taxable income to the recipient and so the recipient does not pay any income tax on the gift either. More than that, and they tap into their lifetime exclusion, currently (2015) $5.43M. All that's needed is a simple form. More convoluted, would be to lend you the full amount and then forgive $14,000 per year. Unnescesary paperwork, in my opinion.",
"title": ""
},
{
"docid": "7ad5b8a7665f87f4c1a7685590461e7f",
"text": "This is tax fraud, plain and simple. I recently wrote an article The Step Transaction Doctrine, in which I explain that a series of events may each be legal, but aggregate to one transaction and the individual steps are ignored. In this case, it goes beyond that, by accepting $5/mo you are already outside the tax code. As littleadv noted, you can't work for a legitimate business for free and not expect to have some kind of issue. The $14K/yr gift isn't a bona fide gift, but ties to that work.",
"title": ""
}
] |
fiqa
|
663e6b59f23872450d20c612db181f0e
|
Any reason to be cautious of giving personal info to corporate fraud departments?
|
[
{
"docid": "76082c0b98ca9ccbc1df18da185d027f",
"text": "I can't address the psychology of trust involved in your question, but here are some common sense guidelines for dealing with your issue. Make sure you know who you are talking to. Call the company you need to speak to via a publicly available phone number. An email or something you got in a letter might be from a different source. If you use a website, you should be sure you are on the correct website. Keep careful records. Make good notes of each phone call and keep all emails and letters forever. Note the time, name and/or ID of the person you spoke to and numbers called in addition to keeping notes on what actions should be done. Keep your faxing transmission receipts and shipping tracking numbers too. If you are nervous, ask them why they want the info. The fraud department should be able to explain it to you. For example, they probably want your social because that is how your credit report is identified. If they are going to fix a credit report, they will need a social. It is doubtful they would have a good explanation why they need your mother's maiden name. Ask for secure transmission, or confirm they have it. Postal mail isn't so secure, but I'll go out on a limb and say most fax machines today are not really fax machines, but software that deals in PDFs. At some point you will have to realize you will have to transmit something. No method is perfect, but you can limit your exposure. Help them do their jobs. If you are (understandably) nervous, consider their motivations: corporate profit. BUT that could very well mean not running afoul of the law and (with any luck) treating customers the best way they know to earn business. If you stymy the fraud department, how can they help you? If the ID theft was serious enough, document your issue for future law enforcement so you getting pulled over for speeding doesn't result in you going to jail for whatever crime the other person did. Perhaps the fraud department you are dealing with can assist there. Finally, while you work with fraud departments to clear up your name and account, work on the other end to limit future damage. Freeze your credit. See if you bank or credit card have monitoring. Use CreditKarma.com or a similar if you cannot find a free service. (Please don't ever pay for credit monitoring.)",
"title": ""
}
] |
[
{
"docid": "92c0079346d0ded3ed163d22572d3b90",
"text": "You are describing a corporation. You can set up a corporation to perform business, but if you were using the money for any personal reasons the courts could Pierce the corporate veil and hold you personally liable. Also, setting up a corporation for purely personal reasons is fraud.",
"title": ""
},
{
"docid": "1338c98be810a7589d60fb24c4903d79",
"text": "When an someone as esteemed and smart as Donald Knuth tells you the chequing system is busted it's time to close your cheque account, or I guess live with the associated risk. Answer to question, yes your account information can be used to commit fraud on you via your bank.",
"title": ""
},
{
"docid": "9a1c8d73a18e912dd13bdb6d7e880bba",
"text": "I think that the person that stole the wallet is up for the credit cards and stuff with money but less likely he/she will be smart enough too use your identity, and even if they do you'll find out somehow now or later!",
"title": ""
},
{
"docid": "db3869d3bbe9694441d0f24d4c98a15b",
"text": "\"As long as there is nothing more to this story you aren't sharing, you can expect those bills you paid to come back (you will have to pay them again later). You can be pretty certain that the name he gave you was fake, and that the bank account you paid your bills with was not his. I would not try to do anything at all with the information he gave you because first it is not his, and second your name is already tied to this bank account via your utility bills. In other words that would be illegal and you are already on the list of suspects. I would say that if you don't call the police they probably won't call you. The police often times do not even waste their time when somebody's light bill was paid with fraudulent financial information or whatever. I have actually seen similar situations play out a number of times and the police have never gotten involved. Disclaimer: I probably don't live where you live, and I'm not an attorney. But I do know what I am talking about so here's my advice (I know you didn't ask for advice but you probably might benefit from it). Let that money go, sometimes people get you. Take it as a lesson and move on. If you do end up having to have contact with the police and you don't already know, they will lie to you and try to trick you into acting in a way that is not in your self interest. But then you kind of look guilty if you won't even talk to them, and in this case you did not do anything illegal. So if I was you I would probably just think of where I might be incriminating myself by telling the truth, if there were any parts of my story that would raise any flags, and think of how I would smooth those out ahead of time. Also for your personal information you do not need to have a sophisticated understanding of computers to do anything you described, if you are familiar with operating a web browser you can do all types of stuff with Paypal. Most people that give off the vibe \"\"criminal\"\" are not going to be able to make any money conning people and would probably have given it up before they got to you. The information you have is not like the most valuable stuff ever but somebody that knew what they were doing could use it to take money out of your account, and if they had that and then could get a few other pieces they could really mess up your life. So that's part of why they say to be careful, any one piece is maybe not so valuable but if you are loose with everything you will probably have a shitty few weeks at some points in the future. \"\"no aa\"\" lol\"",
"title": ""
},
{
"docid": "6dedcdbbf03e9a2de3000237c184bcc1",
"text": "It's very, very unlikely that you received a phone call at work with an incorrect birth date from an actual lending company that thinks it loaned you any money. It's much more likely that you received a phone call at work from a collections agency that would have bought some loan from the aforementioned agency for pennies on the dollar. They would have been hunting around trying to find someone with your name who was born thirteen years earlier. It's even more likely that this is some sort of phishing scam. If you're worried, you can check your credit rating, but it is likely that you can safely ignore the situation. If they call back, ask for thorough details about the credit card. If they're a real collections agency and for some reason they won't leave you alone, IIRC the most surefire course of action is to hire a lawyer to send them a cease-and-desist letter.",
"title": ""
},
{
"docid": "860266c5f091ca5d690561f10b47edb1",
"text": "\"Here are a handful of measures I take myself: I check my credit reports once in a while and look for anything out of the ordinary. If somebody calls me on the telephone claiming to be from my bank or credit card company, utility, etc. I ask for their number, check it, and call them back. I don't give personal information to people merely claiming to be from a place I do business with. I never fill out ballots for free contests. Most of the time these are scams. When I get a call telling me \"\"you won a free cruise\"\" for a ballot I supposedly filled out at the mall, I say they're lying through their teeth. For excitement, I'll sometimes buy a lotto ticket instead. I'm careful when I surf the web. I don't give my personal information to web sites I can't trust. If they look the least bit shady, I'm out. Also, I use different passwords at different web sites. I avoid using a password from a public terminal, but when I must, I change my password soon after. I'm careful when I download software. I don't install anything I didn't get from a trusted source. I pay for software when necessary, so finding a trusted source is not hard. But, I've heard of people who – to save a buck – would download a pirated application from a shady warez site only to be \"\"gifted\"\" a trojan horse key logging or other spyware along with it. When I no longer need a bill, receipt, statement, etc. or any document containing personal information, I shred it, and I use a shredder that does a micro-cut, not just a strip- or cross-cut. The micro-cut remains go in the green bin with wet and yucky organic waste. When I no longer need a hard drive, I use a secure wiping tool like Darik's Boot & Nuke before reusing. If the drive isn't worth reusing, I'll wipe first then take apart with my Torx screwdriver. Once I have the drive platter, I scratch the heck out of it. Remains go to the community recycling depot. That's all I can think of right now; I probably missed a few :-) So, what do others do? I'm curious, too.\"",
"title": ""
},
{
"docid": "7aa8f1f8a428385791c57a0123eed623",
"text": "All the items listed are required for International Wire transfer. In wrong hands this info along with other info can cause issues. Most of the times you trust the person with this info and hence is less cause to worry. So the key is if you don't trust, don't give the details. Use alternatives like; Best open an account for receiving funds. Share the details, once the funds are received move it to an account where the details have not been shared. Alternatively paypal or other such services can help.",
"title": ""
},
{
"docid": "2c682ef5283bb51dbcdf86854fba99e8",
"text": "Yes, but note that some credit card companies let you create virtual cards--you can define how much money is on them and how long they last. If you're worried about a site you can use such a card to make the payment, then get rid of the virtual number so nobody can do dirty deeds with it. In practice, however, companies that do this are going to get stomped on hard by the credit card companies--other than outright scams it basically does not happen. (Hacking is another matter--just pick up the newspaper. It's not exactly unusual to read of hackers getting access to credit card information that they weren't supposed to have access to in the first place.) So long as you deal with a company that's been around for a while the risk is trivial.",
"title": ""
},
{
"docid": "c96289c6f10cf5dd3412d213afde0f90",
"text": "Usually the most significant risk scenarios here are: Third parties can abuse your routing/account numbers to initiate debits, but this is a type of fraud that is easily traced. It can happen, but it is more likely that it would be a scenario where you were specifically targeted vs. the victim of some random fraud. Defending against someone who is specifically going after you is very difficult, especially if you don't know about it. Your SSN isnt used for the bank transfer, you are providing it so that the entity making the payments can report on payments to you for tax purposes. If you are truly worried about this type of scenario, I suggest setting up a dedicated savings account for the purpose of receiving these payments and then sweeping (either manually or automatically) the funds into another account. Most stock brokers will allow you to automate this, and most banks will let you do this manually.",
"title": ""
},
{
"docid": "30c431a4738f2c89c49acec373d3c91a",
"text": "\"Every legitimate claim I've filed regarding fraudulent charges on my card includes signing a legal document. If your \"\"friend\"\" completes such a document and you can verify that it is untrue, he's in deeper trouble than you. Unfortunately, if he's successful in filing a claim that is later proven to be fraudulent, it puts your account in a poor status until it's fully cleared. Even then, corporate inertia may result in longer duration inaccurate information. Once you've cleared the fraudulent claim, you'll want to contact your credit agency to ensure they are provided with correct and proper documentation.\"",
"title": ""
},
{
"docid": "3e987107dbb4125793c6317940aa88a4",
"text": "\"It's anonymous/automated. They don't know who you are, just that customer x1a bought y. If your name isnt given to employees \"\"your\"\" privacy isnt being volated because the dont know its \"\"you.\"\" I imagine the government justifies their intrusions on our digital privacy the same way.\"",
"title": ""
},
{
"docid": "7105af373db635e924f9f01e352fc7d4",
"text": "You don't have to provide your personal home address per se. You can provide a legal address where Companies house can send across paper correspondence to. Companies house legally requires an address because directors are liable to their shareholders(even if you are the only shareholder) and to stop them from disappearing just like that with shareholder's money. Moreover your birth date will also be visible on websites which provide comapnies information. You can ask these websites to stop sharing your personal information. Every company must have a registered office within the UK which is the official legal address of the company. It must be a physical address (i.e. not a PO Box without a physical location) as Companies House will use this address to send correspondence to. To incorporate a private limited company you need at least one director, who has to be over 16 years of age. You may also have a secretary, but this is optional. The information you will need to supply for each officer includes: You may also have officers that are companies or firms, and for these you will need to supply the company or firm name, its registered office address, details of the legal form of the company, where it is registered and if applicable its registration number.",
"title": ""
},
{
"docid": "306bb354eb7a9ffb5fae3393a9007d2d",
"text": "\"Others have already commented on the impact of anything which dissuades merchants from raising possible breaches, so I won't dwell on that. Maybe we need stronger legislation, maybe we don't, but it doesn't change today's answer. Often it works the other way around to what you might expect - rather than the merchant noticing and notifying Visa/MC/others, Visa/MC/others spot patterns of suspicious activity (example 1). I don't have any data on the relative numbers of who is being notified/notifying between merchants and payment processors, but at the point when your card is identified as compromised there's no reason to suppose that an individual merchant in the traditional sense has been compromised, let alone identified. In fact because there's a fast moving investigation it could even be a false alarm that led to your card getting cancelled. Conversely it could be a hugely complex multinational investigation which would be jeopardised. It's simply not safe to assume that simply \"\"brand X\"\" has been compromised, therefore everything \"\"brand X\"\" knows about you is also compromised: Furthermore there's no reason to assume the merchant has even admitted to, or discovered the root cause. MC/Visa/Banks, at the point at which they're cancelling cards simply can't say (at least not in a way that might expensively backfire involving lots of lawyers) because the standard of proof needed to go on record blaming someone is simply not yet met. So: yes it's common that you aren't told anything for all of the above reasons. And of course if you really want to find out more you may have some success with your local data protection legislation and formally make a subject access request (or local equivalent) to see what that brings back. Be sure to do it in writing, to the official address of both mastercard and your bank.\"",
"title": ""
},
{
"docid": "91d1802b16c0cb4b7467d2137e0e4800",
"text": "Probably because large chains can absorb the loss from fraud better than small stores do. Thus, small stores want to ensure that the person holding the card is the same as the name on the card.",
"title": ""
},
{
"docid": "b3db2fd1aa8c7f9b4020e369c5924214",
"text": "So could someone working at your bank directly. Of at your HR department at work. Most of the wait staff at the restaurant I ate at technically had access to my credit card and could steal money. While you are at work, someone could break into your house and steal your stuff too. The point is, Mint and everything else is a matter of the evaluating the risk. Since you already understand the vulnerability (they have your accounts) and you know the risk (they could steal your money) what are the chances it happens? 1.) Mint will make lots more money if it doesn't happen, so it benefits Intuit to pay their employees well and put in safeguards to prevent theft. Mint.com is on your side even if a specific employee isn't. 2.) You have statements and such, so you can independently evaluate mint. I do not just trust mint with my stuff, I check info in Quicken and at the bank sites themselves. I don't do them all equally, but I will catch problems. 3.) Laws mean that if theft happens, you will have the opportunity to be made whole. If you are worried about theft, don't trust other people or generally get a bad feeling, don't do it. If you check your accounts online with the same computer you log into Facebook with, them I would suggest it doesn't bother you. You might have legal or business reasons to be more adverse to risk then me. However, just because somebody could steal your money, I personally don't consider it an acceptable risk compared to the reward. I will also be one of the first people to be robbed, I am not unrealistic.",
"title": ""
}
] |
fiqa
|
603ee4148f3fbbe0f237b4964feae53c
|
Rental Application Fees
|
[
{
"docid": "7377d2268dcb7cd6f476d5923bce0e6a",
"text": "Slightly abbreviated version of the guidance from NOLO.com California state law limits credit check or application screening fees landlords can charge prospective tenants and specifies what landlords must do when accepting these types of fees. (Cal. Civ. Code § 1950.6.) Here are key provisions: I am not a lawyer, but it would seem you have two options if you catch a landlord violating these rules. An idea to avoid the whole problem in the first place: Get a copy of your credit report yourself and take a copy with you to meet the landlord. If they want an application fee, ask why they need it making it clear you know the above law. If they say for a credit report offer to give them a copy in lieu of the fee.",
"title": ""
}
] |
[
{
"docid": "716556dc8e2ec8e89a0b9229f91bd0c6",
"text": "You're asking all the right questions, and if I worked for my landlord's company I might have an answer! I imagine they're capitalizing on people's laziness. I live in the Bay Area where some people probably don't mind paying $35 to not have to walk 100 feet to the office and drop off a check.",
"title": ""
},
{
"docid": "06724d4ce9c252533e99ccea2c29973c",
"text": "If I is the initial deposit, P the periodic deposit, r the rent per period, n the number of periods, and F the final value, than we can combine two formulas into one to get the following answer: F = I*(1+r)n + P*[(1+r)n-1]/r In this case, you get V = 1000*(1.05)20 + 100*[(1.05)20-1]/0.05 = 5959.89 USD. Note that the actual final value may be lower because of rounding errors.",
"title": ""
},
{
"docid": "1f134d8a57ca26dd730ec653e19eee1f",
"text": "Disappointing this is just an advertisement. I was hoping for a discussion on paying rent online. The online portal the property manager I rent from uses is horrible. They charge at 5% fee for processing payments online (which increases my rent by $45/mo).",
"title": ""
},
{
"docid": "554772f1fd22785cb52c3fab4b5a1063",
"text": "In Massachusetts, we have a similar law. Each tenant fills out a W9 and the account is in their name. You need to find a bank willing to do this at no cost, else fees can be problematic. With today's rates, any fee at all will exceed interest earned.",
"title": ""
},
{
"docid": "9d9403bb9d1a39b292f8692b5bc67126",
"text": "\"Have you been rejected from a rental for a specific reason (leading to this question)? Landlords are in the business of exchanging space for regular payments with no drama. Anything they ask in an application should be something to minimize the risk of drama. The \"\"happy path\"\" optimistic goal is that you pay your rent by the due date every month. If your income is not sufficient for this, demonstrating you have assets and would be able to pay for the full term of the lease is part of the decision to enter into the lease with you. In the non-happy-path, say you fall off the face of the earth before ending the lease. The landlord could be owed several months of rent, and could pursue a legal judgment on your assets. With a court order, they can make the bank pay out what is owed; having bank information reduces the landlord's cost and research efforts in the event the story has degenerated to this point (in the jargon of landlording, this means the tenant is \"\"collectable\"\"). While of course you could have zeroed out your accounts or moved money to a bank you didn't tell the landlord in the meantime, if you are not the bad actor in this story, you probably wouldn't have. If you get any kind of \"\"spidey-sense\"\" about a landlord or property at all there is probably a better rental situation in your city. You also want to minimize drama. If the landlord is operating like a business, they're not in this to perform identity theft. If the landlord is sloppy, or has sloppy office workers, that would be different. In the event sharing your asset information truly bothers you, and the money is for rental expense anyway, you could offer to negotiate a 1 year prepaid rental (of course knock another 5%-10% off for time value of money and lower risk to landlord) if you're sure you wouldn't want to leave early.\"",
"title": ""
},
{
"docid": "d1d533045082cea963c107c1c6b250c9",
"text": "The fees for the services are displayed on the PayPal website at https://www.paypal.com/cgi-bin/webscr?cmd=_display-fees-outside Is there anything else you were looking for.",
"title": ""
},
{
"docid": "6a811ba05b575681ba2d20adffe6a2fc",
"text": "This is something you are going to have to work out with the leasing company because your goal is to get them to make an exception to their normal rules. I'm a little surprised they wouldn't take 6 months pre-payment, plus documentation of your savings. One option might be to cash in the bonds (since you said they are mature), deposit them in a savings account, and show them your account balance. That documentation of enough to pay for the year, plus an offer to pay 6 months in advance would be pretty compelling. Ask the property manage if that's sufficient. And if the lease is for one year and you're willing to pay the entire year in advance, I can't see how they would possibly object. If your employment prospects are good (show them your resume and explain why you are moving and what jobs you are seeking) a smart property manager would realize you'll be an excellent, low-risk tenant and will make an effort to convince the parent company that you should live there.",
"title": ""
},
{
"docid": "2ff18fce91f9e00ae614b18af671a83a",
"text": "More possible considerations: Comparability with other properties. Maybe properties that rent for $972 have more amenities than this one (parking, laundry, yard, etc) or are in better repair. Or maybe the $972 property is a block closer to campus and thus commands 30% higher rent (that can happen). Condition of property. You know nothing about this until you see it. It could be in such bad shape that you can't legally rent it until you spend a lot of money fixing it. Or it may just be run down or outdated: still inhabitable but not as attractive to renters, leading to lower rent and/or longer vacancy periods. Do you accept that, or spend a lot of money to renovate? Collecting the rent. Tenants don't necessarily always pay their rent on time, or at all. If a tenant quits paying, you incur significant expenses to evict them and then find a new tenant, and all the while, you collect no rent. There could be a tenant in place paying a much lower rent. Rent control or a long lease may prevent you from raising it. If you are able to raise it, and the tenant doesn't want to pay, see above. Maintenance and more maintenance. College students could be hard on the property; one good kegger could easily cause more damage than their security deposits will cover. Being near a university doesn't guarantee you an easy time renting it. It suggests the demand is high, but maybe the supply is even higher. Renting to college students has additional issues. They are less likely to have incomes large enough to satisfy you that they can pay the rent. Are you willing to deal with cosigners? If a student quits paying, are you willing to try to collect from their cosigning parents in another state? And you'll probably have many tenants (roommates) living in the house. They will come and go separately and unexpectedly, complicating your leasing arrangements. And you may well get drawn in to disputes between them.",
"title": ""
},
{
"docid": "d33cfed182d3f8615b0308ee695e4067",
"text": "As a landlord for 14 years with 10 properties, I can give a few pointers: be able and skilled enough to perform the majority of maintenance because this is your biggest expense otherwise. it will shock you how much maintenance rental units require. don't invest in real estate where the locality/state favors the tenant (e.g., New York City) in disputes. A great state is Florida where you can have someone evicted very quickly. require a minimum credit score of 620 for all tenants over 21. This seems to be the magic number that keeps most of the nightmare tenants out makes sure they have a job nearby that pays at least three times their annual rent every renewal, adjust your tenant's rent to be approximately 5% less than going rates in your area. Use Zillow as a guide. Keeping just below market rates keeps tenants from moving to cheaper options. do not rent to anyone under 30 and single. Trust me trust me trust me. you can't legally do this officially, but do it while offering another acceptable reason for rejection; there's always something you could say that's legitimate (bad credit, or chose another tenant, etc.) charge a 5% late fee starting 10 days after the rent is due. 20 days late, file for eviction to let the tenant know you mean business. Don't sink yourself too much in debt, put enough money down so that you start profitable. I made the mistake of burying myself and I haven't barely been able to breathe for the entire 14 years. It's just now finally coming into profitability. Don't get adjustable rate or balloon loans under any circumstances. Fixed 30 only. You can pay it down in 20 years and get the same benefits as if you got a fixed 20, but you will want the option of paying less some months so get the 30 and treat it like a 20. don't even try to find your own tenants. Use a realtor and take the 10% cost hit. They actually save you money because they can show your place to a lot more prospective tenants and it will be rented much sooner. Empty place = empty wallet. Also, block out the part of the realtor's agreement-to-lease where it states they keep getting the 10% every year thereafter. Most realtors will go along with this just to get the first year, but if they don't, find another realtor. buy all in the same community if you can, then you can use the same vendor list, the same lease agreement, the same realtor, the same documentation, spreadsheets, etc. Much much easier to have everything a clone. They say don't put all your eggs in one basket, but the reality is, running a bunch of properties is a lot of work, and the more similar they are, the more you can duplicate your work for free. That's worth a lot more day-to-day than the remote chance your entire community goes up in flames",
"title": ""
},
{
"docid": "4a725f949aaf815c31c2920f1683fe7d",
"text": "Application & processing an application for obtaining a Registration under the Act to Regional PF commissioner. We would be receiving and keeping a track of all the Nomination & Declaration Forms (Form#2) of all new enrollments for onward submission to PF Office. Our Team would be responsible for Submission of Nomination Forms (Form#2). We would be allotting the Individual P.F. A/c. Nos. and maintain their A/c.'s in the devised P.F. Register to be maintained. Monthly Payment Challans to be computed alongwith the desired MIS Reports would be our responsibility and the same would be handed over to your HR Team to make the payment on or before 15th of every month. Preparation and compilation of Monthly and Annual Returns would be our responsibility. All the Payments and Returns would be filed within the stipulated time and the adherence would be monitored by us. We would be submit application for transfer of fund , withdrawal applications and application for non- refundable claims for House repair / purchase of flat/ for post matriculate education , etc. We would be liasoning on behalf of the establishment with the authorities for ensuring smooth functioning, follow ups and retrieving the Annual Accounts Slips. We would also be attending the periodical Inspections on behalf of the establishment. The Responsibility of the Assessment would be limited for the period which would be coverable under our service tenure. We will keep the Company posted on all Amendments & Development of the Act / various circulars issued by SRO time to time for awareness of employees as well as employer.",
"title": ""
},
{
"docid": "b04cf8e1ff7f2441173d8a4de3017461",
"text": "\"Be very careful with this. When we tried this with furniture, they charged an \"\"administrative\"\" fee to setup the account. I believe it was about $75. So if you defer interest for one year on a $1000 purchase and pay a $75 administrative fee, it's 7.5% interest. Also, they don't always send you a bill when it's due, they just let you go over the date when you could have paid it without paying interest, and then you owe interest from the date of purchase. These plans are slimy. Be careful.\"",
"title": ""
},
{
"docid": "20ae132d01516ae7c708aed732a616e1",
"text": "Surely the yield should be Yield = (Rent - Costs) / Downpayment ? As you want the yield relative to your capital not to the property value. As for the opportunity cost part you could look at the risk free rate of return you could obtain, either through government bonds or bank accounts with some sort of government guarantee (not sure what practical terms are for this in Finland). The management fee is almost 30% of your rent, what does this cover? Is it possible to manage the property yourself, as this would give you a much larger cushion between rent and expenses.",
"title": ""
},
{
"docid": "b5adc69cca3d027f18083e62afca7523",
"text": "From the apartment owners perspective what was the purpose of $300? They promised they wouldn't rent it to somebody before you had a chance to see it. But lets say you did see it, and decided you didn't like the view. Would they have to give the money back? if so, why would they promise not to rent it if somebody showed up first? I would have made it clear, as the owner, what the money was for. It was a $300 fee to delay rental. You would have essentially bought x number of days of delay. You could view it as a mini-short-term rental. Of course there should have been paperwork involved. There should have been been a receipt that at least mentioned the amount of money involved. You may need to pay the amount owed, and may need to determine if you want to sue in small claims court. Of course your agent may have some liability based on your contract with them and any paperwork they signed when the money was sent to the owner. The fact that the bank sided with you doesn't mean the courts will.",
"title": ""
},
{
"docid": "8c5aa064b387820dc05c7f309a1ffe17",
"text": "Schedule E is the form you'll use. It lists nearly all deductions you can take for a rental. TurboTax Deluxe will handle it and it includes State Filing.",
"title": ""
},
{
"docid": "a40bb98efec6409b70151dd126776cff",
"text": "I'm assuming this is the US. Is this illegal? Are we likely to be caught? What could happen if caught? If you sign an occupancy affidavit at closing that says you intend to move in within 60-days, with no intention of doing so, then you'll be committing fraud, specifically mortgage/occupancy fraud, a federal crime with potential for imprisonment and hefty fines. In general, moving in late is not something that's likely to be noticed, if the lender is getting their money then they probably don't care. Renting it out prior to moving in seems much riskier, especially if you live in a city/state that requires rental licensing, or are depending on rental income to carry the mortgage. No idea how frequently people are caught/punished for this type of fraud, but it hardly seems worth finding out.",
"title": ""
}
] |
fiqa
|
2536db2335dec565ffd4d1a34f092f2a
|
~$75k in savings - Pay off house before new home?
|
[
{
"docid": "cdb5958b106e6058ffae51d768bc9c46",
"text": "Congratulations on saving up $75,000. That requires discipline and tenacity. There are a lot of factors that would go into making your decision. First and foremost is the security of the income stream you have now. Being leveraged during times of hardship is not a pleasant experience. Unexpected job losses can and do happen. Only you can determine how secure your and your spouse's situation is. Second, I would consider the job market in the location that you live. If you live in a small town it will be hard to find income levels like you have now. Rental properties are additional ties to an area. Are you happy in the area in which you live? If you were laid off are there opportunities in the same area. Being a long distance landlord is again not a pleasant experience. I can throw being forced to sell to relocate at a reduced price into this same bucket. Third, you need to have 3 to 6 months of expenses saved for emergencies. This is in addition to having no consumer debt (credit cards, car loans, student loans). $75,000 feels like a lot. Life can throw you curve balls. You need to be prepared for them because of the fundamental nature of Murphy's Law. If you were to be a landlord you should err closer to the six month end of the scale. I own two rentals and can speak to people being late a given month, heating and air problems, plumbing issues, washers and dryers breaking, weather related issues, and even a tenant leaving behind for truckloads of trash. Over 20 years I guess I have seen it all. A rental agency will only act as a minor buffer. Fourth, your family situation is important. I personally save 10% of my income for my child's education. If you haven't started doing so or have different feelings on what you might contribute think about it before any financial move. Fifth, any mortgage payment you are making should be 25% or less than your take home pay for a 15 year fixed rate mortgage. Anything less than 20% down and you start burning up money on PMI insurance. 'House Poor' is a term for people that make high incomes but have too much being spent for housing. It is the cause of a lot of financial stress. Sixth, you need to save for retirement. The absolute minimum I recommend is 15% of your income. Even if the match is 6% you should invest the full 15% making it 21%. Social Security is a scary thing and depending on it is not wise. I think your income still qualifies you for contributions to a Roth IRA. If you aren't personally contributing 15% do so before making a move. There is an old joke that homeless people who have a 0 net worth often are richer than people driving fancy cars and living in fancy houses. Ultimately no one can tell you the right answer. Every situation is unique. You have a complex tapestry to your financial life that no else one knows.",
"title": ""
},
{
"docid": "a124946eb7dc8c8a9cb3c3cc6b64bf69",
"text": "\"As others have said, congratulations on saving up 75K in cash while seemingly not neglecting other areas of personal finance. Considering that only 15% of Americans have more than 10K saved this is quite a feat. source If you sell your old house, and buy the new one you will still be in really good financial shape. No need to comment further. Renting your current home and buying a new home introduces a great amount of risk into your life. The risk in this case is mitigated by cash. As others have pointed out, you will need to save a lot more to remove an acceptable amount of risk. Here is what I see: So without paying off your existing house I would see a minimum savings account balance of about double of what you have now. Once you purchase the new house, the amount would be reduced by the down payment, so you will only have about 50K sitting around. The rental emergency fund may be a little light depending on how friendly your state is to landlords. Water heaters break, renters don't pay, and properties can sit vacant. Also anytime you move into a new business there will be mistakes made that are solved by writing checks. Do you have experience running rentals? You might be better off to sell your existing home, and move into a more expensive home than what you are suggesting. You can continue to win at money without introducing a new factor into your life. Alternatively, if you are \"\"bitten by the real estate bug\"\" you could mitigate a lot risk by buying a property that is of similar value to your current home or even less expensive. You can then choose which home to live in that makes the most financial sense. For example some choose to live in the more dilapidated home so they can do repairs as time permits. To me upgrading the home you live in, and renting an expensivish home for a rental is too much to do in such a short time frame. It is assuming far too much risk far to quickly for a person with your discipline. You will get there.\"",
"title": ""
},
{
"docid": "ef88fda581b8247321f9fd356dccdaf7",
"text": "With an annual income of $120,000 you can be approved for a $2800 monthly payment on your mortgage. The trickier problem is that you will save quite a bit on that mortgage payment if you can avoid PMI, which means that you should be targeting a 20% down-payment on your next purchase. With a $500,000 budget for a new home, that means you should put $100,000 down. You only have $75,000 saved, so you can either wait until you save another $25,000, or you can refinance your current property for $95k+ $25k = $120k which would give you about a $575 monthly payment (at 30 years at 4%) on your current property. Your new property should be a little over $1,900 per month if you finance $400,000 of it. Those figures do not include property tax or home owners insurance escrow payments. Are you prepared to have about $2,500 in mortgage payments should your renters stop paying or you can't find renters? Those numbers also do not include an emergency fund. You may want to wait even longer before making this move so that you can save enough to still have an emergency fund (worth 6 months of your new higher expenses including the higher mortgage payment on the new house.) I don't know enough about the rest of your expenses, but I think it's likely that if you're willing to borrow a little more refinancing your current place that you can probably make the numbers work to purchase a new home now. If I were you, I would not count on rental money when running the numbers to be sure it will work. I would probably also wait until I had saved $100,000 outright for the down-payment on the new place instead of refinancing the current place, but that's just a reflection of my more conservative approach to finances. You may have a larger appetite for risk, and that's fine, then rental income will probably help you pay down any money you borrow in the refinancing to make this all worth it.",
"title": ""
}
] |
[
{
"docid": "3e5be56b599f442654446f850300611c",
"text": "Paying extra principal is not a complicated decision. You have a rate, say 5%. And you have an after tax rate, say, 3.75% (if you are in the 25% bracket and it's all deductible) Are you happy to get a 3.75% after tax return? If you have a retirement plan, and are not getting the full company match, that would be the first priority. If you have other debt, say a 10% credit card, that's the next priority. Is the sale soon? If so, I'd imagine you'd prefer to stay liquid, to have the next down payment ready without needing to rent in between.",
"title": ""
},
{
"docid": "f322b9b5a08727925d15bfeaf3f74e1d",
"text": "I think the consensus is that you can't afford a home now and need to build more of a down payment (20% is benchmark, you may also need to pay mortgage insurance if you are below that) and all considered, it takes up too much of your monthly budget. You didn't do anything wrong but as mentioned by Ben, you are missing some monthly and yearly costs with home ownership. I suggest visiting a bank or somewhere like coldwell banker to discuss accurate costs and regulations in your area. I know the feeling of considering paying more now for the very attractive thought of owning a home... in 30 years. After interest, you need to consider that you are paying almost double the initial principle so don't rush for something you can do a year or two down the line as a major commitment. One major point that isn't emphasized in the current answers. You have a large family: Two children, a dog, and a cat. I don't know the kid's ages but given you are in your early twenties and your estimated monthly costs, they are probably very young before the point they really put any stress financially but you need to budget them in exponentially. Some quick figures from experience. Closing costs including inspections, mortgage origination fee, lawyer fees, checking the history of the home for liens, etc, which will set you back minimum 5% depending on the type of purchase (short sales, foreclosures are more expensive because they take longer) Insurance (home and flood) will depend on your zoning but you can expect anywhere between $100-300 a month. For many zones it is mandatory. Also depending on if it's a coop ($800+), condo($500+) or a townhouse-type you will need to pay different levels of monthly maintenance for the groundskeeping as a cooperative fee. at an estimate of a 250K home, all your savings will not be able to cover your closing costs and all 250k will need to be part of your base mortgage. so your base monthly mortgage payment at around 4% will be $1,200 a month. it's too tight. If it was a friend, I would highly suggest against buying in this case to preserve financial flexibility and sanity at such a young age.",
"title": ""
},
{
"docid": "20066787147b6ee9c8164b361abcc108",
"text": "The monthly payment difference isn't that great On a $300K loan, the 30 year monthly payment (at 4%) is $1432, the 15 year (at 3.5%) is $2145, that $712 per month, or 50% higher payment. $712 is the total utility or food bill for a couple. If that $1432 represents 25% of income (a reasonable number) then $2145 is over 35%. I'd rather use that money for something else and not obligate myself at the start of the mortgage. Given how little we save as a country, the $712 is best put into a matched 401(k) in the US or other retirement account if elsewhere.",
"title": ""
},
{
"docid": "6feb68f1f4bf210fa3330896509742de",
"text": "So you wouldn't really be using the IRA money for building the house, but for padding your savings? I would just leave the money in the IRA. Don't take it out just in the off-chance you need it, especially when you already have money in savings. If you want to replenish your savings do it by putting some of your income in there.",
"title": ""
},
{
"docid": "c89bda2bf674c8cdbb86ae67c568f3e8",
"text": "I'd suggest you put only 20% down if you qualify for the 80% amount of the mortgage. Live in the house a year and see what expenses really are. Then if your non-Ret accounts are still being funded to your liking, start prepaying the mortgage if you wish. It's great to start with a house that's only 50% mortgaged, but if any life change happens to you, it may be tough to borrow it back. Far easier to just take your time and not make a decision you may regret. You don't give much detail about your retirement savings, but I'd suggest that I'd rather have a large mortgage and fund my retirement accounts to the maximum than to have a paid house and start the retirement account at age 35. Some choose that option.",
"title": ""
},
{
"docid": "fe2aca48fc1afdc119c92468c2111de1",
"text": "\"The golden rule is \"\"Pay yourself first.\"\" This means that you should have some form of savings plan set up, preferably a monthly automatic withdrawal that comes out the day after your pay is deposited. 10% is a reasonable number to start with. You are in a wonderful situation because you are thinking about this 10-15 years before most of us do. Use this to your advantage. You are also in a good situation if you can defer the purchase of the house (assuming prices don't rise drastically in the next few years -- which they might.) If your home situation is acceptable, then sit down with the parents and present a plan. Something along the lines of: I'd like to move out and start my life. However, it would be advantageous to stay here for a few years to build up a down payment and reserve. I'm happy to help out with expenses, but do need a couple years of rent-free support to get started. Then go into monk mode for one year. It's doable, and you can save a lot of cash. Then you're on the road to freedom.\"",
"title": ""
},
{
"docid": "abeead7391f1ad7e527550a2bca32fd5",
"text": "\"For some people, it should be a top priority. For others, there are higher priorities. What it should be for you depends on a number of things, including your overall financial situation (both your current finances and how stable you expect them to be over time), your level of financial \"\"education\"\", the costs of your mortgage, the alternative investments available to you, your investing goals, and your tolerance for risk. Your #1 priority should be to ensure that your basic needs (including making the required monthly payment on your mortgage) are met, both now and in the near future, which includes paying off high-interest (i.e. credit card) debt and building up an emergency fund in a savings or money-market account or some other low-risk and liquid account. If you haven't done those things, do not pass Go, do not collect $200, and do not consider making advance payments on your mortgage. Mason Wheeler's statements that the bank can't take your house if you've paid it off are correct, but it's going to be a long time till you get there and they can take it if you're partway to paying it off early and then something bad happens to you and you start missing payments. (If you're not underwater, you should be able to get some of your money back by selling - possibly at a loss - before it gets to the point of foreclosure, but you'll still have to move, which can be costly and unappealing.) So make sure you've got what you need to handle your basic needs even if you hit a rough patch, and make sure you're not financing the paying off of your house by taking a loan from Visa at 27% annually. Once you've gotten through all of those more-important things, you finally get to decide what else to invest your extra money in. Different investments will provide different rewards, both financial and emotional (and Mason Wheeler has clearly demonstrated that he gets a strong emotional payoff from not having a mortgage, which may or may not be how you feel about it). On the financial side of any potential investment, you'll want to consider things like the expected rate of return, the risk it carries (both on its own and whether it balances out or unbalances the overall risk profile of all your investments in total), its expected costs (including its - and your - tax rate and any preferred tax treatment), and any other potential factors (such as an employer match on 401(k) contributions, which are basically free money to you). Then you weigh the pros and cons (financial and emotional) of each option against your imperfect forecast of what the future holds, take your best guess, and then keep adjusting as you go through life and things change. But I want to come back to one of the factors I mentioned in the first paragraph. Which options you should even be considering is in part influenced by the degree to which you understand your finances and the wide variety of options available to you as well as all the subtleties of how different things can make them more or less advantageous than one another. The fact that you're posting this question here indicates that you're still early in the process of learning those things, and although it's great that you're educating yourself on them (and keep doing it!), it means that you're probably not ready to worry about some of the things other posters have talked about, such as Cost of Capital and ROI. So keep reading blog posts and articles online (there's no shortage of them), and keep developing your understanding of the options available to you and their pros and cons, and wait to tackle the full suite of investment options till you fully understand them. However, there's still the question of what to do between now and then. Paying the mortgage down isn't an unreasonable thing for you to do for now, since it's a guaranteed rate of return that also provides some degree of emotional payoff. But I'd say the higher priority should be getting money into a tax-advantaged retirement account (a 401(k)/403(b)/IRA), because the tax-advantaged growth of those accounts makes their long-term return far greater than whatever you're paying on your mortgage, and they provide more benefit (tax-advantaged growth) the earlier you invest in them, so doing that now instead of paying off the house quicker is probably going to be better for you financially, even if it doesn't provide the emotional payoff. If your employer will match your contributions into that account, then it's a no-brainer, but it's probably still a better idea than the mortgage unless the emotional payoff is very very important to you or unless you're nearing retirement age (so the tax-free growth period is small). If you're not sure what to invest in, just choose something that's broad-market and low-cost (total-market index funds are a great choice), and you can diversify into other things as you gain more savvy as an investor; what matters more is that you start investing in something now, not exactly what it is. Disclaimer: I'm not a personal advisor, and this does not constitute investing advice. Understand your choices and make your own decisions.\"",
"title": ""
},
{
"docid": "1c06ffefde4806da3073c4d252a5c6fb",
"text": "If you had originally borrowed $100k at 4.75% for 15 years, the last 5 years would include a total of $3,300-$3,500 in interest payment. That is the total universe of savings available to you if you were able to get a 0.0% mortgage. Unless the mortgage is huge, I think that in most scenarios the upfront closing costs, taxes and other fees would immediately exceed any savings. If you have the money, pay it down. Otherwise, keep on truckin' -- you have 60 short months to go.",
"title": ""
},
{
"docid": "7887fa5f84365f71662c00ab61fbdfed",
"text": "\"I'm assuming when you say \"\"…put it towards our mortgage payment?\"\", you mean make additional payments on top of your scheduled payment. Strictly speaking, if the interest on your mortgage is higher than the return you can expect by saving, then yes, your excess savings should be put toward your mortgage. This assumes that there are no pre-payment penalties, that you really won't miss that money in the short term (i.e. you say you have enough savings for emergencies, so that's good), and that both choices would use after-tax dollars (i.e. mortgage payment vs RRSP contribution in Canada is a huge discussion).\"",
"title": ""
},
{
"docid": "dca1a33a7f94d8ef59daa6de936c28c3",
"text": "\"If it was me, I would sell the house and use the proceeds to work on/pay off the second. You don't speak to your income, but it must be pretty darn healthy to convince someone to lend you ~$809K on two homes. Given this situation, I am not sure what income I would have to have to feel comfortable. I am thinking around 500K/year would start to make me feel okay, but I would probably want it higher than that. think I can rent out the 1st house for $1500, and after property management fees, take home about $435 per month. That is not including any additional taxes on that income, or deductions based on repair work, etc. So this is why. Given that your income is probably pretty high, would something less than $435 really move your net worth needle? No. It is worth the reduction in risk to give up that amount of \"\"passive\"\" income. Keeping the home opens you up to all kinds of risk. Your $435 per month could easily evaporate into something negative given taxes, likely rise in insurance rates and repairs. You have a great shovel to build wealth there is no reason to assume this kind of exposure. You will become wealthy if you invest and work to reduce your debt.\"",
"title": ""
},
{
"docid": "81f9e0cdef3a0e82ca2d085a310182fb",
"text": "The below assessment is for primary residences as opposed to income properties. The truth is that with the exception of a housing bubble, the value of a house might outpace inflation by one or two percent. According to the US Census, the price of a new home per square foot only went up 4.42% between 1963 and 2008, where as inflation was 4.4%. Since home sizes increased, the price of a new home overall outpaced inflation by 1% at 5.4% (source). According to Case-Shiller, inflation adjusted prices increased a measly .4% from 1890-2004 (see graph here). On the other hand your down payment money and the interest towards owning that home might be in a mutual fund earning you north of eight percent. If you don't put down enough of a down payment to avoid PMI, you'll be literally throwing away money to get yourself in a home that could also be making money. Upgrades to your home that increase its value - unless you have crazy do-it-yourself skills and get good deals on the materials - usually don't return 100% on an investment. The best tend to be around 80%. On top of the fact that your money is going towards an asset that isn't giving you much of a return, a house has costs that a rental simply doesn't have (or rather, it does have them, but they are wrapped into your rent) - closing costs as a buyer, realtor fees and closing costs as a seller, maintenance costs, and constantly escalating property taxes are examples of things that renters deal with only in an indirect sense. NYT columnist David Leonhart says all this more eloquently than I ever could in: There's an interactive calculator at the NYT that helps you apply Leonhart's criteria to your own area. None of this is to say that home ownership is a bad decision for all people at all times. I'm looking to buy myself, but I'm not buying as an investment. For example, I would never think that it was OK to stop funding my retirement because my house will eventually fund it for me. Instead I'm buying because home ownership brings other values than money that a rental apartment would never give me and a rental home would cost more than the same home purchase (given 10 years).",
"title": ""
},
{
"docid": "e52cab25c8a4b58dd01b6ff3d0d8a071",
"text": "\"Can is fine, and other answered that. I'd suggest that you consider the \"\"should.\"\" Does your employer offer a matched retirement account, typically a 401(k)? Are you depositing up to the match? Do you have any higher interest short term debt, credit cards, car loan, student loan, etc? Do you have 6 months worth of living expenses in liquid funds? One point I like to beat a dead horse over is this - for most normal mortgages, the extra you pay goes to principal, but regardless of how much extra you pay, the next payment is still due next month. So it's possible that you are feeling pretty good that for 5 years you pay so much that you have just 10 left on the 30 year loan, but if you lose your job, you still risk losing the house to foreclosure. It's not like you can ask the bank for that money back. If you are as disciplined as you sound, put the extra money aside, and only when you have well over the recommended 6 months, then make those prepayments if you choose. To pull my comment to @MikeKale into my answer - I avoided this aspect of the discussion. But here I'll suggest that a 4% mortgage costs 3% after tax (in 25% bracket), and I'd bet cap gain rates will stay 15% for non-1%ers. So, with the break-even return of 3.5% (to return 3 after tax) and DVY yielding 3.33%, the questions becomes - do you think the DVY top yielders will be flat over the next 15 years? Any return over .17%/yr is profit. That said, the truly risk averse should heed the advise in original answer, then pre-pay. Update - when asked,in April 2012, the DVY I suggested as an example of an investment that beats the mortgage cost, traded at $56. It's now $83 and still yields 3.84%. To put numbers to this, a lump sum $100K would be worth $148K (this doesn't include dividends), and giving off $5700/yr in dividends for an after-tax $4800/yr. We happened to have a good 4 years, overall. The time horizon (15 years) makes the strategy low risk if one sticks to it.\"",
"title": ""
},
{
"docid": "a31a9db361a97b55d29f3aaf7dc22cfc",
"text": "Other answers are already very good, but I'd like to add one step before taking the advice of the other answers... If you still can, switch to a 15 year mortgage, and figure out what percentage of your take-home pay the new payment is. This is the position taken by Dave Ramsey*, and I believe this will give you a better base from which to launch your other goals for two reasons: Since you are then paying it off faster at a base payment, you may then want to take MrChrister's advice but put all extra income toward investments, feeling secure that your house will be paid off much sooner anyway (and at a lower interest rate). * Dave's advice isn't for everyone, because he takes a very long-term view. However, in the long-term, it is great advice. See here for more. JoeTaxpayer is right, you will not see anything near guaranteed yearly rates in mutual funds, so make sure they are part of a long-term investing plan. You are not investing your time in learning the short-term stock game, so stay away from it. As long as you are continuing to learn in your own career, you should see very good short-term gains there anyway.",
"title": ""
},
{
"docid": "a1cbaf548cfac2d95afa711c88f816b6",
"text": "I think we would be good with paying around $1200 monthly mortgage fees (with all other property fees included like tax etc.) You probably can't get a $250k house for $1,200 a month including taxes and insurance. Even at a 4% rate and 20% down, your mortgage payment alone will be $954, and with taxes and insurance on top of that you're going to be over $1,200. You might get a lower rate but even a drop to 3% only lowers the payment $90/month. Getting a cheaper house (which also reduces taxes and insurance) is the best option financially. What to do with the $15k that I have? If you didn't have a mortgage I'd say to keep 3-6 months of living expenses in an emergency fund, so I wouldn't deplete that just to get a mortgage. You're either going to be Since 1) the mortgage payment would be tight and 2) you aren't able to save for a down payment, my recommendation is for you to rent until you can make a 20% down payment and have monthly payment that is 25% of your take-home pay or less. Which means either your income goes up (which you indicate is a possibility) or you look for less house. Ideally that would be on a 15-year note, since you build equity (and reduce interest) much more quickly than a 3-year note, but you can get the same effect by making extra principal payments. Also, very few people stay in their house for 30 years - 5 years is generally considered the cutoff point between renting and buying. Since you're looking at a 10-year horizon it makes sense to buy a house once you can afford it.",
"title": ""
},
{
"docid": "15c158701768c423b56c2ce8adef5483",
"text": "I also am paying roughly twice as much in rent as a mortgage payment would be on the type of house I have been looking at, so I'd really like to purchase a house if possible. Sounds like I need to rain on your parade a bit: there's a lot more to owning a house than the mortgage. Property tax, insurance, PMI, and maintenance are things that throw this off. You'll also be paying more interest than normal given your recent credit history. It's still possible that buying is better than renting, but one really should run the detailed math on this. For example, looking at houses around where I live, insurance, property tax and special assessments over the course of a year roughly equal the mortgage payments annually. You probably won't be able to get a loan just yet. If you've just started your new job it will take a while to build a documentable income history sufficient for lenders. But take heart! As you take the next year to save up a down payment / build up an emergency fund you'll discover that credit score improves with time. However, it's crucial that you don't do anything to mess with the score. Pay all your bills on time. Don't take out a car loan. Don't close your old revolving accounts. But most of all, don't worry. Rent hurts (I rent too) but in many parts of the US owning hurts more, as your property values fall. A house down the street from my dear old mother has been on the market for several months at a price 33 percent lower than her most recent appraisals. I'm comfortable waiting until markets stabilize / start rising before jumping on real estate.",
"title": ""
}
] |
fiqa
|
7d85d9c64fc7defa0ec5856405015e68
|
For a car, what scams can be plotted with 0% financing vs rebate?
|
[
{
"docid": "b605715d4578ff53e0f1b6bc6e390df0",
"text": "The car deal makes money 3 ways. If you pay in one lump payment. If the payment is greater than what they paid for the car, plus their expenses, they make a profit. They loan you the money. You make payments over months or years, if the total amount you pay is greater than what they paid for the car, plus their expenses, plus their finance expenses they make money. Of course the money takes years to come in, or they sell your loan to another business to get the money faster but in a smaller amount. You trade in a car and they sell it at a profit. Of course that new transaction could be a lump sum or a loan on the used car... They or course make money if you bring the car back for maintenance, or you buy lots of expensive dealer options. Some dealers wave two deals in front of you: get a 0% interest loan. These tend to be shorter 12 months vs 36,48,60 or even 72 months. The shorter length makes it harder for many to afford. If you can't swing the 12 large payments they offer you at x% loan for y years that keeps the payments in your budget. pay cash and get a rebate. If you take the rebate you can't get the 0% loan. If you take the 0% loan you can't get the rebate. The price you negotiate minus the rebate is enough to make a profit. The key is not letting them know which offer you are interested in. Don't even mention a trade in until the price of the new car has been finalized. Otherwise they will adjust the price, rebate, interest rate, length of loan, and trade-in value to maximize their profit. The suggestion of running the numbers through a spreadsheet is a good one. If you get a loan for 2% from your bank/credit union for 3 years and the rebate from the dealer, it will cost less in total than the 0% loan from the dealer. The key is to get the loan approved by the bank/credit union before meeting with the dealer. The money from the bank looks like cash to the dealer.",
"title": ""
},
{
"docid": "85a22b9f88c17e4df080b8498dba4cbc",
"text": "\"Here's a number-crunching example of how the \"\"Zero interest rate\"\" offer is misleading. Suppose the offer is that a car \"\"costs $24,000.00 with zero percent financing over 24 months\"\" or as an alternative, \"\"$3,000.00 off for cash\"\". Ignore the hype: the quoted prices and the quoted interest rates. Look at what really happens to two people who take advantage of the two offers, One person hands over $21,000.00 cash, and leaves with the new car. The second promises to make 24 payments of $1000.00, one a month, starting in one month's time, and also leaves with the same make and model new car. The two people have received exactly the same benefit, so the two payment schemes must have the same value. A mortgage program will tell you that paying off a $21,000.00 loan by making 24 monthly payments of $1000.00 requires an interest rate of 1.10% a month, or an effective annual rate of 14.03%.\"",
"title": ""
}
] |
[
{
"docid": "1380194c0b6436ed04951838f3289501",
"text": "If you have enough money to buy a car in full, that probably means you have good credit. If you have good credit, car dealerships will often offer 0% loans for either a small period of time, like 12 months, or the entire loan. Taking a 0% loan is obviously more optimal than paying the entire lump sum up front. You can take the money and invest in other things that earn you more than 0%. However, most dealerships offer a rebate OR a 0% loan. Some commenters below claim that the rebate is usually larger than the saved interest, so definitely do the math if you have that option.",
"title": ""
},
{
"docid": "c584db6ae2f9e3b6d480b9df41e05090",
"text": "\"I cannot stress this enough, so I'll just repeat it: Don't plan your finances around your credit score. Don't even think about your credit score at all. Plan a budget an stick to it. Make sure you include short and long term savings in your budget. Pay your bills on time. Use credit responsibly. Do all of these things, and your credit rating will take care of itself. Don't try to plan your finances around raising it. On the subject of 0% financing specifically, my rule of thumb is to only ever use it when I have enough money saved up to buy the thing outright, and even then only if my budget will still balance with the added cost of repaying the loan. Other people have other rules, including not taking such loans at all, and you should develop a rule that works for you (but you should have a rule). One rule shouldn't have is \"\"do whatever will optimize your credit score\"\" because you shouldn't plan your finances around your credit score. All things considered, I think the most important thing in your situation is to make sure that you don't let the teaser rate tempt you into making purchases you wouldn't otherwise make. You're not really getting free money; you're just shifting around the time frame for payment, and only within a limited window at that. Also, be sure to read the fine print in the credit agreement; they can be filled with gotchas and pitfalls. In particular, if you don't clear the balance by the end of the introductory rate period, you can sometimes incur interest charges retroactively to the date of purchase. Make sure you know your terms and conditions cold. It sounds like you're just getting started, so best of luck, and remember that Rome wasn't built in a day. Patience can be the most effective tool in your personal finance arsenal. p.s. Don't plan your finances around your credit score.\"",
"title": ""
},
{
"docid": "1495c43f88e687ac41a3febea399f557",
"text": "I haven't heard of these before! (And I'm on the board of a Credit Union.) The 0.99% on loans is great. It's especially great on a used car: the steep part of the depreciation curve was paid by the first owner. The network probably have a business relationship with the credit union. Credit unions do indirect lending -- approval of loans that happens at the point of sale, which then the credit union gets as assets. Depending on the cost of that program, it probably won't hurt. Your credit union wants to keep your business, because they know that you have a lot of options for where you bank and where you get loans.",
"title": ""
},
{
"docid": "2afc463c2de196296f20f632d9d0fe12",
"text": "If you're getting 0% on the financing, it's not costing you anything to borrow that money. So its basically free money. If you are comfortable with the monthly payments, consider going with no downpayment at all. Keep that money aside for a rainy day, or invest it somewhere so that you get some return on it. If you need to lower the payments later you can always use that money to pay down part of the loan later (check with the dealer that it is an open loan). If you're not comfortable with the payments at 0 down, put enough down to bring the monthly payment to a level where you are comfortable.",
"title": ""
},
{
"docid": "12ce6bf1901e7a59419a3c340b6d6bfc",
"text": "I could be mistaken on this, but after the GM bailout and others, weren't laws put in place to essentially force companies to maintain a certain level of liquidity? Also, that 0% is probably closer to .25~.50 through way of credit swaps, no? Or if we assume it's earning .1%, that's still $6,666,667/month ($80,000,000,000 x .001/12).",
"title": ""
},
{
"docid": "c03c89b9c8a7b1f7dc27747751e1c316",
"text": "\"This is completely disgusting, utterly unethical, deeply objectionable, and yes, it is almost certainly illegal. The Federal Trade Commission has indeed filed suit, halted ads, etc in a number of cases - but these likely only represent a tiny percentage of all cases. This doesn't make what the car dealer's do ok, but don't expect the SWAT team to bust some heads any time soon - which is kind of sad, but let's deal with the details. Let's see what the Federal Trade Commission has to say in their article, Are Car Ads Taking You for a Ride? Deceptive Car Ads Here are some claims that may be deceptive — and why: Vehicles are available at a specific low price or for a specific discount What may be missing: The low price is after a downpayment, often thousands of dollars, plus other fees, like taxes, licensing and document fees, on approved credit. Other pitches: The discount is only for a pricey, fully-loaded model; or the reduced price or discount offered might depend on qualifications like the buyer being a recent college graduate or having an account at a particular bank. “Only $99/Month” What may be missing: The advertised payments are temporary “teaser” payments. Payments for the rest of the loan term are much higher. A variation on this pitch: You will owe a balloon payment — usually thousands of dollars — at the end of the term. So both of these are what the FTC explicitly says are deceptive practices. Has the FTC taken action in cases similar to this? Yes, they have: “If auto dealers make advertising claims in headlines, they can’t take them away in fine print,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “These actions show there is a financial cost for violating FTC orders.” In the case referenced above, the owners of a 20+ dealership chain was hit with about $250,000 in fines. If you think that's a tiny portion of the unethical gains they made from those ads in the time they were running, I'd say you were absolutely correct and that's little more than a \"\"cost of doing business\"\" for unscrupulous companies. But that's the state of the US nation at this time, and so we are left with \"\"caveat emptor\"\" as a guiding principle. What can you do about it? Competitors are technically allowed to file suit for deceptive business practices, so if you know any honest dealers in the area you can tip them off about it (try saying that out loud with a serious face). But even better, you can contact the FTC and file a formal complaint online. I wouldn't expect the world to change for your complaint, but even if it just generates a letter it may be enough to let a company know someone is watching - and if they are a big business, they might actually get into a little bit of trouble.\"",
"title": ""
},
{
"docid": "2030d051b9a4283cf0200420312b9693",
"text": "The bank depends on the laws of large numbers. They don't need to make money on every customer -- just on average. There are several ways that zero interest makes sense to them: You asked about banks, and I don't think you see this last scheme in use very much by a bank. Here's why. First, customers absolutely hate it - and when you drop the interest bomb, they will warn their friends away, blow you up on social media, call the TV news consumer protectors, and never, ever, ever do business with you again. Which defeats your efforts in customer acquisition. Second, it only works on that narrow range of people who default just a little bit, i.e. who have an auto-pay malfunction. If someone really defaults, not only will they not pay the punishment interest, they won't pay the principal either! This only makes sense for secured loans like furniture or cars, where you can repo that stuff - with unsecured loans, you don't really have any power to force them to pay, short of burning their credit. You can sue them, but you can't get blood from a stone.",
"title": ""
},
{
"docid": "bcd026c79da30d4424b9df38978406a4",
"text": "\"The question is about the dealer, right? The dealer isn't providing this financing to you, Alfa is, and they're paying the dealer that same \"\"On the Road\"\" price when you finance the purchase. So the dealer gets the same amount either way. The financing, through Alfa, means your payments go to Alfa. And they're willing to give you 3,000 towards purchase of the car at the dealer in order to motivate those who can afford payments but not full cash for the car. They end up selling more cars this way, keeping the factories busy and employees and stockholders happy along the way. At least, that's how it's supposed to work out.\"",
"title": ""
},
{
"docid": "0579f10d1ce90a4cde198f805773cf5a",
"text": "First of all, congratulations on paying off $40k in debt in one year. Mathematically, you'd be better off making the standard car loan payments and putting your extra money toward the student loan. However, there are a few other things that you might want to consider. Over the last year, you've knocked out a whole bunch of different debts. Feels pretty good, doesn't it? At your current rate, you could knock out your new car loan in 6 months. Then you'd only have one debt left. If it sounds to you like it would be nice to only have one debt left, then it might be worth the mathematical disadvantage you would get by paying off the car early instead of putting the money toward the last student loan. The car loan is 0%, but if you are late on a single payment, they will take that opportunity to raise your interest rate to something probably higher than the interest rate of your student loan. For this reason, you may decide it is not worth the hassle, and you'd rather just eliminate the car loan as quickly as possible. Either choice is fine, in my opinion, as long as you have a purpose behind the choice and you are committed to eliminating both debts as quickly as possible. As an aside, it is important to remember that even a 0% loan is not really free money, and needs to be paid back. You know this, of course, but sometimes you see a 0% loan advertized and it feels like free money. It's not. You have probably already paid for the loan by forfeiting a rebate. So although, at this point having already taken this loan and paying for it, you will come out ahead by dragging out your car loan for the full term, in the future do not think that you can make money by buying something at 0% interest.",
"title": ""
},
{
"docid": "29c366b66bc9ac78b881ee6be8d430e3",
"text": "That interest rate (13%) is steep, and the balloon payment will have him paying more interest longer. Investing the difference is a risky proposition because past performance of an investment is no guarantee of future performance. Is taking that risk worth netting 2%? Not for me, but you must answer that last question for yourself. To your edit: How disruptive would losing the car and/or getting negative marks on your credit be? If you can quantify that in dollars then you have your answer.",
"title": ""
},
{
"docid": "90784bb2202e09012dc892aadfee1d73",
"text": "\"As reported by ZeroHedge in January 2016: \"\"While the media claims that this record has been reached because of drastic improvements to the US economy, they are once again failing to account for the central factor: credit expansion.\"\" \"\"In order to generate more vehicle purchases, these companies have incentivized consumers with hot, hard-to-resist offers, similar to the infamous “liar loans” and “no-money down” loans of the 2008 recession.\"\" http://www.zerohedge.com/news/2016-01-11/auto-loan-bubble-ready-pop. Pro tip: Get your news over 1 year in advance by reading ZeroHedge and not shitty Bloomberg or other lamestream media.\"",
"title": ""
},
{
"docid": "454af89ce64a4b4e0a6d5a9c8c1f8ea5",
"text": "\"I'd put more money down and avoid financing. I personally don't think car debt is good debt and if you can't afford the car, you are better off with a cheaper car. Also, you should read up on the 0% offer before deciding to commit. Here's one article that is slightly dated, but discusses some pros and cons of 0% financing. My main point though is that 0% financing is not \"\"free\"\" and you need to consider the cost of that financing before making the purchase. Aside from the normal loan costs of having a monthly payment, possibly buying too much car by looking at monthly cost, etc., a 0% financing offer usually forces you to give the dealer/financing company any rebates that are due to you, in essence making the car cost more.\"",
"title": ""
},
{
"docid": "d1f1aa4fd1d65fa135ec33d4155d334c",
"text": "\"You are correct to be wary. Car dealerships make money selling cars, and use many tactics and advertisements to entice you to come into their showroom. \"\"We are in desperate need of [insert your make, model, year and color]! We have several people who want that exact car you have! Come in and sell it to us and buy a new car at a great price! We'll give you so much money on your trade in!\"\" In reality, they play a shell game and have you focus on your monthly payment. By extending the loan to 4 or 5 years (or longer), they can make your monthly payment lower, sure, but the total amount paid is much higher. You're right: it's not in your best interest. Buy a car and drive it into the ground. Being free of car payments is a luxury!\"",
"title": ""
},
{
"docid": "bf8e57c340cfe4475615371f4ab62bad",
"text": "\"as a used dealer in subprime sales, finance has to be higher than cash because every finance deal has a lender that takes a percentage \"\"discount\"\" on every deal financed. if you notice a dealer is hesitant to give a price before knowing if cash or finance, because every bit of a cash deal's profit will be taken by a finance company in order to finance the deal and then there's no deal. you might be approved but if you're not willing to pay more for a finance deal, the deal isn't happening if I have $5000 in a car, you want to buy it for $6000 and the finance lender wants to take $1200 as a \"\"buy-fee\"\" leaving me $4800 in the end.\"",
"title": ""
},
{
"docid": "eeac29631c2021c0a70d03a09c16d73b",
"text": "Most 0% interest loans have quite high interest rates that are deferred. If you are late on a payment you are hit with all the deferred interest. They're banking on a percentage of customers missing a payment. Also, this is popular in furniture/car sales because it's a way to get people to buy who otherwise wouldn't, they made money on the item sale, so the loan doesn't have to earn them money (even though some will). Traditional banks/lenders do make money from interest and rely on that, they would have to rely on fees if interest were not permitted.",
"title": ""
}
] |
fiqa
|
69e4d82fc9fb957162ec5c6b4a6ce305
|
Dividend vs Growth Stocks for young investors
|
[
{
"docid": "8a034f1611cd316cbe7ee2c792c80699",
"text": "\"The key is to look at total return, that is dividend yields plus capital growth. Some stocks have yields of 5%-7%, and no growth. In that case, you get the dividends, and not a whole lot more. These are called dividend stocks. Other stocks pay no dividends. But if they can grow at 15%-20% a year or more, you're fine.These are called growth stocks. The safest way is to get a \"\"balanced\"\" combination of dividends and growth, say a yield of 3% growing at 8%-10% a year, for a total return of 11%-13%. meaning that you get the best of both worlds.These are called dividend growth stocks.\"",
"title": ""
},
{
"docid": "180e6d94451418039726e6417a0faa49",
"text": "First, what Daniel Carson said. Second, if you're getting started, just make sure you are well diversified. Lots of growth stocks turn into dividend stocks over time-- Microsoft and Apple are the classic examples in this era. Someday, Google will pay a dividend too. If you're investing for the long haul, diversify and watch your taxes, and you'll make out better than nearly everyone else.",
"title": ""
},
{
"docid": "283abe2bf7ba643264d43d27a0f39044",
"text": "A lot of people use dividend stocks as a regular income, which is why dividend stocks are often associated with retirement. If your goal is growth and you're reinvesting capital gains and dividends then investing growth stocks or dividend stocks should have the same effect. The only difference would be if you are manually reinvesting dividends, which could incur extra trading fees.",
"title": ""
},
{
"docid": "a441a35f5ea8b2a32692d8b7d32d6a20",
"text": "\"In financial theory, there is no reason for a difference in investor return to exist between dividend paying and non-dividend paying stocks, except for tax consequences. This is because in theory, a company can either pay dividends to investors [who can reinvest the funds themselves], or reinvest its capital and earn the same return on that reinvestment [and the shareholder still has the choice to sell a fraction of their holdings, if they prefer to have cash]. That theory may not match reality, because often companies pay or don't pay dividends based on their stage of life. For example, early-stage mining companies often have no free cashflow to pay dividends [they are capital intensive until the mines are operational]. On the other side, longstanding companies may have no projects left that would be a good fit for further investment, and so they pay out dividends instead, effectively allowing the shareholder to decide where to reinvest the money. Therefore, saying \"\"dividend paying\"\"/\"\"growth stock\"\" can be a proxy for talking about the stage of life + risk and return of a company. Saying dividend paying implies \"\"long-standing blue chip company with relatively low capital requirements and a stable business\"\". Likewise \"\"growth stocks\"\" [/ non-dividend paying] implies \"\"new startup company that still needs capital and thus is somewhat unproven, with a chance for good return to match the higher risk\"\". So in theory, dividend payment policy makes no difference. In practice, it makes a difference for two reasons: (1) You will most likely be taxed differently on selling stock vs receiving dividends [Which one is better for you is a specific question relying on your jurisdiction, your current income, and things like what type of stock / how long you hold it]. For example in Canada, if you earn ~ < $40k, your dividends are very likely to have a preferential tax treatment to selling shares for capital gains [but your province and specific other numbers would influence this]. In the United States, I believe capital gains are usually preferential as long as you hold the shares for a long time [but I am not 100% on this without looking it up]. (2) Dividend policy implies differences in the stage of life / risk level of a stock. This implication is not guaranteed, so be sure you are using other considerations to determine whether this is the case. Therefore which dividend policy suits you better depends on your tax position and your risk tolerance.\"",
"title": ""
}
] |
[
{
"docid": "7634073cc528cda9424fbd7a8253d95e",
"text": "You should never invest in a stock just for the dividend. Dividends are not guaranteed. I have seen some companies that are paying close to 10% dividends but are losing money and have to borrow funds just to maintain the dividends. How long can these companies continue paying dividends at this rate or at all. Would you keep investing in a stock paying 10% dividends per year where the share price is falling 20% per year? I know I wouldn't. Some high dividend paying stocks also tend to grow a lot slower than lower or non dividend paying stocks. You should look at the total return - both dividend yield and capital return combined to make a better decision. You should also never stay in a stock which is falling drastically just because it pays a dividend. I would never stay in a stock that falls 20%, 30%, 50% or more just because I am getting a 5% dividend. Regarding taxation, some countries may have special taxation rules when it comes to dividends just like they may have special taxation rules for longer term capital gains compared to shorter term capital gains. Again no one should use taxation as the main purpose to make an investment decision. You should factor taxation into your decision but it should never be the determining factor of your decisions. No one has ever become poor in making a gain and paying some tax, but many people have lost a great portion of their capital by not selling a stock when it has lost 50% or more of its value.",
"title": ""
},
{
"docid": "12ba592d2f049943973920988ce2b57c",
"text": "The general difference between high dividend paying stocks and growth stocks is as follows: 1) A high dividend paying stock/company is a company that has reached its maximum growth potential in a market and its real growth (that is after adjustment of inflation) is same (more or less) as the growth of the economy. These companies typically generate a lot of cash (Cash Cow) and has nowhere to really invest the entire thing, so they pay high dividends. Typically Fast Moving Consumer Goods (FMCG) ,Power/Utility companies, Textile (in some countries) come into this category. If you invest in these stocks, expect less growth but more dividend; these companies generally come under 'defensive sector' of the market i.e. whose prices do not fall drastically during down turn in a market. 2) Growth stocks on the other hand are the stocks that are operating in a market that is witnessing rapid growth, for example, technology, aerospace etc. These companies have high growth potential but not much accumulated income as the profit is re-invested to support the growth of the company, so no dividend (you will be typically never get any/much dividend from these companies). These companies usually (for some years) grow (or at least has potential to grow) more than the economy and provide real return. Usually these companies are very sensitive to results (good or bad) and their prices are quite volatile. As for your investment strategy, I cannot comment on that as investment is a very subjective matter. Hope this helps",
"title": ""
},
{
"docid": "d65e2d5329fa3d2f3b1c4b2a853847b7",
"text": "\"Yahoo Finance is definitely a good one, and its ultimately the source of the data that a lot of other places use (like the iOS Stocks app), because of their famous API. Another good dividend website is Dividata.com. It's a fairly simple website, free to use, which provides tons of dividend-specific info, including the highest-yield stocks, the upcoming ex-div dates, and the highest-rated stocks based on their 3-metric rating system. It's a great place to find new stocks to investigate, although you obviously don't want to stop there. It also shows dividend payment histories and \"\"years paying,\"\" so you can quickly get an idea of which stocks are long-established and which may just be flashes in the pan. For example: Lastly, I've got a couple of iOS apps that really help me with dividend investing: Compounder is a single-stock compound interest calculator, which automatically looks up a stock's info and calculates a simulated return for a given number of years, and Dividender allows you to input your entire portfolio and then calculates its growth over time as a whole. The former is great for researching potential stocks, running scenarios, and deciding how much to invest, while the latter is great for tracking your portfolio and making plans regarding your investments overall.\"",
"title": ""
},
{
"docid": "e0a96be69a097f0ddb3916ff126d5baa",
"text": "The reason that you are advised to take more risk while you are young is because the risk is often correlated to a short investment horizon. Young people have 40-50 years to let their savings grow if they get started early enough. If you need the money in 5-15 years (near the end of your earning years), there is much more risk of a dip that will not correct itself before you need the money than if you don't need the money for 25-40 years (someone whose career is on the rise). The main focus for the young should be growth. Hedging your investments with gold might be a good strategy for someone who is worried about the volatility of other investments, but I would imagine that gold will only reduce your returns compared to small-cap stocks, for example. If you are looking for more risk, you can leverage some of your money and buy call options to increase the gains with upward market moves.",
"title": ""
},
{
"docid": "e05a30c4c2dd0cf27738493f5d1a2b47",
"text": "This investment strategy may have tax advantages. In some countries, income received from dividends is taxed as income, whereas profits on share trades are capital gains. If you have already exceeded your tax-free income limit for the year, but not your capital gains tax allowance, it may be preferable to make a dealing profit rather than an investment income. These arrangements are called a bed-and-breakfast.",
"title": ""
},
{
"docid": "a60299283d4304455f80044b59c59161",
"text": "Generally value funds (particularly large value funds) will be the ones to pay dividends. You don't specifically need a High Dividend Yield fund in order to get a fund that pays dividends. Site likes vanguards can show you the dividends paid for mutual funds in the past to get an idea of what a fund would pay. Growth funds on the other hand don't generally pay dividends (or at least that's not their purpose). Instead, the company grows and become worth more. You earn money here because the company (or fund) you invested in is now worth more. If you're saying you want a fund that pays dividends but is also a growth fund I'm sure there are some funds like that out there, you just have to look around",
"title": ""
},
{
"docid": "31ddc4ebffed415c057593a0a676c33a",
"text": "Nobody tracks a single company's net assets on a daily basis, and stock prices are almost never derived directly from their assets (otherwise there would be no concept of 'growth stocks'). Stocks trade on the presumed current value of future positive cash flow, not on the value of their assets alone. Funds are totally different. They own nothing but stocks and are valued on the basis on the value of those stocks. (Commodity funds and closed funds muddy the picture somewhat, but basically a fund's only business is owning very liquid assets, not using their assets to produce wealth the way companies do.) A fund has no meaning other than the direct value of its assets. Even companies which own and exploit large assets, like resource companies, are far more complicated than funds: e.g. gold mining or oil extracting companies derive most of their value from their physical holdings, but those holdings value depends on the moving price and assumed future price of the commodity and also on the operations (efficiency of extraction etc.) Still different from a fund which only owns very liquid assets.",
"title": ""
},
{
"docid": "695d9044391183d088ac37025b39cdb2",
"text": "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.",
"title": ""
},
{
"docid": "7dcda72e44ad0126ba5ec11ec96b37e3",
"text": "Check out the questions about why stock prices are what they are. In a nutshell, a stock's value is based on the future prospects of the company. Generally speaking, if a growth company is paying a dividend, that payment is going to negatively affect the growth of the business. The smart move is to re-invest that capital and make more money. As a shareholder, you are compensated by a rising stock price. When a stock isn't growing quickly, a dividend is a better way for a stockholder to realize value. If a gas and electric company makes a billion dollars, investing that money back into the company is not going to yield a large return. And since those types of companies don't really grow too much, the stocks typically trade in a range and don't see the type of appreciation that a growth stock will. So it makes sense to pay out the dividend to the shareholders.",
"title": ""
},
{
"docid": "df51baa716fa4162186729d8475b8167",
"text": "\"The Dividend Discount Model is based on the concept that the present value of a stock is the sum of all future dividends, discounted back to the present. Since you said: dividends are expected to grow at a constant rate in perpetuity ... the Gordon Growth Model is a simple variant of the DDM, tailored for a firm in \"\"steady state\"\" mode, with dividends growing at a rate that can be sustained forever. Consider McCormick (MKC), who's last dividend was 31 cents, or $1.24 annualized. The dividend has been growing just a little over 7% annually. Let's use a discount, or hurdle rate of 10%. MKC closed today at $50.32, for what it's worth. The model is extremely sensitive to inputs. As g approaches r, the stock price rises to infinity. If g > r, stock goes negative. Be conservative with 'g' -- it must be sustainable forever. The next step up in complexity is the two-stage DDM, where the company is expected to grow at a higher, unsustainable rate in the early years (stage 1), and then settling down to the terminal rate for stage 2. Stage 1 is the present value of dividends during the high growth period. Stage 2 is the Gordon Model, starting at the end of stage 1, and discounting back to the present. Consider Abbott Labs (ABT). The current annual dividend is $1.92, the current dividend growth rate is 12%, and let's say that continues for ten years (n), after which point the growth rate is 5% in perpetuity. Again, the discount rate is 10%. Stage 1 is calculated as follows: Stage 2 is GGM, using not today's dividend, but the 11th year's dividend, since stage 1 covered the first ten years. 'gn' is the terminal growth, 5% in our case. then... The value of the stock today is 21.22 + 51.50 = 72.72 ABT closed today at $56.72, for what it's worth.\"",
"title": ""
},
{
"docid": "6d508d155637deec50c60a2ca1ee444b",
"text": "\"Dividend paying stocks are not \"\"better\"\" In particular shareholders will get taxed on the distribution while the company can most likely invest the money tax free in their operations. The shareholder then has the opportunity to decide when to pay the taxes when they sell their shares. Companies pay dividends for a couple of reasons.... 1.) To signal the strength of the company. 2.) To reward the shareholders (oftentimes the executives of the firm get rather large rewards without having to sell shares they control.) 3.) If they don't have suitable investment opportunities in their field. IE they don't have anything useful to do with the money.\"",
"title": ""
},
{
"docid": "edda35fcb15185c95e9989ac80f206f2",
"text": "25% isnt high growth for tech. Amazon does not fund itself from earnings and any improvement in its inventory turns will accelerate its growth capacity. On the other hand, I would love to hear your choice of valuation method for high-growth companies.",
"title": ""
},
{
"docid": "9ddaeefedd377e0765564f49d50c76b3",
"text": "\"It has little to do with money or finance. It's basic neuroscience. When we get money, our brains release dopamine (read Your Money and Your Brain), and receiving dividends is \"\"getting money.\"\" It feels good, so we're more likely to do it again. What you often see are rationalizations because the above explanation sounds ... irrational, so many people want to make their behavior look more rational. Ceteris paribus a solid growth stock is as good as a solid company that pays dividends. In value-investing terms, dividend paying stocks may appear to give you an advantage in that you can keep the dividends in cash and buy when the price of the security is low (\"\"underpriced\"\"). However, as you realize, you could just sell the growth stock at certain prices and the effect would be the same, assuming you're using a free brokerage like Robin Hood. You can easily sell just a portion of the shares periodically to get a \"\"stream of cash\"\" like dividends. That presents no problem whatsoever, so this cannot be the explanation to why some people think it is \"\"smart\"\" to be a dividend investor. Yes, if you're using a brokerage like Robin Hood (there may be others, but I think this is the only one right now), then you are right on.\"",
"title": ""
},
{
"docid": "54284d2a3c8a95d3298247d368e50224",
"text": "\"The Investment Entertainment Pricing Theory (INEPT) has this bit to note: The returns of small growth stocks are ridiculously low—just 2.18 percent per year since 1927 (versus 17.47 percent for small value, 10.06 percent for large growth, and 13.99 percent for large value). Where the S & P 500 would be a blend of large-cap growth and value so does that meet your \"\"beat the market over the long term\"\" as 1927-1999 would be long for most people.\"",
"title": ""
},
{
"docid": "3149270826356975b301bd95c0ebabf6",
"text": "\"This question is predicated on the assumption that investors prefer dividends, as this depends on who you're speaking to. Some investors prefer growth stocks (some which don't pay dividends), so in this case, we're covering the percent of investors who like dividend paying stocks. It depends on who you ask and it also depends on how self-aware they are because some people may give reasons that make little financial sense. The two major benefits that I hear are fundamentally psychological: Dividends are like mini-paychecks. Since people get a dopamine jolt from receiving a paycheck, I would predict the same holds true for receiving dividends. More than likely, the brain feels a reward when getting dividends; even if the dividend stock performs lower than a growth stock for a decade, the experience of receiving dividends may feel more rewarding (plus, depending on the institution, they may get a report or see the tax information for the year, and that also feels good). Some value investors don't reinvest dividends, as they believe the price of the stock matters (stocks are either cheap or expensive and automatic reinvestment to these investors implies that the price of a stock doesn't matter), so dividends allow them to rebuild their cash after a buy. They can either buy more shares, if the stock is cheap, or keep the cash if the stock is expensive. Think about Warren Buffett here: he purchased $3 billion worth of shares of Wells Fargo at approximately $8-12 a share in 2009 (from my memory, as people were shocked that be bought into a bank when no one liked banks). Consider how much money he makes from dividends off that purchase alone and if he were to currently believe Wells Fargo was overpriced, he could keep the cash and buy something else he believes is cheaper. In these cases, dividends automatically build cash cushions post buying and many value investors believe that one should always have cash on hand. This second point is a little tricky because it can involve risk assessment: some investors believe that high dividend paying stocks, like MO, won't experience the huge declines of indexes like the SPY. MO routed the SPY in 2009 (29% vs. 19%) and these investors believe that's because it's yield was too desired (it feels safer to them - the index side would argue \"\"but what happens in the long run?\"\"). The problem I have with this argument (which is frequent) is that it doesn't hold true for every high yield stock, though some high yield stocks do show strong resistance levels during bear markets.\"",
"title": ""
}
] |
fiqa
|
e057134887d4a40893c0a5f05b31a7b0
|
What should I do with $4,000 cash and High Interest Debt?
|
[
{
"docid": "e044e38a50bd0167f31b7cc9d61a5946",
"text": "Every $1,000 you use to pay off a 26% interest rate card saves you $260 / year. Every $1,000 you use to pay off a 23% interest rate card saves you $230 / year. Every $1,000 you put in a savings account earning ~0.5% interest earns you $5 / year. Having cash on hand is good in case of emergencies, but typically if your debt is on high interest credit cards, you should consider paying off as much of it as possible. In your case you may want to keep only some small amount (maybe $500, maybe $1000, maybe $100) in cash for emergencies. Paying off your high interest debt should be a top priority for you. You may want to look on this site for help with budgeting, also. Typically, being in debt to credit card companies is a sign of living beyond your means. It costs you a lot of money in the long run.",
"title": ""
},
{
"docid": "300da8ce16aa66516972068b1cb3de3f",
"text": "\"If it were me, I would pay off the 23%er. That is as long as you don't borrow anymore. Please consider \"\"your hair on fire\"\" and get that 26%er paid off as soon as possible. From my calculations your big CC is sitting at 26% has a balance of 20K. Holy cow girl, what in the world? The goal here is to have that paid off in less than one year. Get another job, work more than you have in your life. Others may disagree as it is more efficient to pay down the 26%er. However, if you pay it all of within the year the difference only comes to $260. If you gain momentum, which is important in changing your financial life, that $260 will be meaningless. With focus, intensity, and momentum you can get this mess cleaned up sooner than you think. However, if you are going to continue to rack up credit card debt at these rates, it does not matter what you do.\"",
"title": ""
},
{
"docid": "6d47872c305ac82a7baf1b8d3fd8b0b2",
"text": "The difference in interest is not a huge factor in your decision. It's about $2 per month. Personally I would go ahead and knock one out since it's one less to worry about. Then I would cancel the account and cut that card up so you are not tempted to use it again. To address the comments... Cutting up the card is NOT the ultimate solution. The solution is to stop borrowing money... Get on a strict budget, live on less than what you bring home, and throw everything you can at this high-interest debt. The destroying of the card is partly symbolic - it's a gesture to indicate that you're not going to use credit cards at all, or at least until they can be used responsibly, not paying a DIME of interest. It's analogous to a recovering alcoholic pouring out bottles of booze. Sure you can easily get more, but it's a commitment to changing your attitude and behavior. Yes leaving the card open will reduce utilization and improve (or not hurt) credit score - but if the goal is to stop borrowing money and pay off the other card, then once that is achieved, your credit score will be significantly improved, and the cancelling of the first card will not matter. The card (really both cards) should never, ever be used again.",
"title": ""
},
{
"docid": "5951e28e84473a206dafb1940db6ec7f",
"text": "With all due respect to The David, the $1000 is best put against 20%+ debt, no sitting in checking as part of some emergency fund. I'd agree with the decision to pay off the lower rate card. Why? Because we can do the math, and can see the cost in doing so. Low enough that other factors come in, namely, a freed up card. That card can function as the emergency one in the short term. Long term, once these high rate cards are paid off, you'll build your proper emergency fund, but the cost is too high right now. The $4000 is a nice start, but the most important thing is to get your budget under control. Only you can decide how much you can cut back, and go after this debt as if it were life or death.",
"title": ""
},
{
"docid": "336c242807b2a76919c7656d1e3db6e5",
"text": "I see some merit in the other answers, which are all based on the snowball method. However, I would like to present an alternative approach which would be the optimal way in case you have perfect self-control. (Given your amount of debt, most likely you currently do not have perfect self-control, but we will come to that.) The first step is to think about what the minimum amount of emergency funds are that you need and to compare this number with your credit card limit. If your limits are such that your credit cards can still cover potential emergency expenses, use all of the 4000$ to repay the debt on the loan with the higher interest rate. Some answer wrote that Others may disagree as it is more efficient to pay down the 26%er. However, if you pay it all of within the year the difference only comes to $260. This is bad advice because you will probably not pay back the loan within one year. Where would you miraculously obtain 20 000$ for that? Thus, paying back the higher interest loan will save you more money than just 260$. Next, follow @Chris 's advice and refinance your debt under a lower rate. This is much more impactful than choosing the right loan to repay. Make sure to consult with different banks to get the best rate. Reducing your interest rate has utmost priority! From your accumulated debt we can probably infer that you do not have perfect self-control and will be able to minimize your spending/maximize your debt repayments. Thus, you need to incentivize yourself to follow such behavior. A powerful way to do this is to have a family member or very close friend monitor your purchase and saving behavior. If you cannot control yourself, someone else must. It should rather be a a person you trust than the banks you owe money.",
"title": ""
},
{
"docid": "077cd4233e6c723599047e4fc5f27fb7",
"text": "If your credit is good, you should immediately attempt to refinance your high rate credit cards by transferring the balance to credit cards with lower interest rates.You might want to check at your local credit union, credit unions can offer great rates. Use the $4000 to pay off whatever is left on the high rate cards. If your credit is bad, I suggest you call your credit card company and try to negotiate with them. If they consider you a risk they might settle your account for fraction of what you own if you can send payment immediately. Don't tell them you have money, just tell them your are trying to get your finances under control and see what they can offer you. This will damage your credit score but will get you out of depth much sooner and save you money in the long term. Also keep in mind that if they do settle, they'll close your account. That way, you leverage the $4000 and use it as a tool to get concessions from the bank.",
"title": ""
},
{
"docid": "55bc23a70f3c2f798ddca615e31a746c",
"text": "When paying off multiple debts there is a protocol that many support. Payoff your debts according to the snowball method. The snowball method proposes that you make minimum payments on all debts except the smallest one. Payoff the smallest debt as quickly as possible. As smaller debts are paid off, that makes one less minimum payment you need to make, leaving you with more money to put against the next smallest debt. So in your case, pay off the smaller debt completely, then follow up on the larger one by making regular payments at least equal to the sum of your two current minimum payments. You'll see immediate progress in tackling your debt and have one less minimum to worry about, which can serve as a little safety of it's own if you have a bad month. As to saving the thousand dollars, that is pragmatic and prudent. It's not financially useful (you won't make any money in a savings account), but having cash on hand for emergencies and various other reasons is an important security for modern living. As suggested in another answer, you can forgo saving this thousand and put it against debt now, because you will have a freed up credit card. Credit can certainly give you that same security. This is an alternative option, but not all emergencies will take a credit card. You typically can't make rent with your credit card, for example. Good luck paying your debts and I hope you can soon enjoy the freedom of a debt free life.",
"title": ""
},
{
"docid": "9cc9772cf40feea310452158aa1f3243",
"text": "Patti - I realize, of course, that you pose an either/or question. It seems the question closes the door on other potential solutions.",
"title": ""
},
{
"docid": "13d513d4f2ab3d69d388bc0fb074a379",
"text": "I'm going to suggest a slightly different approach. Most answers seem to suggest paying off the lower rate card to clear it. Some answers / comments also talk about emergency funds. One risk of paying off a card is that the card issuer may choose to reduce your credit limit if they see you as high risk, to prevent you re-spending the money. If you don't trust yourself with the card then this could be a good thing (and remember you're always free to ask for a limit decrease). But if you want access to emergency funds, then I would suggest paying half onto each card. That way if one card cuts you off, you have a chance of still having access to the other in an emergency.",
"title": ""
},
{
"docid": "c9e79c3970a82e9d968dd3eaf9229e54",
"text": "\"This is the kind of scenario addressed by Reddit's /r/personalfinance Prime Directive, or \"\"I have $X, what should I do with it?\"\" It follows a fairly linear flowchart for personal spending beginning with a budget and essential costs. The gist of the flowchart is to cover your most immediate costs and risks first, while also maximizing your benefits. It sounds like you would fall somewhere around steps 1 and 3. (Step 2 won't apply since this is not pretax income.) If you don't already have at least $1000 reserved in an emergency fund, that's a great place to start. After that, you'll want to use the rest to pay down your debt. Your credit card debt is very high interest and should be treated as a financial emergency. Besides the balance of your gift, you may want to throw whatever other funds you have saved beyond one month's expenses at this problem. As far as which card, since you have multiple debts you're faced with the classic choice of which payoff method to use: snowball (lowest balance first) or avalanche (highest interest rate first). Avalanche is more financially optimal but less immediately gratifying. Personally, since your 26% APR debt is so large and so high interest, I would recommend focusing every available penny on that card until it is paid off, and then never use it again. Again, per the flowchart, that means using everything left over after steps 0-2 are fulfilled.\"",
"title": ""
},
{
"docid": "d905851f6af654a18f454d523e3f11ce",
"text": "If we're including psychological considerations, then the question becomes much more complicated: will having a higher available credit increase the temptation to spend? Will eliminating 100% of a small debt provide more positive reinforcement than paying off 15% of a larger debt? Etc. If we're looking at the pure financial impact, the question is simpler. The only advantage I see to prioritizing the lower interest card is the float: when you buy something on a credit card, interest is often calculated for that purchase starting at the beginning of the next billing cycle, rather than immediately from the purchase date. I'm not clear on what policies credit card companies have on giving float for credit cards with a carried balance, so you should look into what your card's policy is. Other than than, paying off the higher interest rate card is better than paying off the lower interest rate. On top of that, you should look into whether you qualify for any of the following options (presented from best to worst):",
"title": ""
},
{
"docid": "9c6339ce8800b7d88f46b532fd8775c1",
"text": "I like the answers others gave, if it's some substantial debt you definitely could go the bankruptcy route but it damages your future, also it's morally unethical to borrow all that money and not intend to pay. Second, if you can pay off the entire balance and clear out the 23% interest than I'd do that first. One less bill to concern yourself with. Now let's say you've been making $100 payments monthly on each card (my assumption for this examples sale) now instead of paying $100 to the remaining cards balance each month and saving the other $100, pay $200 against the remaining credit cards balance. By not taking home any money this way you are tackling the liability that is costing you money every month. Unless you have a great investment opportunity on that remaining $1000 or haven't created much of an emergency fund yet, I'd consider putting more of that money towards the debt. Gaining 0.01% on savings interest still means you're eating 25.99% in debt monthly. If you're able to I'd venture out to open a zero interest card and do a balance transfer over to that new card, there will be a minimal transfer fee but you may get some cash back out of it and also that zero interest for a year would help hold off more interest accruing while you're tackling the balance.",
"title": ""
}
] |
[
{
"docid": "0b22e23fac6f27900f195011905db3fa",
"text": "\"What could a small guy with $100 do to make himself not poor? The first priority is an emergency fund. One of the largest expenses of poor people are short-term loans for emergencies. Being able to avoid those will likely be more lucrative than an S&P investment. Remember, just like a loan, if you use your emergency fund, you'll need to refill it. Be smart, and pay yourself 10% interest when you do. It's still less than you'd pay for a payday loan, and yet it means that after every emergency you're better prepared for the next event. To get an idea for how much you'd need: you probably own a car. How much would you spend, if you suddenly had to replace it? That should be money you have available. If you think \"\"must\"\" buy a new car, better have that much available. If you can live with a clunker, you're still going to need a few K. Having said that, the next goal after the emergency fund should be savings for the infrequent large purchases. The emergency fund if for the case where your car unexpectedly gets totaled; the saving is for the regular replacement. Again, the point here is to avoid an expensive loan. Paying down a mortgage is not that important. Mortgage loans are cheaper than car loans, and much cheaper than payday loans. Still, it would be nice if your house is paid when you retire. But here chances are that stocks are a better investment than real estate, even if it's the real estate you live in.\"",
"title": ""
},
{
"docid": "1dd669d41dae2b13de2963af30ee98d2",
"text": "\"First, I would recommend getting rid of this ridiculous debt, or remember this day and this answer, \"\"you will be living this way for many years to come and maybe worse, no/not enough retirement\"\". Hold off on any retirement savings right now so that the money can be used to crush this debt. Without knowing all of your specifics (health insurance deductions, etc.) and without any retirement contribution, given $190,000 you should probably be taking home around $12,000 per month total. Assuming a $2,000 mortgage payment (30 year term), that is $10,000 left per month. If you were serious about paying this off, you could easily live off of $3,000 per month (probably less) and have $7,000 left to throw at the student loan debt. This assumes that you haven't financed automobiles, especially expensive ones or have other significant debt payments. That's around 3 years until the entire $300,000 is paid! I have personally used and endorse the snowball method (pay off smallest to largest regardless of interest rate), though I did adjust it slightly to pay off some debts first that had a very high monthly payment so that I would then have this large payment to throw at the next debt. After the debt is gone, you now have the extra $7,000 per month (probably more if you get raises, bonuses etc.) to enjoy and start saving for retirement and kid's college. You may have 20-25 years to save for retirement; at $4,000 per month that's $1 million in just savings, not including the growth (with moderate growth this could easily double or more). You'll also have about 14 years to save for college for this one kid; at $1,500 per month that's $250,000 (not including investment growth). This is probably overkill for one kid, so adjust accordingly. Then there's at least $1,500 per month left to pay off the mortgage in less than half the time of the original term! So in this scenario, conservatively you might have: Obviously I don't know your financials or circumstances, so build a good budget and play with the numbers. If you sacrifice for a short time you'll be way better off, trust me from experience. As a side note: Assuming the loan debt is 50/50 you and your husband, you made a good investment and he made a poor one. Unless he is a public defender or charity attorney, why is he making $60,000 when you are both attorneys and both have huge student loan debt? If it were me, I would consider a job change. At least until the debt was cleaned up. If he can make $100,000 to $130,000 or more, then your debt may be gone in under 2 years! Then he can go back to the charity gig.\"",
"title": ""
},
{
"docid": "ad32b8cf0dd0f9cc0e07c5649bfad92a",
"text": "In addition to the advice already given (particularly getting rid of high-interest debt), I would add the following:",
"title": ""
},
{
"docid": "907ebd1d1b30cca0aff5ac675d24d1cd",
"text": "To directly answer your question, the best choice is to pay cash and place the rest on your student loan. This is saving you from paying more interest. To offer some advise, consider purchasing a cheaper car to place more money towards your student loan debt. This will be the best financial decision in the long-term. I suspect the reason you are considering financing this vehicle is that the cash payment feels like a lot. Trust your instinct here. This vehicle sounds like large splurge considering your current debt, and your gut is telling you as much. Be patient. Use your liquid funds to get a more affordable vehicle and attack the debt. That is setting yourself up for financial success.",
"title": ""
},
{
"docid": "605842993bf7c451b0f12c45806e8a78",
"text": "First, I would point you to this question: Oversimplify it for me: the correct order of investing With the $50k that you have inherited, you have enough money to pay off all your debt ($40k), purchase a functional used car ($5k), and get a great start on an emergency fund with the rest. There are many who would tell you to wait as long as possible to pay off your student loans and invest the money instead. However, I would pay off the loans right away if I were you. Even if it is low interest right now, it is still a debt that needs to be paid back. Pay it off, and you won't have this debt hanging over your head anymore. Your grandmother has given you an incredible gift. This money can make you completely debt free and put you on a path for success. However, if you aren't careful, you could end up back in debt quickly. Learn how to make a budget, and commit to never spending money that you don't have again.",
"title": ""
},
{
"docid": "4fdc0c096584047dd029d2407e86289d",
"text": "With a lot excess cash you eventually have two goals: Since interest on cash bank deposits does not exceed inflation and you have currency risk, you may want to get into other asset classes. Options that might be, but not limited to are:",
"title": ""
},
{
"docid": "ccbded8e947dc60198be6d55fec7d18c",
"text": "Let's look at some of your options: In a savings account, your $40,000 might be earning maybe 0.5%, if you are lucky. In a year, you'll have earned $200. On the plus side, you'll have your $40,000 easily accessible to you to pay for moving, closing costs on your new house, etc. If you apply it to your mortgage, you are effectively saving the interest on the amount for the life of the loan. Let's say that the interest rate on your mortgage is 4%. If you were staying in the house long-term, this interest would be compounded, but since you are only going to be there for 1 year, this move will save you $1600 in interest this year, which means that when you sell the house and pay off this mortgage, you'll have $1600 extra in your pocket. You said that you don't like to dabble in stocks. I wouldn't recommend investing in individual stocks anyway. A stock mutual fund, however, is a great option for investing, but only as a long-term investment. You should be able to beat your 4% mortgage, but only over the long term. If you want to have the $40,000 available to you in a year, don't invest in a mutual fund now. I would lean toward option #2, applying the money to the mortgage. However, there are some other considerations: Do you have any other debts, maybe a car loan, student loan, or a credit card balance? If so, I would forget everything else and put everything toward one or more of these loans first. Do you have an emergency fund in place, or is this $40,000 all of the cash that you have available to you? One rule of thumb is that you have 3 to 6 months of expenses set aside in a safe, easily accessible account ready to go if something comes up. Are you saving for retirement? If you don't already have retirement savings in place and are adding to it regularly, some of this cash would be a great start to a Roth IRA or something like that, invested in a stock mutual fund. If you are already debt free except for this mortgage, you might want to do some of each: Keep $10,000 in a savings account for an emergency fund (if you don't already have an emergency fund), put $5,000 in a Roth IRA (if you aren't already contributing a satisfactory amount to a retirement account), and apply the rest toward your mortgage.",
"title": ""
},
{
"docid": "2106c31d84b4c18a5fd0a1c91430e2b5",
"text": "Paying off the high-interest debt is a good first start. Paying interest, or compound interest on debt is like paying somebody to make you poor. As for your 401k, you want to contribute enough to get the full match from your employer. You might also consider checking out the fees associated with your 401k with an online fee analyzer. If it turns out you're getting reamed with fees, you can reduce them by fiddling with your investments. Checking your investment options is always a good idea since jobs frequently change them. Opening an IRA is a good call. If you're eligible for both Roth and Traditional IRAs, consider the following: Most financial institutions (brokers or banks) can help you open an IRA in a matter of minutes. If you shop around, you will find very cheap or even no fee options. Many brokers might try to get your business by giving away something for ‘free.' Just make sure you read the fine print so you understand the conditions of their promotional offer. Whichever IRA you choose, you want to make sure that it's managed properly. Some people might say, ‘go for it, do it yourself’ but I strongly disagree with that approach. Stock picking is a waste of time and market timing rarely works. I'd look into flat fee financial advisors. You have lots of options. Just make sure they hear you out, and can design/execute an investment plan specific to your needs At a minimum, they should: Hope this is helpful.",
"title": ""
},
{
"docid": "e25fcd5b89b415a0f9310d96fdd581a2",
"text": "\"Your plan as proposed will not work, because it goes against how banks make money. Banks make money in two ways: (1) Fees [including account fees, investment advice fees, mortgage application fees, etc.]; and (2) Interest Rate Spread. They borrow money for x%, and they lend it out for x+y%. In a simple form, someone gives the bank a deposit, and earns 1%. The bank turns around to the next person in line and loans the money to them for 4%. You are asking them to turn the interest rate spread into a cost instead of their main source of profit: You are asking the bank to borrow money from another person paying them 1.2% interest, and then loan the money to you, paying you 0.6% interest and keeping 0.6% for themselves. The bank would lose money doing this. Technically yes, you can borrow from a bank and invest it in something earning above the 4% interest they will charge you. You can then pay the bank's interest off of your earnings, and make some profit for yourself. BUT this carries an inherent risk: If your investment loses money, you still owe the bank, effectively increasing the negative impact of your investment. This tactic is called \"\"Leveraging\"\"; you can look it up on this site or on google. It is not something you should do if you do not fully understand the risks you are taking on. Given that you are asking this question, I would suggest tactfully that you are not yet well informed enough to make this sort of investment. You run serious risk of losing everything if you over-leverage (assuming the banks will even lend you money in the first place).\"",
"title": ""
},
{
"docid": "562199728b298b68e02ab2224814095c",
"text": "\"Your only real alternative is something like T-Bills via your broker or TreasuryDirect or short-term bond funds like the Vanguard Short-Term Investment-Grade Fund. The problem with this strategy is that these options are different animals than a money market. You're either going to subject yourself to principal risk or lose the flexibility of withdrawing the money. A better strategy IMO is to look at your overall portfolio and what you actually want. If you have $100k in a money market, and you are not going to need $100k in cash for the forseeable future -- you are \"\"paying\"\" (via the low yield) for flexibility that you don't need. If get your money into an appropriately diversified portfolio, you'll end up with a more optimal return. If the money involved is relatively small, doing nothing is a real option as well. $5,000 at 0.5% yields $25, and a 5% return yields only $250. If you need that money soon to pay tuition, use for living expenses, etc, it's not worth the trouble.\"",
"title": ""
},
{
"docid": "a7523c0c096626ffb0b416e5d7207a48",
"text": "Debt creates risk. The more debt you take on, the higher your risk. What happens if you lose your job, miss a payment, or forget to write the final payment check for the exact amount needed, and are left with a balance of $1 (meaning the back-dated interest would be applied)? There is too much risk for little reward? If you paid monthly at 0% and put your money in your savings account like you mentioned, how much interest would you really accrue? Probably not much, since savings account rates suck right now. If you can pay cash for it now, do it. So pay cash now and own it outright. Why prolong it? Is there something looming in the future that you think will require your money? If so, I would put off the purchase. No one can predict the future. Why not pay cash for it now, and pay yourself what would have been the monthly payment? In three years, you have your money back. And there is no risk at all. Also, when making large purchases with cash, you can sometimes get better discounts if you ask.",
"title": ""
},
{
"docid": "1ee79f89d2eccdf0d137f986fd276ece",
"text": "It doesn't make a whole lot of sense to save up and wait to make a payment on any of these loans. Any dollar you pay today works better than saving it and waiting months to pay it, no matter which loan it will be applied to. Since your lender won't let you choose which loan your payment is being applied to, don't worry about it. Just make as big a payment as you can each month, and try to get the whole thing out of your life as soon as possible. The result of this will be that the smaller balance loans will be paid off first, and the bigger balance loans later. It is unfortunate that the higher interest rate loans will be paid later, but it sounds like you don't have a choice, so it is not worth worrying about. Instead of thinking of it as 5 loans of different amounts, think of it as one loan with a balance of $74,000, and make payments as quickly and as often as possible. For example, let's say that you have $1000 a month extra to throw at the loans. You would be better off paying $1000 each month than waiting until you have $4000 in the bank and paying it all at once toward one loan. How the lender divides up your payment is less significant than when the lender gets the payment.",
"title": ""
},
{
"docid": "7f4660e81b6cac0d44cedec2044272b9",
"text": "My recommendation would be to pay off your student loan debt as soon as possible. You mention that the difference between your student loan and the historical, long-term return on the stock market is one-half percent. The problem is, the 7% return that you are counting on from the stock market is not guaranteed. You might get 7% over the next few years, but you also might do much worse. The 6.4% interest that you will save by aggressively paying off your debt is guaranteed. You are concerned about the opportunity cost of paying your debt early. However, this cost is only temporary. By drawing out your debt payments, you have a long-term opportunity cost. By this, I mean that 4 years from now, you could still have 6 years of debt payments hanging over your head, or you could be debt free with all of your income available to save, spend, or invest as you see fit. In my opinion, prolonging debt just to try to come out 0.5% ahead is not worth the hassle or risk.",
"title": ""
},
{
"docid": "6236c533a709b202a826720071e1f5a7",
"text": "\"Although there is no single best answer to your situation, several other people have already suggest it in some form: always pay off your highest after-tax (!) interest loan first! That being said, you probably also have heard about the differentiation for good debt vs. bad debt. Good debt is considered a mortgage for buying your primary home or, as is the case here, debt for education. As far as I am concerned, those are pretty much the only two types of debt I'd ever tolerate. (There may be exceptions for health/medical reasons.) Everything else is consumer debt and my personal rule is, don't buy it if you don't have the money for it! Meaning, don't take on consumer debt. One other thing you may consider before accelerating paying off your student debt, the interest paid on it may be tax deductible. So you should look at what the true interest is on your student loan after taxes. If it is in the (very) low single digits, meaning between 1-3%, you may consider using the extra money towards an automatic investment plan into an ETF index fund. But that would be a question you should discuss with your tax accountant or financial adviser. It is also critical in that case that you don't view the money invested as \"\"found\"\" money later on, unless you have paid off all your debt. (This part is the most difficult for most people so be very cautious and conscious if you decide to go this route!) At any rate, congratulations on making so much progress paying off your debt! Keep it going.\"",
"title": ""
},
{
"docid": "7ac77f862da86e38701a192398ab3ea4",
"text": "I have credit card debt of about $5000 That's the answer right there. You told us the 401(b) has no match. The next highest priority would be credit card debt that's costing you interest. You didn't mention the rate on the card, I'm assuming it's 8% or more. As far as your balance sheet (the 'bottom line') is concerned, pay off a 10% debt is the same as earning 10% on your money. If anyone promises you a higher return with a different investment, I'd run the other way. We hope the market, i.e. the US stock market, as measured by a broad index, say the S&P 500, will return 8-10%/yr over the long term, but this isn't guaranteed. Paying off that credit card will save you the interest every year, and free up the payments to invest elsewhere. In response to Marlene's comment - Crazy? No. Human nature and emotion is what it is. I honestly don't know how to address some of it. Years ago, I was in a similar situation with a reader who had a $5000 'emergency' account, yet had $5000 in credit card debt. I had a tough time getting my head around why it wasn't obvious this made no sense. In your case, I might suggest you pay the card down to below $1000 and have the credit line reduced. Paying high interest on $5K makes no sense at any point in one's life. At least a 20-something can dig his way out and learn a lesson. A pre-retiree shouldn't be throwing this money away.",
"title": ""
}
] |
fiqa
|
3032f0c1e019306a1cce6d9b7e359c4e
|
How to check the paypal's current exchange rate?
|
[
{
"docid": "e0011c2d147a78e3b4afab4acd9ea44c",
"text": "PayPal does charge a premium, both for sending and receiving. Here's how you find their rates:",
"title": ""
},
{
"docid": "5e9d9f9cdbfb2ddae39e31b503360c5e",
"text": "The Paypal 'classic' site option has now been removed and you will not know what you will be charged UNTIL YOU COMMIT TO BUY. Paypal told me today ( brexit day 24th ) that their site is NOT connected to the Ebay site so when Ebay tells me '$77.00 approximately £52.43' for an item I would in fact pay £59.62. You will Not be aware of this UNTIL you commit to by. Paypal informs me there are no plans to restore the 'classic' option Paypal site.",
"title": ""
},
{
"docid": "a22174c44403030698e39181361ab771",
"text": "fx-rate.net offers a AUDUSD exchange rate comparison, which includes paypal: Currencyfair $1.14 Transferwise $ 2.29 Worldremit $ 3.50 Xendpay $ 3.71 Tranzfers $ 5.52 Ukforex $ 7.35 Skrill $ 15.13 Paypal $ 25.77 Kantox $ 27.76 http://fx-rate.net/currency-transfer/?c_input=AUD&cp_input=USD",
"title": ""
},
{
"docid": "8def29393e303b6be727289894f80600",
"text": "\"FYI, just found this (https://www.paypal.com/webapps/mpp/ua/useragreement-full#8) \"\"8.9 Currency Conversion Currency Conversion 2.5% added to the exchange rate The Currency Conversion spread applies whenever a currency conversion is required to complete your transaction. The exchange rate is determined by a financial institution and is adjusted regularly based on market conditions. Adjustments may be applied immediately and without notice to you. When your payment is funded by a debit or credit card and requires a currency conversion, you consent to and authorize PayPal to convert the currency in place of your debit or credit card issuer. You have the right to have your card issuer perform the currency conversion and can choose this option during checkout on your transaction review page before you complete the transaction.\"\" 2.5%!! Can this be true?\"",
"title": ""
},
{
"docid": "a3dda95b6fe5e60b7c1a455d81fc346f",
"text": "\"I cannot speak for Paypal specifically and I doubt anyone who doesn't actually work on their internal automated payment systems could. However, I can speak from experiencing in working on automated forex transaction systems and tell you what many institutions do and it is often NOT based on live rates. There is no law stating an institution must honor a specific market exchange rate. Institutions can determine their own rates how and when they want to. However, there is some useful information on their website: https://www.paypal.com/an/cgi-bin/webscr?cmd=p/sell/mc/mc_convert-outside \"\"The most readily available information on currency exchange rates is based on interbank exchange rates. Interbank exchange rates are established in the course of currency trading among a global network of over 1,000 banks, and are not available through consumer or retail channels.\"\" This leads me to believe they pull exchange rates from either Oanda or XE periodically and then use these rates throughout the day to conduct business. Paypal does not disclose who they use to determine rates. And it's highly doubtful they do this for every transaction (using live rates). Even if they did, there would be no way for you to check and be certain of a particular exchange rate as paypal states: \"\" Consumers may use these rates as a reference, but should not expect to use interbank rates in transactions that involve currency conversion. To obtain actual retail rates, contact your local financial institution or currency exchange, or check the rate displayed in your PayPal transaction.\"\" This is partly because rates can change by the second just like stock prices or anything else which is susceptible to the open market's variables of supply, demand news events etc. So, even if you check the rates on Oanda (which you can do here: http://www.oanda.com/currency/converter/) you are not going to get a 100% accurate representation of what you would get by doing an exchange immediately afterwards from Paypal or any other financial institution. However, if you want to estimate, using Oanda's currency converter will likely get you close in most scenarios. That is assuming Paypal doesn't charge a premium for the exchange, which they may. That is also assuming they use live rates, it's also possible they only update their rates based on market rates periodically and not for every transaction. You may want to test this by checking the exchange rate on your transaction and comparing that to the Oanda rates at the same time.\"",
"title": ""
},
{
"docid": "12c783ab58e622f4b75a45d00cc7d18a",
"text": "There is a way I discovered of finding the current exchange rate before committing to buy, go to send payments, put in your own second email, pay 1gbp as the amount and it will give you the exchange rate and fees in your own currency, in my case euro, before you have to click on send payment",
"title": ""
},
{
"docid": "29cf5583c86e0216a19eb093e877ba35",
"text": "Whenever you pay or withdraw some fund from your account, paypal takes approx 3% of the current currency value along with the fees. i.e. If you are paying/withdraw 100 unit of US Dollars to British pounds and if the current convertion rate is 1$=0.82GBP, then consider reducing 3% of the actual currency rate. So, the approximate magnitude will be 0.82*97% (100-3=97) = 0.7954. So, 1$=0.7954GBP. This formula will not give you 100% accurate value but will help of course. Captain",
"title": ""
}
] |
[
{
"docid": "cbfaa8e5b417b674e4a7ec3116770215",
"text": "PayPal charges a 2.5% currency conversion fee to exchange funds from one currency to another. That means, the receiver would receive $ 9.75. Read More",
"title": ""
},
{
"docid": "ccef86861b5918e8ad02925f6b4ea9c4",
"text": "Is there not some central service that tracks current currency rates that banks can use to get currency data? Sure. But this doesn't matter. All the central service can tell you is how much the rate was historically. But the banks/PayPal don't care about the historical value. They want to know the price that they'll pay when they get around to switching, not the last price before the switch. Beyond that, there is a transaction cost to switching. They have to pay the clearinghouse for managing the transaction. The banks can choose to act as a clearinghouse, but that increases their risk. If the bank has a large balance of US dollars but dollars are falling, then they end up eating that cost. They'll only take that risk if they think that they'll make more money that way. And in the end, they may have to go on the currency market anyway. If a European bank runs out of US dollars, they have to buy them on the open market. Or a US bank might run out of Euros. Or Yen. Etc. Another problem is that many of the currency transactions are small, but the overhead is fixed. If the bank has to pay $5 for every currency transaction, they won't even break even charging 3% on a $100 transaction. So they delay the actual transaction so that they can make more than one at a time. But then they have the risk that the currency value might change in the meantime. If they credit you with $97 in your account ($100 minus the 3% fee) but the price actually drops from $100 to $99, they're out the $1. They could do it the other way as well. You ask for a $100 transaction. They perform a $1000 transaction, of which they give you $97. Now they have $898 ($1000 minus the $5 they paid for the transaction plus the $3 they charged you for the transaction). If there's a 1% drop, they're out $10.98 ($8.98 in currency loss plus a net $2 in fees). This is why banks have money market accounts. So they have someone to manage these problems working twenty-four hours a day. But then they have to pay interest on those accounts, further eating into their profits. Along with paying a staff to monitor the currency markets and things that may affect them.",
"title": ""
},
{
"docid": "4365e9c6ffd3fc7b9acb7f2a38cece51",
"text": "I used MoneyCorp - they typically charge you approximately 2% on top of the official exchange rate. You would probably need to declare that in your home country - I do not know Pakistan rules so can't help there.",
"title": ""
},
{
"docid": "f668293a44aa11b7f4bf48fcf050ab1d",
"text": "If I remember correctly my own experience : no you can't. Paypal will block the money even if it's only for online payement.",
"title": ""
},
{
"docid": "625b4ac57726954c615a0f324b509988",
"text": "There are several red flags here. can they get my bank account info in any way from me transferring money to them? Probably yes. Almost all bank transactions are auditable, and intentionally cause a money track. This track can be followed from both sides. If they can use your bank account as if they were you, that is a bit deeper than what you are asking, but yes they (and the polish cops) can find you through that transfer. I did look up the company and didn't find any scam or complaints concerning them. Not finding scams or complains is good, but what did you find? Did you find good reviews, the company website, its register, etc, etc? How far back does the website goes (try the wayback machine) Making a cardboard front company is very easy, and if they are into identity theft the company is under some guy in guam that never heard of poland or paypal. As @Andrew said above, it is probably a scam. I'd add that this scam leverages on the how easier is to get a PayPal refund compared to a regular bank transfer. It is almost impossible to get the money back on an international transaction. Usually reverting a bank transfer requires the agreement in writing of the receiver and of both banks. As for paypal, just a dispute from the other user: You are responsible for all Reversals, Chargebacks, fees, fines, penalties and other liability incurred by PayPal, a PayPal User, or a third party caused by your use of the Services and/or arising from your breach of this Agreement. You agree to reimburse PayPal, a User, or a third party for any and all such liability. (source) Also, you might be violating the TOS: Allow your use of the Service to present to PayPal a risk of non-compliance with PayPal’s anti-money laundering, counter terrorist financing and similar regulatory obligations (including, without limitation, where we cannot verify your identity or you fail to complete the steps to lift your sending, receiving or withdrawal limit in accordance with sections 3.3, 4.1 and 6.3 or where you expose PayPal to the risk of any regulatory fines by European, US or other authorities for processing your transactions); (emphasis mine, source) So even if the PayPal transfer is not disputed, how can you be sure you are not laundering money? Are you being paid well enough to assume that risk?",
"title": ""
},
{
"docid": "0878af8aa13a09e310192c9020de479d",
"text": "For those who are interested, I am answering my own question: We used Postbank and transferred 6000 Euro, we chose to Transfer in US$, and selected Shared Fees. There were three fees in total: All in all, I paid ~37$; this is about half of what I expected; and I got a perfect exchange rate. Postbank might have its downsides, but it seems they are still a good deal.",
"title": ""
},
{
"docid": "fd2f1fc30829819c8c5653ecd6f4f808",
"text": "As an Indian resident you can open an Resident Foreign Currency Account, i.e. an USD account. This facility is provided by all major banks. I am not sure if PayPal would transfer money to these accounts or would convert. The alternative is to give this account number along with other Bank details to the company in US and ask them to send money via remittance services.",
"title": ""
},
{
"docid": "eb9b830ba43c5a42c6f41b9e1714634b",
"text": "PayPal will be contacting you shortly, I'm sure. You'll see the reversal on their site in a few days as well as a fee from their end I bet.",
"title": ""
},
{
"docid": "c4b740c53cd6ff4f2ff8b29ed3c99642",
"text": "I want to shop in the currency that will be cheapest in CAD at any given time. How do you plan to do this? If you are using a debit or credit card on a CAD account, then you will pay that bank's exchange rate to pay for goods and services that are billed in foreign currency. If you plan on buying goods and services from merchants that offer to bill you in CAD for items that are priced in foreign currency (E.g. buying from Amazon.co.uk GBP priced goods, but having Amazon bill your card with equivalent CAD) then you will be paying that merchant's exchange rate. It is very unlikely that either of these scenarios would result in you paying mid-market rates (what you see on xe.com), which is the average between the current ask and bid prices for any currency pair. Instead, the business handling your transaction will set their own exchange rate, which will usually be less favorable than the mid-market rate and may have additional fees/commission bolted on as a separate charge. For example, if I buy 100 USD worth of goods from a US vendor, but use a CAD credit card to pay, the mid-market rate on xe.com right now indicates an equivalent value of 126.97 CAD. However the credit card company is more likely to charge closer to 130.00 CAD and add a foreign transaction fee of maybe $2-3, or a percentage of the transaction value. Alternatively, if using something like Amazon, they may offer to bill the CAD credit card in CAD for those 100 USD goods. No separate foreign transaction fee in this case, but they are still likely to exchange at the less favorable 130.00 rate instead of the mid-market rates. The only way you can choose to pay in the cheapest equivalent currency is if you already have holdings of all the different currencies. Then just pay using whichever currency gets you the most bang for your buck. Unless you are receiving payments/wages in multiple currencies though, you're still going to have to refill these accounts periodically, thus incurring some foreign transaction fees and being subject to the banker's exchange rates. Where can I lookup accurate current exchange rates for consumers? It depends on who will be handling your transaction. Amazon will tell you at the checkout what exchange rate they will apply if you are having them convert a bill into your local currency for you. For credit/debit card transactions processed in a different currency than the attached account, you need to look at your specific agreement or contact the bank to see which rate they use for daily transactions (and where you can obtain these rates), whether they convert on the day of the transaction vs. the day it posts to your account, and how much they add on ($ and/or %) in fees and commission.",
"title": ""
},
{
"docid": "bc6e266b59ecc292bde5266b4226db53",
"text": "\"The solution I've come up with is to keep income in CAD, and Accounts Receivable in USD. Every time I post an invoice it prompts for the exchange rate. I don't know if this is \"\"correct\"\" but it seems to be preserving all of the information about the transactions and it makes sense to me. I'm a programmer, not an accountant though so I'd still appreciate an answer from someone more familiar with this topic.\"",
"title": ""
},
{
"docid": "2baba78dfdae88f69f0fe2537b25cb3a",
"text": "According to Paypal, they support transactions in Ethiopia: https://www.paypal.com/webapps/mpp/country-worldwide https://developer.paypal.com/docs/classic/api/country_codes/ However those appear to be limited to transferring money out of the country. (link) There is an article here (link) which talks about how to transfer money from paypal back to your bank in Ethiopia. It sounds like you have to set up a US bank account, withdraw the funds to that then somehow transfer the money from their to your bank. NOTE: I have no relationship to any of the sites above, nor do I know if the information is accurate or the trustworthiness of those businesses.",
"title": ""
},
{
"docid": "260f08aa3ed67443f642e7942a91ec08",
"text": "It will cost the same no matter what currency you use, unless you have access to a deal with a currency exchange that gives you an especially favourable conversion rate for a particular currency. If the current exchange rates are US$1.70 to the £, CA$1.80 to the £ and HK$12.50 to the £, then £1, US$1.70, CA$1.80 and HK$12.50 are just four different ways of writing the same amount of money. So whether you pay in US$, CA$ or HK$ it's the same amount of money that you're paying.",
"title": ""
},
{
"docid": "58f356edc765539400f4a3ea5ef4d3b4",
"text": "Yes. I have a US based website that accepts payments via PayPal and can confirm we have many customers from India. Here is a list of countries PayPal supports. Note typically there are some additional fees associated with currency conversion.",
"title": ""
},
{
"docid": "47b1fe6ea3938c0a89565d110d6fdfd8",
"text": "You probably can get away with only updating the exchange rates once a day and specify that any prices quoted in units other than your home currency are estimates only. If you're planning to accept more than one currency as payment, I'd (a) see about whatever regulations there are for doing so, and (b) build in a nice spread for yourself if you're allowed to, since it is a service you're providing to your customers. If you Google currency converter the first result is just that: a currency converter.",
"title": ""
},
{
"docid": "eaf49cfcd2a5ddfdcc47d4ebf7667b29",
"text": "I'm not confident that the requirements for 2017 are up yet, but assuming they don't change much from those of 2016, then probably not if you have no other earnings this year. If you make $500 a month, then you will make $6,000 this year. This is below the filing requirements for most taxpayers, unless you are married but filing separately. At the end of 2017 you should tally up your earnings (including earnings from other sources) find which category you find yourself in on the table, and make a final determination of whether you'll need to file.",
"title": ""
}
] |
fiqa
|
b5ec1be05c76883a2db05f7657dff604
|
Explanations on credit cards in Canada
|
[
{
"docid": "3cc6c9116769ff348070c66a1ed49129",
"text": "\"A credit card is a way to borrow money. That's all. Sometimes the loans are very small - $5 - and sometimes they are larger. You can have a credit card with a company (bank or whatever) that you have no other relationship with. They're not a property of a bank account, they are their own thing. The card you describe sounds exactly like a debit card here, and you can treat your Canadian debit card like your French credit card - you pay for things directly from your bank account, assuming the money is in there. In Canada, many small stores take debit but not credit, so do be sure to get a debit card and not only a credit card. Now as to your specific concerns. You aren't going to \"\"forget to make a wire.\"\" You're going to get a bill - perhaps a paper one, perhaps an email - and it will say \"\"here is everything you charged on your credit card this month\"\" along with a date, which will be perhaps 21 days from the statement date, not the date you used the card. Pay the entire balance (not just the minimum payment) by that date and you'll pay no interest. The bill date will be a specific date each month (eg the 23rd) so you can set yourself a reminder to check and pay your bill once a month. Building a credit history has value if you want to borrow a larger amount of money to buy a car or a house, or to start a business. Unlike the US, it doesn't really have an impact on things like getting a job. If you use your card for groceries, you use it enough, no worries. In 5 years it is nice to look back and see \"\"never paid late; mostly paid the entire amount each month; never went over limit; never went into collections\"\" and so on. In my experience you can tell they like you because they keep raising your limit without you asking them to. If you want to buy a $2500 item and your credit limit is $1500 you could prepay $1000 onto the credit card and then use it. Or you could tell the vendor you'd rather use your debit card. Or you could pay $1500 on the credit card and then rest with your debit card. Lots of options. In my experience once you get up to that kind of money they'd rather not use a credit card because of the merchant fees they pay.\"",
"title": ""
},
{
"docid": "b4da24f321fb782c3eadaf9e189c1c90",
"text": "Is my understanding okay ? If so, it seems to me that this system is rather error prone. By that I mean I could easily forget to make a wire some day and be charged interests while I actually have more than enough money on the check account to pay the debt. Which is where the credit card company can add fees so you pay more and they make more money. Don't forget that in the credit case, you are borrowing money rather than using your own. Another thing that bothers me is that the credit card apparently has a rather low credit limit. If I wanted to buy something that costs $2500 but only have a credit limit of $1500, can I make a preemptive wire from my check account to the VISA account to avoid facing the limit ? If so, what is the point for the customer of having two accounts (and two cards for that matter...) ? If you were the credit card company, do you believe people should be given large limits first? There are prepaid credit cards where you could put a dollar amount on and it would reject if the balance gets low enough. Iridium Prepaid MasterCard would be an example here that I received one last year as I was involved in the floods in my area and needed access to government assistance which was given this way. Part of the point of building up a credit history is that this is part of how one can get the credit limits increased on cards so that one can have a higher limit after demonstrating that they will pay it back and otherwise the system could be abused. There may be a risk that if you prepay onto a credit card and then want to take back the money that there may be fees involved in the transaction. Generally, with credit cards the company makes money on the fees involved for transactions which may come from merchants or yourself as a cash advance on a credit card will be charged interest right away while if you buy merchandise in a store there may not be the interest charged right away.",
"title": ""
},
{
"docid": "8beada6940fcd19d31b2e64fb168897f",
"text": "If so, it seems to me that this system is rather error prone. By that I mean I could easily forget to make a wire some day and be charged interests while I actually have more than enough money on the check account to pay the debt. I have my back account (i.e. chequing account) and VISA account at/from the same bank (which, in my case, is the Royal Bank of Canada). I asked my bank to set up an automatic transfer, so that they automatically pay off my whole VISA balance every month, on time, by taking the money from my bank account. In that way I am never late paying the VISA so I never pay interest charges. IOW I use the VISA like a debit card; the difference is that it's accepted at some places where a debit card isn't (e.g. online, and for car rentals), and that the money is deducted from my bank account at the end of the month instead of immediately.",
"title": ""
},
{
"docid": "7c04f6dc0d7acbc634d4a02bf5166519",
"text": "\"I think it's worth pointing out explicitly that the biggest difference between a credit card (US/Canada) and a debit card (like your French carte de crédit) is that with a credit card, it's entirely possible to not pay the bill or to pay only the \"\"minimum payment\"\" when asked. This results in you owing significantly more money due to interest, which can snowball into higher and higher levels of debt, and end up getting rapidly out of control. This is the reason why you should ALWAYS pay off the ENTIRE balance every month, as attested to in the other answers; it's not uncommon to find people in the US with thousands of dollars of debt they can't pay off from misuse of credit cards.\"",
"title": ""
}
] |
[
{
"docid": "efc61f4ca2cbf4747a962aacb18f1111",
"text": "There are two separate cases here that people are not separating. Any card will allow you to pay an amount not exceeding the actually posted charges. Some cards will allow you to pay more than this, some will not. My parents have deliberately overpaid as a means of having a higher credit limit, I've been denied (different card) when trying to do the same thing and the website wouldn't even allow me to pay temporary charges that hadn't yet become real. (A human operator would allow paying those, though.)",
"title": ""
},
{
"docid": "07387f98d8f5d6003a51cc409fc5a910",
"text": "You have to check your contract to be sure what is it you're paying for. Typically, you get some of the following features which can be unavailable to you in banks which don't charge a monthly fee: Arguably, these expenses could be paid by the interest rates your money earn to the bank. Notice how banks which don't charge a fee usually require you to have a minimum amount of cash in your account or a minimum monthly cash flow. When you pay for your bank's services in cash, there's no such restrictions. I'm not sure if typical banks in the UK would take away your credit card if you lose your job and don't qualify for that kind of card any more, but I do know banks who would. The choice is yours, and while it's indeed sad that you don't have this kind of choice in Canada, it's also not like you're paying solely for the privilege of letting them invest your money behind your back.",
"title": ""
},
{
"docid": "14db4aaccba207332c28e3d8235ba523",
"text": "From a Canadian point of view, I think we are generally very similar to how you describe Austria. The only thing I use cash for, is to pay for my coffee at a local micro-roaster who only accepts cash. Cheques, I only use to pay friends. Everything else is debit or credit card. Very few businesses around here will even accept cheques anymore.",
"title": ""
},
{
"docid": "5fee4c2ada624f9f9dfd3cf43e073b65",
"text": "There are different ways of credit card purchase authorizations. if some choose less secure method it's their problem. Merchants are charged back if a stolen card is used.",
"title": ""
},
{
"docid": "689b2850dd96b39d5d22d06a510114d6",
"text": "This is quite possibly a tactic to attract new clients.. ICICI is one of the banks with a small presence in Canada. There are also banks like Tangerine and PC Financial that are aggressively trying to get new clients to switch over from the big 5 banks. At the time of writing, for a limited time, PC Financial is paying 2.5% interest on savings accounts versus 1.4% for a 1 year GIC.",
"title": ""
},
{
"docid": "d1219fb850544eb95e1b9182489c5e9a",
"text": "One possibility is to ask RBC to lend you some money (or more specifically, to lend you some more money): an overdraft, a personal loan, or whatever. To discuss this you should to talk to your personal banker (not a teller), probably by appointment: to explain why you want it, and how and when you expect repay it. You might (I don't know) say that you want the loan (or some of the loan) to pay off the Visa, and/or for the travel. If you've only just arrived in Canada, however, then I don't see why they should want to lend it to you (i.e. why they should think you're a good credit risk). Is there anyone else (e.g. an immigration sponsor or parent or employer) who might co-sign (a.k.a. guarantee) the loan? I have never had this issue before with any other credit cards but I got an RBC Visa in Canada In some countries (not Canada) a Visa behaves more like a debit card, i.e. you can only spend money you have in the account.",
"title": ""
},
{
"docid": "c3b135c214fc5ac414175d3cc25f3cde",
"text": "Corporations are removed from the options markets. They can neither permit nor forbid others from trading them, local laws notwithstanding. No national options market is as prolific as the US's. In fact, most countries don't even have options trading. Some won't even allow options but rather option-like derivatives. Finance in Canada is much more tightly regulated than the US. This primer on Canadian option eligibility shows how much. While US eligibility is also stringent, the quotas are far less restrictive, so a highly liquid small company can also be included where it would be excluded in Canada for failing the top 25% rule.",
"title": ""
},
{
"docid": "3676ef92f760af7d37a1107c411add97",
"text": "\"I think this stuff was more valid when grace periods were longer. For example, back in the 90's, I had an MBNA card with a 35 day grace period. Many business travellers used Diner's Club charge cards because they featured a 60 day grace period. There are valid uses for this: As JoeTaxpayer stated, if you are benefiting from \"\"tricks\"\" like this, you probably have other problems that you probably ought to deal with.\"",
"title": ""
},
{
"docid": "c84f0f572bfc3e7a3e4c9442340d5088",
"text": "Given that the laws on consumer liability for unauthorized transactions mean no cost in most cases, the CVV is there to protect the merchant. Typically a merchant will receive a lower cost from their bank to process the transaction with the CVV code versus without. As far as the Netflix case goes, (or any other recurring billing for that matter) they wouldn't care as much about it because Visa/MC/Amex regulations prohibit storage of the CVV. So if they collect it then it's only used for the first transaction and renewals just use the rest of the card info (name, expiration date, address). Does the presence of CVV indicate the merchant has better security? Maybe, maybe not. It probably means they care about their costs and want to pay the bank as little as possible to process the transaction.",
"title": ""
},
{
"docid": "ccb53ec70fd1c7e3b4addbd3a77698da",
"text": "\"There are two reasons you would get a higher yield for savings accounts: either because it is not guaranteed by a national deposit insurance fund (CDIC I presume in Canada), or you have to hold it for a longer term. Money Market Accounts are insured in the U.S. and are also very liquid since you can debit from it any time. Because of this, they offer much lower rates of interest than comparable products. If you look at the savings products such as the 1.50% momentum savings account offered by ScotiaBank, you actually have to hold a $5000 balance and not make any debit from it for 90 days in order to get the extra 0.75% that would get you to 1.50%. Essentially this is roughly equivalent to offering you a 1.50% GIC with a 0.75% withdrawal penalty fee, but simply presented in more \"\"positive\"\" terms. As for the Implicity Financial Financial 1.75% offering, it looks like it is not insured by the CDIC.\"",
"title": ""
},
{
"docid": "8f5767d1419297a9b538d367bd4a0332",
"text": "I have a visa with Scotiabank and I purposefully keep a negative balance at times. The guy at the bank said it was a great idea. I have never received a cheque, nor do I want one. The reason is that it allows me to make quick purchases without having to worry about paying back and due dates. Only with large purchases do I allow myself to do that. I still check in with my account every once in a while just to make sure everything is all right. It allows for good money management and piece of mind. I have been doing it for a couple of years and have not been penalized at all. (Wouldn't really make sense to do so though.)",
"title": ""
},
{
"docid": "ba960eb7f7436e5f3824be9fad756a02",
"text": "If you're willing to use OFX or QIF files, most Canadian banks can spit output more data than 90 days. The files are typically used to import into Quicken-like local programs, but can be easily parsed for your webapp, I imagine.",
"title": ""
},
{
"docid": "b454bdd66734e04e3cd3b92bb4779f8f",
"text": "I'm an Australian who just got back from a trip to Malaysia for two weeks over the New Year, so this feels a bit like dejavu! I set up a 28 Degrees credit card (my first ever!) because of their low exchange rate and lack of fees on credit card transactions. People say it's the best card for travel and I was ready for it. However, since Malaysia is largely a cash economy (especially in the non-city areas), I found myself mostly just withdrawing money from my credit card and thus getting hit with a cash advance fee ($4) and instant application of the high interest rate (22%) on the money. Since I was there already and had no other alternatives, I made five withdrawals over the two weeks and ended up paying about $21 in fees. Not great! But last time I travelled I had a Commonwealth Bank Travel Money Card (not a great idea), and if I'd used that instead on this trip and given up fees for a higher exchange rate, I would have been charged an extra $60! Presumably my Commonwealth debit card would have been the same. This isn't even including mandatory ATM fees. If I've learned anything from this experience and these envelope calculations I'm doing now, it's these:",
"title": ""
},
{
"docid": "443bc8c96f4ef3937951264c4c74c89a",
"text": "Lived in same situation for 8 years. I walked into a BMO - told them what I needed to do and they set me right up - no U.S. accounts necessary. My account allowed me to pay bills in USD or CDN. Doesn't get any simpler than that.",
"title": ""
},
{
"docid": "298bc6aaa358239ee51268053527c422",
"text": "I haven't read the terms here but the question may not have a good answer. That won't stop me from trying. Call the real rate (interest rate - inflation) and you'll have what is called negative real rates. It's rare for the overnight real rate to be negative. If you check the same sources for historical data you'll find it's usually higher. This is because borrowing money is usually done to gain an economic benefit, ie. make a profit. That is no longer a consideration when borrowing money short term and is IMO a serious problem. This will cause poor investment decisions like you see in housing. Notice I said overnight rate. That is the only rate set by the BoC and the longer rates are set by the market. The central bank has some influence because a longer term is just a series of shorter terms but if you looked up the rate on long Canadian real return bonds, you'd see them with a real rate around 1%. What happens when the central bank raise or lowers rates will depend on the circumstances. The rate in India is so high because they are using it to defend the rupee. If people earn more interest they have a preference to buy that currency rather than others. However these people aren't stupid, they realize it's the real rate that matters. That's why Japan can get away with very low rates and still have demand for the currency - they have, or had, deflation. When that changed, the preference for their currency changed. So if Canada hast forex driven inflation then the BoC will have to raise rates to defend the dollar for the purpose of lowering inflation from imports. Whether it works or not is another story. Note that the Canadian dollar is very dependant on the total dollar value of net oil exports. If Canada has inflation due too an accelerating economy this implies that there are profitable opportunities so businesses and individuals will be more likely to pay a positive real rate of interest. In that scenario the demand for credit money will drive the real rate of return.",
"title": ""
}
] |
fiqa
|
9865ae895ef4040d147c654ea9ff9a0a
|
How to respond to a customer's demand for payment extension?
|
[
{
"docid": "068fdfe3d42820b093505efed1501d8e",
"text": "In the event that payment is not made by the due date on the invoice then the transaction is essentially null and void and you can sell the work to another client. For your particular situation I would strongly suggest that you implement a sales contract and agreement of original transfer of work of art for any and all future sales of your original works of art. In this contract you need to either enforce payment in full at time of signing or a deposit at signing with payment in full within (X) amount of days and upon delivery of item. In your sales contract you will want to stipulate a late fee in the event that the client does not pay the balance by the date specified, and a clause that stipulates how long after the due date that you will hold the artwork before the client forfeiting deposit and losing rights to the work. You will also want to specify an amount of time that you provide as a grace period in the event client changes their mind about the purchase, and you can make it zero grace period, making all sales final and upon signing of the agreement the client agrees to the terms and is locked into the sale. In which point if they back out they forfeit all deposits paid. I own a custom web design business and we implement a similar agreement for all works that we create for a client, requiring a 50% deposit in advance of work being started, an additional 25% at time of client accepting the design/layout and the final 25% at delivery of finished product. In the event that a client fails to meet the requirements of the contract for the second or final installment payments the client forfeits all money paid and actually owes us 70% of total quoted project price for wasting our time. We have only had to enforce these stipulations on one client in 5 years! The benefit to you for requiring a deposit if payment is not made in full is that it ensures that the client is serious about purchasing the work because they have put money in the game rather than just their word of wanting to purchase. Think of it like putting earnest money down when you make an offer to buy a house. Hope this helps!",
"title": ""
}
] |
[
{
"docid": "532ea8a3447f66a4dbb838a28f89c272",
"text": "\"I put bills with a fixed monthly amount to my credit card, and remember to pay it every month. However, I do not let any bill with a variable amount \"\"pull\"\" access to my funds. I have to \"\"push\"\" the payment. The reason is simple: We've all heard the tale of the Electric meter that rolled past zero, and the customer got charged for $65000.00, or other similar situations. When there is pull access to my money, then I have to work to get my money back. When there is push access, I can (in the electric situation above) pay an estimated monthly amount, (say $100) to demonstrate good faith and make them come after me. When they do, I can ask them to demonstrate the accuracy of the bill. If I have to go after them, I have to demonstrate the inaccuracy.\"",
"title": ""
},
{
"docid": "e7924979d20f06b4944df764769fc72a",
"text": "If something in any transaction in life—financial or otherwise—doesn’t make you feel comfortable and the choice is between saving money with one thing versus another, don’t sell your personal needs short. Pay more elsewhere that treats you the way you expect to be treated. In the long run the $$$ you “save” in a cheaper transaction might cost you more in the headaches and annoyance you have to swallow in dealing with this “bargain” in the future. Your question is this: “Do his sales tactics indicate other underlying problems? How can I deal effectively with those tactics?” And you state this as well: “To make a long story short, the dealer's aggressive sales tactics have made me somewhat uncomfortable.” And finally ask: “How can I deal effectively with those tactics?” Okay, first and foremost if you feel discomfort in anything in life—not just a financial situation—just walk away. You might have to say “No…” when doing this but it’s not always the case you will have to counter aggression with aggression. And specifically in the case of a purchase like this, you need to also ask yourself: “Is this discount being offered me worth the headache I am getting?” At the end of the day money is meaningless and has it’s main worth as an economic motivator/stimulator: Someone has a need and someone else has something that can solve that need. What would it take for the side of need to connect to the side of solution to that need? This is the basic concept surrounding all economics. So that said, I have personally avoided buying things for less money and paid slightly more elsewhere for a service experience that made me feel comfortable. At the end of the day, if you feel happy in the transaction it helps in the long run more than—let’s say—the $20 to $40 you “save” by buying from someone else. Also—on the side of customer service—this person’s sales techniques sound like something out of a very old fashioned sales playbook. Nowadays it’s all about relationships and service: The immediate sale is not as important for competent and reputable businesses because they know a better customer service experience will bring people back. So it doesn’t matter how long this guy has been in business: It could be that he’s been in business a long time just because he has been in business a long time. That said—and in the case of musical instruments—maybe this guy is really good at care and upkeep of instruments but has crappy sales techniques. Keep that in mind as well and just push back on their sales methods. For things like musical instruments, people might be jerks on the sales side but in the maintenance and repair side they are great. Will you need to go to them if/when your instrument needs repair? Or you don’t care? At the end of the day, go with your gut. And if your gut says, “No…” then just go somewhere else and spend your money on an item you like from a place that treats you the way you need.",
"title": ""
},
{
"docid": "f3fd5c9c209bfbf5883680b43d728caf",
"text": "You will be best to cancel the original instruction first, as you will have to wait for any pending payments to be received, as the banks will not entertain multiple refunds. After this can be confirmed the account will simply show a credit which you ask for. Many lenders/banks process these type of transactions after a period of time ie 30 days and there will be no way to speed this up, so the sooner you act the better. When you contact the bank have bank details for the payment(they might transfer externally fingers crossed), or you may receive a cheque in the post. Try to avoid complicating the matter with changes of address and ringing before you have cancelled the instruction etc if possible.",
"title": ""
},
{
"docid": "7be1da953541e9ce40e4598da9a824e4",
"text": "\"Debit Cards have a certain processing delay, \"\"lag time\"\", before the transaction from the vendor completes with your bank. In the US it's typically 3 business days but I have seen even a 15 day lag from Panera Bread. I guess in the UK, payment processors have similar processing delays. A business is not obliged to run its payment processing in realtime, as that's very expensive. Whatever be the lag time, your bank is supposed to cover the payment you promised through your card. Now if you don't have agreements in place (for example, overdraft) with your bank, they will likely have to turn down payments that exceed your available balance. Here is the raw deal: In the end, the responsibility to ensure that your available balance is enough is upon you (and whether you have agreements in place to handle such situations) So what happened is very much legal, a business is not obliged to run its payment processing in realtime and no ethics are at stake. To ensure such things do not happen to me, I used to use a sub-account from which my debit card used to get paid. I have since moved to credit cards as the hassle of not overdrawing was too much (and overdraft fees from banks in the US are disastrous, especially for people who actually need such a facility)\"",
"title": ""
},
{
"docid": "0088551e56693f9713c06610f68b44f1",
"text": "You can't make your bank do a charge back. This function is to assist with straight up fraud, not a customer service mistake. (Think spoofed or stolen card or if a vendor intentionally acted fraudulently.) While you may believe what they did is fraud, your bank will require that you provide the vendor with the opportunity to rectify the situation themselves. Trying to call back and giving up after a long hold time won't meet their standards. If banks started letting anyone unhappy with a vendor start doing charge backs, they would be doing nothing else all day. The issues you're describing has not reached the threshold for the bank to authorize a charge back. Comcast has local and regional offices, and you could go in person to speak with someone. Maybe there isn't one near you. There are non-peak hours which wait times will be less. You'll just have to grin and bear it if you truly want the money back. Then, take your business elsewhere and post bad reviews online. Always keep in mind that when you eventually speak with someone, they will not be the person that messed up, and you should be overly nice and polite to them. I promise it will yield far better results than being surly and demanding. Another way to get Comcast's attention would be to file a complaint with the BBB. It might take longer, but I've had this work with big companies, usually with good results. Again, be nice to whomever contacts you. In reference to your recent duplicate question: Mastercard won't be able to help at all. They play no part in the transaction at all.",
"title": ""
},
{
"docid": "e24b171d757ef9cc138878484923fbde",
"text": "\"You promised to pay the loan if he didn't. That was a commitment, and I recommend \"\"owning\"\" your choice and following it through to its conclusion, even if you never do that again. TLDR: You made a mistake: own it, keep your word, and embrace the lesson. Why? Because you keep your promises. (Nevermind that this is a rare time where your answer will be directly recorded, in your credit report.) This isn't moralism. I see this as a \"\"defining moment\"\" in a long game: 10 years down the road I'd like you to be wise, confident and unafraid in financial matters, with a healthy (if distant) relationship with our somewhat corrupt financial system. I know austerity stinks, but having a strong financial life will bring you a lot more money in the long run. Many are leaping to the conclusions that this is an \"\"EX-friend\"\" who did this deliberately. Don't assume this. For instance, it's quite possible your friend sold the (car?) at a dealer, who failed to pay off this note, or did and the lender botched the paperwork. And when the collector called, he told them that, thinking the collector would fix it, which they don't do. The point is, you don't know: your friend may be an innocent party here. Creditors generally don't report late payments to the credit bureaus until they're 30 days late. But as a co-signer, you're in a bad spot: you're liable for the payments, but they don't send you a bill. So when you hear about it, it's already nearly 30 days late. You don't get any extra grace period as a co-signer. So you need to make a payment right away to keep that from going 30 late, or if it's already 30 late, to keep it from going any later. If it is later determined that it was not necessary for you to make those payments, the lender should give them back to you. A less reputable lender may resist, and you may have to threaten small claims court, which is a great expense to them. Cheaper to pay you. They say France is the nation of love. They say America is the nation of commerce. So it's not surprising that here, people are quick to burn a lasting friendship over a temporary financial issue. Just saying, that isn't necessarily the right answer. I don't know about you, but my friends all have warts. Nobody's perfect. Financial issues are just another kind of wart. And financial life in America is hard, because we let commerce run amok. And because our obsession with it makes it a \"\"loaded\"\" issue and thus hard to talk about. Perhaps your friend is in trouble but the actual villain is a predatory lender. Point is, the friendship may be more important than this temporary adversity. The right answer may be to come together and figure out how to make it work. Yes, it's also possible he's a human leech who hops from person to person, charming them into cosigning for him. But to assume that right out of the gate is a bit silly. The first question I'd ask is \"\"where's the car?\"\" (If it's a car). Many lenders, especially those who loan to poor credit risks, put trackers in the car. They can tell you where it is, or at least, where it was last seen when the tracker stopped working. If that is a car dealer's lot, for instance, that would be very informative. Simply reaching out to the lender may get things moving, if there's just a paperwork issue behind this. Many people deal with life troubles by fleeing: they dread picking up the phone, they fearfully throw summons in the trash. This is a terrifying and miserable way to deal with such a situation. They learn nothing, and it's pure suffering. I prefer and recommend the opposite: turn into it, deal with it head-on, get ahead of it. Ask questions, google things, read, become an expert on the thing. Be the one calling the lender, not the other way round. This way it becomes a technical learning experience that's interesting and fun for you, and the lender is dreading your calls instead of the other way 'round. I've been sued. It sucked. But I took it on boldly, and and actually led the fight and strategy (albeit with counsel). And turned it around so he wound up paying my legal bills. HA! With that precious experience, I know exactly what to do... I don't fear being sued, or if absolutely necessary, suing. You might as well get the best financial education. You're paying the tuition!\"",
"title": ""
},
{
"docid": "964ef441a36a8f3558d245c82db5bc45",
"text": "It may have been the standard practice for a long time, and indeed it still is the common practice for my credit union to apply all excess payment directly to the principal. At the risk of sounding a little cynical, I will suggest that there is a profit motive in the move to not applying excess payments to principal unless directly instructed to do so. Interest accrued isn't reduced until the principal is reduced, so it benefits the creditor to both have the money in advance and to not apply it to the principal. You should probably move forward with the expectation that all of your creditors are adversarial even if only in a passive-aggressive manner.",
"title": ""
},
{
"docid": "b6088456fab65cad84e6a54bbf6e1bf7",
"text": "I don't see this article being about the merit of the customers claim but rather the condition of sale: > You agree not to file any complaint, chargeback, claim, dispute, or make any public forum post, review, Better Business Bureau complaint, social media post, or any public statement regarding the order, our website, or any issue regarding your order, for any reason, within this 90 day period, or to threaten to do so within the 90 day period, or it is a breach of the terms of sale, creating liability for damages in the amount of $250, plus any additional fees, damages - both consequential and incidental, calculated on an ongoing basis. I'm happy to rally my pitchfork against any company that includes these conditions.",
"title": ""
},
{
"docid": "7e36c25e1dba1eb52f81421c5381ad65",
"text": "File a small claims lawsuit in the city that the person resides. The court will charge you a small fee and give you a date. They will also summons the other person to appear. Bring all the documentation that shows the following BONUS - Bring the documentation that shows them saying they will not pay you back I had to sue someone once for a very similar problem. I lent them a 6 month interest free loan. They told me to shove it after 6 months and 1 day. So I sued them. The court should accept facebook messages as proof. More than likely though your friend wont even show up which means you win by default. Here's the bad news, that was the easy part. Just because you win in court doesn't mean the money appears the next day. There are a couple ways you may have to recover your money. Best of luck to you!",
"title": ""
},
{
"docid": "ffd92d990a6b96092871ac822eef4a57",
"text": "\"This is not a normal occurrence, and you have every right to be annoyed, but the technical way it usually happens goes like this: What can happen is when the merchant incorrectly completes the transaction without referencing the pre-authorization transaction. The bank effectively doesn't \"\"know\"\" this is the same transaction, so they process it the same way they process any other purchase, and it has no effect on the pre-authorization and related held/pending transaction. As far as the bank knows, you purchased a second set of blinds in the store for $200 and are still waiting on the first order to come in, they have no idea the store screwed up. The reason this is possible is the purpose of the pre-auth in the first place is that it is a contractual agreement between the bank (credit card) and the merchant that the funds are available, will be available except under rare special circumstances, and thus they can go ahead and process the order. This lets the merchant be secure in the knowledge that they can collect their payment, but you aren't paying interest or monthly payments on something you haven't even gotten yet! This system works reasonably well for everyone - right up until someone screws up and fails to properly release a hold, makes a second transaction instead of properly referencing the first one, or the bank screws up their system and fails to correctly match referenced pre-authorization codes to purchases. The problem is that this should not be a normal occurrence, and the people you are speaking with to try to sort out the issue often do not have the authority or knowledge necessary to properly fix the issue, or its such a hassle for them that they hope you just go away and time fixes the issue on its own. The only sure-fire solution to this is: make sure you have so much extra credit line that this doesn't effect you and you can safely let it time out on its own, or stop doing business with this combination of merchant/payment that creates the problem. Back when my credit limits were being pushed, I would never pay at gas pumps because their hold polices were so weird and unpredictable, and I would only pre-pay inside or with cash to avoid the holds.\"",
"title": ""
},
{
"docid": "b4c8a00c2ccd550325c09cc501ffa17f",
"text": "You can either write it off or pursue it. If you write it off I wouldn't do business with the client again, until they bring their balance owed to you back to zero. If you pursue it, try to reach out to the client and find out why they are not paying what they owe you and try to work out a deal with them if they seem negotiable. If they aren't negotiable then you could take the issue to court, but you'll only be proving a point by then.",
"title": ""
},
{
"docid": "29d14308ca1707942c0fe3a844c420fe",
"text": "I did just what you suggest. The card company honored the charge, they told me the temporary number was solely for the purpose of assigning a number to one vendor/business. So even though I set a low limit, the number was still active and the card company paid the request. Small price to pay, but it didn't go as I wished. For this purpose, I've used Visa/Mastercard gift cards. They are often on sale for face value and no additional fees.",
"title": ""
},
{
"docid": "43faf3384b9ca7f557b35ff222e3f0d7",
"text": "You need to know your costs. Some are fixed. Review them. There are some expenses that are variable. Review the amount and if it is reasonable. Review your large orders. Are they increasing? Ask him how he thinks people will steal from the company. Did he see a large order and the customer will default?",
"title": ""
},
{
"docid": "01cacef29c64c11de2e1789f6891d83c",
"text": "It's a pretty good tip. People are often telling you the answer but not explicitly. Example: You call about bad service and demand a refund. The employee tells you: I'm sorry, sir, I can't give you back your money. But maybe he actually said: I'm sorry, sir, *I* can't give you back your money. Maybe someone else can? I'm sorry, sir, I can't *give* you back your money. So not give but trade? I'm sorry, sir, I can't give you back your *money*. So what can you give?",
"title": ""
},
{
"docid": "aeeec46755857b7736b4766bddabbf33",
"text": "First off... If you provide good service than you shouldn't worry... Since you are providing a service and your customers send payment to your PayPal, if there is no dispute made within 90 days, the customer cannot dispute further. However if it is disputed within 90 days than you may run into some trouble. But it may be in your favor if PayPal finds no signs of fraud and since it's a service payment, PayPal cannot really track it compared to if your customers paid you for a product which can be disputed up to 180 Days?? I may be wrong on that one. However if it does get disputed and PayPal favors your clients than you have to pay it back one way or another. You may want to ask your customers or put yourself a description of the service and terms in the invoice. It may help resolve future disputes. I know this because I have called PayPal customer service and ask which I suggest you do too.",
"title": ""
}
] |
fiqa
|
2d85c4c171b61dabb2c10df8a18742a4
|
What exactly happens during a settlement period?
|
[
{
"docid": "22f5b5bd6ddbadb3f7c70481c5b68139",
"text": "\"Securities clearing and settlement is a complex topic - you can start by browsing relevant Wikipedia articles, and (given sufficient quantities of masochism and strong coffee) progress to entire technical books. You're correct - modern trade settlement systems are electronic and heavily streamlined. However, you're never going to see people hand over assets until they're sure that payment has cleared - given current payment systems, that means the fastest settlement time is going to be the next business day (so-called T+1 settlement), which is what's seen for heavily standardized instruments like standard options and government debt securities. Stocks present bigger obstacles. First, the seller has to locate the asset being sold & make sure they have clear title to it... which is tougher than it might seem, given the layers of abstraction/virtualization involved in the chain of ownership & custody, complicated in particular by \"\"rehypothecation\"\" involved in stock borrowing/lending for short sales... especially since stock borrow/lending record-keeping tends to be somewhat slipshod (cf. periodic uproar about \"\"naked shorting\"\" and \"\"failure to deliver\"\"). Second, the seller has to determine what exactly it is that they have sold... which, again, can be tougher than it might seem. You see, stocks are subject to all kinds of corporate actions (e.g. cash distributions, spin-offs, splits, liquidations, delistings...) A particular topic of keen interest is who exactly is entitled to large cash distributions - the buyer or the seller? Depending on the cutoff date (the \"\"ex-dividend date\"\"), the seller may need to deliver to the buyer just the shares of stock, or the shares plus a big chunk of cash - a significant difference in settlement. Determining the precise ex-dividend date (and so what exactly are the assets to be settled) can sometimes be very difficult... it's usually T-2, except in the case of large distributions, which are usually T+1, unless the regulatory authority has neglected to declare an ex-dividend date, in which case it defaults to standard DTC payment policy (i.e. T-2)... I've been involved in a few situations where the brokers involved were clueless, and full settlement of \"\"due bills\"\" for cash distributions to the buyer took several months of hard arguing. So yeah, the brokers want a little time to get their records in order and settle the trade correctly.\"",
"title": ""
},
{
"docid": "31bb2bcfa644d2d77d932c3d312c5cf9",
"text": "During the settlement period, the buyer transfers payment to the seller and the seller transfers ownership to the buyer. This is really a holdover from the days when so much of stock trading was done by individual human traders, and computers were still not a huge part of the operation. Back then, paper tickets for trades exchanged hands, and the time period was actually 5 days, so 3 days is an improvement. A settlement period was necessary for everyone to figure out their trades and do what was necessary to make the settlements happen, so it was not always a quick process, mainly because of smaller trading firms that didn't have technology to help them along. Nowadays, technology makes settlements easy, and they usually occur at the end of the trading day. The trading firms sum up their trades, figure out who they owe, and send lump sum settlements to the counterparties to their trades. If anything, the 3-day period may just be used now to let parties verify trades before settling. I hope this helps. Good luck!",
"title": ""
}
] |
[
{
"docid": "b3ab4e4fb8cddfc0117247a078637e87",
"text": "\"The settlement date for any trade is the date on which the seller gets the buyer's money and the buyer gets the seller's product. In US equities markets the settlement date is (almost universally) three trading days after the trade date. This settlement period gives the exchanges, the clearing houses, and the brokers time to figure out how many shares and how many dollars need to actually be moved around in order to give everyone what they're owed (and then to actually do all that moving around). So, \"\"settling\"\" a short trade is the same thing as settling any other trade. It has nothing to do with \"\"closing\"\" (or covering) the seller's short position. Q: Is this referring to when a short is initiated, or closed? A: Initiated. If you initiate a short position by selling borrowed shares on day 1, then settlement occurs on day 4. (Regardless of whether your short position is still open or has been closed.) Q: All open shorts which are still open by the settlement date have to be reported by the due date. A: Not exactly. The requirement is that all short positions evaluated based on their settlement dates (rather than their trade dates) still open on the deadline have to be reported by the due date. You sell short 100 AAPL on day 1. You then cover that short by buying 100 AAPL on day 2. As far as the clearing houses and brokers are concerned, however, you don't even get into the short position until your sell settles at the end of day 4, and you finally get out of your short position (in their eyes) when your buy settles at the end of day 5. So imagine the following scenarios: The NASDAQ deadline happens to be the end of day 2. Since your (FINRA member) broker has been told to report based on settlement date, it would report no open position for you in AAPL even though you executed a trade to sell on day 1. The NASDAQ deadline happens to be the end of day 3. Your sell still has not settled, so there's still no open position to report for you. The NASDAQ deadline happens to be the end of day 4. Your sell has settled but your buy has not, so the broker reports a 100 share open short position for you. The NASDAQ deadline happens to be the end of day 5. Your sell and buy have both settled, so the broker once again has no open position to report for you. So, the point is that when dealing with settlement dates you just pretend the world is 3 days behind where it actually is.\"",
"title": ""
},
{
"docid": "e1fdcd7e54bb83602f5e55c5b27dc940",
"text": "At the bottom of the page you linked to, NASDAQ provides a link to this page on nasdaqtrader.com, which states Each FINRA member firm is required to report its “total” short interest positions in all customer and proprietary accounts in NASDAQ-listed securities twice a month. These reports are used to calculate short interest in NASDAQ stocks. FINRA member firms are required to report their short positions as of settlement on (1) the 15th of each month, or the preceding business day if the 15th is not a business day, and (2) as of settlement on the last business day of the month.* The reports must be filed by the second business day after the reporting settlement date. FINRA compiles the short interest data and provides it for publication on the 8th business day after the reporting settlement date. The dates you are seeing are the dates the member firms settled their trades. In general (also from nasdaq.com), the settlement date is The date on which payment is made to settle a trade. For stocks traded on US exchanges, settlement is currently three business days after the trade.",
"title": ""
},
{
"docid": "1fd9eff2faeeb0d51d749525ca2d2c11",
"text": "What typically happens to brokerage accounts during similar situations? This depends on country, time and situation. Nothing is predictable in such situations. In Greece during the said period the stock exchanges were closed for 5 weeks. There was no trading. Edits: Every situation is different and it would be unfair to compare one against another or use it to predict something else. Right now in India due to demonitization, cash withdrawal is limited. One can trade in stocks, unlimited bank transfers, transfer money out of India ...etc. Everything same except for cash withdrawal. In 1990, the ASEAN countries survived a financial collapse, everything was allowed except moving money out of country.",
"title": ""
},
{
"docid": "e1869cf15c6b9a97003f6139f6dfb8f0",
"text": "No, you cannot withdraw the money until settlement day. Some brokers will allow you to trade with unsettled funds, but you cannot withdraw it until it is settled. Think about it, when you buy stock you have to pay for them by T+3, so if you sell you actually don't receive the funds until T+3.",
"title": ""
},
{
"docid": "6ad39f83aacc8997b0def6e760c28763",
"text": "You have to call Interactive Brokers for this. This is what you should do, they might even have a web chat. These are very broker specific idiosyncrasies, because although margin rules are standardized to an extent, when they start charging you for interest and giving you margin until settlement may not be standardized. I mean, I can call them and tell you what they said for the 100 rep.",
"title": ""
},
{
"docid": "32c2716abf18c9873139c68bc1960ebb",
"text": "Looks like the result got decided recently, with a little uncertainty about exactly how much is the total allowed claims: http://www.wilmingtontrust.com/gmbondholders/plan_disclosure.html http://www.wilmingtontrust.com/gmbondholders/pdf/GUC_Trust_Agreement.pdf They give the following example: Accordingly, pursuant to Section 5.3 of the GUC Trust Agreement, a holder of a Disputed Claim in the Amount of $2,000,000 that was Allowed in the amount of $1,000,000 (A) as of the end of the first calendar quarter would receive: Corresponding to the Distribution to the Holders of Initial Allowed Claims: Corresponding to the First Quarter Distribution to Holders of Units: Total:",
"title": ""
},
{
"docid": "df7fcd1a81102f1a96ffe8c8bfdb0914",
"text": "\"Ignoring the complexities of a standardised and regulated market, a futures contract is simply a contract that requires party A to buy a given amount of a commodity from party B at a specified price. The future can be over something tangible like pork bellies or oil, in which case there is a physical transfer of \"\"stuff\"\" or it can be over something intangible like shares. The purpose of the contract is to allow the seller to \"\"lock-in\"\" a price so that they are not subject to price fluctuations between the date the contract is entered and the date it is complete; this risk is transferred to the seller who will therefore generally pay a discounted rate from the spot price on the original day. In many cases, the buyer actually wants the \"\"stuff\"\"; futures contracts between farmers and manufacturers being one example. The farmer who is growing, say, wool will enter a contract to supply 3000kg at $10 per kg (of a given quality etc. there are generally price adjustments detailed for varying quality) with a textile manufacturer to be delivered in 6 months. The spot price today may be $11 - the farmer gives up $1 now to shift the risk of price fluctuations to the manufacturer. When the strike date rolls around the farmer delivers the 3000kg and takes the money - if he has failed to grow at least 3000kg then he must buy it from someone or trigger whatever the penalty clauses in the contract are. For futures over shares and other securities the principle is exactly the same. Say the contract is for 1000 shares of XYZ stock. Party A agrees to sell these for $10 each on a given day to party B. When that day rolls around party A transfers the shares and gets the money. Party A may have owned the shares all along, may have bought them before the settlement day or, if push comes to shove, must buy them on the day of settlement. Notwithstanding when they bought them, if they paid less than $10 they make a profit if they pay more they make a loss. Generally speaking, you can't settle a futures contract with another futures contract - you have to deliver up what you promised - be it wool or shares.\"",
"title": ""
},
{
"docid": "95c2adec4356b3c197307f57a31ce4a5",
"text": "Brokerage firms must settle funds promptly, but there's no explicit definition for this in U.S. federal law. See for example, this article on settling trades in three days. Wikipedia also has a good write-up on T+3. It is common practice, however. It takes approximately three days for the funds to be available to me, in my Canadian brokerage account. That said, the software itself prevents me from using funds which are not available, and I'm rather surprised yours does not. You want to be careful not to be labelled a pattern day trader, if that is not your intention. Others can better fill you in on the consequences of this. I believe it will not apply to you unless you are using a margin account. All but certainly, the terms of service that you agreed to with this brokerage will specify the conditions under which they can lock you out of your account, and when they can charge interest. If they are selling your stock at times you have not authorised (via explicit instruction or via a stop-loss order), you should file a complaint with the S.E.C. and with sufficient documentation. You will need to ensure your cancel-stop-loss order actually went through, though, and the stock was sold anyway. It could simply be that it takes a full business day to cancel such an order.",
"title": ""
},
{
"docid": "90ce3189b5431a3e5deccd34b726d818",
"text": "The original option writer (seller) can close his short position in the contracts he wrote by purchasing back matching contracts (i.e. contracts with the same terms: underlying, option type, strike price, expiration date) from any others who hold long positions, or else who write new matching contract instances. Rather than buyer and seller settling directly, options are settled through a central options clearing house, being the Options Clearing Corporation for exchange-listed options in the U.S. See also Wikipedia - Clearing house (finance). So, the original buyer of the put maintains his position (insurance) and the clearing process ensures he is matched up with somebody else holding a matching obligation, if he chooses to exercise his put. I also answered a similar question but in more detail, here.",
"title": ""
},
{
"docid": "526bc7b18ef95d6807cad2ecda7b09ab",
"text": "If you participate, you will either get some money or some other renumeration. If you do not participate, you will not get anything. The only risk of participating is that if you have suffered actual damages, the settlement may under-compensate you. By significant, I mean thousands of dollars, since bringing suit yourself would be very expensive. Unless you can demonstrate that you have suffered from significant damages as a result of MBNA's bad behavior, joining the class to get whatever you are going to get is almost certainly a no-brainer decision.",
"title": ""
},
{
"docid": "fe0000ec75eb49b8dd3971dad3a268c4",
"text": "Typically there are several parties involved: (Sometimes one company plays multiple roles; for example AmEx is a network and an issuer.) When a merchant charges a card and the issuer approves it, money is transferred from the issuer to the acquirer to the merchant. This settlement process takes some time, but generally is completed within a day. Of course, most cardholders pay on a monthly basis. The issuer must use their own funds in the mean time. If the cardholder defaults, the issuer takes the loss.",
"title": ""
},
{
"docid": "123b23a493b497031a0d631a994c11dc",
"text": "The T+3 settlement date only affects cash accounts. In a cash account, you need to wait until the T+3 settlement date for your funds to be available to make your next trade. But if you convert your cash account into a margin account, then you do not need to wait until the T+3 settlement date for your next trade - your broker will allow you to make another trade immediately.",
"title": ""
},
{
"docid": "12679eab5d95c3cab86365b68d69c28d",
"text": "I used to work on the software in the front office (and a bit of the middle office) of a brokerage firm. This page describes the process pretty well. Basically there are three parts: So to your question: how does an order get executed? ETFs work the same since they are effectively shares of a mutual fund's assets. True mutual fund shares work differently since they don't get traded in the market. They get traded at the end of the market as just a bookkeeping exercise.",
"title": ""
},
{
"docid": "79b730bea961def6987f5d292bed6251",
"text": "Let P denote the amount of the investment, R the rate of return and I the rate of inflation. For simplicity, assume that the payment p is made annually right after the return has been earned. Thus, at the end if the year, the investment P has increased to P*(1+R) and p is returned as the annuity payment. If I = 0, the entire return can be paid out as the payment, and thus p = P*R. That is, at the end of the year, when the dust settles after the return P*R has been collected and paid out as the annuity payment, P is again available at the beginning of the next year to earn return at rate R. We have P*(1+R) - p = P If I > 0, then at the end of the year, after the dust settles, we cannot afford to have only P available as the investment for next year. Next year's payment must be p*(1+I) and so we need a larger investment since the rate of return is fixed. How much larger? Well, if the investment at the beginning of next year is P*(1+I), it will earn exactly enough additional money to pay out the increased payment for next year, and have enough left over to help towards future increases in payments. (Note that we are assuming that R > I. If R < I, a perpetuity cannot be created.) Thus, suppose that we choose p such that P*(1+R) - p = P*(1+I) Multiplying this equation by (1+I), we have [P(1+I)]*(1+R) - [p*(1+I)] = P*(1+I)^2 In words, at the start of next year, the investment is P*(1+I) and the return less the increased payout of p*(1+I) leaves an investment of P*(1+I)^2 for the following year. Each year, the payment and the amount to be invested for the following year increase by a factor of (1+I). Solving P*(1+R) - p = P*(1+I) for p, we get p = P*(R-I) as the initial perpetuity payment and the payment increases by a factor (1+I) each year. The initial investment is P and it also increases by a factor of (1+I) each year. In later years, the investment is P*(1+I)^n at the start of the year, the payment is p*(1+I)^n and the amount invested for the next year is P*(1+I)^{n+1}. This is the same result as obtained by the OP but written in terms that I can understand, that is, without the financial jargon about discount rates, gradients, PV, FV and the like.",
"title": ""
},
{
"docid": "b1e85d77351e39748acab3932a4c949f",
"text": "I wish this was the case in Canada. I lost about 60k on my home in one year and have to sell now to move for work. In the US I could simply default and the bank takes the loss. In Canada if I default, CMHC pays the bank, then I'm sued by CMHC and stuck with the bad debt. Simply put - here the onus of repayment is on the lender, not the lending institution. It sounds good until you are the one looking at losing your shirt.",
"title": ""
}
] |
fiqa
|
8835892871b61ef4de87a6ec64064dcd
|
Value of credit score if you never plan to borrow again?
|
[
{
"docid": "1f1da2383bf77d16e0fca936499ad01e",
"text": "\"In the United States, the Fair Credit Reporting Act allows companies to buy your credit information for \"\"legitimate business needs.\"\" The legitimate use of credit scores and credit reporting varies state to state, but like it or not, you can expect a lot more non-lending use of your credit information in the future. Companies and individuals use credit reports as an assessment of general behavior because, unfortunately, they work. You've seen the disclaimers about \"\"past performance…\"\", but unfortunately in this case… past performance really has been shown to be a pretty reliable indicator of future behavior. So…\"",
"title": ""
},
{
"docid": "f56ea82cfd41bbaf3e175e705bb35301",
"text": "\"what are the incentives to that person to actually pay off his/her debt as opposed to just walking away from it and relying on the cash (s)he has for the future spending needs as opposed to borrowing Well, you can't just \"\"walk away\"\" from debt - you still owe it. Eventually your creditors would end up suing you in court for the money, plus interest owed. I suppose you could try to continually duck the authorities, but you'd still owe the money legally.\"",
"title": ""
},
{
"docid": "cf72b9016862b87ac26ec47661af81e8",
"text": "If you're wealthy why do you think they wouldn't sue you for the money you owed?? And, as sunk818 says, credit scores can influence insurance costs. While you could self-insure your home you generally can't self-insure when it comes to liability coverage on a car.",
"title": ""
},
{
"docid": "124cae85af8990ca07a7801c5d000706",
"text": "Only reason I can think of is that having a credit card, or several, is handy for buying stuff on-line, or not having to haul around a fat wallet full of cash. Of course for some of us, getting the cash back and 0% interest periods are nice, too, even if we don't really need the money. Same as for instance trying to get good mpg when you're driving, even if you could easily afford to fill up a Hummer. It's a game, really.",
"title": ""
},
{
"docid": "b7903f7bac6c4a5fce750be794314e88",
"text": "According to Money Girl, home insurance premiums are higher if you have a poor credit score. You might self-insure though if you are wealthy.",
"title": ""
},
{
"docid": "7cfb64bbf0a388ad9bda6cea06cdc2ce",
"text": "\"There's many concrete answers, but there's something circular about your question. The only thing I can think of is that phone service providers ask for credit report when you want to start a new account but I am sure that could be worked around if you just put down a cash deposit in some cases. So now the situation is flipped - you are relying on your phone company's credit! Who is to say they don't just walk away from their end of the deal now that you have paid in full? The amount of credit in this situation is conserved. You just have to eat the risk and rely on their credit, because you have no credit. It doesn't matter how much money you have - $10 or $10000 can be extorted out of you equally well if you must always pay for future goods up front. You also can't use that money month-by-month now, even in low-risk investments. Although, they will do exactly that and keep the interest. And I challenge your assumption that you will never default. You are not a seraphic being. You live on planet earth. Ever had to pay $125,000 for a chemo treatment because you got a rare form of cancer? Well, you won't be able to default on your phone plan and pay for your drug (or food, if you bankrupt yourself on the drug) because your money is already gone. I know you asked a simpler question but I can't write a good answer without pointing out that \"\"no default\"\" is a bad model, it's like doing math without a zero element. By the way, this is realistic. It applies to renting in, say, New York City. It's better to be a tenant with credit who can withhold rent in issue of neglected maintenance or gross unfair treatment, than a tenant who has already paid full rent and has left the landlord with little market incentive to do their part.\"",
"title": ""
},
{
"docid": "bd54cde816bd45947791601cbb7f80ee",
"text": "\"You're definitely not the first to pose this question. During the peak of the housing crisis I noticed a decent amount of very high dollar properties get abandoned to their fates. Individuals who can afford the mortgage on a 5 million dollar home don't necessarily need their credit to survive so it made more sense to let the asset (now a liability) go and take the hit on their credit for a few years. Unsecured debt, as mentioned is a little trickier because its backed by default by your personal estate. If the creditor is active they will sue you and likely win unless there are issues with their paperwork. Thing is though, you might escape some impacts of the debt to your credit rating and you might not \"\"need\"\" credit, but if you were to act as a wealthy person and not \"\"new money\"\" you would observe the significant value of using credit. credit allows you to leverage your wealth and expand the capacity of your money to import your overall wealth picture. It may prove best to learn that and then make more wealth on your winnings than take the short sighted approach and welch on the debt.\"",
"title": ""
}
] |
[
{
"docid": "a6e78d648403a607c83fb538ac0fd1d7",
"text": "I have recently been the lender to a couple people. It was substantially less money (~$3k), but I was trusting their good faith to pay me back. As a lender, I will never do it again. Reasons, Overall, not worth it.",
"title": ""
},
{
"docid": "67b39f9d9a0fa81fd6d9e382b9752159",
"text": "\"The conclusion that \"\"it's bad to have 0% utilization\"\" from the data you linked is misleading. When people have zero history, they also have zero utilization. The fact that generally people with zero utilization are credit virgins is what drives that average score. Obviously, people with zero, or limited, history will have significantly lower credit scores than folks with some utilization and a lot of history. In response to the couple comments regarding the dip on attaining 0% utilization. The data shows a 67 point drop in average score from 0% to 1%-10%. The stark deviation in average score between those two groups is not the result of a couple point change because of zero utilization.\"",
"title": ""
},
{
"docid": "01f84dfb9ac0438003575fe35c16a1ed",
"text": "Well, it is a negative point of view, but nobody in the history of money has ever loaned money because they like you. I suppose you could paint it as an honest point of view. All money lending is for profit. If you have a high score, you are very likely to repay your loan because you are lower risk. We always hear lower risk... but the risk is that they won't make money off of you. I think that just like we buy previously owned vehicles cars instead of used cars, and we banks call them service fees instead of junk fees, our credit score discusses our credit worthiness instead of profitability But none of that means you can't benefit from it. It isn't a fear tactic, it is a way to judge each other. You probably pay interest and fees to keep it high, but that is price of lending. I think the questioner has a negative view of credit (which I suppose is fine and is their right, I will defend their right to an opinion) but the way we do and judge credit is neither evil or benevolent. I could certainly agree that more transparency would be good, but only for honest folks. If the credit bureaus made it public how they judged us, there would be a new industry for people who want to game the system. Update Since it always will cost to use credit, and using credit is the only way to prove your a low credit risk, it will therefore always cost money to raise your credit score. However the return on investment is exemplified in this question: a person with no credit was able to get a loan, but at serious out of pocket cost. Later, after establishing credit at a price of real money, he was able to secure a nearly identical loan for considerably less cost (in terms of interest paid) because he had proven himself worthy. When I say proven, I mean paid interest. There is nothing wrong with questioning the system, change only occurs when people question the status quo. And for sure our current system is not perfect, but like many employed systems while it is terrible but there is nothing better.",
"title": ""
},
{
"docid": "bf0dd5767867e5eaa5e7a011d127afa5",
"text": "Has this already occurred, if not: why? What are the road blocks? I think it's just that the barriers to entry are rather high. Lenders would potentially be interested in a new score if it demonstrably saved them money (by more effectively weeding out risky borrowers), but because the FICO score already exists and they already know how to use it, there are costs and risks in making the transition, so lenders are unlikely to switch without solid evidence. But to get solid evidence, you would need to test out the new score and see how well it correlated with loan default and so forth. So there is a catch-22: no one will use the score until they know it works, but you can't know whether it works until people start using it. The existence of non-FICO credit scores (like VantageScore) shows that it is possible for alternatives to crop up. The question is just whether they have enough concrete advantages to overcome the track record and name recognition of FICO. Only time will tell. As for why an alternative score wouldn't be open source, you could ask the same about almost anything. Creating a measurably better score would likely take lots of time and money (to gather and analyze data both on characteristics of borrowers and on their record of debt payment). If someone is able to do that, they would probably rather do it secretly and then milk it for billions by selling the results of the secret for a long time without selling the secret itself, as FICO has done.",
"title": ""
},
{
"docid": "a05dfe3bfec8a8b33e261f14d14cdadb",
"text": "How bad would maxing out my credit card once a year affect my score is a related discussion. You shouldn't be using 20%, but rather keep the monthly statement below 20%. If the credit lines add to $5000, charging gas and paying in full each month will help your score (obviously, I assume you don't pay more than $1000/mo for gas). Letting the balance go unpaid month to month means you are paying interest. Probably 18% or more. This is bad.",
"title": ""
},
{
"docid": "71e65b915ad5bd6b5e9fba34bd64e114",
"text": "The whole point of a credit report and, by extension, a credit score, is to demonstrate (and judge) your ability to repay borrowed funds. Everything stems from that goal; available credit, payment history, collections, etc all serve to demonstrate whether or not you personally are a good investment for lenders to pursue. Revolving credit balances are tricky because they are more complicated than fixed loans (for the rest of this answer, I'll just talk about credit cards, though it also applies to lines of credit such as overdraft protection for checking accounts, HELOCs, and other such products). Having a large available balance relative to your income means that at any time you could suddenly drown yourself in debt. Having no credit cards means you don't have experience managing them (and personal finances are governed largely by behavior, meaning experience is invaluable). Having credit cards but carrying a high balance means you know how to borrow money, but not pay it back. Having credit cards but carrying no balance means you don't know how to borrow money (or you don't trust yourself to pay it back). Ideally, lenders will see a pattern of you borrowing a portion of the available credit, and then paying it down. Generally that means utilizing up to 30% of your available credit. Even if you maintain the balance in that range without paying it off completely, it at least shows that you have restraint, and are able to stop spending at a limit you personally set, rather than the limit the bank sets for you. So, to answer your question, 0% balance on your credit cards is bad because you might as well not have them. Use it, pay it off, rinse and repeat, and it will demonstrate your ability to exercise self control as well as your ability to repay your debts.",
"title": ""
},
{
"docid": "58f282bc2b839fbc071dca805eaccf6c",
"text": "\"Read the terms carefully. With promotional offers, if you do anything \"\"bad\"\", the promotion is terminated and you immediately revert to either your normal rate or a penalty rate. \"\"Bad\"\" includes things like: making a late payment, going over your limit, paying less than the minimum payment, etc. I wouldn't sweat the potential credit score impacts. These promotions are pretty much the best deals that you can get for an unsecured loan.\"",
"title": ""
},
{
"docid": "c04766bd3dd7726caf75ff1eeab53a63",
"text": "\"Your use of the term \"\"loan\"\" is confusing, what you're proposing is to open a new card and take advantage of the 0% APR by carrying a balance. The effects to your credit history / score will be the following:\"",
"title": ""
},
{
"docid": "c0bd03783aee58b3f6f5ef4eb8fa4e86",
"text": "You don't need a credit score. After I paid off my house mortgage many years ago I had this discussion with my mortgage agent (now bank VP). Your credit score is not a measure your ability to repay. It is a behavioral model and a statistical measure of the likelihood that the banks will make money off of you when they give you a loan, and a marketing tool that the banking industry uses to sell you long term and short term debt (mortgages and credit cards). Statistically speaking, people who close out major loans change their behaviors, and the model captures this change in behavior. In my own case, even though I have a credit history and sufficient cash is the bank to buy my next home outright, I have no credit score . What the model says is that people with my behavioral profile are not likely to take a loan, and if they did take one, they would pay it back so quickly that the bank would not even recoup the cost of initiating the loan. In short, people with my profile are bad news for the loans side of the bank. Thanks @quid for suggesting I capture this and post it as an answer",
"title": ""
},
{
"docid": "a20d9562e99742ffa112be51363bb7c9",
"text": "If I use my credit card on my ITIN and behave like a good guy (paying everything on time), will it create history for my SSN next year or will I have to start from scratch? Yes, you'll keep your history, it will be reported on your SSN when you update your creditors with it. I have an option of using a secured card v/s an unsecured one. Which one is better from the view of my credit history? The one which you don't have to pay for. Consider the value of money you're using for the secured card, and all the fees and interest you expect to pay. Unless you're planning on a mortgage in the next couple of years, there's no rush with the credit. It is definitely not worth paying money for.",
"title": ""
},
{
"docid": "eeb983da9cfabadda4c0df8aeb8309d3",
"text": "I have heard that it is better for your credit score to pay them down over time. Will it make much of a difference? I have never heard that, however, the financial institutions (who are charging you an amount of interest which was at one time in the not so distant past classified and punishable in state criminal codes) really enjoy you thinking that way. You are clearly capable of doing the math yourself. While I don't know the exact numbers, I am totally confident that you will find in about 5 or 10 minutes (if that long) that eliminating debt of any kind in your life will pay an immediate return that beats the great majority of other investments in terms of risk/reward. After the immediate financial return, there is a quieter, subtler, and even greater long term benefit. Basic principle: Highest Rates First Perhaps this decision could be considered slightly less important than deciding not to smoke during your youth; but I would put it as a close second. You are already in a position where you can see the damage that your prior decisions (about financial debt) have produced. Run the clock back to the time in your life when you were debt free. Now, pay off that debt with the big check, and start from zero. Now, turn on your psychic powers and predict the same amount of time, in the future, with the same amount of money (don't even try to adjust for inflation; just use flat dollars) WITHOUT losing the money which you have given to the financial institutions during this previous part of your life. Do you now see why the financial institutions want you to think about slowly paying them off instead of waking up tomorrow without owing them anything ?",
"title": ""
},
{
"docid": "757f07686cc03e3eb9ce39fad86bef4b",
"text": "\"The worth of a credit score (CS) is variable. If you buy your stuff outright with 100% down then your CS is worthless. If you take a loan to buy stuff then it is worth exactly what you save in interest versus a poor score. But there is also the \"\"access\"\" benefit of CS where loans will no longer be available to you, forcing you to rent. If you consider rent as money down teh tiolet then this could factor in. The formula for CS worth is different for everyone. Bill Gates CS is worth zero to him. Walking away from a mortage is not the same as walking away from a loan. A mortage has collateral. There are 2 objects: the money, and the house. If you walk away the bank gets the house as a fair trade. They keep all money you put against the house to boot! Sometimes the bank PROFITS when you walk away. So in a good market you could consider walking away to be the Moral Michael thing to do. :)\"",
"title": ""
},
{
"docid": "8143e59701da827051bb11538170aa2e",
"text": "Hi guys, have a question from my uni finance course but I’m unsure how to treat the initial loan (as a bond, or a bill or other, and what the face value of the loan is). I’ll post the question below, any help is appreciated. “Hi guys, I have a difficult university finance question that’s really been stressing me out.... “The amount borrowed is $300 million and the term of the debt credit facility is six years from today The facility requires minimum loan repayments of $9 million in each financial year except for the first year. The nominal rate for this form of debt is 5%. This intestest rate is compounded monthly and is fixed from the date the facility was initiated. Assume that a debt repayment of $10 million is payed on 31 August 2018 and $9million on April 30 2019. Following on monthly repayments of $9 million at the end of each month from May 31 2019 to June 30 2021. Given this information determine the outstanding value of the debt credit facility on the maturity date.” Can anyone help me out with the answer? I’ve been wracking my brain trying to decide if I treat it as a bond or a bill.” Thanks in advance,",
"title": ""
},
{
"docid": "707710b1f52ebd3e174ecd48ca16ad0c",
"text": "\"I have never had a credit card and have been able to function perfectly well without one for 30 years. I borrowed money twice, once for a school loan that was countersigned, and once for my mortgage. In both cases my application was accepted. You only need to have \"\"good credit\"\" if you want to borrow money. Credit scores are usually only relevant for people with irregular income or a past history of delinquency. Assuming the debtor has no history of delinquency, the only thing the bank really cares about is the income level of the applicant. In the old days it could be difficult to rent a car without a credit car and this was the only major problem for me before about 2010. Usually I would have to make a cash deposit of $400 or something like that before a rental agency would rent me a car. This is no longer a problem and I never get asked for a deposit anymore to rent cars. Other than car rentals, I never had a problem not having a credit card.\"",
"title": ""
},
{
"docid": "9682391181e29e0ff28ebdd867c816e5",
"text": "Your credit rating will rise once the loan is repaid or paid regularly (in time). It will not get back to normal instantly. If the property is dead weight you may want to sell it so your credit score will increase in the medium term.",
"title": ""
}
] |
fiqa
|
78aefe3fc9be5b3f813e78302a8f32d2
|
For SSI, is “authorized user” status on a bank account the same as “ownership”?
|
[
{
"docid": "a8d3723c9efcbb61d7eed84a2e6893c2",
"text": "\"Having dealt with with Social Security, state agencies, and banks more than I'd care to, I would urge you to do the following: 1) Get a 100% clear answer on whether or not you are listed as \"\"joint\"\" or \"\"authorized user/signer\"\" for an account. This will probably require a call to the bank, but for less than an hour of you and your friend's time you will save yourself a whole lot of hassle. The difference is like this: if you worked at a business that added you as an authorized user for a credit or debit card, this would allow you to use the card to buy things. But that doesn't make the money in the bank yours! On the other hand if you are listed as \"\"joint\"\", this regards ownership, and it could become tricky to establish whether its your money or not to any governmental satisfaction. 2) You are completely correct in being honest with the agency, but that's not enough - if you don't know what the facts are, you can't really be honest with them. If the form is unclear it's ok to ask, \"\"on having a bank account, does being listed as an authorized user on someone else's account count if it isn't my money or bank account?\"\" But if you are listed as holding the account jointly, that changes the question to: \"\"I am listed as joint on someone else's checking account, but it isn't my money - how is that considered?\"\" To Social Security it might mean generating an extra form, or it might mean you need to have the status on the account changed, or they might not care. But if you don't get the facts first, they won't give you the right answers or help you need. And from personal experience, it's a heck of a lot easier to get a straight and clear answer from a bank than it is from a federal government agency. Have the facts with you when you contact them and you'll be ok - but trust me, you don't want them guessing!\"",
"title": ""
}
] |
[
{
"docid": "9cd038c053f0255c2835037a6e81d46d",
"text": "The ownership of the house depends on what the original deed transferring title at the time of purchase says and how this ownership is listed in government records where the title transfer deed is registered. Hopefully the two records are consistent. In legal systems that descended from British common law (including the US), the two most common forms of ownership are tenancy in common meaning that, unless otherwise specified in the title deed, each of the owners has an equal share in the entire property, and can sell or bequeath his/her share without requiring the approval of the others, and joint tenancy with right of survivorship meaning that all owners have equal share, and if one owner dies, the survivors form a new JTWROS. Spouses generally own property, especially the home, in a special kind of JTWROS called tenancy by the entirety. On the other hand, the rule is that unless explicitly specified otherwise, tenancy in common with equal shares is how the owners hold the property. Other countries may have different default assumptions, and/or have multiple other forms of ownership (see e.g. here for the intricate rules applicable in India). Mortgages are a different issue. Most mortgages state that the mortgagees are jointly and severally liable for the mortgage payments meaning that the mortgage holder does not care who makes the payment but only that the mortgage payment is made in full. If one owner refuses to pay his share, the others cannot send in their shares of the mortgage payment due and tell the bank to sue the recalcitrant co-owner for his share of the payment: everybody is liable (and can be sued) for the unpaid amount, and if the bank forecloses, everybody's share in the property is seized, not just the share owned by the recalcitrant person. It is, of course, possible to for different co-owners to have separate mortgages for their individual shares, but the legalities (including questions such as whose lien is primary and whose secondary) are complicated. With regard to who paid what over the years of ownership, it does not matter as far as the ownership is concerned. If it is a tenancy in common with equal shares, the fact that the various owners paid the bills (mortgage payments, property taxes, repairs and maintenance) in unequal amounts does not change the ownership of the property unless a new deed is recorded with the new percentages. Now, the co-owners may decide among themselves as a matter of fairness that any money realized from a sale of the property should be divided up in accordance with the proportion that each contributed during the ownership, but that is a different issue. If I were a buyer of property titled as tenancy in common, I (or the bank who is lending me money to make the purchase) would issue separate checks to each co-seller in proportion to the percentages listed on the deed of ownership, and let them worry about whether they should transfer money among themselves to make it equitable. (Careful here! Gift taxes might well be due if large sums of money change hands).",
"title": ""
},
{
"docid": "0d57a595cc31caf9543fc27603a5a3c4",
"text": "Any institution that issues checks and is connected to the ACH system can be the passive side. Any institution that clears checks and is connected to the ACH system can be the originating side. Not any institution that can be - in fact is. Your credit union doesn't provide this service because they don't want to. It costs them money to implement and support it, but they don't see the required benefit to justify it. They can. My credit union does that.",
"title": ""
},
{
"docid": "82ff187f4225026f40610da4f9d69f54",
"text": "\"There's no difference between \"\"individual\"\" and \"\"business\"\" in this context. What is a personal transaction that involves credit card? You have a garage sale? Its business. You sell something on craigslist - business. Want to let people pay for your daughter's girlscout cookies - business. There's no difference between using Paypal (which has its own credit card reader, by the way) and Square in this context. No-one will ask for any business licenses or anything, just your tax id (be it SSN or EIN). Its exactly the same as selling on eBay and accepting credit cards through your Paypal account, conceptually (charge-back rules are different, because Square is a proper merchant account, but that's it).\"",
"title": ""
},
{
"docid": "e0ceb337a0304f54629cb835061b53e1",
"text": "I have a loan that was picked up by BofA, too. They required escrow, but there was a problem with one of their checks to my insurance company where it evidently got lost in the mail. My insurance company contacted me, and I called BofA, who said it had been paid and may just be taking the insurance company a while to credit all the individual accounts (they send a check for a lot of customers at a time). Well, since the check wasn't received, my insurance company contacted me again, and I finally straightened it out with everyone. After that, I complained that it would have been much easier for me if I paid it myself instead of being a middle man, so they canceled my escrow, refunded the money to me, and now I pay the taxes and insurance myself. I prefer it that way, as it simplifies things. I've been a little surprised that BofA has been really nice whenever I contact them, and always seems willing to make me happy. Maybe it's just because I pay on time and have paid a lot of extra on the principal so that there's no danger that I'll default.",
"title": ""
},
{
"docid": "d3682701ac953d32c8db377f726f3726",
"text": "Is anything possible, and if so, how? Because of the circumstances, there is nothing you can do. You do not have the ISIN, nor are you a part-owner of the account. The information you would need is: As always, good luck.",
"title": ""
},
{
"docid": "fe924b06b4f744985a5c1a50c6871e3b",
"text": "\"In your words, you want to \"\"easily determine whether an item was purchased as part of our individual accounts, or our combined family account.\"\" It's not clear exactly to me what kind of reporting you're trying to get. (I find a useful approach here to be to start with the output you're trying to get from a system, and then see how that maps to the input you want to give the system.) Here's some possibilities:\"",
"title": ""
},
{
"docid": "e0032a751ea184ad652de18d6dacd66d",
"text": "\"I would call the bank and ask how the person is on the account. If they are an owner, or are an authorized user, or what type of owner they are, etc. If the bank makes the distinction between \"\"user\"\" and \"\"owner\"\" then most likely, your funds are not able to be seized. If they are a joint owner, then, typically, 100% of the money is yours and 100% of the money is theirs and either of you could withdraw all the money, close the account, or have the money seized as part of a legal action.\"",
"title": ""
},
{
"docid": "2d3c6d1520bf357ce948881b6c543ae4",
"text": "No financial interest means that you have signing authority over the account, but you don't own the money in it and aren't allowed to withdraw from it at will. One example would be a business account owned by a company where you're employed as a purchasing manager, and you need to sign checks drawn on that account to pay invoices. FBAR doesn't care about income -- it just wants to know about every account that you having signing authority over.",
"title": ""
},
{
"docid": "e4804894dbb9e010b600e66e16c27c06",
"text": "You can open an account in US without having SSN. You need to be physically present to open the account.",
"title": ""
},
{
"docid": "22ee74f1aa2b5b26d759731c67d0ae55",
"text": "\"Social security number should only be needed for things that involve tax withholding or tax payment. Your bank or investment broker, and your employer, need it so they can report your earnings. You need it when filing tax forms. Other than those, nobody should really be asking you for it. The gym had absolutely no good reason to ask and won't have done anything with the number. I think we can ignore that one. The store cards are a bigger problem. Depending on exactly what was done with the data, you may have been messing up the credit record of whoever legitimately had that number... and if so you might be liable on fraud charges if they or the store figure out what happened and come after you. But that's unrelated to the fact that you have a legitimate SSN now. Basically, you really don't want to open this can of worms. And I hope you're posting from a disposable user ID and not using your real name... (As I noted in a comment, the other choice would be to contact the authorities (I'm not actually sure which bureau/department would be best), say \"\"I was young, foolish, and confused by America's process... do I need to do anything to correct this?\"\", and see what happens... but it might be wise to get a lawyer's advice on whether that's a good idea, a bad idea, or simply unnecessary.)\"",
"title": ""
},
{
"docid": "ccae60b74d5d260a4fc4344aeeb06f8e",
"text": "\"so I believe it should be under \"\"No Financial Interest Account Information.\"\" section ? Why? It's your account in your name. From legal perspective it is your personal account and you have financial interest in it.\"",
"title": ""
},
{
"docid": "2de869e9b4c67e8ad0198cdafdbc1620",
"text": "Per Md. REAL PROPERTY Code Ann. § 8-203: (d) (1) (i) The landlord shall maintain all security deposits in federally insured financial institutions, as defined in § 1-101 of the Financial Institutions Article, which do business in the State. (ii) Security deposit accounts shall be maintained in branches of the financial institutions which are located within the State and the accounts shall be devoted exclusively to security deposits and bear interest. (iii) A security deposit shall be deposited in an account within 30 days after the landlord receives it. (iv) The aggregate amount of the accounts shall be sufficient in amount to equal all security deposits for which the landlord is liable. (2) (i) In lieu of the accounts described in paragraph (1) of this subsection, the landlord may hold the security deposits in insured certificates of deposit at branches of federally insured financial institutions, as defined in § 1-101 of the Financial Institutions Article, located in the State or in securities issued by the federal government or the State of Maryland. (ii) In the aggregate certificates of deposit or securities shall be sufficient in amount to equal all security deposits for which the landlord is liable. As such, one or more accounts at your preference; it's up to the bank how to treat the account, so it may be a personal account or it may be a 'commercial' account depending on how they treat it (but it must be separate from your personal funds). A CD is perhaps the easiest way to go, as it's not a separate account exactly but it's easily separable from your own funds (and has better interest). You should also note (further down on that page) that you must pay 3% interest, once per six months; so try to get an account that pays as close as possible to that. You likely won't get 3% right now even in a CD, so consider this as an expense (and you'll probably find many people won't take security deposits in many situations as a result).",
"title": ""
},
{
"docid": "34e6df966186974f602a13e3ae0d3721",
"text": "A share of stock is an asset not much different than any other asset. If the share is being held in a joint account, it's being jointly owned. If the share is being held by a company with multiple owners then the share is owned by the various owners. If you're married and in a community property state, then it's technically owned by both parties.",
"title": ""
},
{
"docid": "f8a3d5abf52e6cc6146c5e24b5cd8000",
"text": "\"Furthermore, the \"\"trust fund\"\" the article talks about doesn't really exist - they SSAdmin just owns treasury bills, which as we all know are obligations of the U.S. government. So - in order to exhaust the \"\"trust fund\"\" you have to expect the U.S. treasury to repay the SSAdmin in full - which we can debate about whether that is a fair assumption or not.\"",
"title": ""
},
{
"docid": "bf3c52ae294bd1bbf9893e00073baa4d",
"text": "Securities or quite a few negotiable instruments can change title of ownership without any issue. Many at times the owner ship in implicit if you are holding a certain instrument. So for example in Stock its a fractional ownership in a company, this ownership transfers to the buyer from the seller without requiring any permission from the company. In case of say Loans, One cannot transfer the loan to some one else without the Banks permission.",
"title": ""
}
] |
fiqa
|
358ccd45afeaf1f9bb8bc4789b143543
|
Insurance company sent me huge check instead of pharmacy. Now what?
|
[
{
"docid": "af1106a29d58d5538e4e2baea1dc30ea",
"text": "The insurance company issued the check. I'd contact the insurance company to have the current check voided and a new one issued to the pharmacy.",
"title": ""
},
{
"docid": "2dbf908577422d9e9844958a62782629",
"text": "Checks are awesome things in that, even if it gets lost the money doesn't change hands until the check is cashed. I would highly recommend NOT signing a check over and putting it in the mail though. Essentially putting your signature on it is saying yes, pay to whomever. Theoretically acceptable, rarely a good idea. Call the insurance company and have them cancel current check to reissue to the correct people. Don't forget to write VOID (in huge letters) on the check before throwing away and/or tearing it up.",
"title": ""
},
{
"docid": "c472e28a902255d7f3e8918550a37e7f",
"text": "Option 4: Go talk with someone in person at an office of the Insurance company. They have helped me several times with things like this. They can get everyone involved on a conference call and make something happen. But you have to go in. Calling is a good way to waste time and get nowhere, they will throw the issue back and forth. Find an office and go. This is the most effective solution.",
"title": ""
},
{
"docid": "608ef839a75b4a9d959fb21bd1c79110",
"text": "So: What you do:",
"title": ""
},
{
"docid": "ec5f508e7f500cdad2d26fd1adf49a37",
"text": "Deposit check and send a personal check (resulting in tax and IRS reporting issues) That's a bad idea, unless maybe the check you're receiving is a certified bank draft. Suppose the insurance company are crooks and the check is fraudulent. It could take weeks or months for some investigation to catch up to that, long after your own personal check was cashed by the pharmacy. The bank will then put you on hook for the 20 grand by reversing the check, even though the funds had been deposited into your account. Do not put yourself into the position of a money handler; you don't have the cash base, insurance, government protection and whatever else that a bank has. And, of course, you're being a free money handler if you do that. (You're not even compensated for postage, time and whatnot). If you're handling money between two parties, you should collect a percentage, or else refuse. That percentage has to be in proportion to the risk, since cashing a check for someone carries a risk similar to (and is effectively a form of) making a loan.",
"title": ""
},
{
"docid": "857974453afa724ad8ac67c7e3956c66",
"text": "In one of your comments you say: Even if the pharmacy is not in the insurance provider network? This is why you got the check instead of your insurance company. I have Blue Cross/Blue Shield, and recently my wife underwent a procedure in the hospital, where one of the physicians involved was not in my providers network. I got a letter from the physicians office stating that since they are out of network, the standard practice was for BCBS to issue the check to me, rather than to the provider. I received the check and made the payment. The main contention is the difference in price, and that is what you need to discuss with both the pharmacy (actual billing) and your insurance company (paid benefits).",
"title": ""
},
{
"docid": "2765e690af1f88102daa11d29be4a1f0",
"text": "You mentioned depositing the check and then sending a personal check. Be sure to account for time, since any deposit over $10,000 the money will be made available in increments, so it may take 10-14 days to get the full amount in your account before you could send a personal check. I would not recommend this option regardless, but if you do, just a heads up.",
"title": ""
},
{
"docid": "d41d8cd98f00b204e9800998ecf8427e",
"text": "",
"title": ""
},
{
"docid": "1d260f2a8ecc297314ac859d57166400",
"text": "\"This is not a mistake. This is done for \"\"Out of Network\"\" providers, and mainly when the patient is an Anthem member, be it Blue Shield or Blue Cross. Even though an \"\"Assignment of Benefits\"\" is completed by the patient, and all fields on the claim from (CMS1500 or UB04) are completed assigning the benefits to the provider, Anthem has placed in their policy that the Assignment of Benefits the patient signs is null and void. No other carrier that I have come across conducts business in this manner. Is it smart? Absolutely not! They have now consumed their member's time in trying to figure out which provider the check is actually for, the member now is responsible for forwarding the payment, or the patient spends the check thinking Anthem made a mistake on their monthly premium at some point (odds are slim) and is now in debt thousands of dollars because they don't check with Anthem. It creates a huge mess for providers, not only have we chased Anthem for payment, but now we have to chase the patient and 50% of the time, never see the payment in our office. It creates more phone calls to Anthem, but what do they care, they are paying pennies on the dollar for their representatives in the Philippines to read from a script. Anthem is the second largest insurance carrier in the US. Their profit was over 800 million dollars within 3 months. The way they see it, we issued payment, so stop calling us. It's amazing how they can accept a CMS1500, but not follow the guidelines associated with it. Your best bet, and what we suggest to patients, either deposit the check and write your a personal check or endorse and forward. I personally would deposit the check and write a personal check for tracking purposes; however, keep in mind that in the future, you may depend on your bank statements for proof of income (e.g. Social Security) and imagine the work having to explain, and prove, a $20,000 deposit and withdraw within the same month.\"",
"title": ""
}
] |
[
{
"docid": "9b677bf9fd32eb6bc39174c40ce70a5b",
"text": "If the hospital is run like hospitals in the US it can take a long time just to determine the bill. The hospital, Emergency room, ER doctors, surgeons, anesthesiologists, X-Ray department, pharmacy and laboratory are considered separate billing centers. It can take a while to determine the charges for each section. Is there an insurance company involved? When there is one involved it can take weeks or months before the hospital determines what the individual owes. The co-pays, coverages, and limits can be very confusing. In my experience it can take a few months before the final amount is known. You may want to call the hospital to determine the status of the bills.",
"title": ""
},
{
"docid": "1203172087dc797dbf83340a004bf503",
"text": "\"check the DATE OF SERVICE on all your invoices carefully. It's possible you actually DID pay already. Sometimes when a medical provider gets \"\"mostly\"\" paid by a third party insurer, they just drop the (small) remainder, as it's more cost than it's worth if it is a trivial amount. Alternatively, they wait until you show up for another office visit, and \"\"ding\"\" you then!\"",
"title": ""
},
{
"docid": "ed29c570eae7fb018586b19dfcde1b80",
"text": "\"This is really unfortunate. In general you can't back date individual policies. You could have (if it was available to you) elected to extend your employer's coverage via COBRA for the month of May, and possibly June depending on when your application was submitted, then let the individual coverage take over when it became effective. Groups have some latitude to retroactively cover and terminate employees but that's not an option in the world of individual coverage, the carriers are very strict about submission deadlines for specific effective dates. This is one of the very few ways that carriers are able to say \"\"no\"\" within the bounds of the ACA. You submit an application, you are assigned an effective date based on the date your application was received and subsequently approved. It has nothing to do with how much money you send them or whether or not you told them to back date your application. If someone at the New York exchange told you you could have a retroactive effective date they shouldn't have. Many providers have financial hardship programs. You should talk to the ER hospital and see what might be available to you. The insurer is likely out of the equation though if the dates of service occurred before your policy was effective. Regarding your 6th paragraph regarding having paid the premium. In this day and age carriers can only say \"\"no\"\" via administrative means. They set extremely rigid effective dates based on your application date. They will absolutely cancel you if you miss a payment. If you get money to them but it was after the grace period date (even by one minute) they will not reinstate you. If you're cancelled you must submit a new application which will create a new coverage gap. You pay a few hundred dollars each month to insure infinity risk, you absolutely have to cover your administrative bases because it's the only way a carrier can say \"\"no\"\" anymore so they cling to it.\"",
"title": ""
},
{
"docid": "fcc99ce53784564e60c8529112455a1e",
"text": "You seem overly fixated on dead tree documentation of purchases. They are deducting this from your account monthly - the mere fact that the money was taken is enough to prove in court that they have you on their books and to hold them to paying out said insurance. The email copies is actually a better way to organize receipts in most cases (can't be destroyed as easily, etc.) You can cancel the insurance - but don't just stop paying (you'd owe them money then). I foresee increasing difficulty navigating the 21st century for you unless you can get past this concern about physical receipts. I doubt other companies would do much better. FWIW, I live in the continental US. I don't know how different the Philippines is with regard to moving everything to digital",
"title": ""
},
{
"docid": "bbbeb5a0fef77fa10d779f442ce583e1",
"text": "You didn't buy it. Your mother did. You can try to cancel it if it was purchased in your name; if your mother purchased it she would have to cancel it. Either way, the company has done it's part by carrying you until that cancellation and you have no grounds for demanding a refund for time already covered. If your mother was spending your money, that is something you need to take up with her unless you want to bring charges against her for theft/fraud. If she was spending her own money, then you may want to talk to a lawyer about getting her declared incompetent so someone else can control her spending. But the money paid is probably gone. It isn't the insurance company's fault that you didn't want it doesn't, and if you don't bring charges you can't complain about their having accepted stolen money. Even if you do bring charges and win, it isn't clear you can get a refund. If you really want to pursue any of this, your next step is to talk to a lawyer.",
"title": ""
},
{
"docid": "8db1c181bc68dc201970efb4f4b3abab",
"text": "\"There's nothing you can do. If he has indeed deposited the check, it would appear on your account fairly quickly - I've never seen it taking more than 2-3 business days. However, a check is a debt instrument, and you cannot close the account until it clears, or until the \"\"unclaimed property\"\" laws of your state kick in. If he claims that he deposited the check, ask it in writing and have your bank (or the bank where it was deposited) investigate why it takes so long to clear. If he's not willing to give it to you in writing - he's likely not deposited it. Whatever the reason may be, even just to cause you nuisance. Lesson learned. Next time - cashier's check with a signed receipt. Re closing the LLC: if you're the only two partners - you can just withdraw yourself from the LLC, take out your share, and drop it on him leaving him the only partner. Check with your local attorney for details.\"",
"title": ""
},
{
"docid": "0d300a37caab11c1aad8bb3eaca7d4f2",
"text": "It's an over crowded boat I'm sure. She hasn't had insurance all year either. She switched departments at the end of last year and they said she had to wait for open enrollment to come around again. So it wasn't by choice that she's been uninsured. It really baffles me that her company, a healthcare provider, would let their employees go through this.",
"title": ""
},
{
"docid": "c4158d595a69b938712cdfcd60768492",
"text": "No you do not insure the cheque. A cheque is just standardized form that instructs a bank to transfer money. It is no more important than an ordinary letter. A cheque carries no commercial value, especially when it has a designated recipient. No mail insurance will cover the financial loss as a result of bank fraud. It is a kind of indirect loss. Just tell her to write your account number at the back of the paper, walk into your bank's branch and tell the teller to deposit it. There is no need of mailing.",
"title": ""
},
{
"docid": "28fbd6147331296e24091a48b5f615a7",
"text": "It is important to understand that when or before you received services from your medical provider(s), you almost certainly signed a document stating that you understand that you are fully responsible for the entire bill, even though the provider may be willing to bill the insurer on your behalf as a service. In almost all cases, this is the arrangement, so it is very unlikely that you will be able to dispute the validity of the bill, since you did receive the service and almost certainly agreed to be fully responsible for the payments. With regard to the discounts, your medical provides have likely contracted with your insurer to provide services at a certain price or discount level, so I would base all of your negotiations with the providers and/or the collectors on those amounts. They can't legitimately bill you for the full amount since you are insured by a company they have a contract with, and you are not self-pay/uninsured, and the fact that they haven't been paid by your insurer doesn't change that, because the discount likely depends on the contact they have with your insurer and not whether or not they are billed/paid by your insurer. Please note - this is a common arrangement, but I'd recommend that you verify this with your insurer. Unfortunately, payment in 90+ days is often typical by insurance standards, so it's not yet clear to me whether or not your insurer has broken any laws such as a Prompt Pay law, or violated the terms of your policy with them (read it!). However, you need to find out which claims rep/adjuster is handling your claims and follow up with them until the payments are made. It's not personal, so make this person's life miserable until it is done and call them so often that they know it's you by the caller ID. I would also recommend contacting the collector(s), and letting them know that you don't have the money and so will not be able to pay, provide them with copies of the EOBs that state that the insurance company plans to pay the providers, and then ignore their calls/letters until the payments are made. When they call, simply reiterate that you don't have the money and that your insurance company is in the process of paying the bills. You have to expect that you will be dealing with a low-paid employee that is following a script. You are just the next person on their robo-call list, and they are not going to understand that you don't have a pile of money laying around with which to pay them, even if you tell them repeatedly. Make sure that you at no point give them access to any of your financial accounts, such as a checking or savings account, or a debit card - they will access it and clean you out. It is likely that your insurance provider will pay the providers directly since they were likely billed by the providers originally. If the providers have sold the debt to the collectors (and are not just employing a collector for debt they still own), you may have to follow up with the providers as well and make sure that the collection activity stops, since the providers may also need to forward the payments to the collectors once they are paid by the insurance company. Of course, if the insurer refuses to pay the claims, at that point I would recommend meeting with a lawyer to seek to force them to pay.",
"title": ""
},
{
"docid": "c2b853fe46b7cbb9694b08f72eb9668b",
"text": "What would happen if you was to cash a check, didn’t realize it was to you and your finance company, take it to a local business that has a money center, they cash the check without even having you sign let alone having the finance companies endorsement on it . The money cleared my account like a couple months ago and it was just brought up now .. ? The reason why the check was made out the owner and the lender is to make sure the repairs were done on the car. The lender wants to make sure that their investment is protected. For example: you get a six year loan on a new car. In the second year you get hit by another driver. The damage estimate is $1,000, and you decide it doesn't look that bad, so you decide to skip the repair and spend the money on paying off debts. What you don't know is that if they had done the repair they would have found hidden damage and the repair would have cost $3,000 and would have been covered by the other persons insurance. Jump ahead 2 years, the rust from the skipped repair causes other issues. Now it will cost $5,000 to fix. The insurance won't cover it, and now a car with an outstanding loan balance of $4,000 and a value of $10,000 if the damage didn't exist needs $5,000 to fix. The lender wants the repairs done. They would have not signed the check before seeing the proof the repairs were done to their satisfaction. But because the check was cashed without their involvement they will be looking for a detailed receipt showing that all the work was done. They may require that the repair be done at a certified repair shop with manufacturer parts. If you don't have a detailed bill ask the repair shop for a copy of the original one.",
"title": ""
},
{
"docid": "cbd9dfe952f74b25dbcfbe52b673e532",
"text": "\"A day or so later I get an email from the mattress company where the rep informs me that they will need to issue me a paper check for the full amount and that I would have to contact Affirm to stop charging me. To which I rapidly answered \"\"Please confirm that with Affirm prior to mailing anything out. On my end the loan was cancelled.\"\" To which the rep replied \"\"confirmed. It has been cancelled.\"\" I think your communication could have been more explicit mentioning that not only was the loan cancelled, you got your initial payments. You have not paid for the mattress. The refund if any should go to Affirm. The Rep has only confirmed that loan has been cancelled. at what point, if any, am i free to use this money? I was planning to just let it sit there until the shoe drops and just returning. But for how long is too long? Sooner or later the error would get realized and you would have to pay this back.\"",
"title": ""
},
{
"docid": "1d2fefa7b803c708ff1d023b7780e877",
"text": "\"•Have you had any problems with bills not being paid? NO •If you had issues, were they addressed satisfactorily? Answer: A big issue that blindsided me: With my bank, the funds come out of my account right away, but the actual payment is done through a third-party service. On my bank's online site it appears that the payment has been made, but that does not necessarily mean that the intended recipient has cashed it. Looking online at my credit union's site is useless, because all I can tell is that the payment has been sent. The only way to verify payment is to contact the intended recipient. Or I may telephone the online bill pay representative at my bank/credit union, who has access to the third party service. If I do nothing, after 90 days, the check is void, at which time the third party service notifies the bank/credit union and the funds will eventually end up back in my account. I learned this today, after a third-party paper check to a health care provider was returned to me via mail by the recipient (because insurance had already paid and I did not owe them anything). The money was in the hands of the third-party service, not in my account, nor that of my credit union nor the recipient. At first my credit union told me that I would have to contact the third-party service myself and work it out. I said \"\"NO WAY\"\" and the credit union did get the money back into account the same day. This is a sweet deal for the third party, who has my money interest-free anywhere from a few days to three months. And risk-free as well, because the money goes directly from my account to the third party service.\"",
"title": ""
},
{
"docid": "cc7a6be9b8252d019482eb7a6c261482",
"text": "Look up escheatment. Companies that have unclaimed property are supposed to send it to your State government. They should have a unclaimed property department of some sort. In short, the company is going to have to pay either you, or your State (In Your Name) so they have to pay it either way. It would be easier for them to just give you new check. Expect them to give you some grief in verifying it has not been cashed and such... but if you have the original, in hand, it shouldn't be too bad. A 'Lost' check may be harder to get replaced. Not a lawyer, don't want to be.",
"title": ""
},
{
"docid": "b285e55976bdcb3fcc8739e2e1f1296e",
"text": "Long story short, 8% turned out to be the tipping point because it was the average subordination level of the A rated tranches of the subprime MBS bonds. The reason this was the magic number is because of the way bonds were placed during the period. Basically no end user wanted to take on the risk of buying below A-rated paper, so instead of being sold directly, these BBB rated and below bonds were re-packaged into CDOs and tranched off. Again, the higher rated paper was sold off to whomever, while the BBB and below stuff got reshuffled and repackaged into other CDOs or CDO^2 , further levering up the initial subprime bonds. Now, back to the magic 8% number. Remember how I said that 8% was the subordination level for the A rated subprime paper? The other way of saying that is once defaults reached 8%, the BBB and below tranches of the the MBS were completely wiped out. Since the CDOs were largely made up of these BBB and below MBS, once they started getting written down so did the CDOs. When the lower rated CDO tranches started to go, because they were also repackaged in the same way, it just continued the negative feedback loop and before long even the AA and AAA rated paper was seeing massive losses. As more and more supposedly safe paper started to get wiped out, highly leveraged CDS contracts started coming due, causing AIG (which had written contracts on over $500 billion in assets) to get downgraded by the rating agencies, putting it on the brink of going under. Because basically every major bank had exposure to AIG, had they gone under, the other banks would have all had to write down those contracts at the same time, essentially causing the entire financial system to collapse.",
"title": ""
},
{
"docid": "983d2b5de6ce0fa254f27f73d368e1d6",
"text": "No, I felt that's what aweraw was trying to say, but they were not doing a good job of it so I took a crack at it from my point of view. I see where you are coming from too. Really, I suspect if we all sat down and had to write a unified view of the role luck plays in our lives we would be surprised how much we agree. :)",
"title": ""
}
] |
fiqa
|
28c50bb6ba850a7f49a70b8d81a502fd
|
Are there any statistics that support the need for Title Insurance?
|
[
{
"docid": "b67f2b35494713624f0203abd7192d20",
"text": "There seems to be no such information available. What is available is that number of claims are high and the Title Insurance companies have gone bankrupt as per the wikipedia article In 2003, according to ALTA, the industry paid out about $662 million in claims, about 4.3% percent of the $15.7 billion taken in as premiums. By comparison, the boiler insurance industry, which like title insurance requires an emphasis on inspections and risk analysis, pays 25% of its premiums in claims. However, no reference to the relationship between when claims are made and when policies are issued is found. As of 2008, the top three remaining title insurers all lost money, while LandAmerica went bankrupt and sold its title business to Fidelity http://en.wikipedia.org/wiki/Title_insurance#Industry_profitability The amount of premium received and claim made can be got from some of the companies balance sheet. For Fidelity its at http://www.investor.fnf.com/releasedetail.cfm?CompID=FNT&ReleaseID=363350 The article in here mentions the claims ratio as 5%. Refer http://www.federaltitle.com/blog/title-insuance-qaa",
"title": ""
},
{
"docid": "87fa009194ec46688dcd92918388f273",
"text": "The point of title insurance is that when you buy a house, it is possible that you may eventually find out that the seller didn't actually own the property - either because they were trying to deceive you, or some transfer of ownership in the past wasn't carried out properly. If that happens you can find yourself with no house, and still owing the mortgager the purchase price. Hardly anybody can afford to take that kind of hit, which is why you need some form of protection against it. The traditional way of doing this was to get a lawyer to do a title search, in which they check that everything in order. However this costs tens of dollars at least to do the work for every sale, and hardly ever finds anything. Title Insurance is a company volunteering to take the hit for you if there turns out to be a problem, in return for a payment of less than the title search would cost. In essence they are saying that it's cheaper to take the risk than do the work. What are the statistics? This report seems to indicate that payout is around 5% of premium, but title insurance is a one-off premium and the payout can theoretically happen many years down the line. However it is almost certain that the insurance companies have done the math and believe that selling this insurance will be profitable for them, so they believe that payouts are going to be substantially less than 100%. Is title insurance worth it for you? If the payout is 5% of premiums, the in a purely statistical sense it is not worth it. You would on average gain more by not taking it. However that is true of almost all insurance. The policy is there to protect you in the unlikely but not impossible event where you would otherwise lose a huge amount of money. Unless you can afford to lose the value of your house, you need some form of protection. We've already seen that the only other form of protection is a title search, and they cost more. The other issue is that if you are taking a mortgage, your mortgager will absolutely insist that you have either a title search or title insurance. There is no other way - and title insurance is the cheaper of the two. In this case it is best to look on the title insurance as simply a cost of doing business. It's irrelevant whether it's worth it or not - you can't do the transaction without it.",
"title": ""
},
{
"docid": "36b4aa8281b6d0bed022cc321bfb03ee",
"text": "\"I'm really surprised at the answers here. Claims/year per region isn't a statistic that is meaningful here... you need to think about the risk factors and the purpose of the insurance. First, what does title insurance do? It protects you against defects in the deed -- defects that may crop up and mean that your mortgage is no longer valid. This is different from most forms of insurance -- the events that render your title invalid are events that may have happened years, decades or even centuries ago. A big part of the insurance policy and its cost is conducting research to assess the validity of a deed. The whole point of the insurance is to reduce claims by improving data associated with the \"\"chain of custody\"\" of the property. So how do you evaluate the risk of finding out about something that happened a long time ago, that nobody appears to know about? IMO, you have to think about risk factors that increase the probability that things were screwed up in the past: You need to have an informed discussion with your attorney and figure out if it makes sense for you. Don't dismiss it out of hand.\"",
"title": ""
},
{
"docid": "06ff1a68b432456d3375a7be0a7c84fa",
"text": "When I bought the house I had my lawyer educate me about everything on the forms that seemed at all unclear, since this was my first time thru the process. On of the pieces of advice that he gave was that title insurance had almost no value in this state unless you had reason to believe the title might be defective but wanted to buy the property anyway. In fact I did get it anyway, as an impulse purchase -- but I'm fully aware that it was a bad bet. Especially since I had the savings to be able to self-insure, which is always the better answer if you can afford to risk the worst case scenario. Also: Ask the seller whether they bought title insurance. Often, it is transferrable at least once.",
"title": ""
}
] |
[
{
"docid": "c531e72f8977fc24c624a99cc206fe5c",
"text": "On most of the consumer electronics it would not make much sense to get Insurance. Mostly these are not priced right [are typically priced higher]. IE there is no study to arrive at equivalent claim rates as in motor vehicle. Further on most of the items there is adequate manufacturing warranty to take care of initial defects. And on most it would make sense to buy a newer model as in todays world consumer electronics are not only getting cheaper by the day, but are also have more function & features.",
"title": ""
},
{
"docid": "e17ffc2a0f6e9a51037f2a78ea0f3f8a",
"text": "Title agencies perform several things: Research the title for defects. You may not know what you're looking at, unless you're a real-estate professional, but some titles have strings attached to them (like, conditions for resale, usage, changes, etc). Research title issues (like misrepresentation of ownership, misrepresentation of the actual property titled, misrepresentation of conditions). Again, not being a professional in the domain, you might not understand the text you're looking at. Research liens. Those are usually have to be recorded (i.e.: the title company won't necessarily find a lien if it wasn't recorded with the county). Cover your a$$. And the bank's. They provide title insurance that guarantees your money back if they missed something they were supposed to find. The title insurance is usually required for a mortgaged transaction. While I understand why you would think you can do it, most people cannot. Even if they think they can - they cannot. In many areas this research cannot be done online, for example in California - you have to go to the county recorder office to look things up (for legal reasons, in CA counties are not allowed to provide access to certain information without verification of who's accessing). It may be worth your while to pay someone to do it, even if you can do it yourself, because your time is more valuable. Also, keep in mind that while you may trust your abilities - your bank won't. So you may be able to do your own due diligence - but the bank needs to do its own. Specifically to Detroit - the city is bankrupt. Every $100K counts for them. I'm surprised they only charge $6 per search, but that is probably limited by the State law.",
"title": ""
},
{
"docid": "e042485852dc24651d7e8ebc3a6289e4",
"text": "\"Yes, a HELOC is great for that. I just had my roof done last month (~$15K, \"\"ugh\"\") and pretty much every major contractor in my area had a 0% same-as-cash for at least 12 months. So that helps - any balance that I don't bank by 11/15/2015 will be on the HELOC.\"",
"title": ""
},
{
"docid": "1837651d08056accb28bde3581e2eb92",
"text": "\"The two questions inherent in any decision to purchase an insurance plan is, \"\"how likely am I to need it?\"\", and \"\"what's the worst case scenario if I don't have it?\"\". The actuary that works for the insurance company is asking these same questions from the other end (with the second question thus being \"\"what would we be expected to have to pay out for a claim\"\"), using a lot of data about you and people like you to arrive at an answer. It really boils down to little more than a bet between you and the insurance company, and like any casino, the insurer has a house edge. The question is whether you think you'll beat that edge; if you're more likely than the insurer thinks you are to have to file a claim, then additional insurance is a good bet. So, the reasons you might decide against getting umbrella insurance include: Your everyday liability is low - Most people don't live in an environment where the \"\"normal\"\" insurance they carry won't pay for their occasional mistakes or acts of God. The scariest one for most is a car accident, but when you think of all the mistakes that have to be made by both sides in order for you to burn through the average policy's liability limits and still be ruined for life, you start feeling better. For instance, in Texas, minimum insurance coverage levels are 50/100/50; assuming neither party is hurt but the car is a total loss, your insurer will pay the fair market value of the car up to $50,000. That's a really nice car, to have a curbside value of 50 grand; remember that most cars take an initial hit of up to 25% of their sticker value and a first year depreciation of up to 50%. That 50 grand would cover an $80k Porsche 911 or top-end Lexus ES, and the owner of that car, in the U.S. at least, cannot sue to recover replacement value; his damages are only the fair market value of the car (plus medical, lost wages, etc, which are covered under your two personal injury liability buckets). If that's a problem, it's the other guy's job to buy his own supplemental insurance, such as gap insurance which covers the remaining payoff balance of a loan or lease above total loss value. Beyond that level, up into the supercars like the Bentleys, Ferraris, A-Ms, Rollses, Bugattis etc, the drivers of these cars know full well that they will never get the blue book value of the car from you or your insurer, and take steps to protect their investment. The guys who sell these cars also know this, and so they don't sell these cars outright; they require buyers to sign \"\"ownership contracts\"\", and one of the stipulations of such a contract is that the buyer must maintain a gold-plated insurance policy on the car. That's usually not the only stipulation; The total yearly cost to own a Bugatti Veyron, according to some estimates, is around $300,000, of which insurance is only 10%; the other 90% is obligatory routine maintenance including a $50,000 tire replacement every 10,000 miles, obligatory yearly detailing at $10k, fuel costs (that's a 16.4-liter engine under that hood; the car requires high-octane and only gets 3 mpg city, 8 highway), and secure parking and storage (the moguls in Lower Manhattan who own one of these could expect to pay almost as much just for the parking space as for the car, with a monthly service contract payment to boot). You don't have a lot to lose - You can't get blood from a turnip. Bankruptcy laws typically prevent creditors from taking things you need to live or do your job, including your home, your car, wardrobe, etc. For someone just starting out, that may be all you have. It could still be bad for you, but comparing that to, say, a small business owner with a net worth in the millions who's found liable for a slip and fall in his store, there's a lot more to be lost in the latter case, and in a hurry. For the same reason, litigious people and their legal representation look for deep pockets who can pay big sums quickly instead of $100 a month for the rest of their life, and so very few lawyers will target you as an individual unless you're the only one to blame (rare) or their client insists on making it personal. Most of your liability is already covered, one way or the other - When something happens to someone else in your home, your homeowner's policy includes a personal liability rider. The first two \"\"buckets\"\" of state-mandated auto liability insurance are for personal injury liability; the third is for property (car/house/signpost/mailbox). Health insurance covers your own emergency care, no matter who sent you to the ER, and life and AD&D insurance covers your own death or permanent disability no matter who caused it (depending on who's offering it; sometimes the AD&D rider is for your employer's benefit and only applies on the job). 99 times out of 100, people just want to be made whole when it's another Average Joe on the other side who caused them harm, and that's what \"\"normal\"\" insurance is designed to cover. It's fashionable to go after big business for big money when they do wrong (and big business knows this and spends a lot of money insuring against it), but when it's another little guy on the short end of the stick, rabidly pursuing them for everything they're worth is frowned on by society, and the lawyer virtually always walks away with the lion's share, so this strategy is self-defeating for those who choose it; no money and no friends. Now, if you are the deep pockets that people look for when they get out of the hospital, then a PLP or other supplemental liability insurance is definitely in order. You now think (as you should) that you're more likely to be sued for more than your normal insurance will cover, and even if the insurance company thinks the same as you and will only offer a rather expensive policy, it becomes a rather easy decision of \"\"lose a little every month\"\" or \"\"lose it all at once\"\".\"",
"title": ""
},
{
"docid": "393cfe7f63759aa40272e57c8141fe59",
"text": "\"The long and short of it is, the mortgage company has a significant interest in the resale value of the home in the event of a default. Imagine a scenario where you say to yourselves that you're not going to repair the deck just yet (\"\"meh, we'll do that next summer\"\") and something happens that causes a default on the mortgage. The resale value of the home may be harmed by the deck, even though you're willing to live with it. That being the case, the mortgage company has every right to insist that you carry out the repairs in order to maintain the property in salable condition, so the essence of it is, you don't have much choice but to do the repairs. Keep in mind too that the insurance company paid for the roof and the deck to be repaired. If they were to learn that you now have no intention of using the money to repair the property, you could end up in legal hot water with them. After all, you did accept the check for repairs that you're now not carrying out.\"",
"title": ""
},
{
"docid": "1d811e4c8d28e6562ab2cec2b871a94d",
"text": "Note: This is what one of the people responsible for this process told me quite a few years ago, it might be different today. I work in insurance, but I don't follow this particular process too closely. New cars necessitate a judgment call, which usually involves a look at claims rates for similar (existing) cars, manufacturer-specific labour and parts costs, expected regional distribution (for example, a new BMW will probably sell better in Bavaria than in other areas, which has higher labour rates than most of the rest of the country, and will be categorised accordingly), and other factors, depending on the situation. These preliminary judgments are largely discarded when the new statistics are compiled, though, which is once a year. New insurance groups are published in early September and usually applied to insurance contracts on January 1st.",
"title": ""
},
{
"docid": "f84220fd43bec9562e69e878985ace2e",
"text": "Insurance - get estimate from an insurance agent who works with policies for commercial real estate. See comments below regarding incorporation. Taxes - if this was basic income for a simple LLC, estimating 25-40% and adjusting over time might work. Rental property is a whole different prospect. Financial experts who specialize in rental properties would be a good source of advice, and worth the cost. See below regarding incorporating. Real estate appreciation - not something you can count on for developed property. Appreciation used to be almost guaranteed to at least keep up with inflation. Now property values are not even guaranteed to go up. Never have been but the general rule was improved real estate in good repair appreciated in price. Even if property values increase over time, rental properties depreciate. In fact, for rental properties, you can claim a certain rate of depreciation over time as an expense on taxes. This depreciation could mean selling for less than you paid for the property after a number of years, and owing capital gains taxes, since you would owe the difference between the depreciated value and the sale price. Related to taxes are local codes. Some areas require you to have a property management license to handle buildings with more than a certain number of units. If you are going to own rental properties, you should protect your private financial life by incorporating. Form a company. The company will own the property and hire any maintenance people or property managers or security staff or any similar employment activities. The company takes out the insurance and pays taxes. The company can pay you a salary. So, bottom line, you can have the company pay all the expenses and take all the risks. Then, assuming there's any money left after expenses, the company can pay you a manager's salary. That way if the worst happens and a tenant breaks their hip in the shower and sues you for ONE MILLION DOLLARS and wins, the company folds and you walk away. You might even consider two companies. One to own the property and lease it to a property management company. The property management company can then go bankrupt in case of some sort of liability issue, in which case you still keep the property, form a new management company, repaint and rename the property and move on. TL;DR: Get insurance advice from insurance agent before you buy. Same for taxes from an accountant. Get trained as a property manager if your local codes require it (might be a good idea anyway). Incorporate and have the company take all the risks.",
"title": ""
},
{
"docid": "13ee4ee6cbf862faced136bfe3156ba8",
"text": "\"Hi I'm the writer thanks for the read and the comment. With the statement you quoted, I'm trying to dispute the claim that \"\"people these days can't afford a house because they would have to pay their entire salary just to afford the mortgage,\"\" which I think is quite common in some circles. The data makes no statement as to whether home ownership is more affordable or not, but simply shows that those buying property are using around the same percentage of their income to pay for it, which the data clearly shows to be true. https://fred.stlouisfed.org/series/RHORUSQ156N As it turns out, home ownership levels have remained within ~5% of their 1980 levels based on percentage of the total population. I think there is an major classification flaw when comparing only sales because a great deal of people inherit property with no sale ever being made.\"",
"title": ""
},
{
"docid": "de5aca707980d49571f86a463301d315",
"text": "The bank doesn't have to do anything. It is your responsibility to provide the proof of insurance. It is the agent's job, which you through your HOA dues paid for, to provide that proof to you. You shouldn't be registering with icerts. They say so in the first sentence on the registration page: Unit Owners, Do Not Register Here! If you own an existing property, and have received a letter from your lender requiring an annual renewal/updated certificate for an association that has recently expired, please forward that letter to [email protected] to receive instructions to place your order. If your request is a new loan of any kind, please contact your lender and request that they either contact us to place this order, or register below. So you can try that route (sending an email to [email protected]), and see if it works. It does cost money, in the range of $20-$100 (I used a different similar service at the time and they charged $75 for this). If it doesn't, you can try and work with the insurance agent. There are some ways to persuade them: California has very strong traditions of consumer protections. In this case, I suggest checking out this site. Let the insurance agent know that as the HOA member - they're working for you, and that in the next HOA meeting you will raise a request to change the insurance agency. Also, remind the agent that the CA Insurance Commission will knock on their doors to ask why they don't provide you with the proof you need. If the HOA management company doesn't help you, you can remind them that they too can be fired. This can be done, and isn't even all that hard. There's a lot of competition in the HOA management market, and it wouldn't be too hard to find a new management company. The HOA management company should have provided you the proof of coverage when they renewed the policy.",
"title": ""
},
{
"docid": "f7713a2682895376021524cd3c65e3cf",
"text": "When we got our mortgage in the state of Washington, in the United States, we had to get title insurance before our lender would loan the money. This ensures that the person selling us the house actually owns the title, clean and clear. If there are any surprises, the insurance covers us (or the lender, really).",
"title": ""
},
{
"docid": "fc5200a551eb8da86019269ffc0be7db",
"text": "Here's a good rule of thumb. In any situation where you are required to purchase insurance (Auto Liability, Property Mortgage Insurance, etc.) you can safely assume that you aren't the primary beneficiary. You are being required to buy that insurance to protect someone else's investment.",
"title": ""
},
{
"docid": "b7903f7bac6c4a5fce750be794314e88",
"text": "According to Money Girl, home insurance premiums are higher if you have a poor credit score. You might self-insure though if you are wealthy.",
"title": ""
},
{
"docid": "9e3f53666b7c9d00610348c62925ba16",
"text": "You are not asking for insurance purposes. So I'll go with this - I have two asset numbers I track. All investments, retirement accounts, etc, the kind that are valued at day's end by the market, etc. From that number I subtract the mortgage. This produces the number that I can say is my net worth with a paid in full house. The second number simply adds back the house's value, give or take. Unless I owned art that was valued in the six figures, it seems pointless to me to add it up, except for insurance. If my wife and I died tomorrow, the kid can certainly auction our stuff off, but knowing that number holds no interest for us. When most people talk 'net worth', I don't see them adding these things up. Cars, maybe, but not even that.",
"title": ""
},
{
"docid": "e9971b7228c37ed52f6fedd32ba21e28",
"text": "If all you look at is the people that can afford houses, then you're just primarily looking at banking policies -- who they will make a loan to, and on what loan terms; which are fairly consistent over time. FRED's home ownership statistic is calculated as the number of households that are owned; it makes no distinction between a household with a college grad still living with their parents because they can't afford living on their own. Apartment leases aren't getting cheap either.",
"title": ""
},
{
"docid": "ce36cabdf10f05954d2cfe31dc253790",
"text": "Why do people take out life insurance on their children? They do so largely because it's being sold to them. The insurance companies generally push them on the basis that if you have to pay for a funeral and burial, the cost would devastate a family's finances. In some rare instances that might actually be true, but not generally. Should I take out a policy on my child? Generally no. When they sell you a policy they have to dance around a catch-22 - if you have enough money to afford the 'cheap' life insurance, then you have enough money to pay for a funeral and burial that's probably not going to happen. If you don't have enough money to pay those expenses in the rare case that a child does die, then you really can't afford the insurance, even if it's only 'pennies a day for peace of mind.' And why would schools send these home to parents, year-after-year? The schools are paid a commission. It is not much more than a fundraiser for them, just like school pictures. Am I missing something? Yes, in fact, you could be making money hand over fist if you were willing to prey on parental insecurities. Just set up a stand outside the hospital and get parents who are just about to deliver to sign up for your amazing insurance plan in case the tragic occurs.",
"title": ""
}
] |
fiqa
|
13ebdbaeeb537314f9119e069f418ad0
|
Buying my first car: why financing is cheaper than paying cash here and now?
|
[
{
"docid": "4f9f5b030ba22a07c5635bb76abf7cda",
"text": "The dealership is getting a kickback for having you use a particular bank to finance through. The bank assumes you will take the full term of the loan to pay back, and will hopefully be a repeat customer. This tactic isn't new, and although it maybe doesn't make sense to you, the consumer, in the long run it benefits the bank and the dealership. (They wouldn't do it otherwise. These guys have a lot of smart people running #s for them). Be sure to read the specifics of the loan contract. There may be a penalty for paying it off early. Most customers won't be able to pay that much in cash, so the bank makes a deal with the dealership to send clients their way. They will lose money on a small percentage of clients, but make more off of the rest of the clients. If there's no penalty for paying it off early, you may just want to take the financing offer and pay it off ASAP. If you truly can only finance $2500 for 6 mos, and get the full discount, then that might work as well. The bank had to set a minimum for the dealership in order to qualify as a loan that earns the discount. Sounds like that's it. Bonus Info: Here's a screenshot of Kelley Blue Book for that car. Car dealers get me riled up, always have, always will, so I like doing this kind of research for people to make sure they get the right price. Fair price range is $27,578 - $28,551. First time car buyers are a dealers dream come true. Don't let them beat you down! And here's more specific data about the Florida area relating to recent purchases:",
"title": ""
},
{
"docid": "1998aad62501d90096f94e435b798ef6",
"text": "The advice given at this site is to get approved for a loan from your bank or credit union before visiting the dealer. That way you have one data point in hand. You know that your bank will loan w dollars at x rate for y months with a monthly payment of Z. You know what level you have to negotiate to in order to get a better deal from the dealer. The dealership you have visited has said Excludes tax, tag, registration and dealer fees. Must finance through Southeast Toyota Finance with approved credit. The first part is true. Most ads you will see exclude tax, tag, registration. Those amounts are set by the state or local government, and will be added by all dealers after the final price has been negotiated. They will be exactly the same if you make a deal with the dealer across the street. The phrase Must finance through company x is done because they want to make sure the interest and fees for the deal stay in the family. My fear is that the loan will also not be a great deal. They may have a higher rate, or longer term, or hit you with many fee and penalties if you want to pay it off early. Many dealers want to nudge you into financing with them, but the unwillingness to negotiate on price may mean that there is a short term pressure on the dealership to do more deals through Toyota finance. Of course the risk for them is that potential buyers just take their business a few miles down the road to somebody else. If they won't budge from the cash price, you probably want to pick another dealer. If the spread between the two was smaller, it is possible that the loan from your bank at the cash price might still save more money compared to the dealer loan at their quoted price. We can't tell exactly because we don't know the interest rates of the two offers. A couple of notes regarding other dealers. If you are willing to drive a little farther when buying the vehicle, you can still go to the closer dealer for warranty work. If you don't need a new car, you can sometimes find a deal on a car that is only a year or two old at a dealership that sells other types of cars. They got the used car as a trade-in.",
"title": ""
}
] |
[
{
"docid": "75a26be06709df3f36a688e5dfa26a49",
"text": "Cash is very effective at getting a discount when buying from individuals (craigslist, garage sales, estate sales, flea markets, etc.). I'll make an offer, then thumb through the cash while they consider it. There eyes will dart back and forth between my eyes and the cash as they decide whether to take my offer. Car dealers do seem to be very unique. The dealer I bought at recently said that 70% of their deals were cash purchases, JoeTaxpayer's dealer said 1% were cash purchases. I've had good luck negotiating with cash for well-loved cars (under $10K) from both individuals or used dealers. I'm also looking for carpet for my house and the first vendor I went to offered at 5% discount if I paid up front (no financing).",
"title": ""
},
{
"docid": "086a9ad3b409d1498b7d28307f1f69f3",
"text": "If you have the money to pay cash for the car. Then 0 months will save you the most money. There are of course several caveats. The money for the car has to be in a relatively liquid form. Selling stocks which would trigger taxes may make the pay cash option non-optimal. Paying cash for the car shouldn't leave you car rich but cash poor. Taking all your savings to pay cash would not be a good idea. Note: paying cash doesn't involve taking a wheelbarrow full of bills to the dealer; You can use a a check. If cash is not an option then the longest time period balanced by the rates available is best. If the bank says x percent for 12-23 months, y percent for 24-47 months, Z percent for 48 to... It may be best to take the 47 month loan, because it keeps the middle rate for a long time. You want to lock in the lowest rate you can, for the longest period they allow. The longer period keeps the required minimum monthly payment as low as possible. The lower rate saves you on interest. Remember you generally can pay the loan off sooner by making extra or larger payments. Leasing. Never lease unless you are writing off the monthly lease payment as a business expense. If the choice is monthly lease payments or depreciation for tax purposes the lease can make the most sense. If business taxes aren't involved then leasing only means that you have a complex deal where you finance the most expensive part of the ownership period, you have to watch the mileage for several years, and you may have to pay a large amount at the end of the period for damages and excess miles. Plus many times you don't end up with the car at the end of the lease. In the United States one way to get a good deal if you have to get a loan: take the rebate from the dealer; and the loan from a bank/credit Union. The interest rate at banking institution is a better range of rates and length. Plus you get the dealer cash. Many times the dealer will only give you the 0% interest rate if you pay in 12 months and skip the rebate; where the interest paid to the bank will be less than the rebate.",
"title": ""
},
{
"docid": "ba37f8fbac914f2ec53278db02793614",
"text": "Dealer financing should be ignored until AFTER you have agreed on the price of the car, since otherwise they tack the costs of it back onto the car's purchase price. They aren't offering you a $2500 cash incentive, but adding a $2500 surcharge if you take their financing package -- which means you're actually paying significantly more than 0.9% for that loan! Remember that you can borrow from folks other than the dealer. If you do that, you still get the cash price, since the dealer is getting cash. Check your other options, and calculate the REAL cost of each, before making your decisions. And remember to watch out for introductory/variable rates on loans! Leasing is generally a bad deal unless you intend to sell the car within three years or so.",
"title": ""
},
{
"docid": "8ac5cffbd419a4f21a5789c2b9dc010d",
"text": "Here is another way to look at it. Does this debt enable you to buy more car than you can really afford, or more car than you need? If so, it's bad debt. Let's say you don't have the price of a new car, but you can buy a used car with the cash you have. You will have to repair the car occasionally, but this is generally a lot less than the payments on a new car. The value of your time may make sitting around waiting while your car is repaired very expensive (if, like me, you can earn money in fine grained amounts anywhere between 0 and 80 hours a week, and you don't get paid when you're at the mechanic's) in which case it's possible to argue that buying the new car saves you money overall. Debt incurred to save money overall can be good: compare your interest payments to the money you save. If you're ahead, great - and the fun or joy or showoff potential of your new car is simply gravy. Now let's say you can afford a $10,000 car cash - there are new cars out there at this price - but you want a $30,000 car and you can afford the payments on it. If there was no such thing as borrowing you wouldn't be able to get the larger/flashier car, and some people suggest that this is bad debt because it is helping you to waste your money. You may be getting some benefit (such as being able to get to a job that's not served by public transit, or being able to buy a cheaper house that is further from your job, or saving time every day) from the first $10,000 of expense, but the remaining $20,000 is purely for fun or for showing off and shouldn't be spent. Certainly not by getting into debt. Well, that's a philosophical position, and it's one that may well lead to a secure retirement. Think about that and you may decide not to borrow and to buy the cheaper car. Finally, let's say the cash you have on hand is enough to pay for the car you want, and you're just trying to decide whether you should take their cheap loan or not. Generally, if you don't take the cheap loan you can push the price down. So before you decide that you can earn more interest elsewhere than you're paying here, make sure you're not paying $500 more for the car than you need to. Since your loan is from a bank rather than the car dealership, this may not apply. In addition to the money your cash could earn, consider also liquidity. If you need to repair something on your house, or deal with other emergency expenditures, and your money is all locked up in your car, you may have to borrow at a much higher rate (as much as 20% if you go to credit cards and can't get it paid off the same month) which will wipe out all this careful math about how you should just buy the car and not pay that 1.5% interest. More important than whether you borrow or not is not buying too much car. If the loan is letting you talk yourself into the more expensive car, I'd say it's a bad thing. Otherwise, it probably isn't.",
"title": ""
},
{
"docid": "2f23b324328a3959962de22867d43218",
"text": "\"Like many things, there are pros and cons to using credit cards. The other folks on here have discussed the pros and length, so I'll just quickly summarize: Convenience of not having to carry cash. Delay paying your bills for a month with no penalty. Build your credit rating for a time when you need a big loan, like buying a house or starting a business. Provide easy access to credit for emergencies or special situations. Many credit cards provide \"\"rewards\"\" of various sorts that can effectively reduce the cost of what you buy. Protection against fraud. Extended warranty, often up to one year Damage warranty, covering breakage that might be explicitly excluded from normal warranty. But there are also disadvantages: One of the advantages of credit cards -- easy access to credit -- can also be a disadvantage. If you pay with cash, then when you run out of cash, you are forced to stop buying. But when you pay with credit, you can fall into the trap of buying things that you can't afford. You tell yourself that you'll pay for it when you get that next paycheck, but by the time the paycheck arrives, you have bought more things that you can't afford. Then you have to start paying interest on your credit card purchases, so now you have less money left over to pay off the bills. Many, many people have gotten into a death spiral where they keep piling up credit card debt until they are barely able to pay the interest every month, never mind pay off the original bill. And yes, it's easy to say, \"\"Credit cards are great as long as you use them responsibly.\"\" That may well be true. But some people have great difficulty being responsible about it. If you find that having a credit card in your pocket leads you to just not worry about how much you buy or what it costs, because, hey, you'll just put it on the credit card, then you will likely end up in serious trouble. If, on the other hand, you are just as careful about what you buy whether you are paying cash or using credit, and you never put more on the credit card than you can pay off in full when the bill arrives, then you should be fine.\"",
"title": ""
},
{
"docid": "979150f0ed4d6e0a2bded0486e3ed0a7",
"text": "\"They aren't actually. It appears to be a low interest rate, but it doesn't cover their true cost of capital. It is a sales tactic where they are raising the sticker price/principal of the car, which is subsidizing the true cost of the loan, likely 4% or higher. It would be hard to believe that the true cost of a car loan would be less than for a mortgage, as with a mortgage the bank can reclaim an asset that tends to rise in value, compared to a used car, which will have fallen in value. This is one reason why you can generally get a better price with cash, because there is a margin built in, in addition to the fact that with cash they get all their profit today versus a discount of future cash flows from a loan by dealing with a bank or other lending company. So if you could see the entire transaction from the \"\"inside\"\", the car company would not actually be making money. The government rate is also so low that it often barely covers inflation, much less operating costs and profit. This is why any time you see \"\"0% Financing!\"\", it is generally a sales tactic designed to get your attention. A company cannot actually acquire capital at 0% to lend to you at 0%, because even if the nominal interest rate were 0%, there is an opportunity cost, as you have observed. A portion of the sticker price is covering the real cost, and subsidizing the monthly payment.\"",
"title": ""
},
{
"docid": "9d174defc8801df83b7f99517cd0d43f",
"text": "At first guess, people have less and less disposable cash/income for a down payment which subsequently results in longer loan duration. I thought I recall reading an article not too long ago where average auto loan term was 70 something months and average new car is $30k+. That’s a lot of $$$ for a country where median household income is $50k.",
"title": ""
},
{
"docid": "c1589d69152a6c39b837a4cbea6147ad",
"text": "I have a job and would like to buy equipment for producing music at home and it would be easier for me to pay for the equipment monthly I just want to address your contention that it would be easier to pay monthly, with an interest calculation. Lets say you get a credit card with a very reasonable rate of 12% and you buy $2,500 of equipment. A typical credit card minimum payment is interest charges + 1% of the principle. You can see how this is going. You've paid nearly $200 to clear about $100 off your principle. Obviously paying the minimum payment will take forever to wipe out this debt. So you pay more, or maybe you get 0% interest for a while and take advantage of that. Paying $100 per month against $2,500 at 12% per year will take 29 months and cost about $390 in interest. At $200 per month it'll take 14 months and cost $184 in interest. Also note, you'll probably get an interest rate closer to 16 or 17%. It's always easier to pay small amounts frequently than it is to pay a lot of money all at once, that ease has a cost. If you're buying the gear to start a little business, or you already have a little business going and want to upgrade some gear, great; disciplined debt handling is a wonderful skill to have in business. If you want to start yourself in to a new hobby, you should not do that with debt. If interest rates are low enough financing something can make sense. 0.9% apr on a car, sure; 15% apr on a mixing board, no. Credit card interest rates are significant and really should not be trifled with.",
"title": ""
},
{
"docid": "277d4423be680399e5c346d4177ce244",
"text": "In the UK at least, dealers definitely want you to take finance. They get benefits from the bank (which are not insubstantial) for doing this; these benefits translate directly to increased commission and internal rewards for the individual salesman. It's conceivable that the salesman will be less inclined to put himself out for you in any way by sweetening your deal as much as you'd like, if he's not going to get incentives out of it. Indeed, since he's taking a hit on his commission from you paying in cash, it's in his best interests to perhaps be firmer with you during price negotiation. So, will the salesman be frustrated with you if you choose to pay in cash? Yes, absolutely, though this may manifest in different ways. In some cases the dealer will offer to pay off the finance for you allowing you to pay directly in cash while the dealer still gets the bank referral reward, so that everyone wins. This is a behind-the-scenes secret in the industry which is not made public for obvious reasons (it's arguably verging on fraud). If the salesman likes you and trusts you then you may be able to get such an arrangement. If this does not seem likely to occur, I would not go out of my way to disclose that I am planning to pay with cash. That being said, you'll usually be asked very early on whether you are seeking to pay cash or credit (the salesman wants to know for the reasons outlined above) and there is little use lying about it when you're shortly going to have to come clean anyway.",
"title": ""
},
{
"docid": "3f2d7cb8ce82aa73b1882a63e63724e8",
"text": "\"Yea but they might feel swindled and that you pulled a fast one on them, and not be as willing to give you good deals in the future. Like, as a totally non mathematical example, they have a car for $50k. They lower the price to 40k with a financing that will bring total payment to 60k. Their break even on that car is let's say 45k. The financier cuts them a commission on expected profits, of maybe 7k? They made an expected 2k on the car. But if you pay it all off asap, they may lose that commission, be 5k in the hole on the sale, and pretty upset. Even more upset if they finance in house. So when you go back to buy another car they'll say \"\"fuck this guy, we need to recoup past lost profits, don't go below 4K above break even.\"\" I'm not really 100% on how financing workings when it comes to cars but from my background in sales this is the bar I would set for a customer that made me take a loss by doing business with them if they tried to come back in the future. This doesn't take into account how car dealerships don't own their inventory, finance all of their cars and actually ARE willing to take a loss on a car just to get it off the lot some times.\"",
"title": ""
},
{
"docid": "584d3a1d780d21200d209d91a428d8b4",
"text": "Cash price is $22,500. Financed, it's the same thing (0% interest) but you pay a $1500 fee. 1500/22500 = 6.6%. Basically the APR for your loan is 1.1% per year but you are paying it all upfront. Opportunity cost: If you take the $22,500 you plan to pay for the car and invested it, could you earn more than the $1500 interest on the car loan? According to google, as of today you can get 1 year CD @ 1.25% so yes. It's likely that interest rates will be going up in medium term so you can potentially earn even more. Insurance cost: If you finance you'll have to get comprehensive insurance which could be costly. However, if you are planning to get it anyway (it's a brand new car after all), that's a wash. Which brings me to my main point: Why do you have $90k in a savings account? Even if you are planning to buy a house you should have that money invested in liquid assets earning you interest. Conclusion: Take the cheap money while it's available. You never know when interest rates will go up again.",
"title": ""
},
{
"docid": "a5508414a61fc0d5f77fd9551e59b8de",
"text": "To add to what others have said, INSTALLMENT CREDIT is a stronger factor when building credit. An installment credit is essentially a loan with a fixed repay amount such as a student loan and a car loan. Banks (when it comes to buying your first home) want to see that you are financially able to repay a big debt (car loan). But be careful, if you cannot pay cash, you cannot afford it. My rule of thumb is that when I'm charging something to my CC, I MUST pay it off when it posts to my account. I just became debt free (paid off about 15k in CC and student loan debt in 18 months) and I love it.",
"title": ""
},
{
"docid": "63c200f9812b79185eda09b2cf23f12d",
"text": "I never understood why people lease rather than buy or finance. I'm financing a new civic 09 @ 0.9%. At the end of the 5 year terms I will have paid less than $800 in interest.",
"title": ""
},
{
"docid": "14fbd60f61528b74f681f6033acfc003",
"text": "The risk besides the extra interest is that you might be upside down on the loan. Because the car loses value the moment you drive off the lot, the slower you pay it off the longer it takes to get the loan balance below the resale value. Of course if you have a significant down payment, the risk of being upside down is not as great. Even buying a used car doesn't help because if you try to sell it back to the dealer the next week they wont give you the full price you paid. Some people try and split the difference, get the longer term loan, but then pay it off as quickly as the shorter term loan. Yes the interest rate is higher but if you need to drop the payment back to the required level you can do so.",
"title": ""
},
{
"docid": "ac5e3eceb0f3f7efed7542521895e212",
"text": "I have gotten a letter of credit from my credit union stating the maximum amount I can finance. Of course I don't show the dealer the letter until after we have finalized the deal. I Then return in 3 business days with a cashiers check for the purchase price. In one case since the letter was for an amount greater then the purchase price I was able drive the car off the lot without having to make a deposit. In another case they insisted on a $100 deposit before I drove the car off the lot. I have also had them insist on me applying for their in-house loan, which was cancelled when I returned with the cashiers check. The procedure was similar regardless If I was getting a loan from the credit union, or paying for the car without the use of a loan. The letter didn't say how much was loan, and how much was my money. Unless you know the exact amount, including all taxes and fees,in advance you can't get a check in advance. If you are using a loan the bank/credit Union will want the car title in their name.",
"title": ""
}
] |
fiqa
|
e2d938368b8ad8d6728add755e7e798a
|
Joint account that requires all signatures of all owners to withdraw money?
|
[
{
"docid": "02a058752d659ec81be42f03e06b6ccb",
"text": "Savings accounts have lower fees. If you don't anticipate doing many transactions per month, e.g. three or fewer withdrawals, then I would suggest a savings account rather than a checking account. A joint account that requires both account holder signatures to make withdrawals will probably require both account holders' signature endorsements, in order to make deposits. For example, if you are issued a tax refund by the U.S. Treasury, or any check that is payable to both parties, you will only be able to deposit that check in a joint account that has both persons as signatories. There can be complications due to multi-party account ownership if cashing versus depositing a joint check and account tax ID number. When you open the account, you will need to specify what your wishes are, regarding whether both parties or either party can make deposits and withdrawals. Also, at least one party will need to be present, with appropriate identification (probably tax ID or Social Security number), when opening the account. If the account has three or more owners, you might be required to open a business or commercial account, rather than a consumer account. This would be due to the extra expense of administering an account with more than two signatories. After the questioner specified interest North Carolina in the comments, I found that the North Carolina general banking statutes have specific rules for joint accounts: Any two or more persons may establish a deposit account... The deposit account and any balance shall be as joint tenants... Unless the persons establishing the account have agreed with the bank that withdrawals require more than one signature, payment by the bank to, or on the order of (either person on) the account satisfys the bank's obligation I looked for different banks in North Carolina. I found joint account terms similar to this in PDF file format, everywhere, Joint Account: If an item is drawn so that it is unclear whether one payee’s endorsement or two is required, only one endorsement will be required and the Bank shall not be liable for any loss incurred by the maker as a result of there being only one endorsement. also Joint accounts are owned by you individually or jointly with others. All of the funds in a joint account may be used to repay the debts of any co-owner, whether they are owed individually, by a co-owner, jointly with other co-owners, or jointly with other persons or entities having no interest in your account. You will need to tell the bank specifically what permissions you want for your joint account, as it is between you and your bank, in North Carolina.",
"title": ""
}
] |
[
{
"docid": "eeca0a2b4af05100ffe716150b4feb26",
"text": "\"I'm pretty sure that the banks here will only allow a joint account with either all citizens or all \"\"foreign resident\"\" or tourists. You may be able to do something with Leumi since they have a US branch in NYC. What many people do (who are US citizens) is open a bank account either at a physical branch or online and then it can be managed all online. Make sure no monthly balance fees or atm fees etc. If you need to transfer money most banks will \"\"buy\"\" a US check (I have done this with Leumi) or you can go to the ATM and pull out a few thousand shekel from the USA account and deposit it right back into the Israeli account. My wife and I did this when we first arrived. Discount Bank seemed to have no fees for pulling money out and a good USD/ILS rate. Just make sure you don't have foreign transaction fees / high rates on the US account. If you need to deposit checks for him you can use the remote deposit feature and just take a picture. בהצלחה!\"",
"title": ""
},
{
"docid": "2931ed836111fe94d3fdb3cbf23826a0",
"text": "Do you have signature authority or interest in the account? Then yes. Interest in the account means that you wire $25K to your dad, but the money still belongs to you (I.e.: if you ask for it your dad will give it back to you).",
"title": ""
},
{
"docid": "532ccb785de284ab88f3b35849ce2e55",
"text": "No. But the scenario is unrealistic. No bank will give the LLC any loan unless the members personally co-sign to guarantee it. In which case, the members become personally liable in addition to the LLC.",
"title": ""
},
{
"docid": "cd55f90bd71c1fc6fbf7018fd284c21f",
"text": "\"Uniform Transfer to Minors Act (UTMA) and Uniform Gift to Minors Act (UGMA) accounts in the United States are accounts that belong to your child, but you can deposit money into. When the child attains his/her majority, the money becomes theirs to spend however they wish. Prior to attaining their majority, a custodian must sign off on withdrawals. Now, they are not foolproof; legally, you can withdraw money if it is spent on the child's behalf, so that can be gamed. What you can do to protect against that is to make another person the custodian (or, perhaps make them joint custodians with yourself, requiring both signatures for withdrawals). UTMA/UGMA accounts do not have to be bank savings accounts; for example, both of my children have accounts at Vanguard which are effectively their college savings accounts. They're invested in various ETFs and similar kinds of investments; you're welcome to choose from a wide variety of options depending on risk tolerance. Typically these accounts have relatively small fees, particularly if you have a reasonable minimum balance (I think USD$10k is a common minimum for avoiding larger fees). If you are looking for something even more secure than a UGMA or UTMA account, you can set up a trust. These have several major differences over the UGMA/UTMA accounts: Some of course consider the second point an advantage, some a disadvantage - we (and Grandma) prefer to let our children make their own choices re: college, while others may not prefer that. Also worth noting as a difference - and concern to think about - in these two. A UGMA or UTMA account that generates income may have taxable events - interest or dividend income. If that's over a relatively low threshhold, about $1050 this year, those earnings will be taxed (on the child's own tax return). If it's over $2100 (this year), those earnings will be taxed at the parents' tax rate (\"\"kiddie tax\"\"). Trusts are slightly different; trusts themselves are taxed, and have their own tax returns. If you do set one of those up, the lawyer who helps you do so should inform you of the tax implications and either hook you up with an accountant or point you to resources to handle the taxes yourself.\"",
"title": ""
},
{
"docid": "8a46ce492ee495a06054dae7c4ee929c",
"text": "\"What you describe is called a \"\"partnership\"\" (\"\"General Partnership\"\", more precise). Partnership are unincorporated associations of people with a common goal in mind. Every partner shares the same responsibility and obligations, and the duties and authorizations to act on behalf of the partnership should be written down and signed by all the partners in a contract, which is called \"\"Operating Agreement\"\". With that in place, you (if you're given the authority by the partners) can open a bank account on behalf of the partnership, and allow other partners access to it (with or without signature authority, per the operating agreement). If you're talking about a group of homeowners - you should set up a \"\"Homeowners Association\"\" (HOA). Per applicable state law it would either be a limited partnership or a special kind of incorporated entity. That entity can enter contracts (hire a lawyer, for example) on behalf of all the owners.\"",
"title": ""
},
{
"docid": "79da6c65d434de3aca1f6e2abf11aa5d",
"text": "\"You need to consult a lawyer in your area. Generally speaking though, if you breach the T&C, they don't have to follow them either, which means that whatever they were responsible for in those terms and conditions, they're no longer responsible. So if you get hacked, and they can prove you breached T&C by sharing your credentials, they are absolutely off the hook for your financial losses. So if they detect you're in breach, they may record it and not pursue any other action unless/until you have an issue, in which case they say, \"\"they're in breach, see here, here and here.\"\" Or there may be regulations that require they notify you of their detection of the breach. If this sort of regulation exists, I suspect that the notification would also include a termination of all accounts as well. I can also picture situation where a company might have such a policy built into the T&C so that they can steer as clear as possible from any situations involving liability and cyber-crime in the same sentence. My suggestion would be to take the terms and conditions for your banks to some kind of legal clinic and get them to explain the parts that you do not understand.\"",
"title": ""
},
{
"docid": "9a838469fa155163c0b924eaa6f44b0e",
"text": "\"Cosigning is explicitly a promise that you will make the payments if the primary signer can not. Don't do it unless you are able to handle the cost and trust the other party will \"\"make you whole\"\" when they can... which means don't do it for anyone you would not lend your money to, since it comes out to about the same level of risk. Having agreed, you're sorta stuck with your ex-friend's problem. I recommend talking to a lawyer about the safest way get out of this. It isn't clear you can even sue the ex-friend at this point.\"",
"title": ""
},
{
"docid": "b2c42bddf3080ea7ae21817338063ec0",
"text": "The bank won't let you because: Differences in required account features — Business accounts have different features (many of them legal features) that are required by businesses. For instances: Do you want to be able to deposit cheques that are written out to your business name? You need a business account for that. Your business could be sold. Then it wouldn't be your business, so it wouldn't make sense to put the business account under your personal name. The bank account and the cash it holds is a business asset and should be owned by the business, so when the business is sold the account goes with it. This is especially the case for a corporation that has shareholders, and not a sole proprietorship. For a business, you could also, in theory, assign other people as signing authorities on the business account (e.g. your corporate treasurer), and the individuals performing that role could change over time. Business accounts allow for this kind of use. Market segmentation — The bank has consciously undertaken to segment their product offerings in order to maximize their profit. Market segmentation helps the bottom line. Even if there were zero legal reasons to have separate personal vs. business accounts, banks would still make it their policy to sell different account types according to use because they can make more money that way. Consider an example in another industry: The plain-old telephone company also practices segmentation w.r.t. personal/business. Do you want a telephone line for a business and listed as such in the phone book? You need a business line. Do you want a phone line hooked up at a non-residential address? You need a business line. Here it's clear it is less of a legal issue than with the bank account, and it doesn't matter that the technical features of the phone line may be identical for the basic product offerings within each segment. The phone company has chosen to segment and price their product offerings this way. Q. Why do companies choose to charge some kinds of customers more than others for essentially the same underlying service? A. Because they can.",
"title": ""
},
{
"docid": "96159077e368527db2d43f985f7595bd",
"text": "\"Your money in the bank is yours. If you lose your bank card and forget the account number, it's still yours. It's just harder to prove. If your name is Joe Smith, it might be harder to find your bank account and to prove it's yours. If \"\"go to the bank\"\" means walking into a branch of the bank and walking out with your money fifteen minutes later, that's unlikely to happen. More likely they will give you forms to fill in to maximise chances of finding your account, and tell you what evidence to bring to prove that you are the owner of the account.\"",
"title": ""
},
{
"docid": "02c78bcfa77c8f9dce19cef17e2a50db",
"text": "It will not affect your tax bracket so long as he files his taxes. It will not affect your credit negatively so long as the joint account takes out no debts. If it does take out debts, then someone would need to pay them to avoid negative credit. Ideally debts should take signatures from both of you (ask the bank). The IRS will not automatically assume that the only reason that two people might have a joint account is illegal activities. If he withdraws money from the account in such a way to cause an overdraft, you might be responsible for it. However, it sounds like he isn't supposed to be withdrawing money from that account. So that's a potential problem but not a guaranteed problem. Make sure that you have the power to close the account without him (so if you break up later, you can take your name off unilaterally). Realize that you might have to pay a little to close the account if he overdraws it. If possible, have the bank refuse overdrafts. Consider a savings account rather than a checking account. The rules may better fit what you want to do. In particular, if you are limited to transfers, that's safer than checks. Schedule a time to talk to someone at the bank about the account. Ask them to leave plenty of time because you have questions. Explain what you want and let them tell you how to structure the account.",
"title": ""
},
{
"docid": "04f81083600e6efd66a27ac1fd14ac8a",
"text": "In my experience, this choice is entirely up to the bank itself. There was a time when, given my mothers ATM card I could go to the bank and pull money for her, but the bank has since changed their rules and now they only will allow people listed on the account to access it, card or no card. If the bank is aware of who you are and knows that your friend is not you, they may be skeptical of allowing your friend to withdraw any money, or they might not care, it's at their discretion. If they do not know who either of you are, if your friend has the card and information needed, that will likely be sufficient, unless they ask for identification.",
"title": ""
},
{
"docid": "ca3869dabd29a013aa9458ceadfec2c0",
"text": "My answer is with respect to the United States. I have no idea about India's regulatory environment. You are opening yourself up to massive liabilities and problems if you deposit their money in your account. I managed investment accounts as a private investment advisor for years (those with less than 15 clients were not required to register) until Dodd-Frank changed the rules. Thus you would have to register as an advisor, probably needing to take the series 65 exam (or qualifying some other way, e.g. getting your CFP/CFA/etc...). I used a discount broker/dealer (Scottrade) as the custodian. Here's how it works: Each client's account was their own account, and I had a master account that allowed me to bill their accounts and manage them. They signed paperwork making me the advisor on their account. I had very little accounting to handle (aside from tracking basis for taxed accounts). If you take custody of the money, you'll have regulatory obligations. There are always lots of stories in the financial advisor trade publications about advisors who go to jail for screwing their clients. The most common factor: they took custody of the assets. I understand why you want a single account - you want to ensure that each client gets the same results, right? Does each client want the same results? Certainly the tax situation for each is different, yes? Perhaps one has gains and wants to take losses in one year, and the other doesn't. If their accounts are managed separately, one can take losses while the other realizes gains to offset other losses. Financial advisors offer these kinds of accounts as Separately Managed Accounts (SMAs). The advisors on these kinds of accounts are mutual funds managers, and they try to match a target portfolio, but they can do things like realize gains or losses for clients if their tax situation would prefer it. You certainly can't let them put retirement accounts into your single account unless the IRS has you on their list of acceptable custodians. I suggest that you familiarize yourself thoroughly with the regulatory environment that you want to operate under. Then, after examining the pros and cons, you should decide which route you want to take. I think the most direct and feasible route is to pass the Series 65, register as an investment advisor, and find a custodian who will let you manage the assets as the advisor on the account. Real estate is another matter, you should talk to an attorney, not some random guy on the internet (even if he has an MBA and a BS in Real Estate, which I do). This is very much a state law thing.",
"title": ""
},
{
"docid": "14dfd4204061a8a6f575f0f1353fff93",
"text": "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.",
"title": ""
},
{
"docid": "a94776ff15107b4078eabd2f71906a41",
"text": "\"Welcome to the 21st century, the New Order. Forget all that legal mumbo jumbo you may have read back in law school in the 1960s about commercial code. Its all gone now. Now we have Check 21 and the Patriot Act !!! Basically what this means is that because some Arab fanatics burned down the World Trade Center, the US government and its allied civilian banking company henchmen now have total control and dictatorship over \"\"your\"\" money, which is no longer really money, but more like a \"\"credit\"\" to your account with THEM which they can do with what they want. Here are some of the many consequences of the two aforementioned acts: (1) You can no longer sue a bank for mishandling your money (2) All your banking transaction information is the joint property of the bank, its \"\"affiliates\"\" and the US Treasury (3) You can no longer conduct private monetary transactions with other people using a bank as your agent; you can only request that a bank execute an unsecured transaction on your behalf and the bank has total control over that transaction and the terms on which occurs; you have no say over these terms and you cannot sue a bank over any financial tort on you for any reason. (4) All banks are required to spy on you, report any \"\"suspicious\"\" actions on your part, develop and run special software to detect these \"\"suspicious actions\"\", and send their employees to government-run educational courses where they are taught to spy on customers, how to report suspicious customers and how to seize money and safe deposit boxes from customers when the government orders them to do so. (5) All banks are required to positively identify everyone who has a bank account or safe deposit box and report all their accounts to the government. (6) No transactions can be done anonymously. All parties to every banking transaction must be identified and recorded. So, from the above it should be clear to (if you are a lawyer) why no endorsement is present. That is because your check is not a negotiable instrument anymore, it is merely a request to the bank to transfer funds to the Treasury. The Treasury does not need to \"\"endorse\"\" anything. In fact, legally speaking, the Treasury could simply order your bank to empty your account into theirs, and they actually do this all the time to people they are \"\"investigating\"\" for supposed crimes. You don't need to endorse checks you receive either because, as I said above, the check is no longer a negotiable instrument. Banks still have people do it, but it is just a pro forma habit from the old days. Since you can't sue the bank, the endorsement is pretty meaningless because it cannot be challenged in court anyway. You could probably just write \"\"X\"\" there and they would deposit it.\"",
"title": ""
},
{
"docid": "cda7eea9124be207c47508a4ae82b316",
"text": "\"we can then start taking penalty free withdrawals from it? There's no \"\"we\"\" in IRA. There's \"\"I\"\". That stands for \"\"Individual\"\". So your wife's age has no influence whatsoever on your ability to make qualified distributions from your IRA. The reason courts order distributions from IRAs is due to the community property laws of various States or other considerations that make spouses entitled to the amounts in the IRAs. However, you're talking about family law here, not tax law. For Federal tax purposes, a distribution ordered by the court doesn't trigger penalty (but is taxable), but any other distribution has to follow the regular qualification criteria.\"",
"title": ""
}
] |
fiqa
|
73ed04ca4c181d2e7e2b02e49e43b1bc
|
Saving/ Investing a lump sum
|
[
{
"docid": "b41317e91da402872831179ca16e4e1b",
"text": "In my mind, when looking at a five year period you have a number of options. You didn't specify where you are based, which admittedly makes it harder, to give you good advice. If you are looking for an investment that can achieve large gains, equities are impossible to ignore. By investing in an index fund or other diverse asset forms (such as mutual funds), your risk is relatively minimal. However there has historically been five year periods where you would lose/flatline your money. If this was to be the case you would likely be better off waiting more than five years to buy a house, which would be frustrating. When markets rebound, they often do it hard. If you are in a major economy, taking something like the top 100 of your stock market is a safe bet, although admittedly you would have made terrible returns if you invested in the Polish markets. While they often achieve lower returns than equity investments, they are generally considered safer - especially government issued bonds. If you were willing to sacrifice returns for safety, you must always consider them. This is an interesting new addition, and I can't comment on the state of it in the United States, however in Europe we have a number of platforms which do this. In the UK, for example you can achieve ~7.3% returns YoY using sites like Funding Circle. If you invest in a diverse range of businesses, you have minimal risk from and individual company not paying. Elsewhere in Europe (although not appropriate for me as everything I do is denominated in Sterling), you can secure 12% in places like Georgia, Poland, and Estonia. This is a very good rate and the platforms seem reputable, and 'guarantee' their loans. However unlike funding circle, they are for consumer loans. The risk profile in my mind is similar to that of equities, but it is hard to say. Whatever you do, you need to do your homework, and ensure that you can handle the level of risk offered by the investments you make. I haven't included things like Savings accounts in here, as the rates aren't worth bothering with.",
"title": ""
},
{
"docid": "fa2b0a6b3793f38dafffe53ce49dc70d",
"text": "5 years is very short term, and since you are sure you'll need the money, investing it into the markets should probably not be done. You can toss it in Ally bank for 1% or consider a 5 yr raise your rate CD A decent write-up on time horizons: http://www.investopedia.com/articles/investing/110813/using-time-horizons-investing.asp If you want to go the stock/bond route you can assess the benefits of using something like a vanguard target date fund, or a roboadvisor such as wealthfront or betterment. You need to assess whether you think you may move up your time horizon, say you want to buy a house in 4 years, or, if it is 5 years, are you ok with it being 6.5-7 if there is a market downturn.",
"title": ""
}
] |
[
{
"docid": "94ea24f9daf0be1aa8cc556f394a7c9f",
"text": "\"Don't mind the percentages. They are highly misleading. First, \"\"saving\"\" is making available for future use. It might be \"\"hoarding\"\", \"\"investing\"\" or a combination thereof. It might be for a specific use (a car, a college education, retirement, etc.), or for a non-specific use (for an emergency, for when you decide to spend some of those savings, or just for lack of a compelling use as of the moment). In first case, whatever you save should be available by the date you intend to use it. In second case, it might be prudent to have savings (and investments, see below) of various liquidity (cash you have at hand, bank account you can draw next day, mutual fund account you can draw in a month, maybe something you can only cash in a year etc.). You will see that the actual percentages you \"\"save\"\" fluctuate enormously throughout your life, varying with the progress of your career, changes of marital status and family cmposition, etc., etc. What you should really do is to come up with a rough plan of how you expect, from right now and to the end of your life at whatever age, have enough money for whatever level of comfort you plan for each period of your life, allowing for some specified level of perturbations. Then you just execute that plan or change it as you go.\"",
"title": ""
},
{
"docid": "f968ac77c114449dadf53ee74f7830b8",
"text": "You can't get there from here. This isn't the right data. Consider the following five-year history: 2%, 16%, 32%, 14%, 1%. That would give a 13% average annual return. Now compare to -37%, 26%, 15%, 2%, 16%. That would give a 4% average annual return. Notice anything about those numbers? Two of them are in both series. This isn't an accident. The first set of five numbers are actual stock market returns from the last five years while the latter five start three years earlier. The critical thing is that five years of returns aren't enough. You'd need to know not just how you can handle a bull market but how you do in a bear market as well. Because there will be bear markets. Also consider whether average annual returns are what you want. Consider what actually happens in the second set of numbers: But if you had had a steady 4% return, you would have had a total return of 21%, not the 8% that would have really happened. The point being that calculating from averages gives misleading results. This gets even worse if you remove money from your principal for living expenses every year. The usual way to compensate for that is to do a 70% stock/30% bond mix (or 75%/25%) with five years of expenses in cash-equivalent savings. With cash-equivalents, you won't even keep up with inflation. The stock/bond mix might give you a 7% return after inflation. So the five years of expenses are more and more problematic as your nest egg shrinks. It's better to live off the interest if you can. You don't know how long you'll live or how the market will do. From there, it's just about how much risk you want to take. A current nest egg of twenty times expenses might be enough, but thirty times would be better. Since the 1970s, the stock market hasn't had a long bad patch relative to inflation. Maybe you could squeak through with ten. But if the 2020s are like the 1970s, you'd be in trouble.",
"title": ""
},
{
"docid": "e155a7538f8822b59bcea7d7e2f5090d",
"text": "In addition to what others have said, I think it is important to consider that government retirement assistance (whatever it is called in each instance) is basically a promise that can be revoked. I talked to a retired friend of mine just yesterday and we got onto that subject; she mentioned that when she was young, the promise was for 90% of one's pay, paid by the government after retiring. It is very different today. Yes, you can gamble that you won't need the saved money, and thus decide not to save anything. What then if you do end up needing the money you did not set aside, but rather spent? You are just now graduating college, and assuming of course that you get a decently-paying job, are likely going to have loads more money than you are used to. If you make an agreement with yourself to set aside even just 10-15% of the difference in income right from the start, that is going to grow into a pretty sizable nest egg by the time you approach retirement age. Then, you will have the option of continuing to work (maybe part-time) or quitting in a way you would not have had otherwise. Now I'm going to pull numbers out of thin air, but suppose that you currently have $1000/month net, before expenses, and can get a job that pays $1800/month net starting out. 10-15% of the difference means you'll be saving around $100/month for retirement. In 35 years, assuming no return on investment (pessimistic, but works if returns match inflation) and no pay rises, that will still be over $40K. That's somewhere on the order of $150/month added to your retirement income for 25 years. Multiply with whatever inflation rate you think is likely if you prefer nominal values. It becomes even more noticable if you save a significant fraction of the additional pay; if you save 1/3 of the additional money (note that you still effectively get a 50% raise compared to what you have been living on before), that gives you a net income of $1500/month instead of $1800 ($500/month more rather than $800/month more) which grows into about $110K in 35 years assuming no return on investment. Nearly $400 per month for 25 years. $100 per week is hardly chump change in retirement, and it is still quite realistic for most people to save 30% of the money they did not have before.",
"title": ""
},
{
"docid": "37d96adb2a4325aba75b2c5be6005d57",
"text": "There are been many tests about invest all the money immediately and average it out during a period of time. The results favor to invest the lump sum immediately, so your money starts to work and produce income with dividends. Cash don't produce any income.",
"title": ""
},
{
"docid": "7ba5c8e77be27b5bbb0c9e0ac99adff3",
"text": "\"@MrChrister - Savings is a great idea. Coudl also give them 1/2 the difference, rather than the whole difference, as then you both get to benefit... Also, a friend of mine had the Bank of Dad, where he'd keep his savings, and Dad would pay him 100% interest every year. Clearly, this would be unsustainable after a while, but something like 10% per month would be a great way to teach the value of compounding returns over a shorter time period. I also think that it's critical how you respond to things like \"\"I want that computer/car/horse/bike/toy\"\". Just helping them to make a plan on how to get there, considering their income (and ways to increase it), savings, spending and so on. Help them see that it's possible, and you'll teach them a worthwhile lesson.\"",
"title": ""
},
{
"docid": "2d1c127a3e9e3982f880d91565d518c2",
"text": "I recall similar strategies when (in the US) interest rates were quite a bit higher than now. The investment company put 75% or so into into a 5 year guaranteed bond, the rest was placed in stock index options. In effect, one had a guaranteed return (less inflation, of course) of principal, and a chance for some market gains especially if it went a lot higher over the next 5 years. The concept is sound if executed correctly.",
"title": ""
},
{
"docid": "2c20c5d5624b3de97beca5b90c1b1dc8",
"text": "As others have said, this opinion is predicated on an assumption that early in your life you have no need to actually USE the money, so you are able to take advantage of compounding interest (because the money is going to be there for many many years) and you are far more tolerant of loss (because you can simply wait for the markets to recover). This is absolutely true of a pension pot, which is locked away for a great many years. But it is absolutely NOT true of general investments. Someone in the mid-20s to mid-30s is very likely to want to spend that money on, say, buying a house. In which case losing 10% of your deposit 3 months before you start looking for a house could potentially be a disaster. Liekwise, in your mid-40s if your child's school/college fund goes up in smoke that's a big deal. It is a very commonly espoused theory, but I think it is also fundamentally flawed in many scenarios.",
"title": ""
},
{
"docid": "22b3b000de1845fc6e8c7e67f098f7dc",
"text": "\"Sure. For starters, you can put it in a savings account. Don't laugh, they used to pay noticeable interest. You know, back in the olden days. You could buy an I-bond from Treasury Direct. They're a government savings bond that pays a specified amount of interest (currently 0%, I believe), plus the amount of the inflation rate (something like 3.5% currently, I believe). You don't get paid the money -- the I-bond grows in value till you sell it. You can open a discount brokerage account, and buy 1 or more shares of stock in a company you like. Discount brokerages generally have a minimum of $500 or so, but will waive that if you set the account up as an IRA. Scot Trade, for instance. (An IRA, in case you didn't know, is a type of account that's tax free but you can't touch it till you turn 59 1/2. It's meant to help you save for retirement.) Incidentally, watch out of \"\"small account\"\" fees that some brokerages might charge you. Generally they're annual or monthly charges they'd charge you to cover their costs on your account -- since they're certainly not going to make it in commissions. That IRA at Scot Trade is no-fee. Speaking of commissions, those will be a big chunk of that $100. It'll be like $7-$10 to buy that stock -- a pretty big bite. However, many of these discount brokerages also offer some mutual funds for no commission. Those mutual funds, in turn, have minimums too, but once again if your account's an IRA many will waive the minimum or set it low -- like $100.\"",
"title": ""
},
{
"docid": "7c7dbf0512932aa995f8d4924466f134",
"text": "\"Here's what I suggest... A few years ago, I got a chunk of change. Not from an inheritance, but stock options in a company that was taken private. We'd already been investing by that point. But what I did: 1. I took my time. 2. I set aside a chunk of it (maybe a quarter) for taxes. you shouldn't have this problem. 3. I set aside a chunk for home renovations. 4. I set aside a chunk for kids college fund 5. I set aside a chunk for paying off the house 6. I set aside a chunk to spend later 7. I invested a chunk. A small chunk directly in single stocks, a small chunk in muni bonds, but most just in Mutual Funds. I'm still spending that \"\"spend later\"\" chunk. It's about 10 years later, and this summer it's home maintenance and a new car... all, I figure it, coming out of some of that money I'd set aside for \"\"future spending.\"\"\"",
"title": ""
},
{
"docid": "beb1fdddf8e9c18e2038837e823bed0d",
"text": "In the United States, the Securities Investor Protection Corporation protects the first $500,000 you have at a brokerage including up to $250,000 in cash. This means that if the firm holding your securities fails financially, you have some coverage. That insurance does not prevent your investment itself from losing money. Even traditionally save money market funds can potentially lose value in a situation called Breaking the buck. This means that the Net Asset Value of the fund falls below $1/share. Alas, during periods of market calamity, even traditionally safe stores of value are subject to increased risk.",
"title": ""
},
{
"docid": "5b1421ff7cbe19205c82ece4c8d8d6c7",
"text": "The straight math might favor leaving it, but I'd personally prefer to have it in my control in an IRA. My own employer offered a buyout on the pension program, and the choice between a nice lump sum vs some fixed number 20 years hence was a simple one for me. Both my wife and I (same company) took the lump sum, and never regretted it.",
"title": ""
},
{
"docid": "175eb77b00771165926f3d2ac67c4b6d",
"text": "I think is an excellent idea. Use free money or almost free to do a lump sump payment. My recommendation is to have a reminder to pay credit card before, almost finishing, the 0% APR period.",
"title": ""
},
{
"docid": "57d4f1523f9fd61903f121d578b425fb",
"text": "I recommend saving for retirement first to leverage compound interest over a long time horizon. The historical real return on the stock market has been about 7%. Assuming returns stay at 7% in the future (big assumption, but don't have any better numbers to go off of), then $8,000 saved today will be worth $119,795 in 40 years (1.07^40*8000). Having a sizable retirement portfolio will give you peace of mind as you progress through life and make other expenditures. If you buy assets that pay you money and appreciate, you will be in a better financial position than if you buy assets that require significant cash outflows (i.e. property taxes, interest you pay to the bank, etc.) or assets that ultimately depreciate to zero (a car). As a young person, you are well positioned to pay yourself (not the bank or the car dealership) and leverage compound interest over a long time horizon.",
"title": ""
},
{
"docid": "e0b0784f9fc25a8f78170f45e68b67e6",
"text": "There are more than a few ideas here. Assuming you are in the U.S., here are a few approaches: First, DRIPs: Dividend Reinvestment Plans. DRIP Investing: How To Actually Invest Only A Hundred Dollars Per Month notes: I have received many requests from readers that want to invest in individual stocks, but only have the available funds to put aside $50 to $100 into a particular company. For these investors, keeping costs to a minimum is absolutely crucial. I have often made allusions and references to DRIP Investing, but I have never offered an explanation as to how to logistically set up DRIP accounts. Today, I will attempt to do that. A second option, Sharebuilder, is a broker that will allow for fractional shares. A third option are mutual funds. Though, these often will have minimums but may be waived in some cases if you sign up with an automatic investment plan. List of mutual fund companies to research. Something else to consider here is what kind of account do you want to have? There can be accounts for specific purposes like education, e.g. a college or university fund, or a retirement plan. 529 Plans exist for college savings that may be worth noting so be aware of which kinds of accounts may make sense for what you want here.",
"title": ""
},
{
"docid": "ee2c4b844bf6867deea08781a2c05ee9",
"text": "\"Between 1 and 2 G is actually pretty decent for a High School Student. Your best bet in my opinion is to wait the next (small) stock market crash, and then invest in an index fund. A fund that tracks the SP500 or the Russel 2000 would be a good choice. By stock market crash, I'm talking about a 20% to 30% drop from the highest point. The stock market is at an all time high, but nobody knows if it's going to keep going. I would avoid penny stocks, at least until you can read their annual report and understand most of what they're claiming, especially the cash flow statement. From the few that I've looked at, penny stock companies just keep issuing stock to raise money for their money loosing operations. I'd also avoid individual stocks for now. You can setup a practice account somewhere online, and try trading. Your classmates probably brag about how much they've made, but they won't tell you how much they lost. You are not misusing your money by \"\"not doing anything with it\"\". Your classmates are gambling with it, they might as well go to a casino. Echoing what others have said, investing in yourself is your best option at this point. Try to get into the best school that you can. Anything that gives you an edge over other people in terms of experience or education is good. So try to get some leadership and team experience. , and some online classes in a field that interests you.\"",
"title": ""
}
] |
fiqa
|
d2a83f600d6376e069066778242cc300
|
Is debt almost always the cause of crashes and recessions?
|
[
{
"docid": "c07159e245303172793305c3a1d8a2be",
"text": "While debt increases the likelihood and magnitude of a crash, speculation, excess supply and other market factors can result in crashes without requiring excessive debt. A popular counter example of crashes due to speculation is 16th century Dutch Tulip Mania. The dot com bubble is a more recent example of a speculative crash. There were debt related issues for some companies and the run ups in stock prices were increased by leveraged traders, but the actual crash was the result of failures of start up companies to produce profits. While all tech stocks fell together, sound companies with products and profits survive today. As for recessions, they are simply periods of time with decreased economic activity. Recessions can be caused by financial crashes, decreased demand following a war, or supply shocks like the oil crisis in the 1970's. In summary, debt is simply a magnifier. It can increase profits just as easily as can increase losses. The real problems with crashes and recessions are often related to unfounded faith in increasing value and unexpected changes in demand.",
"title": ""
},
{
"docid": "645ffcd5f477c364552f62afc998402d",
"text": "\"The statement can be true, but isn't a general rule. Crashes and recessions are two different things. A crash is when the market rapidly revalues something when prices are out of equilibrium, whether it be stocks, a commodity or even a service. When the internet was new, nobody knew how to design webpages, so web page designers were in huge demand and commanded insane price premiums. I literally had college classmates billing real companies $200+/hr for marginal web skills. Eventually, the market \"\"clued up\"\" and that industry collapsed overnight. Another example of a crash from the supply point of view was the discovery of silver in the western US during the 19th century -- these discoveries increased the supply of the commodity to the point that silver coin eroded in value and devastated small family farms, who mostly dealt in silver currency. Recessions are often linked to crashes, but you don't need a crash to have a recession. Basically, during a recession, trade and industrial activity drop. The economy operates in cycles, and the euphoria and over-optimistic projections of a growing or booming economy lead to periods of reduced growth where the economy essentially reorganizes itself. Capital is a (if not the) key element of the economic cycle -- it's a catalyst that makes things happen. Debt is one form of capital -- it's not good, not bad. Generally cheap capital (ie. low interest rates) bring economic growth. Why? If I can borrow at 4%, I can then perform some sort of economic activity (bake bread, make computers, assemble cars, etc) that will earn myself 6, 8 or 10% on the dollar. When interest rates go up, economic activity slows, because the higher cost of credit increases the risk of losing money on an investment. The downside of cheap capital is that risk taking gets too easy and you can run into situations like the $2M ranch houses in California. The downside of expensive/tight capital is that it gets harder for businesses to operate and economic activity slows down. The effects of either extreme cascade and snowball.\"",
"title": ""
},
{
"docid": "7fa4236619f0c3895073c76edb5eb278",
"text": "The root cause can be said to always be a crisis in confidence. It may be due to a very real event. However, confidence is what pushes the markets up and worries are what bring them down.",
"title": ""
},
{
"docid": "e35a68f6566711783b486d9bc1f8496e",
"text": "A lack of trust in the regulator can also stop everyone trading. If you don’t believe the bank notes you are getting paid with are real, why do any work?",
"title": ""
}
] |
[
{
"docid": "41ffb7be0749b4171352551b6bcd46bc",
"text": "\"There was a time when government policy was actually pretty damn smart. There were a range of \"\"automatic stabilizers\"\" that kicked in when there was a recession and they had a fast and large impact. It wasn't until Reagan that we started to chip away at those as well as go into a perpetual debt stimulus posture. These two actions helped to prime the system for an inevitable \"\"large\"\" shock. Even now, after one of the longest expansions in history we're STILL running a substantial deficit. And as such the appetite to expand it when the next recession hits will be diminished (as it was during the great recession when we really needed 3 trillion in stimulus spending and got less than 1).\"",
"title": ""
},
{
"docid": "2d4595c4e33035d108c772b10d26fa5b",
"text": "It depends on why the stocks crashed. If this happened because interest rates shot up, bonds will suffer also. On the other hand, stocks could be crashing because economic growth (and hence earnings) are disappointing. This pulls down interest rates and lifts bonds.",
"title": ""
},
{
"docid": "b8f6e63d5633a6b93d55ac418d50aa71",
"text": "Typically the debt is held by individuals, corporations and investment funds, not by other countries. In cases where substantial amounts are held by other countries, those countries are typically not in debt themselves (e.g. China has huge holdings of US Treasuries). If the debts were all cancelled, then the holders of the debt (as listed above) would lose out badly and the knock-on effects on the economy would be substantial. Also, governments that default tend to find it harder to borrow money again in the future.",
"title": ""
},
{
"docid": "312d9c813916aa05b71e3fdeac51bd57",
"text": "\"Yes. Bonds perform very well in a recession. In fact the safer the bond, the better it would do in a recession. Think of markets having four seasons: High growth and low inflation - \"\"growing economy\"\" High growth and high inflation - \"\"overheating economy\"\" Low growth and high inflation - \"\"stagflation\"\" Low growth and low inflation - \"\"recession\"\" Bonds are the best investment in a recession. qplum's flagship strategy had a very high allocation to bonds in the financial crisis. That's why in backtest it shows much better returns.\"",
"title": ""
},
{
"docid": "a53203e93e54c64b01441646a3c92d95",
"text": "\"None of the previous answers (which are all good) mention margin accounts (loans from your broker). You may also have heard them described as \"\"leverage\"\". It may seem odd to mention this rather narrow form of debt here, but it's important because overuse of leverage has played a large part in pretty much every financial crisis you can think of (including the most recent one). As the Investopedia definitions indicate, leverage magnifies gains, but also magnifies losses. I consider margin/leverage to be \"\"bad\"\" debt.\"",
"title": ""
},
{
"docid": "0e82dc8fadcfa9887733a3d37adfb011",
"text": "Incredible article, tons of data. Thank you! It does answer the above posters question if you're willing to read through. It provides data with and without 'revolving debt'. Side note; interesting to see how age and income trend. Debt increasing during the family-middle aged years, and during the peak income earning years. I'd say you want these credit card debt lower overall and on average; but with the distribution it may be sustainable.",
"title": ""
},
{
"docid": "7f66a841d1b8220b8ac3b9817ba46358",
"text": "Isn't it clear to everyone that something that isn't measured by economists yet is going horribly wrong in the US since they started with the debt bing? I know so many people with no savings whatsoever and just hanging on.",
"title": ""
},
{
"docid": "8e50170e3079427d32863a48ed4f6907",
"text": "I was being sarcastic. Student loan crash is a major circle jerk in some Financial subs If anything, it's more likely to manifest itself as OP described. Economic growth is going to be lower is a substantial portion of the populus is servicing debt than consuming goods.",
"title": ""
},
{
"docid": "dfaeffe85aafea3a5e7818563474d004",
"text": "Since 2008, when it all came crashing down, I read a variety of solid data sources that said this asset bubble and mortgage/HELOCs were going to reset (blow up) in slow motion for years, maybe decades. Nothing changed from that time. This has been happening for hundreds of years from what I understand now.",
"title": ""
},
{
"docid": "bc36975d7683f568850949230c160c80",
"text": "By the phrasing of your question it seems that you are under the mistaken impression that countries are borrowing money from other countries, in which case it would make sense to question how everyone can be a borrower with no one on the other side of the equation. The short answer is that the debt is owed mostly to individuals and institutions that buy debt instruments. For example, you know those US savings bonds that parents are buying to save for their children's education? Well a bond is just a way to loan money to the Government in exchange for the original money plus some interest back later. It is as simple as that. I think because the debt and the deficit are usually discussed in the context of more complex macroeconomic concerns people often mistakenly assume that national debts are denominated in some shadow banking system that is hidden from the common person behind some red-tape covered bureaucracy. This is not the case here. Why did they get themselves into this much debt? The same reason the average person does, they are spending more than they bring in and are enabled by access to easy credit. Like many people they are also paying off one credit card using another one.",
"title": ""
},
{
"docid": "d366215b375cef0820dc85e6d867f191",
"text": "I agree that the cause of the crash can make a huge difference in the effect on the bond market. Here's a few other possibilities: All that to say that there's no definitive answer as to how the bond market will respond to an equity crash. Bonds are much more highly correlated to equities lately, but that could be due to much lower interest rates pushing more of the risk of bonds to the credit worthiness of the issuer, increasing correlation.",
"title": ""
},
{
"docid": "49298734e5683df12355c7dbccf30bb4",
"text": "\"The default scenario that we're talking about in the Summer of 2011 is a discretionary situation where the government refuses to borrow money over a certain level and thus becomes insolvent. That's an important distinction, because the US has the best credit in the world and still carries enormous borrowing power -- so much so that the massive increases in borrowing over the last decade of war and malaise have not affected the nation's ability to borrow additional money. From a personal finance point of view, my guess is that after the \"\"drop dead date\"\" disclosed by the Treasury, you'd have a period of chaos and increasing liquidity issues after government runs out of gimmicks like \"\"borrowing\"\" from various internal accounts and \"\"selling\"\" assets to government authorities. I don't think the markets believe that the Democrats and Republicans are really willing to destroy the country. If they are, the market doesn't like surprises.\"",
"title": ""
},
{
"docid": "bbbf2a6b23742336462b8913f03a364a",
"text": "\"Your argument is biased vastly in favor of the banks: Doesn't the simultaneous growth of the residential and commercial real estate pricing bubbles undermines the case made by yourself that Fannie and Freddie were at the root of the problem? Why does your explanation also leave out predatory lending? Or that during 2006, 22% of homes purchased (1.65 million units) were for investment purposes, with an additional 14% (1.07 million units) purchased as vacation homes. During 2005, these figures were 28% and 12%, respectively. In other words, a record level of nearly 40% of homes purchased were not intended as primary residences. Or that housing prices nearly doubled between 2000 and 2006, a vastly different trend from the historical appreciation at roughly the rate of inflation. Or that the proportion of subprime ARM loans made to people with credit scores high enough to qualify for conventional mortgages with better terms increased from 41% in 2000 to 61% by 2006. From wikipedia: So why did lending standards decline? In a Peabody Award winning program, NPR correspondents argued that a \"\"Giant Pool of Money\"\" (represented by $70 trillion in worldwide fixed income investments) sought higher yields than those offered by U.S. Treasury bonds early in the decade. Further, this pool of money had roughly doubled in size from 2000 to 2007, yet the supply of relatively safe, income generating investments had not grown as fast. Investment banks on Wall Street answered this demand with financial innovation such as the mortgage-backed security (MBS) and collateralized debt obligation (CDO), which were assigned safe ratings by the credit rating agencies. In effect, Wall Street connected this pool of money to the mortgage market in the U.S., with enormous fees accruing to those throughout the mortgage supply chain, from the mortgage broker selling the loans, to small banks that funded the brokers, to the giant investment banks behind them. By approximately 2003, the supply of mortgages originated at traditional lending standards had been exhausted. However, continued strong demand for MBS and CDO began to drive down lending standards, as long as mortgages could still be sold along the supply chain. Eventually, this speculative bubble proved unsustainable.\"",
"title": ""
},
{
"docid": "e06513ea6682d175b2be99e6ede27c69",
"text": "The short answer is if you own a representative index of global bonds (say AGG) and global stocks (say ACWI) the bonds will generally only suffer minimally in even the medium large market crashes you describe. However, there are some caveats. Not all bonds will tend to react the same way. Bonds that are considered higher-yield (say BBB rated and below) tend to drop significantly in stock market crashes though not as much as stock markets themselves. Emerging market bonds can drop even more as weaker foreign currencies can drop in global crashes as well. Also, if a local market crash is caused by rampant inflation as in the US during the 70s-80s, bonds can crash at the same time as markets. There hasn't been a global crash caused by inflation after countries left the gold standard, but that doesn't mean it can't happen. Still, I don't mean to scare you away from adding bond exposure to a stock portfolio as bonds tend to have low correlations with stocks and significant returns. Just be aware that these correlations can change over time (sometimes quickly) and depend on which stocks/bonds you invest in.",
"title": ""
},
{
"docid": "0d2b6fbe48101ebb881deb9bc368cca2",
"text": "Inflation is bad for people with lots of cash assets. It's good for debtors, particularly debtors with unsecured debt.",
"title": ""
}
] |
fiqa
|
7a579b2758d471292b83fd8aa7789c02
|
What factors should I consider when evaluating index funds?
|
[
{
"docid": "2b6cde81fdb549260eac7262ff180761",
"text": "The idea of an index is that it is representative of the market (or a specific market segment) as a whole, so it will move as the market does. Thus, past performance is not really relevant, unless you want to bank on relative differences between different countries' economies. But that's not the point. By far the most important aspect when choosing index funds is the ongoing cost, usually expressed as Total Expense Ratio (TER), which tells you how much of your investment will be eaten up by trading fees and to pay the funds' operating costs (and profits). This is where index funds beat traditional actively managed funds - it should be below 0.5% The next question is how buying and selling the funds works and what costs it incurs. Do you have to open a dedicated account or can you use a brokerage account at your bank? Is there an account management fee? Do you have to buy the funds at a markup (can you get a discount on it)? Are there flat trading fees? Is there a minimum investment? What lot sizes are possible? Can you set up a monthly payment plan? Can you automatically reinvest dividends/coupons? Then of course you have to decide which index, i.e. which market you want to buy into. My answer in the other question apparently didn't make it clear, but I was talking only about stock indices. You should generally stick to broad, established indices like the MSCI World, S&P 500, Euro Stoxx, or in Australia the All Ordinaries. Among those, it makes some sense to just choose your home country's main index, because that eliminates currency risk and is also often cheaper. Alternatively, you might want to use the opportunity to diversify internationally so that if your country's economy tanks, you won't lose your job and see your investment take a dive. Finally, you should of course choose a well-established, reputable issuer. But this isn't really a business for startups (neither shady nor disruptively consumer-friendly) anyway.",
"title": ""
},
{
"docid": "9a71e54c51a33edaa86448edea5040c1",
"text": "Your link is pointing to managed funds where the fees are higher, you should look at their exchange traded funds; you will note that the management fees are much lower and better reflect the index fund strategy.",
"title": ""
}
] |
[
{
"docid": "b37971b421af08c8675b6b64c044e31f",
"text": "One thing to be aware of when choosing mutual funds and index ETFs is the total fees and costs. The TD Ameritrade site almost certainly had links that would let you see the total fees (as an annual percentage) for each of the funds. Within a category, the lowest fees percentage is best, since that is directly subtracted from your performance. As an aside, your allocation seems overly conservative to me for someone that is 25 years old. You will likely work for 40 or so years and the average stock market cycle is about 7 years. So you will likely see 5 or so complete cycles. Worrying about stability of principal too young will really cut into your returns. My daughter is your age and I have advised her to be 100% in equities and then to start dialing that back in about 25 years or so.",
"title": ""
},
{
"docid": "bdcf05dafe8669ec0c776f77e15f1190",
"text": "Yes you should take in the expenses being incurred by the mutual fund. This lists down the fees charged by the mutual fund and where expenses can be found in the annual statement of the fund. To calculate fees and expenses. As you might expect, fees and expenses vary from fund to fund. A fund with high costs must perform better than a low-cost fund to generate the same returns for you. Even small differences in fees can translate into large differences in returns over time. You don't pay expenses, so the money is taken from the assets of the fund. So you pay it indirectly. If the expenses are huge, that may point to something i.e. fund managers are enjoying at your expense, money is being used somewhere else rather than being paid as dividends. If the expenses are used in the growth of the fund, that is a positive sign. Else you can expect the fund to be downgraded or upgraded by the credit rating agencies, depending on how the credit rating agencies see the expenses of the fund and other factors. Generally comparison should be done with funds invested in the same sectors, same distribution of assets so that you have a homogeneous comparison to make. Else it would be unwise to compare between a fund invested in oil companies and other in computers. Yes the economy is inter twined, but that is not how a comparison should be done.",
"title": ""
},
{
"docid": "b1551ce33e769d1897d208ca91c38a52",
"text": "\"There are a few reasons why an index mutual fund may be preferable to an ETF: I looked at the iShare S&P 500 ETF and it has an expense ratio of 0.07%. The Vanguard Admiral S&P 500 index has an expense ratio of 0.05% and the Investor Shares have an expense ratio of 0.17%, do I don't necessarily agree with your statement \"\"admiral class Vanguard shares don't beat the iShares ETF\"\".\"",
"title": ""
},
{
"docid": "642605635985e7e03e7dea5aa0e99d77",
"text": "Foreign stocks tend to be more volatile -- higher risk trades off against higher return potential, always. The better reason for having some money in that area is that, as with bonds, it moves out-of-sync with the US markets and once you pick your preferred distribution, maintaining that balance semi-automatically takes advantage of that to improve your return-vs-risk position. I have a few percent of my total investments in an international stock index fund, and a few percent in an international REIT, both being fairly low-fee. (Low fees mean more of the money reaches you, and seems to be one of the better reasons for preferring one fund over another following the same segment of the market.) They're there because the model my investment advisor uses -- and validated with monte-carlo simulation of my specific mix -- shows that keeping them in the mix at this low level is likely to result in a better long-term outcome than if i left them out. No guarantees, but probabilities lean toward this specfic mix doing what i need. I don't pretend to be able to justify that via theory or to explain why these specific ratios work... but I understand enough about the process to trust that they are on (perhaps of many) reasonable solutions to get the best odds given my specific risk tolerance, timeline, and distaste for actively managing my money more than a few times a year. If that.",
"title": ""
},
{
"docid": "cbbe1fd1341e1ff9781db641f39c960f",
"text": "My main criterion for choosing a broker is the fee schedule. I care about investing in index funds and paying as little as possible in fees. In the US that brings everyone to Vanguard or Fidelity, and currently Vanguard edges Fidelity out on costs for the particular funds I am invested in.",
"title": ""
},
{
"docid": "78edcf3c84f09c26a42e0c97f2ab44b3",
"text": "Index Funds & ETFs, if they are tracking the same index, will be the same in an ideal world. The difference would be because of the following factors: Expense ratio: i.e. the expense the funds charge. This varies and hence it would lead to a difference in performance. Tracking error: this means that there is a small percentage of error between the actual index composition and the fund composition. This is due to various reasons. Effectively this would result in the difference between values. Demand / Supply: with ETFs, the fund is traded on stock exchanges like a stock. If the general feeling is that the index is rising, it could lead to an increase in the price of the ETF. Index funds on the other hand would remain the same for the day and are less liquid. This results in a price increase / decrease depending on the market. The above explains the reason for the difference. Regarding which one to buy, one would need to consider other factors like: a) How easy is it to buy ETFs? Do you already hold Demat A/C & access to brokers to help you conduct the transaction or do you need to open an additional account at some cost. b) Normally funds do not need any account, but are you OK with less liquidity as it would take more time to redeem funds.",
"title": ""
},
{
"docid": "9d67e11a7c3b69dc6f4b90c0aaaa9054",
"text": "I don't know what you mean by 'major'. Do you mean the fund company is a Fidelity or Vanguard, or that the fund is broad, as in an s&P fund? The problem starts with a question of what your goals are. If you already know the recommended mix for your age/risk, as you stated, you should consider minimizing the expenses, and staying DIY. I am further along, and with 12 year's income saved, a 1% hit would be 12% of a year's pay, I'd be working 1-1/2 months to pay the planner? In effect, you are betting that a planner will beat whatever metric you consider valid by at least that 1% fee, else you can just do it yourself and be that far ahead of the game. I've accepted the fact that I won't beat the average (as measured by the S&P) over time, but I'll beat the average investor. By staying in low cost funds (my 401(k) S&P fund charges .05% annual expense) I'll be ahead of the investors paying planner fees, and mutual fund fees on top of that. You don't need to be a CFP to manage your money, but it would help you understand the absurdity of the system.",
"title": ""
},
{
"docid": "5103c63d89644a428f070da7464eb105",
"text": "\"Ah ok, I can appreciate that. I'm fluent in English and Mr. Graham's command of English can be intimidating (even for me). The edition I have has commentary by Mr. Jason Zweig who effectively rewrites the chapters into simpler English and updates the data (some of the firms listed by Mr. Graham don't exist either due to bankruptcy or due to consolidation). But I digress. Let's start with the topics you took; they're all very relevant, you'd be surprised, the firm I work for require marketing for certain functions. But not being good at Marketing doesn't block you from a career in Finance. Let's look at the other subjects. You took high level Maths, as such I think a read through Harry Markowitz's \"\"Portfolio Selection\"\" would be beneficial, here's a link to the paper: https://www.math.ust.hk/~maykwok/courses/ma362/07F/markowitz_JF.pdf Investopedia also has a good summary: http://www.investopedia.com/walkthrough/fund-guide/introduction/1/modern-portfolio-theory-mpt.aspx This is Mr. Markowitz's seminal work; while it's logical to diversify your portfolio (remember the saying \"\"don't put all your eggs in one basket\"\"), Mr. Markwotiz presented the relationship of return, risk and the effects of diversification via mathematical representation. The concepts presented in this paper are taught at every introductory Finance course at University. Again a run through the actual paper might be intimidating (Lord knows I never read the paper from start to finish, but rather read text books which explained the concepts instead), so if you can find another source which explains the concepts in a way you understand, go for it. I consider this paper to be a foundation for other papers. Business economics is very important and while it may seem like it has a weak link to Finance at this stage; you have to grasp the concepts. Mr. Michael Porter's \"\"Five Forces\"\" is an excellent link between industry structure (introduced in Microeconomics) and profit potential (I work in Private Equity, and you'd be surprised how much I use this framework): https://hbr.org/2008/01/the-five-competitive-forces-that-shape-strategy There's another text I used in University which links the economic concept of utility and investment decision making; unfortunately I can't seem to remember the title. I'm asking my ex-classmates so if they respond I'll directly send you the author/title. To finish I want to give you some advice; a lot of subjects are intimidating at first, and you might feel like you're not good enough but keep at it. You're not dumber than the next guy, but nothing will come for free. I wasn't good at accounting, I risked failing my first year of University because of it, I ended up passing that year with distinction because I focused (my second highest grade was Accounting). I wasn't good in economics in High School, but it was my best grades in University. I wasn't good in financial mathematics in University but I aced it in the CFA. English is your second language, but you have to remember a lot of your peers (regardless of their command of the language) are being introduced to the new concepts just as you are. Buckle down and you'll find that none of it is impossible.\"",
"title": ""
},
{
"docid": "0918254a089cca9fd94fee63324ec519",
"text": "\"Your bank's fund is not an index fund. From your link: To provide a balanced portfolio of primarily Canadian securities that produce income and capital appreciation by investing primarily in Canadian money market instruments, debt securities and common and preferred shares. This is a very broad actively managed fund. Compare this to the investment objective listed for Vanguard's VOO: Invests in stocks in the S&P 500 Index, representing 500 of the largest U.S. companies. There are loads of market indices with varying formulas that are supposed to track the performance of a market or market segment that they intend to track. The Russel 2000, The Wilshire 1000, The S&P 500, the Dow Industrial Average, there is even the SSGA Gender Diversity Index. Some body comes up with a market index. An \"\"Index Fund\"\" is simply a Mutual Fund or Exchange Traded Fund (ETF) that uses a market index formula to make it's investment decisions enabling an investor to track the performance of the index without having to buy and sell the constituent securities on their own. These \"\"index funds\"\" are able to charge lower fees because they spend $0 on research, and only make investment decisions in order to track the holdings of the index. I think 1.2% is too high, but I'm coming from the US investing world it might not be that high compared to Canadian offerings. Additionally, comparing this fund's expense ratio to the Vanguard 500 or Total Market index fund is nonsensical. Similarly, comparing the investment returns is nonsensical because one tracks the S&P 500 and one does not, nor does it seek to (as an example the #5 largest holding of the CIBC fund is a Government of Canada 2045 3.5% bond). Everyone should diversify their holdings and adjust their investment allocations as they age. As you age you should be reallocating away from highly volatile common stock and in to assets classes that are historically more stable/less volatile like national government debt and high grade corporate/local government debt. This fund is already diversified in to some debt instruments, depending on your age and other asset allocations this might not be the best place to put your money regardless of the fees. Personally, I handle my own asset allocations and I'm split between Large, Mid and Small cap low-fee index funds, and the lowest cost high grade debt funds available to me.\"",
"title": ""
},
{
"docid": "07f7202017432ca3558e5ec9494595bc",
"text": "Current evidence is that, after you subtract their commission and the additional trading costs, actively managed funds average no better than index funds, maybe not as well. You can afford to take more risks at your age, assuming that it will be a long time before you need these funds -- but I would suggest that means putting a high percentage of your investments in small-cap and large-cap stock indexes. I'd suggest 10% in bonds, maybe more, just because maintaining that balance automatically encourages buy-low-sell-high as the market cycles. As you get older and closer to needing a large chunk of the money (for a house, or after retirement), you would move progressively more of that to other categories such as bonds to help safeguard your earnings. Some folks will say this an overly conservative approach. On the other hand, it requires almost zero effort and has netted me an average 10% return (or so claims Quicken) over the past two decades, and that average includes the dot-bomb and the great recession. Past results are not a guarantee of future performance, of course, but the point is that it can work quite well enough.",
"title": ""
},
{
"docid": "8b90dc3f316e64f6d93f0fd4e355334d",
"text": "An index fund is inherently diversified across its index -- no one stock will either make or break the results. In that case it's a matter of picking the index(es) you want to put the money into. ETFs do permit smaller initial purchases, which would let you do a reasonable mix of sectors. (That seems to be the one advantage of ETFs over traditional funds...?)",
"title": ""
},
{
"docid": "ef0e9ae89d9c52b31c87383d6b21d9af",
"text": "Financial advisers like to ask lots of questions and get nitty-gritty about investment objectives, but for the most part this is not well-founded in financial theory. Investment objectives really boils down to one big question and an addendum. The big question is how much risk you are willing to tolerate. This determines your expected return and most characteristics of your portfolio. The addendum is what assets you already have (background risk). Your portfolio should contain things that hedge that risk and not load up on it. If you expect to have a fixed income, some extra inflation protection is warranted. If you have a lot of real estate investing, your portfolio should avoid real estate. If you work for Google, you should avoid it in your portfolio or perhaps even short it. Given risk tolerance and background risk, financial theory suggests that there is a single best portfolio for you, which is diversified across all available assets in a market-cap-weighted fashion.",
"title": ""
},
{
"docid": "663374eb1366efd15357a239d1becb56",
"text": "Thanks for the advice. I will look into index funds. The only reason I was interested in this stock in particular is that I used to work for the company, and always kept an eye on the stock price. I saw that their stock prices recently went down by quite a bit but I feel like I've seen this happen to them a few times over the past few years and I think they have a strong catalogue of products coming out soon that will cause their stock to rise over the next few years. After not being able to really understand the steps needed to purchase it though, I think I've learned that I really don't know enough about the stock system in general to make any kind of informed decisions about it and should probably stick to something lower-risk or at least do some research before making any ill-informed decisions.",
"title": ""
},
{
"docid": "0643549bec4cfd3d47f375fa02daa3dc",
"text": "\"From How are indexes weighted?: Market-capitalization weighted indexes (or market cap- or cap-weighted indexes) weight their securities by market value as measured by capitalization: that is, current security price * outstanding shares. The vast majority of equity indexes today are cap-weighted, including the S&P 500 and the FTSE 100. In a cap-weighted index, changes in the market value of larger securities move the index’s overall trajectory more than those of smaller ones. If the fund you are referencing is an ETF then there may be some work to do to figure out what underlying securities to use when handling Creation and Redemption units as an ETF will generally have shares created in 50,000 shares at a time through Authorized Participants. If the fund you are referencing is an open-end fund then there is still cash flows to manage in the fund as the fund has create and redeem shares in on a daily basis. Note in both cases that there can be updates to an index such as quarterly rebalancing of outstanding share counts, changes in members because of mergers, acquisitions or spin-offs and possibly a few other factors. How to Beat the Benchmark has a piece that may also be useful here for those indices with many members from 1998: As you can see, its TE is also persistently positive, but if anything seems to be declining over time. In fact, the average net TE for the whole period is +0.155% per month, or an astounding +1.88% pa net after expenses. The fund expense ratio is 0.61% annually, for a whopping before expense TE of +2.5% annually. This is once again highly statistically significant, with p values of 0.015 after expenses and 0.0022 before expenses. (The SD of the TE is higher for DFSCX than for NAESX, lowering its degree of statistical significance.) It is remarkable enough for any fund to beat its benchmark by 2.5% annually over 17 years, but it is downright eerie to see this done by an index fund. To complete the picture, since 1992 the Vanguard Extended Index Fund has beaten its benchmark (the Wilshire 4500) by 0.56% per year after expenses (0.81% net of expenses), and even the Vanguard Index Trust 500 has beaten its benchmark by a razor thin 0.08% annually before (but not after) expenses in the same period. So what is going on here? A hint is found in DFA's 1996 Reference Guide: The 9-10 Portfolio captures the return behavior of U.S. small company stocks as identified by Rolf Banz and other academic researchers. Dimensional employs a \"\"patient buyer\"\" discount block trading strategy which has resulted in negative total trading costs, despite the poor liquidity of small company stocks. Beginning in 1982, Ibbotson Associates of Chicago has used the 9-10 Portfolio results to calculate the performance of small company stocks for their Stocks, Bonds, Bills, and Inflation yearbook. A small cap index fund cannot possibly own all of the thousands of stocks in its benchmark; instead it owns a \"\"representative sample.\"\" Further, these stocks are usually thinly traded, with wide bid/ask spreads. In essence what the folks at DFA learned was that they could tell the market makers in these stocks, \"\"Look old chaps, we don't have to own your stock, and unless you let us inside your spread, we'll pitch our tents elsewhere. Further, we're prepared to wait until a motivated seller wishes to unload a large block.\"\" In a sense, this gives the fund the luxury of picking and choosing stocks at prices more favorable than generally available. Hence, higher long term returns. It appears that Vanguard did not tumble onto this until a decade later, but tumble they did. To complete the picture, this strategy works best in the thinnest markets, so the excess returns are greatest in the smallest stocks, which is why the positive TE is greatest for the DFA 9-10 Fund, less in the Vanguard Small Cap Fund, less still in the Vanguard Index Extended Fund, and minuscule with the S&P500. There are some who say the biggest joke in the world of finance is the idea of value added active management. If so, then the punch line seems to be this: If you really want to beat the indexes, then you gotta buy an index fund.\"",
"title": ""
},
{
"docid": "4babe885cc0b9c925ba104bf0a8636c8",
"text": "\"Nope, its not legal. Easy to explain: If you know something that isn't public known (\"\"inside\"\") it's called insider trading. Hard to prove (impossible), but still illegal. To clarify: If the CEO says it AND its known in public its not illegal. In any case the CEO could face consequences (at least from his company).\"",
"title": ""
}
] |
fiqa
|
9b1bef2377f681bfa5417551f9ccf4ab
|
Is keeping track of your money and having a budget the same thing?
|
[
{
"docid": "ee510b366ce1f9f90801a38b00b1aefc",
"text": "A budget is a plan for spending money in the future. Tracking spending is only looking at what happened in the past. Many people only track their spending, a proper budget can be key to achieving financial goals. You might earn enough and not spend frivolously enough that you aren't hamstrung by lack of a budget, but if you have specific financial goals, odds are you'll be more successful at achieving them by budgeting rather than only tracking spending. I'm a fan of zero-sum budgets, where every dollar is allocated to a specific bucket ahead of time. Here's a good write-up on zero-sum budgets: How and Why to Use a Zero-Sum Budget",
"title": ""
},
{
"docid": "57c1187f6f4dbb66379c306eff33bdef",
"text": "The two are closely related. A budget is a detailed plan for how to spend. Expense tracking is a tool to analyze your previous spending performance. Creating a plan for how to spend your money without any record of your previous spending--is an empty promise to yourself that you will never follow up on. Did I stay within my budget? Doesn't matter, I didn't track the spending anyway. Even if you do plan to track your performance, if you have not previously done so, you won't have a good basis for how much to expect in each category. Most people have a general idea of how much they have spent and many budgets are formed based on that general intuition, but they are often surprised when they track how every penny is spent and look at the totals from month to month and over years. By actually seeing how much has been spent it's easier to pick the big financial drains and target them for reduction, if your desire is more savings, for example. I know people who keep a close eye on what they spend each month, but they don't allocate money in categories for the next month. They don't perform as well on reducing spending, but they often don't care. They feel like they make enough and they save enough, so why worry? I also know people who create an unrealistic budget each month because they haven't done a good job tracking their previous spending. They know what the monthly bills are, but they don't account well for variable or cyclical expenses like repairs, Christmas, etc. Both tools are essential for maximizing your own personal finance.",
"title": ""
},
{
"docid": "1406719d95ff278f1cb5ba03b6d36915",
"text": "\"What you are doing is neither one. You are simply watching to make sure you don't overdraw, which itself suggests you might be living hand to mouth and not saving. Keeping track of your money and budgeting are useful tools which help people get on top of their money. Which tends to have the effect of allowing you to save. How much did you spend on groceries last month? Eating out? Gas? If you were \"\"keeping track of your money\"\", you could say immediately what you spent, and whether that is above or below average, and why. How much do you plan to spend in the next 3 months on gas, groceries, eating out? If you knew the answer to that question, then you would have a \"\"budget\"\". And if those months go by, and your budget proves to have been accurate, or educates you as to what went wrong so you can learn and fix it... then your budget is a functioning document that is helping you master your money. Certainly the more powerful of the two is the \"\"keeping track\"\", or accounting of what has happened to you so far. It's important that you keep track of every penny without letting stuff \"\"slip through the cracks\"\". Here you can use proper accounting techniques and maybe accounting software, just like businesses do where they reconcile their accounting against their bank statements and wallet cash. I shortcut that a little. I buy gift cards for McDonalds, Panera, Starbucks, etc. and buy my meals with those. That way, I only have one transaction to log, $40 - McDonalds gift card instead of a dozen little meals. It works perfectly fine since I know all that money went to fast food. A little more dangerous is that I treat wallet cash the same way, logging say two monthly entries of $100 to cash rather than 50 little transactions of left $1 tip at restaurant. This only works because cash is a tiny part of my overall expenditures - not worth accounting. If it added up to a significant part, I'd want accounting on that.\"",
"title": ""
},
{
"docid": "87ff9493c12684fd4f58b6a01cee10ed",
"text": "\"A budget is a predetermined plan for spending allocated funds to a fixed set of categories according to a schedule. If by, \"\"Keeping track of your money\"\" you mean you are only recording your spending to see on what it is being spent and when, then the answer is no. A budget has constraints on three things: Schedule: The mortgage has to be paid at the 1st of the month with a 2 day grace period. Amount: The mortgage payment is 1500.00 Category: The mortgage. Tracking your money would be as follows: 10/5/2016: $25 for a video game. 10/5/2016: $129.99 for two automobile tires. 10/6/2016: $35.25 for luncheon. I didn't like him! Why did I blow this money? 10/7/2016: nothing spent...yoohoo! 10/8/2016: Payday, heck yeah! I'm financially solvent YET AGAIN! How do I do it?! See the difference?\"",
"title": ""
}
] |
[
{
"docid": "54572d665f17daa6265547ad4047434a",
"text": "\"Money management is data-driven. You've been operating on \"\"how you feel\"\" and \"\"what should be\"\", and that's why it hasn't been working. First you collect data on how you actually are spending money. Record every expenditure and categorize what it was used for. Go back 6-12 months if you can. You don't need blistering detail, in fact I adjusted my lifestyle to make that easy. Fast food meals, movie tickets, USB cables, anything too small to bother recording, I just pay cash for that. Everything else: check, ACH or credit card. It is not excessive to do it in Quickbooks or similar if you know the app. Whatever is most efficient for you. Now you have a log of what you've been spending on what in a time oeriod, and a log of your income. Congratulations, you have a \"\"Profit & Loss Statement\"\", a basic financial planning tool. Now you can look at it accurately, decide if the money you are spending in each department brings the value and joy that fits the expenditure, and change what you want. You may decide you'd rather save $1000/mo than run a $200/mo deficit. Changing is simply coming up with different numbers that you think are achievable. Congratulations, you have a budget or spending plan. Again, data driven. The point is, your spending plan is based on your actual experience with past expenditures, not blind-guessing. Then, go out and make it happen.\"",
"title": ""
},
{
"docid": "ec13e0b91f191cd39a8984f1b9cf65aa",
"text": "Get on a written budget at the BEGINNING of the month. If you dont write down where your money goes BEFORE you spend it, you have no way of keeping track of it. I couldn't do a thing until I got on a written budget but now that I am, I've paid off $10,000 in 7 months.",
"title": ""
},
{
"docid": "08ce38aafaf9fbec87735e5eb5c28727",
"text": "\"I'm reminded of a conversation I had regarding food. I used the word 'diet' and got pushback, as I meant it in sense of 'what one eats'. That's what a diet is, what you eat in an average week, month, year. That list has no hidden agenda unless you want it to. If your finances are in good shape, debt under control, savings growing, etc, a budget is more of an observation than a constraint. In the same way that my bookshelf tells you a lot about who I am, books on finance, math, my religion, along with some on English and humor, my budget will also tell you what my values are. Edit - In a recent speech, regarding Joe Biden, Hillary Clinton said \"\"He has a saying: ‘Don’t tell me what you value. Show me your budget and I will tell you what you value.’ \"\" - nearly exactly my thoughts on this. For the average person, a budget helps to reign in the areas where spending is too high. $500/mo eating out? For the couple hacking away at $30k in credit card debt, that would be an obvious place to cut back. If this brings you happiness, there's little reason to cut back. The budget becomes a reflection of your priorities, and if, at some point in the future, you need to cut back, you'll have a good understanding of where the money is going.\"",
"title": ""
},
{
"docid": "770b55a96711bfa89c581bb4fd39eeae",
"text": "You don't. My budget for the year takes my gross income and nets out tax, spending, etc to account for every dollar. My assets (and the target of the savings during the year) are a balance sheet item. The sum already there isn't part of each year's budget.",
"title": ""
},
{
"docid": "edcdae945b83a18c7c90645115ed8420",
"text": "\"What you are describing sounds a lot like the way we handle our household budget. This is possible, but quite difficult to do with an Excel spreadsheet. It is much easier to do with dedicated budgeting software designed for this purpose. When choosing personal budgeting software, I've found that the available packages fall in two broad categories: Some packages take what I would call a proactive approach: You enter in your bank account balances, and assign your money into spending categories. When you deposit your paycheck, you do the same thing: you add this money to your spending categories. Then when you spend money, you assign it to a spending category, and the software keeps track of your category balances. At any time, you can see both your bank balances and your spending category balances. If you need to spend money in a category that doesn't have any more money, you'll need to move money from a different category into that one. This approach is sometimes called the envelope system, because it resembles a digital version of putting your cash into different envelopes with different purposes. A few examples of software in this category are You Need a Budget (YNAB), Mvelopes, and EveryDollar. Other packages take more of a reactive approach: You don't bother assigning a job to the money already in your bank account. Instead, you just enter your monthly income and put together a spending plan. As you spend money, you assign the transactions to a spending category, and at the end of the month, you can see what you actually spent vs. what your plan was, and try to adjust your next budget accordingly. Software that takes this approach includes Quicken and Mint.com. I use and recommend the proactive approach, and it sounds from your question like this is the approach that you are looking for. I've used several different budgeting software packages, and my personal recommendation is for YNAB, the software that we currently use. I don't want this post to sound too much like a commercial, but I believe it will do everything you are looking for. One of the great things about the proactive approach, in my opinion, is how credit card accounts are handled. Since your spending category balances only include real money actually sitting in an account (not projected income for the month), when you spend money out of a category with your credit card, the software deducts the money from the spending category immediately, as it is already spent. The credit card balance goes negative. When the credit card bill comes and you pay it, this is handled in the software as an account transfer from your checking account to your credit card account. The money in the checking account is already set aside for the purpose of paying your credit card bill. Dedicated budgeting software generally has a reconcile feature that makes verifying your bank statements very easy. You just enter the date of your bank statement and the balance, and then the software shows you a list of the transactions that fall in those dates. You can check each one against the transactions on the statement, editing the ones that aren't right and adding any that are missing from the software. After everything checks out, the software marks the transactions as verified, so you can easily see what has cleared and what hasn't. Let me give you an example to clarify, in response to your comment. This example is specific to YNAB, but other software using the same approach would work in a similar way. Let's say that you have a checking account and a credit card account. Your checking account, named CHECKING, has $2,000 in it currently. Your credit card currently has nothing charged on it, because you've just paid your bill and haven't used it yet this billing period. YNAB reports the balance of your credit card account (we'll call this account CREDITCARD), as $0. Every dollar in CHECKING is assigned to a category. For example, you've got $200 in \"\"groceries\"\", $100 in \"\"fast food\"\", $300 in \"\"rent\"\", $50 in \"\"phone\"\", $500 in \"\"emergency fund\"\", etc. If you add up the balance of all of your categories, you'll get $2,000. Let's say that you've written a check to the grocery store for $100. When you enter this in YNAB, you tell it the name of the store, the account that you paid with (CHECKING), and the category that the expense belongs to (groceries). The \"\"groceries\"\" category balance will go down from $200 to $100, and the CHECKING account balance will go down from $2,000 to $1,900. Now, let's say that you've spent $10 on fast food with your credit card. When you enter this in YNAB, you tell it the name of the restaurant, the account that you paid with (CREDITCARD), and the category that the expense belongs to (fast food). YNAB will lower the \"\"fast food\"\" category balance from $100 to $90, and your CREDITCARD account balance will go from $0 to $-10. At this point, if you add up all the category balances, you'll get $1,890. And if you add up your account balances, you'll also get $1,890, because CHECKING has $1,900 and CREDITCARD has $-10. If you get your checking account bank statement at this time, the account balance of $1,900 should match the statement and you'll see the payment to the grocery store, assuming the check has cleared. And if the credit card bill comes now, you'll see the fast food purchase and the balance of $-10. When you write a check to pay this credit card bill, you enter this in YNAB as an account transfer of $10 from CHECKING to CREDITCARD. This transfer does not affect any of your category balances; they remain the same. But now your CHECKING account balance is down to $1,890, and CREDITCARD is back to $0. This works just as well whether you have one checking account and one credit card, or 2 checking accounts, 2 savings accounts, and 3 credit cards. When you want to spend some money, you look at your category balance. If there is money in there, then the money is available to spend somewhere in one of your accounts. Then you pick an account you want to pay with, and, looking at the account balance, if there isn't enough money in that account to pay it, you just need to move some money from another account into that one, or pick a different account. When you pay for an expense with a credit card, the money gets deducted from the category balances immediately, and is no longer available to spend on something else.\"",
"title": ""
},
{
"docid": "1ee3149b12c0eb37a8beb933962a0205",
"text": "I recently made the switch to keeping track of my finance (Because I found an app that does almost everything for me). Before, my situation was fairly simple: I was unable to come up with a clear picture of how much I was spending vs saving (altho I had a rough idea). Now I here is what it changes: What I can do now: Is it useful ? Since I don't actually need to save more than I do (I am already saving 60-75% of my income), 1) isn't important. Since I don't have any visibility on my personal situation within a few years, 2) and 3) are not important. Conclusion: Since I don't actually spend any time building theses informations I am happy to use this app. It's kind of fun. If I did'nt had that tool... It would be a waste of time for me. Depends on your situation ? Nb: the app is Moneytree. Works only in Japan.",
"title": ""
},
{
"docid": "59001b744c03bd891f700de8949fd673",
"text": "\"First of all, kudos for thinking about budgeting at 21 years old. So many people don't plan with their money, and years later wonder where it all went. You are doing a lot of things right with your budget. You've got saving goals, namely your next car and a down payment on a house. You are saving almost 20% of your income for retirement, which is amazing. I like the luxury fund, too. It is good to put some money aside that you can spend on whatever you want, guilt free, because you know that everything important is already planned for. When it comes to budgeting, one thing to remember is that your budget does not have to be perfect, and it is not set in stone. If you find that your amount for \"\"living costs\"\" (which I'm assuming includes things like food, utilities, and rent) is too low, you can allocate more money to it and reduce something else. There is no need to feel bad if you end up having to change some things around in the budget. Congratulations on being debt free! I would encourage you to stay out of debt. Keep the credit cards paid in full each month, and save up for your next car so you can pay cash for that, too. Another saving goal that I would recommend adding to your budget would be an emergency fund. This is basically a pile of cash that is available to you in case something unexpected and urgent comes up that you haven't planned for. By having the emergency fund in place, you won't be forced to go into debt due to an emergency. The amount recommended is usually 3 to 6 months' worth of your expenses.\"",
"title": ""
},
{
"docid": "65c0e3b68efbc4fd3788f304e00d70b7",
"text": "\"I'm currently using You Need A Budget for this. It lets you track spending my category and \"\"save\"\" money in particular accounts from month to month. They also have some strong opinions about how one should manage one's cashflow, so check it out to see if it'll work for you. It's neither web-based nor free, but the licensing terms are very reasonable.\"",
"title": ""
},
{
"docid": "9c806ddf329c98ccf57a67bdaa8d97fa",
"text": "It's hard to be disciplined when the money is right there to be spent. So what you should do is have two bank accounts. One for savings and one for spending. Figure out how much you need to spend per week and have your pay automatically deposit that much into the spending account and divert the rest into these accounts. Never touch your savings account unless it is an emergency or whatever. In fact, if you really want, you should put it as a termed deposit which you can't touch. As the only thing you see is your spending balance, you'll be forced to get used to living within your means. After a while, you're going to forget that you have that savings account at all.",
"title": ""
},
{
"docid": "0f7e29383446f4f67dd080e3f8938a28",
"text": "\"As others have said, doing a monthly budget is a great idea. I tried the tracking expenses method for years and it got me nowhere, I think for these reasons: If budgeting isn't your cup of tea, try the \"\"pay yourself first\"\" method. Here, as soon as you get a paycheck take some substantial portion immediately and use it to pay down debt, or put it in savings (if you have no debt). Doing this will force you to spend less money on impulse items, and force you to really watch your spending. If you take this option, be absolutely sure you don't have any open credit accounts, or you'll just use them to make up the difference when you find yourself broke in the middle of the month. The overall key here is to get yourself into a long term mind set. Always ask yourself things like \"\"Am I going to care that I didn't have this in 10 years? 5 years? 2 months? 2 days even? And ask yourself things like \"\"Would I perfer this now, or this later plus being 100% debt free, and not having to worry if I have a steady paycheck\"\". I think what finally kicked my butt and made me realize I needed a long term mind set was reading The Millionaire Next Door by Tom Stanley. It made me realize that the rich get rich by constantly thinking in the long term, and therefore being more frugal, not by \"\"leveraging\"\" debt on real estate or something like 90% of the other books out there tell you.\"",
"title": ""
},
{
"docid": "482c834cf825bd1f559658f73a034ad2",
"text": "In a word: budgeting. In order to have money left over at the end of the month, you need to be intentional about how you spend it. That is all a budget is: a plan for spending your money. Few people have the discipline and abundance of income necessary to just wing it and not overspend. By making a plan at home ahead of time, you can decide how much you will spend on food, entertainment, etc, and ensure you have enough money left over for things like rent/mortgage and utility bills, and still have enough for longer-term savings goals like a car purchase or retirement. If you don't have a plan, it's simply not reasonable to expect yourself to know if you have enough money for a Venti cup as you drive past the Starbucks. A good plan will allow you to spend on things that are important to you while ensuring that you have enough to meet your obligations and long-term goals. Another thing a budget will do for you is highlight where your problem is. If your problem is that you are spending too much money on luxuries, the budget will show you that. It might also reveal to you that your rent is too high, or your energy consumption is too great. On the other hand, you might realize after budgeting that your spending is reasonable, but your income is too low. In that case, you should focus on spending more of your time working or looking for a better paying job.",
"title": ""
},
{
"docid": "bbc830aab6f767674a4253f0588992bc",
"text": "\"Here is what we do. We use YNAB to do our budgeting and track our expenses. Anything that gets paid electronically is tracked to the penny. It really needs to be, because you want your transaction records to match your bank's transaction records. However, for cash spending, we only count the paper money, not the coins. Here is how it works: If I want a Coke out of a vending machine for 75 cents, and I put a dollar bill in and get a quarter back as change, I record that as a $1.00 expense. If, instead, I put 3 quarters in to get the Coke, I don't record that expense at all. Spending coins is \"\"free money.\"\" We do this mainly because it is just easier to keep track of. I can quickly count the cash in my wallet and verify that it matches the amount that YNAB thinks I have in my wallet, and I don't need to worry about the coins. Coins that are in my car to pay for parking meters or coins in the dish on my dresser don't need to be counted. This works for us mainly because we don't do a whole lot of cash spending, so the amount we are off just doesn't add up to a significant portion of our spending. And, again, bank balances are exact to the penny.\"",
"title": ""
},
{
"docid": "abdc0f634367fb8d5f4ae7281c1843c7",
"text": "Good question, very well asked! The key here is that you need to find a solution that works for you two without an overt amount of effort. So in a sense it is somewhat behavior driven, but it is also technology driven. My wife and I use spreadsheets for both checking account management and budgeting. A key time saver is that we have a template sheet that gets copied and pasted, then modified for the current month. Typically 90% of the stuff is the same and each month requires very little modification. This is one of my problems with EveryDollar. I have to enter everything each and every month. We also have separate checking accounts and responsibility for different areas of the family expenses. Doing this risks that we act as roommates, but we both clearly understand the money in one persons account equally belongs to the other and during hard times had to make up for shortfalls on the part of the other. Also we use cash for groceries, eating out, and other day to day expenses. So we don't have a great need to track expenses or enter transactions. That is what works for us, and it takes us very little time to manage our money. The budget meeting normally lasts less than a half hour and that includes goal tracking. We kind of live by the 80/20 principle. We don't see a value in tracking where every dime went. We see more value in setting and meeting larger financial goals like contributing X amount to retirement and things of that nature. If we overspent a bit at Walgreens who cares provided the larger goals are meant and we do not incur debt.",
"title": ""
},
{
"docid": "33566963de30c4b510e893fd513777f9",
"text": "Both Credit Card and Mortgage work on same principle. The interest is calculated on the remaining balance. As the balance reduces the interest reduces. The Mortgage schedule is calculated with the assumption that you would be paying a certain amount over a period of years. However if you pay more, then the balance becomes less, and hence the subsequent interest also reduces. This means you would pay the loan faster and also pay less then originaly forecasted. The other type of loan, typically personal loans / auto loans in older days worked on fixed schedule. This means that you need to pay principal + Pre Determined interest. This is then broken into equal monthly installment. However in such a schedule, even if you pay a lumpsum amount in between, the total amount you need to pay remains same. Only the tenor reduces.",
"title": ""
},
{
"docid": "6bb718a4b47000594f78c65fa8a33aee",
"text": "Because it's a good indicator of how much their asset worth. In oversimplified example, wouldn't you care how much your house, car, laptop worth? Over the course of your life you might need to buy a bigger house, sell your car etc. to cope with your financial goal / situation. It's similar in company's case but with much more complexity.",
"title": ""
}
] |
fiqa
|
f4702379f2ea993f5c79b7ab0660b2cf
|
How does a big lottery winner cash his huge check risk-free?
|
[
{
"docid": "dffcb5eda0d2611e3115fcc4a6af855f",
"text": "If the funds are deposited into a noninterest-bearing account, they will be covered by FDIC insurance regardless of the amount (However, this extended coverage may not be valid after Dec. 31, 2012): On November 9, 2010, the FDIC issued a Final Rule implementing section 343 of the Dodd-Frank Wall Street Reform and Consumer Protection Act that provides for unlimited insurance coverage of noninterest-bearing transaction accounts. Beginning December 31, 2010, through December 31, 2012, all noninterest-bearing transaction accounts are fully insured, regardless of the balance of the account, at all FDIC-insured institutions. (Source: http://www.fdic.gov/deposit/deposits/changes.html)",
"title": ""
},
{
"docid": "ee4f001deb30303964cbc1f65c10cfb3",
"text": "You have a few options: Personally, I would cash the check at my broker and buy a mixture of US Government and New York Tax-Exempt securities until I figured out what to do with it.",
"title": ""
},
{
"docid": "074ea5e57c752ea120f2017f3eceb057",
"text": "\"You cant! There is the risk that between the time you get the check and the time you get to the bank that you will be murdered, have a heart attack, stroke, or aneurysm too. And they are probably more likely than the bank going out of business between the time you deposit the money and get access to it. Prior to accepting the check I would do the following: Get a lawyer that specializes in finance and tax law. There are some steps you can take to minimize your tax exposure. There is little you can do about the immediate tax on the winnings but there are things you can do to maximize the return of your money. You will want to do what you can to protect that money for yourself and your family. Also create or revise your will. This is a lot of money and if something happens to you people from your family and \"\"friends\"\" will come out of the woodwork trying to claim your money. Make sure your money goes where you want it to in the event something happens to you. Get a financial planner. This money can either make you or break you. If you plan for success you will succeed. If you trust yourself to make good decisions with out a plan, in a few years you will be broke and wondering what happened to your money. Even at 1% at 20million dollars that is 200k a year in interest... a pretty good income by itself. You do not have to save every penny but you can plan for a nice lifestyle that will last, if you plan and stick to your plan. Do research and know what bank you are going to deposit the money in. Talk to the bank let them know of your plans so they can be ready for it. It is not every day that they get a 20 million dollar deposit. They will need to make plans to handle it. If you are going to spread the money out among several banks they can prepare for that too. When choosing that bank I would look for one where their holdings are significantly more than you are depositing. I would not really go with one of the banks that was rescued. They have already shown that they can not handle large sums of money and assuming they will not screw it up with my money is not something I would be comfortable with. There were some nice sized banks that did not need a bail out. I would choose one of them.\"",
"title": ""
}
] |
[
{
"docid": "7974d3ee3f0a0b0419c5ad0e5b586466",
"text": "\"Looking at some large lotto games out there, it seems that the lump sum (cash) option comes in at anywhere from about 50 to 70 percent of the jackpot amount (sum of annual payouts, typically over 20 to 30 years). I'm a fan of the phrase \"\"money today is better than money tomorrow.\"\" There's no telling how laws will change, taxes will change, if inflation will skyrocket, if you'll die early, if you or a family member will encounter a life-changing event, etc. By taking the lump sum option you trade a percentage of the winnings for the risk of the future unknowns. How much are those unknowns worth to you? The tax implications are something else to consider. In your example of a \"\"small\"\" jackpot with $50,000 annual payouts, it's likely that you could still avoid the highest tax bracket each year, whereas taking the lump sum would be taxed at the highest rate (35% of the amount above $373k, for a single filer in 2010). However, this might not make much of a difference for large jackpots with higher annual payouts. With the lump sum option, you also have a greater potential of investment returns (and losses) since you can put all the money to work for you right away. It also allows you to purchase larger assets sooner, if that's something that interests you. In the end, I'd say the reduced risk and the higher return potential of the lump sum option is well worth the reduced payout. I'd also suggest not playing the lottery :)\"",
"title": ""
},
{
"docid": "0ab045a99c76a8f6c9dac6c9730b8bab",
"text": "Yes, but it's a matter of paper trail and lifestyle. Your $600K guy may get questioned when he makes the deposit, but would show the record of having that money elsewhere. People buy cars with cash (a check) all the time. The guy filing a tax return claiming little to no income or no return at all, is more likely to get flagged than the $100K+ earning couple who happened to be able to save to buy their $25K car every 10 years with cash. On reading the article, the bank had its own concerns. The guy who was trying to withdraw the money was elderly, and the bank seemed pretty concerned to make sure he wasn't about to be scammed. It may not be spelled out as such, but a custodian of one's money does have an obligation to not be party to a potential scam, and the very request for such a huge sum of money in cash is a red flag.",
"title": ""
},
{
"docid": "fd8d9237bd2d0276394dd62710a65540",
"text": "Will 2 millions dollars check to be cash? Will a bank convert a check to cash? In my experience, no. Even for small checks. Unless you happen to have a VERY good relationship with your banker (read as: have an existing large bank balance.) The exception is if you go to the bank the check is drawn on. But even then, I doubt they'll cash a $2M dollar check. Can you deposit a $2M dollar check? Most definitely. How long will 2 millions dollars check to be cash? Depends on your bank's policies, relationship with you, and the origination of the check. You'll need to talk to the exact bank in question to find out. Some guidelines from my own experiences: Out of country checks will take quite awhile, say 4 weeks, even for trivial amounts. I'm not sure what a $2M size would do. Beyond that situation, it will likely depend on whether you have more money than the check's worth in your bank accounts. If so, they may be willing to give you cash in a few days. Or if you only want some of the money as cash in a few days, that might be possible. If the bank couldn't cash for him, will the bank give him some of cash for example, $500,000 for now, and the rest wait to be cash at later time like 24 hours or 1 week? Unless you already have a lot of money in your relationship with the bank, I think it is HIGHLY UNLIKELY they will let you have ANY of the money in 24 hours. You MIGHT get some of it in a week. The issue will be that such a large check will be viewed as having a high chance of being fraudulent, so they will want to be exceptionally conservative.",
"title": ""
},
{
"docid": "1ea22f3848d931782d35dccdbe5fdeed",
"text": "The only certain way is to have the issuer confirm it. You'd think there would be a better way, but no there isn't. I suggest you read this story about what can happen even if you are the innocent victim trying to cash a fraudulent Cashier's Check. The consequences included some jail time and huge attorney fees for this unlucky person.",
"title": ""
},
{
"docid": "d7d4ec3f4b46b3085ba58507580e1240",
"text": "If I needed a safe-ish way to bank a lot of cash in vegas I'd exchange for high value chips at the local gambling establishments. I have to imagine that's being done already for other less than legal enterprises.",
"title": ""
},
{
"docid": "58654a927a52b3436e6c0ccfaf535765",
"text": "Avoid talking to a person: Just use an automated system, such as an ATM or a cellphone app. Automated systems will ONLY scan for the RTN # and Account number at the bottom of the check (the funny looking blocky numbers). The automated system will not care who the check is made out to, or who is present, so long as you have an account to credit the money into, and the account number on the check can get the money debited properly.",
"title": ""
},
{
"docid": "9b3bd63f5d55ca2eb550414c3182b710",
"text": "Setting aside for the moment the very relevant issue of whether you need the full amount quickly, I'll just tackle comparing which option gives you to maximum amount of money (in terms of real dollars). The trick is, unless you think inflation will suddenly reverse itself or stop entirely (not likely), $50K today is worth a LOT more than $50K in 20 years. If you don't believe me, consider that just 30 years ago the average price for a mid-level new car was around $3k. When you grandfather says he got a burger for a nickel, he isn't talking about 2010 dollars. So, how do you account for this? Well, the way financial people and project managers do it to estimate how much to pay today for $1 at some point in the future is through a net present value (NPV) calculation. You can find a calculator here. In your question, you gave some numbers for the payout, but not the lump sum prize amount. Going solely on what you have provided, I calculate that you should take the lump sum if it is greater than $766,189.96 which is the net present value of 20 years of $50K Payments assuming 3% annual inflation, which is fairly a fairly reasonable number given history. However, if you think the out-of-control Gov't spending is going to send inflation through the roof (possible, but not a given), then you almost certainly would want the lump sum. I suppose in that scenario you might want the lump sum anyway because if the Govt starts filching on their obligations, doing it to a small number of lottery winners might be politically more popular than cutting other programs that affect a large number of voters.",
"title": ""
},
{
"docid": "6a3ec9b0c7870ef5eef3a926d09037f6",
"text": "\"There are no risk-free high-liquidity instruments that pay a significant amount of interest. There are some money-market accounts around that pay 1%-2%, but they often have minimum balance or transaction limits. Even if you could get 3%, on a $4K balance that would be $120 per year, or $10 per month. You can do much better than that by just going to $tarbucks two less times per month (or whatever you can cut from your expenses) and putting that into the savings account. Or work a few extra hours and increase your income. I appreciate the desire to \"\"maximize\"\" the return on your money, but in reality increasing income and reducing expenses have a much greater impact until you build up significant savings and are able to absorb more risk. Emergency funds should be highly liquid and risk-free, so traditional investments aren't appropriate vehicles for them.\"",
"title": ""
},
{
"docid": "963bb09f1dcdfde66c39c1c8ecf380be",
"text": "The billion dollar jackpot is a sunk cost, a loss for prior bettors. If you had $250M and could buy every ticket combination, you'd be betting that not more than 4 other tickets will win on the next drawing. Even if 5 won, you'd have all the second place, third place, etc tickets, and would probably break even at worst. Forget this extreme case. If I gave you a game where you had a chance to bet $100,000 for a 1 in 9 chance to win a million dollars, would you do it? Clearly, the odds are in your favor, right? But, for this kind of money, you'd probably pass. There's a point where the market itself seems to reflect a set of probable outcomes and can be reduced to gambling. I've written about using options to do this very thing, yet, even in my writing, I call it gambling. I'm careful not to confuse the two (investing and gambling, that is.)",
"title": ""
},
{
"docid": "51863cda125d76edb58e5d99691c7392",
"text": "\"As you've observed, when you're dealing with that amount of money, you're going to have to give up FDIC guarantees. That means that keeping the money in a bank account carries some risk with it: if that particular bank goes bust, you could lose most of your money. There are a few options to stretch the FDIC limit such as CDARS, but likely can't handle your hypothetical $800 million. So, what's a lucky winner to do? There are a few options, including treasury securities, money market funds, and more general capital investments such as stocks and bonds. Which one(s) are best depend on what your goals are, and what kind of risks you find acceptable. Money in the bank has two defining characteristics: its value is very stable, and it is liquid (meaning you can spend it very easily, whenever you want, without incurring costs). Treasury securities and money market funds each focus on one of these characteristics. A treasury security is a piece of paper (or really, an electronic record) saying that the US Federal Government owes you money and when they will pay it back. They are very secure in that the government has never missed a payment, and will move heaven and earth to make sure they won't miss one in the future (even taking into account recent political history). You can buy and sell them on an open market, either through a broker or directly on the Treasury's website. The major downside of these compared to a bank account is that they're not as liquid as cash: you own specific amounts of specific kinds of securities, not just some number of dollars in an account. The government will pay you guaranteed cash on specified dates; if you need cash on different dates, you will need to sell the securities in the open market and the price will be subject to market fluctuations. The other \"\"cash-like\"\" option is money market funds. These are a type of mutual fund offered by financial companies. These funds take your money and spread it out over a wide variety of very low risk, very short term investments, with the goal of ensuring that the full value will never go down and is available at any time. They are very liquid: you can typically transfer cash quickly and easily to a normal bank account, write checks directly, and sometimes even use \"\"online bill pay\"\"-like features. They have a very good track record for stability, too, but no one is guaranteeing them against something going terribly wrong. They are lower risk than a (non-FDIC-insured) bank account, since the investments are spread out across many institutions. Beyond those two somewhat \"\"cash-like\"\" options, there are of course other, more general investments such as stocks, bonds, and real estate. These other options trade away some degree of stability, liquidity, or both, in exchange for better expected returns.\"",
"title": ""
},
{
"docid": "37744cb356d487c24fefaa8b68df185c",
"text": "Not really. A bank will honor a million dollar check if there are funds there to let it clear.",
"title": ""
},
{
"docid": "a899e12d589d25e5d3cb4db5cd2bb4a6",
"text": "\"Document how you came to have the stuff in the first place. First to defend against potential government inquiry; and second to establish that you held the asset more than one year, so you qualify for long-term capital gains rate. I wouldn't sell it privately all at once, if you can avoid it. If you can prove you held it more than a year, you should pay the long-term capital gains tax rate, which is fairly low. You'll keep most of it. A huge windfall often goes very badly. People don't change their financial habits, burn through their winnings shockingly fast, overspend it, and wind up deep in debt. At the end of the crazy train, their lives end up worse. That wasn't your question, but you'll do better if you're on guard for that, with good planning and a desire to invest it in things which give you deferred income in the future. That's the cooler thing, when your investments mean you don't have to go to work! I don't mean donate ALL of it to charity. But feel free. If you hold a security more than one year, and donate it to charity, you get a tax deduction for the appreciated value (even though the security didn't actually cost you that). (link) Do not convert the BTC to cash then donate the cash. Donate it as BTC. Your tax deduction works against your highest tax bracket. If you are paying in a 28% tax bracket (your next $100 of income has $28 tax), then for every $100 of charitable donation, you get $28 back on Federal. It does the same to state tax, and you also avoid the 10-15% capital gains tax because you didn't sell the securities. Do your 1040 both ways and note the difference.***** Your charitable deduction of appreciated securities is capped at 30% of AGI. Any excess will carryover and becomes a tax deduction for the next year, and it can carryover for several years. ** Use a donor-advised fund. If you have are donating more than $5000, you don't need to search for a charity that will take Bitcoin, and you also don't need to pick a charity now. Instead, open a special type of giving account called a Donor-Advised Fund. The DAF, itself, is a charity. It specializes in accepting complex donations and liquidating them into cash. The cash credits to your giving account. You take the tax deduction in the year you give to the DAF. Then, when you want to give to a charity, you tell the DAF to donate on your behalf***. You can tell them to give on your behalf anonymously, or merely conceal your address so you don't get the endless charity junk mail. The DAF lets you hold the money in index funds, so your \"\"charity nest egg\"\" can grow with the market. Mine has more than doubled thanks to the market. This money is no longer yours at this point; you can't give it back to yourself, only to licensed charities. The Fidelity Donor Advised Fund makes a big thing of taking Bitcoin, and I really like them. **** I love my DAF, and it has been a charitable-giving workhorse. It turns you into a philanthropist, and that changes you life in ways I cannot describe. Certainly makes me more level-headed about money. Lottery winner syndrome is just not a risk for me (partly because I'm now on the board of charities, and oversee an endowment.) Donating generally will reduce suspicion (criminals don't do that), but donating to a DAF even moreso. Since the DAF would have to return ill-gotten gains, they're involved. Their lawyers will back you up. The prosecutor is up against a billion dollar corporation instead of just you. With Fidelity particularly, Bitcoin is a crusade for them, and their lawyers know how to defend Bitcoin. A Fidelity DAF is a good play for that reason alone IMO. ** The gory details: Presumably you are donating to regular charities or a Donor Advised Fund, and these are \"\"50% limit organizations\"\". Since it's capital gains, you have a 30% limit. If your donation is more than 30% of AGI, or if you have carryover from last year, you use Worksheet 2 in Publication 526. You plug your donations into line 4, then the worksheet grinds through all the math and shows what part you deduct this year and what part you carryover to the next year. *** I specifically asked managers at two DAFs whether they were OK with someone donating a complex asset to the DAF, and immediately giving the entire cash amount to a charity. The DAF doesn't get any fees if you do that. They said not only are they OK with it, most of their donors do exactly that and most DAF accounts are empty. They make it on the 0.6% a year custodial fee on the other accounts, and charitable giving to them. Mind you, you can only donate to 501C3 type charities, what IRS calls \"\"50% limit organizations\"\". This actually protects you from donating to organizations who lie about their status. **** I'm not with Fidelity, but I am a satisfied DAF customer. The DAF funds its overhead by deducting 0.6% per year from your giving account. If you invest the funds in a mutual fund within the DAF, that investment pays the 0.08% to 1.5% expense ratio of the fund. I can live with that. ***** I just Excel'd the value of donating $100 of appreciated security instead of taking it as capital gains income. 28% Fed tax, 15% Fed cap gains, 8% state tax on both. Take the $100 as income, pay $23 in cap gains tax. Donate $100 in securities, the $23 tax goes away since you didn't sell it. Really. The $100 charitable deduction offsets $100 in income, also saving you $36 in regular income tax. Net tax savings $59. However you lost the $100! So you are net $41 poorer. It costs you $41 to donate $100 to charity. This gets better in higher brackets.\"",
"title": ""
},
{
"docid": "d8209f4c9de8d573f190b134f7b2fb0b",
"text": "\"What are the options available for safe, short-term parking of funds? Savings accounts are the go-to option for safely depositing funds in a way that they remain accessible in the short-term. There are many options available, and any recommendations on a specific account from a specific institution depend greatly on the current state of banks. As you're in the US, If you choose to save funds in a savings account, it's important that you verify that the account (or accounts) you use are FDIC insured. Also be aware that the insurance limit is $250,000, so for larger volumes of money you may need to either break up your savings into multiple accounts, or consult a Accredited Investment Fiduciary (AIF) rather than random strangers on the internet. I received an inheritance check... Money is a token we exchange for favors from other people. As their last act, someone decided to give you a portion of their unused favors. You should feel honored that they held you in such esteem. I have no debt at all and aside from a few deferred expenses You're wise to bring up debt. As a general answer not geared toward your specific circumstances: Paying down debt is a good choice, if you have any. Investment accounts have an unknown interest rate, whereas reducing debt is guaranteed to earn you the interest rate that you would have otherwise paid. Creating new debt is a bad choice. It's common for people who receive large windfalls to spend so much that they put themselves in financial trouble. Lottery winners tend to go bankrupt. The best way to double your money is to fold it in half and put it back in your pocket. I am not at all savvy about finances... The vast majority of people are not savvy about finances. It's a good sign that you acknowledge your inability and are willing to defer to others. ...and have had a few bad experiences when trying to hire someone to help me Find an AIF, preferably one from a largish investment firm. You don't want to be their most important client. You just want them to treat you with courtesy and give you simple, and sound investment advice. Don't be afraid to shop around a bit. I am interested in options for safe, short \"\"parking\"\" of these funds until I figure out what I want to do. Apart from savings accounts, some money market accounts and mutual funds may be appropriate for parking funds before investing elsewhere. They come with their own tradeoffs and are quite likely higher risk than you're willing to take while you're just deciding what to do with the funds. My personal recommendation* for your specific circumstances at this specific time is to put your money in an Aspiration Summit Account purely because it has 1% APY (which is the highest interest rate I'm currently aware of) and is FDIC insured. I am not affiliated with Aspiration. I would then suggest talking to someone at Vanguard or Fidelity about your investment options. Be clear about your expectations and don't be afraid to simply walk away if you don't like the advice you receive. I am not affiliated with Vanguard or Fidelity. * I am not a lawyer, fiduciary, or even a person with a degree in finances. For all you know I'm a dog on the internet.\"",
"title": ""
},
{
"docid": "2afdb7895ff858324e1611105b470a98",
"text": "\"Bad plan. This seems like a recipe for having your money taken away from you by CBP. Let me explain the biases which make it so. US banking is reliable enough for the common citizen, that everyone simply uses banks. To elaborate, Americans who are unbanked either can't produce simple identity paperwork; or they got an account but then got blacklisted for overdrawing it. These are problems of the poor, not millionaires. Outside of determined \"\"off the grid\"\" folks with political reasons to not be in the banking and credit systsm, anyone with money uses the banking system. Who's not a criminal, anyway. We also have strong laws against money laundering: turning cash (of questionable origin) into \"\"sanitized\"\" cash on deposit in a bank. The most obvious trick is deposit $5000/day for 200 days. Nope, that's Structuring: yeah, we have a word for that. A guy with $1 million cash, it is presumed he has no choice: he can't convert it into a bank deposit, as in this problem - note where she says she can't launder it. If it's normal for people in your country to haul around cash, due to a defective banking system, you're not the only one with that problem, and nearby there'll be a country with a good banking system who understands your situation. Deposit it there. Then retain a US lawyer who specializes in this, and follow his advice about moving the money to the US via funds transfer. Even then, you may have some explaining to do; but far less than with cash. (And keep in mind for those politically motivated off-the-financial-grid types, they're a bit crazy but definitely not stupid, live a cash life everyday, and know the law better than anybody. They would definitely consider using banks and funds transfers for the border crossing proper, because of Customs. Then they'll turn it into cash domestically and close the accounts.)\"",
"title": ""
},
{
"docid": "f20b119435dc7ba0c27a33ff5b42b5a5",
"text": "If you've got millions in a wallet but only make 50k a year, the government will go after you for tax evasion if you ever try to spend a significant amount of it. You can never cash out, that's not clean money",
"title": ""
}
] |
fiqa
|
c83a1d4bb6f842ba22a9a83964c4b907
|
Will a credit card company close my account if I stop using it?
|
[
{
"docid": "2c9c75c629be6d5071b24dbc148034f2",
"text": "Please realize that your issuer can close the account for any number of reasons. Inactivity is one, as having a credit line open costs them money and if you never charge anything, the company doesn't get any transaction fees from vendors nor does the company get to charge you any interest. An occasional charge is likely to keep your card from being closed automatically, but it is not a guarantee. Another reason they may close the account is that you have other bad marks show up on your credit score, or their criteria for offering you the card change so you no longer match their target demographic. I have a credit card issued by my credit union that I have not used for a couple of years. They will not close the card account because my other accounts are still very profitable for them. If I were not an otherwise profitable customer, I wouldn't be surprised if they closed my credit card account. If you are serious about keeping the account open, you should probably have more than a trivial amount of usage.",
"title": ""
},
{
"docid": "f2247122968b09670d2cec77d633d95f",
"text": "\"There is no universal answer here. Some card issuers will. Some that will close the account will warn you first. For my \"\"sock drawer\"\" cards I'll try to take each out semi-annually to make a single transaction, then put it back in the drawer. I've heard you should charge something quarterly, I've never had one closed with semi-annual charges.\"",
"title": ""
},
{
"docid": "dde69407a68c2f0f4c5994a7db97627f",
"text": "The answer is maybe. I had a Chase card without a purchase in over 4 years get canceled out of the blue, without so much as a notification telling me it was at risk for cancelation. They told me they typically close accounts after 24 months of inactivity (not including card fees) but let mine go for longer because I have several other credit cards, savings and checking accounts with them. I would recommend spending at least once per year on the card.",
"title": ""
},
{
"docid": "9ceccbac66e27f4e8dd3aa3bd00de91a",
"text": "\"Assuming the question is \"\"will they close it for inactivity (alone)\"\".. the answer is \"\"Nope\"\" ... unequivocally. Update: < My answer is geared to credit Cards issues by companies that deal in credit, not merchandise (i.e. store cards, retailer cards, etc). Retailers (like Amazon, etc), want to sell goods and are in the credit card business to generate sales. Banks and credit companies (about whom I am referring) make their money primarily on interest and secondarily on service charges (either point of use charged to the vendor that accepts payment, or fees charged to the user).> The only major issuer I will say that it might be possible is Discover, because I never kept a Discover card. I also don't keep department store cards, which might possibly do this; but I do doubt it in either of those cases too. My answer is based on Having 2 AMEX cards (Optima and Blue) and multiple other Visa/MC's that I NEVER use... and most of these I have not for over 10+ years. Since I am also presuming that you are also not talking about an account that charges a yearly or other maintenance fee.. Why would they keep the account open with the overhead (statements and other mailings,etc)? Because you MIGHT use it. You MIGHT not be able to pay it off each month. Because you MIGHT end up paying thousands in interest over many years. The pennies they pay for maintaining your account and sending you new cards with chip technology, etc.. are all worth the gamble of getting recouped from you! This is why sales people waste their time with lots of people who will not buy their product, even though it costs them time and money to prospect.. because they MIGHT buy. Naturally, there are a multitude of reasons for canceling a card; but inactivity is not one. I have no less than 10+ \"\"inactive\"\" cards, one that has a balance, and two I use \"\"infrequently\"\". I really would not mind if they closed all those accounts.. but they won't ;) So enjoy your AMEX knowing that your Visa will be there when you need/want it.. The bank that issues your Visa is banking on it! (presuming you don't foul up financially) Cheers!\"",
"title": ""
},
{
"docid": "21247d238d7a1c233e9f5a6dc582682c",
"text": "The workaround solution is to simply avoid having an exactly zero balance on your account. Thus for inactive credit cards that I want to keep around for emergency use, I always leave a small positive balance on the card. The credit card company reserves the right to cancel my card at any time, but a positive balance would force them to send me a check for the privilege of doing so. A positive balance avoids making the account appear inactive and makes it cheaper for them to simply leave the account open.",
"title": ""
}
] |
[
{
"docid": "334bff4f28f783af0492485b984f5c1e",
"text": "I'm in the US, and I can't speak for all credit cards, but I have done this in the past. I've paid extra on my credit card, and had a positive balance on my credit card account. The purchases made after paying extra were applied to the balance, and if there was money left over on the statement closing date, I didn't owe anything that month. Of course, I didn't incur any interest charges, but I never pay interest anyway, as I always pay my statement in full each month and never take a cash advance on my credit card. You could call your credit card company and ask them what will happen, or if you are feeling adventurous, you could just send them some extra money and see what happens. Most likely, they will just apply it to your account and give you a positive balance.",
"title": ""
},
{
"docid": "6eeebb604046b2dd9274a55dbadbaf4f",
"text": "Your credit score is definitely affected by the age of your credit accounts, so if you frequently close one card and open another new one, you're adversely affecting the overall average age of accounts. This is something to consider and whether it is worth what you're trying to achieve. Sometimes, if you're a good customer and are insistent enough, you can simply call your credit card company and use the threat of closing your account in favor of another card that offers something attractive to get your current bank to sweeten its incentives to keep your business. I know many people who've done this with real success, and they spare themselves the hassle of obtaining a new card and suffering the short term consequences on their credit report. This might be an avenue worth trying before you just close the account and move on. I hope this helps. Good luck!",
"title": ""
},
{
"docid": "3f6ad89054cedd1e9a346afac2308349",
"text": "The Fair Credit Reporting Act (FCRA) says that account history will stay on your credit report as a closed account for 7 years, and then it will drop off, just like any other bad or good mark on your credit (aside from bankruptcies which stay on reports for 10 years, and can be asked about for the rest of your life). The presence of a new credit card will do more to lower your score in the short term than closing an old credit card. On a related note, reporting a card as lost or stolen can also show up as a different, closed account, even if you keep the same account open with the creditor.",
"title": ""
},
{
"docid": "3333d869722843e63a4782d30d9e231f",
"text": "Some years ago a call center operator told me a bit more than they probably should have. They like to see a lot of money go through the card, but very little staying on the card. Yes, they make money on the interest but one card defaulting blows away the profit on a lot of other cards. The 3% take from the merchants is both reliable and up-front, not 6 months down the line when (and if) you pay the interest. So if you want to make your credit card company happy, pay your bills in full every month. I have credit far beyond my actual means because I run work expenses on my personal card, I was told they didn't care (and had already guessed) that it wasn't my money. The point was I was handling things in a way they liked. Not quite at Palladium status, but cards with $200 annual fees are mine for the asking, and I haven't paid interest since the early 1990's.",
"title": ""
},
{
"docid": "004045a3f04f04b4337bbbe4ccc90771",
"text": "Check out /r/personalfinance for more detailed advice. Not sure your question. Yes, cancelling it will cause it to disappear from your credit report. Apply for your own card right now (a free rewards one ideally) if your credit it good enough and you have a job. Never pay interest and keep that card and your credit will naturally head to 720+ with no negative marks over time.",
"title": ""
},
{
"docid": "22338a43b9006dea9a3662a5d65947de",
"text": "Nope. Or at least, if it were possible the company offering such a credit card would quickly go out of business. Credit card companies make money off of fees from the merchants the user is buying from and from the users themselves. If they charged no fees to the user on cash advances and, in fact, gave a 3% back on cash advances, then it would be possible for a user to: The company would lose money until they stopped the loophole or went out of business.",
"title": ""
},
{
"docid": "63d342f0ad89564e38df7ece1bc661f8",
"text": "First off, congratulations on taking care of your finances and paying off your cards! Takes a lot of discipline. If your next oldest card is just a year apart, you can safely close this card.",
"title": ""
},
{
"docid": "ce8df3b5edca7c3e7cf625537995bd2f",
"text": "Credit card companies are businesses. Businesses will make any decision that makes them money. So does it make them money to cancel your account? It's a simple cost-benefit analysis: you having an account with them will probably give them some benefit for very little cost to them. The only real cost associated with an open account is someone who uses the card but doesn't pay, but they're pretty sure you won't be doing that.",
"title": ""
},
{
"docid": "b4596827bd6ac7951cd9af1fd78ba478",
"text": "The card-holder agreement does not explicitly specify a minimum spending requirement. It does though, have the following catch-all clause for closing the account: We may: • cancel your Account, • suspend the ability to make charges, • cancel or suspend any feature on your Account, and • notify merchants that your Account has been cancelled or suspended. If we do any of these, you must still pay us for all charges under the terms of this Agreement. We may do any of these things at our discretion, even if you pay on time and your Account is not in default. If your Account is cancelled, you must destroy your cards. We may agree to reinstate your Account after a cancellation. If we do this, we may: • reinstate any additional cards issued on your Account, • charge you any applicable annual fees, and • charge you a fee for reinstating the Account. One would suspect that American Express would happily collect the fee from anyone who holds the card, but is not using it (in any way). Someone, though, that isn't spending the expected amount of money, but is availing themselves of the 24 hour concierge service, etc., would probably find their privileges revoked and/or their card canceled.",
"title": ""
},
{
"docid": "c39644834b92aa943e87d1ec90e0826b",
"text": "You don't need to use an open line of credit to help your credit score. You didn't ask this, but another option is to not cut up the card and keep the account open, even if you don't use it. I mention this because sometimes when you are calling in or setting up an online account to service the card, you may need to have the expiration date and CVV code on hand. This has burned me a few times as I had to hunt around for a card I rarely ever use. That being said, if you are worried that you might use the card if you know it's there, then sure, cut it up.",
"title": ""
},
{
"docid": "3c0e577710a6a0c468ead87e343577e1",
"text": "Assuming you don't plan on continuing to use the card frequently, the best advice I've heard is to leave them open unless they have an annual fee. Also, leaving it open with a zero balance doesn't help your credit score as much as using it a few times a year (even for small amounts) because it will eventually shift to an inactive state that is less positive for your credit score.",
"title": ""
},
{
"docid": "68783a5b04d0137e5486a0089d3501a1",
"text": "The two factors that will hurt you the most is the age of the credit account, and your available credit to debt ratio. Removing an older account takes that account out of the equation of calculating your overall credit score, which can hurt significantly, especially if that is the only, or one of just a couple, of open credit lines you have available. Reducing your available credit will make your current debt look bigger than what it was before you closed your account. Going over a certain percentage for your debt to available credit can make you look less favorable to lenders. [As stated above, closing a credit card does remove it from the credit utilization calculation which can raise your debt/credit ratio. It does not, however; affect the average age of credit cards. Even closed accounts stay on your credit report for ten years and are credited toward average age of cards. When the closed credit card falls off your report, only then, will the average age of credit cards be recalculated.] And may I suggest getting your free credit report from https://www.annualcreditreport.com . It's the only place considered 'official' to receive your free annual credit report as told by the FTC. Going to other 3rd party sites to pull your credit report can risk your information being traded or sold. EDIT: To answer your second point, there are numerous factors that banks and creditors will consider depending on the type of card you're applying for. The heavier the personal rewards (cash back, flyer miles, discounts, etc.) the bigger the stipulation. Some factors to consider are your income to debt ratio, income to available credit ratio, number of revolving lines of credit, debt to available credit ratio, available credit to debt ratio, and whether or not you have sufficient equity and/or assets to cover both your debt and available credit. They want to make sure that if you go crazy and max out all of your lines of credit, that you are capable of paying it all back in a sufficient amount of time. In other words, your volatility as a debt-consumer.",
"title": ""
},
{
"docid": "70cbde4e59f8d13443d6583130e5122e",
"text": "\"Speaking from personal experience: I have had a credit card canceled for exactly this reason. It's happened to me three times, with two different providers (NatWest and Nationwide). After the third instance I stopped bothering to even carry a credit card. It's worth noting that all three were \"\"free\"\" cards in the sense that I paid no flat fee or subscription to get the cards. The only way the issuer could make a profit on them was through interest. I was also not a frequent user, carrying the card for convenience more than anything else, although I did make purchases on all three. So it's certainly a possibility. But I live in the UK and I'm guessing most of your other respondents do not. It may be a practice that's more common here than in the US. That might even explain the origin of the rumour.\"",
"title": ""
},
{
"docid": "b6e87baff7f70673898d614e256331f5",
"text": "Quant has been an interesting part of finance, but I always thought they missed something really important. The standard methods of statistical analysis can’t explain what’s going on with economy and firms. Otherwise, quant hedge funds would have been making money all the time. The conventional quants find patterns in data, test them then go live. These models work until some fundamental (or not so fundamental) shifts in the market. Then they find themselves back in the drawing board looking for their next model. This kind of analysis seems like a lot of grind for fairly unpredictable returns. There are more and more companies that don’t lend themselves well to fundamental analysis as we know it. Financial data and some poor flawed human analysts insights alone can no longer explain much. This is a unique set of challenges that Data Science, more specifically AI could solve. The speed at which AI can learn and process information is just mind boggling. AI can learn the entire financial history of decision making in minutes. It can recognize patterns, make sophisticated analysis and constantly update its probability tables as the new information comes in. This is something no human can compete with. Imagine a quantitative engine that adapts as the economy changes. It could draw heaps of unstructured data about a company, learn from it in real time, make course corrections and spit out its recommendations. To the degree that human decision making is involved in the strategic decision making of companies, we will need the depth of context that can be provided by humans, but I see the field moving away from excel spreadsheets with fairly poor predicting capacity to AI models with strong predictive capacity.",
"title": ""
},
{
"docid": "235844a2d25fb6628b055a1f80b77c6c",
"text": "\"Because this question seems like it will stick around, I will flesh out my comments into an actual answer. I apologize if this does not answer your question as-asked, but I believe these are the real issues at stake. For the actual questions you have asked, I have paraphrased and bolded below: Firstly, don't do a real estate transaction without talking to a lawyer at some stage [note: a real estate broker is not a lawyer]. Secondly, as with all transactions with family, get everything in writing. Feelings get hurt when someone mis-remembers a deal and wants the terms to change in the future. Being cold and calculated now, by detailing all money in and out, will save you from losing a brother in the future. \"\"Should my brother give me money as a down payment, and I finance the remainder with the bank?\"\" If the bank is not aware that this is what is happening, this is fraud. Calling something a 'gift' when really it's a payment for part ownership of 'your' house is fraud. There does not seem to be any debate here (though I am not a lawyer). If the bank is aware that this is what is happening, then you might be able to do this. However, it is unlikely that the bank will allow you to take out a mortgage on a house which you will not fully own. By given your brother a share in the future value in the house, the bank might not be able to foreclose on the whole house without fighting the brother on it. Therefore they would want him on the mortgage. The fact that he can't get another mortgage means (a) The banks may be unwilling to allow him to be involved at all, and (b) it becomes even more critical to not commit fraud! You are effectively tricking the bank into thinking that you have the money for a down payment, and also that your brother is not involved! Now, to the actual question at hand - which I answer only for use on other transactions that do not meet the pitfalls listed above: This is an incredibly difficult question - What happens to your relationship with your brother when the value of the house goes down, and he wants to sell, but you want to stay living there? What about when the market changes and one of you feels that you're getting a raw deal? You don't know where the housing market will go. As an investment that's maybe acceptable (because risk forms some of the basis of returns). But with you getting to live there and with him taking only the risk, that risk is maybe unfairly on him. He may not think so today while he's optimistic, but what about tomorrow if the market crashes? Whatever the terms of the agreement are, get them in writing, and preferably get them looked at by a lawyer. Consider all scenarios, like what if one of you wants to sell, does the other have the right to delay, or buy you out. Or what if one if you wants to buy the other out? etc etc etc. There are too many clauses to enumerate here, which is why you need to get a lawyer.\"",
"title": ""
}
] |
fiqa
|
5b3e6089a3b2725ee5bf6c8717c97453
|
How to determine contractor hourly rate and employee salary equivalents?
|
[
{
"docid": "57bf2196d8e9d5f568780851408f9248",
"text": "Here are a few points to consider: Taxes: As a consultant, you will be responsible for the employer portion of the Social Security and Medicare taxes, and you might have to pay for state unemployment insurance and state disability insurance, as well. Office expenses: As a consultant, you may be required to buy your own laptop, pay for your own software licenses and buy other office-related supplies. For higher-end services, you may be setting up a complete office and even hire your own secretary and other support staff. Benefits: As a consultant, you will be responsible for your own health insurance, retirement plan and other benefits that an employer would ordinarily provide. Education: Your employer will likely pay for books and magazine subscriptions and send you to seminars, in order to keep your skills current; your client won't. Liability: Consultants face certain liabilities that employees don't, and have to factor the cost of insuring against those risks into their rate. Let's say you're a software developer, and your faulty code causes a nuclear plant's reactor core to overheat and melt down. As an employee, you'll get fired. As a consultant, you will get sued. Even consultants in low-risk fields can easily shell out thousands of dollars per year for a basic general liability policy. Sales & marketing: Don't forget that when your contract ends, you will have expenses associated with finding your next client, including the opportunity cost of not getting paid for your services during that time. All these factors contribute to your overhead, which you have to roll into your consulting rate. You should also add a margin of profit -- after all, as you're in business for yourself, you should be compensated for taking this entrepreneurial risk. If you're looking for a quick over-the-thumb rule, you can figure that your equivalent consulting rate should be about twice what you would be paid hourly as an employee. Assuming you work 2,000 hours a year, if you would receive a $100,000 salary, your hourly rate should be $100. Of course, this is only a very rough guideline. Ultimately, your rate will mostly be influenced by how established you are and how much your services are in demand.",
"title": ""
},
{
"docid": "24eb3e483f2345ef2008c1dcd038a5f0",
"text": "Take $100,000 base salary, x 1.5 = $150,000 contractor salary, divide by 1,872 hours = $80/hr",
"title": ""
}
] |
[
{
"docid": "39111f34d9ea66aec5d967ac0e8e8f75",
"text": "Nice attempt at trying to obfuscate the math by suggesting your wage was half of what you actually got paid. You were paid $9/hr, not $4.50. Was your CEO spending billions of other people's money playing martian when he could have been paying his employees instead?",
"title": ""
},
{
"docid": "eea277229a31bb3a52cb07a41ce3bd35",
"text": "\"If you're really a part-time worker, then there are some simple considerations.... The remote working environment, choice of own hours, and non-guarantee of work availability point to your \"\"part-time\"\" situation being more like a consultancy, and that would normally double or triple the gross hourly rate. But if they're already offering or paying you a low hourly figure, they are unlikely to give you consultant rates.\"",
"title": ""
},
{
"docid": "5597c924fe5b5e96210502d7d8756eba",
"text": "\"Why would you just look at salary and not total comp for a first year? It's pretty misleading to say \"\"$60k to work 100 hours a week\"\" when you do in fact get paid well above that. Also, in my 2 years of consulting, I've never come anywhere close to 100 hour work weeks. It usually fluctuates between 45-60 hours. Not to mention Fridays are usually pretty casual/relaxed days since you're working from home or in your home office doing random firm activities/networking.\"",
"title": ""
},
{
"docid": "c16909161420015cfe515d752c82b07b",
"text": "Okay but still three people at $12/hr is $16 more per hour than one person at $20/hr. And if anything paying taxes and benefits for one employee is cheaper than doing so for three. I still don't see how u/NEVERDOUBTED asserts that the three at $12/hr cost less. Where's the math, man???",
"title": ""
},
{
"docid": "c4f182954cbea0e8f5df43839a121238",
"text": "I'm trying to get the numbers to work. I built a quick spreadsheet that allocated the lost time as stated against the overall pay increase, assuming 1.5x for more than 40 hours. I can't find a reasonable number of hours worked where a 9% cut in hours outweighs the near 20% increase in wages.",
"title": ""
},
{
"docid": "c9b219180d9e2d78b21e5d2f6787fe61",
"text": "\"The answer depends on this: If you had to hire someone to do what you are doing in the S-corp, what would you pay them? If you are doing semi-unskilled work part-time, then $20k might be reasonable. If you are a professional working full time, it's too low. Don't forget that, in addition to \"\"billable\"\" work, you are also doing office tasks, such as invoicing and bookkeeping, that the IRS will also want to see you getting paid for. There was an important court ruling on this subject recently: Watson v. Commissioner. Watson owned an S-Corp where he was the sole employee. The S-Corp itself was a 25% owner in a very successful accounting firm that Watson worked through. All of the revenue that Watson generated at the accounting firm was paid to the S-Corp, which then paid Watson through salary and distributions. Watson was paying himself $24k a year in salary and taking over $175k a year in distributions. For comparison, even first-year accountants at the firm were making more than $24k a year in salary. The IRS determined that this salary amount was too low. To determine an appropriate amount for Watson's salary, the IRS did a study of the salaries of peers in firms of the same size as the firm Watson was working with, taking into account that owners of firms earn a higher salary than non-owners. The number that the IRS arrived at was $93k. Watson was allowed to take the rest ($80k+ each year) as distributions. Again, this number was based on a study of the salaries of peers. It was far short of the $200k+ that the S-Corp was pulling in from the accounting firm. Clearly, Watson was paying himself far too low of a salary. But even at this extreme example, where Watson's S-Corp was directly getting all of its revenue from one accounting firm in which Watson was an owner, the IRS still did not conclude that all of the revenue should have been salary and subject to payroll taxes. You should ask an accountant or attorney for advice. They can help you determine an appropriate amount for your salary. Don't be afraid of an audit, but make sure that you can defend your choices if you do get audited. If your choices are based on professional advice, that will help your case. See these articles for more information:\"",
"title": ""
},
{
"docid": "7f48d2497330bc421990b575863046a8",
"text": "In accrual accounting, you account for items on the income statement when the service has been delivered - in this case, the service that your employees are providing your company. Because of this, you incur the expense in the fiscal year that your employees work for you. So, you incur the expense, and net income decreases by (1-t)*wage expense. Net income decreases, so owners' equity decreases; to balance you credit wages payable. Once the wages are paid, you decrease the liabilities side (wages payable) and offset it with a Cash change on the assets side.",
"title": ""
},
{
"docid": "730bf896fd9945161b247899375340c3",
"text": "I'm a freelance programmer, reverse-engineer, and network engineer. I do quarterly 1099 filings using a cheap local accounting firm. I did them on my own at first; not that hard.. You deduct from sum the percentage for that earning-tier issued by the IRS.. $500.00 for writing algorithms on a timer? Yikes.. I did topcoder once but it didn't pay much then it was only good for portfolio.. No way I would race to do algorithms for third-world-rate capital..",
"title": ""
},
{
"docid": "6944f9c0b50e5048b10f8ec9bfc045df",
"text": "Software Contractors are not employees of the company that is procuring the software. Software Contractors necessarily work for another legal business entity. There is a business to business relationship between the procurer of the software and the entity producing the software. Therefore, the company procuring the software is not required to pay a minimum wage, or adhere to any other employment law. When any individual or company orders a software product and agrees to pay for it, that is a fixed priced contract. This happens millions of times a day. The amount of time taken to produce the software has no direct bearing on price. For instance, there is no minimum price for Microsoft Word based on the number of hours taken to produce it. Generally a Software Contractor will be a director and shareholder of a limited liability corporation. Directors are exempt from the standard protection offered under employment law. If the company producing the software was employing non-directors to produce the software, rather than sub-contracting to another business then employment law would apply.",
"title": ""
},
{
"docid": "3cd06f09541ff85e29fb9bb2fa1596e7",
"text": "This sounds very like disguised employment. You act like an employee of the company, but your official relationship with them is as a contractor. You gain none of the protection you get from being an employee, and this may make you cheaper, less risky and more desirable for the company who is hiring you. Depending on your country you may also pay corporation tax rather than income tax, which may represent a very significant saving. Also, the company hiring you may not have to pay PAYE, national insurance, stakeholder pension, etc. This arrangement is normal and legal providing you genuinely are acting as a subcontractor. However if you are behaving as an employee (desk at the company, company email, have to work specific hours in a specific location, no ability to subcontract, etc.) you may be classified as a disguised employee. In the UK it used to be common practice for highly paid employees to set up shell companies to avoid tax. This will now get you into hot water. Google IR35 It sounds like your relationship in this case is directly with the recruiter. You will have to consider if the recruiter is acting as your employer, or if you remain a genuinely independent agent. The duration of your contract with the recruiter will have a bearing on this. In the UK there are a whole series of tests for disguised employment. This is a good arrangement provided you go in with your eyes open and an awareness of the legislation. However you should absolutely check the rules that apply in your country before entering into this agreement. You could potentially be stung very badly indeed.",
"title": ""
},
{
"docid": "938db83ce9d0d8d64a670ca38b919a3b",
"text": "Note: This is not professional tax advice. If you think you need professional tax advice, find a licensed professional in your local area. What are the expected earnings/year? US$100? US$1,000? US$100,000? I would say if this is for US$1,000 or less that registering an EIN, and consulting a CPA to file a Partnership Tax return is not going to be a profitable exercise.... all the earnings, perhaps more, will go to paying someone to do (or help do) the tax filings. The simplest taxes are for a business that you completely own. Corporations and Partnerships involve additional forms and get more and more and complex, and even more so when it involves foreign participation. Partnerships are often not formal partnerships but can be more easily thought of as independent businesses that each participants owns, that are simply doing some business with each other. Schedule C is the IRS form you fill out for any businesses that you own. On schedule C you would list the income from advertising. Also on schedule C there is a place for all of the business expenses, such as ads that you buy, a server that you rent, supplies, employees, and independent contractors. Amounts paid to an independent contractor certainly need not be based on hours, but could be a fixed fee, or based on profit earned. Finally, if you pay anyone in the USA over a certain amount, you have to tell the IRS about that with a Form 1099 at the beginning of the next year, so they can fill out their taxes. BUT.... according to an article in International Tax Blog you might not have to file Form 1099 with the IRS for foreign contractors if they are not US persons (not a US citizen or a resident visa holder).",
"title": ""
},
{
"docid": "5cbb996244fc60be4ce51aa99ccabc02",
"text": "The short Answer is NO, HMRC do not like disguised employment which is what this is as you fall under IR35 you can bill them via an umbrella company and you should be charging the contractor rate not a permie rate. http://www.contractoruk.com/",
"title": ""
},
{
"docid": "5630e94014578741255ef17b238ba8fe",
"text": "There's a lot more cost in wages than just the hourly wage itself. As you got taxes that is split between the employer and employee. You also have general overhead costs (ie paperwork). If they are full time employees you then have the costs of benefits as well in there.",
"title": ""
},
{
"docid": "d0d32795fb708850657d5f006b8a351b",
"text": "\"We used an internal billing system where we have Project numbers, overheads, and proposal numbers. Projects may or may not have a client backing them, Overheads are strictly that, overhead costs. In the chargeback system we utilize (written by yours truly) we devised an SLO (Service Level Offering) which is the default, PC and Default software such as Office, Adobe Reader, Windows etc... and the hardware itself plus depreciation. This, when analyzed with total Business Unit working manhours, can devise an hourly rate that we apply to all Projects/Overheads/Proposals through time booked to these account through the Timecard system. A rate of 3.00 per manhour worked is applied accross the business Unit. Additional costs are divied by percentage based on Timecards. If Employee A charges 50% time to Project 1, 40% to Project 2 and 10% to project C, then those percentages will be applied to divy out the additional IT costs to the various projects, and thus making these items billable back to the client. This lowers our Overhead costs, transfers cost from Cost Centre to Profit Centre and lowers our GMAF. As for external to IT, it often prevents shit from getting done. \"\"Hey man, can you help me for a second?\"\" \"\"RAAAAAAWWW GIMME CHARGE NUMBER!!!!!!!!\"\" and creates internal animosity between project managers.\"",
"title": ""
},
{
"docid": "881d9743c9290902d46440ea7dadc826",
"text": "This is a snapshot of the Jan '17 puts for XBI, the biotech index. The current price is $65.73. You can see that even the puts far out of the money are costly. The $40 put, if you get a fill at $3, means a 10X return if the index drops to $10. A 70X return for a mild, cyclic, drop isn't likely to happen. Sharing youtube links is an awful way to ask a question. The first was far too long to waste my time. The second was a reasonable 5 minutes, but with no example, only vague references to using puts to protect you in bad years. Proper asset allocation is more appropriate for the typical investor than any intricate option-based hedging strategy. I've successfully used option strategies on the up side, multiplying the returns on rising stocks, but have never been comfortable creating a series of puts to hit the jackpot in an awful year.",
"title": ""
}
] |
fiqa
|
17fd2106b80dc8049a68899a15b81369
|
Why was my Credit Limit Increase Denied?
|
[
{
"docid": "9cca679a295a5864a66e8217c08eff7b",
"text": "\"I think they gave you the answer: You haven't previously shown that you can run that particular card up to (near) its existing maximum and then pay it off, so they don't have a strong indication that you can handle that large an unsecured loan. Generally, requests to have the limits raised when there isn't evidence that the customer is finding the current limit inconvenient are going to be considered suspicious. Remember, a great credit rating does not require that they consider you a good risk -- it's just one of the things they consider. Why do you need the limit raised? Have you tried contacting the bank's credit department directly and discussing what they will or won't let you do? Re paying off the card every month: Remember, they do get a processing fee from the vendor. They'd prefer that we paid interest (I'm told the term of art for those of us who don't is \"\"deadbeats\"\"), but they certainly don't lose money when we don't. And they'd generally rather have us be loyal customers who MIGHT someday pay interest, and who are bringing in fees, than have us go elsewhere.\"",
"title": ""
},
{
"docid": "70be767cf8054746efe00c029e2349f2",
"text": "\"The bottom line is that you are kind of a terrible customer for them. Granted you are far better than one that does not pay his bills, but you are (probably) in the tier right above that. Rewards cards are used to lure the unorganized into out of control interest rates and late payments. These people are Capital One's, and others, best customers. They have traded hundreds of dollars in interest payments for a couple of dollars in rewards. The CC company says: \"\"YUMMY\"\"! You, on the other hand, cut into their \"\"meager\"\" profits from fees collected from your transactions. Why should they help you make more money? Why should they further cut into your profits? Response to comment: Given your comment I think the bottom line is a matter of perspective. You seem like a logical, altruistic type person who probably seeks a win-win situation in business dealings. This differs from CC companies they operate to seek one thing: enslavement. BTW the \"\"terrible customer\"\" remark should be taken as a compliment. After you get past the marketing lies you begin to see what reward programs and zero percent financing is all about. How do most people end up with 21%+ interest rates? They started with a zero percent balance loan, and was late for a payment. Reward cards work a bit differently. Studies show that people tend to spend about 17% more when they use a reward card. I've caught myself ordering an extra appetizer or beer and have subsequently stopped using a reward card for things I can make a decision at the time of purchase. For people with tight budgets this leads to debt. My \"\"meager\"\" profits paragraph makes sense when you understand the onerous nature of CC companies. They are not interested in earning 2% on purchases (charge 3% and give back 1%) for basically free money. You rightly see this as what should be a win-win for all parties involved. Thus the meager in quotation marks. CC companies are willing to give back 1% and charge 3% if you then pay 15% or more on your balance. Some may disagree with me on the extracting nature of CC companies, but they are wrong. I like him as an actor, but I don't believe Samuel Jackson's lines.\"",
"title": ""
}
] |
[
{
"docid": "efc61f4ca2cbf4747a962aacb18f1111",
"text": "There are two separate cases here that people are not separating. Any card will allow you to pay an amount not exceeding the actually posted charges. Some cards will allow you to pay more than this, some will not. My parents have deliberately overpaid as a means of having a higher credit limit, I've been denied (different card) when trying to do the same thing and the website wouldn't even allow me to pay temporary charges that hadn't yet become real. (A human operator would allow paying those, though.)",
"title": ""
},
{
"docid": "18127088510ed511e14029a376fff64e",
"text": "A) The Credit Rating Agencies only look at the month-end totals that are on your credit card, as this is all they ever get from the issuing bank. So a higher usage frequency as described would not make any direct difference to your credit rating. B) The issuing bank will know if you use the credit with the higher frequency, but it probably has little effect on your limit. Typically, after two to three month, they reevaluate your credit limit, and it could go up considerably if you never overdrew (and at this time, it could indirectly positively affect your credit rating). You could consider calling the issuing bank after two month and try to explain the history a bit and get them to increase the limit, but that only makes sense if your credit score has recovered. Your business paperwork could go a long way to convince someone, if you do so well now. C) If your credit rating is still bad, you need to find out why. It should have normalized to a medium range with the bad historic issues dropped.",
"title": ""
},
{
"docid": "52feda2bfa5b003fa24d3ee131ed0895",
"text": "Because people are going deeper into debt and filing for bankruptcy more often, there is more risk on behalf of the credit company. Therefore, they limit their risk by lower limits and increasing interest. For every person that goes bankrupt, there might be 10 that pay that new higher interest rate, thereby netting a profit even though they lost out completely on the one customer. The recent legislation limited how and under what circumstance rate are adjusted and raised, but not forbidden. As for the fact that these banks took tax money under the idea (we all thought) I see two points of view. We never should have had the credit we did, so they are correcting and you (like me and millions of others) are suffering for their prior mistakes. It is an honest attempt to correct the system for long term stability even if we suffer in the short term. We gave them tax money, they need to not screw us over. In response to the still frozen credit markets I would suggest penalty taxes to companies that do not lend. Penalties to companies that do not modify mortgages. The second you take government money is the last second a you are entitled to a profit of anything. Furthermore, we the people bought you and we the people get to decide your salary. The bottom line is there is truth in both statements. Things are totally screwed up right now because we ALL made mistakes in the past trying to get a bigger profit or own a bigger house. There are those among us who didn't make a mistake, and those among us who made nothing but mistakes. As a society, we have to pay the piper either way. The best thing you can do now is pay down your debts, live simply and spend your money wisely.",
"title": ""
},
{
"docid": "351b8a1e9fb4e0c37cd26d326b02f834",
"text": "One reason why they limit it is to protect you. If I hack your account, I get your entire financial history. I can see a copy of every check you ever wrote. I can see the account number with every doctor, utility, and credit card. I can also see the account information on the back of those checks for all your relatives who you sent $10 for their birthday. I can use the information in those accounts to see where you used to live, this allows me to spoof you when applying for new credit. If they ask if I ever lived on Main street in Anytown USA. I can confidently say yes. If I only let you download a window of time, the responsibility is on you to protect that data that is before the window. They protect it in file isolated from the internet, and finally only in archive locations. Some of the information doesn't exists in electronic form. Data from the 1990's and earlier may not exist in the form you want. They have been expanding the windows over time. I can see/download a pdf of my monthly statement going back 7 years. Of course that data can't go directly into quicken. Some places do let you get a file that goes back farther, but they charge you for it, and it can only be done by them sending you the file. That prevents you from downloading your entire history everyday. That times 70 Million customers would overwhelm their server and other infrastructure. Regarding the amount of data:",
"title": ""
},
{
"docid": "238acb579177dbbd1370975042f0620f",
"text": "Usually Bonds are used to raised capital when a lender doesn't want to take on sole risk of lending. If you are looking at raising anything below 10m bonds are not a option because the bank will just extend you a line of credit.",
"title": ""
},
{
"docid": "3d546b6e4bd4a4a825ca9009cdc7b12a",
"text": "Another reason is that the amount of unused credit you have is a positive factor on your credit score. It's generally easier to open several different accounts for $X dollars each with different banks than to get your current bank to raise your limit severalfold in a single go. Your current bank has to worry about why you suddenly are asking for a large additional amount of credit; while other banks will be willing to offer you smaller amounts of credit in the hope that you transfer your business from your current bank to them.",
"title": ""
},
{
"docid": "01264d3bf1b37ab9fb671b8d57b01293",
"text": "I've read multiple times that the way to rebuild the credit score is to get a credit card and then have some minor charges on it every month and have them paid in full every month. Old negative events age and this disciplined activity rebuild the score to some not to horrible levels. Now it's true that it's hard to get reasonably good credit cards when your credit score is poor. Yet it's not necessary to have a good credit card for this case - such things as large credit limit are not needed. All that's needed is a long grace period so that there's no interest between the moment a charge is done and a moment the bill is paid in full at the end of the month. Yes, the card may have rather high interest and rather low credit limit, but it doesn't really matter. I've read once on MSN Money that people are offered credit even while they're in the middle of bankruptcy, so it's not impossible to get a credit card in the described situation. Goes without saying that a lot of discipline will be needed to have all this implemented.",
"title": ""
},
{
"docid": "07b529c7d2395c26971e103a1982d34f",
"text": "While I agree with keshlam@ that the gym had no reason (or right) to ask for your SSN, giving false SSN to obtain credit or services (including gym membership) may be considered a crime. While courts disagree on whether you can be charged with identity theft in this scenario, you may very well be charged with fraud, and if State lines are crossed (which in case of store cards is likely the case) - it would be a Federal felony charge. Other than criminal persecution, obviously not paying your debt will affect your credit report. Since you provided false identity information, the negative report may not be matched to you right away, but it may eventually. In the case the lender discovers later that you materially misrepresented information on your mortgage application - they may call on your loan and either demand repayment in full at once or foreclose on you. Also, material misrepresentation of facts on loan application is also a criminal fraud. Again, if State lines are crossed (which in most cases, with mortgages they are), it becomes a Federal wire fraud case. On mortgage application you're required to disclose your debts, and that includes lines of credits (store cards and credit cards are the same thing) and unpaid debts (like your gym membership, if its in collection).",
"title": ""
},
{
"docid": "e3c326b2ea3f1b5e375bbd90af5d2132",
"text": "\"I don't know of a situation where rejecting a raise would make sense. Often, one can be in a phaseout of some benefit, so that even though you're in a certain tax bracket, the impact of the next $100 is greater than the bracket rate alone. Taxation of social security benefits is one such anomaly. It can be high, but never over 100%. Update - The Affordable Care Act contains such an anomaly - go to the Kaiser Foundation site, and see the benefit a family of three might receive. A credit for up to $4631 toward their health care insurance cost. But, increase the income to above $78120 Modified Adjusted Gross Income (MAGI) and the benefit drops to zero. The fact that the next dollar of income will cost you $4631 in the lost credit is an example of a step-function in the tax code. I'd still not turn down the raise, but I'd ask that it be deposited to my 401(k). And when reconciling my taxes each April, I'd use an IRA in case I still went over a bit. Consider, it's April, and your MAGI is $80,120. Even if you don't have to cash to deposit to the IRA, you borrow it, from a 24% credit card if need be. Because the $2000 IRA will trigger not just $300 less Federal tax, but a $4631 health care credit. Note - the above example will apply to a limited, specific group who are funding their own health care expense and paying above a certain percent of income. It's not a criticism of ACA, just a mathematical observation appropriate to this question. For those in this situation, a close look at their projected MAGI is in order. Another example - the deduction for college tuition and fees. This is another \"\"step function.\"\" Go a dollar over the threshold, $130K joint, and the deduction drops from $4000 to $2000. You can claim that a $2000 deduction is a difference of 'only' $500 in tax due, but the result is a quick spike in the marginal rate. For those right at this number, it would be worth it to increase their 401(k) deduction to get back under this limit.\"",
"title": ""
},
{
"docid": "4144fdafb5464a6c4ad0a0a2b5c90ec5",
"text": "Why do you want to improve your credit score? Did you want to buy something? If not, I don't see the point in improving it. If you want to buy something, you can work towards long-term solutions like others have mentioned. In the short term, you can dispute the accuracy of all the negative line items in your report. This will give you a short boost in your credit report while the line items are being investigated as they will be taken off your credit report in the mean time. If you're looking to get a car or mortgage a home, you could time your dispute with purchasing the high dollar assets. This is a trick that does work, but you have to make your move while your credit score is the best it can be.",
"title": ""
},
{
"docid": "ffd92d990a6b96092871ac822eef4a57",
"text": "\"This is not a normal occurrence, and you have every right to be annoyed, but the technical way it usually happens goes like this: What can happen is when the merchant incorrectly completes the transaction without referencing the pre-authorization transaction. The bank effectively doesn't \"\"know\"\" this is the same transaction, so they process it the same way they process any other purchase, and it has no effect on the pre-authorization and related held/pending transaction. As far as the bank knows, you purchased a second set of blinds in the store for $200 and are still waiting on the first order to come in, they have no idea the store screwed up. The reason this is possible is the purpose of the pre-auth in the first place is that it is a contractual agreement between the bank (credit card) and the merchant that the funds are available, will be available except under rare special circumstances, and thus they can go ahead and process the order. This lets the merchant be secure in the knowledge that they can collect their payment, but you aren't paying interest or monthly payments on something you haven't even gotten yet! This system works reasonably well for everyone - right up until someone screws up and fails to properly release a hold, makes a second transaction instead of properly referencing the first one, or the bank screws up their system and fails to correctly match referenced pre-authorization codes to purchases. The problem is that this should not be a normal occurrence, and the people you are speaking with to try to sort out the issue often do not have the authority or knowledge necessary to properly fix the issue, or its such a hassle for them that they hope you just go away and time fixes the issue on its own. The only sure-fire solution to this is: make sure you have so much extra credit line that this doesn't effect you and you can safely let it time out on its own, or stop doing business with this combination of merchant/payment that creates the problem. Back when my credit limits were being pushed, I would never pay at gas pumps because their hold polices were so weird and unpredictable, and I would only pre-pay inside or with cash to avoid the holds.\"",
"title": ""
},
{
"docid": "7dcbbcc78bd1561999720f4fd276ad02",
"text": "Yeah I have credit cards now but his credit line got me jumped up from maybe a 200 to a 650 in a few months or a year or so. My bad I figured I posted it in the wrong sub! So if he cancels it, will this cause me to lose points? Considering the credit line is about 20K?",
"title": ""
},
{
"docid": "345ebba66a67476e6b9e1fb4bdd33b3d",
"text": "I had a macys card which only had $75.00 credit limit... I accidently paid over the limit so the card had $100.00 in it. I left it that way for a month.. My credit limit turned into 100.. So I do think its possible to increase your credit limit that way.. I've tried many times requesting for a credit limit increase.. I was denied many times.. The only thing I have is to add money but the tricky thing is that you'll have to add money and spend the whole amount and then pay it off at once for the credit limit to stick. But since you have great credit assuming because your limit is 1000, you should request for an increase of your credit limit.",
"title": ""
},
{
"docid": "7cfb64bbf0a388ad9bda6cea06cdc2ce",
"text": "\"There's many concrete answers, but there's something circular about your question. The only thing I can think of is that phone service providers ask for credit report when you want to start a new account but I am sure that could be worked around if you just put down a cash deposit in some cases. So now the situation is flipped - you are relying on your phone company's credit! Who is to say they don't just walk away from their end of the deal now that you have paid in full? The amount of credit in this situation is conserved. You just have to eat the risk and rely on their credit, because you have no credit. It doesn't matter how much money you have - $10 or $10000 can be extorted out of you equally well if you must always pay for future goods up front. You also can't use that money month-by-month now, even in low-risk investments. Although, they will do exactly that and keep the interest. And I challenge your assumption that you will never default. You are not a seraphic being. You live on planet earth. Ever had to pay $125,000 for a chemo treatment because you got a rare form of cancer? Well, you won't be able to default on your phone plan and pay for your drug (or food, if you bankrupt yourself on the drug) because your money is already gone. I know you asked a simpler question but I can't write a good answer without pointing out that \"\"no default\"\" is a bad model, it's like doing math without a zero element. By the way, this is realistic. It applies to renting in, say, New York City. It's better to be a tenant with credit who can withhold rent in issue of neglected maintenance or gross unfair treatment, than a tenant who has already paid full rent and has left the landlord with little market incentive to do their part.\"",
"title": ""
},
{
"docid": "6a82a58202ec394a50a1b5aa8ce2f7f3",
"text": "This is normal with the dealer's financing. To add more details to littleadv's answer, what happens is when you get the financing through the dealer, at first, they will try to do the loan on your behalf with local banks in your area. This is why you see several hard inquiries; one from each back. If none of these banks wants to take the loan, then dealer's financing entity will take the loan. This was my exact experience with Hyundai. In addition, don't get surprise if you start receiving letters saying that your loan was rejected. The dealer will send the loan requests simultaneously, and some of the banks might deny the loan. This also happened to me, and I have been owning my car for around a year. Still, make sure that the letters matches with the credit inquiries.",
"title": ""
}
] |
fiqa
|
013a7544de8353168b923f827bf4597f
|
Clothing Store Credit Card Account closed but not deleted
|
[
{
"docid": "0eeb5183d169e66dbe014066095e48da",
"text": "You have little chance of getting it deleted. I have the same situation, I closed mine in 2006, and the login still works. Keep the paperwork that you closed it (or print a PDF of the site showing so), and forget about it. If someone is trying to cheat, re-opening it should be the same difficulty as making a new one in your name, so it is not really an additional risk. You could also set the username and password both to a long random string, and not keep them. That soft-forces you to never login again. Note that it will also stay on your credit record for some years (but that's not a bad thing, as it is not in default; in the contrary). The only negative is that if you apply for credit, you might be ashamed of people seeing you ever having had a Sears or Macy's card or so.",
"title": ""
},
{
"docid": "2fe5739bea1df0c4b5309e27ba46262f",
"text": "\"They close accounts to render them inoperative. They never delete accounts because they want to retain the data to inform any future decision to give you credit. Also, 99% of the time, if a customer demands their account be deleted, it's because of adverse credit marks and the angry customer wants this accurate information to stop burning their credit report. The answer in this case absolutely must be \"\"heck, no!\"\" That pretty much precludes any valid reason to delete an account. As such, their business systems are not built in a way to make account deletion really possible. Even if you got a job with the company's data-processing department and had direct query/write accesses to the databases, you would find it technically inachievable to surgically remove the specific data (without risking serious damage to the entire DB). And it would still be in transaction logs, so not gone forever. Another reason to keep your account alive is to give you online access to statements. After all, the IRS can audit you 5 years after the fact, so it's real nice to be able to go back that far. Most places the statue of limitations is 6-7 years, so again, defending yourself in a lawsuit, here's raw data from an independent third party that you couldn't have faked. Strictly from a customer service POV, that means you can self-serve on requests like that, instead of having to involve expensive staff time. I totally get the annoyance of having yet another login/password you don't want to have flapping out there in the breeze potentially exposed to a cracker... but given that the account is closed, it's probably not going to cause you much trouble. If anything, change the password to one outside your normal choices, perhaps even one you don't know (retain). As long as you retain the email you have tied to the account, you can always reset the password on the off chance you ever need to get back in. Speaking of that, don't rely on your ISP's ([email protected] or [email protected] or [email protected]), get a Gmail account. I have a dedicated gmail account just for stuff like that.\"",
"title": ""
},
{
"docid": "43e888025ed583febf021612ceb59427",
"text": "If it is closed, you should be able to trust that it is closed permanently. What you still have is the online account. Imagine this would be removed and then the account would be re-activated? That should not happen, but the way you see it, you must be afraid of that as well. What I mean to say: See these two things as completely separate.",
"title": ""
},
{
"docid": "f7a54ca9b45f248ad3c03b5eb173e2a2",
"text": "There are three parties involved here: there's the store that issued you the card, then they have some bank that's actually handling the account, and there is some network (VISA, MasterCard, etc.) that the transactions go through. So one avenue to consider is seeing whether all three are aware of you canceling the card.",
"title": ""
}
] |
[
{
"docid": "c6b6c0b21e83c57a3b62918af7f3f1bf",
"text": "\"* Don't underestimate the power of facial recognition wizardry. * No, you don't have to show ID to activate the cards. But keep in mind that they know which cards were activated. There is a paper trail. I'm sure Amex, Visa, MC would happily deactivate the cards for them. Target just has to report that the cards were activated using fraud/theft. * If you took advantage of this \"\"deal\"\" your best bet is to get the prepaid credit cards and spend the money asap at another store (walmart) before they are deactivated. * If indeed this legally is considered fraud, and they go after you for it, you could end up in a giant heap of trouble as many laws have been broken. And, if you use any of the \"\"fraudulent\"\" CC's to make online purchases from a company in another state you could face even more federal charges.\"",
"title": ""
},
{
"docid": "8630f5c40a3b7606a87642027ce64970",
"text": "In your specific case, I would leave them open unless you have a specific reason for wanting to close them - particularly, unless you feel closing them is necessary for you to not misuse them. The impact on the credit score is not why I say this, though. Much more important are the two competing real factors: My suggestion would be to take the cards and put them in your file cabinet, or whatever would cause you to not use them. In fact, you could even cut them up but not close the accounts - I had an account open that I didn't possess a physical card for several years for and didn't use at all, and it stayed open (though it's not guaranteed they'll keep it open for you if you never use it). In an emergency you could then ask them to send you a new copy of the card very easily. But, keep them, just in case you need them. Once you have paid off your balances on your balance-carrying cards, then you should consider closing some of them. Keep enough to be able to live for ~4-6 months (a similar amount to the ideal rainy day fund in savings, basically) and then close others, particularly if you can do so in a way that keeps your average account age reasonably stable.",
"title": ""
},
{
"docid": "df92b37b680f3e6b31e7f3a3039562c0",
"text": "You also might want to see what sort of documentation the credit card company has. Companies can get pretty lazy sometimes about recordkeeping; there have been cases where banks tried to foreclose on a property but weren't able to produce documents establishing the mortgage. With your father dead, is there anything other than the credit card company's word that the debt is valid?",
"title": ""
},
{
"docid": "964d07be2a94d7b563c58ec7b7db7184",
"text": "I closed an account with them for an unrelated reason (down payment brought account below minimum and I didn't want to switch types of accounts or pay a fee) and it was super easy. I was surprised at how quick the whole process was. That said, I didn't have a brokerage or even any CDs - just checking and savings and my automatic payments were tied to other bank acccounts.",
"title": ""
},
{
"docid": "35eb4630e4d5a9c221eae7a051c04be1",
"text": "\"I don't know why you shut it down from a C&D letter. If anything you should have seen it as them asking you to remove his name and any trademarks from your site. They don't own \"\"fuck you\"\" being printed on clothes. Sounds like you pulled the trigger too quick. Bet there was plenty of money to still be made with that site. Maybe someone more resilient will pick up the torch.\"",
"title": ""
},
{
"docid": "66b35acf56e4b858179a6a2252a75163",
"text": "\"I was I a similar position as you, and sometimes credit bureaus might be difficult to deal with, especially when high amounts of money are involved. To make the long story short, someone opened a store credit card under my name and made a charge of around 3k. After reporting this to the bureaus, they did not want to remove the account from my credit report citing that the claim was \"\"frivolous\"\". After filing a police report, the police officer gave me the phone number for the fraud department of this store credit card, and after they investigated, they removed the account from my credit. I would suggest to do the following: Communicating with Creditors and Debt Collectors You have the right to: Stop creditors and debt collectors from reporting fraudulent accounts. After you give them a copy of a valid identity theft report, they may not report fraudulent accounts to the credit reporting companies. Get copies of documents related to the theft of your identity, like transaction records or applications for new accounts. Write to the company that has the documents, and include a copy of your identity theft report. You also can tell the company to give the documents to a specific law enforcement agency. Stop a debt collector from contacting you. In most cases, debt collectors must stop contacting you after you send them a letter telling them to stop. Get written information from a debt collector about a debt, including the name of the creditor and the amount you supposedly owe. If a debt collector contacts you about a debt, request this information in writing. I know that you said that the main problem was that your credit account was combined with another. But there might be a chance that identity theft was involved. If this is the case, and you can prove it, then you might have access to more tools to help you. For example, you can file a report with the FTC, and along with a police report, this can be a powerful tool in stopping these charges. Feel free to go to the identitytheft.gov website for more information.\"",
"title": ""
},
{
"docid": "ce8df3b5edca7c3e7cf625537995bd2f",
"text": "Credit card companies are businesses. Businesses will make any decision that makes them money. So does it make them money to cancel your account? It's a simple cost-benefit analysis: you having an account with them will probably give them some benefit for very little cost to them. The only real cost associated with an open account is someone who uses the card but doesn't pay, but they're pretty sure you won't be doing that.",
"title": ""
},
{
"docid": "d9ad3bad94c76aa6ab2e013dcbfa0c3e",
"text": "Close the account. The age doesn't outweigh the fact that you have to pay for the card. It would be one thing if the credit line was a couple thousand but showing the credit bureaus that you are staying away from the $425.00 doesn't really make them think you are any more trustworthy with your available credit. Utilization matters when you are staying away from much larger chunks of your available credit (across all cards).",
"title": ""
},
{
"docid": "a7bd00d1f83db36a4c2a96aa335a7a9c",
"text": "\"Thanks for the reply man. Yeah it literally says \"\"closed\"\" next to the accou t name. But we finally got ahold of someone, I guess they close your account whenever you have $0 in it and the account should open again 1-2 business days after the direct deposit tries to go into her account. At least that's what the lady said. She hates this bank but we live in a small town and there's just not many options in terms of banking here. Thanks for the help though man I appreciate it!\"",
"title": ""
},
{
"docid": "4e39f2aa66c02a22a9eb53c52ff636bd",
"text": "A credit balance can happen any time you have a store return, but paid the bill in full. It's no big deal. Why not just charge the next gas purchase or small grocery store purchase, to cycle it through? Yes - unused cards can get canceled by the bank, and that can hurt your credit score. In the US anyway. I'm guessing it's the same system or similar in Canada.",
"title": ""
},
{
"docid": "2c9c75c629be6d5071b24dbc148034f2",
"text": "Please realize that your issuer can close the account for any number of reasons. Inactivity is one, as having a credit line open costs them money and if you never charge anything, the company doesn't get any transaction fees from vendors nor does the company get to charge you any interest. An occasional charge is likely to keep your card from being closed automatically, but it is not a guarantee. Another reason they may close the account is that you have other bad marks show up on your credit score, or their criteria for offering you the card change so you no longer match their target demographic. I have a credit card issued by my credit union that I have not used for a couple of years. They will not close the card account because my other accounts are still very profitable for them. If I were not an otherwise profitable customer, I wouldn't be surprised if they closed my credit card account. If you are serious about keeping the account open, you should probably have more than a trivial amount of usage.",
"title": ""
},
{
"docid": "9602e16151bf709cfb818f3eed2690dc",
"text": "I used square in the past for personal yard sale and they did not transfer balance to my bank acct because they told me it was against their policy and I had to have a business license that they could either refund the credit cards i process or keep the money. So they kept it I never got it back. I don't recommend anybody to use square.",
"title": ""
},
{
"docid": "bc28dfa716f66d5aff573a4d995cbf1a",
"text": "\"Executive summary: It sounds like the merchant just did an authorization then cancelled that authorization when you cancelled the order, so there was never an actual charge so you'll never see an actual refund and there's no money to \"\"claim\"\". More detail: From your second paragraph, it sounds like they just did an authorization but never posted the transaction. A credit card authorization is basically the merchant asking your credit card company \"\"Does sandi have enough credit to pay this amount and if so please reserve that amount for a bit.\"\" The authorization will decrease the total credit you have available on the card, but it's not actually a charge, so if your billing cycle ends, it won't show up on your statement. Depending on which company issued your credit card, you may be able to see the authorization online, usually labelled something like \"\"Pending transactions\"\". Even if your credit card company doesn't show pending transactions, you'll see a decrease in your available credit, however you shouldn't see an increase in your balance. The next step, and the only way the original merchant gets paid, is for the merchant to actually post a transaction to your card. Then it becomes a real charge that will show up on your next credit card statement and you'll be expected to pay it (unless you dispute the charge, but that's a different issue). If the charge is for the same amount as the authorization, the authorization will go away (it's now been converted to an actual charge). If the amounts are different, or the merchant never posts a transaction, the authorization will be removed by your credit card company automatically after a certain amount of time. So it sounds like you placed the order, the merchant did an authorization to make sure you could pay for it and to reserve the money, but then you cancelled the order before the merchant could post the transaction, so you were never really charged for it. The merchant then cancelled the authorization (going by the start of your third paragraph). So there was never an actual transaction posted, you were never charged, and you never really owed any money. Your available credit went down for a bit, but now should be restored to what it was before you placed the order. You'll never see an actual refund reflected on your credit card statement because there was no actual transaction.\"",
"title": ""
},
{
"docid": "18e1af1027d619f2518b7ce53d45abf1",
"text": "Check with your bank, usually a statement is either at the same day of month (e.g.: every 15th of the month), or every 30 days (e.g: March 15th, April 14th, May 14th, so forth). From my experience, most credit cards use the same day of month strategy. Keep in mind that if the day is not a business day (e.g.: weekend), the statement is closed either the previous or the next business day.",
"title": ""
},
{
"docid": "a03156df5f0b04b4961d56ac075f92a1",
"text": "I think you are overcomplicating the scenario by assuming a benefit that doesn't exist. Assume an employee earns 50k, before considering the MSP. The corporation wants to cover the MSP. They have two options: increase the salary to $50,900, or keep the salary the same and pay for the MSP directly. Both options increase the employee's taxable income by $900. Both options decrease the corporation's income by $900. Net tax for each is unchanged. *Note - I couldn't find any specific reference to the MSP in income tax documentation on either BC Finance's or CRA's website. I am assuming that it is treated as a regular cash benefit, though I am not 100% convinced this is the case. If I am wrong in this please provide a comment below.",
"title": ""
}
] |
fiqa
|
76acb80d4ed9cefe5988a8179dffd03b
|
What is the future of 401(k) in terms of stability and reliability?
|
[
{
"docid": "2718a31eaa687938f260a38571913c0d",
"text": "\"My guess is that the point is that yields on bonds and cash equivalents is so low that inflation will cause the inflation-adjusted returns to be negative. There is something to be said for how much inflation can eat out of investment returns. At the same time, I would note the occupation of the person making that post along with what biases this person likely has. \"\"Entrepreneur, Started & sold several cos, Author 11 books (latest \"\"Choose Yourself!\"\") , Angel Inv., JamesAltucher.com\"\" would to me read as someone that isn't who I'd turn for investment advice when it comes to employer-sponsored plans. Be careful of what you blindly follow as sometimes that is how wolves lead the sheep to slaughter.\"",
"title": ""
},
{
"docid": "cc3d48259d5f94ea4b2f9e5f8ee45386",
"text": "\"The same author wrote in that article “they have a trillion? Really?” But that’s what happens when ten million dollars compounds at 2% over 200 years. Really? 2% compounded over 200 years produces a return of 52.5X, multiply that by 10M and you have $525 million. The author is off by a factor of nearly 2000 fold. Let's skip this minor math error. The article is not about 401(k)s. His next line is \"\"The whole myth of savings is gone.\"\" And the article itself, \"\"10 Reasons You Have To Quit Your Job In 2014\"\" is really a manifesto about why working for the man is not the way to succeed long term. And in that regard, he certainly makes good points. I've read this author over the years, and respect his views. 9 of the 10 points he lists are clear and valuable. This one point is a bit ambiguous and falls into the overgeneraluzation \"\"Our 401(k) have failed us.\"\" But keep in mind, even the self employed need to save, and in fact, have similar options to those working for others. I have a Solo 401(k) for my self employment income. To be clear, there are good 401(k) accounts and bad. The 401(k) with fees above 1%/yr, and no matching, awful. The 401(k) I have from my job before I retired has an S&P index with .02%/yr cost. (That's $200/$million invested per year.) The 401(k) is not dead.\"",
"title": ""
},
{
"docid": "2cf0565bf8be7594385e7725cc7aa7cf",
"text": "\"Let's pretend that the author of that article is not selling anything and is trying to help you succeed in life. I have nothing against sales, but that author is throwing out a lot of nonsense to sell his stuff and is creating a state of urgency so that people adopt this mindset. It's clever and it obviously works. From a pure time perspective, most people won't make enough money to run their own business and be as profitable as if they worked for a company. This is a reality that few want to acknowledge. If you invested in yourself and your career with the same discipline and urgency as an entrepreneur, most people would be better off at a company when you consider the benefits and the fact that employees have a full 7.5% of social security paid by their employer (entrepreneurs see the full 15% while employees don't). Why do I start here, because this author isn't telling you that the more people take his advice, the more their earnings will regress to the mean or below. In fact, most of my entrepreneur friends have to go back to work when their reality fails after they burn through their savings. 401ks are not a perfect system, but there are more 401k millionaires now than ever before this, and people who give the author's advice are always looking to avoid doing what they need to do - save for retirement. Most people I know sadly realize this in their 50s, when it's too late, and start trying to \"\"catch up.\"\" I don't blame the author for this, as he knows his article will appeal to younger people who don't have the wisdom to see that his advice hasn't been great for most. The reality is that for most people 401ks will provide tax advantaged savings that you can use when you're older; taxes will eat at your earnings, so these accounts really help. Finally, look at the article again especially the part you quote. He says inflation will carve out what you save, yet inflation is less than 2%. Where is he getting this from? In the past decade, we've seen numerous deflationary spirals and the market overall has come back from the fall in 2009. Again, this isn't \"\"good enough\"\" for this author, so buy his stuff to learn how to succeed! There have been numerous decades (50s,70s) that were much worse for investors than this past one.\"",
"title": ""
}
] |
[
{
"docid": "ba545d0ffb72e46b1873ca833d5f71bf",
"text": "I would say that it depends. If you have to do it now, or in the near future, I would keep the pension, as I think the current market is overpriced and approaching bubble status. (And, to interject politics, because I'm pretty sure Trump will screw it up before too long.) If you can take the money out and invest after it crashes, though... Though I'm sure that some people will object to this as market timing, I had a similar opportunity in '09. I took the money, moved it into an IRA invested mostly in index & international funds, and have been quite satisfied with the result.",
"title": ""
},
{
"docid": "74c020c4969af53f64ab7f5211d86b49",
"text": "\"The gross liabilities (benefit obligation) will still be there, regardless. They are *future* benefits. Sure, you can increase funding to the plan to eliminate the *net* pension liability, but why? The new assets would earn very little. The shortfall is not an excessively large risk. The only reason seems to be the \"\"all-consuming focus on immediate results\"\" which is more rhetoric than reality in this case.\"",
"title": ""
},
{
"docid": "9b550cd328fc152dabda777f75e4d49b",
"text": "The S&P top 5 - 401(k) usually comply with the DOL's suggestion to offer at least three distinct investment options with substantially different risk/return objectives. Typically a short term bond fund. Short term is a year or less and it will rarely have a negative year. A large cap fund, often the S&P index. A balanced fund, offering a mix. Last, the company's stock. This is a great way to put all your eggs in one basket, and when the company goes under, you have no job and no savings. My concern about your Microsoft remark is that you might not have the choice to manage you funds with such granularity. Will you get out of the S&P fund because you think this one stock or even one sector of the S&P is overvalued? And buy into what? The bond fund? If you have the skill to choose individual stocks, and the 401(k) doesn't offer a brokerage window (to trade on your own) then just invest your money outside the 401(k). But. If they offer a matching deposit, don't ignore that.",
"title": ""
},
{
"docid": "b36177c86a000963a421bfef2ab82829",
"text": "I use the self-directed option for the 457b plan at my job, which basically allows me to invest in any mutual fund or ETF. We get Schwab as a broker, so the commissions are reasonable. Personally, I think it's great, because some of the funds offered by the core plan are limited. Generally, the trustees of your plan are going to limit your investment options, as participants generally make poor investment choices (even within the limited options available in a 401k) and may sue the employer after losing their savings. If I was a decision-maker in this area, there is no way I would ever sign off to allowing employees to mess around with options.",
"title": ""
},
{
"docid": "883e13003661c691b6adae423ffef8b1",
"text": "\"A diversified portfolio (such as a 60% stocks / 40% bonds balanced fund) is much more predictable and reliable than an all-stocks portfolio, and the returns are perfectly adequate. The extra returns on 100% stocks vs. 60% are 1.2% per year (historically) according to https://personal.vanguard.com/us/insights/saving-investing/model-portfolio-allocations To get those average higher stock returns, you need to be thinking 20-30 years (even 10 years is too short-term). Over the 20-30 years, you must never panic and go to cash, or you will destroy the higher returns. You must never get discouraged and stop saving, or you will destroy the higher returns. You have to avoid the panic and discouragement despite the likelihood that some 10-year period in your 20-30 years the stock market will go nowhere. You also must never have an emergency or other reason to withdraw money early. If you look at \"\"dry periods\"\" in stocks, like 2000 to 2011, a 60/40 portfolio made significant money and stocks went nowhere. A diversified portfolio means that price volatility makes you money (due to rebalancing) while a 100% stocks portfolio means that price volatility is just a lot of stress with no benefit. It's somewhat possible, probably, to predict dry periods in stocks; if I remember the statistics, about 50% of the variability in the market price 10 years out can be explained by normalized market valuation (normalized = adjusted for business cycle and abnormal profit margins). Some funds such as http://hussmanfunds.com/ are completely based on this, though a lot of money managers consider it. With a balanced portfolio and rebalancing, though, you don't have to worry about it very much. In my view, the proper goal is not to beat the market, nor match the market, nor is it to earn the absolute highest possible returns. Instead, the goal is to have the highest chance of financing your non-financial goals (such as retirement, or buying a house). To maximize your chances of supporting your life goals with your financial decisions, predictability is more important than maximized returns. Your results are primarily determined by your savings rate - which realistic investment returns will never compensate for if it's too low. You can certainly make a 40-year projection in which 1.2% difference in returns makes a big difference. But you have to remember that a projection in which value steadily and predictably compounds is not the same as real life, where you could have emergency or emotional factors, where the market will move erratically and might have a big plunge at just the wrong time (end of the 40 years), and so on. If your plan \"\"relies\"\" on the extra 1.2% returns then it's not a reasonable plan anyhow, in my opinion, since you can't count on them. So why suffer the stress and extra risk created by an all-stocks portfolio?\"",
"title": ""
},
{
"docid": "ddaec831da2ea04d33237c7a9d7a2a9b",
"text": "Are you sure the question even makes sense? In the present-day world economy, it's unlikely that someone young who just started working has the means to put away any significant amount of money as savings, and attempting to do so might actually preclude making the financial choices that actually lead to stability - things like purchasing [the right types and amounts of] insurance, buying outright rather than using credit to compensate for the fact that you committed to keep some portion of your income as savings, spending money in ways that enrich your experience and expand your professional opportunities, etc. There's also the ethical question of how viable/sustainable saving is. The mechanism by which saving ensures financial stability is by everyone hoarding enough resources to deal with some level of worst-case scenario that might happen in their future. This worked for past generations in the US because we had massive amounts (relative to the population) of (stolen) natural resources, infrastructure built on enslaved labor, etc. It doesn't scale with modern changes the world is undergoing and it inherently only works for some people when it's not working for others. From my perspective, much more valuable financial skills for the next generation are:",
"title": ""
},
{
"docid": "19b77118c82ee59413679b2e08b53b94",
"text": "I have read in many personal finance books that stocks are a great investment for the long term, because on average they go up 5-7% every year. This has been true for the last 100 years for the S&P500 index, but is there reason to believe this trend will continue indefinitely into the future? It has also been wrong for 20+ year time periods during those last 100 years. It's an average, and you can live your whole career at a loss. There are many things to support the retention of the average, over the next 100 years. I think the quip is out of scope of your actual investment philosophy. But basically there are many ways to lower your cost basis, by reinvesting dividends, selling options, or contributing to your position at any price from a portion of your income, and by inflation, and by the growth of the world economy. With a low enough cost basis then a smaller percentage gain in the index gives you a magnified profit.",
"title": ""
},
{
"docid": "67a8f8a83db55a5a110890deeebbdcf3",
"text": "\"You have a high risk tolerance? Then learn about exchange traded options, and futures. Or the variety of markets that governments have decided that people without high income are too stupid to invest in, not even kidding. It appears that a lot of this discussion about your risk profile and investing has centered around \"\"stocks\"\" and \"\"bonds\"\". The similarities being that they are assets issued by collections of humans (corporations), with risk profiles based on the collective decisions of those humans. That doesn't even scratch the surface of the different kinds of asset classes to invest in. Bonds? boring. Bond futures? craziness happening over there :) Also, there are potentially very favorable tax treatments for other asset classes. For instance, you mentioned your desire to hold an investment for over a year for tax reasons... well EVERY FUTURES TRADE gets that kind of tax treatment (partially), whether you hold it for one day or more, see the 60/40 rule. A rebuttal being that some of these asset classes should be left to professionals. Stocks are no different in that regards. Either educate yourself or stick with the managed 401k funds.\"",
"title": ""
},
{
"docid": "5baab23655fcb5e43bd9fbdbbb8e2704",
"text": "So an investor would get their principal back in interest payments after 13.5 years if things remained stable, not accounting for discounting future cash flows/any return for the risk they are taking. The long maturity helps insurance companies and pensions properly match the duration of their liabilities. Still doesn't seem like a good bet, but it makes sense that it happened.",
"title": ""
},
{
"docid": "e4e31795af415c177c865881565520b2",
"text": "(After seeing your most recent comment on the original question, it looks like others have answered the question you intended, and described the extreme difficulty of getting the timing right the way you're trying to. Since I've already typed it up, what follows answers what I originally thought your question was, which was asking if there were drawbacks to investing entirely in money market funds to avoid stock volatility altogether.) Money market funds have the significant drawback that they offer low returns. One of the fundamental principles in finance is that there is a trade-off between low risk and high returns. While money market funds are extremely stable, their returns are paltry; under current market conditions, you can consider them roughly equivalent to cash. On the other hand, though investing in stocks puts your money on a roller coaster, returns will be, on average, substantially higher. Since people often invest in order to achieve personal financial stability, many feel naturally attracted to very stable investments like money market funds. However, this tendency can be a big mistake. The higher returns of the stock market don't merely serve to stoke an investor's greed, they are necessary for achieving most people's financial goals. For example, consider two hypothetical investors, saving for retirement over the course of a 40-year career. The first investor, apprehensive Adam, invests $10k per year in a money market fund. The second investor, brave Barbara, invests $10k per year in an S&P 500 index fund (reinvesting dividends). Let's be generous and say that Adam's money market fund keeps pace with inflation (in reality, they typically don't even do that). At the end of 40 years, in today's money, Adam will have $10,000*40 = $400,000, not nearly enough to retire comfortably on. On the other hand, let's assume that Barbara gets returns of 7% per year after inflation, which is typical (though not guaranteed). Barbara will then have, using the formula for the future value of an annuity, $10,000 * [(1.07)^40 - 1] / 0.07, or about $2,000,000, which is much more comfortable. While Adam's strategy produces nearly guaranteed results, those results are actually guaranteed failure. Barbara's strategy is not a guarantee, but it has a good chance of producing a comfortable retirement. Even if her timing isn't great, over these time scales, the chances that she will have more money than Adam in the end are very high. (I won't produce a technical analysis of this claim, as it's a bit complicated. Do more research if you're interested.)",
"title": ""
},
{
"docid": "cec3aa0b253783266df657ccf1b9adb4",
"text": "Too much of a focus on short term goals. They will do almost anything to maximize the numbers for each quarter at the expense of future quarters. Leadership incentives were not long term. So if I decide not to invest in some future technology or business so my cash is higher this quarter, I get a bigger bonus but also handicap future earnings a few years away",
"title": ""
},
{
"docid": "b5b9a2379fe0e363b5e4f935c7eda594",
"text": "\"Defining risk tolerance is often aided with a series of questions. Such as - You are 30 and have saved 3 years salary in your 401(k). The market drops 33% and since you are 100% S&P, you are down the same. How do you respond? (a) move to cash - I don't want to lose more money. (b) ride it out. Keep my deposits to the maximum each year. Sleep like a baby. A pro will have a series of this type of question. In the end, the question resolves to \"\"what keeps you up at night?\"\" I recall a conversation with a coworker who was so risk averse, that CDs were the only right investment for her. I had to explain in painstaking detail, that our company short term bond fund (sub 1 year government paper) was a safe place to invest while getting our deposits matched dollar for dollar. In our conversations, I realized that long term expectations (of 8% or more) came with too high a risk for her, at any level of her allocation. Zero it was.\"",
"title": ""
},
{
"docid": "72728dfe747564351ad248445cf8d524",
"text": "There's an interview with Andrew Lo on the WSJ that's worth a listen. One idea he touched on briefly is how the rise of index funds may be creating an investor monoculture. If this is the case, then he thinks it could lead to more market volatility. Interesting stuff. http://www.wsj.com/podcasts/andrew-w-lo-talks-how-to-evolve-with-adaptive-markets/4B141ED2-23EA-409E-BFEE-96791EEB473E.html",
"title": ""
},
{
"docid": "88503afa549aad8dc89116885c39d1de",
"text": "Via www.socialsecurity.gov: As a result of changes to Social Security enacted in 1983, benefits are now expected to be payable in full on a timely basis until 2037, when the trust fund reserves are projected to become exhausted. These estimates reflect the intermediate assumptions of the Social Security Board of Trustees in their 2009 Annual Trustees Report. The Congressional Budget Office (CBO) has been making similar estimates for several years that tend to be somewhat more optimistic than the trustees' estimates principally because CBO assumes faster growth in labor productivity and real earnings levels for the future. Doesn't seem too optimistic from the program itself. Also, it is true that recessions end, but in our current state of being trillions of dollars in debt, does it look like things are on the upswing?",
"title": ""
},
{
"docid": "5833ec8d238cc8454f640e2e7dadd266",
"text": "It has been hinted at in some other answers, but I want to say it explicitly: Volatility is not risk. Volatility is how much an investment goes up and down, risk is the chance that you will lose money. For example, stocks have relatively high volatility, but the risk that you will lose money over a 40 year period is virtually zero (in particular if you invest in index funds). Bonds, on the other hand, have basically no volatility (their cash flow is totally predictable if you trust the future of your government), but there is a significant risk that they will perform worse than stocks over a longer period. So, volatility equals risk only if you are day trading. A 401(k) is literally the opposite of that. For further reading: Never confuse risk and volatility Also, investing is not gambling. Gambling is bad because the odds are stacked against you. You need more than average luck to actually win and the longer you play, the more you will lose. Investing means buying productive capital that will produce further value. The odds are in your favor. Even if you do a moderately bad job at investing, the longer you stay, the more you will win.",
"title": ""
}
] |
fiqa
|
5dd94f9c4e2b0e0d58dcf16faf6b3e01
|
Would I ever need credit card if my debit card is issued by MasterCard/Visa?
|
[
{
"docid": "8a464b9052001d051093a8dc7cdc0325",
"text": "\"The credit card may have advantages in at least two cases: In some instances (at least in the US), a merchant will put a \"\"hold\"\" on a credit card without charging it. This happens a lot at hotels, for example, which use the hold as collateral against damages and incidental charges. On a credit card this temporarily reduces your credit limit but never appears on your bill. I've never tried to do it on a debit card, but my understanding is that they either reject the debit card for this purpose or they actually make the withdrawal and then issue a refund later. You'll actually need to account for this in your cash flow on the debit card but not on the credit card. If you get a fraudulent charge on your credit card, it impacts that account until you detect it and go through the fraud resolution process. On a debit card, the fraudulent charge may ripple through the rest of your life. The rent payment that you made by electronic transfer or (in the US) by check, for example, is now rejected because your bank account is short by the amount of the fraud even if you didn't use the debit card to pay it. Eventually this will probably get sorted out, but it has potential to create a bigger mess than is necessary. Personally, I never use my debit card. I consider it too risky with no apparent benefit.\"",
"title": ""
},
{
"docid": "d74a74d5aeabef3044cf1f4454d7077d",
"text": "Need is a strong word. As far as merchants are concerned, if they accept, e.g., Visa credit, they will accept Visa Debit. The reverse is not necessarily true. Up until lately, Aldi would only accept debit cards (credit cards have higher merchant fees), and when I used to got to Sam's Club, they would accept Visa debit, but not credit (they had/have an exclusive deal with Discover for credit). So, yes, they can tell from the card number whether it's credit or debit. However, I've never heard of a case of the situation being biased against debit.* That said there are some advantages to having a credit card: ETA: I don't know how credit history works in the EU, but in the US having open credit accounts definitely does affect your credit score which directly affects what rate you can get for a mortgage. *ETA_2: As mentioned in the comments and another answer, car rentals will often require credit cards and not debit (Makes sense to me that they would want to make sure they can get their money if there is damage to the car). Many credit cards do include rental car insurance if you use it to pay for your rental, so that's another potential advantage for credit cards.",
"title": ""
},
{
"docid": "2b427d7dc670337191f7536098090d5e",
"text": "Car rental agencies typically accept only credit cards for the rental (you can pay at the end with debit, but the securing during the rental must be a credit card - or a high cash deposit). Hotel advance-bookings - even if many months in the future - will work fine with a credit card, but - as explained by others - on a debit card, it would directly affect your cash flow (you basically have to prepay instead of just leave the credit card number on file. The same is sometimes true for other advance booking, like cruises, tours, etc.",
"title": ""
},
{
"docid": "d29207bab15c1a4dd87966e319f5296a",
"text": "Possibly not relevant to the original asker, but in the UK another advantage of using a credit card is that when making a purchase over £100 and paying by credit card you get additional protection on the purchase which you wouldn't get when paying by debit card. E.g. if you buy something costing £100 and the company goes bust before it's delivered, you can claim the money back from the credit card company. Whereas if you paid by debit card, you would potentially lose out. This protection is a legal requirement under Section 75 of the Consumer Credit Act 1974.",
"title": ""
},
{
"docid": "265fc40dd566fbf1e8fc9f60c1719367",
"text": "I was hoping to comment on the original question, but it looks to me like the asker lives in the EU, where credit cards are a lot less common and a lot of the arguments (car rental, building up of credit etc) brought forward by people living in the US just don't apply. In fact especially airlines (and other merchants) will charge you extra when using a credit card instead of a debit card and this can add up fairly quickly. I hold a credit card purely for travelling outside the EU and occasionally I will travel for work and make my own arrangements, then it can come in handy as I am able to reclaim my expenses before I have to pay my credit card bill (in this case I will also claim the extra credit card fees from my employer). This however is for my personal convenience and not strictly necessary. (I could fill out a bunch of paperwork and claim the costs from my employer as an advance.) In the EU I find that if my VISA debit card will not work in a shop, neither will my credit card, so on that note it's pretty pointless. So to answer the asker question: If you live (and travel) in the EU you don't need a credit card, ever. If you travel to the US, it would be advantageous to get one. Occasionally banks will offer you a credit card for free and there's no harm in taking it (apart from the fact that you have one more card to keep track off), but if you do, set up a direct debit to pay it off automatically. And as other people have said: Don't spend money you don't have. If you are not absolutely sure you can't do this, don't get a credit card.",
"title": ""
},
{
"docid": "c392eba0ad6ab801cc2013507daae51a",
"text": "The question should be - do you need a debit card? Other than American Express I have to tell my other credit card issuers to not make my cards dual debit/credit. Using a debit card card can be summed up easily - It creates a risk of fraud, errors, theft, over draft, and more while providing absolutely no benefit. It was simply a marketing scheme for card companies to reduce risk that has lost favor, although they are still used. That is why banks put it on credit cards by default if they can. (I am talking about logical people who can control not overspending because of debit vs. credit - as it is completely illogical that you would spend more based on what kind of card you have.)",
"title": ""
},
{
"docid": "93a0c77bd96dcc00649728b679847af7",
"text": "Credit cards are often more fool proof, against over-drawing. Consider Bill has solid cash flow, but most of their money is in his high interest savings account (earning interest) -- an account that doesn't have a card, but is accessible via online banking. Bill keeps enough in the debit (transactions) account for regular spending, much of which comes out automatically (E.g. rent, utilities), some of which he spends as needed eg shopping, lunch. On top of the day to day money Bill keeps an overhead amount, so if something happens he doesn't overdraw the account -- which would incur significant fees. Now oneday Bill sees that the giant flatscreen TV he has been saving for is on clearence sale -- half price!, and there is just one left. It costs more than he would normally spend in a week -- much more. But Bill knows that his pay should have just gone in, and his rent not yet come out. Plus the overhead he keep in the account . So there is money in his debit account. When he gets home he can open up online banking and transfer from his savings (After all the TV is what he was saving for) What Bill forgets is that there was a public holiday last week in the state where payroll is operated, and that his pay is going to go in a day late. So now he might have over drawn the account buying the TV, or maybe that was fine, but paying the rent over draws the account. Now he has a overdraft fee, probably on the order of $50. Most banks (at least where I am), will happily allow you to overdraw you account. Giving you a loan, at high interest and with an immediate overdraft fee. (They do this cos the fee is so high that they can tolerate the risk of the non-assessed loan.) Sometimes (if you ask) they don't let you do it with your own transcations (eg buying the TV), but they do let you do it on automated payements (eg the Rent). On the other hand banks will not let you over draw a credit card. They know exactly how much loan and risk they were going to take. If Bill had most of his transactions going on his credit card, then it would have just bounced at the cash register, and Bill would have remembered what was going on and then transferred the money. There are many ways you can accidentally overdraw your account. Particularly if it is a shared account.",
"title": ""
},
{
"docid": "0fcc289f55e8fd85bb987f6f218ff4fe",
"text": "If you are solvent enough, and organised enough to pay your credit card bill in full each month, then use the credit card. There are no disadvantages and several plus points, already mentioned. Use the debit card when you would be surcharged for using the credit card, or where you can negotiate a discount for not subjecting the vendor to credit card commission.",
"title": ""
},
{
"docid": "98ba8154a4fdeb826cdd6ef732faaf67",
"text": "In most cases, a debit card can be charged like a credit card so there is typically no strict need for a credit card. However, a debit card provides weaker guarantees to the merchant that an arbitrary amount of money will be available. This is for several reasons: As such, there are a few situations where a credit card is required. For example, Amazon requires a credit card for Prime membership, and car rental companies usually require a credit card. The following does not apply to the OP and is provided for reference. Debit cards don't build credit, so if you've never had a credit card or loan before, you'll likely have no credit history at all if you've never had a credit card. This will make it very difficult to get any nontrivially-sized loan. Also, some employers (typically if the job you're applying for involves financial or other highly sensitive information) check credit when hiring, and not having credit puts you at a disadvantage.",
"title": ""
},
{
"docid": "c35962088635faf13f84983276ec6936",
"text": "I haven't had a credit card in fifteen years. I use nothing but my debit card. (I find the whole idea of credit on a micro scale loathsome.) I have yet to encounter a single problem doing so, other than a lower than usual credit score for not keeping 23(!!!) revolving lines of credit open, or that's the number CreditKarma tells me I need in order to be an optimal consumer. In an nutshell, no, you don't NEED one. There are reasons to have them, but no.",
"title": ""
},
{
"docid": "9e88c6e1c6c8ea228540df3db741c995",
"text": "\"You ask about the difference between credit and debit, but that may be because you're missing something important. Regardless of credit/debit, there is value in carrying two different cards associated with two different accounts. The reason is simply that because of loss, fraud, or your own mismanagement, or even the bank's technical error, any card can become unusable for some period of time. Exactly how long depends what happened, but just sending you a new card can easily take more than one business day, which might well be longer than you'd like to go without access to any funds. In that situation you would be glad of a credit card, and you would equally be glad of a second debit card on a separate account. So if your question is \"\"I have one bank account with one debit card, and the only options I'm willing to contemplate are (a) do nothing or (b) take a credit card as well\"\", then the answer is yes, take a credit card as well, regardless of the pros or cons of credit vs debit. Even if you only use the credit card in the event that you drop your debit card down a drain. So what you can now consider is the pros and cons of a credit card vs managing an additional bank account -- unless you seriously hate one or more of the cons of credit cards, the credit card is likely to win. My bank has given me a debit card on a cash savings account, which is a little scary, but would cover most emergencies if I didn't have a credit card too. Of course the interest rate is rubbish and I sometimes empty my savings account into a better investment, so I don't use it as backup, but I could. Your final question \"\"can a merchant know if I give him number of debit or credit card\"\" is already asked: Can merchants tell the difference between a credit card and embossed debit card? Yes they can, and yes there are a few things you can't (or might prefer not to) do with debit. The same could even be said of Visa vs. Mastercard, leading to the conclusion that if you have a Visa debit you should look for a Mastercard credit. But that seems to be less of an issue as time goes on and almost everywhere in Europe apparently takes both or neither. If you travel a lot outside the EU then you might want to be loaded down with every card under the sun, and three different kinds of cash, but you'd already know that without asking ;-)\"",
"title": ""
},
{
"docid": "82c0d383ab7f3d71b0b52db63afae003",
"text": "Skimmers are most likely at gas station pumps. If your debit card is compromised you are getting money taken out of your checking account which could cause a cascade of NSF fees. Never use debit card at pump. Clark Howard calls debit cards piece of trash fake visa/mc That is because of all the points mentioned above but the most important fact is back in the 60's when congress was protecting its constituents they made sure that the banks were responsible for fraud and maxed your liability at $50. Debit cards were introduced much later when congress was interested in protecting banks. So you have no protection on your debit card and if they find you negligent with your card they may not replace the stolen funds. I got rid of my debit card and only have an ATM card. So it cannot be used in stores which means you have to know the pin and then you can only get $200 a day.",
"title": ""
},
{
"docid": "2c2fadd0a3d14a203908b8eeb433eb2c",
"text": "My view is from the Netherlands, a EU country. Con: Credit cards are more risky. If someone finds your card, they can use it for online purchases without knowing any PIN, just by entering the card number, expiration date, and security code on the back. Worse, sometimes that information is stored in databases, and those get stolen by hackers! Also, you can have agreed to do periodic payments on some website and forgot about them, stopped using the service, and be surprised about the charge later. Debit cards usually need some kind of device that requires your PIN to do online payments (the ones I have in the Netherlands do, anyway), and automated periodic payments are authorized at your bank where you can get an overview of the currently active ones. Con: Banks get a percentage of each credit card payment. Unlike debit cards where companies usually pay a tiny fixed fee for each transaction (of, say, half a cent), credit card payments usually cost them a percentage and it comes to much more, a significant part of the profit margin. I feel this is just wrong. Con: automatic monthly payment can come at an unexpected moment With debit cards, the amount is withdrawn immediately and if the money isn't there, you get an error message allowing you to pay some other way (credit card after all, other bank account, cash, etc). When a recent monthly payment from my credit card was due to be charged from my bank account recently, someone else had been paid from it earlier that day and the money wasn't there. So I had to pay interest, on something I bought weeks ago... Pro: Credit cards apparently have some kind of insurance. I've never used this and don't know how it works, but apparently you can get your money back easily after fraudulent charges. Pro: Credit cards can be more easily used internationally for online purchases I don't know how it is with Visa or MC-issued debit cards, but many US sites accept only cards that have number/expiration date/security code and thus my normal bank account debit card isn't useable. Conclusion: definitely have one, but only use it when absolutely necessary.",
"title": ""
}
] |
[
{
"docid": "bb0e3e99c7cda972e38413ba3620e23d",
"text": "\"There are hidden costs to using rewards cards for everything. The credit card company charges fees to the merchant every time you make a purchase. These fees are a small amount per transaction, plus a portion of the transaction amount. These fees are higher for rewards cards. (For example, the fees might be 35 cents for a PIN-transaction on a debit card, or 35 cents plus 2 percent for an ordinary credit card or signature transaction on a debit card, or 35 cents plus 3.5 percent on a rewards card.) After considering all of their expenses, merchant profit margins are often quite small. To make the same amount of profit by serving a rewards-card customer as a cash customer, the merchant needs to sell higher profit-margin items and/or more items to the rewards-card customer. People who \"\"pay with plastic\"\" tend to spend more than people who \"\"pay with cash\"\". If you pay with a rewards card, will you spend even more?\"",
"title": ""
},
{
"docid": "f61e2fa0b51e154e19ee6efdffc99751",
"text": "\"No you do not need a credit card. They are convenient to have sometimes. But you do not \"\"need\"\" one. I know people who only have one for use when they travel for work and get reimbursed later. But most companies have other ways to pay for your travel if you tell them you do not have a credit card.\"",
"title": ""
},
{
"docid": "7a6e0c52a7b8939afaf7259203e176a8",
"text": "Try to buy an airline ticket, rent a hotel room, or rent a car without a credit card. Doable? Perhaps. Easy? Nope. With a debit card, you run the risk of a hotel reserving more than your stay's cost for room service, parking, etc and potentially having a domino effect if other payments bounce. We just spent 3 nights in NYC, room was just over $1000. Do I really want to carry that much cash?",
"title": ""
},
{
"docid": "b7f4767308966ca2738264c9fce47c28",
"text": "Lets say Debit is what you pay and Credit is what somebody else pays for you. A Debit card will charge your bank account directly. A Credit card will charge your bank account some time later. In both cases the shop owner has the money available directly. It's called Credit because somebody believes you will be able to pay your debt on time (or later with an interest). As for purchase and sales. A customer buys = makes a purchase. A shopkeeper sells = makes a sale. Note from a bar: I made an agreement with the bank. They don't sell beer, I don't give Credit.",
"title": ""
},
{
"docid": "a50567012a5f76663c63333666711132",
"text": "Generally most businesses will not, but it's not uncommon. Not sure about other countries, but in Australia merchants here generally have to pay VISA or Mastercard a commission if the consumer chooses to use credit. So even if they don't levy a charge, they may have a minimum purchase amount which you can use credit cards for. Amongst some of the ones who do include... Pretty much all of the budget airlines like (Virgin) airlines. I think there's been some outrage with them cause they charge $4.50 per person per trip which in some cases is greater than the transaction cost they have to pay to the credit card companies. Aldi Supermarket link they're kind of a budget supermarket. You got to pay for shopping bags and also charge 1% more for credit card. On a side note, we also have a thing called EFTPOS here (http://en.wikipedia.org/wiki/EFTPOS) which is a debit card network. I think this network charges less commission because generally, a lof of businesses that charge for credit may not charge for EFTPOS. I also feel EFTPOS is also more secure as it requires a pin number, unlike a credit card which requires a signature.",
"title": ""
},
{
"docid": "c8f019a27ed05f78e83063182b5f864b",
"text": "In Addition to @JoeTaxpayer's answer, in the UK credit cards offer additional protection than if you were to pay by debit card. This includes (but is not limited to) getting your money back if the company you've bought something from goes bust before your order is complete.",
"title": ""
},
{
"docid": "28aca8fc12242a63427a0c031f083621",
"text": "I don't know of any that are comparable to credit cards. There's a reason for that. Debit cards, being newer, have a much lower interchange rate. Since collecting on debt is risky and less predictable, rewards / miles are paid from those interchange fees. This means with a debit card there's less money to pay you with. So what can you do? Assuming your credit isn't terrible, you can just open a credit card account and pay in full for purchases by the grace period. I don't know how all cards work, but my grace period allows me to pay in full by the billing date (roughly a month from purchase) and incur no finance charges. In effect, I get a small 30 day loan with no interest, and a cash back incentive (I dislike miles). You're also less liable for fraud via CC than debit.",
"title": ""
},
{
"docid": "cc0afa68bdef66b859a26ba038e0ab48",
"text": "As someone who spends a lot of time in France, I learned that many French banks will issue debit cards to US citizens, as an add-on feature to a bank account. The fees are not low. Societe Generale charges 8 Euros per month, Credit Agricole charges 30 Euros a year, BNP Paribas charges 12 Euros a month. I'm sure other banks will issue cards as well. You need to show 2 items proving US residence, such as a utility bill, plus a passport. They can open an account immediately, on that basis and it takes about 7-10 days to get your debit card.",
"title": ""
},
{
"docid": "229e624be26e55c13dc369974db632b8",
"text": "Just use a credit card like AMEX Blue that categorizes your purchases, and reconcile at the end of the month. There is no good reason to use a debit card.",
"title": ""
},
{
"docid": "50b54ee0f2d50fba4547d1c2c497b452",
"text": "A debit card takes the funds right from your account. There's no 'credit' issued along the way. The credit card facilitates a short term loan. If you are a pay-in-full customer, as I am, there's a cost to lend the money, but we're not paying it. It's part of the fee charged to the merchant. Thus the higher transaction cost.",
"title": ""
},
{
"docid": "22a1be4fe209a2fd1ecad737d0d6f717",
"text": "\"I have a merchant account and accept Visa, Mastercard, and Discover but not AMEX. I don't take AMEX because they want me to go through another approval process (on top of what was required to get merchant status) and their fees are a percent or two higher than the other cards. This doesn't sound like a lot - but for a business that grosses $1M per year, an extra 2 percentage points is $20K. I don't gross $1M, but the additional cost for me to take AMEX would still use the word \"\"thousand\"\" and I don't see any reason to jump through extra hoops and fill out more forms for the privilege of giving extra money away. I haven't found anyone yet who wanted to pay me with AMEX who can't pay me with another card or a check instead.\"",
"title": ""
},
{
"docid": "69ba39e1c70624111401b32ce3b72bc1",
"text": "\"Credit cards have three important advantages. None of them are for day-to-day borrowing of money. Safety - Credit cards have better fraud protection than checks or cash, and better than most debit/check cards. If you buy something with a credit card, you also get the issuer's (think Visa) assurances that your will get the product you paid for, or your money back. At almost any time, if a product you buy is not what you expect, you can work with the issuer, even if the store says \"\"screw you\"\". Security - Credit cards are almost universally accepted as a \"\"security\"\" against damages to the vendor. Hotels, car rentals, boat rentals etc. will accept a credit card as a means of securing their interests. Without that, you may have to make huge deposits, or not be able to rent at all. For example, in my area (touristy) you can not rent a car on debit or cash. You must use a credit card. Around here most hotel rooms require a credit card as well. This is different from area to area, but credit cards are nearly universally accepted. Emergencies - If you're using your credit card properly, then you have some extra padding when stuff goes wrong. For example, it may be cheaper to place a bill on a credit card for a couple months while you recover from a car accident, than to deplete your bank account and have to pay fees. Bonus - Some cards have perks, like miles, points, or cash back. Some can be very beneficial. You need to be careful about the rules with these bonuses. For example, some cards only give you points if you carry a balance. Some only give miles if you shop at certain stores. But if you have a good one, these can be pretty fantastic. A 3% cash back on purchases can make a large difference over time.\"",
"title": ""
},
{
"docid": "c0b0f2a8a8ad5213aec82f7c592e9d45",
"text": "Debit cards with the Visa or Mastercard symbol on them work technically everywhere where credit cards work. There are some limitations where the respective business does not accept them, for example car rentals want a credit card for potential extra charges; but most of the time, for day-to-day shopping and dining, debit cards work fine. However, you should read up the potential risks. A credit card gives you some security by buffering incorrect/fraudulent charges from your account, and credit card companies also help you reverse incorrect charges, before you ever have to pay for it. If you use a debit card, it is your money on the line immediately - any incorrect charge, even accidential, takes your money from your account, and it is gone while you work on reversing the charge. Any theft, and your account can be cleaned out, and you will be without money while you go after the thief. Many people consider the debit card risk too high, and don't use them for this reason. However, many people do use them - it is up to you.",
"title": ""
},
{
"docid": "bc869a65f4d468b2b752447d3f61113f",
"text": "A bank selling a foreclosed property would negotiate a lower cash deal, I doubt it would be that extreme, 130 vs 100. An individual seller may give up $10K to save time and get his next home closed as well, but again, I suspect it would be rare to find that large a delta.",
"title": ""
},
{
"docid": "c73fa6c7170b8d929709dcd0f3304ece",
"text": "Find a way to raise the cash needed to pay the store back, plus penalties. Be humble and apologetic. You have committed fraud. Depending on the amount, it may be a felony. Be an adult, settle the debt. If not, they have grounds to open a complaint with law enforcement. Your county jail probably has a number of residents who are paper hangers.",
"title": ""
}
] |
fiqa
|
7066c503a78bafcf4b9516d7a9536e67
|
$65000/year or $2500 every two weeks: If I claim 3 exemptions instead of zero, how much would my take home pay be?
|
[
{
"docid": "9ae88354d918c5f09d1b21baec41180e",
"text": "\"Take a look at IRS Publication 15. This is your employer's \"\"bible\"\" for withholding the correct amount of taxes from your paycheck. Most payroll systems use what this publication defines as the \"\"Percentage Method\"\", because it requires less data to be entered into the system in order to correctly compute the amount of withholding. The computation method is as follows: Taxes are computed \"\"piecewise\"\"; dollar amounts up to A are taxed at X%, and then dollar amounts between A and B are taxed at Y%, so total tax for B dollars is A*X + (B-A)*Y. Here is the table of rates for income earned in 2012 on a daily basis by a person filing as Single: To use this table, multiply all the dollar amounts by the number of business days in the pay period (so don't count more than 5 days per week even if you work 6 or 7). Find the range in which your pay subject to withholding falls, subtract the \"\"more than\"\" amount from the range, multiply the remainder by the \"\"W/H Pct\"\" for that line, and add that amount to the \"\"W/H Base\"\" amount (which is the cumulative amount of all lower tax brackets). This is the amount that will be withheld from your paycheck if you file Single or Married Filing Separately in the 2012 TY. If you file Married Filing Jointly, the amounts defining the tax brackets are slightly different (there's a pretty substantial \"\"marriage advantage\"\" right now; withholding for a married person in average wage-earning range is half or less than a person filing Single.). In your particular example of $2500 biweekly (10 business days/pp), with no allowances and no pre-tax deductions: So, with zero allowances, your employer should be taking $451.70 out of your paycheck for federal withholding. Now, that doesn't include PA state taxes of 3.07% (on $2500 that's $76.75), plus other state and federal taxes like SS (4.2% on your gross income up to 106k), Medicare/Medicaid (1.45% on your entire gross income), and SUTA (.8% on the first $8000). But, you also don't get a refund on those when you fill out the 1040 (except if you claim deductions against state income tax, and in an exceptional case which requires you to have two jobs in one year, thus doubling up on SS and SUTA taxes beyond their wage bases). If you claim 3 allowances on your federal taxes, all other things being equal, your taxable wages are reduced by $438.45, leaving you with taxable income of $2061.55. Still in the 25% bracket, but the wages subject to that level are only $619.55, for taxes in the 25% bracket of $154.89, plus the withholding base of $187.20 equals total federal w/h of $342.09 per paycheck, a savings of about $110pp. Those allowances do not count towards other federal taxes, and I do not know if PA state taxes figure these in. It seems odd that you would owe that much in taxes with your withholding effectively maxed out, unless you have some other form of income that you're reporting such as investment gains, child support/alimony, etc. With nobody claiming you as a dependent and no dependents of your own, filing Single, and zero allowances on your W-4 resulting in the tax withholding above, a quick run of the 1040EZ form shows that the feds should owe YOU $1738.20. The absolute worst-case scenario of you being claimed as a dependent by someone else should still get you a refund of $800 if you had your employer withhold the max. The numbers should only have gotten better if you're married or have kids or other dependents, or have significant itemized deductions such as a home mortgage (on which the interest and any property taxes are deductible). If you itemize, remember that state income tax, if any, is also deductible. I would consult a tax professional and have him double-check all your numbers. Unless there's something significant you haven't told us, you should not have owed the gov't at the end of the year.\"",
"title": ""
},
{
"docid": "6b526fac64b86f0d375209d228854e1b",
"text": "I use paycheckcity.com and first punch in my paycheck and make sure it calculates within a few pennies the value of my actual paycheck. Then I fiddle with withholding values, etc. to see the effect of change. It has been very effective for me over the years.",
"title": ""
},
{
"docid": "b04d53ce83ed677bc2f41e24f2f00f62",
"text": "It will usually take a week or two for changes to your withholding to take effect in payroll. However 0 deductions will withhold more per check than 3. So if at 0 deductions you are having to pay in April then I would suggest not changing your W2 to 3 deductions. Instead in the section for extra with holding add $25 per week. This should leave you with a more manageable return in April.",
"title": ""
}
] |
[
{
"docid": "8e67f5d319cbe5f6e7fc12d9ff5115ee",
"text": "\"In general, you are allowed to deduct up to $50/month per student (see page 4), but only if you aren't reimbursed. In your case, since you are receiving a stipend, the full $2000 will be treated as taxable income. But the question of \"\"is it worth it\"\" really depends on how much you will actually spend (and also what you'll get from the experience). Suppose you actually spend $1000/month to host them, and if your combined tax rate is 35%, you'll pay $700 in additional taxes each month, but you'll still profit $300 each month. If your primary motivation for hosting students is to make a profit, you could consider creating a business out of it. If you do that you will be able to deduct all of your legitimate business expenses which, in the above example, would be $1000/month. Keeping with that example, you would now pay taxes on $1000 instead of $2000, which would be $350, meaning your profit would now be $650/month. (Increasing your profit by $350/month.) You will only need to keep spending records if you plan to go the business route. My advice: assume you won't be going the business route, and then figure out what your break even point is based on your tax rate (Fed+state+FICA). The formula is: Max you can spend per month without losing money = 2000 - (2000 * T) e.g. if T = 35%, the break even point is $1300. Side note: My family hosted 5 students in 5 years and it was always a fantastic experience. But it is also a very big commitment. Teenagers eat a lot, and they drive cars, and go on dates, and play sports, and need help with their homework (especially English papers), and they don't seem to like bed times or curfews. IMHO it's totally worth it, even without the stipend...\"",
"title": ""
},
{
"docid": "7ab2b7a9ead93dbd14f80545351f29f7",
"text": "The basis of the home is the cost of land and material. That's it. Your time isn't added to basis. No different than if you spend 1000 hours in a soup kitchen. You deduct miles for your car and expenses you can document but you can't deduct your time. Over 2 years, you could have a gain up to $500K per married couple and pay no tax.",
"title": ""
},
{
"docid": "c4ed680239a1ff1eacc16c0128ef87c6",
"text": "Math time. 24 means 2 years out of college, or 6 years out of highschool, the latter being much more plausible given the poster's content quality. $100k / 6 = $16.7k/year 16.7k / 52 weeks = $321/week $321 / (11/hr * (1 - 15% taxes)) = 34 hours per week. So he worked 34 hours per week, without fail, for 6 years, with NO expenses of any kind whatsoever. OR, much more likely, he managed to save only $10k, not $100k in 6 years.",
"title": ""
},
{
"docid": "67cefadd81dfdf094b0f937fe9e5899f",
"text": "I know this is rather late, but with your income it is almost certainly better for your mother to claim you as a dependent. I was in a similar situation this last year, I didn't get the full weight of the tax break because my taxes went down to zero with this exemption along with claiming myself as a dependent. I used Turbotax to run both our taxes both ways to verify, the difference was about 1000 dollars saved for my parents to claim me as a dependent vs claiming myself as a dependent. If you are unsure it doesn't take long to run the numbers through Turbotax, TaxACT, or some similar software.",
"title": ""
},
{
"docid": "fc9a5b1af8c773dbf2e50e14fa7421dd",
"text": "\"I'll start with a question... Is the 63K before or after taxes? The short answer to your question on how much is reasonable is: \"\"It depends.\"\" It depends on a lot more than where you live, it depends on what you want... do you want to pay down debt? Do you want to save? Are you trying to buy a house? Those will influence how much you \"\"can\"\" (should let yourselves) spend. It also depends on your actual salary... just because I spend 5% of my salary on something doesn't mean bonkers to you if you're making 63,000 and I'm only making 10,000. I also have a lot of respect for you trying to take this on. It's never easy. But I would also recommend you start by trying to see what you can do to track how much you are actually spending. That can be hard, especially if you mostly use cash. Once you're tracking what you spend, I still think you're coming at this a bit backwards though... rather than ask 'how much is reasonable' to spend on those other expenses, you basically need to rule out the bigger items first. This means things like taxes, your housing, food, transportation, and kid-related expenses. (I've got 2.5 kids of my own.) I would guess that you're listing your pre-tax salaries on here... so start first with whatever it costs you to pay taxes. I'm a US citizen living in Berlin, haven't filed UK taxes, but uktaxcalculators.co.uk says that on 63,000 a year with 3 deductions your net earnings will actually be 43,500. That's 3,625/month. Then what does it cost you each month for rent/utilities/etc. to put a house over your family's head? The rule of thumb they taught in my home-economics class was 35-40%, but that's not for Europe... you'll know what it costs. Let's say its 1,450 a month (40%) for rent and utilities and maybe insurance. That leaves 2,175. The next necessity after housing is food. My current food budget is about 5-6% of my after-tax salary. But that may not compare... the cost to feed a family of 3 is a fairly fixed number, and our salaries aren't the same. As I said, I am a US expat living in Berlin, so I looked at this cost of living calculator, and it looks like groceries are about 7-10% higher there around Cardiff than here in Germany. Still, I spend about 120 € per week on food. That has a fair margin in it for splurging on ice cream and a couple brewskies. It feeds me (I'm almost 2m and about 100 kilos) and my family of four. Let's say you spend 100£ a week on groceries. For budgeting, that's 433£ a month. (52 weeks / 12 months == 4.333 weeks/month) But let's call it 500£. That leaves 1,675. From here, you'll have to figure out the details of where your own money is going--that's why I said you should really start tracking your expenses somehow... even just for a short time. But for the purposes of completing the answers to your questions, the next step is to look at saving before you try spending anything else. A nice target is to aim for 10% of your after-tax pay going into a savings account... this is apart from any other investments. Let's say you do that, you'll be putting away 363£ per month. That leaves 1,300£. As far as other expenses... you need some money for transport. You haven't mentioned car(s) but let's say you're spending another 500£ there. That would be about enough to cover one with the petrol you need to get around town. That leaves 800£ As far as a clothing budget and entertainment, I usually match my grocery budget with what I call \"\"mad money\"\". That's basically money that goes towards other stuff that I would love to categorize, but that my wife gets annoyed with my efforts to drill into on a regular basis. That's another 500£, which leaves 300£. You mentioned debts... assuming that's a credit card at around 20% interest, you probably pay 133£ a month just in interest... (20% = 0.20 / 12 = 0.01667 x 8,000 = 133) plus some nominal payment towards principal. So let's call it 175£. That leaves you with 125£ of wiggle room, assuming I have even caught all of your expenses. And depending on how they're timed, you are probably feeling a serious squeeze in between paychecks. I recognize that you're asking specific questions, but I think that just based on the questions you need a bit more careful backing into the budget. And you REALLY need to track what you're spending for the time being, until you can say... right, we usually spend about this much on X... how can we cut it out? From there the basics of getting your financial house in order are splattered across the interwebs. Make a budget... stick to it... pay down debts... save. Develop goals and mini incentives/rewards as a way to make sure your change your psyche about following a budget.\"",
"title": ""
},
{
"docid": "3a7a6ec1313cb73c04f7e0e1ba797cb9",
"text": "House rent allowance:7500 House Rent can be tax free to the extent [less of] Medical allowance : 800 Can be tax free, if you provide medical bills. Conveyance Allowance : 1250 Is tax free. Apart from this, if you invest in any of the tax saving instruments, i.e. Specified Fixed Deposits, NSC, PPF, EPF, Tution Fees, ELSS, Home Loan Principal etc, you can get upto Rs 150,000 deductions. Additional Rs 50,000 if you invest into NPS. If you have a home loan, upto Rs 200,000 in interest can be deducted. So essentially if you invest rightly you need not pay any tax on the current salary, apart from the Rs 200 professional tax deducted.",
"title": ""
},
{
"docid": "d50f90f0c864294278fa0691bbb3ef40",
"text": "You will most likely pay around 30%, between standard income tax and payroll taxes. That is a good place to start. If you live in a state/city with income taxes, add that to the mix.",
"title": ""
},
{
"docid": "7156a9fde48c1a3aec096bab435c99e9",
"text": "Yes, you can do what you are contemplating doing, and it works quite well. Just don't get the university's payroll office too riled by going in each June, July, August and September to adjust your payroll withholding! Do it at the end of the summer when perhaps most of your contract income for the year has already been received and you have a fairly good estimate for what your tax bill will be for the coming year. Don't forget to include Social Security and Medicare taxes (both employee's share as well as employer's share) on your contract income in estimating the tax due. The nice thing about paying estimated taxes via payroll deduction is that all that tax money can be counted as having been paid in four equal and timely quarterly payments of estimated tax, regardless of when the money was actually withheld from your university paycheck. You could (if you wanted to, and had a fat salary from the university, heh heh) have all the tax due on your contract income withheld from just your last paycheck of the year! But whether you increase the withholding in August or in December, do remember to change it back after the last paycheck of the year has been received so that next year's withholding starts out at a more mellow pace.",
"title": ""
},
{
"docid": "054d1fd715f86a9e2710a4654ea243ee",
"text": "Your phrasing of the question isn't very clear, but I believe you're asking: Does our total household income classify us as tax exempt? Or, can we avoid filing taxes if we make $22,500 or less per year? The answer is no. Your tax liability will be very low, and if you have dependents or other deductible expenses (mortgage interest, 401K contributions, etc.), you're likely looking at a close to $0 liability. You still have to file your taxes, and you can't claim exempt on your W-4. Even if you did qualify to be tax exempt, you still have to file taxes.",
"title": ""
},
{
"docid": "224406f6bceb88a7eb6490251a5f4211",
"text": "The are a couple of explanations that I can think of; though for determining exactly what is different you will want to print out both returns and compare them line by line to see how they differ. If the company grossed up your income to account for the taxes on housing (possibly by paying the additional withholding), you may be just benefiting from them estimating your tax rate. This can especially be the case if your only work was the three month internship. They would have to assume your salary was for the entire year. There is an earned income tax credit for low wage earners that you may have qualified for (it would depend your specific circumstances if you meet the criteria). But that credit for a range of income actually pays out more the more you earn (to encourage working that extra hour instead of reducing benefit because you had another hour of employment). As for the housing subsidy itself, while the value is quite high the IRS considers that to be a taxable benefit that the employer provided you and so it needs to be added to your W-2 wages. $8k a month seems quite high, but I don't know the quality of the apartment you were provided and what the going rates are in the area. Given that you said you worked for a major tech company, I can imagine that you might have been working in an area with high rents. If the employer did gross up your paycheck so as to cover your taxes, that $24k would also include that extra tax payment (e.g. if the employer paid $8k in additional taxes for you, then the housing cost that they directly paid were $16k).",
"title": ""
},
{
"docid": "11bf58b5be2052e7b15c114f910ca349",
"text": "For estimating your take home salary, I suggest using one of the many free salary calculators available over the Internet. I personally use PaycheckCity.com, but there are plenty of others available. To calculate your allowances for the US Federal tax, you can use the worksheet attached to the form W-4. Similar form (with a similar worksheet) is available for state taxes, on the Illinois Department of Revenue web site.",
"title": ""
},
{
"docid": "f391e1973ce5d44431f468b2706ada91",
"text": "This is a frequent problem for anyone with a large amount of deductions, whether it is student loan interest, home mortgage interest, charitable contributions, or anything else. As an employee getting your tax withheld from your check, your options to reduce the amount withheld are limited. The HR department has no control over how much they withhold; the amount is calculated using a standard formula based on the number of exemptions you tell them. The number of exemptions you claim on your W-4 form does not have to match reality. If you currently have 1 exemption claimed, ask them what the withholding would be if you claimed 4 exemptions. If that's not enough, go higher. As long as you are not withholding so little that you have a large tax bill at the end of the year, you are fine. Of course, when you do your taxes, you need to have the correct number of exemptions claimed on your 1040, but this number does not need to match your W-4.",
"title": ""
},
{
"docid": "0245e7dd79a8a1f4a9a3573a060f57d3",
"text": "The Australian Tax Office website shows Tax Rates for individuals based on the income earned in the Financial Year. Calculating what you'll be taxed For instance, it show that every dollar you earn up to $18,200, you are not taxed. Every dollar over that, up to $37k is taxed at 19 cents. And so on.. Example 1 So as an example, if your income for the year is $25,000 you will be taxed $1292. Working: Here's how it's look if you were doing it in a spreadsheet using the Tax Rates table on the ATO website as a guide: Example 2 If you income is $50,000, it'd look like this: Withholding Your employer is obligated to remove the taxable part from your wage each time your paid. They do that using the calculation above. If at the end of the financial year, the ATO determines that too much as been withheld (ie. you've claimed deductions that've reduce your taxable income to less than what your actual income is), that's when you may be eligible for a refund. If your employer didn't withhold enough or you had income from other sources that haven't been taxed already, then you may actually need to pay rather than expecting a refund. Your question If you earn $18,200 in the year and for some reason your employer did withhold tax from your pay, say $2,000, then yes, you'll get all that $2,000 back as a refund since the Tax Rate for income up to $18,200 is $0.00. If you earned $18,201 and your employer withheld $2000, you'd get $1999.81 back as a refund ($2000 - 19c). You have to pay 19c tax on that $1 over $18,200.",
"title": ""
},
{
"docid": "c999d9b19f351dca287fcaade93b30dd",
"text": "\"The translation scheme is detailed in IRS Publication 15, \"\"Employer's Tax Guide\"\". For the 2010 version, the information is in Section 16 on Page 37. There are two ways that employers can calculate the withheld tax amount: wage bracket and percentage. Alternatively, they can also use one of the methods defined in IRS Publication 15-A. I'll assume the person making $60k/yr with 10 allowances is paid monthly ($5000/period) and married. Using the wage bracket method, the amount withheld for federal taxes would be $83 per pay period. Using the percentage method, it would be $81.23 per pay period. I don't recommend that you use this information to determine how to fill out your W-4. The IRS provides a special online calculator for that purpose, which I have always found quite accurate. Note: \"\"allowances\"\" are not the same as \"\"dependents\"\"; \"\"allowances\"\" are a more realistic estimation of your tax deductions, taking into consideration much more than just your dependents.\"",
"title": ""
},
{
"docid": "9dadf04330272c604017c02c4af4042b",
"text": "Another thing to remember is that a lot of these one-off police jobs have 4 hour minimum pay requirements, even when they last half an hour (at least in Massachusetts). If you can schedule two jobs such that each one is half an hour, you could work one hour at lunch time and get paid for 8.",
"title": ""
}
] |
fiqa
|
5bf525a4285824b60f3d1a2ab8091a84
|
Student loan payments and opportunity costs
|
[
{
"docid": "2fafdfc536de79a7ae3d9e9234c7c5d3",
"text": "Ponder this. Suppose that a reputable company or government were to come out and say hey, we are going to issue some 10 year bonds at 6.4%. Anyone interested in buying some? Assume that the company or government is financially solid and there is zero chance that they will go bankrupt. Think those bonds would sell? Would you be interested in buying such a bond? Well, I would wager that these bonds would sell like hotcakes, despite the fact that the long term stock market return beats it by a half percent. Heck, vanguard's junk bond fund is hot right now. It only yields 4.9% and those are junk bonds, not rock solid companies (see vanguard high yield corporate bond fund) Every time you make an extra principal payment on your student loan, you are effectively purchasing a investment with a rock solid, guaranteed 6.4% return for 10 years (or whatever time you have left on the loan if make no extra payments). On top of that, paying off a loan early builds your credit reputation, improves your monthly cash flow once the loan is paid, may increase your purchasing power for a house or car, and if nothing else, it frees you from being a slave to that debt payment every month. Edit Improved wording based on Ross's comment",
"title": ""
},
{
"docid": "7f4660e81b6cac0d44cedec2044272b9",
"text": "My recommendation would be to pay off your student loan debt as soon as possible. You mention that the difference between your student loan and the historical, long-term return on the stock market is one-half percent. The problem is, the 7% return that you are counting on from the stock market is not guaranteed. You might get 7% over the next few years, but you also might do much worse. The 6.4% interest that you will save by aggressively paying off your debt is guaranteed. You are concerned about the opportunity cost of paying your debt early. However, this cost is only temporary. By drawing out your debt payments, you have a long-term opportunity cost. By this, I mean that 4 years from now, you could still have 6 years of debt payments hanging over your head, or you could be debt free with all of your income available to save, spend, or invest as you see fit. In my opinion, prolonging debt just to try to come out 0.5% ahead is not worth the hassle or risk.",
"title": ""
},
{
"docid": "f02b70e2127301b9138ff10812ebf62b",
"text": "Staying with your numbers - a 7% long term return will have a tax of 15% (today's long term cap gain tax) resulting in a post tax of 5.95%. On the other hand, even if the student loan interest remains deductible, it's subject to phaseout and a really successful grad will quickly lose the deduction. There's a similar debate regarding mortgage debt. When I've commented on my 3.5% mortgage costing 2.5% post tax, there's no consensus agreeing that this loan should remain as long as possible in favor of investing in the market for its long term growth. And in this case the advantage is a full 3.45%/yr. While I've made my decision, Ben's points remain, the market return isn't guaranteed, while that monthly loan payment is fixed and due each month. In the big picture, I'd prioritize to make deposits to the 401(k) up to the match, if offered, pay down any higher interest debt such as credit cards, build an emergency account, and then make extra payments to the student loan. Keep in mind, also - if buying a house is an important goal, the savings toward the downpayment might take priority. Student Loans and Your First Mortgage is an article I wrote which describes the interaction between that loan debt and your mortgage borrowing ability. It's worth understanding the process as paying off the S/L too soon can impact that home purchase.",
"title": ""
},
{
"docid": "45ffef67391ba0c6ccbc1f34d04b591b",
"text": "\"I'll use similar logic to Dave Ramsey to answer this question because this is a popular question when we're talking about paying off any debt early. Also, consider this tweet and what it means for student loans - to you, they're debt, to the government, they're assets. If you had no debt at all and enough financial assets to cover the cost, would you borrow money at [interest rate] to obtain a degree? Put it in the housing way, if you paid off your home, would you pull out an equity loan/line for a purchase when you have enough money in savings? I can't answer the question for you or anyone else, as you can probably find many people who will see benefits to either. I can tell you two observations I've made about this question (it comes a lot with housing) over time. First, it tends to come up a lot when stocks are in a bubble to the point where people begin to consider borrowing from 0% interest rate credit cards to buy stocks (or float bills for a while). How quickly people forget what it feels (and looks like) when you see your financial assets drop 50-60%! It's not Wall Street that's greedy, it's most average investors. Second, people asking this question generally overlook the behavior behind the action; as Carnegie said, \"\"Concentration is the key to wealth\"\" and concentrating your financial energy on something, instead of throwing it all over the place, can simplify your life. This is one reason why lottery winners don't keep their winnings: their financial behavior was rotten before winning, and simply getting a lot of money seldom changes behavior. Even if you get paid a lot or little, that's irrelevant to success because success requires behavior and when you master the behavior everything else (like money, happiness, peace of mind, etc) follows.\"",
"title": ""
},
{
"docid": "181b96c6143eceb3a5d75487435a116c",
"text": "\"As Mr. Money Money Mustache once said: IF YOU HAVE CREDIT CARD DEBT, YOU SHOULD FEEL LIKE YOUR HAIR IS ON FIRE Student loan debt is different than credit card debt. Rather than having spent the money on just about anything, it was invested in improving yourself and probably your financial future. This was probably a good decision. However, unlike most credit card debt, if you ever have to file for bankruptcy, your student loans will not be erased. They will follow you forever. Pay your debts off as quickly as you can. While it may be true that \"\"long-term return on the stock market is about 7%\"\", you cannot assume that this will always be the case, especially in the short term. What if you had made this assumption in 2007? To assume that your stocks will beat a 6.4% guaranteed return over the next few years is not really investing. It's gambling.\"",
"title": ""
},
{
"docid": "aec131cdd655f9281eb9842eaf3eec1c",
"text": "\"I bought a house when I was 22, I also had $10k in student load debt. After the down payment, I had $1,500 to my name and $82k worth of debt. All the advice pointed to \"\"pay the minimum payment and invest the rest.\"\" I discarded the advice and scrimped and put everything extra to those bills. I paid it all off by the time I was 31, and now at 34 I'm self employed, have about $110,000 saved up, a house worth $105,000, 2 cars worth a total of $8,000 and no debt. Keep in mind most of those years I was making $24-$30k a year I might have lost out on a couple years of investments, but right now there are no money worries... wouldn't you rather be like that instead of worrying if you might lose your job?\"",
"title": ""
},
{
"docid": "adc62f6f0972b5dc3eb86197c5981b47",
"text": "I agree with the advice given, but I'll add another angle from which to look at it. It sounds like you are already viewing the money used to either pay off the loan early or invest in the market as an investment, which is great. You are wise to think about opportunity cost, but like others pointed out, you are overlooking the risk factor. The way I would look at this is: I could take a guaranteed 6.4% return by paying off the loan or a possible 7% return by investing the money. If the risk pays off modestly, all you've done is earned 0.6%, with a huge debt still hanging over you. Personally, I would take the guaranteed 6.4% return by paying off the debt, then invest in the stock market. Now this is looking at the investment as a single, atomic pool of money. But you can split it up a bit. Let's say the amount of extra disposable income you want to invest with is $1,000/mo. Then you could pay an extra $500/mo to your student loan and invest the other $500 in the stock market, or do a 400/600 split, or whatever suits your risk tolerance. You mentioned multiple loans and 6.4% is the highest loan. What I would do, based on what I value personally, is put every extra penny into paying off the 6.4% loan because that is high. Once that is done, if the next loan is 4% of less, then split my income between paying extra to it and investing in the market. Remember, with each loan you pay off, the monthly income that previously went to it is now available, and can be used for the next loan or the other goals.",
"title": ""
},
{
"docid": "238b4afec99f3a2c7537e1b63f7a2661",
"text": "\"If I understand correctly, your question boils down to this: \"\"I have $X to invest over 25 years, are guaranteed returns at a 0.6% lower rate better than what I expect to get from the stock market over the same period?\"\" Well, I believe the standard advice would go something like: Rational investors pay a premium to reduce risk/volatility. Or, put another way, guaranteed returns are more valuable than risky returns, all things equal. I don't know enough about student loans in America (I'm Australian). Here a student loan is very low interest and the minimum repayments scale with what you earn not what you owe, starting at $0 for a totally liveable wage - Here I'd say there's a case to just pay the minimum and invest extra money elsewhere. If yours is a private loan though, following the same rules as other loans, remember the organisation extending your loan has access to the stock market too! why would they extend a loan to you on worse terms than they would get by simply dumping money into an index fund? Is the organisation that extends student loans a charity or subsidised in some way? If not, someone has already built a business on the the analysis that returns at 6.4% (including defaults) beats the stock market at 7% in some way. What I would put back to you though, is that your question oversimplifies what is likely your more complex reality, and so answering your question directly doesn't help that much to make a persuasive case - It's too mathematical and sterile. Here are some things off the top of my head that your real personal circumstances might convince you to pay off your loan first, hit up Wall Street second:\"",
"title": ""
},
{
"docid": "ea8a474b4d948ac0a762c22defdb91a6",
"text": "The only real consideration I would give to paying off the debt as slowly as possible is if inflation were much higher than it is now. If you had a nice medium to low interest (fixed rate) loan, like yours, and then inflation spiked to 7-8%, for example, then you're better off not paying it now because it's effectively making you money (and then when inflation calms back down, you pay it off with your gains). However, with a fairly successful and active Federal Reserve being careful to avoid inflation spikes, it seems unlikely that will occur during your time owing this debt - and certainly isn't anywhere near that point now. Make sure you're saving some money not for the return but for the safety net (put it in something very safe), and otherwise pay off your debt.",
"title": ""
},
{
"docid": "69064f4bfc9e28329b6ce9104c70f988",
"text": "\"Already a lot of great answers, but since I ask myself this same question I thought I'd share my 2 cents. As @user541852587 pointed out, behavior is of the essence here. If you're like most recent grads, this is probably the first time in your life you are getting serious about building wealth. Can you pay your loans down quickly and then have the discipline to invest just as much -- if not more -- than you were putting towards your loans? Most people are good at paying bills in full and on time, yet many struggle to \"\"pay themselves\"\" in full and on time. As @Brandon pointed out, you can do both. I find this makes a great deal of practical sense. It helps form good behaviors, boosts confidence, and \"\"diversifies\"\" those dollars. I have been paying double payments on my student loans while at the same time maxing out my IRA, HSA, & 401k. I also have a rental property (but that's another can of worms). I'm getting on top and feeling confident in my finances, habits, etc. and my loans are going down. With each increase in pay, I intend to pay the loans down faster than I invest until they're paid off. Again -- I like the idea of doing both.\"",
"title": ""
}
] |
[
{
"docid": "d5eb3828d5cad0bb6084f28b4bec7086",
"text": "I agree that college doesn't or shouldn't have to be all about job prep. However, the caveat I will add is that if you go into DEBT for your education, you should certainly be thinking about the economic value your education can provide you. The last point about subsidized college being cheaper than the current system.. I don't know.. I'd have to see these reports you speak of, and who made them, and for what incentive. At the end of the day though, these findings are all moot unless we can have a conversation about the hyperinflation in college costs directly related to 'free' aka subsidized education.",
"title": ""
},
{
"docid": "ab0b002019998dadfd61f5d5231a3e07",
"text": "Excellent question and it is a debate that is often raised. Mathematically you are probably best off using option #1. Any money that is above and beyond minimum payments earns a pretty high interest rate, about 6.82% in the form of saved interest payments. The problem is you are likely to get discouraged. Personal finance is a lot about behavior, and after working at this for a year, and still having 5 loans, albeit a lower balance, might take a bit of fight out of you. Paying off such a large balance, in a reasonable time, will take a lot of fight. With the debt snowball, you pay the minimum to the student loan, save in an outside account, and when it is large enough, you execute option #2. So a year from now you might only have three loans instead of five. If you behaved exactly the same your balance would be higher after that year then using the previous method. However often one does not behave the same. Because the goals are shorter and more attainable it is easier to delay some gratification. The 8 dollars you are saving in your weekly gas budget, because of low prices, is meaningful when saving for a 4K goal, where it is meaningless when looking at it as a 74K goal. With the 4K goal you are more apt to put that money in your savings, where the 74K goal you might spend it on a latte. For me, the debt snowball worked really well. With either option make sure that excess payments actually go to a reduction in principle not a prepayment of interest. Given this you may be left with no option. For example if method #1 you only prepay interest, you are forced to use option #2.",
"title": ""
},
{
"docid": "49e9a01c74b4a5f021796aee71d6cfc4",
"text": "Actually, a few lenders now will offer a consolidation loan that will consolidate both Federal and private student loans. One example is Cedar Ed, http://cedaredlending.com/PrivateConsolidationLoan.htm",
"title": ""
},
{
"docid": "8143e59701da827051bb11538170aa2e",
"text": "Hi guys, have a question from my uni finance course but I’m unsure how to treat the initial loan (as a bond, or a bill or other, and what the face value of the loan is). I’ll post the question below, any help is appreciated. “Hi guys, I have a difficult university finance question that’s really been stressing me out.... “The amount borrowed is $300 million and the term of the debt credit facility is six years from today The facility requires minimum loan repayments of $9 million in each financial year except for the first year. The nominal rate for this form of debt is 5%. This intestest rate is compounded monthly and is fixed from the date the facility was initiated. Assume that a debt repayment of $10 million is payed on 31 August 2018 and $9million on April 30 2019. Following on monthly repayments of $9 million at the end of each month from May 31 2019 to June 30 2021. Given this information determine the outstanding value of the debt credit facility on the maturity date.” Can anyone help me out with the answer? I’ve been wracking my brain trying to decide if I treat it as a bond or a bill.” Thanks in advance,",
"title": ""
},
{
"docid": "46b990bd8697459f7756d5e3f0c2227e",
"text": "I wasn't 100% on which columns of the scale you were referring to, but think I captured the correct ones in this comparison, using the scale for BA and MA (MA scale starting 2 years later, with decreased income reflected for first two years), applying a 1% cost of living increase each year to the scale or to prior year after the scale maxes out and assuming you borrow 40k and repay years 3-10, then the difference and cumulative difference between each scenario: So it would be about 16 years to start coming out ahead, but this doesn't account for the tax deduction of student loan interest. Some things in favor of borrowing for a MA, there are loan forgiveness programs for teachers, you might only make 5-years of minimum payments before having the remainder forgiven if you qualify for one of those programs. Not sure how retirement works for teachers in WA, but in some states you can get close to your maximum salary each year in retirement. Additionally, you can deduct student loan interest without itemizing your tax return, so that helps with the cost of the debt. Edit: I used a simple student loan calculator, if you financed the full 40k at 6% you'd be looking at $444 monthly payments for 10 years, or $5,328/year (not calculating the tax deduction for loan interest).",
"title": ""
},
{
"docid": "f85e13b9c2caab8271e436ba28db873d",
"text": "Is there anything here I should be deathly concerned about? A concern I see is the variable rate loans. Do you understand the maximum rate they can get to? At this time those rates are low, but if you are going to put funds against the highest rate loan, make sure the order doesn't change without you noticing it. What is a good mode of attack here? The best mode of attack is to pay off the one with the highest rate first by paying more than the minimum. When that is done roll over the money you were paying for that loan to the next highest. Note if a loan balance get to be very low, you can put extra funds against this low balance loan to be done with it. Investigate loan forgiveness programs. The federal government has loan forgiveness programs for certain job positions, if you work for them for a number of years. Some employers also have these programs. What are the payoff dates for the other loans? My inexact calculations put a bunch in about 2020 but some as late as 2030. You may need to talk to your lender. They might have a calculator on their website. Why do my Citi loans have a higher balance than the original payoff amounts? Some loans are subsidized by the federal government. This covers the interest while the student is still in school. Non-subsidized federal loans and private loans don't have this feature, so their balance can grow while the student is in school.",
"title": ""
},
{
"docid": "9da32b85dcc4f1ec2176174ada19620e",
"text": "There are many ways to temper the dollar burden of an education. Your question has very little information, so I am going to assume the following: You are attending a University in the United States, you are paying for school with a combination of loans, scholarships, gifts, and your own income, and that you are a typical (socially) 18-22 year old male/female. Tuition Food Alcohol and Social Activities Books Room/Board/Transportation Income (I don't have as much advice here, someone else will need to chime in)",
"title": ""
},
{
"docid": "48e172018af2cc2e1a44b4248cd90b52",
"text": "Lets pretend that your parents were given the opportunity to pay X for a year of college tuition in the year that you were born. That would have been a significant portion of their yearly income. But what if they were given the opportunity to pay for that year of college when you are 18, but at the price it was when you were born. That tuition bill would be much easier to pay. That would be a very small amount of their yearly income. Why? the cost of tuition grew at a high inflation rate, but the second option allowed them to skip inflation on the bill side, but keep inflation regarding wages. You asked about paying for stuff you want today with future money; where my example was to pay new money for old expenses. If you believe that inflation will be high,and your income will keep up with it; it is advantageous to pay with future $'s",
"title": ""
},
{
"docid": "5979df35b8e180bdb36a688c8a683794",
"text": "You might try to refinance some of those loans. It sounds like you are serious about minimizing interest expense, if you think you will be able to pay those loans in full within five years you might also try a loan that is fixed for five years before becoming variable. If you do not think you can repay the loans in full before that time, you should probably stick with the fixed rates that you have. It may even be profitable to refinance those loans through another lender at the exact same fixed rate because it gets around their repayment tricks that effectively increase your interest on those two smaller loans.",
"title": ""
},
{
"docid": "70871e94302038a1d3b12f2603dde00f",
"text": "\"It appears you can elect to classify some or all of your scholarship money as taxable. If you do this, you would be deemed to have used the scholarship funds for non-deductible purposes (e.g., room and board), and you could be eligible to claim the American opportunity credit based on the money you used to pay for the tuition out of your own pocket. I found this option in the section of Publication 970 about \"\"Coordination with Pell grants and other scholarships\"\", specifically example 3: The facts are the same as in Example 2—Scholarship excluded from income [i.e., Bill receives a $5600 scholarship and paid $5600 for tuition]. If, unlike Example 2, Bill includes $4,000 of the scholarship in income, he will be deemed to have used that amount to pay for room and board. The remaining $1,600 of the $5,600 scholarship will reduce his qualified education expenses and his adjusted qualified education expenses will be $4,000. Bill's AGI will increase to $34,000, his taxable income will increase to $24,250, and his tax before credits will increase to $3,199. Based on his adjusted qualified education expenses of $4,000, Bill would be able to claim an American opportunity tax credit of $2,500 and his tax after credits would be $699. You can only reclassify income in this way to the extent that your scholarship allows you to use that money for nonqualified expenses (such as room and board). You should carefully check the terms of the scholarship to determine whether it allows this. The brief paragraph you cite from the Palmetto fellowship document is not totally clear on this point (at least to my eye). You might want to ask the fellowship administrators if there are restrictions on how they money may be used. In addition, I would be cautious about attempting to do this unless you actually did pay for the nonqualified expenses yourself, so you can treat the money as fungible. If, for instance, your parents paid for your room and board, it's not clear whether you could legitimately claim that you used the scholarship money to pay for that, since you didn't pay for it at all (although in this case your parents could possibly be able to claim the AOC themselves). I mention this because you say in your question that you \"\"only used the scholarship for tuition and fees\"\". I'm not sure how exactly you meant that, but it seems from the example cited above that, in order to claim the scholarship as taxable income, you have to actually have nonqualified expenses which you can say you paid for with the scholarship. (Also, of course, you had to actually receive the money yourself. If the scholarship money was given directly to your school as payment of tuition, then you never had any ability to use it for anything else.)\"",
"title": ""
},
{
"docid": "0d451afa068fba7cee2fe211e4678508",
"text": "Depending on the student loan, this may be improper usage of the funds. I know the federal loans I received years ago were to be used for education related expenses only. I would imagine most, if not all, student loans would have the same restrictions. Bonus Answer: You must have earned income to contribute to an IRA (e.g. money received from working (see IRS Publication 590 for details)). So, if your earmarked money is coming from savings only, then you would not be eligible to contribute. As far as whether you can designate student loans for the educational expenses and then used earned income for an IRA I would imagine that is fine. However, I have not found any documentation to support my assumption.",
"title": ""
},
{
"docid": "5e68a7f16bbbafd367c5aa932c0fa551",
"text": "The short answer is that you can use student loans for living expenses. Joe provides a nice taxonomy of loans. I would just add that some loans are not only guaranteed, but also subsidized. Essentially the Government buys down the rate of the loan. The mechanics are that a financial aid package might consist of grants, work study (job), subsidized, and guaranteed loans. One can turn down one or more of the elements of the package. All will be limited in some form. The work study will have a maximum number of hours and generally has low pay. Many find better deals working in the businesses surrounding the college or starting their own services type business. The grants rarely cover the full cost of tuition and books. The loans will both be limited in amount. It mainly depends on what you qualify for, and generally speaking the lower the income the more aid one qualifies for. Now some students use all their grant, all their loan money and buy things that are not necessary. For example are you going to live in the $450/month dorm, or the new fancy apartments that are running $800/month? Are you going to use the student loan money to buy a car? Will it be a new BMW or a 8 year old Camary? I see this first hand as I live near a large university. The pubs are filled with college students, not working, but drinking and eating every night. Many of them drive very fancy cars. The most onerous example of this is students at the military academies. Attendees have their books and tuition completely paid for. They also receive a stipend, and more money can be earned over the summer. They also all qualify for a 35K student loan in their junior year. Just about every kid, takes this loan. Most of those use the money to buy a car. I know a young lady who did exactly that, and so did many of her friends. So kids with a starting pay of 45K also start life with a 35K. Buying a nice car in the military is especially silly as they cannot drive it while deployed and they are very likely to be deployed. At least, however, they are guaranteed a starting job with a nice starting pay, and upward potential. College kids who behave similarly might not have it as good. Will they even find work? Will the job have the ability to move up? How much security is in the job? One might say that this does not apply to engineers and such, but I am working with a fellow with a computer science degree who cannot find a job and has not worked in the past 6 months. This even though the market is super hot right now for computer engineers. So, in a word, be very careful what you borrow.",
"title": ""
},
{
"docid": "c4b02dc1399ac958d79cd4f2b20e5a4c",
"text": "Considering I'm in a nearly identical situation, I'll speak to my personal strategy and maybe there's some value for you as well. You have ~$22k in loans, which you say you could pay off today. So, what I read is that you're sitting there with a $22k investment and want to know which investment to make: pay down debt, invest in yourself/start up, or some variation between those options. Any investor worth his salt will ask a couple of questions: what is my risk, and what is my gain? Paying off your student loans offers no financial risk at the cost of opportunity risk, and gains you returns of 3.4%, 6.8%, 3.4%, 4.5%, and 6.8%. Those percentage gains are guaranteed and the opportunity risk is unknown. Investing in a startup is inherently risky, with the potential for big payoffs. But with this investment, you are accepting a lot of risk for potentially some gain (it could be the next Apple, it could also fail). So, with your situation (like mine), I'd say it's best to accept the easy investment for now and fully vet out your tech start up idea in the meantime.",
"title": ""
},
{
"docid": "3ad260835a0873e58ea782221470c88e",
"text": "\"Assuming the numbers in your comments are accurate, you have $2400/month \"\"extra\"\" after paying your expenses. I assume this includes loan payments. You said you have $3k in savings and a $2900 \"\"monthly nut\"\", so only one month of living expenses in savings. In my opinion, your first goal should be to put 100% of your extra money towards savings each month, until you have six months of living expenses saved. That's $2,900 * 6 or $17,400. Since you have $3K already that means you need $14,400 more, which is exactly six months @ $2,400/month. Next I would pay off your $4K for the bedroom furniture. I don't know the terms you got, but usually if you are not completely paid off when it comes time to pay interest, the rate is very high and you have to pay interest not just going forward, but from the inception of the loan (YMMV--check your loan terms). You may want to look into consolidating your high interest loans into a single loan at a lower rate. Barring that, I would put 100% of my extra monthly income toward your 10% loan until its paid off, and then your 9.25% loan until that's paid off. I would not consider investing in any non-tax-advantaged vehicle until those two loans (at minimum) were paid off. 9.25% is a very good guaranteed return on your money. After that I would continue the strategy of aggressively paying the maximum per month toward your highest interest loans until they are all paid off (with the possible exception of the very low rate Sallie Mae loans). However, I'm probably more conservative than your average investor, and I have a major aversion to paying interest. :)\"",
"title": ""
},
{
"docid": "5117ae499bb638cb572adcbf65bef376",
"text": "Thanks for explaining added value - I do not think professors are much, if any part of the problem, it really does come down to cost in my eyes. Year over year costs go up. As a country we are pricing ourselves out of education. It will continue to create disparity and eventually you will have a large segment of the population saying no way on college (I can get a lot of free courseware on edx.org and other sites). As numbers drop colleges are going to be hard pressed to really make money. I often ponder what that money is spent for. I know a chunk goes to sports and other not necessarily academic activities. I have advocated for years to people who cannot afford to go to a 4yr college to attend community college, get an Associates and make their decision from there. With exception of the Ivy league schools I do not think there is enough value in 4 yr degree's in the job market. I am in IT and the number of people I have worked with who have had degrees since the early days of my career has dropped greatly. Many of them had non-computer degrees and jumped job fields to fill gaps early on. Just my two cents. I really believe that most professors are not the problem (unless they are paid huge sums and even that's dependent on a lot of things)",
"title": ""
}
] |
fiqa
|
73ef4b0046ba5159fb1521766adfc8ee
|
Is it true that more than 99% of active traders cannot beat the index?
|
[
{
"docid": "a138eba53b94d8218782106dd88a7a6e",
"text": "What decision are you trying to make? Are you interested day trading stocks to make it rich? Or are you looking at your investment options and trying to decide between an actively managed mutual fund and an ETF? If the former, then precise statistics are hard to come by, but I believe that 99% of day traders would do better investing in an ETF. If the latter, then there are lots of studies that show that most actively managed funds do worse than index funds, so with most actively managed funds you are paying higher fees for worse performance. Here is a quote from the Bogleheads Guide to Investing: Index funds outperform approximately 80 percent of all actively managed funds over long periods of time. They do so for one simple reason: rock-bottom costs. In a random market, we don't know what future returns will be. However, we do know that an investor who keeps his or her costs low will earn a higher return than one who does not. That's the indexer's edge. Many people believe that your best option for investing is a diverse portfolio of ETFs, like this. This is what I do.",
"title": ""
},
{
"docid": "f1049121ec177abfc5cd10991f71b76c",
"text": "Obviously, these numbers can never be absolute simply because not all the information is public. Any statistic will most likely be biased. I can tell you the following from my own experience that might get you closer in your answer: Hence, even though I cannot give you exact numbers, I fully agree that traders cannot beat the index long term. If you add the invested time and effort that is necessary to follow an active strategy, then the equation looks even worse. Mind you, active trading and active asset allocation (AAA) are two very different things. AAA can have a significant impact on your portfolio performance.",
"title": ""
},
{
"docid": "d551a112c05e7e4ad3cf68a202c506dc",
"text": "That is such a vague statement, I highly recommend disregarding it entirely, as it is impossible to know what they meant. Their goal is to convince you that index funds are the way to go, but depending on what they consider an 'active trader', they may be supporting their claim with irrelevant data Their definition of 'active trader' could mean any one or more of the following: 1) retail investor 2) day trader 3) mutual fund 4) professional investor 5) fund continuously changing its position 6) hedge fund. I will go through all of these. 1) Most retail traders lose money. There are many reasons for this. Some rely on technical strategies that are largely unproven. Some buy rumors on penny stocks in hopes of making a quick buck. Some follow scammers on twitter who sell newsletters full of bogus stock tips. Some cant get around the psychology of trading, and thus close out losing positions late and winning positions early (or never at all) [I myself use to do this!!]. I am certain 99% of retail traders cant beat the market, because most of them, to be frank, put less effort into deciding what to trade than in deciding what to have for lunch. Even though your pension funds presentation is correct with respect to retail traders, it is largely irrelevant as professionals managing your money should not fall into any of these traps. 2) I call day traders active traders, but its likely not what your pension fund was referring to. Day trading is an entirely different animal to long or medium term investing, and thus I also think the typical performance is irrelevant, as they are not going to manage your money like a day trader anyway. 3,4,5) So the important question becomes, do active funds lose 99% of the time compared to index funds. NO! No no no. According to the WSJ, actively managed funds outperformed passive funds in 2007, 2009, 2013, 2015. 2010 was basically a tie. So 5 out of 9 years. I dont have a calculator on me but I believe that is less than 99%! Whats interesting is that this false belief that index funds are always better has become so pervasive that you can see active funds have huge outflows and passive have huge inflows. It is becoming a crowded trade. I will spare you the proverb about large crowds and small doors. Also, index funds are so heavily weighted towards a handful of stocks, that you end up becoming a stockpicker anyway. The S&P is almost indistinguishable from AAPL. Earlier this year, only 6 stocks were responsible for over 100% of gains in the NASDAQ index. Dont think FB has a good long term business model, or that Gilead and AMZN are a cheap buy? Well too bad if you bought QQQ, because those 3 stocks are your workhorses now. See here 6) That graphic is for mutual funds but your pension fund may have also been including hedge funds in their 99% figure. While many dont beat their own benchmark, its less than 99%. And there are reasons for it. Many have investors that are impatient. Fortress just had to close one of its funds, whose bets may actually pay off years from now, but too many people wanted their money out. Some hedge funds also have rules, eg long only, which can really limit your performance. While important to be aware of this, that placing your money with a hedge fund may not beat a benchmark, that does not automatically mean you should go with an index fund. So when are index funds useful? When you dont want to do any thinking. When you dont want to follow market news, at all. Then they are appropriate.",
"title": ""
}
] |
[
{
"docid": "7cd5e8af0b5545ab3beca350d62578d0",
"text": "Yes an index is by definition any arbitrary selection. In general, to measure performance there are 2 ways: By absolute return - meaning you want a positive return at all times ie. 10% is good. -1% is bad. By relative return - this means beating the benchmark. For example, if the benchmark returns -20% and your portfolio returns -10%, then it has delivered +10% relative returns as compared to the benchmark.",
"title": ""
},
{
"docid": "25ecfa8f3c795681212ee83de19234fc",
"text": "Private investors as mutual funds are a minority of the market. Institutional investors make up a substantial portion of the long term holdings. These include pension funds, insurance companies, and even corporations managing their money, as well as individuals rich enough to actively manage their own investments. From Business Insider, with some aggregation: Numbers don't add to 100% because of rounding. Also, I pulled insurance out of household because it's not household managed. Another source is the Tax Policy Center, which shows that about 50% of corporate stock is owned by individuals (25%) and individually managed retirement accounts (25%). Another issue is that household can be a bit confusing. While some of these may be people choosing stocks and investing their money, this also includes Employee Stock Ownership Plans (ESOP) and company founders. For example, Jeff Bezos owns about 17% of Amazon.com according to Wikipedia. That would show up under household even though that is not an investment account. Jeff Bezos is not going to sell his company and buy equity in an index fund. Anyway, the most generous description puts individuals as controlling about half of all stocks. Even if they switched all of that to index funds, the other half of stocks are still owned by others. In particular, about 26% is owned by institutional investors that actively manage their portfolios. In addition, day traders buy and sell stocks on a daily basis, not appearing in these numbers. Both active institutional investors and day traders would hop on misvalued stocks, either shorting the overvalued or buying the undervalued. It doesn't take that much of the market to control prices, so long as it is the active trading market. The passive market doesn't make frequent trades. They usually only need to buy or sell as money is invested or withdrawn. So while they dominate the ownership stake numbers, they are much lower on the trading volume numbers. TL;DR: there is more than enough active investment by organizations or individuals who would not switch to index funds to offset those that do. Unless that changes, this is not a big issue.",
"title": ""
},
{
"docid": "eea837f2962ad63b6cc13e0c938fd84a",
"text": "Support and resistance only works as a self-fulfilling prophecy. If everyone trading that stock agrees there's a resistance at so-and-so level, and it is on such-and-such scale, then they will trade accordingly and there will really be a support or resistance. So while you can identify them at any time scale (although as a rule the time scale on which you observed them should be similar to the time scale on which you intend to use them), it's no matter unless that's what all the other traders are thinking as well. Especially if there are multiple possible S/P levels for different time scales, there will be no consensus, and the whole system will break down as one cohort ruins the other group's S/P by not playing along and vice versa. But often fundamentals are expected to dominate in the long run, so if you are thinking of trades longer than a year, support and resistance will likely become meaningless regardless. It's not like that many people can hold the same idea for that long anyhow.",
"title": ""
},
{
"docid": "4d9775c0ff085d4d7023a275e8706142",
"text": "\"A huge amount of money in all financial markets is from institutional investors, such as mutual funds, government pension plans, sovereign wealth funds, etc. For various reasons these funds do all of their trading at the end of the day. They care primarily that their end-of-day balances are in line with their targets and are easy to audit and far less about \"\"timing the market\"\" for the best possible trades. So, if you're looking at a stock that is owned by many institutional investors -- such as a stock (like AAPL) that makes up a significant portion of an index that many funds track -- there will be a huge amount of activity at this time relative to stocks that are less popular among institutions. Even just in its introduction this paper (PDF) gives a fair overview of other reasons why there's a lot of trading at end-of-day in general. (In fact, because of all this closing activity and the reliance on end-of-day prices as signposts for financial calculations, the end-of-day has for decades been the single most fraud-ridden time of the trading day. Electronic trading has done away with a lot of the straight-up thievery that floor traders and brokers used to get away with at the expense of the public, but it still exists. See, for example, any explanation of the term banging the close, or the penalties against 6 banks just last month for manipulating the FX market at the close.)\"",
"title": ""
},
{
"docid": "77f40b3209aec2de9ea6811bdedc2815",
"text": "Focusing on options, many people and companies use them to mitigate risk(hedge) When used as a hedge the objective is not to win big, it is to create a more predictable outcome. Option traders win big by consistenly structuring trades with a high probability of success. In this way, they take 100 and turn it into 1000 with 100 small trades with a target profit of $10/trade. Although options are a 'zero sum' game, a general theory among options traders is the stock market only has a 54-56 probability of profit(PoP) - skewed from 50-50 win/loss because the market tends to go up over a long time frame. Using Option trading strategies strategically, you have more control over PoP and you can set yourself up to win whether the security goes up/down/sideways. A quick and dirty measure of PoP is an options' delta. If the delta on a call option is 19, there is roughly a 19% chance your option will be in the money at expiration - or a 19% chance of hitting a home run and multiplyimg your money. If the delta is 68, there is a 68% chance of a profitable trade or getting on base. There are more variables to this equation, but I hope this clearly explains the essence.",
"title": ""
},
{
"docid": "cfb8eb76f144b9bc12d00e547c5e16c9",
"text": "\"I'd refer you to Is it true that 90% of investors lose their money? The answer there is \"\"no, not true,\"\" and much of the discussion applies to this question. The stock market rises over time. Even after adjusting for inflation, a positive return. Those who try to beat the market, choosing individual stocks, on average, lag the market quite a bit. Even in a year of great returns, as is this year ('13 is up nearly 25% as measured by the S&P) there are stocks that are up, and stocks that are down. Simply look at a dozen stock funds and see the variety of returns. I don't even look anymore, because I'm sure that of 12, 2 or three will be ahead, 3-4 well behind, and the rest clustered near 25. Still, if you wish to embark on individual stock purchases, I recommend starting when you can invest in 20 different stocks, spread over different industries, and be willing to commit time to follow them, so each year you might be selling 3-5 and replacing with stocks you prefer. It's the ETF I recommend for most, along with a buy and hold strategy, buying in over time will show decent returns over the long run, and the ETF strategy will keep costs low.\"",
"title": ""
},
{
"docid": "a6cebd35e0d7b2223ba9bbf6ab880406",
"text": "Backstory (since I've never submitted a link before and don't know how to write a paragraph up there): I work as an analyst intern at a small RIA and this paper has been mentioned a few times. What do you guys think? What are the managers that actually CAN outperform benchmarks doing that most (~2/3) can't?",
"title": ""
},
{
"docid": "13d54dbd5a6b33f419ebeafe4f977782",
"text": "\"I read the book, and I'm willing to believe you'd have a good chance of beating the market with this strategy - it is a reasonable, rational, and mechanical investment discipline. I doubt it's overplayed and overused to the point that it won't ever work again. But only IF you stick to it, and doing so would be very hard (behaviorally). Which is probably why it isn't overplayed and overused already. This strategy makes you place trades in companies you often won't have heard of, with volatile prices. The best way to use the strategy would be to try to get it automated somehow and avoid looking at the individual stocks, I bet, to take your behavior out of it. There may well be some risk factors in this strategy that you don't have in an S&P 500 fund, and those could explain some of the higher returns; for example, a basket of sketchier companies could be more vulnerable to economic events. The strategy won't beat the market every year, either, so that can test your behavior. Strategies tend to work and then stop working (as the book even mentions). This is related to whether other investors are piling in to the strategy and pushing up prices, in part. But also, outside events can just happen to line up poorly for a given strategy; for example a bunch of the \"\"fundamental index\"\" ETFs that looked at dividend yield launched right before all the high-dividend financials cratered. Investing in high-dividend stocks probably is and was a reasonable strategy in general, but it wasn't a great strategy for a couple years there. Anytime you don't buy the whole market, you risk both positive and negative deviations from it. Here's maybe a bigger-picture point, though. I happen to think \"\"beating the market\"\" is a big old distraction for individual investors; what you really want is predictable, adequate returns, who cares if the market returns 20% as long as your returns are adequate, and who cares if you beat the market by 5% if the market cratered 40%. So I'm not a huge fan of investment books that are structured around the topic of beating the market. Whether it's index fund advocates saying \"\"you can't beat the market so buy the index\"\" or Greenblatt saying \"\"here's how to beat the market with this strategy,\"\" it's still all about beating the market. And to me, beating the market is just irrelevant. Nobody ever bought their food in retirement because they did or did not beat the market. To me, beating the market is a game for the kind of actively-managed mutual fund that has a 90%-plus R-squared correlation with the index; often called an \"\"index hugger,\"\" these funds are just trying to eke out a little bit better result than the market, and often get a little bit worse result, and overall are a lot of effort with no purpose. Just get the index fund rather than these. If you're getting active management involved, I'd rather see a big deviation from the index, and I'd like that deviation to be related to risk control: hedging, or pulling back to cash when valuations get rich, or avoiding companies without a \"\"moat\"\" and margin of safety, or whatever kind of risk control, but something. In a fund like this, you aren't trying to beat the market, you're trying to increase the chances of adequate returns - you're optimizing for predictability. I'm not sure the magic formula is the best way to do that, focused as it is on beating the market rather than on risk control. Sorry for the extra digression but I hope I answered the question a bit, too. ;-)\"",
"title": ""
},
{
"docid": "15eea65830ec471dbb2b7d7acf7f652a",
"text": "No. As long as you are sensible, an average person can make money on the stock market. A number of my investments (in Investment trusts) over the last 10 yeas have achieved over 200%. You're not going to turn $1000 into a million but you can beat cash. I suggest reading the intelligent investor by Graham - he was Warren Buffet's mentor",
"title": ""
},
{
"docid": "c1492fef953735b5f6997e04a1d5492e",
"text": "\"The professional financial advisors do have tools which will take a general description of a portfolio and run monte-carlo simulations based on the stock market's historical behavior. After about 100 simulation passes they can give a statistical statement about the probable returns, the risk involved in that strategy, and their confidence in these numbers. Note that they do not just use the historical data or individual stocks. There's no way to guarantee that the same historical accidents would have occurred that made one company more successful than another, or that they will again. \"\"Past performance is no guarantee of future results\"\"... but general trends and patterns can be roughly modelled. Which makes that a good fit for those of us buying index funds, less good for those who want to play at a greater level of detail in the hope of doing better. But that's sorta the point; to beat market rate of return with the same kind of statistical confidence takes a lot more work.\"",
"title": ""
},
{
"docid": "b809e27c7650e4615cd9a31b7744ab4f",
"text": "From my 15 years of experience, no technical indicator actually ever works. Those teaching technical indicators are either mostly brokers or broker promoted so called technical analysts. And what you really lose in disciplined trading over longer period is the taxes and brokerages. That is why you will see that teachers involved in this field are mostly technical analysts because they can never make money in real markets and believe that they did not adhere to rules or it was an exception case and they are not ready to accept facts. The graph given above for coin flip is really very interesting and proves that every trade you enter has 50% probability of win and lose. Now when you remove the brokerage and taxes from win side of your game, you will always lose. That is why the Warren Buffets of the world are never technical analysts. In fact, they buy when all technical analysts fails. Holding a stock may give pain over longer period but still that is only way to really earn. Diversification is a good friend of all bulls. Another friend of bull is the fact that you can lose 100% but gain any much as 1000%. So if one can work in his limits and keep investing, he can surely make money. So, if you have to invest 100 grand in 10 stocks, but 10 grand in each and then one of the stocks will multiply 10 times in long term to take out cost and others will give profit too... 1-2 stocks will fail totally, 2-3 will remain there where they were, 2-3 will double and 2-3 will multiply 3-4 times. Investor can get approx 15% CAGR earning from stock markets... Cheers !!!",
"title": ""
},
{
"docid": "fe940f93051087ade962c2d903cb6d8e",
"text": "In my opinion, the ability to set a sell or buy price is the least of my concerns. Your question of whether to choose individual stocks vs funds prompts a different issue for me to bring to light. Choosing stocks that beat the market is not simple. In fact, a case can be made for the fact that the average fund lags the market by more and more over time. In the end, conceding that fact and going with the lowest cost funds or ETFs will beat 90% of investors over time.",
"title": ""
},
{
"docid": "6e4f01017045a7b9ef74ebae91eacf5a",
"text": "\"I actually love this question, and have hashed this out with a friend of mine where my premise was that at some volume of money it must be advantageous to simply track the index yourself. There some obvious touch-points: Most people don't have anywhere near the volume of money required for even a $5 commission outweigh the large index fund expense ratios. There are logistical issues that are massively reduced by holding a fund when it comes to winding down your investment(s) as you get near retirement age. Index funds are not touted as categorically \"\"the best\"\" investment, they are being touted as the best place for the average person to invest. There is still a management component to an index like the S&P500. The index doesn't simply buy a share of Apple and watch it over time. The S&P 500 isn't simply a single share of each of the 500 larges US companies it's market cap weighted with frequent rebalancing and constituent changes. VOO makes a lot of trades every day to track the S&P index, \"\"passive index investing\"\" is almost an oxymoron. The most obvious part of this is that if index funds were \"\"the best\"\" way to invest money Berkshire Hathaway would be 100% invested in VOO. The argument for \"\"passive index investing\"\" is simplified for public consumption. The reality is that over time large actively managed funds have under-performed the large index funds net of fees. In part, the thrust of the advice is that the average person is, or should be, more concerned with their own endeavors than they are managing their savings. Investment professionals generally want to avoid \"\"How come I my money only returned 4% when the market index returned 7%? If you track the index, you won't do worse than the index; this helps people sleep better at night. In my opinion the dirty little secret of index funds is that they are able to charge so much less because they spend $0 making investment decisions and $0 on researching the quality of the securities they hold. They simply track an index; XYZ company is 0.07% of the index, then the fund carries 0.07% of XYZ even if the manager thinks something shady is going on there. The argument for a majority of your funds residing in Mutual Funds/ETFs is simple, When you're of retirement age do you really want to make decisions like should I sell a share of Amazon or a share of Exxon? Wouldn't you rather just sell 2 units of SRQ Index fund and completely maintain your investment diversification and not pay commission? For this simplicity you give up three basis points? It seems pretty reasonable to me.\"",
"title": ""
},
{
"docid": "99a35d8a21693b605106176989414fed",
"text": "This is Rob Bennett, the fellow who developed the Valuation-Informed Indexing strategy and the fellow who is discussed in the comment above. The facts stated in that comment are accurate -- I went to a zero stock allocation in the Summer of 1996 because of my belief in Robert Shiller's research showing that valuations affect long-term returns. The conclusion stated, that I have said that I do not myself follow the strategy, is of course silly. If I believe in it, why wouldn't I follow it? It's true that this is a long-term strategy. That's by design. I see that as a benefit, not a bad thing. It's certainly true that VII presumes that the Efficient Market Theory is invalid. If I thought that the market were efficient, I would endorse Buy-and-Hold. All of the conventional investing advice of recent decades follows logically from a belief in the Efficient Market Theory. The only problem I have with that advice is that Shiller's research discredits the Efficient Market Theory. There is no one stock allocation that everyone following a VII strategy should adopt any more than there is any one stock allocation that everyone following a Buy-and-Hold strategy should adopt. My personal circumstances have called for a zero stock allocation. But I generally recommend that the typical middle-class investor go with a 20 percent stock allocation even at times when stock prices are insanely high. You have to make adjustments for your personal financial circumstances. It is certainly fair to say that it is strange that stock prices have remained insanely high for so long. What people are missing is that we have never before had claims that Buy-and-Hold strategies are supported by academic research. Those claims caused the biggest bull market in history and it will take some time for the widespread belief in such claims to diminish. We are in the process of seeing that happen today. The good news is that, once there is a consensus that Buy-and-Hold can never work, we will likely have the greatest period of economic growth in U.S. history. The power of academic research has been used to support Buy-and-Hold for decades now because of the widespread belief that the market is efficient. Turn that around and investors will possess a stronger belief in the need to practice long-term market timing than they have ever possessed before. In that sort of environment, both bull markets and bear markets become logical impossibilities. Emotional extremes in one direction beget emotional extremes in the other direction. The stock market has been more emotional in the past 16 years than it has ever been in any earlier time (this is evidenced by the wild P/E10 numbers that have applied for that entire time-period). Now that we are seeing the losses that follow from investing in highly emotional ways, we may see rational strategies becoming exceptionally popular for an exceptionally long period of time. I certainly hope so! The comment above that this will not work for individual stocks is correct. This works only for those investing in indexes. The academic research shows that there has never yet in 140 years of data been a time when Valuation-Informed Indexing has not provided far higher long-term returns at greatly diminished risk. But VII is not a strategy designed for stock pickers. There is no reason to believe that it would work for stock pickers. Thanks much for giving this new investing strategy some thought and consideration and for inviting comments that help investors to understand both points of view about it. Rob",
"title": ""
},
{
"docid": "7da17d5be6aabf802964420172f6efc5",
"text": "\"Sure they work - right until they don't. Explanation: A stock picking strategy based on technical indicators is at worst a mix of random guessing and confirmation bias, which will \"\"work\"\" only due to luck. At best, it exploits a systematic inefficiency of the market. And any such inefficiency will automatically disappear when it is exploited by many traders. If it's published in a book, it is pretty much guaranteed not to work anymore. Oh, and you only get to know in hindsight (if at all) which of the two cases above applies to any given strategy.\"",
"title": ""
}
] |
fiqa
|
12e760f4402137fb2ad15aae78054abd
|
As a US Permanent Resident, how much money I can send from the US to India in my NRE account per year?
|
[
{
"docid": "a9a3dfa1f556faed2d300371982d3cf4",
"text": "I assume that you are a citizen of India, and are what Indian law calls a NRI (NonResident Indian) and thus entitled to operate an NRE (NonResident External) account in India. You can deposit US dollars into the NRE account, but the money is converted to Indian Rupees (INR) and held as INR. You can withdraw the money and bring it back to the US as US dollars, but the INR will be converted to US$ at the exchange rate applicable on the date of the transaction. With the recent decline of the Indian Rupee against the US dollar, many NRE accounts lost a lot of their value. You can deposit any amount of money in your NRE account. Some banks may limit the amount you can send in one business day, but if 250 times that amount seriously limits the amount of money you want to send each year, you should not be asking here; there are enough expensive lawyers, bankers and tax advisors who will gladly guide you to a satisfactory solution. There is no limitation on the total amount that you can have in your NRE account. The earnings (interest paid) on the sum in your NRE account is not taxable income to you in India but you may still need to file an income tax return in India to get a refund of the tax withheld by the bank (TDS) and sent to the tax authorities. The bank should not withhold tax on the earnings in an NRE account but it did happen to me (in the past). While the interest paid on your NRE account is not taxable in India, it is taxable income to you on your US tax returns (both Federal and State) and you must declare it on your tax return(s) even though the bank will not issue a 1099-INT form to you. Be aware also about the reporting requirements for foreign accounts (FBAR, TD F90-22.1 etc). Lots of people ignored this requirement in the past, but are more diligent these days after the IRS got a truckload of information about accounts in foreign banks and went after people charging them big penalties for not filing these forms for ever so many years. There was a huge ruckus in the Indian communities in the US about how the IRS was unfairly targeting simple folks instead of auditing the rich! But, if the total value of the accounts did not exceed $10K at any time of the year, these forms do not need to be filed. It seems, though, that you will not fall under this exemption since you are planning on having considerably larger sums in your NRE account. So be sure and follow the rules.",
"title": ""
}
] |
[
{
"docid": "0c69177e47bd21ad594a45558a393d9f",
"text": "Assuming that the NRE (NonResident External) account is in good standing, that is, you are still eligible to have an NRE account because your status as a NonResident of India has not changed in the interim, you can transfer money back from your NRE account to your US accounts without any problems. But be aware that you bear the risk of getting back a much smaller amount than you invested in the NRE account because of devaluation of the Indian Rupee (INR). NRE accounts are held in INR, and whatever amounts (in INR) that you choose to withdraw will be converted to US$ at the exchange rate then applicable. Depending on whether it is the Indian bank that is doing the conversion and sending money by wire to your US bank, or you are depositing a cheque in INR in your US bank, you may be charged miscellaneous service fees also. To answer a question that you have not asked as yet, there is no US tax on the transfer of the money. The interest paid on your deposits into the NRE account are not taxable income to you in India, but are taxable income to you in the US, and so I hope that you have been declaring this income each year on Schedule B of your income tax return, and also reporting that you have accounts held abroad, as required by US law. See for example, this question and its answer and also this question and its answer.",
"title": ""
},
{
"docid": "33da7c09e1a08fdf982f837b5ce5fe70",
"text": "Most Banks allow to make an international transfer. As the amounts is very small, there is no paperwork required. Have your dad walk into any Bank and request for a transfer. He should be knowing your Bank's SWIFT BIC, Name and Address and account number. Edit: Under the liberalised remittance scheme, any individual can transfer upto 1 million USD or eq. A CA certificate is required. Please get in touch with your bank in India for exact steps",
"title": ""
},
{
"docid": "a37ba433298a25962301a4c5df8a2d03",
"text": "You haven't indicated where the funds are held. They should ideally be held in NRO account. If you haven't, have this done ASAP. Once the funds are in NRO account, you can repatriate this outside of India subject to a limit of 1 million USD. A CA certificate is required. Please contact your Indian Bank and they should be able to guide you. There are no tax implications of this in US as much as I know, someone else may post the US tax aspect.",
"title": ""
},
{
"docid": "96fb4aa75f6d71320b62f947c29f32f3",
"text": "What taxes will I have to pay to India? Income earned outside of India when your status is Non-Resident Indian, there is no tax applicable. You can repatriate the funds back to India within 7 years without any tax event. Someone else may put an answer about US taxes.",
"title": ""
},
{
"docid": "0c774915fc2990b4046a3769e743b9d2",
"text": "my tax liabilities in India on my stock profit in US You would need to pay tax on the profit in India as well after you have become resident Indian. India and US have a double tax avoidance treaty. Hence if you have already paid tax in US, you can claim benefit and pay balance if any. For example if you US tax liability is 20 USD and Indian liability is USD 30, you just need to pay 10 USD. If the Indian tax liability is USD 20 or less you don't need to pay anything. what if in future I transfer all my US money to India? The funds you have earned in US while you were Non-Resident is tax free in India. You can bring it back any-time within a period of 7 years.",
"title": ""
},
{
"docid": "c64bdcc8417e0d806b606ffe2228e94b",
"text": "A. Kindly avoid taking dollars in form of cash to india unless and until it is an emergency. Once the dollar value is in excess of $10,000, you need to declare the same with Indian customs at the destination. Even though it is not a cumbersome procedure, why unnecessarily undergo all sort of documentation and most importantly at all security checks, you will be asked questions on dollars and you need to keep answering. Finally safety issue is always there during the journey. B.There is no Tax on the amount you declare. You can bring in any amount. All you need is to declare the same. C. It is always better to do a wire transfer. D. Any transfer in excess of $14,000 from US, will atract gift tax as per IRS guidelines. You need to declare the same while filing your Income Tax in US and pay the gift tax accordingly. E. Once your fiance receives the money , any amount in excess of Rs 50,000 would be treated as individual income and he has to show the same under Income from other sources while filing the taxes. Taxes will be as per the slab he falls under. F.Only for blood relatives , this limit of 50,000 does not apply. G. Reg the Loan option, suggest do not opt for the same. Incase you want to go ahead, then pl ensure that you fully comply with IRS rules on Loans made to a foreign person from a US citizen or resident. The person lending the money must report the interest payment as income on his or her yearly tax return provided the loan has interest element. No deduction is allowed if the proceeds are used for personal or non-business purposes.In the case of no-interest loans, most people believe there is no taxable income because no interest is paid. The IRS views this seriously and the tax rules are astonishingly complex when it comes to no-interest loans. Even though no interest is paid to the lender, the IRS will treat the transaction as if the borrower paid interest at the applicable federal rate to the lender and the lender subsequently gifted the interest back to the borrower.The lender is taxed on the imaginary interest income and, depending on the amount, may also be liable for gift tax on the imaginary payment made back to the borrower. Hope the above claryfies your query. Since this involves taxation suggest you take an opinion from a Tax attorney and also ask your fiance to consult a Charted Accountant on the same. Regards",
"title": ""
},
{
"docid": "67ecc3e3dcdb4210d7f539a4f5a2b4a0",
"text": "As an NRI, you can't hold a regular savings account. It should have been converted to NRO. Option 1: Open NRE account : Since I am relocating permanently this might not be good option for me as converting This is the best Option as funds into NRE are not taxable in India. The provides a clean paper trail so that if there are any tax queries, you can answer them easily. You can open a Rupee NRE account, move the funds. On return move the funds into Normal Savings account and close the NRE account. This is not much of hassle. Option 2: Create NRO account: There would be taxes on the interest earned of the funds. But I am not sure of this, since I will have been moved to India permanently would I need to still pay taxes on the interest earned while I am in India? Any interest in NRO or normal savings account is taxable in India. There is no exemption. Option 3: I can transfer my funds directly to my account in India but I believe I would have to pay tax on the the funds that I transfer and that would be double taxation. Which I think would be the worst option for me. Please correct me if I am wrong. This is incorrect. Any earnings outside of India when your status is NRI, is not taxable in India. Opening an NRE account provides proper paper trail of funds. As an NRI one cannot hold normal savings account. This should have been converted into an NRO account. Although there is no penalty prescribed, its violation of FEMA regulation. I also hope you were declaring any income in India, i.e. interest etc on savings and filing returns accordingly. Option 4: I can transfer the funds to my direct relatives account. I still believe there would be tax to be paid on the interest earned of the amount. You can transfer it to your parents / siblings / etc. This would come under gift tax purview and would not be taxable. They can then gift this back to you. However such transactions would appear to be evading regulations and may come under scrutiny. Interest on Savings account is taxable. So best is go with Option 1. No hassle. Else go with Option 3, but ensure that you have all the paperwork kept handy for next 7 years.",
"title": ""
},
{
"docid": "9811f2f705f0e72198286d48a3602352",
"text": "To my knowledge, there shouldn't be a limit on the amount you can receive as a gift, and gifts are not considered income to you; they are not taxable for the recipient. Depending on the size of the wire transfer, it may be reported by the bank to the government, but there is no limit, and it should not be a concern to you. (I don't think that $2500 is large enough to be reportable anyway.) Having said that, this might be a good question to ask your international student advisor at your school to make sure he or she agrees. There is a very similar question on Avvo.com (a legal question-and-answer site) that agrees: Limit to transfer money to students on f1 visa.",
"title": ""
},
{
"docid": "63446bd49d23b1872991316c108d9e6e",
"text": "As NRI/PIO (Non-Resident Indian/Person of Indian Origin), the overseas income and transfers in foreign currency are exempt from Indian income taxes. However, the account in India has to be designated NRE or FCNR. There are three kind of accounts that an NRI can maintain Interest earned in NRE and FCNR accounts is exempt from income taxes. Interest earned in NRO accounts is not exempt from income taxes, in fact banks would withhold about 30% of interest (TDS). The exact tax liability would depend upon income generated in India and TDS could be applied towards that liability when the tax returns are filed. There are other implications also of designating the account as NRE or NRO. NRE accounts can only be funded via inward remittance of permitted foreign currency e.g. deposit USD/GBP. So proceeds like rental income, pension etc. that are generated in INR within India can't be deposited in this account. The money deposited in NRE account can grow tax free and can be converted back in any foreign currency freely. On the other hand NRO accounts can be funded through both inward remittance of permitted foreign currency or local income e.g. rental, pension etc. All the amount in this account is treated as Indian originated INR (even if remitted in foreign currency) and thus is taxed as any other bank account. The amount in this account is subject to the annual cap of convertibility of USD 1 million. Both NRE and NRO accounts are maintained in INR and can be Saving and Term Deposit. Any remittance made to these accounts in any foreign currency is converted to INR at the time of deposit and is maintained in INR. FCNR account are held in foreign currency and can only be Term Deposit. Official definitions: Accounts for Non Resident Indians (NRIs) and Persons of Indian Origin (PIOs)",
"title": ""
},
{
"docid": "970bf827c2ba21f4e4be22f0c766713e",
"text": "As the college education is very costly, I want to send USD 25,000 to him as a gift. What is the procedure and what Indian and American tax laws are involved ? This transaction will be treated as gift. As per Indian law you can transfer unlimited amount to your close relative [son-in-law/grandchildren/daughter/etc]. In US the gift tax is on donor, as you are no US citizen you are not bound by this. As your son-in-law/grandchildren are US citizens, there is no tax to them. Your son-in-law may still need to declare this in Form 3250 or such relevant returns. Under the Liberalized remittance scheme [Refer Q3], you can transfer upto USD 250,000 per year. There maybe some forms that you need to fill. Ask your Bank. If the amount is more than USD 25,000 a CA certificate along with 15CA, 15CB need to be filled. Essentially the CA certifies that taxes on the funds being transferred have already been paid to Govt of India. Can I send money to him directly or to his father who is submitting tax returns in USA? This does not make any difference in India. Someone else may answer this question if it makes a difference in US.",
"title": ""
},
{
"docid": "525af4c7a0373197b4a72adee488f3df",
"text": "The US will let you keep as much money as you want to within its borders regardless of your citizenship. You'll owe capital gains tax in the US unless you're subject to a tax treaty (which you would probably make as an election in the year of the transaction). I don't know if India has any rules about how it governs its citizens' foreign assets, but the US requires citizens to file a form annually declaring foreign accounts over $10,000. You may be subject to additional Indian taxes if India taxes global income like the US does.",
"title": ""
},
{
"docid": "5e7432bbf2b00cabb07ad86234b42c8f",
"text": "If you had purchased the land directly from your NRI account in your name [with power of attorney] in your wife's name, it would have been very simple to get the funds back. Whenever you sell the land, transfer the funds into NRO account. From NRO account you can repatriate back USD 1 Million. A CA certificate is required detailing the purpose and that tax is paid on the funds, talk to your bank and it should be easy. The gains will be taxable in India as well as in the US. You can claim rebate to the extent of taxes paid in India.",
"title": ""
},
{
"docid": "1399f2e6614b36a0dda352caa0ebf2f2",
"text": "I have not opened any NRE/NRO account before coming to Finland. This is in violation of Foreign Exchange Management Act. Please get this regularized ASAP. All your savings account need to be converted to NRO. Shall I transfer funds from abroad to both NRE and NRO account or I can transfer only to NRE account in India? You can transfer to NRE or NRO. It is advisable to transfer into NRE as funds from here can be repatriated out of India without any paperwork. Funds from NRO account need paperwork to move out of India. I am a regular tax payer in abroad. The Funds which i'll transfer in future will attract any additional tax in India? As your status is Non Resident and the income is during that period, there is no tax applicable in India on this. Few Mutual Fund SIPs (monthly basis) are linked with my existing saving account in india. Do these SIPs will stop when the savings account will turn into NRO account? Shall I need to submit any documents for KYC compliance? If yes, to whom I should submit these? is there any possibility to submit it Online? Check your Bank / Mutual Fund company. Couple of FDs are also opened online and linked with this existing saving account. Do the maturity amount(s) subject to TDS or any tax implication such as 30.9% as this account will be turned into NRO account till that time and NRO account attracts this higher tax percentage. These are subject to taxes in India. This will be as per standard tax brackets. Which account (NRE/NRO) is better for paying EMIs for Home Loan, SIPs of Mutual Funds, utility bills in India, transfer money to relative's account etc Home Loan would be better from NRE account as if you sell the house, the EMI paid can be credited into NRE account and you can transfer this out of India without much paperwork. Same for SIP's. For other it doesn't really matter as it is an expense. Is there any charge to transfer fund from NRE to NRO account if both account maintain in same Bank same branch. Generally No. Check with your bank. Which Bank account's (NRE/NRO) debit/ATM card should be used in Abroad in case of emergency. Check with your bank. NRE funds are more easy. NRO there will be limits and reporting. Do my other savings accounts, maintained in different Banks, also need to be converted into NRO account? If yes, how can it be done from Abroad? Yes. ASAP. Quite a few leading banks allow you to do this if you are not present. Check you bank for guidance.",
"title": ""
},
{
"docid": "94fbe93988a093aad31077a48a91e604",
"text": "Your NRI friend can use normal Banks or specialized remittance services. There are questions on this website that give pro's and con's. From Indian tax point of you, you have received a gift from friend and as such it falls under Gift Tax act. Any amount upto Rs 50,000 is tax free. Anything above it is taxable as per tax bracket.",
"title": ""
},
{
"docid": "bd0c4d866faf69c94a07dac1b192fd45",
"text": "Anyone able to recommend a good resource on computing discounted cash flows? I'm looking for something that will walk me through calculating DCFs working from the balance sheet, income statement, etc. Textbook or online resources both work!",
"title": ""
}
] |
fiqa
|
528bc358446ef74d2b445e5b203a2a70
|
Non-qualified Savings Plan vs. 401(k) for Highly Compensated Employee
|
[
{
"docid": "685042ecaae0c90f90b6d0ed29fe6f61",
"text": "\"401k plans are required to not discriminate against the non-HCE participants, and one way they achieve this is by limiting the percentage of wages that HCEs can contribute to the plan to the average annual percentage contribution by the non-HCE participants or 3% whichever is higher. If most non-HCE employees contribute only 3% (usually to capture the employer match but no more), then the HCEs are stuck with 3%. However, be aware that in companies that award year-end bonuses to all employees, many non-HCEs contribute part of their bonuses to their 401k plans, and so the average annual percentage can rise above 3% at the end of year. Some payroll offices have been known to ask all those who have not already maxed out their 401k contribution for the year (yes, it is possible to do this even while contributing only 3% if you are not just a HCE but a VHCE) whether they want to contribute the usual 3%, or a higher percentage, or to contribute the maximum possible under the nondiscrimination rules. So, you might be able to contribute more than 3% if the non-HCEs put in more money at the end of the year. With regard to NQSPs, you pretty much have their properties pegged correctly. That money is considered to be deferred compensation and so you pay taxes on it only when you receive it upon leaving employment. The company also gets to deduct it as a business expense when the money is paid out, and as you said, it is not money that is segregated as a 401k plan is. On the other hand, you have earned the money already: it is just that the company is \"\"holding\"\" it for you. Is it paying you interest on the money (accumulating in the NQSP, not paid out in cash or taxable income to you)? Would it be better to just take the money right now, pay taxes on it, and invest it yourself? Some deferred compensation plans work as follows. The deferred compensation is given to you as a loan in the year it is earned, and you pay only interest on the principal each year. Since the money is a loan, there is no tax of any kind due on the money when you receive it. Now you can invest the proceeds of this loan and hopefully earn enough to cover the interest payments due. (The interest you pay is deductible on Schedule A as an Investment Interest Expense). When employment ceases, you repay the loan to the company as a lump sum or in five or ten annual installments, whatever was agreed to, while the company pays you your deferred compensation less taxes withheld. The net effect is that you pay the company the taxes due on the money, and the company sends this on to the various tax authorities as money withheld from wages paid. The advantage is that you do not need to worry about what happens to your money if the company fails; you have received it up front. Yes, you have to pay the loan principal to the company but the company also owes you exactly that much money as unpaid wages. In the best of all worlds, things will proceed smoothly, but if not, it is better to be in this Mexican standoff rather than standing in line in bankruptcy court and hoping to get pennies on the dollar for your work.\"",
"title": ""
},
{
"docid": "c9bba64387bc286a5f6e57bdb56f95c6",
"text": "\"Also, in (5), is it considered unpaid wages? Because that's pretty high on the bankruptcy hierarchy. No. It is near the bottom, in with unsecured debt. If you have access to the plan documents, see if the plan has the phrase \"\"rabbi trust\"\" anywhere in it. This means that the money is not kept comingled with the corporation's regular accounts, but is rather deposited with a financial institution (such as Fidelity).\"",
"title": ""
}
] |
[
{
"docid": "810eceab7edb6216ea4133d029874089",
"text": "\"I humbly disagree with #2. the use of Roth or pre-tax IRA depends on your circumstance. With no match in the 401(k), I'd start with an IRA. If you have more than $5k to put in, then some 401(k) would be needed. Edit - to add detail on Roth decision. I was invited to write a guest article \"\"Roth IRAs and your retirement income\"\" some time ago. In it, I discuss the large amount of pretax savings it takes to generate the income to put you in a high bracket in retirement. This analysis leads me to believe the risk of paying tax now only to find tHat you are in a lower bracket upon retiring is far greater than the opposite. I think if there were any generalization (I hate rules of thumb, they are utterly pick-apartable) to be made, it's that if you are in the 15% bracket or lower, go Roth. As your income puts you into 25%, go pretax. I believe this would apply to the bulk of investors, 80%+.\"",
"title": ""
},
{
"docid": "526ff54a34e7c72935adaef6d41c5467",
"text": "Is there any benefit to investing in a Roth 401(k) plan, as opposed to a Roth IRA? They have separate contribution limits, so how much you contribute to one does not change the amount you can contribute to the other. Which is relevant to your question because you said the earnings on that account compounded over the next 40 years growing tax-free will be much higher than what I'd save on current taxes on a traditional 401(k). This is only true if you max out your contribution limits. If you start with the same amount of money and have the same marginal tax rate in both years, it doesn't matter which one you pick. Start with $10,000 to invest. With the traditional, you can invest all $10,000. With the Roth, you pay taxes on it and then invest it. Let's assume a tax rate of 25%. So invest $7500. Let's assume that you invest either amount long enough to double four times (forty years at 7% return after inflation is about right). So the traditional has $160,000 and the Roth has $120,000. Now you withdraw them. For simplicity's sake, we'll pretend it's all one year. It's probably over several years, but the math is easier in a single year. With the Roth, you have $120,000. With the traditional, you have to pay tax. Again, let's assume 25%. So that's $40,000, leaving you with $120,000 from the traditional. That is the same amount as the Roth! So it would make sense to If you can max out both, great. You do that for forty years and your retirement will be as financially secure as you can make it. If you can't max them out, the most important thing is the employer match. That's free money. Then you may prefer your Roth IRA to the 401k. Note that you can also roll over your Roth 401k to a Roth IRA. Then you can withdraw your contributions from the Roth IRA without penalty or additional tax. Alternate source. Beyond answering your question, I would still like to reiterate that Roth or traditional does not have a big effect on your investment unless you max them out or you have different tax rates now versus in retirement. It may change other things. For example, you can roll over a Roth 401k to a Roth IRA without paying taxes. And the Roth IRA will act like it was contributed directly. You have to check with your employer what their rollover rules are. They may allow it any time or only at employment separation (when you leave the job). If you do max out your Roth accounts, then they will perform better than the traditional accounts at the same nominal contribution. This is because they are tax free while your returns in the other accounts will have to pay taxes. But it doesn't matter until you hit the limits. Until then, you could just invest the tax savings of the traditional as well as the money you could invest in a Roth.",
"title": ""
},
{
"docid": "3c54146549ea8213426752bdf6109208",
"text": "\"I spent some time searching, and couldn't find the answer written explicitly in IRS regulations. What I did find was this chart from the irs showing that nonqualified distributions from a Roth 401k are pro-rated between contributions and earnings. It is well documented that you can't withdraw any money early or tax free (even contributions) from a Roth 401k (\"\"Designated Roth Account\"\" in IRS parlance) that has made any money. source You can do a direct rollover from a \"\"Designated Roth Account\"\" to a Roth IRA and the basis describing contributions vs. earnings is preserved. source And there is plenty of evidence showing you can withdraw contributions from a Roth IRA without penalty. source All that being said, I can't find anything from the IRS that says this is a legitimate strategy.\"",
"title": ""
},
{
"docid": "76fdec82f23aeb8c14fab73c29211526",
"text": "\"Your employer could consider procuring benefits via a third party administrator, which provides benefits to and bargains collectively on behalf of multiple small companies. I used to work for a small start-up that did exactly that to improve their benefits across the board, including the 401k. The fees were still higher than buying a Vanguard index or ETF directly, but much better than the 1% you're talking about. In the meantime, here's my non-professional advice from personal experience and hindsight: If you're in a low/medium tax bracket and your 401k sucks, you might be better off to pay the tax up front and invest in a taxable account for the flexibility (assuming you're disciplined enough that you don't need the 401k to protect you from yourself). If you max out a crappy 401k today, you might miss a better opportunity to contribute to a 401k in the future. Big expenses could pop up at exactly the same time you get better investment options. Side note: if not enough employees participate in the 401k, the principals won't be able to take full advantage of it themselves. I think it's called a \"\"nondiscrimination test\"\" to ensure that the plan benefits all employees, not just the owners and management. So voting with your feet might be the best way to spark improvement with your employer. Good luck!\"",
"title": ""
},
{
"docid": "0deb71bd75eb42efd55ff7ba8b2bc824",
"text": "\"IRA is not always an option. There are income limits for IRA, that leave many employees (those with the higher salaries, but not exactly the \"\"riches\"\") out of it. Same for Roth IRA, though the MAGI limits are much higher. Also, the contribution limits on IRA are more than three times less than those on 401K (5K vs 16.5K). Per IRS Publication 590 (page 12) the income limit (AGI) goes away if the employer doesn't provide a 401(k) or similar plan (not if you don't participate, but if the employer doesn't provide). But deduction limits don't change, it's up to $5K (or 100% of the compensation, the lesser) even if you're not covered by the employers' pension plan. Employers are allowed to match the employees' 401K contributions, and this comes on top of the limits (i.e.: with the employers' matching, the employees can save more for their retirement and still have the tax benefits). That's the law. The companies offer the option of 401K because it allows employee retention (I would not work for a company without 401K), and it is part of the overall benefit package - it's an expense for the employer (including the matching). Why would the employer offer matching instead of a raise? Not all employers do. My current employer, for example, pays above average salaries, but doesn't offer 401K match. Some companies have very tight control over the 401K accounts, and until not so long ago were allowed to force employees to invest their retirement savings in the company (see the Enron affair). It is no longer an option, but by now 401K is a standard in some industries, and employers cannot allow themselves not to offer it (see my position above).\"",
"title": ""
},
{
"docid": "fb78091094c61cbf35643c978ba23f06",
"text": "I am in the process of writing an article about how to maximize one's Social Security benefits, or at least, how to start the analysis. This chart, from my friends at the Social Security office shows the advantage of waiting to take your benefit. In your case, you are getting $1525 at age 62. Now, if you wait 4 years, the benefit jumps to $2033 or $508/mo more. You would get no benefit for 4 years and draw down savings by $73,200, but would get $6,096/yr more from 64 on. Put it off until 70, and you'd have $2684/mo. At some point, your husband should apply for a spousal benefit (age 66 for him is what I suggest) and collect that for 4 years before moving to his own benefit if it's higher than that. Keep in mind, your generous pensions are likely to push you into having your social security benefit taxed, and my plan, above will give you time to draw down the 401(k) to help avoid or at least reduce this.",
"title": ""
},
{
"docid": "8a26c9a711bf92156189f30f9df2b8d2",
"text": "Without running the numbers, if they are close I prefer a 401K over DB. With a 401K the money is yours, with a DB you are at the mercy of the employer. Two things could happen: You could lose your job or they could just take away or reduce the DB. In my mind DB is much higher risk than 401K.",
"title": ""
},
{
"docid": "a253b6cffa7a7926e5d5c5802a2858d2",
"text": "Separate from some of the other considerations such as the legality, it is likely going to be worth your will if you employer has company matching even if you have to pay the early withdraw penalty because the matching funds from your employer can be viewed as gains on the money deposited. For example, using round numbers to make the math easy: No 401(k) Deposit With 401(k) Deposit So as you can see there is a benefit to deferring some of the earnings to the 401(k) account due to the employer matching but the actual dollar amount that you would be able to take home will be different based upon your own circumstances. Depending upon what the take home would be at the end of the day the percentage return may or may not be worth the time involved with doing the paperwork. However, all of this only applies if you have to pull the money out early as once you hit 59.5 years old you can start withdrawing the money without the tax penalty in which case the returns on your initial deposit will be much more.",
"title": ""
},
{
"docid": "1b95dc966e98ff7d01f8d66c5876f50b",
"text": "You're talking about ESPP? For ESPP it makes sense to utilize the most the company allows, i.e.: in your case - 15% of the paycheck (if you can afford deferring that much, I assume you can). When the stocks are purchased, I would sell them immediately, not hold. This way you have ~10% premium as your income (pretty much guaranteed, unless the stock falls significantly on the very same day), and almost no exposure. This sums up to be a nice 1.5% yearly guaranteed bonus, on top of any other compensation. As to keeping the stocks, this depends on how much you believe in your company and expect the stocks to appreciate. Being employed and dependent on the company with your salary, I'd avoid investing in your company, as you're invested in it deeply as it is.",
"title": ""
},
{
"docid": "068bed5880ce9e76d2f629508242671d",
"text": "You might want to bring this fancy new IRS rule to your employer's attention. If your employer sets it up, an After-Tax 401(k) Plan allows employees to contribute after-tax money above the $18k/year limit into a special 401(k) that allows deferral of tax on all earnings until withdrawal in retirement. Now, if you think about it, that's not all that special on its own. Since you've already paid tax on the contribution, you could imitate the above plan all by yourself by simply investing in things that generate no income until the day you sell them and then just waiting to sell them until retirement. So basically you're locking up money until retirement and getting zero benefit. But here's the cool part: the new IRS rule says you can roll over these contributions into a Roth 401(k) or Roth IRA with no extra taxes or penalties! And a Roth plan is much better, because you don't have to pay tax ever on the earnings. So you can contribute to this After-Tax plan and then immediately roll over into a Roth plan and start earning tax-free forever. Now, the article I linked above gets some important things slightly wrong. It seems to suggest that your company is not allowed to create a brand new 401(k) bucket for these special After-Tax contributions. And that means that you would have to mingle pre-tax and post-tax dollars in your existing Traditional 401(k), which would just completely destroy the usefulness of the rollover to Roth. That would make this whole thing worthless. However, I know from personal experience that this is not true. Your company can most definitely set up a separate After-Tax plan to receive all of these new contributions. Then there's no mingling of pre-tax and post-tax dollars, and you can do the rollover to Roth with the click of a button, no taxes or penalties owed. Now, this new plan still sits under the overall umbrella of your company's total retirement plan offerings. So the total amount of money that you can put into a Traditional 401(k), a Roth 401(k), and this new After-Tax 401(k) -- both your personal contributions and your company's match (if any) -- is still limited to $53k per year and still must satisfy all the non-discrimination rules for HCEs, etc. So it's not trivial to set up, and your company will almost certainly not be able to go all the way to $53k, but they could get a lot closer than they currently do.",
"title": ""
},
{
"docid": "f74cfd1bbee899a603683b9b73a62322",
"text": "I assume that with both companies you can buy stock mutual funds, bonds mutual funds, ETFs and money market accounts. They should both offer all of these as IRAs, Roth IRAs, and non-retirement accounts. You need to make sure they offer the types of investments you want. Most 401K or 403b plans only offer a handful of options, but for non-company sponsored plans you want to have many more choices. To look at the costs see how much they charge you when you buy or sell shares. Also look at the annual expenses for those funds. Each company website should show you all the fees for each fund. Take a few funds that you are likely to invest in, and have a match in the other fund family, and compare. The benefit of the retirement accounts is that if you make a less than perfect choice now, it is easy to move the money within the family of funds or even to another family of funds later. The roll over or transfer doesn't involve taxes.",
"title": ""
},
{
"docid": "d0e622644fac5c51c872683f0cc8e444",
"text": "Also, consider the possibility of early withdrawal penalties. Regular 401k early withdrawal (for non-qualified reasons) gets you a 10% penalty, in addition to tax, on the entire amount, even if you're just withdrawing your own contributions. Withdrawing from a Roth 401k can potentially mean less penalties (if it's been in place 5 years, and subject to a bunch of fine print of course).",
"title": ""
},
{
"docid": "7786b43ee5c64e1979321bbcbb9d2380",
"text": "YMMV, but I don't accept non-answers like that from HR. Sometimes you need to escalate. Usually when I get this sort of thing, I go to my boss and he asks them the question in writing and they give him a better answer. (HR in most companies seem to be far more willing to give information to managers than employees.) Once we both had to go to our VP to get HR to properly listen to and answer the question. Policies like this which may have negative consequences (your manager could lose a good employee over this depending on how to close to retirement you are and how much you need to continue making that larger contribution) that are challenged by senior managment have a better chance of being resolved than when non-managment employees bring up the issue. Of course I havea boss I know will stand up for me and that could make a difference in how you appraoch the problem.",
"title": ""
},
{
"docid": "6a74565edf0db6d12f62a512085a4056",
"text": "There are two things to consider: taxes - beneficial treatment for long-term holding, and for ESPP's you can get lower taxes on higher earnings. Also, depending on local laws, some share schemes allow one to avoid some or all on the income tax. For example, in the UK £2000 in shares is treated differently to 2000 in cash vesting - restricted stocks or options can only be sold/exercised years after being granted, as long as the employee keeps his part of the contract (usually - staying at the same place of works through the vesting period). This means job retention for the employees, that's why they don't really care if you exercise the same day or not, they care that you actually keep working until the day when you can exercise arrives. By then you'll get more grants you'll want to wait to vest, and so on. This would keep you at the same place of work for a long time because by quitting you'd be forfeiting the grants.",
"title": ""
},
{
"docid": "cc79b7d0c25624489c412bc3a9836fe6",
"text": "\"Basically, a 401(k) can have what is called a \"\"loan\"\", but is more properly a \"\"structured withdrawal and repayment agreement\"\". This allows you to access your nest egg to pay for unforeseen expenses, without having to actually cash it out and pay the 10% penalty plus taxes. You can get up to half of your current savings, with an absolute cap of $50k, minus the balance of any other loan outstanding. While there is a balance outstanding, you must make regular scheduled payments. The agreement does include an interest rate, but basically that interest money goes into your account. The downside of a 401(k) loan is the inflexibility; you must pay the scheduled amount, and you also have to keep the job for which you're paying into the 401(k); if you quit or are fired, the balance of the loan must usually be paid in 60 days, or else the financial institution will consider the unpaid balance a \"\"withdrawal\"\" and notify the IRS to that effect. Now, with a Roth account, it works a little differently. Basically, contributions to any Roth account (IRA or 401(k)) are post-tax. But, that means the money's now yours; there is no penalty or additional taxes levied on any amount you cash out. So, a loan basically just provides structure; you withdraw, then pay back under structured terms. But, if you need a little cash for a good reason, it's usually better just to cash out some of the principal of a Roth account and then be disciplined enough to pay back into it.\"",
"title": ""
}
] |
fiqa
|
7821fa208b7f3d76ed634757752ed58d
|
How do wire transfers get settled?
|
[
{
"docid": "384e8f4f9cfd57bcd1d185a8fbc1a6dc",
"text": "Wire transfers normally run through either the Fedwire system or the Clearing House Interbank Payments System (CHIPS). The process generally works like this: You approach a bank or other financial institution and ask to transfer money. You give the bank a certain code, either an international bank account number or one of several other standards, which informs the bank where to send the money. The bank sends a message through a system like Fedwire to the receiving bank, along with settlement instructions. This is where the process can get a bit tricky. For the wire transfer to work, the banks must have reciprocal accounts with each other, or the sending bank must send the money to a bank that does have such an account with the receiver. If the sending bank sends the money to a third-party bank, the transaction is settled between them, and the money is then sent to the receiving bank from the third-party bank. This last transaction may be a wire transfer, ACH transfer, etc. The Federal Reserve fits into this because many banks hold accounts for this purpose with the Federal Reserve. This allows them to use the Fed as the third-party bank referred to above. Interestingly enough, this is one of the significant ways in which the Fed makes a profit, because it, along with every other bank and routing agent in the process, collects a miniscule fee on this process. You'll often find sources that state that Fedwire is only for transferring large transactions; while this is technically correct, it's important to understand that financial institutions don't settle every wire transfer or payment immediately. Although the orders are put in immediately, the financial institutions settle their transactions in bulk at the end of the business day, and even then they normally only settle the difference. So, if Chase owes Bank of America $1M, and Bank of America owes Chase $750K, they don't send these as two transactions; Chase simply credits BAC $250K. You didn't specifically ask about ACH transfers, which as littleadv pointed out, are different from wire transfers, but since ACH transfers can often form a part of the whole process, I'll explain that process too. ACH is a payment processing system that works through the Federal Reserve system, among others. The Federal Reserve (through the Fedline and FedACH systems) is by far the largest payment processor. The physical cash itself isn't transferred; in simple terms, the money is transferred through the ACH system between the accounts each bank maintains at the Federal Reserve. Here is a simple example of how the process works (I'm summarizing the example from Wikipedia). Let's say that Bob has an account with Chase and wants to get his paycheck from his employer, Stack Exchange, directly deposited into this account. Assume that Stack Exchange uses Bank of America as their bank. Bob, the receiver, fills out a direct deposit authorization form and gives it to his employer, called the originator. Once the originator has the authorization, they create an entry with an Originating Depository Financial Institution, which acts as a middleman between a payment processor (like the Federal Reserve) and the originator. The ODFI ensures that the transaction complies with the relevant regulations. In this example, Bank of America is the ODFI. Bank of America (the ODFI) converts the transaction request into an ACH entry and submits it, through an ACH operator, to the Receiving Depository Financial Institution (RDFI), which in this case is Chase bank. Chase credits (deposits) the paycheck in Bob's account. The Federal Reserve fits into all of this in several ways. Through systems like Fedline and FedACH, the Fed acts as an ACH operator, and the banks themselves also maintain accounts at the Federal Reserve, so it's the institution that actually performs the settling of accounts between banks.",
"title": ""
}
] |
[
{
"docid": "457d622371d738723f400eaa2f67c280",
"text": "frostbank.com is the closest thing I've found, so accepting this (my own) answer :) EDIT: editing from my comment earlier: frostbank.com has free incoming international wires, so that's a partial solution. I confirmed this works by depositing $1 (no min deposit requirement) and wiring $100 from a non-US bank. Worked great, no fees, and ACH'd it to my main back, no problems/fees. No outgoing international wires, alas.",
"title": ""
},
{
"docid": "bd6817e4cdc5230ba683aa08909bea15",
"text": "I would certainly hope to make the transfer by wire - the prospect of popping cross the border with several million dollars in the trunk seems... ill fated. I suppose I'm asking what sort of taxes, duties, fees, limits, &c. would apply Taxes - None. It is your money, and you can transfer it as you wish. You pay taxes on the income, not on the fact of having money. Reporting - yes, there's going to be reporting. You'll report the origin of the money, and whether all the applicable taxes have been paid. This is for the government to avoid money laundering. But you're going to pay all the taxes, so for transfer - you'll just need to report (and maybe, for such an amount, actually show the tax returns to the bank). Fees - shop around. Fees differ, like any other product/service costs on the marketplace.",
"title": ""
},
{
"docid": "b8f0329706b710b3d3fecb719bad343a",
"text": "Because a wire transfer requires the individual bank to bank process, it is usually more expensive than an automated clearing house, which requires minimal involvement by individuals at financial institutions. Many ACH transactions come with only a small fee, or even no fee at all, since they are run with more efficiency. However, if you want a better guarantee that your money will arrive on time, it might be worth it to pay the wire transfer fee. With both cases, it is possible for errors to be made. However, since you often get to review the information before it is sent with a wire transfer, the method is a little more secure. Also, because identities are verified with wire transfers that take place between bank accounts, there is less chance of fraud. Wire transfers that take place between financial institutions are generally considered quite secure. from http://www.depositaccounts.com/blog/difference-between-wire-transfer-and-ach.html",
"title": ""
},
{
"docid": "683686c0406e2aa612ec99dabbea69f6",
"text": "\"As far as I understand, OP seems to be literally asking: \"\"why, regarding the various contracts on various exchanges (CBE, etc), is it that in some cases they are 'cash settled' and in some 'physically settled' -?\"\" The answer is only that \"\"the exchange in question happens to offer it that way.\"\" Note that it's utterly commonplace for contracts to be settled out physically, and happens in the billions as a daily matter. Conversely zillions in \"\"cash settled\"\" contracts play out each day. Both are totally commonplace. Different businesses or entities or traders would use the two \"\"varieties\"\" for sundry reasons. The different exchanges offer the different varieties, ultimately I guess because they happen to think that niche will be profitable. There's no \"\"galactic council\"\" or something that enforces which mode of settlement is available on a given offering - ! Recall that \"\"a given futures contracts market\"\" is nothing more than a product offered by a certain exchange company (just like Burger King sells different products). I believe in another aspect of the question, OP is asking basically: \"\"Why is there not, a futures contract, of the mini or micro variety for extremely small amounts, of currency futures, which, is 'physically' settled rather than cash settled ..?\"\" If that's the question the answer is just \"\"whatever, nobody's done it yet\"\". (Or, it may well exist. But it seems extremely unlikely? \"\"physically\"\" settled currencies futures are for entities operating in the zillions.) Sorry if the question was misunderstood.\"",
"title": ""
},
{
"docid": "22f5b5bd6ddbadb3f7c70481c5b68139",
"text": "\"Securities clearing and settlement is a complex topic - you can start by browsing relevant Wikipedia articles, and (given sufficient quantities of masochism and strong coffee) progress to entire technical books. You're correct - modern trade settlement systems are electronic and heavily streamlined. However, you're never going to see people hand over assets until they're sure that payment has cleared - given current payment systems, that means the fastest settlement time is going to be the next business day (so-called T+1 settlement), which is what's seen for heavily standardized instruments like standard options and government debt securities. Stocks present bigger obstacles. First, the seller has to locate the asset being sold & make sure they have clear title to it... which is tougher than it might seem, given the layers of abstraction/virtualization involved in the chain of ownership & custody, complicated in particular by \"\"rehypothecation\"\" involved in stock borrowing/lending for short sales... especially since stock borrow/lending record-keeping tends to be somewhat slipshod (cf. periodic uproar about \"\"naked shorting\"\" and \"\"failure to deliver\"\"). Second, the seller has to determine what exactly it is that they have sold... which, again, can be tougher than it might seem. You see, stocks are subject to all kinds of corporate actions (e.g. cash distributions, spin-offs, splits, liquidations, delistings...) A particular topic of keen interest is who exactly is entitled to large cash distributions - the buyer or the seller? Depending on the cutoff date (the \"\"ex-dividend date\"\"), the seller may need to deliver to the buyer just the shares of stock, or the shares plus a big chunk of cash - a significant difference in settlement. Determining the precise ex-dividend date (and so what exactly are the assets to be settled) can sometimes be very difficult... it's usually T-2, except in the case of large distributions, which are usually T+1, unless the regulatory authority has neglected to declare an ex-dividend date, in which case it defaults to standard DTC payment policy (i.e. T-2)... I've been involved in a few situations where the brokers involved were clueless, and full settlement of \"\"due bills\"\" for cash distributions to the buyer took several months of hard arguing. So yeah, the brokers want a little time to get their records in order and settle the trade correctly.\"",
"title": ""
},
{
"docid": "0c095c5d16485bc331c95bf1af2efc1e",
"text": "\"If wire transfer through your bank does not work then perhaps one of the more popular money transfer services may be what you are looking for such as MoneyGram or Western Union. Now these rely on a trusted \"\"registered\"\" third party to do the money transfer so you need to make sure that you are working with a legitimate broker. Each money transfer service has a site that allows you to perform the search on registered parties around your area. There are certain fees that are sometimes applied due to the amount being transferred. All of these you will want to do some detailed research on before you make the transfer so that you do not get scammed. I would suggest doing a lot of research and asking people that you trust to recommend a trusted broker. I have not personally used the services, but doing a quick search brought many options with different competitive conversion rates as well as fees. Good luck.\"",
"title": ""
},
{
"docid": "39e4c10bfdb085862e06dd7d912a17f3",
"text": "As Nathan has correctly noted, ACH processes transactions in daily batches. The reason for that is accounting - the money doesn't actually change hands for each transaction. All the transactions are aggregated and calculated in the batch process, and the money only changes hands for the difference. Consider this: If each transaction was to be handled separately, each time banks would have to adjust their books to account for the money movement. But if we do it in batch we have this: The resulting inter-bank transfers: Total for the original 30 transactions - 2 transactions between the banks: A->B and C->A. If you need money to be transferred immediately (relatively) - you can use wire transfer. Some banks will still aggregate and batch-process those, but more than once a day. They'll charge you additional fee for their inconvenience.",
"title": ""
},
{
"docid": "fb0ec6287c551631f64d37bf35bb7dc5",
"text": "\"For most banks this is not the case. Transfers within the bank are usually instantaneous. It is not uncommon for banks to draw out the length of transactions because while the money is \"\"transferring\"\" or \"\"settling\"\" it is actually sitting on the bank's balance sheet, being lent out but not earning any interest. A good deal for them when you aggregate over the millions of customers they have. Your bank may be trying to squeeze a few pennies of interest out of you. Delays in transactions also allow their fraud team the flexibility to investigate transactions if they want to. Normally they probably don't but if the bank delays all transactions, then those being investigated will not be aware of it.\"",
"title": ""
},
{
"docid": "88c461ef9c397b80086de1ac45b49a68",
"text": "I'm not sure I understand what you're trying to say, but in general its pretty simple: She goes to the UK bank and requests a wire transfer, providing your details as a recipient. You then go to your bank, fill the necessary forms for the money-laundaring regulations, you probably also need to pay the taxes on the money to the IRS, and then you have it. If you have 1 million dollars (or is it pounds?), I'm sure you can afford spending several hundreds for a tax attorney to make sure your liabilities are reduced to minimum.",
"title": ""
},
{
"docid": "5cddce3b65a395f5d975656c883d828c",
"text": "from what I learnt in au and limited to au banking system ( very much like other western countries), banks settle their transfers ( inter banks) 4pm afternoon. Those transactions are like everyday between accounts, person to person, person to vendor(not credit cards), vendors to vendors( small businesses) etc. as for large transactions banks use check accounts( yes banks themselves have check account for each other). Check accounts are settled in three business days( ex public holidays). When large business deal with large business, they use debentures and corporate bonds which is a business IOU and using banks as mediate to settle. IOUs have up to 60 days settle periods. Some complications unique to au banking system. There are only 4 large banks in au and they and their subsidiaries own 99% of the assets collectively. What gets more interesting is large 4 banks owns each other. Each banks holds significant amount shares of other banks. They are like 4 brothers with different surnames. All of it is to minimise risk and share profit.",
"title": ""
},
{
"docid": "cdd518a446eeea87e53bd9c3b525ef69",
"text": "Being into Business since years and having clients worldwide I receive a lot of payments via wire transfers. Some in business and some in personal checking accounts. I have never been charged by my bank for any incoming wire. And by the way I bank with HSBC and BoA in the US. Actually the charges on the account depends on the type of account you are opening/holding with the bank. With a tight competition in the finance and banking industry you can always demand the bank for the services you want and the pricing you want. The best thing to do is ask your bank if they can wave those incoming wire charges for you and if not you have a whole bunch of options.",
"title": ""
},
{
"docid": "53b920a8744acc0df88502e7a62a2264",
"text": "A lot of questions, but all it boils down to is: . Banks usually perform T+1 net settlements, also called Global Netting, as opposed to real-time gross settlements. That means they promise the counterparty the money at some point in the future (within the next few business days, see delivery versus payment) and collect all transactions of that kind. For this example say, they will have a net outflow of 10M USD. The next day they will purchase 10M USD on the FX market and hand it over to the global netter. Note that this might be more than one transaction, especially because the sums are usually larger. Another Indian bank might have a 10M USD inflow, they too will use the FX market, selling 10M USD for INR, probably picking a different time to the first bank. So the rates will most likely differ (apart from the obvious bid/ask difference). The dollar rate they charge you is an average of their rate achieved when buying the USD, plus some commission for their forex brokerage, plus probably some fee for the service (accessing the global netting system isn't free). The fees should be clearly (and separately) stated on your bank statement, and so should be the FX rate. Back to the second example: Obviously since it's a different bank handing over INRs or USDs (or if it was your own bank, they would have internally netted the incoming USDs with the outgoing USDs) the rate will be different, but it's still a once a day transaction. From the INRs you get they will subtract the average FX achieved rate, the FX commissions and again the service fee for the global netting. The fees alone mean that the USD/INR sell rate is different from the buy rate.",
"title": ""
},
{
"docid": "3e5bdfd9c24f25f07783ca8aed2c4b0b",
"text": "A handful of well-known banks in the United States are part of the clearXchange network, which allows customers of those banks to move money amongst them. The clearXchange service is rebranded differently by each member bank. For example, Chase calls it QuickPay, while Wells Fargo calls it SurePay, and Capital One calls it P2P Payments. To use clearXchange, the sender's bank must be part of the network. The recipient isn't required to be in the network, though if they are it makes things easier, as no setup is required on the recipient's end in that case. Otherwise, they must sign up on the clearXchange site directly. From what I can tell, most payments are fee-free within the network. I have repeating payments set up with Chase's QuickPay, and they do not charge fees.",
"title": ""
},
{
"docid": "d494f736c2fe7c90d149b3ec3bbbcc0f",
"text": "There are several ways to minimize the international wire transfer fees: Transfer less frequently and larger amounts. The fees are usually flat, so transferring larger amounts lowers the fee percentage. 3% is a lot. In big banks, receiving is usually ~$15. If you transfer $1000 at a time, its 1.5%, if you transfer $10000 - it's much less, accordingly. If you have the time - have them send you checks (in US dollars) instead of wire transferring. It will be on hold for some time (up to a couple of weeks maybe), but will be totally free for you. I know that many banks have either free send and/or receive. I know that ETrade provides this service for free. My credit union provides if for free based on the relationship level, I have a mortgage with them now, so I don't pay any fees at all, including for wire transfer. Consider other options, like Western Union. Those may cost more for the sender (not necessarily though), but will be free for the receiver. You can get the money in cash, or checks, which you can just deposit on your regular bank account. For smaller amounts, it should be much cheaper than wire transfer, for example - sending $500 to India costs $10, while wire transfer is $30.",
"title": ""
},
{
"docid": "c05c869e4935166e9ed6d58d4660102f",
"text": "\"I looked this up on Wikipedia, and was hoping the answer would be \"\"no - stores cannot refuse legal tender\"\", but unfortunately, it's not the case! If the retailer wants to go to the lengths of refusing certain denominations to protect themselves from counterfeit currency, they are fully within their rights to do so. The \"\"Legal Tender\"\" page on Wikipedia says this about Canadian bills: [...] Retailers in Canada may refuse bank notes without breaking the law. According to legal guidelines, the method of payment has to be mutually agreed upon by the parties involved with the transactions. For example, convenience stores may refuse $100 bank notes if they feel that would put them at risk of being counterfeit victims [...] What is interesting about what I found out, is that legal tender cannot be refused if it is in repayment of an existing debt (i.e. not a store transaction for which there existed no previous debt). So you could offload your $100 bills when repaying your Sears credit card account (or pay in pennies if you wanted to!) and they couldn't refuse you!\"",
"title": ""
}
] |
fiqa
|
2610b3e155af92e861d3f1b7d3805fef
|
How does one value Facebook stock as a potential investment?
|
[
{
"docid": "f842bd669390984b235833aa573c6614",
"text": "In the long term, a P/E of 15-25 is the more 'normal' range. With a 90 P/E, Facebook has to quadruple its earnings to get to normal. It this possible? Yes. Likely? I don't know. I am not a stock analyst, but I love numbers and try to get to logical conclusions. I've seen data that worldwide advertising is about $400B, and US about $100B. If Facebook's profit runs 25% or so and I want a P/E of 20, it needs profit of $5B on sales of $20B (to reconcile its current $100B market cap). No matter what FB growth in sales is, the advertising spent worldwide will not rise or fall by much more than the economy. So with a focus on ads, they would need about 5% of the world market to grow into a comfortable P/E. Flipping this around, if all advertising were 25% profit (a crazy assumption), there are $100B in profit to be had world wide each year, and the value of the companies might total $2T in aggregate. The above is a rambling sharing of the reasonable bounds one might expect in analyzing a stock. It can be used for any otherwise finite market, such as soft drinks. There are only so many people on the planet, and in aggregate, the total soft drink consumption can't exceed, say 6 billion gallons per day. The pie may grow a bit, but it's considered fixed as an order of magnitude. Edit - for what it's worth, as of 8/3/12, the price has dropped significantly, currently $20, and the P/E is showing as 70X. I'm not making any predictions, but the stock needs a combined higher earnings or lower valuation to still approach 'normal.'",
"title": ""
},
{
"docid": "2898cbcad650524273c571ea685cf014",
"text": "\"You could try this experiment: pay for an Ad/banner on Facebook for 1 month. The Ad/banner should link to your ecommerce site. Then see if the Ad/banner does or does not convert into ecommerce orders (\"\"converting\"\" means that people coming to your eccomerce site from Facebook after having clicked on your Ad/banner really buy something on your site). If it does convert, you will go on paying for Ads/banners and other people will do the same for their sites, so FB might make cash in next years. But if it does NOT convert you and everybody else will soon discover and stop paying for Ads/banners, thus it will be hard for Facebook to make money with Advertising, thus Facebook might be just a big bubble (unless they find other ways of making money). I did the experiment I suggested above and the conversion rate was an absoulte ZERO!!! (Instead Google Adwords converted well for the same site). So IMHO I would stay away from FB. But remember that stock market is emotional (at least on short periods of time), so it might be that even if FB wil never become a cash cow, for the 1st few months people (expecially small investors tempeted by the brand) might go crazy for the stocks and buy buy buy, making the price go up up up. EDIT in reply to some comments below arguing that my answer was boiled down to one single experiment: General Motors said Tuesday that it will stop paid advertising on Facebook...the social media paid ads simply weren't delivering the hoped-for buyers... (CNN May/15/2012) A donkey can not fly either when it's me (with a single experiment) trying to make it fly or the entire GM workforce.\"",
"title": ""
},
{
"docid": "f63cceb091fed668aefa3680076af07f",
"text": "\"To know if a stock is undervalued is not something that can be easily assessed (else, everybody would know which stock is undervalued and everybody will buy it until it reaches its \"\"true\"\" value). But there are methods to assess the value of a company, I think that the 3 most known methods are: If the assets of the company were to be sold right now and that all its debts were to be paid back right now, how much will be left? This remaining amount would be the fundamental value of your company. That method could work well on real estate company whose value is more or less the buildings that they own minus of much they borrowed to acquire them. It's not really usefull in the case of Facebook, as most of its business is immaterial. I know the value of several companies of the same sector, so if I want to assess the value of another company of this sector I just have to compare it to the others. For example, you find out that simiral internet companies are being traded at a price that is 15 times their projected dividends (its called a Price Earning Ratio). Then, if you see that Facebook, all else being equal, is trading at 10 times its projected dividends, you could say that buying it would be at a discount. A company is worth as much as the cash flow that it will give me in the future If you think that facebook will give some dividends for a certain period of time, then you compute their present value (this means finding how much you should put in a bank account today to have the same amount in the future, this can be done by dividing the amount by some interest rates). So, if you think that holding a share of a Facebook for a long period of time would give you (at present value) 100 and that the share of the Facebook is being traded at 70, then buy it. There is another well known method, a more quantitative one, this is the Capital Asset Pricing Model. I won't go into the details of this one, but its about looking at how a company should be priced relatively to a benchmark of other companies. Also there are a lot's of factor that could affect the price of a company and make it strays away from its fundamental value: crisis, interest rates, regulation, price of oil, bad management, ..... And even by applying the previous methods, the fundemantal value itself will remain speculative and you can never be sure of it. And saying that you are buying at a discount will remain an opinion. After that, to price companies, you are likely to understand financial analysis, corporate finance and a bit of macroeconomy.\"",
"title": ""
},
{
"docid": "c292006ff02210387d9df2e28d2437bb",
"text": "\"The amount of hype and uneducated investors/speculators driving its prices up. Just by that I would say its prices are inflated. Bear in mind that Facebook don't sell anything tangible. They can go down as fast as they went up. Most of their income is ad based and single-product oriented, and as such highly dependent on usage and trends (remember MySpace?). Having said that, all the other \"\"classic\"\" valuation techniques are still valid and you should utilize them.\"",
"title": ""
}
] |
[
{
"docid": "fe61fe6dda1ebeb516ecc9824dd2d930",
"text": "Even people who did think it was a good didn't really get screwed. If you are an investor who thinks Facebook is a good buy then fucking hold it. The company hasn't even released its first quarter of earnings yet. If the people who bought Facebook are right about it it will be worth it in five years. The fact is we cannot say whether or not that is going to happen right now. The only people who really got screwed are the ones who wanted to flip it. If you wanted to flip it you lost a lot of money, but the retail investors who figured that Facebook long-term was worth the money, didn't get screwed. They might be wrong and might lose all their money five years from now, but they didn't get screwed yet.",
"title": ""
},
{
"docid": "dcf6b3771ad03916adfe08e2982cd346",
"text": "\"An answer can be found in my book, \"\"A Modern Approach to Graham and Dodd Investing,\"\" p. 89 http://www.amazon.com/Modern-Approach-Graham-Investing-Finance/dp/0471584150/ref=sr_1_1?s=books&ie=UTF8&qid=1321628992&sr=1-1 \"\"If a company has no sustained cash flow over time, it has no value...If a company has positive cash flow but economic earnings are zero or less, it has a value less than book value and is a wasting asset. There is enough cash to pay interim dividends, bu the net present value of the dividend stream is less than book value.\"\" A company with a stock trading below book value is believed to be \"\"impaired,\"\" perhaps because assets are overstated. Depending on the situation, it may or may not be a bankruptcy candidate.\"",
"title": ""
},
{
"docid": "f0656add052a98a8db4a16389833068c",
"text": "Source, see if you have access to it Convertible notes are often used by angel investors who wish to fund businesses without establishing an explicit valuation of the company in which they are investing. When an investor purchases equity in a startup, the purchase price of the equity implies a company valuation. For example, if an investor purchases a 10 per cent ownership stake in a company, and pay $1m for that stake, this implies that the company is worth $10m. Some early stage investors may wish to avoid placing a value on the company in this way, because this in turn will affect the terms under which later-stage investors will invest in the company. Convertible notes are structured as loans at the time the investment is made. The outstanding balance of the loan is automatically converted to equity when a later equity investor appears, under terms that are governed by the terms set by the later-stage equity investor. An equity investor is someone who purchases equity in a company. Example:- Suppose an angel investor invests $100,000 using a convertible note. Later, an equity investor invests $1m and receives 10% of the company's shares. In the simplest possible case, the initial angel investor's convertible note would convert to 1/10th of the equity investor's claim. Depending on the exact structure of the convertible note, however, the angel investor may also receive extra shares to compensate them for the additional risk associated with being an earlier investor The worst-case scenario would be if the issuing company initially performed well, meaning that the debt would be converted into shares, and subsequently went bankrupt. The converted shares would become worthless, but the holder of the note would no longer have any recourse. Will twitter have to sell their offices and liquidate staff to close this debt? This depends on the seniority(priority) of the debt. Debt is serviced according to seniority. The higher seniority debts will be paid off first and then only the lower seniority debts be serviced. This will all be in the agreements when you enter into a transaction. When you say liquidate staff you mean sell off their assets and not sell their staff into slavery.",
"title": ""
},
{
"docid": "5332ab4fcf9969669a3adebdc5e92194",
"text": "\"Bloomberg suggests that two Fidelity funds hold preferred shares of Snapchat Inc.. Preferred shares hold more in common with bonds than with ordinary stock as they pay a fixed dividend, have lower liquidity, and don't have voting rights. Because of this lower liquidity they are not usually offered for sale on the market. Whether these funds are allowed to hold such illiquid assets is more a question for their strategy document than the law; it is completely legal for a company to hold a non-marketable interest in another, even if the company is privately held as Snapchat is. The strategy documents governing what the fund is permitted to hold, however, may restrict ownership either banning non-market holdings or restricting the percentage of assets held in illiquid instruments. Since IPO is very costly, funds like these who look to invest in new companies who have not been through IPO yet are a very good way of taking a diversified position in start-ups. Since they look to invest directly rather than through the market they are an attractive, low cost way for start-ups to generate funds to grow. The fund deals directly with the owners of the company to buy its shares. The markdown of the stock value reflects the accounting principle of marking to market (MTM) financial assets that do not have a trade price so as to reflect their fair value. This markdown implies that Fidelity believe that the total NPV of the company's net assets is lower than they had previously calculated. This probably reflects a lack of revenue streams coming into the business in the case of Snapchat. edit: by the way, since there is no market for start-up \"\"stocks\"\" pre-IPO my heart sinks a little every time I read the title of this question. I'm going to be sad all day now :(.\"",
"title": ""
},
{
"docid": "a5ad9cc5c56afd2f812810cd5f15af08",
"text": "One of the problems is that its being marketed at a growth stock. When Facebook has 900 million users, there isn't exactly a lot of growth left. The only thing they can do is try to squeeze more money out of their existing user base, which won't be easy to do for people not generally interested in clicking ads or paying for things. Facebook as a company will continue to do well for a long long time. It's good they aren't really dependent on the money their stock brings them. I wouldn't be surprised to see the stock settle around $18-$22ish, even though it probably should technically settle in the $13-15 range.",
"title": ""
},
{
"docid": "a8b88198916d748a47f9a1efedca2ada",
"text": "Yeah from what I've read, Facebook is pilling up the profits so they could be in very good position to do the RA as well. Its crazy if you think about the Google one.. At least $100m more went to the shareholders due to the different fee structure. Why wouldn't you do that if you had the option?",
"title": ""
},
{
"docid": "ee8a6f97c97ef7941969a41f0081da28",
"text": "\"What littleadv said is correct. His worth is based on the presumed worth of the total company value (which is much greater than all investment dollars combined because of valuation growth)*. In other words, his \"\"worth\"\" is based on the potential return for his share of ownership at a rate based on the latest valuation of the company. He is worth $17.5 billion today, but the total funding for Facebook is only $2.4 billion? I don't understand this. In private companies, valuations typically come from either speculation/analysts or from investments. Investment valuations are the better gauge, because actual money traded hands for a percentage ownership. However, just as with public companies on the stock market, there are (at least) two caveats. Just because someone else sold their shares at a given rate, doesn't mean that rate... In both cases, it's possible the value may be much lower or much higher. Some high-value purchases surprise for how high they are, such as Microsoft's acquisition of Skype for $8.5 billion. The formula for one owner's \"\"worth\"\" based on a given acquisition is: Valuation = Acquisition amount / Acquisition percent Worth = Owner's percent × Valuation According to Wikipedia Zuckerberg owns 24%. In January, Goldman Sach's invested $500 million at a $50 billion valuation. That is the latest investment and puts Zuckerberg's worth at $12 billion. However, some speculation places a Facebook IPO at a much higher valuation, such as as $100 billion. I don't know what your reference is for $17 billion, but it puts their valuation at $70.8 billion, between the January Goldman valuation and current IPO speculation. * For instance, Eduardo Saverin originally invested $10,000, which, at his estimated 5% ownership, would now be worth $3-5 billion.\"",
"title": ""
},
{
"docid": "443ed933186e8032726e0e1c7ace6636",
"text": "\"> Wall St ripped off retail investors pretty good \"\"Ripped off\"\" ? How about \"\"retail investors did not sufficiently research and think about the company, invested poorly\"\" Seriously, a 20 minute thought experiment pre-IPO of \"\"is Facebook worth $100bn, and does it have growth prospects?\"\" ought to immediately discount the stock. The smart money was always on \"\"short it as soon as you can\"\" If you're making investment decisions like \"\"Hey, I know what that company is. I use facebook!\"\" you deserve to lose money.\"",
"title": ""
},
{
"docid": "effdb8dcc335751c858d9ba889630d68",
"text": "FB's IPO was at exactly the right price. The intent all along was to allow insiders to sell to retail bagholders, hence the large support by JPM to hold the line at $38.0000000, the absolutely legendary hype, and the unusual step of allowing retail in on it.",
"title": ""
},
{
"docid": "575ea962df2310a80f53c4f8f5e81c12",
"text": "DCF only works with stable cash flows, a new tech company that does not have stable cash flows or even cash flows that are easy to ACCURATELY forecast is a poor candidate for DCF. Comparables don't really work well in this space as the closest thing they would have is skype and other messager products. The honest and true value of the acquisition is the value captured/saved by facebook from the decrease in competition and as facebook is in the advertising business, this gives them a way to stay in the lives of their users. Facebook could argue, the core rationale for the acquisition was to stay current with their users keeping their core product attractive to their customers (advertisers).",
"title": ""
},
{
"docid": "c214d560ed54ea4495c8526b2894adf6",
"text": "The worth of a share of stocks may be defined as the present cash value of all future dividends and liquidations associated therewith. Without a crystal ball, such worth may generally only be determined retrospectively, but even though it's generally not possible to know the precise worth of a stock in time for such information to be useful, it has a level of worth which is absolute and not--unlikely market price--is generally unaffected by people buying and selling the stock (except insofar as activities in company stock affect a company's ability to do business). If a particular share of stock is worth $10 by the above measure, but Joe sells it to Larry for $8, that means Joe gives Larry $2. If Larry sells it to Fred $12, Fred gives Larry $2. The only way Fred can come out ahead is if he finds someone else to give him $2 or more. If Fred can sell it to Adam for $13, then Adam will give Fred $3, leaving Fred $1 better off than he would be if he hadn't bought the stock, but Adam will be $3 worse off. The key point is that if you sell something for less than it's worth, or buy something for more that it's worth, you give money away. You might be able to convince other people to give you money in the same way you gave someone else money, but fundamentally the money has been given away, and it's not coming back.",
"title": ""
},
{
"docid": "af2e38ba5d717fc1e30e479aeb76faec",
"text": "There are two very large negative factors that affect Yahoo's valuation. The first is that their search business is in decline and continues to lose ground to Google and even Bing. There's no sign that they have any plan or product in the works to offset this decline, so there's tremendous uncertainty about the company's forward-looking revenues. The second is that the company can't seem to decide what to do with its stake in Alibaba, clearly the company's most valuable asset. It they sell it, the question then becomes what they plan to do with the proceeds. Will they do share buybacks or offer a special dividend to reward investors? Will they use some or all of the money to make strategic acquisitions that are revenue-enhancing? Will they use it to develop new products/services? Keep in mind one other thing here, too. There's a world of difference between what something is valued at and what someone's willing to actually pay for it. A patent portfolio is great and perhaps holds good value, assuming the buyer can find a way to monetize it. How exactly was the valuation of the patents arrived at, and are they worthwhile enough for someone to pay anywhere close to that valuation? There's more to this than meets the eye by using a first-blush look at asset valuation, and that's where the professionals come in. My bet is that they have it right and there's something the rest of the market doesn't see or understand about it, hence questions like yours. I hope this helps. Good luck!",
"title": ""
},
{
"docid": "4319ebd4f62eadb63d61aa3c1f162649",
"text": "The Facebook IPO wasn't a debacle. Facebook got maximum value for their shares. That's precisely what you want at IPO. If you sell your stock initially for $25, and next week it's at $35, you've left a hell of a lot of money on the table.",
"title": ""
},
{
"docid": "8ad8c31cf38ded9ae11e02d78b881164",
"text": "\"Thank you for the in-depth, detailed explanation; it's refreshing to see a concise, non verbose explanation on reddit. I have a couple of questions, if that's alright. Firstly, concerning mezzanine investors. Based on my understanding from Google, these people invest after a venture has been partially financed (can I use venture like that in a financial context, or does it refer specifically to venture capital?) so they would receive a smaller return, yes? Is mezzanine investing particularly profitable? It sounds like you'd need a wide portfolio. Secondly, why is dilution so important further down the road? Is it to do with valuation? Finally, at what point would a company aim to meet an IPO? Is it case specific, or is there a general understanding of the \"\"best time\"\"? Thank you so much for answering my questions.\"",
"title": ""
},
{
"docid": "ffe077ce7109494b884f009cd2cac25f",
"text": "\"People treat an emergency fund as some kind of ace-in-the-hole when it comes to financial difficulty, but it is only one of many sources of money that you can utilize. What is an emergency? First, you have to define what an emergency is. Is it a lost job? Is it an unplanned event (pregnancy, perhaps)? Is it a medical emergency? Is it the death of you or your spouse? Also, what does it mean to be unplanned? Is being so unhappy with your job that you give a 2-week notice an emergency? Is one month of planning an emergency? Two? Only you can answer these questions for yourself, but they significantly shape your financial strategy. Planning is highly dependent on your cashflow, and, for some people, it may take them a year to build enough savings to enable them to take 3 months off work. For others, they may be able to change their spending to build up enough for 3 months in 1 month. Also, you have to consider the length of the emergency. Job-loss is rarely permanent, but it's rarely short as well. The current average is 30.7 weeks: that's 7 months! Money in an Emergency There are six main places that people get money during a financial emergency: A good emergency strategy takes all six of these into account. Some emergencies may lean more on one source than the other. However, some of these are correlated. For example, in 2008, three things happened: the stock market crashed, unsecured debt dried up, and people faced financial emergency (lost jobs, cut wages). If you were dependent on a stock portfolio and/or a line of credit, you'd be up a creek, because the value of your investments suddenly decreased, and you can't really tap your now significantly limited line of credit. However, if you had a one or more of cash savings, unemployment income, and unemployment insurance, you would probably have been OK. Budgeting for an emergency When you say \"\"financial emergency\"\", most people think job loss. However, the most common cause of bankruptcy in the US is medical debt. Depending on your insurance situation, this could be a serious risk, or it may not be. People say you should have 3x-6x of your monthly income in savings because it's an easy, back-of-the-envelope way to handle most financial emergency risk, but it's not necessarily the most prudent strategy for you. To properly budget for an emergency, you need to fully take into account what emergencies you are likely to face, and what sources of financing you would have access to given the likely factors that led to that emergency. Generally, having a savings account with some amount of liquid cash is an important part of a risk-mitigation strategy. But it's not a panacea for every kind of emergency.\"",
"title": ""
}
] |
fiqa
|
a58c163a345574222f881c19ddc6033e
|
I cosigned for a friend who is not paying the payment
|
[
{
"docid": "9a838469fa155163c0b924eaa6f44b0e",
"text": "\"Cosigning is explicitly a promise that you will make the payments if the primary signer can not. Don't do it unless you are able to handle the cost and trust the other party will \"\"make you whole\"\" when they can... which means don't do it for anyone you would not lend your money to, since it comes out to about the same level of risk. Having agreed, you're sorta stuck with your ex-friend's problem. I recommend talking to a lawyer about the safest way get out of this. It isn't clear you can even sue the ex-friend at this point.\"",
"title": ""
},
{
"docid": "170f30bfa452e1d4d4dc1b3e35bba2df",
"text": "\"I'm sorry you are going through this, but what you are dealing with is exactly is how cosigning works. It is among other reasons why you should never cosign a loan for someone unless you are 100% prepared to pay the loan on their behalf. Unfortunately, the main \"\"benefit\"\" to cosigning a loan is to the bank - they don't care who makes payments, only that someone does. It is not in their interest to educate purchasers who can easily get themselves into the situation you are in. What your options are depends a fair bit on the type of loan it is. The biggest problem is that normally as cosigner you cannot force your friend to do anything. If it is for a car, your best bet is to convince them to sell the car and hopefully recoup more than the cost of the loan. Many workplaces have some sort of free service to provide counseling/guidance on this sort of thing. Look into your employee benefits as you may have some free services there. You can sue your friend in small claims court, but keep in mind: It also depends on how big the loan is relative to your income. While it might feel good to sue your friend in small claims court, if it's for $500 it probably isn't worthwhile - but if your friend just stopped paying off their $30k vehicle assuming you will pay for it, even though they can pay for it themselves?\"",
"title": ""
},
{
"docid": "47f824d42ed7ff0928853fa65f72d426",
"text": "\"I am not sure how anyone is answering this unless they know what the loan was for. For instance if it is for a house you can put a lien on the house. If it is for the car in most states you can take over ownership of it. Point being is that you need to go after the asset. If there is no asset you need to go after you \"\"friend\"\". Again we need more specifics to determine the best course of action which could range from you suing and garnishing wages from your friend to going to small claims court. Part of this process is also getting a hold of the lending institution. By letting them know what is going on they may be able to help you - they are good at tracking people down for free. Also the lender may be able to give you options. For example if it is for a car a bank may help you clear this out if you get the car back plus penalty. If a car is not in the red on the loan and it is in good condition the bank turns a profit on the default. If they can recover it for free they will be willing to work with you. I worked in repo when younger and on more than a few occasions we had the cosigner helping. It went down like this... Co-signer gets pissed like you and calls bank, bank works out a plan and tells cosigner to default, cosigner defaults, banks gives cosigner rights to repo vehicle, cosigner helps or actually repos vehicle, bank gets car back, bank inspects car, bank asks cosigner for X amount (sometimes nothing but not usually), cosigner pays X, bank does not hit cosigners credit, bank releases loan and sells car. I am writing this like it is easy but it really requires that asset is still in good condition, that cosigner can get to the asset, and that the \"\"friend\"\" still is around and trusts cosigner. I have seen more than a few cosigners promise to deliver and come up short and couple conspiring with the \"\"friend\"\". I basically think most of the advice you have gotten so far is crap and you haven't provided enough info to give perfect advice. Seeking a lawyer is a joke. Going after a fleeing party could eat up 40-50 billable hours. It isn't like you are suing a business or something. The lawyer could cost as much as repaying the loan - and most lawyers will act like it is a snap of their fingers until they have bled you dry - just really unsound advice. For the most part I would suggest talking to the bank and defaulting but again need 100% of the details. The other part is cosigning the loan. Why the hell would you cosign a loan for a friend? Most parents won't cosign a loan for their own kids. And if you are cosigning a loan, you write up a simple contract and make the non-payment penalties extremely costly for your friend. I have seen simple contracts that include 30% interests rates that were upheld by courts.\"",
"title": ""
},
{
"docid": "ae66c980c607a24baad826a1aaa2be90",
"text": "The point of co-signing for a friend is that they're your friend. You signed for them in the belief that your friendship would ensure they didn't burn you. If your friend has hung you out to dry, basically they aren't your friend any more. Before you lawyer up, how's about talking to your friend as a friend? Sure he may have moved away from the area, but Facebook is still a thing, right? It's possible he doesn't even realise you're taking the fall for him. And presumably you have mutual friends too. If he's blanking you then he does know you're taking the fall and doesn't care. So call/message them too and let them know the situation. Chances are he doesn't want all his other friends cutting him off because they can see he'd treat them the same way he's treating you. And chances are they'll give you his number and new address, because they don't want to be in the middle. If this fails, look at the loan. If it's a loan secured against something of his (e.g. a car), let it go. The bank will repossess it, and that's job done. Of course it will look bad on your credit for a while, but you're basically stuck with that.",
"title": ""
},
{
"docid": "e24b171d757ef9cc138878484923fbde",
"text": "\"You promised to pay the loan if he didn't. That was a commitment, and I recommend \"\"owning\"\" your choice and following it through to its conclusion, even if you never do that again. TLDR: You made a mistake: own it, keep your word, and embrace the lesson. Why? Because you keep your promises. (Nevermind that this is a rare time where your answer will be directly recorded, in your credit report.) This isn't moralism. I see this as a \"\"defining moment\"\" in a long game: 10 years down the road I'd like you to be wise, confident and unafraid in financial matters, with a healthy (if distant) relationship with our somewhat corrupt financial system. I know austerity stinks, but having a strong financial life will bring you a lot more money in the long run. Many are leaping to the conclusions that this is an \"\"EX-friend\"\" who did this deliberately. Don't assume this. For instance, it's quite possible your friend sold the (car?) at a dealer, who failed to pay off this note, or did and the lender botched the paperwork. And when the collector called, he told them that, thinking the collector would fix it, which they don't do. The point is, you don't know: your friend may be an innocent party here. Creditors generally don't report late payments to the credit bureaus until they're 30 days late. But as a co-signer, you're in a bad spot: you're liable for the payments, but they don't send you a bill. So when you hear about it, it's already nearly 30 days late. You don't get any extra grace period as a co-signer. So you need to make a payment right away to keep that from going 30 late, or if it's already 30 late, to keep it from going any later. If it is later determined that it was not necessary for you to make those payments, the lender should give them back to you. A less reputable lender may resist, and you may have to threaten small claims court, which is a great expense to them. Cheaper to pay you. They say France is the nation of love. They say America is the nation of commerce. So it's not surprising that here, people are quick to burn a lasting friendship over a temporary financial issue. Just saying, that isn't necessarily the right answer. I don't know about you, but my friends all have warts. Nobody's perfect. Financial issues are just another kind of wart. And financial life in America is hard, because we let commerce run amok. And because our obsession with it makes it a \"\"loaded\"\" issue and thus hard to talk about. Perhaps your friend is in trouble but the actual villain is a predatory lender. Point is, the friendship may be more important than this temporary adversity. The right answer may be to come together and figure out how to make it work. Yes, it's also possible he's a human leech who hops from person to person, charming them into cosigning for him. But to assume that right out of the gate is a bit silly. The first question I'd ask is \"\"where's the car?\"\" (If it's a car). Many lenders, especially those who loan to poor credit risks, put trackers in the car. They can tell you where it is, or at least, where it was last seen when the tracker stopped working. If that is a car dealer's lot, for instance, that would be very informative. Simply reaching out to the lender may get things moving, if there's just a paperwork issue behind this. Many people deal with life troubles by fleeing: they dread picking up the phone, they fearfully throw summons in the trash. This is a terrifying and miserable way to deal with such a situation. They learn nothing, and it's pure suffering. I prefer and recommend the opposite: turn into it, deal with it head-on, get ahead of it. Ask questions, google things, read, become an expert on the thing. Be the one calling the lender, not the other way round. This way it becomes a technical learning experience that's interesting and fun for you, and the lender is dreading your calls instead of the other way 'round. I've been sued. It sucked. But I took it on boldly, and and actually led the fight and strategy (albeit with counsel). And turned it around so he wound up paying my legal bills. HA! With that precious experience, I know exactly what to do... I don't fear being sued, or if absolutely necessary, suing. You might as well get the best financial education. You're paying the tuition!\"",
"title": ""
},
{
"docid": "090598b25ad86dc8c42f5c2246085762",
"text": "Another option, not yet discussed here, is to allow the loan to go into default and let the loaning agency repossess the property the loan was used for, after which they sell it and that sale should discharge some significant portion of the loan. Knowing where the friend and property is, you may be able to help them carry out the repossession by providing them information. Meanwhile, your credit will take a significant hit, but unless your name is on the deed/title of the property then you have little claim that the property is yours just because you're paying the loan. The contract you signed for the loan is not going to be easily bypassed with a lawsuit of any sort, so unless you can produce another contract between you and your friend it's unlikely that you can even sue them. In short, you have no claim to the property, but the loaning agency does - perhaps that's the only way to avoid paying most of the debt, but you do trade some of your credit for it. Hopefully you understand that what you loaned wasn't money, but your credit score and earning potential, and that you will be more careful who you choose to lend this to in the future.",
"title": ""
},
{
"docid": "0cab331721d5895425e6eb5ca2f0c24b",
"text": "I would like to add one minor point for clarity: Cosigning means that you, alongside your friend, enter into a contract with the bank. It does not necessarily mean that you now have a contract with your friend, although that could implicitly be concluded. If the bank makes use of their contracted right to make you pay your friend's debts with them, this has no effect on your legal relationship with your friend. Of course, you can hold him or her liable for your damages he or she has caused. It is another question whether this would help you in practice, but that has been discussed before.",
"title": ""
},
{
"docid": "148f0f976110c67e4db7052db46b5637",
"text": "\"Without all the details it's hard to tell what options you may have, but none of them are good. When you cosign you are saying that, you believe the primary signer will make good on the loan, but that if he doesn't you will. You are 100% responsible for this debt. As such, there are some actions you can take. First, really try to stress to your friend, that they need to get you outta this loan. Urge them to re-finance with out you if they can. Next look for \"\"better\"\" ways of defaulting on the loan and take them. Depending on what the loan is for you could deed-in-lue or short sale. You may just have to admit default. If you work with the bank, and try not to drag out the process, you will likely end up in a better place down the line. Also of importance is ownership. If you pay the loan, do you get ownership of the thing the loan was secured against? Usually not, but working with an attorney and the bank, maybe. For example, if it's a car, can the \"\"friend\"\" sign over the car to you, then you sell it, and reduce your debt. Basically as a cosigner, you have some rights, but you have all the responsibilities. You need to talk to an attorney and possibly the bank, and see what your options are. At this point, if you think the friend is not that much of a friend anymore, it's time to make sure that any conversation you have with them is recorded in email, or on paper.\"",
"title": ""
},
{
"docid": "2b7bcce1e6caa6671c2cf0e7ffc9fd8a",
"text": "\"Sue the friend. When you win, garnish his wages. It does not have to be by so much that it makes him quit his job, but get 75.00 per pay period to come to you. This may require the use of a private investigator but, if you want to make this \"\"friend\"\" face consequences, this is your only option. Otherwise, let it go and keep paying his bill.\"",
"title": ""
},
{
"docid": "5620c024950487dff9344ee03c171ec5",
"text": "I came across such a situation and I am still facing it. My friend borrowed my credit card for his expenses as he had misplaced his debit card and for the time being had asked for my credit card to handle the expenses he does. He paid for initial 2 months and then was not able to make payments, mainly due to not being able to arrange money or if it was a contri party, he would collect cash from friends but again spend the same. Months passes by... the bill had come upto 65k and calls from bank and other respective organizations Finally my dad came into picture and slowly the issue is resolving he has paid 50K remaining is still pending. So basically, the reason I shared this part of story was he is my Best friend and in order to not spoil our friendship I did not want to take any such step which would later on affect our friendship. This completely depends on the individuals how they react to the situation. Keeping Ego, superiority, favour sort of feelings and words apart things can be resolved between friends. You do not know what is the situation on the other side. Probably you can connect with him ask him to explain you why is not able to pay the debts and take action accordingly. If he is not able to provide a proper reason then you may take some actions like mentioned in initial answers, run after the assets he own or anything else.Stay Calm and patient. Do not take any such step which you would regret later on...!",
"title": ""
},
{
"docid": "d2551584505861e4c97a7fe6477e8276",
"text": "I think I'm reading that you cosigned a loan with a friend, and they've stopped paying on their loan. Not a whole lot of options here. You'll have to pay the loan off by yourself or allow the loan to go into collections in hopes that you'll get more money later and pay it off then. Small claims court is definitely an option at that point. Next time, perhaps try not to cosign loans with friends unless you really trust them and are confident that you can pay the loan off if they cannot.",
"title": ""
},
{
"docid": "95c99fdba044993b8b9314c59ca5831c",
"text": "If the bank is calling your employer, the federal Fair Debt Collection Practices Act (FDCPA) limits where and when debt collectors can contact consumer debtors. In many cases, debt collectors that contact debtors at work are violating the FDCPA. http://www.nolo.com/legal-encyclopedia/a-debt-collector-calling-me-work-is-allowed.html",
"title": ""
}
] |
[
{
"docid": "92aab8cb766f94c1910be0643c85211c",
"text": "From your viewpoint you paying the dealer directly is better. You know that the check went to the dealer, and was used to purchase a car. If you give the check to your friend they may say I can't find the car I want this week, so I will purchase it next week but first let me by groceries and a new suit. I will replace the funds after my next paycheck. Next thing you know they are still short of funds. This might not happen, but it could. From your friends viewpoint getting a check from you allows them to potentially keep your part of the transaction out of view of the dealer/lender. In a mortgage situation the lender will take a look at your bank account to make sure there isn't a hidden loan, but I am not sure they do when they are approving a car loan. What you want to avoid is being a co-signer for the loan. As a co-signer you will be responsible for all payments; and missed payments will hurt your credit score.",
"title": ""
},
{
"docid": "f3c707c379924f7a5f0f0ce1687b79a4",
"text": "You may have a few options if the company continues to ignore your communication. Even if none of these works out, the debt should still probably be paid out by the estate of your friend.",
"title": ""
},
{
"docid": "326da0a0c278ca89edbf77cc0da4b4ac",
"text": "Something else to consider, even if your friend is on the up and up and never misses a payment: Until the house is paid off, any time you apply for credit banks will count the mortgage payment on your friends house against your ability to pay all your existing debts in addition to whatever new loan you're applying for. If you're renting a home now, this will likely mean that you'll be unable to buy one until your friends house is paid off.",
"title": ""
},
{
"docid": "e04a6a482c4d33b7cb0fdf8682ac7c1c",
"text": "Send a well-documented payment to the original creditor. Do it in such a way that you would have the ability to prove that you sent a payment if they reject it. Should they reject it, demonstrate that to the credit reporting bureaus.",
"title": ""
},
{
"docid": "bb68642a73cf83fa8b727e24c41e3068",
"text": "\"I'll take an alternate route: honesty + humor. Say something like this with a smile and a laugh, like you know they're crazy, but they maybe don't know it yet. \"\"Are you crazy? Co-signing a loan can put us both in a lot of potential danger. First, you shouldn't get a loan that you can't afford/attain on your own, and second, I'd be crazy to agree to be liable for a loan that someone else can't get on their own. You want something bad enough, you get your credit rating in order, or you save up the money - that's how I bought (my car/house/trip to Geneva). I'd be happy to point you in the right direction if you want to put a plan together.\"\" You're offering help, but not the kind that puts you in danger. Declining to co-sign a loan can't damage your relationship with this person as much as failure to pay will.\"",
"title": ""
},
{
"docid": "394bc28a2c7d606a83f44eb928d11e84",
"text": "Are there any risks you're overlooking? I think if you're considering this at all you're overlooking all of the risks... namely, if you think the issue with him not paying on the loan is the procedure involved with initiating collections or taking him to court for a judgement you're severely underestimating actually collecting after you're awarded a judgement. Typically when people stop paying a debt, its because they don't have money. A judgement doesn't change that. Now you could include in the promissory note a lien on some piece of his property, if he has one. Even with the lien and a judgement against him you can't do much. There are laws related to lending by individuals, related to debt collection, maximum/minimum interest rates; there may even be a law that mandating individuals may only assess simple interest. I doubt you'll be able to find a formal institution that will take over as nothing more than an administrator, though you might as well start researching how to sell the debt once your colleague defaults. IF you can legally amortize the loan at 4% and $450 per month, you're not made whole until about month 78. Months 79 through about 90 will be your profit zone. At this rate of return I'd just buy a muni... If you're willing to kiss this money good bye, and lending it generates more amusement to you than setting it on fire, go for it!",
"title": ""
},
{
"docid": "570ac0090e1be889f6f2c7fedd9e6ef7",
"text": "Without knowledge of the special provisions of your loan contract, the one with the highest interest rate should be paid first. Or, if one's fixed payment is much larger than the other, and it is a burden, then it should be paid first, but refinancing may be an option. Socially speaking and possibly even economically since it could affect your reputation, it is probably best to either refinance the cosigned loan or pay that off as rapidly as possible. Economically speaking, I would recommend no prepayment since the asset that is leveraged is your mind which will last many decades, probably exceeding the term of the loan, but some caveats must be handled first: Many would disagree, but I finance the way I play poker: tight-aggressive.",
"title": ""
},
{
"docid": "7a44496c2bd1e2232797a0e4fd167338",
"text": "\"Definitely consult a lawyer. Mortgages are highly regulated now, and regardless of how familiar borrower & lender are, the standard contract will be extremely long. (at least in the US) There are no \"\"friends and/or family\"\" exceptions. If the contract does not conform to regulations, it may be invalid, and all the money you lent could simply evaporate since it was the borrower who actually bought the house, and it's the loan contract that's rendered null & void; in that case, it may be better to simply donate the money.\"",
"title": ""
},
{
"docid": "068fdfe3d42820b093505efed1501d8e",
"text": "In the event that payment is not made by the due date on the invoice then the transaction is essentially null and void and you can sell the work to another client. For your particular situation I would strongly suggest that you implement a sales contract and agreement of original transfer of work of art for any and all future sales of your original works of art. In this contract you need to either enforce payment in full at time of signing or a deposit at signing with payment in full within (X) amount of days and upon delivery of item. In your sales contract you will want to stipulate a late fee in the event that the client does not pay the balance by the date specified, and a clause that stipulates how long after the due date that you will hold the artwork before the client forfeiting deposit and losing rights to the work. You will also want to specify an amount of time that you provide as a grace period in the event client changes their mind about the purchase, and you can make it zero grace period, making all sales final and upon signing of the agreement the client agrees to the terms and is locked into the sale. In which point if they back out they forfeit all deposits paid. I own a custom web design business and we implement a similar agreement for all works that we create for a client, requiring a 50% deposit in advance of work being started, an additional 25% at time of client accepting the design/layout and the final 25% at delivery of finished product. In the event that a client fails to meet the requirements of the contract for the second or final installment payments the client forfeits all money paid and actually owes us 70% of total quoted project price for wasting our time. We have only had to enforce these stipulations on one client in 5 years! The benefit to you for requiring a deposit if payment is not made in full is that it ensures that the client is serious about purchasing the work because they have put money in the game rather than just their word of wanting to purchase. Think of it like putting earnest money down when you make an offer to buy a house. Hope this helps!",
"title": ""
},
{
"docid": "952ca1d90bac05577db80d5258d82c06",
"text": "\"Never forget that student lenders and their collection agencies are dangerous and clever predators, and you, the student borrower, are their legal prey. They look at you and think, \"\"food.\"\" My friend said she never pays her student loans and nothing has happened. She's wrong. Something has happened. She just doesn't know about it yet. Each unpaid bill, with penalties, has been added to the balance of her loan. Now she owes that money also. And she owes interest on it. That balance is probably building up very fast indeed. She's playing right into the hands of her student lender. They are smiling about this. When the balance gets large enough to make it worthwhile, her student lender will retain an aggressive collection agency to recover the entire balance. The agency will come after her in court, and they are likely to win. If your friend lives in the US, she'll discover that she can't declare bankruptcy to escape this. She has the bankruptcy \"\"reform\"\" act of 2006, passed during the Bush 43 regime, to thank for this. A court judgement against her will make it harder for her to find a job and even a spouse. I'm not saying this is right or just. I believe it is wrong and unjust to make university graduates into debt slaves. But it is true. As for being paid under the table, I hope your friend intends on dying rather than retiring when she no longer can work due to age. If she's paid under the table she will not be eligible for social security payments. You need sixteen calendar quarters of social security credit to be eligible for payments. I know somebody like this. It's a hell of a way to live, especially on weekends when the local church feeding programs don't operate. Paying people under the table ought to be a felony for the business owner.\"",
"title": ""
},
{
"docid": "a46e30f4bc33d0e7cd964393fe909451",
"text": "Beg, plead, whimper, and hope they take pity on you. Sorry, but there's no way to force someone to take less than you legitimately owe them except to declare bankrupty, and even that may not do it. If they aren't interested in throwing away $3000, your best bet really is to try to arrange a payment plan, or to get a loan from somewhere and pay that back over time. Of course either of those options is likely to cost you interest, but that's what happens... I wish I could say something else, but there really isn't any good news here.",
"title": ""
},
{
"docid": "64fb7a323214f50afbc01fecc4753d61",
"text": "Your first step is to talk to the current lender and ask about refinancing in the other person's name. The lender is free to say no, and if they think the other person is unlikely to pay it back, they won't refinance. If you're in this situation because the other person didn't qualify for a loan in the first place, the lender probably won't change their mind, but it's still worth asking. From the lender's point of view, you'll be selling the other person the car. If they qualify for a loan, it's as simple as getting the loan from a bank, then doing whatever is required by your state to sell a car between either private parties or between relatives (depending on who the other person is). The bank might help you with this, or your state's DMV website. Here are a few options that don't involve changing who is on the loan: Taking out a loan for another person is always a big risk. Banks have entire departments devoted to determining who is a good credit risk, and who isn't, so if a person can't get a loan from a bank, it's usually for a good reason. One good thing about your situation: you actually bought the car, and are the listed owner. Had you co-signed on a loan in the other person's name, you'd owe the money, but wouldn't even have the car's value to fall back on when they stopped paying.",
"title": ""
},
{
"docid": "1a9a715a99e75fda4a54ce531c8a5a61",
"text": "'If i co-sign that makes me 100% liable if for any reason you can't or won't pay. Also this shows up on a credit report just like it's my debt. This limits the amount i can borrow for any reason. I don't want to take on your debt, that's your business and i don't want to make it mine'.",
"title": ""
},
{
"docid": "8be4b8c3196627390ff6bf2365f30916",
"text": "\"My thoughts on loaning money to friends or family are outlined pretty extensively here, but cosigning on a loan is a different matter. It is almost never a good idea to do this (I say \"\"almost\"\" only because I dislike absolutes). Here are the reasons why: Now, all that said, if my sister or parents were dying of cancer and cosigning a loan was the only way to cure them, I might consider cosigning on a loan with them, if that was the only option. But, I would bet that 99.9% of such cases are not so dire, and your would-be co-borrower will survive with out the co-signing.\"",
"title": ""
},
{
"docid": "a0994d1ec45dc7b1639e3b353e740fc7",
"text": "Don't forget job. That's one of the things people in the lower classes lost. I was trying to figure out why there weren't mass firings at trading and accounting firms until the numbers started popping up. They had basically just liquidated what they had, bought at lower numbers, and are now reaping the profits. Too bad most people earning under $250k a year can't do that.",
"title": ""
}
] |
fiqa
|
af920854fcb3276da86ccd27c4974ff5
|
Why don't more people run up their credit cards and skip the country?
|
[
{
"docid": "0d4aa993cd8b7d0073c74d02c62e2577",
"text": "It's harder than you think. Once card companies start seeing your debt to credit line ratios climb, they will slash your credit lines quickly. Also, cash credit lines are always much smaller, so in reality, such a scheme would require you to buy goods that can be converted to cash, which dilutes your gains and makes it more likely that you're going to get detected and busted. Think of the other problems. Where do you store your ill-gotten gains? How do you get the money out of the country? How will your actions affect your family and friends? Also, most people are basically good people -- the prospect of defrauding $100k, leaving family and friends behind and living some anonymous life in a third world country isn't an appealing one. If you are criminally inclined, building up a great credit history is not very practical -- most criminals are by nature reactive and want quick results.",
"title": ""
},
{
"docid": "46ac2f0aa2eaf6f949b4a2039ebc6484",
"text": "Because most people aren't willing to sacrifice their ability to live in the US for 100k. Remember that you can't pull this off multiple times easily. So as a one and done kind of deal, 100k isn't a great trade for the right to live in tthe US or whatever country you have roots in, particularly once you factor in:",
"title": ""
},
{
"docid": "e1303b3ef48e60c5cbb8b049b93abd32",
"text": "Even if you could get it with no major hassle, $100,000 is just not that much money. In a cheap third world country, as an expat you're looking at spending about $800-$2000/month, plus unexpected expenses. Locals live on less, but very few of us would be happy with the lifestyle of a Honduran or Thai farmer. Your 100k will last 4-10 years. This is hardly a great deal considering you're cutting off ties back home and almost becoming a fugitive. With USD going down the drain (e.g. in Thailand it went down 25% in 3 years), this period would probably be even shorter. Of course, you could work in the new country, but if you do then you don't need 100k to start with. The initial amount may improve your security, but from that standpoint being able to go back and work in your home country is worth more.",
"title": ""
},
{
"docid": "db3fe131c638bf9737403e717c635377",
"text": "I take it the premise of the question is that we're assuming the person isn't worried about the morals. He's a criminal out for a quick buck. And I guess we're assuming that wherever you go, they wouldn't arrest you and extradite you back to the U.S. As others have noted, you can't just walk into a bank the day you graduate high school or get out of prison or whatever and get a credit line of $100,000. You have to build up to that with an income and a pattern of responsible behavior over a period of many years. I don't have the statistics handy but I'd guess most people never reach a credit limit on credit cards of $100,000. Maybe many people could get that on a home equity line of credit, but again, you'd have to build up that equity in your house first, and that would take many years. Then, while $100,000 sounds like a lot of money, how long could you really live on that? Even in a country with low cost of living, it's not like you could live in luxury for the rest of your life. If you can get that kind of credit limit, you probably are used to living on a healthy income. Sure, you could get a similar lifestyle for less in some other countries, but not for THAT much less. If you know a place where for $10,000 a year you can live a life that would cost $100,000 per year in the U.S., I'd like to know about it. Even living a relatively frugal life, I doubt the money would last more than 4 or 5 years. And then what are you going to do? If you come back to the U.S. you'd presumably be promptly arrested. You could get a job in your new country, but you could have done that without first stealing $100,000. Frankly, if you're the sort of person who can get a $100,000 credit limit, you probably can live a lot better in the U.S. by continuing to work and play by the rules than you could by stealing $100,000 and fleeing to Haiti or Eritrea. You might say, okay, $100,000 isn't really enough. What if I could get a $1 million credit limit? But if you have the income and credit rating to get a $1 million credit limit, you probably are making at least several hundred thousand per year, probably a million or more, and again, you're better off to continue to play by the rules. The only way that I see that a scam like this would really work is if you could get a credit limit way out of proportion to any income you could earn legitimately. Like somehow if you could convince the bank to give you a credit limit of $1 million even though you only make $15,000 a year. But that would be a scam in itself. That's why I think the only time you do hear of people trying something like this is when they USED to make a lot of money but have lost it. Like someone has a multi-million dollar business that goes broke, he now has nothing, so before the bank figures it out he maxes out all his credit and runs off.",
"title": ""
},
{
"docid": "ea4f6d41989081ee98b66fcdd1343613",
"text": "Quality of life, success and happiness are three factors that are self define by each individual. Most of the time all three factors go hand by hand with your ability to generate wealth and save. Actually, a recent study showed that there were more happy families with savings than with expensive products (car, jewelry and others). These 3 factors, will be very difficult to maintain after someone commit such action. First, because you will fear every interaction with the origin of the money. Second, because every individual has a notion of wrong doing. Third, for the reasons that Jaydles express. Also, most cards, will call you and stop the cards ability to give money, if they see an abusive pattern. Ether, skipping your country has some adverse psychological impact in the family and individual that most of the time 100K is not enough to motivate such change. Thanks for reading. Geo",
"title": ""
}
] |
[
{
"docid": "0383a3d4efc2433af856ac82cdaa3e04",
"text": "\"Do you guys know any options that are accessible to any global citizen? Prepaid and stored value cards are anonymous. For an arbitrary reason, the really anonymous ones only allow you to load $500 but there is no regulation that dictates this amount. In the USA, these cards are exempt from being declared at border crossings. Not because they look like credit cards, but because they are exempt by the US Treasury and Customs. The cons is that there are generally fees to use them. US DOJ has done research showing that some groups take advantage of the exemption moving upwards of $50,000 a day between borders, but Congress is fine with this exemption and the burden is always on the government to determine \"\"illicit origin\"\". Stigmatizing how money is moved is only a 30 year old phenomenon, but many free nations do not really have capital controls, they only care that you pay taxes and that the integrity of their stock markets are upheld. Aside from that there are no qualms about anonymity, except from your neighbors but they dont matter for a global citizen. In theory, the UK should have more flexibility in anonymity options, such as stored value cards with higher limits.\"",
"title": ""
},
{
"docid": "31fa6913dcce1b5d529f2d45eb778025",
"text": "What sort of amount are we talking about here, and what countries are you travelling to? As long as it's not cash, most countries will neither know or care how much money is in your bank account or on your credit card limit, and can't even check if they wanted to. Even if they can, there are very few countries where they would check without already suspecting you of a crime. I think you're worrying over nothing. Even if it's cash, most countries have no border control anyway, and those who do (UK, Ireland) allow up to £10,000 or so cash without even having to declare it... Just open a second bank account and don't take the card (or cut the card up). Use online banking to transfer money in smaller chunks to your main account. Alternately (or additionally) take a credit card or two with a smaller limit (enough to make sure you're comfortably able to deal with one month plus emergency money). Then set up your regular bank account to pay this credit card off in full every month. If I was really concerned, I'd open a second bank account and add a sensible amount of money to it (enough to cover costs of my stay and avoid questions about whether I can afford my stay, but not so much it would raise question). Then I'd open two credit cards with a limit of perhaps $1000-2000: one covers the costs of living wherever I'm going, the other is for emergencies or if I misjudge and go over my amount per month. Set up your bank to pay these off each month, and you're sorted Honestly, I think you're worrying over nothing. People travel inside Europe every day with millions in the bank and raise no questions. You're legally allowed to have money!",
"title": ""
},
{
"docid": "c2ecf361875bddae8e68e43c43660b57",
"text": "\"Because the value of distressed assets is close to what they are selling for. When you lend money, you know there is a risk of default. You gamble on that risk, and you take the responsibility if you lose because the person taking the money can't pay. People who buy distressed debt on the idea that they can make more money off of it are only able to do that in two ways: not giving a shit what the impacts of wringing more money out create, figuring out a legal way to make someone else pay for it through ripple blackmail effects (other people also are impacted when a country can't function.) If you back Klarman, you may say the point is you are \"\"teaching\"\" Puerto Rico and everyone else that they shouldn't take on debt they can't afford. But when has that ever worked? The pensioners who are bankrupt are the ones actually getting the pain of the lesson. Another lesson could be to investors not to lend to people who can't pay them back. The people lending the money are the ones who now don't have it because they made a bad choice. Seth Klarman could also learn a lesson about taking on distressed debt being a non-lucrative pastime. Or we can all learn a lesson that taking on distressed debt is very lucrative. A big change America implemented was getting rid of debtor's prisons. This looks a lot like getting excited about debtor's prison to me. EDIT: I should note I am thinking of the Algerian version of making a ton of money off of distressed national debt. As opposed to making a bit more money off of distressed debt because you were willing to let the collapse figure itself out. Though I'm not so sure about that either.\"",
"title": ""
},
{
"docid": "ec09dc872a11a9632bf93028640f0f72",
"text": "While the US hosts most of the world's innovative startups, its own financial and banking systems are very slow to change. The infrastructure exists, however the ACH transfers are not wide-spread between individuals. Banks much prefer the option of bill-pay (i.e.: as you said, mailing a check, something in other countries people wouldn't even think of), than letting you do it yourself. Why? Because they can. There's no real competition over consumers, and the consumers themselves are not educated or sophisticated. Thus, the banks are comfortable with the lack of innovation - since as long as they are all lacking innovation - consumers won't demand it because they won't even know things are possible. And it is definitely cheaper for the banks not to innovate and keep your money for a week while the bill-pay check is en route, than try and develop new things. In other countries, the regulator would step up and force banks to develop new infrastructure and widen the options, but in the US regulation is considered a bad thing, and people are easily swayed, being uneducated and uninformed, by the corporations to support politicians who act against their (people's) best interest in protecting the corporations and reducing and limiting the regulators even further.",
"title": ""
},
{
"docid": "d327f6f54ca772c49710eccf4c905d53",
"text": "They are not as good of an option when compared to a card you open chosen based on features and rates. Get a card with a lower rate that can be used anywhere.",
"title": ""
},
{
"docid": "828c11ab1a9dd388af11264f4d0f4c04",
"text": "The US is one of the only countries which taxes its citizens on global income. You're ignoring the high fixed costs of compliance with the US tax code, both for individuals and institutions. Compliance is so big an issue that foreign banks are turning away US customers rather than having to comply with FATCA, leaving people unable to open a bank account. Also, renunciations of citizenship are up something like 400%, and they aren't all billionaires.",
"title": ""
},
{
"docid": "29e5364098ed267e8d58e3f0f938a9e2",
"text": "People with credit cards tend to have better credit than those who only have debit cards. People with better credit tend to not abuse such things as car rentals. It costs money for any company to run your credit. It doesn't cost a rental company any outflow of money to reject debit cards. So the possession of a credit card becomes a stand-in for running your credit before you rent a car.",
"title": ""
},
{
"docid": "fcbf762f2bd16440bc83a5320a6dfc65",
"text": "Lots of places in the US do it. Although the way that they usually phrase it is 'prices reflect a x.x% discount for cash' since most of the credit card companies have an agreement that says you cannot charge a surcharge if someone is using a credit card. So they get around it by giving a discount for cash. effect is the same, but it skirts the letter of the agreement",
"title": ""
},
{
"docid": "7832dedd1fee46484365b4dc17bf4aa4",
"text": "There are several reasons why credit cards are popular in the US: On the other hand, debit cards do not have any of these going for them. A debit card doesn't make much money for the bank unless you overdraw or something, so banks don't have incentive to push you to use them as much. As a result they don't offer rewards other benefits. Some people say the ability to spend more than you have is a downside of a credit card. But it's really an upside. The behavior of doing that when it isn't needed is bad, but that's not the card's fault, it's the users'. You can get a credit card with a very small limit if this is an issue for you. The question I find interesting is why debit cards are more popular in your home country. I can't think of any advantage they offer besides free cash back. But most people in the US don't use cash much either. I have to think in your home country the banks have a different revenue model or perhaps your country isn't as eager to offer tons of easy credit to everyone as the US is.",
"title": ""
},
{
"docid": "cb85de0b7686d07f00729fa1f49c9002",
"text": "The U.S. bankruptcy laws no longer make it simple to discharge credit card debt, so you can't simply run up a massive tab on credit cards and then just walk away from them anymore. That used to be the case, but that particular loophole no longer exists the way it once did. Further, you could face fraud charges if it can be proven you acted deliberately with the intent to commit fraud. Finally, you won't be able to rack up a ton of new cards as quickly as you might think, so your ability to amass enough to make your plan worth the risk is not as great as you seem to believe. As a closing note, don't do it. All you do is make it more expensive for the rest of us to carry credit cards. After all, the banks aren't going to eat the losses. They'll just pass them along in the form of higher fees and rates to the rest of us.",
"title": ""
},
{
"docid": "41be16162f9c8fab361ef64f24f0ab6f",
"text": "That might happen if this incident leads to a deflationary demand for consumer credit instruments in the US to approaching Third World penetration levels. Ironic, as the consumer credit industry is spending gigadollars trying to spark the same consumer credit frenzy in those countries. The demographics are already primed for turning away from consumer credit, as the Millennials are already increasingly predisposed against credit as they age.",
"title": ""
},
{
"docid": "dbd62be03bb002ae46dc41aa9b2276eb",
"text": "I've been hearing storied from Germans that this is happening in Germany, too, but at the bank level. All anecdotal, people I've met telling me their personal stories, but they follow the same pattern. Go to the bank, try to take out a few grand for a vacation or large purchase, bank tells them they can't have that much and that they just have to do with less, even if the account balance covers the withdrawal.",
"title": ""
},
{
"docid": "f55e29b5b419a1fa47ae9f6fc7d40bd7",
"text": "Nice idea. When I started my IRAs, I considered this as well, and the answer from the broker was that this was not permitted. And, aside from transfers from other IRAs or retirement accounts, you can't 'deposit' shares to the IRA, only cash.",
"title": ""
},
{
"docid": "68ca8ce246d0e966543105f3cfd308d4",
"text": "Yes, it is unreasonable and unsustainable. We all want returns in excess of 15% but even the best and richest investors do not sustain those kinds of returns. You should not invest more than a fraction of your net worth in individual stocks in any case. You should diversify using index funds or ETFs.",
"title": ""
}
] |
fiqa
|
eabca0d4093b0bf323221b0f00088f39
|
When one pays Quarterly Estimated Self Employment Taxes, exactly what are they paying?
|
[
{
"docid": "fd07b9332ec0af4e8cddc1f4c558f5dc",
"text": "\"From the IRS page on Estimated Taxes (emphasis added): Taxes must be paid as you earn or receive income during the year, either through withholding or estimated tax payments. If the amount of income tax withheld from your salary or pension is not enough, or if you receive income such as interest, dividends, alimony, self-employment income, capital gains, prizes and awards, you may have to make estimated tax payments. If you are in business for yourself, you generally need to make estimated tax payments. Estimated tax is used to pay not only income tax, but other taxes such as self-employment tax and alternative minimum tax. I think that is crystal clear that you're paying income tax as well as self-employment tax. To expand a bit, you seem to be confusing self-employment tax and estimated tax, which are not only two different things, but two different kinds of things. One is a tax, and the other is just a means of paying your taxes. \"\"Self-employment tax\"\" refers to the Social Security and Medicare taxes that you must pay on your self-employment income. This is an actual tax that you owe. If you receive a W-2, half of it is \"\"invisibly\"\" paid by your employer, and half of it is paid by you in the form of visible deductions on your pay stub. If you're self-employed, you have to pay all of it explicitly. \"\"Estimated tax\"\" does not refer to any actual tax levied on anyone. A more pedantically correct phrasing would be \"\"estimated tax payment\"\". Estimated taxes are just payments that you make to the IRS to pay tax you expect to owe. Whether you have to make such payments depends on how much tax you owe and whether you've paid it by other means. You may need to pay estimated tax even if you're not self-employed, although this would be unusual. (It could happen, for instance, if you realized large capital gains over the year.) You also may be self-employed but not need to pay estimated tax (if, for instance, you also have a W-2 job and you reduce your withholding allowances to have extra tax withheld). That said, if you earn significant income from self-employment, you'll likely have to make estimated tax payments. These are prepayments of the income tax and Social Security/Medicare taxes you accrue based on your self-employment income. As Pete B. mentioned in his answer, a possible reason that your estiamtes are low is because some taxes have already been withheld from the paychecks you received so far during the year (while you were an employee). These represent tax payments you've already made; you don't need to pay that money a second time, but you may need to make estimated tax payments for your income going forward.\"",
"title": ""
},
{
"docid": "83b0ba3e5841488f99a591f1984b9dc7",
"text": "\"Your question does not say this explicitly, but I assume that you were once a W-2 employee. Each paycheck a certain amount was withheld from your check to pay income, social security, and medicare taxes. Just because you did not receive that amount of money earned does not mean it was immediately sent to the IRS. While I am not all that savvy on payroll procedures, I recall an article that indicated some companies only send in withheld taxes every quarter, much like you are doing now. They get a short term interest free loan. For example taxes withheld by a w-2 employee in the later months of the year may not be provided to the IRS until 15 January of the next year. You are correct in assuming that if you make 100K as a W-2 you will probably pay less in taxes than someone who is 100K self employed with 5K in expenses. However there are many factors. Provided you properly fill out a 1040ES, and pay the correct amount of quarterly payments, you will almost never owe taxes. In fact my experience has been the forms will probably allow you to receive a refund. Tax laws can change and one thing the form did not include last year was the .9% Medicare surcharge for high income earners catching some by surprise. As far as what you pay into is indicative of the games the politicians play. It all just goes into a big old bucket of money, and more is spent by congress than what is in the bucket. The notion of a \"\"social security lockbox\"\" is pure politics/fantasy as well as the notion of medicare and social security taxes. The latter were created to make the actual income tax rate more palatable. I'd recommend getting your taxes done as early as possible come 1 January 2017. While you may not have all the needed info, you could firm up an estimate by 15 Jan and modify the amount for your last estimated payment. Complete the taxes when all stuff comes in and even if you owe an amount you have time to save for anything additional. Keep in mind, between 1 Jan 17 and 15 Apr 17 you will earn and presumably save money to use towards taxes. You can always \"\"rob\"\" from that money to pay any owed tax for 2016 and make it up later. All that is to say you will be golden because you are showing concern and planning. When you hear horror stories of IRS dealings it is most often that people spent the money that should have been sent to the IRS.\"",
"title": ""
}
] |
[
{
"docid": "cba1425be952a8c31d88fddb317ac8f0",
"text": "I've had zero taxable income for the past 2 years and yet the calculations say I owe the government $250 for each year for the Self Employment tax. How can they charge a non-zero tax on my income when my taxable income is zero? That is theft. That demands reform.",
"title": ""
},
{
"docid": "e14cb4c06d785d9ab927ff0914196dcc",
"text": "This is wrong. It should be or Now, to get back to self-employment tax. Self-employment tax is weird. It's a business tax. From the IRS perspective, any self-employed person is a business. So, take your income X and divide by 1.0765 (6.2% Social Security and 1.45% Medicare). This gives your personal income. Now, to calculate the tax that you have to pay, multiply that by .153 (since you have to pay both the worker and employer shares of the tax). So new calculation or they actually let you do which is better for you (smaller). And your other calculations change apace. And like I said, you can simplify Q1se to and your payment would be Now, to get to the second quarter. Like I said, I'd calculate the income through the second quarter. So recalculate A based on your new numbers and use that to calculate Q2i. or Note that this includes income from both the first and second quarters. We'll reduce to just the second quarter later. This also has you paying for all of June even though you may not have been paid when you make the withholding payment. That's what they want you to do. But we aren't done yet. Your actual payment should be or Because Q2ft and Q2se are what you owe for the year so far. Q1ft + Q1se is what you've already paid. So you subtract those from what you need to pay in the second quarter. In future quarters, this would be All that said, don't stress about it. As a practical matter, so long as you don't owe $1000 or more when you file your actual tax return, they aren't going to care. So just make sure that your total payments match by the payment you make January 15th. I'm not going to try to calculate for the state. For one thing, I don't know if your state uses Q1i or Q1pi as its base. Different states may have different rules on that. If you can't figure it out, just use Q1i, as that's the bigger one. Fix it when you file your annual return. The difference in withholding is going to be relatively small anyway, less than 1% of your income.",
"title": ""
},
{
"docid": "67ea53fdb59599c1da7dc8de5c972c19",
"text": "Do you have a regular job, where you work for somebody else and they pay you a salary? If so, they should be deducting estimated taxes from your paychecks and sending them in to the government. How much they deduct depends on your salary and what you put down on your W-4. Assuming you filled that out accurately, they will withhold an amount that should closely match the taxes you would owe if you took the standard deduction, have no income besides this job, and no unusual deductions. If that's the case, come next April 15 you will probably get a small refund. If you own a small business or are an independent contractor, then you have to estimate the taxes you will owe and make quarterly payments. If you're worried that the amount they're withholding doesn't sound right, then as GradeEhBacon says, get a copy of last year's tax forms (or this year's if they're out by now) -- paper or electronic -- fill them out by estimating what your total income will be for the year, etc, and see what the tax comes out to be.",
"title": ""
},
{
"docid": "12145f28caf8629f91f0f822a8de3b2c",
"text": "Don't overthink it. As an employee, whether of your own corporation or of someone else, you get a salary and there are deductions taken out. As the owner of a business you get (hopefully) business profits as well. And, in general, you often have other sources of income from investments, etc. Your estimated tax payments are based on the difference between what was withheld from your salary and what you will owe, based on salary, business income, and other sources. So, in essence, you just add up all the income you expect, estimate what the tax bill will be, and subtract what's been withheld. That's your estimated tax payment.",
"title": ""
},
{
"docid": "bfb3bb9c58961c4994b6fef8d7252358",
"text": "I heard that a C-Corp being a one person shop (no other employees but the owner) can pay for the full amount 100% of personal rent if the residence is being used as a home office. Sure. Especially if you don't mind being audited. Technically, it doesn't matter how the money gets where it goes as long as the income tax filings accurately describe the tax situation. But the IRS hates it when you make personal expenses from a business account, even if you've paid the required personal income tax (because their computers simply aren't smart enough to keep up with that level of chaos). Also, on a non-tax level, commingling of business and personal funds can reduce the effectiveness of your company's liability protection and you could more easily become personally liable if the company goes bankrupt. From what I understand the 30% would be the expense, and the 70% profit distribution. I recommend you just pay yourself and pay the rent from your personal account and claim the allowed deductions properly like everyone else. Why & when it would make sense to do this? Are there any tax benefits? Never, because, no. You would still have to pay personal income tax on your 70% share of the rent (the 30% you may be able to get deductions for but the rules are quite complicated and you should never just estimate). The only way to get money out of a corporation without paying personal income tax is by having a qualified dividend. That's quite complicated - your accounting has to be clear that the money being issued as a qualified dividend came from an economic profit, not from a paper profit resulting from the fact that you worked hard without paying yourself market value.",
"title": ""
},
{
"docid": "447c3f654c405b11900b5814b150328a",
"text": "Alright, team! I found answers to part 1) and part 2) that I've quote below, but still need help with 3). The facts in the article below seem to point to the ability for the LLC to contribute profit sharing of up to 25% of the wages it paid SE tax on. What part of the SE tax is that? I assume the spirit of the law is to only allow the 25% on the taxable portion of the income, but given that I would have crossed the SS portion of SE tax, I am not 100%. (From http://www.sensefinancial.com/services/solo401k/solo-401k-contribution/) Sole Proprietorship Employee Deferral The owner of a sole proprietorship who is under the age of 50 may make employee deferral contributions of as much as $17,500 to a Solo 401(k) plan for 2013 (Those 50 and older can tack on a $5,500 annual catch-up contribution, bringing their annual deferral contribution to as much as $23,000). Solo 401k contribution deadline rules dictate that plan participant must formally elect to make an employee deferral contribution by Dec. 31. However, the actual contribution can be made up until the tax-filing deadline. Pretax and/or after-tax (Roth) funds can be used to make employee deferral contributions. Profit Sharing Contribution A sole proprietorship may make annual profit-sharing contributions to a Solo 401(k) plan on behalf of the business owner and spouse. Internal Revenue Code Section 401(a)(3) states that employer contributions are limited to 25 percent of the business entity’s income subject to self-employment tax. Schedule C sole-proprietors must base their maximum contribution on earned income, an additional calculation that lowers their maximum contribution to 20 percent of earned income. IRS Publication 560 contains a step-by-step worksheet for this calculation. In general, compensation can be defined as your net earnings from self-employment activity. This definition takes into account the following eligible tax deductions: (1) the deduction for half of self-employment tax and (2) the deduction for contributions on your behalf to the Solo 401(k) plan. A business entity’s Solo 401(k) contributions for profit sharing component must be made by its tax-filing deadline. Single Member LLC Employee Deferral The owner of a single member LLC who is under the age of 50 may make employee deferral contributions of as much as $17,500 to a Solo 401(k) plan for 2013 (Those 50 and older can tack on a $5,500 annual catch-up contribution, bringing their annual deferral contribution to as much as $23,000). Solo 401k contribution deadline rules dictate that plan participant must formally elect to make an employee deferral contribution by Dec. 31. However, the actual contribution can be made up until the tax-filing deadline. Pretax and/or after-tax (Roth) funds can be used to make employee deferral contributions. Profit Sharing Contribution A single member LLC business may make annual profit-sharing contributions to a Solo 401(k) plan on behalf of the business owner and spouse. Internal Revenue Code Section 401(a)(3) states that employer contributions are limited to 25 percent of the business entity’s income subject to self-employment tax. Schedule C sole-proprietors must base their maximum contribution on earned income, an additional calculation that lowers their maximum contribution to 20 percent of earned income. IRS Publication 560 contains a step-by-step worksheet for this calculation. In general, compensation can be defined as your net earnings from self-employment activity. This definition takes into account the following eligible tax deductions: (i) the deduction for half of self-employment tax and (ii) the deduction for contributions on your behalf to the Solo 401(k). A single member LLC’s Solo 401(k) contributions for profit sharing component must be made by its tax-filing deadline.",
"title": ""
},
{
"docid": "d7885cbddc73d702df6c3ddfae17ec64",
"text": "\"See Publication 505, specifically the section on \"\"Annualized Income Installment Method\"\", which says: If you do not receive your income evenly throughout the year (for example, your income from a repair shop you operate is much larger in the summer than it is during the rest of the year), your required estimated tax payment for one or more periods may be less than the amount figured using the regular installment method. The publication includes a worksheet and explanation of how to calculate the estimated tax due for each period when you have unequal income. If you had no freelance income during a period, you shouldn't owe any estimated tax for that period. However, the process for calculating the estimated tax using this method is a good bit more complex and confusing than using the \"\"short\"\" method (in which you just estimate how much tax you will owe for the year and divide it into four equal pieces). Therefore, in future years you might want to still use the equal-payments method if you can swing it. (It's too late for this year since you missed the April deadline for the first payment.) If you can estimate the total amount of freelance income you'll receive (even though you might not be able to estimate when you'll receive it), you can probably still use the simpler method. If you really have no idea how much money you'll make over the year, you could either use the more complex computation, or you could use a very high estimate to ensure you pay enough tax, and you'll get a refund if you pay too much.\"",
"title": ""
},
{
"docid": "ce251ce6d31823ac7124eae816392f7c",
"text": "Do you have any insight on average *effective* rates paid by SE owners? As a counterpoint to your (very valid) links, filing as S-corp allows for taxes on distributions to be exempt from payroll tax and taxed at much lower rates. Also, being SE allows for various deductions not possible for wage earners. There's probably other examples not immediately coming to mind. Also, SE taxes equal taxes otherwise paid by employer + employee. It's just that those employer taxes don't appear on the employee's paystub so not everyone realizes this.",
"title": ""
},
{
"docid": "04b3f704a8ebfdd049ca8774d1e03bd8",
"text": "If you have a one-time event, you are allowed to make a single estimated payment for that quarter on Form 1040-ES. People seem to fear that if they make one such payment they will need to do it forevermore, and that is not true. The IRS instructions do kind of read that way, but that's because most people who make estimated payment do so because of some repeating circumstance like being self-employed. In addition, you may qualify for one or more waivers on a potential underpayment penalty when you file your Form 1040 even if you don't make an estimated payment, and you may reduce or eliminate any penalty by annualizing your income - which is to say breaking it down by quarter rather than the full year. Check on the instructions for Form 2210 for more detail, including Schedule AI for annualizing income. This is some work, but it might be worthwhile depending on your situation. https://www.irs.gov/instructions/i2210/ch02.html",
"title": ""
},
{
"docid": "5923619c7a3b18fc6934a3f2d6b95dc8",
"text": "You will not necessarily incur a penalty. You can potentially use the Annualized Income Installment method, which allows you to compute the tax due for each quarter based on income actually earned up to that point in the year. See Publication 505, in particular Worksheet 2-9. Form 2210 is also relevant as that is the form you will use when actually calculating whether you owe a penalty after the year is over. On my reading of Form 2210, if you had literally zero income during the first quarter, you won't be expected to make an estimated tax payment for that quarter (as long as you properly follow the Annualized Income Installment method for future quarters). However, you should go through the calculations yourself to see what the situation is with your actual numbers.",
"title": ""
},
{
"docid": "e5ce258c252eb127e48a7a588eb6ee11",
"text": "You must pay your taxes at the quarterly intervals. For most people the withholding done by their employer satisfies this requirement. However, if your income does not have any withholding (or sufficient), then you must file quarterly estimated tax payments. Note that if you have a second job that does withhold, then you can adjust your W4 to request further withholding there and possibly reduce the need for estimated payments. Estimated tax payments also come into play with large investment earnings. The amount that you need to prepay the IRS is impacted by the safe harbor rule, which I am sure others will provide the exact details on.",
"title": ""
},
{
"docid": "c409a1afbc53fbc1ed1a0b689ab8c03a",
"text": "Assuming you are Resident Indian. As per Indian Income Tax As per section 208 every person whose estimated tax liability for the year exceeds Rs. 10,000, shall pay his tax in advance in the form of “advance tax”. Thus, any taxpayer whose estimated tax liability for the year exceeds Rs. 10,000 has to pay his tax in advance by the due dates prescribed in this regard. However, as per section 207, a resident senior citizen (i.e., an individual of the age of 60 years or above) not having any income from business or profession is not liable to pay advance tax. In other words, if a person satisfies the following conditions, he will not be liable to pay advance tax: Hence only self assessment tax need to be paid without any interest. Refer the full guideline on Income tax website",
"title": ""
},
{
"docid": "3c240eb80447171c476c7943200e8042",
"text": "One possibility that I use: I set up an LLC and get paid through that entity. Then I set up a payroll service through Bank of America and set up direct deposit so that it is free. I pay myself at 70% of my hourly rate based on the number of hours I work, and the payroll service does all the calculations for me and sets up the payments to the IRS. Typically money is left over in my business account. When tax time rolls around, I have a W2 from my LLC and a 1099 from the company I work for. I put the W2 into my personal income, and for the business I enter the revenue on the 1099 and the payroll expenses from paying myself; the left over in the business account is taxed as ordinary income. Maybe it's overkill, but setting up the LLC makes it possible to (a) set up a solo 401(k) and put up to $51k away tax-free, and (b) I can write off business expenses more easily.",
"title": ""
},
{
"docid": "07b1bf8262c1ae737d88e0063c01632c",
"text": "I agree with your strategy of using a conservative estimate to overpay taxes and get a refund next year. As a self-employed individual you are responsible for paying self-employment tax (which means paying Social Security and Medicare tax for yourself as both: employee and an employer.) Current Social Security Rate is 6.2% and Medicare is 1.45%, so your Self-employment tax is 15.3% (7.65%X2) Assuming you are single, your effective tax rate will be over 10% (portion of your income under $ 9,075), but less than 15% ($9,075-$36,900), so to adopt a conservative approach, let's use the 15% number. Given Self-employment and Federal Income tax rate estimates, very conservative approach, your estimated tax can be 30% (Self-employment tax plus income tax) Should you expect much higher compensation, you might move to the 25% tax bracket and adjust this amount to 40%.",
"title": ""
},
{
"docid": "e7ccac55c68e68fb150691852e53e0c9",
"text": "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.",
"title": ""
}
] |
fiqa
|
bda83ebf364b9539c7d3420fd51a854d
|
Where can I lookup accurate current exchange rates for consumers?
|
[
{
"docid": "0d54bb4724c3cde18970948c74e5dec8",
"text": "What you see on XE, is the rate at which it is being traded in the market. What you receive from a broker is the rate minus a fee, for the service being provided. You can check what rates are available for visa and mastercard on the following websites. Visa rates Mastercard rates I want to shop in the currency that will be cheapest in CAD at any given time. This is a mirage and isn't going to help much. The prices you pay might be reflecting the exchange rates, difference in the product quality and other factors too. Rates are fixed for a day, so any FX movement you see in the market willn't be reflected in what you pay.",
"title": ""
},
{
"docid": "c4b740c53cd6ff4f2ff8b29ed3c99642",
"text": "I want to shop in the currency that will be cheapest in CAD at any given time. How do you plan to do this? If you are using a debit or credit card on a CAD account, then you will pay that bank's exchange rate to pay for goods and services that are billed in foreign currency. If you plan on buying goods and services from merchants that offer to bill you in CAD for items that are priced in foreign currency (E.g. buying from Amazon.co.uk GBP priced goods, but having Amazon bill your card with equivalent CAD) then you will be paying that merchant's exchange rate. It is very unlikely that either of these scenarios would result in you paying mid-market rates (what you see on xe.com), which is the average between the current ask and bid prices for any currency pair. Instead, the business handling your transaction will set their own exchange rate, which will usually be less favorable than the mid-market rate and may have additional fees/commission bolted on as a separate charge. For example, if I buy 100 USD worth of goods from a US vendor, but use a CAD credit card to pay, the mid-market rate on xe.com right now indicates an equivalent value of 126.97 CAD. However the credit card company is more likely to charge closer to 130.00 CAD and add a foreign transaction fee of maybe $2-3, or a percentage of the transaction value. Alternatively, if using something like Amazon, they may offer to bill the CAD credit card in CAD for those 100 USD goods. No separate foreign transaction fee in this case, but they are still likely to exchange at the less favorable 130.00 rate instead of the mid-market rates. The only way you can choose to pay in the cheapest equivalent currency is if you already have holdings of all the different currencies. Then just pay using whichever currency gets you the most bang for your buck. Unless you are receiving payments/wages in multiple currencies though, you're still going to have to refill these accounts periodically, thus incurring some foreign transaction fees and being subject to the banker's exchange rates. Where can I lookup accurate current exchange rates for consumers? It depends on who will be handling your transaction. Amazon will tell you at the checkout what exchange rate they will apply if you are having them convert a bill into your local currency for you. For credit/debit card transactions processed in a different currency than the attached account, you need to look at your specific agreement or contact the bank to see which rate they use for daily transactions (and where you can obtain these rates), whether they convert on the day of the transaction vs. the day it posts to your account, and how much they add on ($ and/or %) in fees and commission.",
"title": ""
},
{
"docid": "8bcdf4cca2c9f6777c2b69ade14f4138",
"text": "Current and past FX rates are available on Visa's website. Note that it may vary by country, so use your local Visa website.",
"title": ""
}
] |
[
{
"docid": "81736205bbbb2bef19b6b96f71dcb2db",
"text": "\"You might convert all your money in local currency but you need take care of following tips while studying abroad.Here are some money tips that can be useful during a trip abroad. Know about fees :- When you use a debit card or credit card in a foreign country, there are generally two types of transaction fees that may apply: Understand exchange rates :- The exchange rate lets you know the amount of nearby money you can get for each U.S. dollar, missing any expenses. There are \"\"sell\"\" rates for individuals who are trading U.S. dollars for foreign currency, and, the other way around, \"\"purchase\"\" rates. It's a smart thought to recognize what the neighborhood money is worth in dollars so you can comprehend the estimation of your buys abroad. Sites like X-Rates offer a currency converter that gives the current exchange rate, so you can make speedy comparisons. You can utilize it to get a feel for how much certain amount (say $1, $10, $25, $50, $100) are worth in local currency. Remember that rates fluctuate, so you will be unable to suspect precisely the amount of a buy made in a foreign currency will cost you in U.S. dollars. To get cash, check for buddy banks abroad:- If you already have an account with a large bank or credit union in the U.S., you may have an advantage. Being a client of a big financial institution with a large ATM system may make it easier to find a subsidiary cash machine and stay away from an out-of-system charge. Bank of America, for example, is a part of the Global ATM Alliance, which lets clients of taking an interest banks use their debit cards to withdraw money at any Alliance ATM without paying the machine's operator an access fee, in spite of the fact that you may at present be charged for converting dollars into local currency used for purchases. Citibank is another well known bank for travelers because it has 45,000 ATMs in more than 30 countries, including popular study-abroad destinations such as the U.K., Italy and Spain. ATMs in a foreign country may allow withdrawals just from a financial records, and not from savings so make sure to keep an adequate checking balance. Also, ATM withdrawal limits will apply just as they do in the U.S., but the amount may vary based on the local currency and exchange rates. Weigh the benefits of other banks :- For general needs, online banks and even foreign banks can also be good options. With online banks, you don’t have to visit physical branches, and these institutions typically have lower fees. Use our checking account tool to find one that’s a good fit. Foreign banks:- Many American debit cards may not work in Europe, Asia and Latin America, especially those that don’t have an EMV chip that help prevent fraud. Or some cards may work at one ATM, but not another. One option for students who expect a more extended stay in a foreign country is to open a new account at a local bank. This will let you have better access to ATMs, and to make purchases more easily and without as many fees. See our chart below for the names of the largest banks in several countries. Guard against fraud and identity theft:- One of the most important things you can do as you plan your trip is to let your bank know that you’ll be abroad. Include exact countries and dates, when possible, to avoid having your card flagged for fraud. Unfortunately, incidents may still arise despite providing ample warning to your bank. Bring a backup credit card or debit card so you can still access some sort of money in case one is canceled. Passports are also critical — not just for traveling from place to place, but also as identification to open a bank account and for everyday purposes. You’ll want to make two photocopies and give one to a friend or family member to keep at home and put the other in a separate, secure location, just in case your actual passport is lost or stolen.\"",
"title": ""
},
{
"docid": "652a441b503ccae88a469cfbf4f0a0d6",
"text": "I can't think of any specifically, but if you haven't already done so it would be worthwhile reading a textbook on macro-economics to get an idea of how money supply, exchange rates, unemployment and so on are thought to relate. The other thing which might be interesting in respect of the Euro crisis would be a history of past economic unions. There have been several of these, not least the US dollar (in the 19C, I believe); the union of the English and Scottish pound (early 1600s); and the German mark. They tend to have some characteristic problems, caused partly by different parts of the union being at different stages in an economic cycle. Unfortunately I can't think of a single text which gathers this together.",
"title": ""
},
{
"docid": "0044afa440570181fb34cb566eaab389",
"text": "I found the zephyr database, which does the job. Nonetheless if someone knows other (open) sources, be welcome to answer.",
"title": ""
},
{
"docid": "e61919cc2567f96df4868a9c4de17281",
"text": "At any instant, three currencies will have exchange rates so if I know the rate between A and B, and B to C, the A to C rate is easily calculated. You need X pounds, so at that moment, you are subject to the exchange rate right then. It's not a deal or bargain, although it may look better in hindsight if the currencies move after some time has passed. But if a currency is going to depreciate, and you have the foresight to know such things, you'd already be wealthy and not visiting here.",
"title": ""
},
{
"docid": "500aba91d79281094dbadba775df5b7a",
"text": "I'm using iBank on my Mac here and that definitely supports different currencies and is also supposed to be able to track investments (I haven't used it to track investments yet, hence the 'supposed to' caveat).",
"title": ""
},
{
"docid": "bd7f2b503ced211bf1dc76b6d304183f",
"text": "Central banks don't generally post exchange rates with other currencies, as they are not determined by central banks but by the currency markets. You need a source for live exchange rate data (for example www.xe.com), and you need to calculate the prices in other currencies dynamically as they are displayed -- they will be changing continually, from minute to minute.",
"title": ""
},
{
"docid": "f7ff0489f0eabd8d4d808b9215088b15",
"text": "You can get this data from a variety of sources, but likely not all from 1 source. Yahoo is a good source, as is Google, but some stock markets also give away some of this data, and there's foreign websites which provide data for foreign exchanges. Some Googling is required, as is knowledge of web scraping (R, Python, Ruby or Perl are great tools for this...).",
"title": ""
},
{
"docid": "81a0892a695ba40344a68db23cb8c3a6",
"text": "moneydashboard.com claims to be the UK's Mint but I have problem using it with my HSBC account right now. I have contacted their helpdesk.",
"title": ""
},
{
"docid": "7b0d59e3f864aab765fbc03b515de78f",
"text": "\"The setting of interest rates (or \"\"repurchase rates\"\") varies from country to country, as well as with the independence of the central bank. There are a number of measurements and indices that central bankers can take into account: This is a limited overview but should give an indication of just how complex tracking inflation is, let alone attempting to control it. House prices are in the mix but which house or which price? The choice of what to measure faces the difficulty of attempting to find a symmetrical basket which really affects the majority regularly (and not everyone is buying several new houses a year so the majority are ring-fenced from fluctuations in prices at the capital end, but not from the interest-rate end). And this is only when the various agencies (Statistics, Central Bank, Labour, etc.) are independent. In countries like Venezuela or Argentina, government has taken over release of such data and it is frequently at odds with individual experience. Links for the US: And, for Australia:\"",
"title": ""
},
{
"docid": "041ce37bd0f111523e88e92d4ce75aaf",
"text": "\"Large multinationals who do business in multiple locales hedge even \"\"stable\"\" currencies like the Euro, Yen and Pound - because a 5-10% adverse move in an exchange rate is highly consequential to the bottom line. I doubt any of them are going to be doing significant amounts of business accepting a currency with a 400% annual range. And why should they? It's nothing more than another unit of payment - one with its own problems.\"",
"title": ""
},
{
"docid": "b0eea496577f21e08aba1c08f0120db3",
"text": "\"I've been doing a bunch of Googling and reading since I first posed this question on travel.SE and I've found an article on a site called \"\"thefinancebuff.com\"\" with a very good comparison of costs as of September 2013: Get the Best Exchange Rate: Bank Wire, Xoom, XE Trade, Western Union, USForex, CurrencyFair by Harry Sit It compares the following methods: Their examples are for sending US$10,000 from the US to Canada and converting to Canadian dollars. CurrencyFair worked out the cheapest.\"",
"title": ""
},
{
"docid": "db751b9cc469f547550a323044b23d8e",
"text": "For manual conversion you can use many sites, starting from google (type 30 USD in yuan) to sites like xe.com mentioned here. For programmatic conversion, you could use Google Calculator API or many other currency exchange APIs that are available. Beware however that if you do it on the real site, the exchange rate is different from actual rates used by banks and payment processing companies - while they use market-based rates, they usually charge some premium on currency conversion, meaning that if you have something for 30 dollars, according to current rate it may bet 198 yuan, but if he uses a credit card for purchase, it may cost him, for example, 204 yuan. You should be very careful about making difference between snapshot market rates and actual rates used in specific transaction.",
"title": ""
},
{
"docid": "2a63c6cf65d6173908d16b4ae483f407",
"text": "I thought to enlarge on user Zephyr's comment above. PC Financial seems to fail to calculate explicitly and then display the cashback reward return of 1%, for the benefit of consumers; does it want to conceal or mislead or conceal customers. Anyhow, I show this using this info below. I'll just calculate using the rate for 'everywhere you shop', since many deem travel a luxury. (1) 20,000 PC points = $20 in Free Groceries Minimum redemption is 20,000 PC Points (2) Earn 10 PC points for every $1 spent, everywhere you shop Earn 20 PC points for every $1 spent on travel services at pctravel.ca† Cashback Reward Rate = Reward/Expenditure. I find confusing the exposition '20,000 PC points = $20', because this is NOT the cost or expenditure; I regard this as the reward. The key step is to calculate the expenditure needed to achieve this reward, which again is 20,000 PC points. Thus, we must attain (1) from (2), and must solve for ¿ in this ratio problem: 10/20,000 = $1/¿ ===> ? = $2000. So $2000 must be spent, to reap $20 as the reward. Altogether, cashback reward = $20/$2000 = 0.01 = 1%. QED. I Googled this card before, and I infer from this article that PC changed its cashback ratios: You get five PC points for every dollar you spend on your bank card at participating stores where President’s Choice products are sold. This is a bit disappointing as I can do the math in my head and determine that the PC points rewards are only worth 0.5% of your purchase amount. I had expected at least 1% to compete with the top reward credit cards. Also, the webpage errs in the following; the 'cent' is supposed to be a dollar: PC points are worth one tenth of a cent each. So if you use the minimum allowable amount of PC points of 20,000, you will get $20.00 worth of groceries.",
"title": ""
},
{
"docid": "8257d17b4fce98bacecffd5f57a491f1",
"text": "\"I've considered simply moving my funds to an Australian bank to \"\"lock-in\"\" the current rate, but I worry that this will put me at risk of a substantial loss (due to exchange rates, transfer fees, etc) when I move my funds back into the US in 6 months. Why move funds back? If you want to lock in current exchange rates, figure out how much money you are likely to spend in Australia for the next six months. Move just enough funds to cover that to an Australian bank. Leave the remainder in the United States (US), as your future expenses will be in US dollars. So long as you don't find some major, unanticipated purchase, this covers you. You have enough money for the next six months with no exchange rate worries. At the end of the six months, if you fall slightly short, cover with your credit card as you are doing now. You'll take a loss, but on a small amount of money. If you have a slight excess and you were right about the exchange rate, you'll make a little profit at the end. If you were wrong, you'll take a small loss. The key here is that you should be able to budget for your six months. You can lock in current exchange rates just for that amount of money. Moving all your funds to Australia is a gamble. You can certainly do that if you want, but rather than gambling, it may be better to take the sure thing. You know you need six months expenses, so just move that. You will definitely be spending six months money in Australia, so you are immune to exchange rate fluctuations for that period. The remainder of your money can stay in the US, as that's where you plan to spend it. However, recent political events back in the States have me (and, I'm sure, every currency speculator and foreign investor) worried that this advantage will not last for much longer. If currency speculators expect exchange rates to fall, then they'd have already bid down the rates. I.e. they'd keep speculating until the rates did fall. So the speculators expect the current rates are correct, otherwise they'd move them. Donald Trump's state goal is to increase exports relative to imports. If he's successful, this could cause the US dollar to fall to make exports cheaper and imports more expensive. However, if his policies fail, then the opposite is likely to happen. Most of his announced trade policies are more likely to increase the value of the dollar than to decrease it. In particular, that is the likely result of increased tariffs. If you are worried about Trump failing, then you should worry about a strong dollar. That's more in line with actual speculation since the election. I don't know that I'd make a strong bet in either direction. Hedging makes more sense to me, as it simply locks in the current situation, which you apparently find favorable. Not hedging at all might produce some profit if the dollar goes up. Gambling all your funds might produce some profit if the dollar goes down. The middle path of hedging just what you're spending is the safest if least likely to produce profit. My recommendation is to hedge the six months expenses and enjoy your time abroad. Why worry about political events that you can't control? Enjoy your working (studying) vacation.\"",
"title": ""
},
{
"docid": "f8a3b86208adcc243e3092e47447862d",
"text": "It seems like there are a few different things going on here because there are multiple parties involved with different interests. The car loan almost surely has the car itself as collateral, so, if you stop paying, the bank can claim the car to cover their costs. Since your car is now totaled, however, that collateral is essentially gone and your loan is probably effectively dead already. The bank isn't going let you keep the money against a totaled car. I suspect this is what the adjuster meant when he said you cannot keep the car because of the loan. The insurance company sounds like they're going to pay the claim, but once they pay on a totaled car, they own it. They have some plan for how they recover partial costs from the wreck. That may or may not allow you (or anyone else) to buy it from them. For example, they might have some bulk sale deal with a salvage company that doesn't allow them to sell back to you, they may have liability issues with selling a wrecked car, etc. Whatever is going on here should be separate from your loan and related to the business model of your insurance company. If you do have an option to buy the car back, it will almost surely be viewed as a new purchase by the insurances company and your lender, as if you bought a different car in similar condition.",
"title": ""
}
] |
fiqa
|
415b073d2f887f9c25f6869577755db4
|
How to get rid of someone else's debt collector?
|
[
{
"docid": "c15816a0b00f6eee6143953eeca0884a",
"text": "\"Sue the debt collectors in small claims court. There are several example stories around the internet, but this is a well written one from the consumerist. If your phone is a cell phone: \"\"it is against the law for a company to leave a pre-recorded message on your cell phone.\"\" In fact, the call frequency increased once they realized they had reached a live person. I called each of these companies multiple times, and though I was given assurances each time that my number would be taken off of their lists, the calls continued, morning, noon and night. At my wits end, I decided the only way to have the harassing calls stop was to file suits against the collection companies. It's very important to understand that it is against the law for a company to leave a pre-recorded message on your cell phone. Armed with this knowledge, I filed suit against several of the collection companies. I filed in small claims court so I did not need to hire an attorney, and the process was as simple as completing a paragraph on a complaint form. For evidence, I had over a hundred Google Voicemail transcripts showing the times the companies called and the text of the pre-recorded messages. Mysteriously, the calls all stopped immediately on the same date the collection companies received the certified letters stating they were being sued. Then a new flurry of calls began pouring in. This time it was their attorneys. The attorneys representing these out of state collection companies were all desperate to settle out of court. hey did not want to incur the expense of traveling for court or hiring a local law firm who wasn't on retainer. They also understood they had no justifiable defense for the calls. To make a long story short, so far I have successfully sued 3 of these collection companies and settled for more than $5,000 out of court. All it cost me was $35 and 20 minutes per suit. Making these companies pay is the only incentive for them to stop their illegal and harassing practices. If more consumers knew their rights and actually took a few minutes to stand up for them, it would become less profitable for these companies to conduct business the way they do now. -Source And whether you have a cell phone or land line, It is illegal for the debt collectors to tell you they are calling to collect a debt for someone else under the Fair Debt Collection Practices Act (wikipedia, ftc docs). What Remedies Are Available If The Debt Collector Violates The Law Under the Fair Debt Collection Practices Act, you have the right to sue a debt collector in state or federal court within one year from the date of the violation. If you win, you may recover damages in the amount of any losses you suffered as a result of the violation, plus an additional amount of up to $1,000.00. You may also be able to recover court costs and attorney fees. If the same debt collector has engaged in unlawful conduct with a number of consumers, it may be possible to find a lawyer who will file a class action lawsuit. -Source With regard to whether you can sue under FDCPA if you are not the debtor, one FDCPA lawyer (take with grain of salt) says yes: Did you know that it doesn't matter if you owe the account the debt collector is calling you about or not? If a debt collector violates the FDCPA (the federal Fair Debt Collection Practices Act, 15 USC 1692 et. seq.) that debt collector could be liable to pay you statutory damages, actual damages, attorney's fees, and court costs. -Source\"",
"title": ""
},
{
"docid": "3aa73616af3f7a1e40c6ed37c63ab375",
"text": "\"As a former debt collector myself, I can tell you that we did occasionally get someone claiming that they weren't who they really were. However, it was pretty obvious who was telling the truth after a while. Above all else, just be calm and polite. Technically, you can also say \"\"do not call this number again\"\" and they have to stop calling, but I wouldn't do this right off the bat. Its best if they are convinced that you aren't the guy they're looking for. Calmness and politeness are traits that debtors usually lack, sometimes because they are just normal people overwhelmed with their situation, and sometimes because they are irrational loser (sorry, but its true). Either way, if you are consistently calm and unconcerned about their threats, they will either give up or realize you aren't the guy. Eventually they will stop calling you (or at least I know I would have stopped calling you).\"",
"title": ""
},
{
"docid": "9520bf26d6485a6f3ddee445a98cb94a",
"text": "Suing is a legitimate option as well as screening your calls but here's another idea which has personally worked and relates to the collections I did for awhile. Talk with the collector. Outstanding debt gets sold many times and each time a new collector gets their hands on an account they do their due diligence which means calling every single number multiple times. Collectors a looking for consumers who actively evade collections calls for years. My recommendation is to use logic and explain the situation. Give your first name and describe when you received the phone number and then ask a simple question. When in the last 3 1/2 years have you or any collector had a successful hit from this number. They'll respond never in 3 1/2 years. The collector notes the account for themselves and future collectors. Debt collectors are about about making money, not wasting time and they do review all notes pertaining to an account. Will it work? Maybe not but hopefully it will stop the calls with a short conversation. Good luck.",
"title": ""
},
{
"docid": "9f8e0f5aa9201d430285f1d60f079b89",
"text": "I have been in a similar position for quite a while now and the only thing that seems to help is screening phone calls. I have a long list of collector numbers set to not ring on my phone. They can still leave a voice mail but they never do. As far as I know there aren't any laws that protect you from nuisance phone calls. FDCPA letters only apply to the debtor and the collector it is sent to it doesn't protect an unrelated third party from getting annoying phone calls. I have a feeling that sending FDCPA letters is just confirming that you probably are the debtor and prolong the collection calls.",
"title": ""
},
{
"docid": "a8edad472ccf151ee0ee506b18eda838",
"text": "Step 1)I answer the phone saying it is illegal to call my cell phone and I want all further communications in writing. Put this number on the do not call list and reverse search the number they dialed. Step 2) I say that whoever changed their number and how long I have owned the number and I call forward when they don't stop. I forward calls through google voice and mark them as spam. They get a sorry number was disconnected recording. Step 3) REALLY HARSH. I say the person passed away only if they aren't deterred enough by the previous efforts or they get cross into extreme harassment. Usually Step 1 is enough to stop the calls no matter who they ask for.",
"title": ""
}
] |
[
{
"docid": "5ba4e9b75cd4469b202c5d4dbf60ec8c",
"text": "Get it in writing from the debt collector first that there will be a pay for deletion. This is the most fail safe way that I know to get a collections debt completely removed from a credit report, and also without the chance of it being put back on the report by another agency.",
"title": ""
},
{
"docid": "00bd09a0e1ad8996b87e451d0b0c0dd5",
"text": "This doesn't seem to explain the odd behavior of the collector, but I wanted to point out that the debt collector might not actually own the debt. If this is the case then your creditor is still the original institution, and the collector may or may not be allowed to actually collect. Contact the original creditor and ask how you can pay off the debt.",
"title": ""
},
{
"docid": "b6e21401fe58d768d763e0c093cfcf13",
"text": "First things first, its always good to set the records straight. When you are trying to clear your debt do them one by one and ask the collection agent that you would pay in full only if the records would be deleted from your credit history and most of the collection agencies are happy to take it off your credit report as they are getting the money. This would work generally only when you pay the full amount. I can guarantee you this because I have tried it myself after hearing about it from my friends. If you have already paid whole amount already then records of your payments generally will not be available after 2 years with any banks even the big ones like Bank of America or Wells Fargo. That means if they don't have the records no body else would because its a burden as your payment is written off. You can file a dispute to credit bureaus for your payment history and if they couldn't provide you the history they have to take your record off your history even they know that you have delinquent history because they don't have enough proof to confirm that. And when you file a dispute its always good to file it by paper as they have to write back and you can ask hard copies of the proofs which are very difficult to get. One more thing if you want to dispute it might take couple of months atleast and you need to have patience because you already might have known how important credit history is.",
"title": ""
},
{
"docid": "2ef47bc6e77a08529092f461b85d993b",
"text": "\"The lead story here is you owe $12,000 on a car worth $6000!! That is an appalling situation and worth a lot to get out of it. ($6000, or a great deal more if the car is out of warranty and you are at risk of a major repair too.) I'm sorry if it feels like the payments you've made so far are wasted; often the numbers do work out like this, and you did get use of the car for that time period. Now comes an \"\"adversary\"\", who is threatening to snatch the car away from you. I have to imagine they are emotionally motivated. How convenient :) Let them take it. But it's important to fully understand their motivations here. Because financially speaking, the smart play is to manage the situation so they take the car. Preferably unbeknownst that the car is upside down. Whatever their motivation is, give them enough of a fight; keep them wrapped up in emotions while your eye is on the numbers. Let them win the battle; you win the war: make sure the legal details put you in the clear of it. Ideally, do this with consent with the grandfather \"\"in response to his direct family's wishes\"\", but keep up the theater of being really mad about it. Don't tell anyone for 7 years, until the statute of limitations has passed and you can't be sued for it. Eventually they'll figure out they took a $6000 loss taking the car from you, and want to talk with you about that. Stay with blind rage at how they took my car. If they try to explain what \"\"upside down\"\" is, feign ignorance and get even madder, say they're lying and they won, why don't they let it go? If they ask for money, say they're swindling. \"\"You forced me, I didn't have a choice\"\". (which happens to be a good defense. They wanted it so bad; they shoulda done their homework. Since they were coercive it's not your job to disclose, nor your job to even know.) If they want you to take the car back, say \"\"can't, you forced me to buy another and I have to make payments on that one now.\"\"\"",
"title": ""
},
{
"docid": "935727f455dbdcdac5aa776580a95ca5",
"text": "The bank will sell your debt to a collection agency, that will then follow you everywhere you go and demand payment. They will put a negative notice on your credit report preventing you from getting any new credit, and might sue you in court and take over some or all of your assets through court judgement.",
"title": ""
},
{
"docid": "46129c258ecb12f5a85af074100f5744",
"text": "\"This will probably require asking the SO to sign a quitclaim and/or to \"\"sell\"\" him her share of the vehicle's ownership and getting it re-titled in his own name alone, which is the question you actually asked. To cancel the cosigner arrangement, he has to pay off the loan. If he can't or doesn't want to do that in cash, he'd have to qualify for a new loan to refinasnce in his name only, or get someone else (such as yourself) to co-sign. Alternatively, he might sell the car (or something else) to pay what he still owes on it. As noted in other answers, this kind of mess is why you shouldn't get into either cosigning or joint ownership without a written agreement spelling out exactly what happens should one of the parties wish to end this arrangement. Doing business with friends is still doing business.\"",
"title": ""
},
{
"docid": "4e93e2ae3614116bb408f1dff585a5e2",
"text": "\"The debt collection agency needs to see a copy of the notice from the bank that the $300 charge is a disputed and fraudulent charge. Also require them to provide proof. To reduce your stress, you should contact a lawyer to handle the debt collection agency. Disputing the information on your credit report is exactly the way to \"\"fix\"\" that issue. All they need to see is the bank letter stating that the charges were fraudulent. The credit reports should show that item as disputed for at least a month if not remove it entirely. The bank should be able to provide with copies although you may have to pay a research charge if the information is old enough. I recommend talking to your local branch manager to get what you need.\"",
"title": ""
},
{
"docid": "3214ebb04e28fd0dda794aa50304dcb3",
"text": "There are a number of ways to get out of debt. First, stop spending on that card. You could apply for a 0% APR credit card and if you qualify with a credit limit equal (or higher) than what you have now, then you could transfer the balance and start on paying that down. You could also work out a payment plan with Chase - they would rather have some of the money vs. none of it. But you need to reach out sooner rather than later to avoid having it sent to collections. Since your cash flow is terrible, you could also pick up a second or third part time job - deliver pizzas, work at the mall, whatever, to help increase your cash flow and use that money to pay down your debts. The Federal Trade Commission has some resources on how to cope with debt.",
"title": ""
},
{
"docid": "edd337c752d17dd13f30fed364e2a553",
"text": "@littleadv has said most of what I'd say if they had not gotten here first. I'd add this much, it's important to understand what debt collectors can and cannot do, because a lot of them will use intimidation and any other technique you can think of to get away with as much as you will let them. I'd start with this PDF file from the FTC and then start googling for info on your state's regulations. Also it would be a very very good idea to review the documents you signed (or get a copy) when you took out the loan to see what sort of additional penalties etc you may have already agreed to in the event you default. The fee's the collector is adding in could be of their own creation (making them highly negotiable), or it might be something you already agreed to in advance(leaving you little recourse but to pay them). Do keep in mind that in many cases debt collectors are ausually llowed at the very least to charge you simple interest of around 10%. On a debt of your size, paid off over several years, that might amount to more than the $4K they are adding. OTOH you can pretty much expect them to try both, tacking on 'fees' and then trying to add interest if the fees are not paid. Another source of assistance may be the Department of Education Ombudsman: If you need help with a defaulted student loan, contact the Department of Education's Ombudsman at 877-557-2575 or visit its website at www.fsahelp.ed.gov. But first you must take steps to resolve your loan problem on your own (there is a checklist of required steps on the website), or the Ombudsman will not assist you.",
"title": ""
},
{
"docid": "958adefe530f3b14d55e5dd7a5537ad3",
"text": "If one does pay, one should only pay after they get a letter stating such a payment fully satisfies the debt. Then, one should only pay via money order or cashiers check. Never pay by personal check or credit card. Send such a payment via certified mail to ensure delivery. As stated in other answers: There might be an issue of honoring your debts, but that doesn't come into play here. You already didn't pay your debt, and the original owner of the note already took money. Paying this debt is only money in pocket of the debt collector. The scammier they are, and the worse they treat you would factor in.",
"title": ""
},
{
"docid": "bd157acb0e9dec2b7b4343d6a0a95b9d",
"text": "Maybe you know something I don't, but as far as I'm aware, you can't get rid of it. **Student loans are with you for life**. You will be sent to collections, but it doesn't disappear after 7 years. Settlements are incredibly rare unless your loan is ballooning... in which case, a settlement doesn't change all that much. You will lose tax benefits, the government will garnish 15% of your wages, and you will be a debt slave until it's paid off. Defaulting on student loans is much, much more painful than defaulting on private loans. The *only* exception to this is if you've made 120 months of repayments while employed at a qualifying non-profit or governmental organization. And even then, it only applies to federal loans and there are exceptions (better not refinance or the clock resets, for example). Also, if you default, you will no longer be eligible. Private student loans have no escape hatch and are equally unforgiving. Thank your elected representatives.",
"title": ""
},
{
"docid": "de6d817069222c9fc39f519b322d65f8",
"text": "\"Step one: Contact the collection agency. Tell them that they have the wrong person, and the same name is just a coincidence. I would NOT give them my correct social security number, birth date, or other identifying information. This could be a total scam for the purpose of getting you to give them such personal identifying information so they can perform an identity theft. Even if it is a legitimate debt collection agency, if they are overzealous and/or incompetent, they may enter your identifying information into their records. \"\"Oh, you say your social security number isn't 123-45-6789, but 234-56-7890. Thank you, let me update our records. Now, sir, I see that the social security number in our records matches your social security number ...\"\" Step two: If they don't back off, contact a lawyer. Collection agencies work by -- call it \"\"intimidation\"\" or \"\"moral persuasion\"\", depending on your viewpoint. Years after my wife left me, she went bankrupt. A collection agency called me demanding payment of her debts before the bankruptcy went through. I noticed two things about this: One, We were divorced and I had no responsibility for her debts. Somehow they tracked down my new address and phone number, a place where she had never even lived. Why should I pay her debts? I had no legal obligation, nor did I see any moral obligation. Two, Their pitch was that she/I should pay off this debt before the bankruptcy was final. Why would anyone do that? The whole point of declaring bankruptcy is so you don't have to pay these debts. They were hoping to intimidate her into paying even though she wouldn't be legally obligated to pay. If you don't owe the money, of course there's no reason why you should pay it. If they continue to pursue you for somebody else's debt, in the U.S. you can sue them for harassment. There are all sorts of legal limits on what collection agencies are allowed to do. Actually even if they do back off, it might be worth contacting a lawyer. I suspect that asking your employer to garnish your wages without a court order, without even proof that you are responsible for this debt, is a tort that you could sue them for.\"",
"title": ""
},
{
"docid": "bcc928967afec28bfb27fe29d9bdec82",
"text": "\"Step 1. Log onto chase.com Step 2. Click on the account in question Step 3. Add \"\"Outstanding balance\"\" to \"\"Pending charges\"\" Step 4. Pay said total amount With all the energy you spent trying to find out if they're doing something illegal, you could've resolved the original issue yourself and be done with it.\"",
"title": ""
},
{
"docid": "8f364aab021845547452178a44d83fa4",
"text": "The issue is that the lender used two peoples income, debts, and credit history to loan both of you money to purchase a house. The only way to get a person off the loan, is to get a new loan via refinancing. The new loan will then be based on the income, debt, and credit history of one person. There is no paperwork you can sign, or the ex-spouse can sign, that will force the original lender to remove somebody from the loan. There is one way that a exchange of money between the two of you could work: The ex-spouse will have to sign paperwork to prove that it is not a loan that you will have to payback. I picked the number 20K for a reason. If the amount of the payment is above 14K they will have to document for the IRS that this is a gift, and the amount above 14K will be counted as part of their estate when they die. If the amount of the payment is less than 14K they don't even have to tell the IRS. If the ex-souse has remarried or you have remarried the multiple payments can be constructed to exceed the 14K limit.",
"title": ""
},
{
"docid": "b5825b7937a3c46f4dad210d283bc7aa",
"text": "Also see who has the authority to delete bills or items on bills. This was a huge scam with some servers I've worked with. If you can delete an entire bill that was paid in cash then that's money in your pocket.",
"title": ""
}
] |
fiqa
|
b1ff3ce6e154d192aadce74387fbd3ca
|
End of financial year: closing transactions
|
[
{
"docid": "ed09f5a61997ebe3e2fd0ddfe3a013fa",
"text": "\"I'm not sure there's a good reason to do a \"\"closing the books\"\" ceremony for personal finance accounting. (And you're not only wanting to do that, but have a fiscal year that's different from the calendar year? Yikes!) My understanding is that usually this process is done for businesses to be able to account for what their \"\"Retained Earnings\"\" and such are for investors and tax purposes; generally individuals wouldn't think of their finances in those terms. It's certainly not impossible, though. Gnucash, for example, implements a \"\"Closing Books\"\" feature, which is designed to create transactions for each Income and Expenses account into an end-of-year Equity Retained Earnings account. It doesn't do any sort of closing out of Assets or Liabilities, however. (And I'm not sure how that would make any sense, as you'd transfer it from your Asset to the End-of-year closing account, and then transfer it back as an Opening Balance for the next year?) If you want to keep each year completely separate, the page about Closing Books in the Gnucash Wiki mentions that one can create a separate Gnucash file per year by exporting the account tree from your existing file, then importing that tree and the balances into a new file. I expect that it makes it much more challenging to run reports across multiple years of data, though. While your question doesn't seem to be specific to Gnucash (I just mention it because it's the accounting tool I'm most familiar with), I'd expect that any accounting program would have similar functionality. I would, however, like to point out this section from the Gnucash manual: Note that closing the books in GnuCash is unnecessary. You do not need to zero out your income and expense accounts at the end of each financial period. GnuCash’s built-in reports automatically handle concepts like retained earnings between two different financial periods. In fact, closing the books reduces the usefulness of the standard reports because the reports don’t currently understand closing transactions. So from their point of view it simply looks like the net income or expense in each account for a given period was simply zero. And that's largely why I'm just not sure what your goals are. If you want to look at your transactions for a certain time, to \"\"just focus on the range of years I'm interested in for any given purpose\"\" as you say, then just go ahead and run the report you care about with those years as the dates. The idea of \"\"closing books\"\" comes from a time when you'd want to take your pile of paper ledgers and go put them in storage once you didn't need to refer to them regularly. Computers now have no challenges storing \"\"every account from the beginning of time\"\" at all, and you can filter out that data to focus on whatever you're looking for easily. If you don't want to look at the old data, just don't include them in your reports. I'm pretty sure that's the \"\"better way to keep the books manageable\"\".\"",
"title": ""
}
] |
[
{
"docid": "636e89a10742d086814eda92bc6aaca3",
"text": "At the end of the year, the mutual fund company sends you a statement like any other investment and it has a bunch of boxes that you copy into your tax return software. Then you just check the box that says 'tax-exempt' and you're done.",
"title": ""
},
{
"docid": "2aed869cd16df85e36dd933d8d121c8c",
"text": "Close-end funds just means there's a fixed number of shares available, so if you want to buy some you must purchase from other existing owners, typically through an exchange. Open-end funds mean the company providing the shares is still selling them, so you can buy them directly from the company. Some can also be traded on exchanges as well.",
"title": ""
},
{
"docid": "1b4f0d060e1fbe089adecd08499cf3d3",
"text": "A government official said that the e-filing website had seen overloading due to last-minute filings. The last date for filing the income tax returns (ITRs) has been extended to 5th of August 2017 for the financial year 2016-17, the original deadline was 31st of July, 2017.",
"title": ""
},
{
"docid": "e7e27751dba88a72cd630751ffa52621",
"text": "I know some companies or entities have large incomes or expenses at certain times of the year, and like to close their books after these large events. For example where I work, the primary seasonal income comes after summer, so our fiscal year ends at the last days of October. This gives the accountants enough time to collect all the funds, reconcile whatever they have to, pay off whatever they have to and get working on a budget for the next year sooner than a calendar year would. There also might be tax reasons. To get all of your income at the beginning of your fiscal year, even if that is in the middle of the calendar year would allow a company to plan large deductible investments with more certainty. I am not to sure of the tax reasons.",
"title": ""
},
{
"docid": "36a2251f0e3038728874ef6f3cf0ad31",
"text": "My grandfather owned a small business, and I asked him that very question. His answer was that year-end closeout is very time-consuming, both before and after EOY (end of year), and that they didn't want to do all that around Christmas and New Year.",
"title": ""
},
{
"docid": "3700ea152d1680761ab5001bc0390c48",
"text": "Reading IRS Regulations section 15a.453-1(c) more closely, I see that this was a contingent payment sale with a stated maximum selling price. Therefore, at the time of filing prior years, there was no way of knowing the final contingent payment would not be reached and thus the prior years were filed correctly and should not be amended. Those regulations go on to give an example of a sale with a stated maximum selling price where the maximum was not reached due to contingency and states that in such cases: When the maximum [payment] amount is subsequently reduced, the gross profit ratio will be recomputed with respect to payments received in or after the taxable year in which an event requiring reduction occurs. However, in this case, that would result in a negative gross profit ratio on line 19 of form 6252 which Turbo Tax reports should be a non-negative number. Looking further in the regulations, I found an example which relates to bankruptcy and a resulting loss in a subsequent year: For 1992 A will report a loss of $5 million attributable to the sale, taken at the time determined to be appropriate under the rules generally applicable to worthless debts. Therefore, I used a gross profit ratio of zero on line 19 and entered a separate stock sale not reported on a 1099-B as a worthless stock on Form 8949 as a capital loss based upon the remaining basis in the stock sold in an installment sale. I also included an explanatory statement with my return to the IRS stating: In 2008, I entered into an installment sale of stock. The sale was a contingent payment sale with a stated maximum selling price. The sales price did not reach the agreed upon maximum sales price due to some contingencies not being met. According to the IRS Regulations section 15a.453-1(c) my basis in the stock remains at $500 in 2012 after the final payment. Rather than using a negative gross profit ratio on line 19 of form 6252, I'm using a zero ratio and treating the remaining basis as a schedule-D loss similar to worthless stock since the sale is now complete and my remaining basis is no longer recoverable.",
"title": ""
},
{
"docid": "de1c3721708671a47ab4ef8409f51c16",
"text": "If the underlying is currently moving as aggressively as stated, the broker would immediately forcibly close positions to maintain margin. What securities are in fact closed depends upon the internal algorithms. If the equity in the account remains negative after closing all positions if necessary, the owner of the account shall owe the broker the balance. The broker will close the account and commence collections if the owner of the account does not pay the balance quickly. Sometimes, brokers will impose higher margin requirements than mandated to prevent the above eventuality. Brokers frequently close positions that violate internal or external margin requirements as soon as they are breached.",
"title": ""
},
{
"docid": "2021896ab5fde00bf401811c12b52f10",
"text": "Cart's answer is basically correct, but I'd like to elaborate: A futures contract obligates both the buyer of a contract and the seller of a contract to conduct the underlying transaction (settle) at the agreed-upon future date and price written into the contract. Aside from settlement, the only other way either party can get out of the transaction is to initiate a closing transaction, which means: The party that sold the contract buys back another similar contract to close his position. The party that bought the contract can sell the contract on to somebody else. Whereas, an option contract provides the buyer of the option with the choice of completing the transaction. Because it's a choice, the buyer can choose to walk away from the transaction if the option exercise price is not attractive relative to the underlying stock price at the date written into the contract. When an option buyer walks away, the option is said to have expired. However – and this is the part I think needs elaboration – the original seller (writer) of the option contract doesn't have a choice. If a buyer chooses to exercise the option contract the seller wrote, the seller is obligated to conduct the transaction. In such a case, the seller's option contract is said to have been assigned. Only if the buyer chooses not to exercise does the seller's obligation go away. Before the option expires, the option seller can close their position by initiating a closing transaction. But, the seller can't simply walk away like the option buyer can.",
"title": ""
},
{
"docid": "37336f4aa9142fc911bbc1bb0ac04cf6",
"text": "\"Assuming these are standardized and regulated contracts, the short answer is yes. In your example, Trader A is short while Trader B is long. If Trader B wants to exit his long position, he merely enters a \"\"sell to close\"\" order with his broker. Trader B never goes short as you state. He was long while he held the contract, then he \"\"sold to close\"\". As to who finds the buyer of Trader B's contract, I believe that would be the exchange or a market maker. Therefore, Trader C ends up the counterparty to Trader A's short position after buying from Trader B. Assuming the contract is held until expiration, Trader A is responsible for delivering contracted product to Trader C for contracted price. In reality this is generally settled up in cash, and Trader A and Trader C never even know each other's identity.\"",
"title": ""
},
{
"docid": "1569f93563ab208396b84015c60d687d",
"text": "* Absolutely agree with /u/IsAnAlpaca * You /must/ not agree to this without seeing his balance sheet. * That means assets and liabilities, but also ask for the last 12 months' cash flow * Inability or unwillingness to provide any of those things is a HUGE no-go red flag.",
"title": ""
},
{
"docid": "8ffce4eaf8955793d3399c6118abab23",
"text": "Yes this is possible. The most likely tool to use in this case would be a Home Equity Line of Credit (HELOC). This is a line of credit for which the full amount is backed by home equity (difference between market and book prices). Most likely your financial institution will apply a factor to this collateral to account for various risks which will reduce the maximum amount that can be taken as a line of credit. https://en.m.wikipedia.org/wiki/Home_equity_line_of_credit",
"title": ""
},
{
"docid": "36fcccad5602fec5364f2c1f4e6d3235",
"text": "Generally stock trades will require an additional Capital Gains and Losses form included with a 1040, known as Schedule D (summary) and Schedule D-1 (itemized). That year I believe the maximum declarable Capital loss was $3000--the rest could carry over to future years. The purchase date/year only matters insofar as to rank the lot as short term or long term(a position held 365 days or longer), short term typically but depends on actual asset taxed then at 25%, long term 15%. The year a position was closed(eg. sold) tells you which year's filing it belongs in. The tiny $16.08 interest earned probably goes into Schedule B, typically a short form. The IRS actually has a hotline 800-829-1040 (Individuals) for quick questions such as advising which previous-year filing forms they'd expect from you. Be sure to explain the custodial situation and that it all recently came to your awareness etc. Disclaimer: I am no specialist. You'd need to verify everything I wrote; it was just from personal experience with the IRS and taxes.",
"title": ""
},
{
"docid": "0ddf5935ce37f66c96defd0182a0c28d",
"text": "\"This may be closed as not quite PF, but really \"\"startup\"\" as it's a business question. In general, you should talk to a professional if you have this type of question, specifics like this regarding your tax code. I would expect that as a business, you will use a proper paper trail to show that money, say 1000 units of currency, came in and 900 went out. This is a service, no goods involved. The transaction nets you 100, and you track all of this. In the end you have the gross profit, and then business expenses. The gross amount, 1000, should not be the amount taxed, only the final profit.\"",
"title": ""
},
{
"docid": "38765067a397d9b0e341b2b3e44ba294",
"text": "\"Plenty! Following are just a few: For things like RESP and RRSP which have an \"\"end\"\" date; as you or your children age, you should be migrating to less speculative investments and more secure ones. When children are young, for example, you might be in a \"\"growth\"\" type fund. Later on, you would likely want to switch that to an \"\"income\"\" fund, which is also more conservative and less likely to lose principal. Are you getting the best benefit from your credit cards? Is there another card with benefits that you would get more \"\"back\"\" from using? Is that fee-based Air miles card worth it? Is cash-back better for you? If you have regular investment withdrawals, can you increase them? Do you like the plan they are going in to? Similarly look over any other long-term debt repayment. Student loans, car loans, mortgage. What is coming up this year, what is \"\"ending\"\". If, for example, car payment will end, how will you earmark that money, so it just does not disappear into general funds. While you could go over things like these more often, once a year should be plenty often to keep tabs and not obsess. Good Luck!\"",
"title": ""
},
{
"docid": "b727ae7b43228b83efcdc86a2ddfa0c7",
"text": "Looking at your dates, I think I see a pattern. It appears that your statement closing date is always 17 business days before the last business day of the month. For example, if you start at May 31 and start counting backwards, skipping Saturdays, Sundays, and May 30 (Memorial Day), you'll see that May 5 is 17 business days before May 31. I cannot explain why Bank of America would do this. If you ask them, let us know what they say. If it bothers you, find another bank. I do most of my banking (checking, savings, etc.) with a local credit union. Their statements end on the last day of the month, every month without fail. (Very nice, in my opinion.) I have two credit cards with nationally known banks, and although those statements end in the middle of the month, they are consistently on the same date every month. (One of them is on the 13th; the other date I can't recall right now.) You are right, a computer does the work, and your statement date should be able to fall on a weekend without trouble. Even when these were assembled by hand, the statement date could still be on a weekend, and they just wouldn't write it up until the following Monday. You should be able to find another bank or credit union that does this.",
"title": ""
}
] |
fiqa
|
2846d37d3928156057787e492e220610
|
How much would it cost me to buy one gold futures contract on Comex?
|
[
{
"docid": "0d2e0573d0cc917b52c7b308c9e9f620",
"text": "When you buy a futures contract you are entering into an agreement to buy gold, in the future (usually a 3 month settlement date). this is not an OPTION, but a contract, so each party is taking risk, the seller that the price will rise, the buyer that the price will fall. Unlike an option which you can simply choose not to exercise if the price goes down, with futures you are obligated to follow through. (or sell the contract to someone else, or buy it back) The price you pay depends on the margin, which is related to how far away the settlement date is, but you can expect around 5% , so the minimum you could get into is 100 troy ounces, at todays price, times 5%. Since we're talking about 100 troy ounces, that means the margin required to buy the smallest sized future contract would be about the same as buying 5 ounces of gold. roughly $9K at current prices. If you are working through a broker they will generally require you to sell or buy back the contract before the settlement date as they don't want to deal with actually following through on the purchase and having to take delivery of the gold. How much do you make or lose? Lets deal with a smaller change in the price, to be a bit more realistic since we are talking typically about a settlement date that is 3 months out. And to make the math easy lets bump the price of gold to $2000/ounce. That means the price of a futures contract is going to be $10K Lets say the price goes up 10%, Well you have basically a 20:1 leverage since you only paid 5%, so you stand to gain $20,000. Sounds great right? WRONG.. because as good as the upside is, the downside is just as bad. If the price went down 10% you would be down $20000, which means you would not only have to cough up the 10K you committed but you would be expected to 'top up the margin' and throw in ANOTHER $10,000 as well. And if you can't pay that up your broker might close out your position for you. oh and if the price hasn't changed, you are mostly just out the fees and commissions you paid to buy and sell the contract. With futures contracts you can lose MORE than your original investment. NOT for the faint of heart or the casual investor. NOT for folks without large reserves who can afford to take big losses if things go against them. I'll close this answer with a quote from the site I'm linking below The large majority of people who trade futures lose their money. That's a fact. They lose even when they are right in the medium term, because futures are fatal to your wealth on an unpredicted and temporary price blip. Now consider that, especially the bit about 'price blip' and then look at the current volatility of most markets right now, and I think you can see how futures trading can be as they say 'Fatal to your Wealth' (man, I love that phrase, what a great way of putting it) This Site has a pretty decent primer on the whole thing. their view is perhaps a bit biased due to the nature of their business, but on the whole their description of how things work is pretty decent. Investopedia has a more detailed (and perhaps more objective) tutorial on the futures thing. Well worth your time if you think you want to do anything related to the futures market.",
"title": ""
},
{
"docid": "6798b2dc3f9c4a3f181e781dc794fc76",
"text": "Brokers usually have this kind of information, you can take a look at interactive brokers for instance: http://www.interactivebrokers.co.uk/contract_info/v3.6/index.php?action=Details&site=GEN&conid=90384435 You are interested in the initial margin which in this case is $6,075. So you need that amount to buy/sell 1 future. In the contract specification you see the contract is made for 100 ounces. At the current price ($1,800/oz), that would be a total of $180,000. It is equivalent to saying you are getting 30x leverage. If you buy 1 future and the price goes from $1,800 to $1,850, the contract would go from $180,000 to $185,000. You make $5,000 or a 82% return. I am pretty sure you can imagine what happens if the market goes against you. Futures are great! (when your timing is perfect).",
"title": ""
},
{
"docid": "b61a93a2cdc0652ecf72d577d67b3b63",
"text": "The lot size is 100 troy ounce. See the contract specification at the same site; http://www.cmegroup.com/trading/metals/precious/gold_contract_specifications.html So with the current price of around $1785, one lot would cost you around 178,500. There may be other sites that offer smaller lots you would need to check with your broker. if the price moves up by $500, you gain $50,000 for a lot. The margin required changes from time to time: Currently it's $3666, with a maintenance of $3332, so a drop of $3.34 per oz of gold will cause a margin call. You make or lose 100 times the per oz movement as there are 100oz in the contract you cited. There's also a broker fee analogous to the commission on a stock trade. The other option would be to buy a fund that invests in Gold, this will be more easier to buy and the lot sizes will be much less. I hope you jumped into this great opportunity. At the time, experts said gold would have a straight run to $5000.",
"title": ""
},
{
"docid": "9dad31ba2c5fb4acb8693713bdfde500",
"text": "In order to understand how much you might gain or lose from participating in the futures markets, it is important to first understand the different ways in which the slope of the futures markets can be described. In many of the futures markets there is a possibility of somebody buying a commodity at the spot price and selling a futures contract on it. In order to do this they need to hold the commodity in storage. Most commodities cost money to hold in storage, so the futures price will tend to be above the spot price for these commodities. In the case of stock index futures, the holder receives a potential benefit from holding the stocks in an index. If the futures market is upward sloping compared to the spot price, then it can be called normal. If the futures market is usually downward sloping compared to the spot price then it can be called inverted. If the futures market is high enough above the spot price so that more of the commodity gets stored for the future, then the market can be called in contango. If the futures market is below the point where the commodity can be profitably stored for the future, and the market can be called in backwardation. In many of these cases, there is an implicit cost that the buyer of a future pays in order to hold the contract for certainly time. Your question is how much money you make if the price of gold goes up by a specific amount, or how much money you lose if the price of gold goes down by the same specific amount. The problem is, you do not say whether it is the spot price or the futures price which goes up or down. In most cases it is assumed that the change in the futures price will be similar to the change in the spot price of gold. If the spot price of gold goes up by a small amount, then the futures price of gold will go up by a small amount as well. If the futures price of gold goes up by a small amount, this will also drive the spot price of gold up. Even for these small price changes, the expected futures price change in expected spot price change will not be exactly the same. For larger price changes, there will be more of a difference between the expected spot price change in expected future price change. If the price eventually goes up, then the cost of holding the contract will be subtracted from any future gains. If the price eventually goes down, then this holding cost should be added to the losses. If you bought the contract when it was above the spot price, the price will slowly drift toward the spot price, causing you this holding cost. If the price of gold does not change any from the current spot price, then all you are left with is this holding cost.",
"title": ""
}
] |
[
{
"docid": "aa44f765e5a2f38704d6cc8e004c6e7c",
"text": "Most of the gold prices at international markets are USD denominated. Hence the prices would be same in international markets where large players are buying and selling. However this does not mean that the prices to the individuals in local markets is same. The difference is due to multiple things like cost of physical delivery, warehousing, local taxation, conversion of Local currency to USD etc. So in essence the price of Gold is similar to price of Crude Oil. The price of Oil is more or less same on all the markets exchanges, though there is small difference this is because of the cost of delivery/shipment which is borne by the buyer. However the cost of Oil to retail individual varies from country to country.",
"title": ""
},
{
"docid": "2ce1cee0983831c85823c1166a154b4e",
"text": "\"In layman's terms, oil on the commodities market has a \"\"spot price\"\" and a \"\"future price\"\". The spot price is what the last guy paid to buy a barrel of oil right now (and thus a pretty good indicator of what you'll have to pay). The futures price is what the last guy paid for a \"\"futures contract\"\", where they agreed to buy a barrel of oil for $X at some point in the future. Futures contracts are a form of hedging; a futures contract is usually sold at a price somewhere between the current spot price and the true expected future spot price; the buyer saves money versus paying the spot price, while the seller still makes a profit. But, the buyer of a futures contract is basically betting that the spot price as of delivery will be higher, while the seller is betting it will be lower. Futures contracts are available for a wide variety of acceptable future dates, and form a curve when plotted on a graph that will trend in one direction or the other. Now, as Chad said, oil companies basically get their cut no matter what. Oil stocks are generally a good long-term bet. As far as the best short-term time to buy in to an oil stock, look for very short windows when the spot and near-future price of gasoline is trending downward but oil is still on the uptick. During those times, the oil companies are paying their existing (high) contracts for oil, but when the spot price is low it affects futures prices, which will affect the oil companies' margins. Day traders will see that, squawk \"\"the sky is falling\"\" and sell off, driving the price down temporarily. That's when you buy in. Pretty much the only other time an oil stock is a guaranteed win is when the entire market takes a swan dive and then bottoms out. Oil has such a built-in demand, for the foreseeable future, that regardless of how bad it gets you WILL make money on an oil stock. So, when the entire market's in a panic and everyone's heading for gold, T-debt etc, buy the major oil stocks across the spectrum. Even if one stock tanks, chances are really good that another company will see that and offer a buyout, jacking the bought company's stock (which you then sell and reinvest the cash into the buying company, which will have taken a hit on the news due to the huge drop in working capital). Of course, the one thing to watch for in the headlines is any news that renewables have become much more attractive than oil. You wait; in the next few decades some enterprising individual will invent a super-efficient solar cell that provides all the power a real, practical car will ever need, and that is simultaneously integrated into wind farms making oil/gas plants passe. When that happens oil will be a thing of the past.\"",
"title": ""
},
{
"docid": "74828bede8859a500467a1ed38b291cd",
"text": "December, 8, 2011 ( 01:30 pm) :- Gold & Silver good support by the investors who are keep maintaining their buy position in MCX & Comex. But spot traders has sold 1000 kg Silver on Wednesday. Apart from this Silver maintaining their support above $ 32 & but also facing some resistance at $ 33.20. If today $ 33.20, Silver able to trade above that level than we can fore see their prices up to $ 34 - 35 in short term but if all problems are sowed after the today meet. Gold trend today totally bullish, If they trade above $ 1740 & Rs 29250 in MCX, We can for see Gold prices up to $ 1760 - $ 1780 in Comex & Rs 29500 - Rs 29700 in MCX.",
"title": ""
},
{
"docid": "ea6800045e771f331e32666416c65c19",
"text": "Unless you have the storage and transportation facilities for it, or can come up with the money needed to rent or build those, no -- or not in any significant quantity. Buying oil futures is essentially an on-paper version of the same bet. Futures prices are already taking into account both expectations about price changes and the fact that there's cash tied up until they come due, but storage costs also adjust to follow those expectations.",
"title": ""
},
{
"docid": "ab6cc8d9826ecf75e8add750017c25d1",
"text": "\"Don't put all your eggs in one basket and don't assume that you know more than the market does. The probability of gold prices rising again in the near future is already \"\"priced in\"\" as it were. Unless you are privy to some reliable information that no one else knows (given that you are asking here, I'm guessing not), stay away. Invest in a globally diversified low cost portfolio of primarily stocks and bonds and don't try to predict the future. Also I would kill for a 4.5% interest rate on my savings. In the USA, 1% is on the high side of what you can get right now. What is inflation like over there?\"",
"title": ""
},
{
"docid": "37746c35a5215dfe0fce2b7fab17a074",
"text": "I use futures options as a sort of hedge to an underwater position that I want to hold onto. If I am short at 3900 on /NQ and it moves up 3910 then I can sell a put against my position. For example, I sell this month's 3850 put for 15.00. If the NQ continues up to 3920, I can probably buy back that put for ~12.00 and sell the 3860 for 15.00. Rinse and repeat if it keeps moving up. If then the NQ moves down to 3900 then my futures position will be up +10 where my futures options put position will only be down about -3 for a net of +7. I suppose you could also trade a futures option by itself instead of the future's contract if you didn't want to risk as much $ in a day trade. Keep in mind that price you see for a future's options relates to the underlying. For /NQ 1 point = $20 so if a 3850 put costs 15.00 that is really $300. ES (Sp 500 futures) 1 point = $50 so a 1900 put that costs 15.00 would really be $750.",
"title": ""
},
{
"docid": "1036b5a2d57545cec61d53dda57b458c",
"text": "On international stock exchanges, they trade Puts and Calls, typically also for currencies. If for example 1 NOK is worth 1 $ now, and you buy Calls for 10000 NOK at 1.05 $ each, and in a year the NOK is worth 1.20 $ (which is what you predict), you can execute the Call, meaning 'buying' the 10000 NOK for the contracted 1.05 $ and selling them for the market price of 1.20 $, netting you 12000 - 10500 = 1500 $. Converting those back to NOK would give you 1250 NOK. Considering that those Calls might cost you maybe 300 NOK, you made 950 NOK. Note that if your prediction is common knowledge, Calls will be appropriately priced (=expensive), and there is little to make on them. And note also that if you were wrong, your Calls are worth less than toilet paper, so you lost the complete 300 NOK you paid for them. [all numbers are completely made up, for illustration purposes] You can make the whole thing easier if you define the raise of the NOK against a specific currency, for example $ or EUR. If you can, you can instead buy Puts for that currency, and you save yourself converting the money twice.",
"title": ""
},
{
"docid": "184b192142a08e69ff99c90145a0ef1a",
"text": "You're missing the cost-of-carry aspect: The cost of carry or carrying charge is the cost of storing a physical commodity, such as grain or metals, over a period of time. The carrying charge includes insurance, storage and interest on the invested funds as well as other incidental costs. In interest rate futures markets, it refers to the differential between the yield on a cash instrument and the cost of the funds necessary to buy the instrument. So in a nutshell, you'd have to store the gold (safely), invest your money now, i.e. you're missing out on interests the money could have earned until the futures delivery date. Well and on top of that you need to get the gold shipped to London or wherever the agreed delivery place is. Edit: Forgot to mention that of course there are arbitrageurs that make sure the futures and spot market prices don't diverge. So the idea isn't that bad as I might have made it sound but being in the arbitrage business myself I should disclaim that profits are small and arbitraging is highly automated, so before you spot a $1 profit somewhere between any two contracts, you can be quite sure it's been taken by an arbitrageur already.",
"title": ""
},
{
"docid": "37e4a50d30b9b0df113973cbb7a4e610",
"text": "The other answer covers the mechanics of how to buy/sell a future contract. You seem however to be under the impression that you can buy the contract at 1,581.90 today and sell at 1,588.85 on expiry date if the index does not move. This is true but there are two important caveats: In other words, it is not the case that your chance of making money by buying that contract is more than 50%...",
"title": ""
},
{
"docid": "ed60840adabb35f50fbe3ecac6904235",
"text": "\"What you're looking for are either FX Forwards or FX Futures. These products are traded differently but they are basically the same thing -- agreements to deliver currency at a defined exchange rate at a future time. Almost every large venue or bank will transact forwards, when the counterparty (you or your broker) has sufficient trust and credit for the settlement risk, but the typical duration is less than a year though some will do a single-digit multi-year forward on a custom basis. Then again, all forwards are considered custom contracts. You'll also need to know that forwards are done on currency pairs, so you'll need to pick the currency to pair your NOK against. Most likely you'll want EUR/NOK simply for the larger liquidity of that pair over other possible pairs. A quote on a forward will usually just be known by the standard currency pair ticker with a settlement date different from spot. E.g. \"\"EUR/NOK 12M\"\" for the 12 month settlement. Futures, on the other hand, are exchange traded and more standardized. The vast majority through the CME (Chicago Mercantile Exchange). Your broker will need access to one of these exchanges and you simply need to \"\"qualify\"\" for futures trading (process depends on your broker). Futures generally have highest liquidity for the next \"\"IMM\"\" expiration (quarterly expiration on well known standard dates), but I believe they're defined for more years out than forwards. At one FX desk I've knowledge of, they had 6 years worth of quarterly expirations in their system at any one time. Futures are generally known by a ticker composed of a \"\"globex\"\" or \"\"cme\"\" code for the currency concatenated with another code representing the expiration. For example, \"\"NOKH6\"\" is 'NOK' for Norwegian Krone, 'H' for March, and '6' for the nearest future date's year that ends in '6' (i.e. 2016). Note that you'll be legally liable to deliver the contracted size of Krone if you hold through expiration! So the common trade is to hold the future, and net out just before expiration when the price more accurately reflects the current spot market.\"",
"title": ""
},
{
"docid": "2865984a64db25a71c7b3f2c57f1afc5",
"text": "\"Your plan already answers your own question in the best possible way: If you want to be able to make the most possible profit from a large downward move in a stock (in this case, a stock that tracks gold), with a limited, defined risk if there is an upward move, the optimal strategy is to buy a put option. There are a few Exchange Traded Funds (ETFs) that track the price of gold. think of them as stocks that behave like gold, essentially. Two good examples that have options are GLD and IAU. (When you talk about gold, you'll hear a lot about futures. Forget them, for now. They do the same essential thing for your purposes, but introduce more complexity than you need.) The way to profit from a downward move without protection against an upward move is by shorting the stock. Shorting stock is like the opposite of buying it. You make the amount of money the stock goes down by, or lose the amount it goes up by. But, since stocks can go up by an infinite amount, your possible loss is unlimited. If you want to profit on a large downward move without an unlimited loss if you're wrong and it goes up, you need something that makes money as the stock drops, but can only lose so much if it goes up. (If you want to be guaranteed to lose nothing, your best investment option is buying US Treasuries, and you're technically still exposed to the risk that US defaults on its debt, although if you're a US resident, you'll likely have bigger problems than your portfolio in that situation.) Buying a put option has the exact asymmetrical exposure you want. You pay a limited premium to buy it, and at expiration you essentially make the full amount that the stock has declined below the strike price, less what you paid for the option. That last part is important - because you pay a premium for the option, if it's down just a little, you might still lose some or all of what you paid for it, which is what you give up in exchange for it limiting your maximum loss. But wait, you might say. When I buy an option, I can lose all of my money, cant I? Yes, you can. Here's the key to understanding the way options limit risk as compared to the corresponding way to get \"\"normal\"\" exposure through getting long, or in your case, short, the stock: If you use the number of options that represent the number of shares you would have bought, you will have much, much less total money at risk. If you spend the same \"\"bag 'o cash\"\" on options as you would have spent on stock, you will have exposure to way more shares, and have the same amount of money at risk as if you bought the stock, but will be much more likely to lose it. The first way limits the total money at risk for a similar level of exposure; the second way gets you exposure to a much larger amount of the stock for the same money, increasing your risk. So the best answer to your described need is already in the question: Buy a put. I'd probably look at GLD to buy it on, simply because it's generally a little more liquid than IAU. And if you're new to options, consider the following: \"\"Paper trade\"\" first. Either just keep track of fake buys and sells on a spreadsheet, or use one of the many online services where you can track investments - they don't know or care if they're real or not. Check out www.888options.com. They are an excellent learning resource that isn't trying to sell you anything - their only reason to exist is to promote options education. If you do put on a trade, don't forget that the most frustrating pitfall with buying options is this: You can be basically right, and still lose some or all of what you invest. This happens two ways, so think about them both before you trade: If the stock goes in the direction you think, but not enough to make back your premium, you can still lose. So you need to make sure you know how far down the stock has to be to make back your premium. At expiration, it's simple: You need it to be below the strike price by more than what you paid for the option. With options, timing is everything. If the stock goes down a ton, or even to zero - free gold! - but only after your option expires, you were essentially right, but lose all your money. So, while you don't want to buy an option that's longer than you need, since the premium is higher, if you're not sure if an expiration is long enough out, it isn't - you need the next one. EDIT to address update: (I'm not sure \"\"not long enough\"\" was the problem here, but...) If the question is just how to ensure there is a limited, defined amount you can lose (even if you want the possible loss to be much less than you can potentially make, the put strategy described already does that - if the stock you use is at $100, and you buy a put with a 100 strike for $5, you can make up to $95. (This occurs if the stock goes to zero, meaning you could buy it for nothing, and sell it for $100, netting $95 after the $5 you paid). But you can only lose $5. So the put strategy covers you. If the goal is to have no real risk of loss, there's no way to have any real gain above what's sometimes called the \"\"risk-free-rate\"\". For simplicity's sake, think of that as what you'd get from US treasuries, as mentioned above. If the goal is to make money whether the stock (or gold) goes either up or down, that's possible, but note that you still have (a fairly high) risk of loss, which occurs if it fails to move either up or down by enough. That strategy, in its most common form, is called a straddle, which basically means you buy a call and a put with the same strike price. Using the same $100 example, you could buy the 100-strike calls for $5, and the 100-strike puts for $5. Now you've spent $10 total, and you make money if the stock is up or down by more than $10 at expiration (over 110, or under 90). But if it's between 90 and 100, you lose money, as one of your options will be worthless, and the other is worth less than the $10 total you paid for them both.\"",
"title": ""
},
{
"docid": "a43b96a974577a49b2762736aabffc13",
"text": "\"As proposed: Buy 100 oz of gold at $1240 spot = -$124,000 Sell 1 Aug 2014 Future for $1256 = $125,600 Profit $1,600 Alternative Risk-Free Investment: 1 year CD @ 1% would earn $1240 on $124,000 investment. Rate from ads on www.bankrate.com \"\"Real\"\" Profit All you are really being paid for this trade is the difference between the profit $1,600 and the opportunity for $1240 in risk free earnings. That's only $360 or around 0.3%/year. Pitfalls of trying to do this: Many retail futures brokers are set up for speculative traders and do not want to deal with customers selling contracts against delivery, or buying for delivery. If you are a trader you have to keep margin money on deposit. This can be a T-note at some brokerages, but currently T-notes pay almost 0%. If the price of gold rises and you are short a future in gold, then you need to deposit more margin money. If gold went back up to $1500/oz, that could be $24,400. If you need to borrow this money, the interest will eat into a very slim profit margin over the risk free rate. Since you can't deliver, the trades have to be reversed. Although futures trades have cheap commissions ~$5/trade, the bid/ask spread, even at 1 grid, is not so minimal. Also there is often noisy jitter in the price. The spot market in physical gold may have a higher bid/ask spread. You might be able to eliminate some of these issues by trading as a hedger or for delivery. Good luck finding a broker to let you do this... but the issue here for gold is that you'd need to trade in depository receipts for gold that is acceptable for delivery, instead of trading physical gold. To deliver physical gold it would likely have to be tested and certified, which costs money. By the time you've researched this, you'll either discover some more costs associated with it or could have spent your time making more money elsewhere.\"",
"title": ""
},
{
"docid": "bc1c0fc5cf69b8f5f14f16e716ab63a4",
"text": "There are 2 schools of thought in determining the price of a future contract in a day prior to expiration. The cost of carry model, states that the price of a future contract today is the spot price plus the cost of carrying the underlying asset until expiration minus the return that can be obtained from carrying the underlying asset. FuturePrice = SpotPrice + (CarryCost - CarryReturn) The expectancy model, states that the price of the futures contract depends on the expectation about the spot market's price in the future. In this case, the price of the future contract will diverge from the spot price depending on how much the price is expected to rise or fall before expiration. A few glossary terms: cost of carry For physical commodities such as grains and metals, the cost of storage space, insurance, and finance charges incurred by holding a physical commodity. In interest rate futures markets, it refers to the differential between the yield on a cash instrument and the cost of funds necessary to buy the instrument. Also referred to as carrying charge. spot price The price at which a physical commodity for immediate delivery is selling at a given time and place. The cash price.",
"title": ""
},
{
"docid": "e9948929aaf617dfbf4968b14dc626dc",
"text": "The papers you would need to buy are called 'futures', and they give you the right to buy (or sell) a certain amount of oil at a certain location (some large harbor typically), for a certain price, on a certain day. You can typically sell these futures anytime (if you find someone that buys them), and depending on the direction you bought, you will make or lose money according to oil rice changes - if you have the future to get oil for 50 $, and the market price is 60, this paper is obviously worth 10 $. Note that you will have to sell the future at some day before it runs out, or you get real oil in some harbor somewhere for it, which might not be very useful to you. As most traders don't want really any oil, that might happen automatically or by default, but you need to make sure of that. Note also that worst case you could lose a lot more money than you put in - if you buy a future to deliver oil for 50 $, and the oil price runs, you will have to procure the oil for new price, meaning pay the current price for it. There is no theoretical limit, so depending on what you trade, you could lose ten times or a thousand times what you invested. [I worded that without technical lingo so it is clear for beginners - this is the concept, not the full technical explanation]",
"title": ""
},
{
"docid": "df7fcd1a81102f1a96ffe8c8bfdb0914",
"text": "\"Ignoring the complexities of a standardised and regulated market, a futures contract is simply a contract that requires party A to buy a given amount of a commodity from party B at a specified price. The future can be over something tangible like pork bellies or oil, in which case there is a physical transfer of \"\"stuff\"\" or it can be over something intangible like shares. The purpose of the contract is to allow the seller to \"\"lock-in\"\" a price so that they are not subject to price fluctuations between the date the contract is entered and the date it is complete; this risk is transferred to the seller who will therefore generally pay a discounted rate from the spot price on the original day. In many cases, the buyer actually wants the \"\"stuff\"\"; futures contracts between farmers and manufacturers being one example. The farmer who is growing, say, wool will enter a contract to supply 3000kg at $10 per kg (of a given quality etc. there are generally price adjustments detailed for varying quality) with a textile manufacturer to be delivered in 6 months. The spot price today may be $11 - the farmer gives up $1 now to shift the risk of price fluctuations to the manufacturer. When the strike date rolls around the farmer delivers the 3000kg and takes the money - if he has failed to grow at least 3000kg then he must buy it from someone or trigger whatever the penalty clauses in the contract are. For futures over shares and other securities the principle is exactly the same. Say the contract is for 1000 shares of XYZ stock. Party A agrees to sell these for $10 each on a given day to party B. When that day rolls around party A transfers the shares and gets the money. Party A may have owned the shares all along, may have bought them before the settlement day or, if push comes to shove, must buy them on the day of settlement. Notwithstanding when they bought them, if they paid less than $10 they make a profit if they pay more they make a loss. Generally speaking, you can't settle a futures contract with another futures contract - you have to deliver up what you promised - be it wool or shares.\"",
"title": ""
}
] |
fiqa
|
8b7def461fce4f18ccf392596ed7efd0
|
Setting up auto-pay. Should I use my bank that holds mortage or my personal bank?
|
[
{
"docid": "19fa81d4f7fc0ca1253b7f0a44f2159c",
"text": "\"One factor to consider is timing. If you set up the automatic payments through the bank that holds the mortgage (I'll call them the \"\"receiving\"\" bank), they will typically record the transactions as occurring on the actual dates you've set up the automatic payments to occur on, which generally eliminates e.g. the risk of having late payments. By contrast, setting up auto-pay through your personal bank (the \"\"sending\"\" bank) usually amounts to, on the date you specify, your bank deducts the amount from your account and sends a check to the receiving bank (and many banks actually send this check by mail), which may result in the transaction not being credited to your mortgage until several business days later. A second consideration (and this may not be as likely to occur on a loan payment as with a utility or service) is the amount of the payment. When you set up your auto-pay through the sending bank, you explicitly instruct your bank as to the amount to send (also, if you don't have enough in your account, your bank may wait to send the bill payment until you do). This can be good if finances are tight, or if you just like having absolute control of the payment. The risk, though, is that if some circumstance increases the amount that you need to pay one month, you'll have to proactively adjust your auto-pay setting before it fires off. Whereas, if you've set the auto-pay up through the receiving bank, they would most likely submit the transaction to your bank for the higher amount automatically. I'll give an example based on something I saw fairly often when I worked for Dish Network on recovery (customers in early disconnect, the goal being to take a payment and restore service). If you had set up auto-pay through your bank based on your package price, and then the price increased by $2/month, you might not notice at first (your service stays on, and your bill doesn't have any red stamps on it), but the difference will slowly add up until it exceeds a full month's payment, at which point a late fee starts being assessed. From there, it quickly snowballs until the service is turned off. Whereas if you had set that auto-pay up through the provider, when the rate increased, they would simply submit an EFT for the new, higher amount to your bank. On the opposite side of the spectrum: if you've set up the auto-pay through the sending bank, and you're not paying close enough attention when you finally pay off the mortgage, you might accidentally overpay by either making an extra payment or because the final payment is smaller than the rest. Then you'd have to wait a few days (or weeks?) for the receiving bank to issue a refund, leaving those funds unavailable to you in the interim. For these reasons, I personally prefer to always set up automatic payments through the receiving bank, rather than the sending bank.\"",
"title": ""
},
{
"docid": "9a74ce917b8bba32d778ccb34fe977c9",
"text": "Depending on your bank you may receive an ACH discount for doing automatic withdrawals from a deposit account at that bank. Now, this depends on your bank and you need to do independent research on that topic. As far as dictating what your extra money goes towards each month (early payments, principal payments, interest payments) you need to discuss that with your bank. I'm sure it's not too difficult to find. In my experience most banks, so long as you didn't sign a contract on your mortgage where you're penalized for sending additional money, will apply extra money toward early payments, and not principal. I would suggest calling them. I know for my student loans I have to send a detailed list of my loans and in what order I want my extra payments toward each, otherwise it will be considered an early payment, or it will be spread evenly among them all.",
"title": ""
}
] |
[
{
"docid": "acc09c5d98f893e55f4d2b9ce0497689",
"text": "Disclosure: I work for Wells Fargo Home Mortgage. This is normal. The bank is giving you a discount on the interest rate in exchange for the automatic payments. Unfortunately, the bank has the power here; they have your mortgage, and they have the right to call your loan in full at any time, and foreclose on your house if you don't pony up. It's okay to not like being pushed around, but you need to know when to hold'em and when to fold'em, and your facing a royal flush with pair of 4s.",
"title": ""
},
{
"docid": "26d1fa0919c5d0cd9e23e44fd94ee05e",
"text": "yeah, i get that it's not optional. just sucks that nothing has changed substantially since i closed on the loan 11 months ago (same PMI, same HO, essentially the same property taxes) and now i have to pay more. seems like the closing docs could have taken into account timing of those payments so that i primed the pump with enough from the beginning.",
"title": ""
},
{
"docid": "f20c565456d604db8ccfa9d1dbcb0f82",
"text": "As a former banker, the title of the car will be assigned to the loan account holder(s) because legally, he/she/they are responsible for payments. I've never heard of any case where the car title differs from the loan account holder(s). Throughout my career in the bank, I've come across quite a number of parents who did the same for their children and the car title was always assigned to the loan account holder's name. You do have a choice of applying for a joint loan with one of your parents unless if you are concerned about what your credit score might be. Once the loan has been paid off, the title could be changed to your name from your parents of course. As for insurance, there are numerous options where the insurance would cover all drivers of the car however at a slightly higher price like you've mentioned.",
"title": ""
},
{
"docid": "7fb04bb2fa978a172aa3069d185e839f",
"text": "There is no difference in safety form the perspective of the bank failing, due to FDIC/NCUA insurance. However, there is a practical issue that should be considered, if you allow payments to be automatically withdrawn from your checking account In the case of an error, all of you money may be unavailable until the error is resolved, which could be days or weeks. By having two accounts, this possibility may be reduced. It isn't a difference between checking and savings, but a benefit of having two accounts. Note that if both accounts are at the same bank, hey make take money from other accounts to cover the shortfall. That said, I've done this for years and have never had a problem. Also, I have two accounts, one at a local credit union with just enough kept in it to cover any payments, and another online account that has the rest of my savings. I can easily transfer funds between the two accounts in a couple days.",
"title": ""
},
{
"docid": "e66a88b7cf69b7bdd8106cc680cc8d92",
"text": "\"I would suggest opening a bank account that you use to accept deposits only, and then get a system set up where it automatically transfers the money over to your main account. If not instantly it could transfer the money hourly or daily. Of course you would have to pay a premium for this \"\"peace of mind\"\" ;)\"",
"title": ""
},
{
"docid": "60d54be3b63010282dc4e0772eaea452",
"text": "I would ignore the bank completely when they use gross income. Decide, based upon your current living situation, what your MAX limit on a monthly payment is. Then from that determine the size and cost of the house you can buy. My husband and I decided on a $2000 monthly payment max, but also agreed $1500 was more reasonable. When using those numbers in the calculators it is way less than when using gross income. When we used our gross pay the calculators all said we could afford double what we were looking for. Since they don't know what our take home pay is (after all the deductions including 401k, healthcare, etc), the estimates on gross income are way higher than what we can comfortably afford. Set a budget based on your current living situation and what you want your future to look like. Do you want to scrimp and coupon clip or would you rather live comfortably in a smaller home? Do the online calculators based on take home pay and on gross pay to get a sense of the range you could be looking at.",
"title": ""
},
{
"docid": "81b2ae9f0162027b20065683189591a2",
"text": "Option three is our preferred method, and we never argue about money. First we did a budget to work out ALL monthly joint out-goings (mortgage, bills, grocery etc). Then we each agreed who would pay what into the joint or household account - at the moment, I earn more than my wife, so I pay more, but we sit down every three or four months, to see if it needs adjusting. This way, we each keep our own individual accounts private, but pay what is necessary into the household account. We also set up a joint savings account; often at the end of the month, we'll have a little extra left in the household acount, and we siphon that off into joint savings to cover future unexpected costs - looks like our tumble dryer is on its last spin cycle at the moment, for example, and the joint savings account will be able to cover the cost of replacement. it all takes a bit of administration - but, as I say, we've never had a cross word about money, so the system seems to work.",
"title": ""
},
{
"docid": "7488478ce920b35c3d40540eac3f9dfc",
"text": "Most modern bank accounts can be set up to automatically pay bills for anyone, even someone who has no control over the account. This account would be in a trustee's name for the untrustworthy party. An automatic transfer could be set up from the source account to the irresponsible party's bank account to pay their allowance. It would be wise to remove all overdraft capability from the recipients account, but the whole system might help them learn some responsibility. There are more formal legal structures for forming a long term care-taking trust (with spendthrift provisions to protect the trust from legal action). The trust would need to be maintained by a trustee, resulting in maintenance fees on the principle. It might also help to know if there are legally recognized factors that impair the beneficiaries ability to take care of themselves (substance abuse, depression, age, mental impairment, etc.), but depending on state law, trusts can be designed very flexibly to cover the lifetime of an heir and even their heirs.",
"title": ""
},
{
"docid": "ead8374a12f4653b276207257e104e35",
"text": "\"I use online banking as much as possible and I think it may help you get closer to your goal. I see you want to know where the money goes and save time so it should work for you like it did for me. I used to charge everything or write checks and then pay a big visa bill. My problem was I never knew exactly how much I spent because neither Visa or check writing are record systems. They just generate transactions records. I made it a goal use online banking to match my spending to the available cash and ended up ok usually 9-10 months out of the year. I started with direct deposit of my paycheck. Each Saturday, I sit down and within a half hour, I've paid the bills for the week and know where I stand for the following week. Any new bill that comes in, I add it to online banking even if it's not a recurring expense. I also pull down cash from the ATM but just enough to allow me to do what I have to do. If it's more than $30 or $40 bucks, I use the debit card so that expense goes right to the online bank statement. My monthly bank statement gives me a single report with everything listed. Mortgage, utilities, car payment, cable bill, phone bill, insurance, newspaper, etc... It does not record these transactions in generic categories; they actually say Verizon or Comcast or Shop Rite. I found this serves as the only report I need to see what's happening with my budget. It may take a while to change to a plan like this one. but you'll now have a system that shows you in a single place where the money goes. Move all bills that are \"\"auto-pay\"\" to the online system and watch your Visa bill go down. The invested time is likely what you're doing now writing checks. Hope this helps.\"",
"title": ""
},
{
"docid": "4f03c1b110541156fe89f80e845b9001",
"text": "When setting these up for my own bill payment, I was surprised, after the fact, to see that a couple I thought would be a mailed check were actually instant transfers, and for others, vice versa. On line banking typically asks you for the due date and they handle from there. If you need this detail before the payment, I'd ask the bank. Else, it's easy to see after the fact for a given payee.",
"title": ""
},
{
"docid": "ed4d9e1cdd86fd64dea1691920e253a2",
"text": "Banks have electronic money counters so the order really doesn't matter. When I make a cash deposit that's large, I usually just put it in an envelope and hand it over.",
"title": ""
},
{
"docid": "2fa6e938d11ef82ce12ac841a01fabd6",
"text": "\"From the bank's perspective, they are offering a service and within their rights to charge appropriately for that service. Depending on the size of their operation, they may have considerable overhead costs that they need to recoup one way or another to continue operating (profitably, they hope). Traditionally, banks would encourage you to save with them by offering interest growth on your deposits. Meanwhile they would invest your (and all of their customer's) funds in securities or loans to other patrons that they anticipate will generate income for them at a faster rate than the interest they pay back to you. These days however, this overly simplified model is relatively insignificant in consumer banking. Instead, they've found they can make a lot more profit by simply charging fees for the handling of your funds, and when they want to loan money to consumers they just borrow from a central bank. What this means is that the size of your balance (unless abnormally huge) is of little interest to a branch manager - it doesn't generate revenue for them much faster than a tiny balance with the same number of transactions would. To put it simply, they can live without you, and your threatening to leave, even if you follow through, is barely going to do anything to their bottom line. They will let you. If you DO have an abnormally huge balance, and it's all in a simple checking or savings account, then it might make them pause for thought. But if that's true then frankly you're doing banking wrong and should move those funds somewhere where they can work harder for you in terms of growth. They might even suggest so themselves and direct you to one of their own \"\"personal wealth managers\"\".\"",
"title": ""
},
{
"docid": "ded88302704edac9ccacb87a3e81e195",
"text": "Personally, I keep two regular checking accounts at different banks. One gets a direct deposit totaling the sum of my regular monthly bills and a prorated provision for longer term regular bills like semi-annual car insurance premiums. I leave a buffer in the account to account for the odd expensive electrical bill or rate increase or whatever. One gets a direct deposit of the rest which I then allocate to savings and spending. It makes sense to me to separate off regular planned expenses (rent/mortgage, utility bills, insurance premiums) from spending money because it lets me put the basics of my life on autopilot. An added benefit is I have a failover checking account in the event something happens to one of them. I don't keep significant amounts of money in either account and don't give transfer access to the savings accounts that store the bulk of my money. I wear a tinfoil hat when it comes to automatic bank transfers and account access... It doesn't make sense to me to keep deposits separate from spending, it makes less sense to me to spend off of a savings account.",
"title": ""
},
{
"docid": "6ec9ed07eed727fa6ea5c2ba8cd7ad1f",
"text": "My wife and I set up a shared bank account. We knew the monthly costs of the mortgage and estimated the cost of utilities. Each month, we transferred enough to cover these, plus about 20% so we could make an extra mortgage payment each year and build up an emergency fund, and did so using automatic transactions. Other shared expenses such as groceries, we handled on an ad-hoc basis, settling up every month or three. We initially just split everything 50-50 because we both earned roughly the same income. When that changed, we ended up going with a 60-40 split. We maintained our separate bank accounts, though this may have changed in the future. A system like this may work for you, or may at least provide a starting point for a discussion. And I do strongly advise having a frank and open discussion on these points. Dealing with money can be tricky in the bounds of a marriage.",
"title": ""
},
{
"docid": "9efcd54fdc54c52fb10a140211e2b41e",
"text": "The only people who should know my online bank password are me & my spouse. Forget it, I won't share that sensitive information with any other company. I might as well give a blank check! Besides, don't banks require people to keep their username & password & PIN private? I signed an agreement to that effect, I think! So even if I did find the online services compelling enough to try, I would want to check with my own bank first & ask them if it's OK to give my password to somebody else. I wonder what they would say to that!!",
"title": ""
}
] |
fiqa
|
bf3469d8c132fd3cca6ec5033293bb16
|
Selling equities for real-estate down payment
|
[
{
"docid": "c57aed130745f7340909eab64d045c58",
"text": "\"My suggestion would be to do the math. That is the best advice you can get when considering any investment. There are other factors you haven't considered, too... like the fact that interest rates are at extremely low levels right now, so borrowing money is relatively cheap. If you're outside the US though, that may be less of a consideration as the mortgage lending institutions in Europe only tend to give 5-year locks on loan rates without requiring a premium. You may be somewhere else in the world. You will probably struggle to do the actual math about the probability of the market going down or up, but what you can do is this: Figure out what it would cost you to cash out the investments. You say your balance is $53,000 in various items. (Congrats! That's a nice chunk of money.) But with commissions and taxes and etc., it may reduce the value of your investments by 10% - 25% when you try to cash out those investments. Paying $3,000 to get that money out of the investments is one thing... but if you're sending $10,000 to the tax man when you sell this all off, that changes the economics of your investments a LOT. In that case you might be better off seeing what happens if the markets correct by 10%... you'd still have more than if you sold out and paid major taxes. Once you know your down payment, calculate the amount of property you could afford. You know your down payment could be somewhere around $50,000 after taxes and other items... At an 80:20 loan-to-value ratio that's about $250,000 of a property that you can qualify for, assuming you could obtain the loan for $200,000. What could you buy for that? Do some shopping and figure out what your options are... Once you have two or three potential properties, figure out the answer to \"\"What would the property give you?\"\" Is it going to be rented out? Are you going to live there? Both? If you're living in it, then you come out ahead if the costs for the mortgage debt and the ongoing maintenance and repairs are less than what you currently pay in rent. Figure out what you pay right now to put a roof over your head. Will the place you could buy need repairs? Will you pay more on a mortgage for $200,000 USD (in your local currency) than what you currently do for housing? Don't even factor in the possible appreciation of a house you inhabit when you're making this kind of investment decision... it could just as easily burn down as go up in value. If you would rent it, what kind of rental would that be? Long-term rental? Expect to pay for other people to break your stuff. Short-term rental? You can collect more money per tenant per day, but you'll end up with higher vacancy rates. And people still break your stuff. But do the math and see if you could collect enough in rent from a tenant (person or business or whatever the properties are you could buy) to cover the amount you are paying in debt, plus what you would pay in taxes (rent is income), plus what you would need for maintenance, plus insurance. IF the numbers make sense, then real estate can be a phenomenally lucrative investment. I own some investment properties myself. It is a great hedge against inflation (you can raise rents when contracts lapse... usually) and it is an excellent way to own a tangible item. But if you don't know the numbers and exactly how it would make you better off than sitting and hoping that the markets go up, because they generally do over time, then don't take the jump.\"",
"title": ""
}
] |
[
{
"docid": "b4e446ef6ed7ae3dba27349e0b3fede8",
"text": "You're not crazy, but the banks are. Here's the problem: You're taking 100% LTV on property A - you won't be able to get a second mortgage for more than 80% total (including the current mortgage) LTV. That's actually something I just recently learned from my own experience. If the market is bad, the banks might even lower the LTV limit further. So essentially, at least 20% of your equity in A will remain on the paper. Banks don't like seeing the down-payment coming from anywhere other than your savings. Putting the downpayment from loan proceeds, even if not secured by the property which you're refinancing, will probably scare banks off. How to solve this? Suggest to deal with it as a business, putting both properties under a company/LLC, if possible. It might be hard to change the titles while you have loans on your properties, but even without it - deal with it as if it is a business. Approach your bank for a business loan - either secured by A or unsecured, and another investment loan for B. Describe your strategy to the banker (preferably a small community bank in the area where the properties are), and how you're going to fund the properties. You won't get rates as low as you have on A (3.25% on investment loan? Not a chance, that one is a keeper), but you might be able to get rid of the balloon/variable APR problem.",
"title": ""
},
{
"docid": "3b027f0a256497e1482eeda873c4335b",
"text": "Full disclosure: I’m an intern for EquityZen, so I’m familiar with this space but can speak with the most accuracy about EquityZen. Observations about other players in the space are my own. The employee liquidity landscape is evolving. EquityZen and Equidate help shareholders (employees, ex-employees, etc.) in private companies get liquidity for shares they already own. ESOFund and 137 Ventures help with option financing, and provide loans (and exotic structures on loans) to cover costs of exercising options and any associated tax hit. EquityZen is a private company marketplace that led the second wave of VC-backed secondary markets starting early 2013. The mission is to help achieve liquidity for employees and other private company shareholder, but in a company-approved way. EquityZen transacts with share transfers and also a proprietary derivative structure which transfers economics of a company's shares without changing voting and information rights. This structure typically makes the transfer process cheaper and faster as less paperwork is involved. Accredited investors find the process appealing because they get access to companies they usually cannot with small check sizes. To address the questions in Dzt's post: 1). EquityZen doesn't take a 'loan shark' approach meaning they don't front shareholders money so that they can purchase their stock. With EquityZen, you’re either selling your shares or selling all the economic risk—upside and downside—in exchange for today’s value. 2). EquityZen only allows company approved deals on the platform. As a result, companies are more friendly towards the process and they tend to allow these deals to take place. Non-company approved deals pose risks for buyers and sellers and are ultimately unsustainable. As a buyer, without company blessing, you’re taking on significant counterparty risk from the seller (will they make good on their promise to deliver shares in the future?) or the risk that the transfer is impermissible under relevant restrictions and your purchase is invalid. As a seller, you’re running the risk of violating your equity agreements, which can have severe penalties, like forfeiture of your stock. Your shares are also much less marketable when you’re looking to transact without the company’s knowledge or approval. 3). Terms don't change depending an a shareholder's situation. EquityZen is a professional company and values all of the shareholders that use the platform. It’s a marketplace so the market sets the price. In other situations, you may be at the mercy of just one large buyer. This can happen when you’re facing a big tax bill on exercise but don’t have the cash (because you have the stock). 4). EquityZen doesn't offer loans so this is a non issue. 5). Not EquityZen! EquityZen creates a clean break from the economics. It’s not uncommon for the loan structures to use an interest component as well as some other complications, like upside participation and and also a liquidation preference. EquityZen strives for a simple structure where you’re not on the hook for the downside and you’ve transferred all the upside as well.",
"title": ""
},
{
"docid": "2af07b740b87613ecc580fd8f8e59ced",
"text": "\"I am assuming you mean derivatives such as speeders, sprinters, turbo's or factors when you say \"\"derivatives\"\". These derivatives are rather popular in European markets. In such derivatives, a bank borrows the leverage to you, and depending on the leverage factor you may own between 50% to +-3% of the underlying value. The main catch with such derivatives from stocks as opposed to owning the stock itself are: Counterpart risk: The bank could go bankrupt in which case the derivatives will lose all their value even if the underlying stock is sound. Or the bank could decide to phase out the certificate forcing you to sell in an undesirable situation. Spread costs: The bank will sell and buy the certificate at a spread price to ensure it always makes a profit. The spread can be 1, 5, or even 10 pips, which can translate to a the bank taking up to 10% of your profits on the spread. Price complexity: The bank buys and sells the (long) certificate at a price that is proportional to the price of the underlying value, but it usually does so in a rather complex way. If the share rises by €1, the (long) certificate will also rise, but not by €1, often not even by leverage * €1. The factors that go into determining the price are are normally documented in the prospectus of the certificate but that may be hard to find on the internet. Furthermore the bank often makes the calculation complex on purpose to dissimulate commissions or other kickbacks to itself in it's certificate prices. Double Commissions: You will have to pay your broker the commission costs for buying the certificate. However, the bank that issues the derivative certificate normally makes you pay the commission costs they incur by hiding them in the price of the certificate by reducing your effective leverage. In effect you pay commissions twice, once directly for buying the derivative, and once to the bank to allow it to buy the stock. So as Havoc P says, there is no free lunch. The bank makes you pay for the convenience of providing you the leverage in several ways. As an alternative, futures can also give you leverage, but they have different downsides such as margin requirements. However, even with all the all the drawbacks of such derivative certificates, I think that they have enough benefits to be useful for short term investments or speculation.\"",
"title": ""
},
{
"docid": "98863528ca9a2014fa3bc34c6c060f5a",
"text": "yes, i am incorporating monte carlo return scenarios for both equity and real estate. yeah there is a lot to consider in the case of the property being a condo where you have to account for property taxes as well as condo fees. the two projects have entirely different considerations and it's not like the money that is injected to one is similar to the other (very different) which is why i figured there should be differing discount rates. in any case, thanks for the discussion and suggestions.",
"title": ""
},
{
"docid": "99c930926902e10d8b135a90ddfbcc9a",
"text": "THANK YOU so much! That is exactly what I was looking for. Unfortunately I'm goign to be really busy for 7 days but I'd love to tear through some of this material and ask you some questions if you don't mind. What do you do for a living now? Still in real estate? Did you go toward the brokerage side or are you still consulting? What's the atmosphere/day-to-day like?",
"title": ""
},
{
"docid": "488a2e2da0765eb148803ded8cdeccfb",
"text": "Like @littleadv, I don't consider a mortgage on a primary residence to be a low-risk investment. It is an asset, but one that can be rather illiquid, depending on the nature of the real estate market in your area. There are enough additional costs associated with home-ownership (down-payment, insurance, repairs) relative to more traditional investments to argue against a primary residence being an investment. Your question didn't indicate when and where you bought your home, the type of home (single-family, townhouse, or condo) the nature of your mortgage (fixed-rate or adjustable rate), or your interest rate, but since you're in your mid-20s, I'm guessing you bought after the crash. If that's the case, your odds of making a profit if/when you sell your home are higher than they would be if you bought in the 2006/2007 time-frame. This is no guarantee of course. Given the amount of housing stock still available, housing prices could still fall further. While it is possible to lose money in all sorts of investments, the illiquid nature of real estate makes it a lot more difficult to limit your losses by selling. If preserving principal is your objective, money market funds and treasury inflation protected securities are better choices than your home. The diversification your financial advisor is suggesting is a way to manage risk. Not all investments perform the same way in a given economic climate. When stocks increase in value, bonds tend to decrease (and vice versa). Too much money in a single investment means you could be wiped out in a downturn.",
"title": ""
},
{
"docid": "1204c1c74efccffe5263f5a5928bbdca",
"text": "Buying individual/small basket of high dividend shares is exposing you to 50%+ and very fast potential downswings in capital/margin calls. There is no free lunch in returns in this respect: nothing that pays enough to help you pay your mortgage at a high rate won’t expose you to a lot of potential volatility. Main issue here looks like you have very poorly performing rental investments you should consider selling or switching up rental usage/how you rent them (moving to shorter term, higher yield lets, ditching any agents/handymen that are taking up capital/try and refinance to lower mortgage rates etc etc). Trying to use leveraged stock returns to pay for poorly performing housing investments is like spraying gasoline all over a fire. Fixing the actual issue in hand first is virtually always the best course of action in these scenarios.",
"title": ""
},
{
"docid": "ad9c8354dd526a1f94c6ca1f2ff3a52c",
"text": "A bigger down payment is good, because it insulates you from the swings in the real estate market. If you get FHA loan with 3% down and end up being forced to move during a down market, you'll be in a real bind, as you'll need to scrape up some cash or borrow funds to get out of your mortgage.",
"title": ""
},
{
"docid": "2de50b0a507dbbebf92b1c947f1e604b",
"text": "How does one buy this quantity of TIPS? Do you simply buy directly from the US Treasury? You will might have to go through a financial institution like a broker or a bank. Edit: You can also buy bonds directly with TreasuryDirect. Is it cheaper to buy a fund that invests in TIPS? It might be cheaper depending on the fund itself. But you can't know for sure the price that the fund will be worth at you payout date. Since bonds can go up in value (and are likely to with rates this low), is there a way to measure potential downside? Statistically speaking yes. You can look at the variation in price/interest of the bonds in the last years, to see how they usually move, then compute the price range where they are likely to be (that can be wide for volatile securities). But there is no guarantee that there won't be some black swan event that will make the price shoot up/down. In another word, it's speculation Can I mitigate downside risk by choosing different TIPS maturity? There are quantitative strategies to do that, like finding that some products that are negatively correlated, such that a loss in one is be hedged by a gain in another. However those correlation are likely to be just statistics. And for every product that you buy you are likely to have to pay some fees for your bank/broker which can be more devastating than the inflation itself. Is there some other strategy I should be considering to protect my cash against inflation (or maybe a mixed strategy)? As I wrote above, trying to use complex financial products can incurs loss and will have fees (both for buying and selling). Is it really necessary to hedge from a 2% inflation by taking such risk? Personally, I don't think so. If I were you I would just be buying bonds maturing for your payout date. That would negate the reselling risk and reduce the fees.",
"title": ""
},
{
"docid": "6278cee56a5973aae9cec2d8328fb568",
"text": "\"Generally, when you own something - you can give it as a collateral for a secured loan. That's how car loans work and that's how mortgages work. Your \"\"equity\"\" in the asset is the current fair value of the asset minus all your obligations secured by it. So if you own a property free and clear, you have 100% of its fair market value as your equity. When you mortgage your property, banks will usually use some percentage loan-to-value to ensure they're not giving you more than your equity now or in a foreseeable future. Depending on the type and length of the loan, the LTV percentage varies between 65% and 95%. Before the market crash in 2008 you could even get more than 100% LTV, but not anymore. For investment the LTV will typically be lower than for primary residence, and the rates higher. I don't want to confuse you with down-payments and deposits as it doesn't matter (unless you're in Australia, apparently). So, as an example, assume you have an apartment you rent out, which you own free and clear. Lets assume its current FMV is $100K. You go to a bank and mortgage the apartment for a loan (get a loan secured by that apartment) at 65% LTV (typical for condos for investment). You got yourself $65K to buy another unit free and clear. You now have 2 apartments with FMV $165K, your equity $100K and your liability $65K. Mortgaging the new unit at the same 65% LTV will yield you another $42K loan - you may buy a third unit with this money. Your equity remains constant when you take the loan and invest it in the new purchase, but the FMV of your assets grows, as does the liability secured by them. But while the mortgage has fixed interest rate (usually, not always), the assets appreciate at different rates. Now, lets be optimistic and assume, for the sake of simplicity of the example, that in 2 years, your $100K condo is worth $200K. Voila, you can take another $65K loan on it. The cycle goes on. That's how your grandfather did it.\"",
"title": ""
},
{
"docid": "6c8a416ad3271707caef66cfe7803798",
"text": "Pay cash for the house but negotiate at least a 4% discount. You already made your money without having to deal with long term unknowns. I don't get why people would want invest with risk when the alternative are immediate realized gains.",
"title": ""
},
{
"docid": "b89990eeba193697f81dbf2659aaadf4",
"text": "\"First it is worth noting the two sided nature of the contracts (long one currency/short a second) make leverage in currencies over a diverse set of clients generally less of a problem. In equities, since most margin investors are long \"\"equities\"\" making it more likely that large margin calls will all be made at the same time. Also, it's worth noting that high-frequency traders often highly levered make up a large portion of all volume in all liquid markets ~70% in equity markets for instance. Would you call that grossly artificial? What is that volume number really telling us anyway in that case? The major players holding long-term positions in the FX markets are large banks (non-investment arm), central banks and corporations and unlike equity markets which can nearly slow to a trickle currency markets need to keep trading just for many of those corporations/banks to do business. This kind of depth allows these brokers to even consider offering 400-to-1 leverage. I'm not suggesting that it is a good idea for these brokers, but the liquidity in currency markets is much deeper than their costumers.\"",
"title": ""
},
{
"docid": "a0b313dc70955d4dd6322d735b89def0",
"text": "Don't do it. I would sell one of my investment houses and use the equity to pay down your primary mortgage. Then I would refinance my primary mortgage in order to lower the payments.",
"title": ""
},
{
"docid": "3e7f7a24bf514c80562b0fb0562fcf4c",
"text": "\"How can one offset exposure created by real-estate purchase? provides a similar discussion. Even if such a product were available in the precise increments you need, the pricing would make it a loser for you. \"\"There's no free lunch\"\" in this case, and the cost to insure against the downside would be disproportional to the true risk. Say you bought a $100K home. At today's valuations, the downside over a given year might be, say, 20%. It might cost you $5000 to 'insure' against that $20K risk. Let me offer an example - The SPY (S&P ETF) is now at $177. A $160 (Dec '14) put costs $7.50. So, if you fear a crash, you can pay 4%, but only get a return if the market falls by over 14%. If it falls 'just' 10%, you lose your premium. With only 5% down, you will get a far better risk-adjusted return by paying down the mortgage to <78% LTV, and requesting PMI, if any, be removed. Even if no PMI, in 5 years, you'll have 20% more equity than otherwise. Over the long term, 5 year's housing inflation would be ~ 15% or so. This process would help insure you are not underwater in that time. Not guarantee, but help.\"",
"title": ""
},
{
"docid": "04b7de29b81964c51f8be69e5e3d5cfe",
"text": "\"I don't have a formula for anything like this, but it is important to note that the \"\"current value\"\" of any asset is really theoretical until you actually sell it. For example, let's consider a house. You can get an appraisal done on your house, where your home is inspected, and the sales of similar houses in your area are compared. However, this value is only theoretical. If you found yourself in a situation where you absolutely had to sell your house in one week, you would most likely have to settle for much less than the appraised value. The same hold true for collectibles. If I have something rare that I need cash for immediately, I can take it to a pawn shop and get cash. However, if I take my time and locate a genuinely interested collector, I can get more for it. This is comparable to someone who holds a significant percentage of shares in a publicly held corporation. If the current market value of your shares is $10 million, but you absolutely need to sell your entire stake today, you aren't going to get $10 million. But if you take your time selling a little at a time, you are more likely to get much closer to this $10 million number. A \"\"motivated seller\"\" means that the price will drop.\"",
"title": ""
}
] |
fiqa
|
419f1e27d24757cc087ce7de011d973e
|
Working Capital Definition
|
[
{
"docid": "9e905a52faf79b0f5c72e8e48ceeefe1",
"text": "As you say, if you delay paying your bills, your liabilities will increase. Like say your bills total $10,000 per month. If you normally pay after 30 days, then your short-term liabilities will be $10,000. If you stretch that out to pay after 60 days, then you will be carrying two months worth of bills as a short-term liability, or $20,000. Your liabilities go up. Assume you keep the same amount of cash on hand after you stretch out your payments like this as you did before. Now your liabilities are higher but your assets are the same, so your working capital goes down. For example, suppose you kept $25,000 in the bank before this change and you still keep $30,000 after. Then before your working capital was $25,000 minus $10,000, or $15,000. After it is $25,000 minus $20,000, or only $5,000. So how does this relate to cash flow? While presumably if the company has $10,000 per month in bills, and their bank balance remains at $25,000 month after month, then they must have $10,000 per month in income that's going to pay those bills, or the bank balance would be going down. So now if they DON'T pay that $10,000 in bills this month, but the bank account doesn't go up by $10,000, then they must have spent the $10,000 on something else. That is, they have converted that money from an on-going balance into cash flow. Note that this is a one-time trick. If you stretch out your payment time from 30 days to 60 days, then you are now carrying 2 months worth of bills on your books instead of 1. So the first month that you do this -- if you did it all at once for all your bills -- you would just not pay any bills that month. But then you would have to resume paying the bills the next month. It's not like you're adding $10,000 to your cash flow every month. You're adding $10,000 to your cash flow the month that you make the change. Then you return to equilibrium. To increase your cash flow every month this way, you would have to continually increase the time it takes you to pay your bills: 30 days this month, 45 days the next, 60 the next, then 75, 90, etc. Pretty soon your bills are 20 years past due and no one wants to do business with you any more. Normally people see an action like this as an emergency measure to get over a short-term cash crunch. Adopting it as a long-term policy seems very short-sighted to me, creating a long-term relationship problem with your suppliers in exchange for a one-shot gain. But then, I'm not a big corporate finance officer.",
"title": ""
}
] |
[
{
"docid": "69c205cbf9bf56e0b9473160c3e8c9ba",
"text": "Market Capitalization is the equity value of a company. It measures the total value of the shares available for trade in public markets if they were immediately sold at the last traded market price. Some people think it is a measure of a company's net worth, but it can be a misleading for a number of reasons. Share price will be biased toward recent earnings and the Earnings Per Share (EPS) metric. The most recent market price only reflects the lowest price one market participant is willing to sell for and the highest price another market participant is willing to buy for, though in a liquid market it does generally reflect the current consensus. In an imperfect market (for example with a large institutional purchase or sale) prices can diverge widely from the consensus price and when multiplied by outstanding shares, can show a very distorted market capitalization. It is also a misleading number when comparing two companies' market capitalization because while some companies raise the money they need by selling shares on the markets, others might prefer debt financing from private lenders or sell bonds on the market, or some other capital structure. Some companies sell preferred shares or non-voting shares along with the traditional shares that exist. All of these factors have to be considered when valuing a company. Large-cap companies tend to have lower but more stable growth than small cap companies which are still expanding into new markets because of their smaller size.",
"title": ""
},
{
"docid": "6d91641b0115b29c154cba6ec4cc1368",
"text": "Just to clarify things: The Net Working Capital is the funds, the capital that will finance the everyday, the short term, operations of a company like buying raw materials, paying wages erc. So, Net Working Capital doesn't have a negative impact. And you should not see the liabilities as beneficial per se. It's rather the fact that with smaller capital to finance the short term operations the company is able to make this EBIT. You can see it as the efficiency of the company, the smaller the net working capital the more efficient the company is (given the EBIT). I hope you find it helpful, it's my first amswer here. Edit: why do you say the net working capital has a negative impact?",
"title": ""
},
{
"docid": "862b9445109a46967822a08ef1286be4",
"text": "Buying capital assets doesn't immediatley reduce a company's profits. They can get allowances for it but the assets are written down over a number of years Edit: two comments below mine were deleted which fairly called me out for amazon's high capital investment policy to which I reaponded: Fine I've had a few drinks. All I meant was capital doesn't directly reduce profits in most instances. Large investments like amazon would. You are right. But for Joe bloggs limited it doesn't. I had in mind the accountant the movie where one line Affleck says confuses capital and revenue and it stuck with me that a lot of people thought this. Didn't mean to have a go.",
"title": ""
},
{
"docid": "9529241402c4dcf8bf0a1425d45b5c92",
"text": "I think this is a bit of fallacy. Capital is not a fix thing. If there is value to be realized, business can find the money. The issue really is that the job is hard and the company views it as a cost, not an investment.",
"title": ""
},
{
"docid": "d4521934ec85b9804d0873a7241a44ee",
"text": "Companies in their earliest stages will likely not have profits but do have the potential for profits. Thus, there can be those that choose to invest in companies that require capital to stay in business that have the potential to make money. Venture Capital would be the concept here that goes along with John Bensin's points that would be useful background material. For years, Amazon.com lost money particularly for its first 6 years though it has survived and taken off at times.",
"title": ""
},
{
"docid": "6b05298f3563d6864d3393cef31eb4c9",
"text": "Based on the definitions I found on Investopedia, it depends on whether or not it is going against an asset or a liability. I am not sure what type of accounting you are performing, but I know in my personal day-to-day dealings credits are money coming into my account and debits are money going out of my account. Definition: Credit, Definition: Debit",
"title": ""
},
{
"docid": "8efcdd3d51f7df55046289063213940d",
"text": "\"Doing fine != creating more jobs edit:4 million in the past two years isn't really enough to say that we are making any real progress on the millions out of work. Also wages are declining as they seek to cut costs which is a major problem as well. They way you define \"\"fine\"\" is very relative.\"",
"title": ""
},
{
"docid": "1f4e6ede9c7537f3b3b238688c7e2262",
"text": "While true, I don't have capital. The VC does. And while whatever my product is is in development, I'm haemorrhaging that capital on things like food and rent. If I want to make more, my startup is put on hold while I find some paid work. The dollar signs are an incentive for the VC to help make your business a success.",
"title": ""
},
{
"docid": "f76bb54bf06f0c84f8169e7d1583ffa0",
"text": "Living wage applies to the location that the job is in. Warehouse in Northern KY? Living wage for northern KY. Warehouse in NYC? Living wage for NYC. Those numbers will be very different. As for a definition of a living wage, that varies. One definition is that it's the minimum income that allows a worker to meet their basic needs (food, housing, transportation, healthcare, etc), presumably without needing to rely on a social net. If you need for food stamps or housing assistance to meet your basic needs for food and shelter, you probably aren't making a living wage.",
"title": ""
},
{
"docid": "70d63e6d6967e380b926dcbec8186683",
"text": "Variance of a single asset is defined as follows: σ2 = Σi(Xi - μ)2 where Xi's represent all the possible final market values of your asset and μ represents the mean of all such market values. The portfolio's variance is defined as σp2 = Σiwi2σi2 where, σp is the portfolio's variance, and wi stands for the weight of the ith asset. Now, if you include the borrowing in your portfolio, that would classify as technically shorting at the borrowing rate. Thus, this weight would (by the virtue of being negative) increase all other weights. Moreover, the variance of this is likely to be zero (assuming fixed borrowing rates). Thus, weights of risky assets rise and the investor's portfolio's variance will go up. Also see, CML at wikipedia.",
"title": ""
},
{
"docid": "2bc6f8bc8f09c67ea95d522896ed8f58",
"text": "Put simply: Financial Services provides or facilitates access to capital in some capacity, and are companies unto themselves (TD Ameritrade, Goldman Sachs, Bank of America, etc), this also includes accounting companies which provide financial information, and insurance companies that deal with risk. Corporate Finance is part of all businesses in any industry (So for example Starbucks has a finance department, and those employees are doing corporate finance), and plans how to use capital to fund a company's projects and make sure there is sufficient cash on hand as it's needed for daily operations. Corporate Finance interacts with Financial Services to access the capital needed to fund the business's activities.",
"title": ""
},
{
"docid": "8627b383cbdb6db68614a5784acb1870",
"text": "In view of business, we have to book the entries. Business view, owner and business are different. When capital is invested in business by owner, in future business has to repay it. That's why, capital always credit. When we come about bank (business prospective) - cash, bank, fd are like assets which can help in the business. Bank is current asset (Real account) - Debit (what comes into the business) Credit (what goes out of the business) Hence credit and debit differs from what type of account is it.... credit - when business liables debit - what business has and receivables",
"title": ""
},
{
"docid": "085b9e5bbc0ece3cb0def12fbf86347c",
"text": "You need to look at where the profits are coming from. In this case, compressed wage growth and extreme cost-cutting. I mean shit, Dimon ripped out all of JPMs Bloomberg terminals. Work happiness at banks are much lower and people are leaving, save for at certain types of banks. The profits are just coming from employees. Overtime is a lot lower to non-existent in right to work states and you'll pull 10-30 hours over what you signed on for on a weekly basis. If you're not aware of what capital requirements are then I really can't dive into this. I suggest you read up on Basel 3, the US system, liquidity cover ratio (LCR) and then understand generally what products yield more and the risks attached to those. If you do know those then I feel like you know where my response is going, but I'm happy to get into it more.",
"title": ""
},
{
"docid": "0ac0b0b64d309a1940fa5d71c715c966",
"text": "Means A has a much higher level of interest payments dye to either higher debt or higher cost of debt (or combination of both). MM theory suggests higher debt in a capital structure due to the tax shield but you need to consider if A's debt level is appropriate or too high and what that says about your company.",
"title": ""
},
{
"docid": "0821351bfacb6aad101a8173bd66ac7b",
"text": "Also, cash doesn't necessarily mean cash in the bank, like you or I would think of. It means cash-convertible (usually bonds) that can be sold or turned into cash within three months period (but usually can be done within a few weeks). But like you said, they are probably making more money by keeping it in their current investments. Plus, interest rates are at the lowest they will ever be, and GE is practically borrowing money for free. Quite smart, actually.",
"title": ""
}
] |
fiqa
|
a4c55a7d818cf4fb28de1fc6b24e709e
|
Do I need to report to FInCEN if I had greater than $10,000 worth of bitcoin in a foreign bitcoin exchange?
|
[
{
"docid": "efce0491704a8e58e2bad654003dc996",
"text": "Yes, I'd say you do. This is similar to reporting a brokerage account. Also, don't forget the requirements for form 8938.",
"title": ""
},
{
"docid": "af3575f1faff6c617daffd493faa8815",
"text": "Lets look at possible use cases: If you ever converted your cryptocurrency to cash on a foreign exchange, then **YES** you had to report. That means if you ever daytraded and the US dollar (or other fiat) amount was $10,000 or greater when you went out of crypto, then you need to report. Because the regulations stipulate you need to report over $10,000 at any point in the year. If you DID NOT convert your cryptocurrency to cash, and only had them on an exchange's servers, perhaps traded for other cryptocurrency pairs, then NO this did not fall under the regulations. Example, In 2013 I wanted to cash out of a cryptocurrency that didn't have a USD market in the United States, but I didn't want to go to cash on a foreign exchange specifically for this reason (amongst others). So I sold my Litecoin on BTC-E (Slovakia) for Bitcoin, and then I sold the Bitcoin on Coinbase (USA). (even though BTC-E had a Litecoin/USD market, and then I could day trade the swings easily to make more capital gains, but I wanted cash in my bank account AND didn't want the reporting overhead). Read the regulations yourself. Financial instruments that are reportable: Cash (fiat), securities, futures and options. Also, http://www.bna.com/irs-no-bitcoin-n17179891056/ whether it is just in the blockchain or on a server, IRS and FINCEN said bitcoin is not reportable on FBAR. When they update their guidance, it'll be in the news. The director of FinCEN is very active in cryptocurrency developments and guidance. Bitcoin has been around for six years, it isn't that esoteric and the government isn't that confused on what it is (IRS and FinCEN's hands are tied by Congress in how to more realistically categorize cryptocurrency) Although at this point in time, there are several very liquid exchanges within the United States, such as the one NYSE/ICE hosts (Coinbase).",
"title": ""
},
{
"docid": "2bffe90d075b52449ec5d91e29289f36",
"text": "\"Firstly you have to know exactly what you are asking here. What you have if you \"\"own\"\" bitcoins is a private key that allows you to make a change to the blockchain that can assign a piece of information from yourself to the next person. Nothing more nothing less. The fact that this small piece of information is considered to have a market value, is a matter of opinion, and is analagous to owning a domain name. A domain name is an entry in a register, that has equal weight to all other entries, but the market determines if that information (eg: CocaCola.com) has any more value than say another less well know domain. Bitcoin is the same - an entry in a register, and the market decides which entry is more valuable than another. So what exactly are you wanting to declare to FinCEN? Are you willing to declare the ownership of private key? Of course not. So what then? An uncrackable private key can be generated at will by anyone, without even needing to \"\"own\"\" or transact in bitcoins, and that same private key would be equally valid on any of the 1000's of other bitcoin clones. The point I want to make is that owning a private key in itself is not valuable. Therefore you do not need, nor would anyone advise notifying FinCEN of that fact. To put this into context, every time you connect to online banking, your computer secretly generates a new random private key to secure your communications with the bank. Theoretically that same private key could also be used to sign a bitcoin transaction. Do you need to declare every private key your computer generates? No. Secondly, if you are using any of the latest generation of HD wallets, your private key changes with every single transaction. Are you seriously saying that you want to take it on your shoulders to inform FinCEN every time you move information (bitcoin amounts) around even in your own wallets? The fact is FinCEN could never \"\"discover\"\" your ownership of bitcoins (or any of the 1000s of alt coins) other than by you informing them of this fact. You may want to carefully consider the personal implications of starting down this road especially as all FinCEN would need to do is subpoena your bitcoin private key to steal your so-called funds, as they have done recently to other more prominent persons in the community. EDIT to clarify the points raised in comments. You do not own the private key to the bitcoins stored on a foreign exchange, nor can you discover it. The exchange owns the private key. You therefore do not either technically have control over the coins (MtGox is a very good example here - they went out of business because they allowed their private keys to be used by some other party who was able to siphon off the coins). Your balance is only yours when you own the private keys and the ability to spend. Any other situation you can neither recover the bitcoin to sell (to pay for any taxes due). So you do not either have the legal right nor the technical right to consider those coins in your possession. For those who do not understand the technical or legal implications of private key ownership, please do not speculate about what \"\"owning\"\" bitcoin actually means, or how ownership can be discovered. Holding Bitcoin is not illegal, and the US government who until recently were the single largest holder of Bitcoin demonstrate simply by this fact alone that there is nothing untoward here.\"",
"title": ""
}
] |
[
{
"docid": "3d950755a8b61ed3e9d7451cdd84b0b3",
"text": "\"Im not sure, but let me try. \"\"That person\"\" won't affect the value of currency, after two (or three) years (maybe months), agencies will report anomalies in country. Will be start the end of market. God bless FBI and NSA for prevent this. Actually, good \"\"hypothetical\"\" question.\"",
"title": ""
},
{
"docid": "6741ccbfeef4e9a7fda20823cabc2b82",
"text": "No, you don't. But you do need to file FBAR to report your foreign accounts if you have $10K or more at any given day in all of them combined, when you're a US resident. You need to file FBAR annually by the end of June (note: it must be received by FinCEN by the end of June, but nowadays you file it electronically anyway).",
"title": ""
},
{
"docid": "956ddecfc0653002284ed107b47600ee",
"text": "Don't all of the major bitcoin processors limit the risk to basically zero for the large multinationals that choose to accept bitcoin? I haven't been involved recently, but I know when bitpay and coinbase were starting, whatever bitcoin you received was automatically transferred to USD at the current rate, unless you opted out and chose to keep the bitcoin.",
"title": ""
},
{
"docid": "10d39f80d62655e1021c876a1a6d6781",
"text": "If you buy foreign currency as an investment, then the gains are ordinary income. The gains are realized when you close the position, and whether you buy something else go back to the original form of investment is of no consequence. In case #1 you have $125 income. In case #2 you have $125 income. In case #3 you have $166 loss. You report all these items on your Schedule D. Make sure to calculate the tax correctly, since the tax is not capital gains tax but rather ordinary income at marginal rates. Changes in foreign exchange between a transaction and the conversion of the proceeds to USD are generally not considered as income (i.e.: You sold a property in Mexico, but since the money took a couple of days to clear, the exchange rate changed and you got $2K more/less than you would based on the exchange rate on the day of the transaction - this is not a taxable income/loss). This is covered by the IRC Sec. 988. There are additional rules for contracts on foreign currency, TTM rules, etc. Better talk to a licensed tax adviser (EA/CPA licensed in your State) for anything other than trivial.",
"title": ""
},
{
"docid": "532edf7ff562fcf73cde242b4cffd10a",
"text": "> If you have a different currency from the U.S. Dollar, and it increases in value greatly, do you have to pay tax on that increased value relative to the U.S. dollar? Technically, all profit you make as a US citizen or resident is subject to tax. It doesn't matter in what currency the profit takes place, and it doesn't matter if the profit never hits US dollars at all. You made profit, you owe tax. Obviously the IRS is not going to bother with enforcing taxation on that Canadian twenty-dollar bill in your wallet from your last trip to Vancouver. But if you're sitting on a million dollars in Bitcoin profit, and the IRS finds out about it, expect them to start caring quite a bit. > There isn't much of a transaction record, is there? There is in fact a detailed and public transaction record. What there isn't is an easy way to match wallets to people; however, all similar machine learning projects seem to indicate that it wouldn't be hard at all to make these matchups.",
"title": ""
},
{
"docid": "0c44e8add21de2cabf4f249a87937361",
"text": "I do not think banks have an obligation to report any deposits to the IRS, however, they probably have an obligation to report deposits exceeding certain threshold amounts to FinCEN. At least that's how it works in Canada, and we're known to model our Big Brother-style activities after our neighbour to the South.",
"title": ""
},
{
"docid": "0714e64d06233bbf500bca0aeeafe657",
"text": "\"The existing IRS guidance in the US related to bitcoin indicates it will be taxed as property. You'll sell your coins then when you file your taxes for that year you will indicate the dollar value that you sold as a capital gain with a $0 cost basis since you can't prove your initial cost. You can use a block chain explorer to get an idea of when the coins were transferred to your wallet to lay to rest any idea that someone paid you $1,000,000 for some sort of nefarious reason today. Prepare to be audited, I'd probably shop around for a local tax guy willing to prepare your return. Additionally, I probably wouldn't sell it all at once or even all in a single year. It's obvious but I think it's worth saying, there's no law against making money. You bought the equivalent of junk a number of years ago that, by some kind of magic, has a value today. You're capitalizing on the value increase. I don't think there's a reason to \"\"worry\"\" about the government.\"",
"title": ""
},
{
"docid": "278761b17fa57982144a46c66491ce57",
"text": "Like-kind of exchanges have a list of requirements. The IRS has not issued formal guidance in the matter. I recommend to be aggressive and claim the exchange, while justifying it with a good analogy to prove good faith (and persuade the IRS official reading it the risk of losing in tax court would be to high). Worst case the IRS will attempt to reject the exchange, at which point you could still pony up to get rid of the problem, interest being the only real risk. For example: Past tax court rulings have stated that collectable gold coins are not like kind to gold bars, and unlike silver coins, but investment grade gold coins are like kind to gold bars. So you could use a justification like this: I hold Bitcoin to be like-kind to Litecoin, because they use the same fundamental technology with just a tweak in the math, as if exchanging different grades of gold bars, which has been approved by tax court ruling #xxxxx. Note that it doesn't matter whether any of this actually makes sense, it just has be reasonable enough for you to believe, and look like it is not worth pursuing to an overworked IRS official glancing at it. I haven't tried this yet, so up to now this is a guess, but it's a good enough guess in my estimation that I will be using it on some rather significant amounts next year.",
"title": ""
},
{
"docid": "ca4f820b9bdb5a53b055950641355db2",
"text": "Do not try to deposit piece wise. Either use the system in complete transparence, or do not use it at all. The fear of having your bank account frozen, even if you are in your rights, is justified. In any case, I don't advise you to put in bank before reaching IRS. Also keep all the proof that you indeed contacted them. (Recommended letter and copy of any form you submit to them) Be ready to also give those same documents to your bank to proove your good faith. If they are wrong, you'll be considered in bad faith until you can proove otherwise, without your bank account. Do not trust their good faith, they are not bad people, but very badly organized with too much power, so they put the burden of proof on you just because they can. If it is too burdensome for you then keep cash or go bitcoin. (but the learning curve to keep so much money in bitcoin secure against theft is high) You should declare it in this case anyway, but at least you don't have to fear having your money blocked arbitrarily.",
"title": ""
},
{
"docid": "7272c31978e10ac0038691e7e9e1f605",
"text": "\"The only \"\"authoritative document\"\" issued by the IRS to date relating to Cryptocurrencies is Notice 2014-21. It has this to say as the first Q&A: Q-1: How is virtual currency treated for federal tax purposes? A-1: For federal tax purposes, virtual currency is treated as property. General tax principles applicable to property transactions apply to transactions using virtual currency. That is to say, it should be treated as property like any other asset. Basis reporting the same as any other property would apply, as described in IRS documentation like Publication 550, Investment Income and Expenses and Publication 551, Basis of Assets. You should be able to use the same basis tracking method as you would use for any other capital asset like stocks or bonds. Per Publication 550 \"\"How To Figure Gain or Loss\"\", You figure gain or loss on a sale or trade of property by comparing the amount you realize with the adjusted basis of the property. Gain. If the amount you realize from a sale or trade is more than the adjusted basis of the property you transfer, the difference is a gain. Loss. If the adjusted basis of the property you transfer is more than the amount you realize, the difference is a loss. That is, the assumption with property is that you would be using specific identification. There are specific rules for mutual funds to allow for using average cost or defaulting to FIFO, but for general \"\"property\"\", including individual stocks and bonds, there is just Specific Identification or FIFO (and FIFO is just making an assumption about what you're choosing to sell first in the absence of any further information). You don't need to track exactly \"\"which Bitcoin\"\" was sold in terms of exactly how the transactions are on the Bitcoin ledger, it's just that you bought x bitcoins on date d, and when you sell a lot of up to x bitcoins you specify in your own records that the sale was of those specific bitcoins that you bought on date d and report it on your tax forms accordingly and keep track of how much of that lot is remaining. It works just like with stocks, where once you buy a share of XYZ Corp on one date and two shares on another date, you don't need to track the movement of stock certificates and ensure that you sell that exact certificate, you just identify which purchase lot is being sold at the time of sale.\"",
"title": ""
},
{
"docid": "9b4a5fff5ef3a98fcf333a137464c7af",
"text": "Deliberately breaking transactions into smaller units to avoid reporting requirements is called structuring and may attract the attention of the IRS and/or law enforcement agencies. I'm not sure what the specific laws are on structuring with respect to FBAR reporting requirements and/or electronic transfers (as opposed to cash transactions). However, there's been substantial recent publicity about cases where people had their assets seized simply because federal agents suspected they were trying to avoid reporting requirements (even if there was no hard evidence of this). It is safer not to risk it. Don't try to structure your transactions to avoid the reporting requirements.",
"title": ""
},
{
"docid": "c7cf03316171ccd1ef7f305ef2953a99",
"text": "Sure; you can deposit cash. A few notes apply: Does the source of cash need to be declared ? If you deposit more than $10,000 in cash or other negotiable instruments, you'll be asked to complete a form called a Currency Transaction Report (here's the US Government's guidance for consumers about this form). There's some very important information in that guidance document about structuring, which is a fairly serious crime that you can commit if you break up your deposits to avoid reporting. Don't do this. The linked document gives examples. Also don't refuse to make your deposit and walk away when presented with a CTR form. In addition, you are also required to report to Customs and Border Protection when you bring more than $10,000 in or out of the country. If you are caught not doing so, the money may be seized and you could be prosecuted criminally. Many countries have similar requirements, often with different dollar amounts, so it's important to make sure you comply with their laws as well. The information from this reporting goes to the government and is used to enforce finance and tax laws, but there's nothing wrong or illegal about depositing cash as long as you don't evade the reporting requirements. You will not need to declare precisely where the cash comes from, but they will want the information required on the forms. Is it taxable ? Simply depositing cash into your bank account is not taxable. Receiving some forms of income, whether as cash or a bank deposit, is taxable. If you seem to have a large amount of unexplained cash income, it is possible an IRS audit will want an explanation from you as to where it comes from and why it isn't taxable. In short, if the income was taxable, you should have paid taxes on it whether or not you deposit it in a bank account. What is the limit of the deposit ? There is no government limit. An individual bank may have their own limit and/or may charge a fee for larger deposits. You could always call the bank and ask.",
"title": ""
},
{
"docid": "bc29f3df7b49d4faef1a5644c2244382",
"text": "It's not enough just to check if your order doesn't exceed 10% of the 20 day average volume. I'll quote from my last answer about NSCC illiquid charges: You may still be assessed a fee for trading OTC stocks even if your account doesn't meet the criteria because these restrictions are applied at the level of the clearing firm, not the individual client. This means that if other investors with your broker, or even at another broker that happens to use the same clearing firm, purchase more than 5 million shares in an individual OTC stock at the same time, all of your accounts may face fees, even though individually, you don't exceed the limits. The NSCC issues a charge to the clearing firm if in aggregate, their orders exceed the limits, and the clearing firm usually passes these charges on to the broker(s) that placed the orders. Your broker may or may not pass the charges through to you; they may simply charge you significantly higher commissions for trading OTC securities and use those to cover the charges. Since checking how the volume of your orders compares to the average past volume, ask your broker about their policies on trading OTC stocks. They may tell you that you won't face illiquid charges because the higher cost of commissions covers these, or they may give you specifics on how to verify that your orders won't incur such charges. Only your broker can answer this with certainty.",
"title": ""
},
{
"docid": "4dda835616037c706767369d1efac27a",
"text": "\"See \"\"Structuring transactions to evade reporting requirement prohibited.\"\" You absolutely run the risk of the accusation of structuring. One can move money via check, direct transfer, etc, all day long, from account to account, and not have a reporting issue. But, cash deposits have a reporting requirement (by the bank) if $10K or over. Very simple, you deposit $5000 today, and $5000 tomorrow. That's structuring, and illegal. Let me offer a pre-emptive \"\"I don't know what frequency of $10000/X deposits triggers this rule. But, like the Supreme Court's, \"\"We have trouble defining porn, but we know it when we see it. And we're happy to have these cases brought to us,\"\" structuring is similarly not 100% definable, else one would shift a bit right.\"\" You did not ask, but your friend runs the risk of gift tax issues, as he's not filing the forms to acknowledge once he's over $14,000.\"",
"title": ""
},
{
"docid": "d50c7fdfce08325fca77e8f189c16e91",
"text": "It's important to note that the US is also the country that taxes its expats when they live abroad, and forces foreign banks to disclose assets of US citizens. Americans are literally the property of their government. America is a tax farm and its citizens can't leave the farm. Wherever you go, you are owned. And that now appears to be true of your Bitcoin as well. Even if you spend 50 years outside the USA, your masters want a piece of what you earn. Land of the Free.",
"title": ""
}
] |
fiqa
|
037ba714b4fb2cfec53348d0e94d68dd
|
Why do new car loans, used car loans, and refinanced loans have different rates and terms?
|
[
{
"docid": "b31d9b98a4891e6facb0202448d55049",
"text": "\"New car loans, used car loans, and refinances have different rates because they have different risks associated with them, different levels of ability to recoup losses if there is a default, and different customer profiles. (I'm assuming third party lender for all of these questions, not financing the dealer arranges, as that has other considerations built into it.) A new car loan is both safer to some extent (as the car is a \"\"known\"\" risk, having no risk of damage/etc. prior to purchase), but also harder to recoup losses (because new cars immediately devalue significantly, while used cars keep more of their value). Thus the APRs are a little different; in general for the same amount a new car will be a bit lower APR, but of course used car loans are typically lower amounts. Refinance is also different; customer profile wise, the customer who is refinancing in these times is likely someone who is a higher risk (as why are they asking for a loan when they're mostly paid off their car?). Otherwise it's fairly similar to a used car, though probably a bit newer than the average used car.\"",
"title": ""
},
{
"docid": "067b00eeae4c7564c16d7388d5bed468",
"text": "According to AutoTrader, there are many different reasons, but here are three: New cars have a better resale value and it's easier to predict its resale value in case you default on the loan and they repossess the car. Lenders that are through auto makers can use different incentives for getting you to buy a new car. Used car financing is usually through other banks. People with higher credit scores tend to buy new cars, and therefore can get a lower rate because of their higher credit score.",
"title": ""
},
{
"docid": "f974cda43eb4fee7fd6b2844f12a5fd7",
"text": "\"There are normally three key factors that define different kinds of loans, these factors affect the risk that the lender takes on and so the interest rate. The interest rate on any loan is linked to market interest rates; the lender shouldn't be able to receive a higher rate of interest for lending the money at no risk, and the level of risk that the lender believes the borrower to have. The three features of a particular loan are: These reduce the risk of complete or total non-payment (default) of the principal or any missed interest payments. Taken in order: Amortising Here some of the monthly payment pays a proportion of the underlying principal of the loan. This reduces the amount outstanding and so reduces the capacity for default on the full principal as part of the principal has already been paid. Security In a secured loan there is an asset such as a car, house, boat, gold, shares etc. that has a value on resale that is held against the loan. The lender may repossess the security if the borrower defaults and recover their money that way. This also acts as a \"\"stick\"\" using the loss of property to convince the borrower that it is better to keep paying the interest. The future value of the security will be taken into account when deciding how much this reduces the interest rate. Guarantor A guarantor to a loan guarantees that the borrower will repay the loan and interest in full and, if the borrower does not fulfil that obligation, the lender is able to seek legal redress from the guarantor for the borrower's debts. Each of these reduce the risk of the loan as detailed and so reduce the interest rate. The interest rate, then, is made up of three parts; the market interest rate (m) plus the interest rate premium for the borrower's own credit worthiness (c) minus the value of the features of the loan that help to reduce risk (l). The interest rate of the loan (r) is categorised as: r = m + c - l. Credit ratings themselves are an inexact science and even when two lenders are looking at the same credit score for the same person they will give a different interest rate premium. This is mostly for business reasons, and the shape of their loan book, that are too tedious to go through here. All in all the different types of loan give flexibility at the cost of a different interest rate. If you don't want the chance of your car being repossessed you don't take a secured loan, if you have a family member who can help and doesn't mind taking on your risk take a guaranteed loan.\"",
"title": ""
}
] |
[
{
"docid": "042b71b15063e51189ae00318215f078",
"text": "If it's possible in your case to get such a loan, then sure, providing the loan fees aren't in excess of the interest rate difference. Auto loans don't have the fees mortgages do, but check the specific loan you're looking at - it may have some fees, and they'd need to be lower than the interest rate savings. Car loans can be tricky to refinance, because of the value of a used car being less than that of a new car. How much better your credit is likely determines how hard this would be to get. Also, how much down payment you put down. Cars devalue 20% or so instantly (a used car with 5 miles on it tends to be worth around 80% of a new car's cost), so if you put less than 20% down, you may be underwater - meaning the principal left on the loan exceeds the value of the car (and so you wouldn't be getting a fully secured loan at that point). However, if your loan amount isn't too high relative to the value of the car, it should be possible. Check out various lenders in advance; also check out non-lender sites for advice. Edmunds.com has some of this laid out, for example (though they're an industry-based site so they're not truly unbiased). I'd also recommend using this to help you pay off the loan faster. If you do refinance to a lower rate, consider taking the savings and sending it to the lender - i.e., keeping your payment the same, just lowering the interest charge. That way you pay it off faster.",
"title": ""
},
{
"docid": "afcc0a968d643cff64bd0cfd4ba171b7",
"text": "I don't know what rates are available to you now, but yes, if you can refinance your car at a better rate with no hidden fees, you might save some money in interest. However, there are a couple of watchouts: Your original loan was a 6 year loan, and you have 5 years remaining. If you refinance your car with a new 6 year loan, you will be paying on your car for 7 years total, and you will end up paying more interest even though your interest rate might have gone down. Make sure that your new loan, in addition to having a lower rate than the old loan, does not have a longer term than what you have remaining on the original loan. Make sure there aren't any hidden fees or closing costs with the new loan. If there are, you might be paying your interest savings back to the bank in fees. If your goal is to save money in interest, consider paying off your loan early. Scrape together extra money every month and send it in, making sure that it is applied to the principal of your loan. This will shorten your loan and save you money on interest, and can be much more significant than refinancing. After your loan is paid off, continue saving the amount you were spending on your car payment, so you can pay cash for your next car and save even more.",
"title": ""
},
{
"docid": "9d174defc8801df83b7f99517cd0d43f",
"text": "At first guess, people have less and less disposable cash/income for a down payment which subsequently results in longer loan duration. I thought I recall reading an article not too long ago where average auto loan term was 70 something months and average new car is $30k+. That’s a lot of $$$ for a country where median household income is $50k.",
"title": ""
},
{
"docid": "3b5300c8ffa3ace3ae49d6d1404e6652",
"text": "\"A re-financing, or re-fi, is when a debtor takes out a new loan for the express purpose of paying off an old one. This can be done for several reasons; usually the primary reason is that the terms of the new loan will result in a lower monthly payment. Debt consolidation (taking out one big loan at a relatively low interest rate to pay off the smaller, higher-interest loans that rack up, like credit card debt, medical bills, etc) is a form of refinancing, but you most commonly hear the term when referring to refinancing a home mortgage, as in your example. To answer your questions, most of the money comes from a new bank. That bank understands up front that this is a re-fi and not \"\"new debt\"\"; the homeowner isn't asking for any additional money, but instead the money they get will pay off outstanding debt. Therefore, the net amount of outstanding debt remains roughly equal. Even then, a re-fi can be difficult for a homeowner to get (at least on terms he'd be willing to take). First off, if the homeowner owes more than the home's worth, a re-fi may not cover the full principal of the existing loan. The bank may reject the homeowner outright as not creditworthy (a new house is a HUGE ding on your credit score, trust me), or the market and the homeowner's credit may prevent the bank offering loan terms that are worth it to the homeowner. The homeowner must often pony up cash up front for the closing costs of this new mortgage, which is money the homeowner hopes to recoup in reduced interest; however, the homeowner may not recover all the closing costs for many years, or ever. To answer the question of why a bank would do this, there are several reasons: The bank offering the re-fi is usually not the bank getting payments for the current mortgage. This new bank wants to take your business away from your current bank, and receive the substantial amount of interest involved over the remaining life of the loan. If you've ever seen a mortgage summary statement, the interest paid over the life of a 30-year loan can easily equal the principal, and often it's more like twice or three times the original amount borrowed. That's attractive to rival banks. It's in your current bank's best interest to try to keep your business if they know you are shopping for a re-fi, even if that means offering you better terms on your existing loan. Often, the bank is itself \"\"on the hook\"\" to its own investors for the money they lent you, and if you pay off early without any penalty, they no longer have your interest payments to cover their own, and they usually can't pay off early (bonds, which are shares of corporate debt, don't really work that way). The better option is to keep those scheduled payments coming to them, even if they lose a little off the top. Often if a homeowner is working with their current bank for a lower payment, no new loan is created, but the terms of the current loan are renegotiated; this is called a \"\"loan modification\"\" (especially when the Government is requiring the bank to sit down at the bargaining table), or in some cases a \"\"streamlining\"\" (if the bank and borrower are meeting in more amicable circumstances without the Government forcing either one to be there). Historically, the idea of giving a homeowner a break on their contractual obligations would be comical to the bank. In recent times, though, the threat of foreclosure (the bank's primary weapon) doesn't have the same teeth it used to; someone facing 30 years of budget-busting payments, on a house that will never again be worth what he paid for it, would look at foreclosure and even bankruptcy as the better option, as it's theoretically all over and done with in only 7-10 years. With the Government having a vested interest in keeping people in their homes, making whatever payments they can, to keep some measure of confidence in the entire financial system, loan modifications have become much more common, and the banks are usually amicable as they've found very quickly that they're not getting anywhere near the purchase price for these \"\"toxic assets\"\". Sometimes, a re-fi actually results in a higher APR, but it's still a better deal for the homeowner because the loan doesn't have other associated costs lumped in, such as mortgage insurance (money the guarantor wants in return for underwriting the loan, which is in turn required by the FDIC to protect the bank in case you default). The homeowner pays less, the bank gets more, everyone's happy (including the guarantor; they don't really want to be underwriting a loan that requires PMI in the first place as it's a significant risk). The U.S. Government is spending a lot of money and putting a lot of pressure on FDIC-insured institutions (including virtually all mortgage lenders) to cut the average Joe a break. Banks get tax breaks when they do loan modifications. The Fed's buying at-risk bond packages backed by distressed mortgages, and where the homeowner hasn't walked away completely they're negotiating mortgage mods directly. All of this can result in the homeowner facing a lienholder that is willing to work with them, if they've held up their end of the contract to date.\"",
"title": ""
},
{
"docid": "0abf2d4619c289bdab3c1e7ba705521d",
"text": "\"A repossessed automobile will have lost some value from sale price, but it's not valueless. They market \"\"title loans\"\" to people without good credit on this basis so its a reasonably well understood risk pool.\"",
"title": ""
},
{
"docid": "dc69d3f6e641e3921c55c1180b6158e7",
"text": "\"Following up on @petebelford's answer: If you can find a less expensive loan, you can refinance the car and reduce the total interest you pay that way. Or, if your loan permits it (not all do; talk to the bank which holds the loan and,/or read the paperwork you didn't look at), you may be able to make additional payments to reduce the principal of the loan, which will reduce the amount and duration of the loan and could significantly reduce the total interest paid ... at the cost of requiring you pay more each month, or pay an additional sum up front. Returning the car is not an option. A new car loses a large portion of its value the moment you drive it off the dealer's lot and it ceases to be a \"\"new\"\" car. You can't return it. You can sell it as a recent model used car, but you will lose money on the deal so even if you use that to pay down the loan you will still owe the bank money. Given the pain involved that way, you might as well keep the car and just try to refinance or pay it off. Next time, read and understand all the paperwork before signing. (If you had decided this was a mistake within 3 days of buying, you might have been able to take advantage of \"\"cooling down period\"\" laws to cancel the contract, if such laws exist in your area. A month later is much too late.)\"",
"title": ""
},
{
"docid": "4ba0904c027d73e4cfead5e90c27a3d6",
"text": "In addition to the other answers, also consider this: Federal bond interest rates are nowhere near the rates you mentioned for short term bonds. They are less than 1% unless you're talking about terms of 5-10 years, and the rates you mentioned are for 10 to 30-years terms. Dealer financed car loans are usually 2-5 years (the shorter the term - the lower the rate). In addition, as said by others, you pay more than just the interest if you take a car loan from the dealer directly. But your question is also valid for banks.",
"title": ""
},
{
"docid": "374f98708af43b789ea27528fbcb43e0",
"text": "\"I think the risk involved with the \"\"fund gaining a larger rate of return\"\" is probably priced in. Why would the bank take the risk on you with a car loan when it could put it in the same fund you're talking about and make more money?\"",
"title": ""
},
{
"docid": "8d280f9654cc7e6f9132494b19bc1d4f",
"text": "Not long after college in my new job I bought a used car with payments, I have never done that since. I just don't like having a car payment. I have bought every car since then with cash. You should never borrow money to buy a car There are several things that come into play when buying a car. When you are shopping with cash you tend to be more conservative with your purchases look at this Study on Credit card purchases. A Dunn & Bradstreet study found that people spend 12-18% more when using credit cards than when using cash. And McDonald's found that the average transaction rose from $4.50 to $7.00 when customers used plastic instead of cash. I would bet you if you had $27,000 dollars cash in your hand you wouldn't buy that car. You'd find a better deal, and or a cheaper car. When you finance it, it just doesn't seem to hurt as bad. Even though it's worse because now you are paying interest. A new car is just insanity unless you have a high net worth, at least seven figures. Your $27,000 car in 5 years will be worth about $6500. That's like striking a match to $340 dollars a month, you can't afford to lose that much money. Pay Cash If you lose your job, get hurt, or any number of things that can cost you money or reduce your income, it's no problem with a paid for car. They don't repo paid for cars. You have so much more flexibility when you don't have payments. You mention you have 10k in cash, and a $2000 a month positive cash flow. I would find a deal on a 8000 - 9000 car I would not buy from a dealer*. Sell the car you have put that money with the positive cash flow and every other dime you can get at your student loans and any other debt you have, keep renting cheap keep the college lifestyle (broke) until you are completely out of debt. Then I would save for a house. Finally I would read this Dave Ramsey book, if I would have read this at your age, I would literally be a millionaire by now, I'm 37. *Don't buy from a dealer Find a private sale car that you can get a deal on, pay less than Kelly Blue Book. Pay a little money $50 - 75 to have an automotive technician to check it out for you and get a car fax, to make sure there are no major problems. I have worked in the automotive industry for 20 + years and you rarely get a good deal from a dealer. “Everything popular is wrong.” Oscar Wilde",
"title": ""
},
{
"docid": "70c5f0d9cf31a5765db3b0f253f4e554",
"text": "I worked in auto finance years ago, what dealers tend to do in refinance the negative value of the customer current car to the new one. So if a car is worth 30k they may finance it for 35k. Finance company will do as not to lose the dealer and customer is happy to get a new car. I had one customer call on a car he financed for 85k, car brand new was worth 70k. Told me how he was looking to pay out the loan and go to the competition for better rates. Before offering anything I did a quick value check and no way was it worth it for us to reduce the rates. Told him good luck and he needed to pay X amount, he asked me if I'm not going to offer a better deal, I told him no. He blew up telling me the dealer told him to call 6 mouths later and the financial company would reduce the rates if he asked for a payout. Customer also had a car that dropped its value like no tomorrow, so it book value was around 60k. So over the refinance limit. 6 mouths later get a call from collection, telling me just a heads up this guy's cars was sold at the auction as he couldn't make repayments for 30k. Guy was also told by the dealer he could just hand the car back in but wasn't told he still needed to pay back the difference in the loan once he did. My god some people had no clue.",
"title": ""
},
{
"docid": "cc84cf9347d8b4cf8bdb537eee046017",
"text": "This is because short term debt needs to be rolled over to finance the long term project and so, when interest rates rise they will be refinanced at a higher interest rate. This means that it will end up costing more than if the company had taken out a long term loan at the lower rate. A long term project implies that the beneficial (incoming) cashflows will be long term but with short term financing the debt will come payable sooner which is why it needs rolling over; any beneficial cashflows are not enough to cover the debt.",
"title": ""
},
{
"docid": "ba52e2de758b83fa4bbace296bc92660",
"text": "\"Yikes! Not always is this the case... For example, you purchased a new car with an interest rate of 5-6%or even higher... Why pay that much interest throughout the loan. Sometimes trading in the vehicle at a lower rate will get you a lower or sometimes the same payment even with an upgraded (newer/safer technology) design. The trade off? When going from New to New, the car may depreciate faster than what you would save from the interest savings on a new loan. Sometimes the tactics used to get you back to the dealership could be a little harsh, but if you do your research long before you inquire, you may come out on the winning end. Look at what you're paying in interest and consider it a \"\"re-finance\"\" of your car but taking advantage of the manufacturer's low apr special to off-set the costs.\"",
"title": ""
},
{
"docid": "9874f6737c29c6ccdcf50be800ba0095",
"text": "You need to do the maths exactly. The cost of buying a car in cash and using a loan is not the same. The dealership will often get paid a significant amount of money if you get a loan through them. On the other hand, they may have a hold over you if you need their loan (no cash, and the bank won't give you money). One strategy is that while you discuss the price with the dealer, you indicate that you are going to get a loan through them. And then when you've got the best price for the car, that's when you tell them it's cash. Remember that the car dealer will do what's best for their finances without any consideration of what's good for you, so you are perfectly in your rights to do the same to them.",
"title": ""
},
{
"docid": "dc5d2f7ab87c363b8359dcfbff796599",
"text": "The key word you are looking for is that you want to refinance the loan at a lower rate. Tell banks that and ask what they can offer you.",
"title": ""
},
{
"docid": "9e814218015e61c473d66135a4cfd495",
"text": "I agree with the deposit part. But if you are buying a new car, the loan term should meet the warranty term. Assuming you know you won't exceed the mileage limits, it's a car with only maintainence costs and the repayment cost at that point.",
"title": ""
}
] |
fiqa
|
3215e67810b24236d08f521b0f815f05
|
What did John Templeton mean when he said that the four most dangerous words in investing are: ‘this time it’s different'?
|
[
{
"docid": "5251f5c2cb3094dab1305d925471dd86",
"text": "\"Essentially, he means \"\"one ignores history at their own peril\"\". We often hear people arguing that \"\"the old rules no longer apply\"\". Whether it be to valuations, borrowing, or any of the other common metrics, to ignore the lessons of the past is to invite disaster. History shows us that major crises in the markets usually occur when the old rules are ignored and people believe that current exceptional market conditions are justified by special circumstances.\"",
"title": ""
},
{
"docid": "d8622b98765f45cfe577ed689ab53af2",
"text": "\"This refers to the faulty idea that the stock market will behave differently than it has in the past. For example, in the late 1990s, internet stocks rose to ridiculous heights in price, to be followed soon after with the Dot-Com Bubble crash. In the future, it's likely that there will be another such bubble with another hot stock - we just don't know what kind. Saying that \"\"this time it will be different\"\" could mean that you expect this bubble not to burst when, historically, that is never the case.\"",
"title": ""
},
{
"docid": "0e5330dace41924c1d1d905a21fb010e",
"text": "\"It's a statement that seems to be true about our tendency to believe we won't make the same mistake twice, even though we do, and that somehow what's occurring in the present is completely different, even when the underlying fundamentals of the situation may be nearly identical. It's a form of self-delusion and, sometimes, mass-delusion, and it has been a major contributing factor to many of our worst financial disasters. If you look at every housing bubble, for instance, we examine the aftermath, put new regulations and procedures into place, theoretically to prevent it from happening again, and then move forward. When the cycle starts to repeat itself, we ignore the signals, telling ourselves, \"\"oh, that can't happen again -- this time it's different.\"\" When investors begin to ignore the warning signs because they think the current situation is somehow totally different and therefore there will be a different outcome than the last disaster, that's when things actually do go bad. The 2008 housing crisis was caused by the same essential forces that brought about similar (albeit smaller scale) housing disasters in the 80's and 90's -- greed caused banks and other participants in the housing sector to make loans they knew were no good (an oversimplification to be sure, but apt nonetheless), and eventually the roof caved in on the market. In 2008, the essential dynamics were the same, but everyone had convinced themselves that the markets were more sophisticated and could never allow things like that to happen again. So, everyone told themselves this was different, and they dove into the markets headlong, ignoring all of the warning signs along the way that clearly told the story of what was coming had anyone bothered to notice.\"",
"title": ""
},
{
"docid": "6b8cc723454e494712174748761f537a",
"text": "\"There's an elephant in the room that no one is addressing: Suckers. Usually when there's a bubble, many people are fully aware that its a bubble. \"\"This time its different\"\" is a sales pitch to the outsiders. It the dotcom boom for example a lot of people knew that the P/E was ridiculous but bought objectively valueless tech stocks with the idea of unloading them later to even bigger fools. People view it like the children's game musical chairs: as long as I'm not standing when the music ends some other sucker gets left holding the bag. But once you get that first hit of easy money, its sooo tempting to keep playing the game. Sometimes, if it lasts long enough, you start to drink your own kool-aid: gee maybe it really is different this time. The best way to win a crooked game is not to play*. *Just in case someone thinks I'm advising against the stock market in general, I'm not: I'm advocating not buying stocks that you know are worthless with the hope of unloading them on some other sucker.\"",
"title": ""
},
{
"docid": "6be9ede1c3f854caa8cfd3b0e63ec2b6",
"text": "\"A brief review of the financial collapses in the last 30 years will show that the following events take place in a fairly typical cycle: Overuse of that innovation (resulting in inadequate supply to meet demand, in most cases) Inadequate capacity in regulatory oversight for the new volume of demand, resulting in significant unregulated activity, and non-observance of regulations to a greater extent than normal Confusion regarding shifting standards and regulations, leading to inadequate regulatory reviews and/or lenient sanctions for infractions, in turn resulting in a more aggressive industry \"\"Gaming\"\" of investment vehicles, markets and/or buyers to generate additional demand once the market is saturated \"\"Chickens coming home to roost\"\" - A breakdown in financial stability, operational accuracy, or legality of the actions of one or more significant players in the market, leading to one or more investigations A reduction in demand due to the tarnished reputation of the instrument and/or market players, leading to an anticipation of a glut of excess product in the market \"\"Cold feet\"\" - Existing customers seeking to dump assets, and refusing to buy additional product in the pipeline, resulting in a glut of excess product \"\"Wasteland\"\" - Illiquid markets of product at collapsed prices, cratering of associated portfolio values, retirees living below subsistence incomes Such investment bubbles are not limited to the last 30 years, of course; there was a bubble in silver prices (a 700% increase through one year, 1979) when the Hunt brothers attempted to corner the market, followed by a collapse on Silver Thursday in 1980. The \"\"poster child\"\" of investment bubbles is the Tulip Mania that gripped the Netherlands in the early 1600's, in which a single tulip bulb was reported to command a price 16 times the annual salary of a skilled worker. The same cycle of events took place in each of these bubbles as well. Templeton's caution is intended to alert new (especially younger) players in the market that these patterns are doomed to repeat, and that market cycles cannot be prevented or eradicated; they are an intrinsic effect of the cycles of supply and demand that are not in synch, and in which one or both are being influenced by intermediaries. Such influences have beneficial effects on short-term profits for the players, but adverse effects on the long-term viability of the market's profitability for investors who are ill-equipped to shed the investments before the trouble starts.\"",
"title": ""
},
{
"docid": "248b6a9cef27acb33e66c19d5dad5907",
"text": "To play devil’s advocate to much of what has been written before, it's also worth noting that this is quite an important quote for a sort of reverse reason to what has been discussed before us, that of that fact that virtually every economic situation is different. As it's such a reflexive problem, each and every set of exact circumstances is always different from before. Technology radically changes, monetary policy and economic thinking shift, social needs and market expectations change and thus change the very fabric of markets as they do. It's only in its most basic miss projections of growth that economics repeats, and much like warfare, has constant shifts that radically change the core assumptions about it and do create completely new circumstances that we have to struggle to deal with predicting. People betting on the endless large scale mechanised warfare between western powers continuing post nuclear weapons would have been very, very wrong for example. That time it actually was different, and this actually happens with surprisingly often in finance in ways people quickly bury in the memories and adopt to the new norm. Remember when public ownership of stock wasn't a thing? When bonds didn't exist? No mortgages? Pre insurance? These are all inventions and changes that did change the world forever and were genuinely different and have been ever since, creating huge structural changes in economies, growth rates and societies interactions. As the endless aim of the game is predicting growth well, we often see people/groups over extend on one new thing, and/or under extend on another as they struggle to model these shifts and step changes. Talking as if the fact that people do this consistently as if it is some kind of obvious thing we can easily learn from (or easily take advantage of) in the context of such a vague and complex problem could be argued to be highly naïve and largely useless. This time it is different. Last time it was too.",
"title": ""
}
] |
[
{
"docid": "19225d0959de97f5bf2d6855eb77f19a",
"text": ">At some point you can no longer take on more debt even if you wanted to. If global and domestic investors think you are going to be a risky investment then they cut you off. The *issuer* of a currency can't be cut off from spending in the currency they issue.",
"title": ""
},
{
"docid": "77e3b89127f83c9de24b0f431df4cc89",
"text": "This is why I am amazed that people are saying this time the market is different; it will only correct itself; we won't see another crash like '08. When in reality, all of the data is pointing to a bubble that is about to burst worst than '08.",
"title": ""
},
{
"docid": "60831e5ae1c8012fed7a865058b09965",
"text": "One of the funnier parts of the finance crisis was seeing just how awful Morgenson could be. Every time she wrote something dumb, she'd manage to one-up herself the next time. It was impressive. (which made me remember that [Calculated Risk even had a tag](http://www.calculatedriskblog.com/search/label/Picking%20On%20Poor%20Gretchen) for posts about her awful stories.)",
"title": ""
},
{
"docid": "9825521e8c224412f832211f9404e01c",
"text": "> The stock market measures individual companies' ups and downs, right? Not precisely, no. If anything it measures... 1. Information 2. Risk and Riskiness 3. Market Sentiment > Perhaps it could even gain over my life. One would assume that this would be a relatively flat graph, with little if any trend, and occasional spikes upwards and downwards. It'd also be subject to caps and floors, unlike the market which is only floored (at 0). > I don't know if anyone could come up with a kind of standardised measurement we could use to do this. It'd be impossible. Happiness is subjective *and* relative. Getting a million bucks might make me happy, but Bill Gates bored. Having a child can be conflicting intensely. The death of a loved one could be both sad and a relief.",
"title": ""
},
{
"docid": "5647ff51faca34bb74459ad4f3d56779",
"text": "\"fennec has a very good answer but i feel it provides too much information. So i'll just try to explain what that sentence says. Put option is the right to sell a stock. \"\"16 puts on Cisco at 71 cents\"\", means John comes to Jim and says, i'll give you 71 cent now, if you allow me to sell one share of Cisco to you at $16 at some point in the future ( on expiration date). NYT quote says 1000 puts that means 1000 contracts - he bought a right to sell 100,000 shares of Cisco on some day at $16/share. Call option - same idea: right to buy a stock.\"",
"title": ""
},
{
"docid": "356a2e623de8568a36800b87f23611e0",
"text": "\"There may well be several such graphs, I expect googling will turn them up; but the definition of risk is actually quite important here. My definition of risk might not be quite the same as yours, so the relative risk factors would be different. For example: in general, stocks are more risky than bonds. But owning common shares in a blue-chip company might well be less risky than owning bonds from a company teetering on the edge of bankruptcy, and no single risk number can really capture that. Another example: while I can put all my money in short-term deposits, and it is pretty \"\"safe\"\", if it grows at 1% so that my investment portfolio cannot fund my retirement, then I have a risk that I will run out of money before I shuffle off this mortal coil. How to capture that \"\"risk\"\" in a single number? So you will need to better define your parameters before you can prepare a visual aid. Good Luck\"",
"title": ""
},
{
"docid": "0633a8f9a7f64459ddcbb18125935018",
"text": "\"I think that \"\"memoryless\"\" in this context of a given stock's performance is not a term of art. IMO, it's an anecdotal concept or cliche used to make a point about holding a stock. Sometimes people get stuck... they buy a stock or fund at 50, it goes down to 30, then hold onto it so they can \"\"get back to even\"\". By holding the loser stock for emotional reasons, the person potentially misses out on gains elsewhere.\"",
"title": ""
},
{
"docid": "5d2b124795bc36a1421cb615e4b3ab19",
"text": "\"Can you easily stomach the risk of higher volatility that could come with smaller stocks? How certain are you that the funds wouldn't have any asset bloat that could cause them to become large-cap funds for holding to their winners? If having your 401(k) balance get chopped in half over a year doesn't give you any pause or hesitation, then you have greater risk tolerance than a lot of people but this is one of those things where living through it could be interesting. While I wouldn't be against the advice, I would consider caution on whether or not the next 40 years will be exactly like the averages of the past or not. In response to the comments: You didn't state the funds so I how I do know you meant index funds specifically? Look at \"\"Fidelity Low-Priced Stock\"\" for a fund that has bloated up in a sense. Could this happen with small-cap funds? Possibly but this is something to note. If you are just starting to invest now, it is easy to say, \"\"I'll stay the course,\"\" and then when things get choppy you may not be as strong as you thought. This is just a warning as I'm not sure you get my meaning here. Imagine that some women may think when having a child, \"\"I don't need any drugs,\"\" and then the pain comes and an epidural is demanded because of the different between the hypothetical and the real version. While you may think, \"\"I'll just turn the cheek if you punch me,\"\" if I actually just did it out of the blue, how sure are you of not swearing at me for doing it? Really stop and think about this for a moment rather than give an answer that may or may not what you'd really do when the fecal matter hits the oscillator. Couldn't you just look at what stocks did the best in the last 10 years and just buy those companies? Think carefully about what strategy are you using and why or else you could get tossed around as more than a few things were supposed to be the \"\"sure thing\"\" that turned out to be incorrect like the Dream Team of Long-term Capital Management, the banks that were too big to fail, the Japanese taking over in the late 1980s, etc. There are more than a few times where things started looking one way and ended up quite differently though I wonder if you are aware of this performance chasing that some will do.\"",
"title": ""
},
{
"docid": "2272958d9934c53d50c10223e989af33",
"text": "I always thought high-risk investing is hit or miss, but this is working out very well with the stocks I've chosen High risk investing IS hit and miss. We are in an historic bull market. Do not pat yourself on the back too hard, the bear can be around any corner and your high risk strategy will then be put to the test.",
"title": ""
},
{
"docid": "d6bf11b0627d73cbea9659cfedae9210",
"text": "\"The calculation and theory are explained in the other answers, but it should be pointed out that the video is the equivalent of watching a magic trick. The secret is: \"\"Stock A and B are perfectly negatively correlated.\"\" The video glasses over that fact that without that fact the risk doesn't drop to zero. The rule is that true diversification does decrease risk. That is why you are advised to spread year investments across small-cap, large-cap, bonds, international, commodities, real estate. Getting two S&P 500 indexes isn't diversification. Your mix of investments will still have risk, because return and risk are backward calculations, not a guarantee of future performance. Changes that were not anticipated will change future performance. What kind of changes: technology, outsourcing, currency, political, scandal.\"",
"title": ""
},
{
"docid": "778c0d92d2a35ab391cb4a0481d8f181",
"text": "no offense, but clicking through to that guys blog and fund page he seems like a charlatan and a snake oil salesman. It's not surprising that he doesn't like asset manager software because he himself is an asset manager. the software is trying to replace him. He doesn't make money by beating the market... he makes money by convincing others that he can... he is exactly the type of person that the original article is warning against investing with.",
"title": ""
},
{
"docid": "844e727cb6711f204c235c018b8b8ca0",
"text": "It's a phrase that has no meaning out of context. When I go to Las Vegas (I don't go, but if I did) I would treat what I took as money I plan to lose. When I trade stock options and buy puts or calls, I view it as a calculated risk, with a far greater than zero chance of having the trade show zero in time. A single company has a chance of going bankrupt. A mix of stocks has risk, the S&P was at less than half its high in the 2008 crash. The money I had in the S&P was not money I could afford to lose, but I could afford to wait it out. There's a difference. We're not back at the highs, but we're close. By the way, there are many people who would not sleep knowing that their statement shows a 50% loss from a prior high point. Those people should be in a mix more suited to their risk tolerance.",
"title": ""
},
{
"docid": "02382e9730d0476bf5a1918851d312c7",
"text": "\"Classic investing guru Benjamin Graham defines \"\"An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return.\"\" He contrasts this with speculation which is anything else (no thorough analysis, no safety of principal, or no adequate return). The word \"\"adequate\"\" is important, since it contrasts adequate returns with those that are either lower than needed or higher than necessary to reach your goals.\"",
"title": ""
},
{
"docid": "3749bd9223d2080c026d8c67c9ac9201",
"text": "\"Translation : Funds managers that use traditionnal methods to select stocks will have less success than those who use artificial intelligence and computer programs to select stocks. Meaning : The use of computer programs and artificial intelligence is THE way to go for hedge fund managers in the future because they give better results. \"\"No man is better than a machine, but no machine is better than a man with a machine.\"\" Alternative article : Hedge-fund firms, Wall Street Journal. A little humour : \"\"Whatever is well conceived is clearly said, And the words to say it flow with ease.\"\" wrote Nicolas Boileau in 1674.\"",
"title": ""
},
{
"docid": "e2900a922d243bb2b0282f4fcec6579b",
"text": "\"no way -- he suggests that if you don't have an edge, no one needs to play the game. He doesn't like the idea of a \"\"lesser bad\"\" way to invest (MPT). If you do decide to get involved in investing, then it's about absolute performance, not relative. He believes that the whole relative performance thing -- beating some arbitrary benchmark -- is just an artificial construct.\"",
"title": ""
}
] |
fiqa
|
df957d14f03a4955236c51e8189dc277
|
What prices are compared to decide a security is over-valued, fairly valued or under-valued?
|
[
{
"docid": "242876aa631d68d5e2aa0e20a00e08bf",
"text": "\"I was wondering how \"\"future cash flows of the asset\"\" are predicted? Are they also predicted using fundamental and/or technical analysis? There are a many ways to forecast the future cash flows of assets. For example, for companies: It seems like calculating expected/required rate using CAPM does not belong to either fundamental or technical analysis, does it? I would qualify the CAPM as quantitative analysis because it's mathematics and statistics. It's not really fundamental since its does not relies on economical data (except the prices). And as for technical analysis, the term is often used as a synonym for graphical analysis or chartism, but quantitative analysis can also be referred as technical analysis. the present value of future cash flows [...] (called intrinsic price/value, if I am correct?) Yes you are correct. I wonder when deciding whether an asset is over/fair/under-valued, ususally what kind of price is compared to what other kind of price? If it's only to compare with the price, usually, the Net asset value (which is the book value), the Discount Cash flows (the intrinsic value) and the price of comparable companies and the CAPM are used in comparison to current market price of the asset that you are studying. Why is it in the quote to compare the first two kinds of prices, instead of comparing the current real price on the markets to any of the other three kinds? Actually the last line of the quote says that the comparison is done on the observed price which is the market price (the other prices can't really be observed). But, think that the part: an asset is correctly priced when its estimated price is the same as the present value of future cash flows of the asset means that, since the CAPM gives you an expected rate of return, by using this rate to compute the present value of future cash flows of the asset, you should have the same predicted price. I wrote this post explaining some valuation strategies. Maybe you can find some more information by reading it.\"",
"title": ""
}
] |
[
{
"docid": "6bf6a14a1513d13c389d1123443d40fb",
"text": "\"P/E is a useful tool for evaluating the price of a company, but only in comparison to companies in similar industries, especially for industries with well-defined cash flows. For example, if you compared Consolidated Edison (NYSE:ED) to Hawaiian Electric (NYSE:HE), you'll notice that HE has a significantly higher PE. All things being equal, that means that HE may be overpriced in comparison to ED. As an investor, you need to investigate further to determine whether that is true. HE is unique in that it is a utility that also operates a bank, so you need to take that into account. You need to think about what your goal is when you say that you are a \"\"conservative\"\" investor and look at the big picture, not a magic number. If conservative to you means capital preservation, you need to ensure that you are in investments that are diversified and appropriate. Given the interest rate situation in 2011, that means your bonds holding need to be in short-duration, high-quality securities. Equities should be weighted towards large cap, with smaller holdings of international or commodity-associated funds. Consider a target-date or blended fund like one of the Vanguard \"\"Life Strategy\"\" funds.\"",
"title": ""
},
{
"docid": "1fec42beb84e2821dd90cd035446ea8d",
"text": "Something like cost = a × avg_spreadb + c × volatilityd × (order_size/avg_volume)e. Different brokers have different formulas, and different trading patterns will have different coefficients.",
"title": ""
},
{
"docid": "8a6e87ece5bda5dbb3720b8f90837b88",
"text": "\"Here is how I would approach that problem: 1) Find the average ratios of the competitors: 2) Find the earnings and book value per share of Hawaiian 3) Multiply the EPB and BVPS by the average ratios. Note that you get two very different numbers. This illustrates why pricing from ratios is inexact. How you use those answers to estimate a \"\"price\"\" is up to you. You can take the higher of the two, the average, the P/E result since you have more data points, or whatever other method you feel you can justify. There is no \"\"right\"\" answer since no one can accurately predict the future price of any stock.\"",
"title": ""
},
{
"docid": "351caceff65bf83be90d557d5c8a94f5",
"text": "I stock is only worth what someone will pay for it. If you want to sell it you will get market price which is the bid.",
"title": ""
},
{
"docid": "ede6a47dd7289c2b8990c723b09625da",
"text": "A stock is only worth what someone is willing to pay for it. If it trades different values on different days, that means someone was willing to pay a higher price OR someone was willing to sell at a lower price. There is no rule to prevent a stock from trading at $10 and then $100 the very next trade... or $1 the very next trade. (Though exchanges or regulators may halt trading, cancel trades, or impose limits on large price movements as they deem necessary, but this is beside the point I'm trying to illustrate). Asking what happens from the close of one day to the open of the next is like asking what happens from one trade to the next trade... someone simply decided to sell or pay a different price. Nothing needs to have happened in between.",
"title": ""
},
{
"docid": "79d5438b0c557a93e7157a96506906bf",
"text": "I work on a buy-side firm, so I know how these small data issues can drive us crazy. Hope my answer below can help you: Reason for price difference: 1. Vendor and data source Basically, data providers such as Google and Yahoo redistribute EOD data by aggregating data from their vendors. Although the raw data is taken from the same exchanges, different vendors tend to collect them through different trading platforms. For example, Yahoo, is getting stock data from Hemscott (which was acquired by Morningstar), which is not the most accurate source of EOD stocks. Google gets data from Deutsche Börse. To make the process more complicated, each vendor can choose to get EOD data from another EOD data provider or the exchange itself, or they can produce their own open, high, low, close and volume from the actual trade tick-data, and these data may come from any exchanges. 2. Price Adjustment For equities data, the re-distributor usually adjusts the raw data by applying certain customized procedures. This includes adjustment for corporate actions, such as dividends and splits. For futures data, rolling is required, and back-ward and for-warding rolling can be chosen. Different adjustment methods can lead to different price display. 3. Extended trading hours Along with the growth of electronic trading, many market tends to trade during extended hours, such as pre-open and post-close trading periods. Futures and FX markets even trade around the clock. This leads to another freedom in price reporting: whether to include the price movement during the extended trading hours. Conclusion To cross-verify the true price, we should always check the price from the Exchange where the asset is actually traded. Given the convenience of getting EOD data nowadays, this task should be easy to achieve. In fact, for professional traders and investors alike, they will never reply price on free providers such as Yahoo and Google, they will most likely choose Bloomberg, Reuters, etc. However, for personal use, Yahoo and Google should both be good choices, and the difference is small enough to ignore.",
"title": ""
},
{
"docid": "73143af4a4f1f0f7a3f85b82cb901a9f",
"text": "\"Their algorithm may be different (and proprietary), but how I would to it is to assume that daily changes in the stock are distributed normally (meaning the probability distribution is a \"\"bell curve\"\" - the green area in your chart). I would then calculate the average and standard deviation (volatility) of historical returns to determine the center and width of the bell curve (calibrating it to expected returns and implied volaility based on option prices), then use standard formulas for lognormal distributions to calculate the probability of the price exceeding the strike price. So there are many assumptions involved, and in the end it's just a probability, so there's no way to know if it's right or wrong - either the stock will cross the strike or it won't.\"",
"title": ""
},
{
"docid": "e672e48be08da56391e77f6c10a69ca0",
"text": "\"Investopedia's explanation of overbought: An asset that has experienced sharp upward movements over a very short period of time is often deemed to be overbought. Determining the degree in which an asset is overbought is very subjective and can differ between investors. Technicians use indicators such as the relative strength index, the stochastic oscillator or the money flow index to identify securities that are becoming overbought. An overbought security is the opposite of one that is oversold. Something to consider is the \"\"potential buyers\"\" and \"\"potential sellers\"\" of a stock. In the case of overbought, there are many more buyers that have appeared and driven the price to a point that may be seen as \"\"unsustainably high\"\" and thus may well come down soon if one looks at the first explanation. For oversold, consider the flip side of this. A real life scenario here would be to consider airline tickets where a flight may be \"\"overbooked\"\" that could also be seen as \"\"oversold\"\" in that more tickets were sold than seats that are available and thus people will be bumped as not all tickets can be honored in this case. For a stock scenario of \"\"oversold\"\" consider how IPOs work where several buyers have to exist to buy the shares so the investment bank isn't stuck holding them which sends up the price since the amount wanted by the buyers may be more than what can be sold. The price shifts in bringing out more of one side than the other is the point you are missing. In shifting the price up, this attracts more sellers to satisfy the buyers. However, if there is a surge of buyers that flood the market, then there could be a perception that the security is overbought in the sense that there may be few buyers left for the security and thus the price may fall in the near term. If the price is coming down, this attracts more buyers to achieve the other side. The potential part is what you don't see and I wonder if you can imagine this part of the market. The airline example I give as an example as you don't seem to think either side of buying or selling can be overloaded. In the case of an oversold flight, there were more seats sold than available so yes it is possible. Stocks exist in finite quantities as there are only X shares of a company trading at any one time if you look into the concept of a float.\"",
"title": ""
},
{
"docid": "3bce49c9f14e16724303feccaa0b44cf",
"text": "I disagree strongly with the other two answers posted thus far. HFT are not just liquidity providers (in fact that claim is completely bogus, considering liquidity evaporates whenever the market is falling). HFT are not just scalping for pennies, they are also trading based on trends and news releases. So you end up having imperfect algorithms, not humans, deciding the price of almost every security being traded. These algorithms data mine for news releases or they look for and make correlations, even when none exist. The result is that every asset traded using HFT is mispriced. This happens in a variety of ways. Algos will react to the same news event if it has multiple sources (Ive seen stocks soar when week old news was re-released), algos will react to fake news posted on Twitter, and algos will correlate S&P to other indexes such as VIX or currencies. About 2 years ago the S&P was strongly correlated with EURJPY. In other words, the American stock market was completely dependent on the exchange rate of two currencies on completely different continents. In other words, no one knows the true value of stocks anymore because the free market hasnt existed in over 5 years.",
"title": ""
},
{
"docid": "fd25863c896820977eca451e4ac7e6ae",
"text": "It's done by Opening Auction (http://www.advfn.com/Help/the-opening-auction-68.html): The Opening Auction Between 07.50 and a random time between 08.00 and 08.00.30, there will be called an auction period during which time, limit and market orders are entered and deleted on the order book. No order execution takes place during this period so it is possible that the order book will become crossed. This means that some buy and sell orders may be at the same price and some buy orders may be at higher prices than some sell orders. At the end of the random start period, the order book is frozen temporarily and an order matching algorithm is run. This calculates the price at which the maximum volume of shares in each security can be traded. All orders that can be executed at this price will be filled automatically, subject to price and priorities. No additional orders can be added or deleted until the auction matching process has been completed. The opening price for each stock will be either a 'UT' price or, in the event that there are no transactions resulting form the auction, then the first 'AT' trade will be used.",
"title": ""
},
{
"docid": "fac9c2afeec9e875553e5d562890d340",
"text": "You are right that every transaction involves a seller and a buyer. The difference is the level of willingness from both parties. Overbought and oversold, as I understand them (particularly in the context of stocks), describe prolonged price increase (overbought, people are more willing to buy than sell, driving price up) and price decrease (oversold, people are more willing to sell than buy, driving price down).",
"title": ""
},
{
"docid": "0a7c42f12fa6bc8050d60398fd81742d",
"text": "This is a tough question SFun28. Let's try and debug the metric. First, let's expand upon the notion share price is determined in an efficient market where prospective buyers and sellers have access to info on an enterprises' cash balance and they may weigh that into their decision making. Therefore, a desirable/undesirable cash balance may raise or lower the share price, to what extent, we do not know. We must ask How significant is cash/debt balance in determining the market price of a stock? As you noted, we have limited info, which may decrease the weight of these account balances in our decision process. Using a materiality level of 5% of net income of operations, cash/debt may be immaterial or not considered by an investor. investors oftentimes interpret the same information differently (e.g. Microsoft's large cash balance may show they no longer have innovative ideas worth investing in, or they are well positioned to acquire innovative companies, or weather a contraction in the sector) My guess is a math mind would ignore the affect of account balances on the equity portion of the enterprise value calculation because it may not be a factor, or because the affect is subjective.",
"title": ""
},
{
"docid": "5aa3f904bf8a057a8e5e4f1f7d9de354",
"text": "There isn't a formula like that, there is only the greed of other market participants, and you can try to predict how greedy those participants will be. If someone decided to place a sell order of 100,000 shares at $5, then you can buy an additional 100,000 shares at $5. In reality, people can infer that they might be the only ones trying to sell 100,000 shares right then, and raise the price so that they make more money. They will raise their sell order to $5.01, $5.02 or as high as they want, until people stop trying to buy their shares. It is just a non-stop auction, just like on ebay.",
"title": ""
},
{
"docid": "865734973d4b7c2127e0322bdd58ae69",
"text": "Fair value can mean many different things depending on the context. And it has nothing to do with the price at which your market order would be executed. For example if you buy market, you could get executed below 101 if there are hidden orders, at 101 if that sell order is large enough and it is still there when your order reaches the market, or at a higher price otherwise.",
"title": ""
},
{
"docid": "643e78b1c9d9d924611f22ae25d4853d",
"text": "\"I would differentiate between pricing and valuation a bit more: Valuation is the result of investment analysis and the result of coming up with a fair value for a company and its shares; this is done usually by equity analysts. I have never heard about pricing a security in this context. Pricing would indicate that the price of a product or security is \"\"set\"\" by someone (i.e. a car manufacturer sets the prices of its new cars). The price of a security however is not set by an analyst or an institution, it is solely set by the stock market (perhaps based on the valuations of different analysts). There is only one exception to this: pricing an IPO before its shares are actually traded on an exchange. In this case the underwriting banks set the price (based on the valuation) at which the shares are distributed.\"",
"title": ""
}
] |
fiqa
|
ea21de2e55715f498ffa0e3f0a317ca2
|
In the UK what are citizens legally obliged to do (in order to not be fined)
|
[
{
"docid": "52498cdd3e021fd8a072857f318318fc",
"text": "Edited to add an important one that I forgot, because I don't have a TV myself. You need to: That's really about it, unless you're employing people or running a business turning over more than £81,000 per year (or doing one of a number of relatively unlikely things that require specific paperwork, such as owning a horse or farm animal (but not a dog or cat or similar)). It's not a bureaucratic country. None of those things except the driving licence/car tax/MOT test/car insurance will be a police matter if omitted, but you could be fined for them (although it's vanishingly unlikely that you'd be fined for not registering to vote and for jury service). You don't need to understand the law before being on a jury, because it's the judge's job to ensure that the jury understand the law as it relates to the case in front of them. A few pieces of paperwork jargon for you:",
"title": ""
}
] |
[
{
"docid": "a9bede1cd2db3745c8535cc13749c4b0",
"text": "I mean its probably not set like that in a cynical sense, though yeah any time its coming from a private company it'll be as expensive as they think people can pay without losing their shit. ps. things that are supposed to be human rights should just be on up to a certain amount. Obviously you don't want needless waste of resources so it'd be good to have some kind of overage fines.",
"title": ""
},
{
"docid": "de6119c0d2b4a720fe2708b1f452630b",
"text": "I don't think you understand human rights. Human rights aren't something enforced on someone, they are inherent in a person's humanity. If you don't want to participate in society (pay taxes) and would prefer giving up your citizenship or spending time in jail you can choose to stop paying taxes. It is also important to realize corporations pay a smaller proportion of US tax revenue than they have since before world war 2. Corporations are not pulling their weight considering the benefits they are granted by the US Government. Your silly argument against paying taxes because you think people worse off economically then you don't deserve the joy of having a family is depressing. The United States is the wealthiest nation in the history of world and people are having on average far fewer children than in the past. Having a lot of young people is beneficial to the country. The fact their parents are forced to work so much they can't raise their children adequately is a failure of the economy and society, not a personal failure of an individual. Unless you think a poor family in Idaho is responsible for the demise of global capitalism, the financialization of the economy, and the cultural counter revolution against the working class.",
"title": ""
},
{
"docid": "aa0af11b5c6e1591cfa75e3f1c01b9a5",
"text": "This might be useful http://ec.europa.eu/taxation_customs/individuals/cash-controls_en As far as I am aware there should be no issues with anything below 10000. But anything after that you have to declare.",
"title": ""
},
{
"docid": "d9a4820e1ba3a6ff12e78d7c4f0c2593",
"text": "Aren't we doing something wrong if we must restrict people's financial transactions to be safe? PS: To clarify: Shouldn't we arrange our lives in such a way that our safety isn't dependent on what financial transactions banks or others engage in?",
"title": ""
},
{
"docid": "5423ef8724fe8442875f11fca5a2f18e",
"text": "I brought this up to my CPA. She said don't do it. People used to do it, but now they're cracking down. Is it unfair? Yes. But it's the government so don't mess with them.",
"title": ""
},
{
"docid": "c1948198ef0302f0df8ff601e6faf448",
"text": "I'm arguing that proclaiming that everyone in a certain area is part of some collective agreement isn't the same as actually having a collective agreement. Therefore, no person has an obligation to pay for it if he/she does not want to be a part of it. And no, they don't have an obligation to take positive action to reject it.",
"title": ""
},
{
"docid": "aa58feb088d2ac17ee263e7ef4eaa4b8",
"text": "With the corruption that goes on in these countries (China, Thailand, Etc), it's difficult for (US-UK) companies to comply with anti-corruption laws and still do business there. These countries demand bribes for permits, use of land etc. and if you don't pay expect to wait for these necessary things indefinetly...",
"title": ""
},
{
"docid": "f6799590bcc94cf5dfaf7a974d0ed5d4",
"text": "Are you suggesting when they break a law involving a small portion of their total business they pay fines involving all portions of their business? I'm suggesting when they break a law, they pay fines related to the crime comitted. So relating how much their fine was on a tiny portion of their business should not be compared to total quarterly profits, unless those profits were related to the crime. Similar punishment methods to most crimes individuals commit.",
"title": ""
},
{
"docid": "5d8a3966501f9b1f0ee5a3b8b0067849",
"text": "If you're an American, and willing to give up citizenship, good luck to you. Otherwise, Uncle Sam still wants his due -- Americans are responsible for paying taxes on income earned anywhere on earth, regardless of their residence.",
"title": ""
},
{
"docid": "96590398a0f731898bfd6dfe7b36f51c",
"text": "All rules have unintended consequences. The more complex the ruleset, the more difficult it is to predict the outcome. The choice is fundamentally to constantly change the rules, and pile rules on top of rules, or simplify the rules and make them more permanent. If what the MP was suggesting was tax-code simplification in order to reduce the unintended side-effects then I would call this smart. However adding extra rules and making the tax-code denser and more difficult to follow I believe makes the 'intent' of the law _harder_ to follow, undermining the purpose of creating the new rules.",
"title": ""
},
{
"docid": "6c7f3f0533ea364be143008b7a33a693",
"text": "\"This page lays down the requirements for an \"\"unincorporated association\"\" to pay tax (i.e. any group that's not a registered entity). You pay tax is you make money from: it looks like you don't do any of those, so you don't need to file for taxes. There is another exemption that you don't have to file if it is likely that you would owe less than a hundred pounds taxes, which would also probably apply to you. There are many thousands of clubs and societies in the UK that don't need to register for tax purposes, so you are far from alone. It is probably worth creating an actual club (\"\"Captain Insanity Server Club\"\") and keeping records of donations and expenses for the server. There isn't any need to legally incorporate or anything like that, though you might try having a separate bank account for it if you can get a free one, so that if the tax authorities ever audit you personally you can show them that the donations you received weren't income to you.\"",
"title": ""
},
{
"docid": "d42f5d1ef5a99e3b66adbc4aa9f60cc4",
"text": "If this happens, the solution isn't to force people to use sidewalks. It's to take the approach of London and make crossing at any point legal, and have it be the drivers responsibility to not hit people. Laws in many cases are better when they reflect reality (and thus ease enforcement) rather than trying to shoehorn something impractical into place.",
"title": ""
},
{
"docid": "c07d66125a8b85e3e017fff3f8e0dbac",
"text": "The individual drivers are the ones who should be making the decision as to whether Uber's treatment of them is acceptable. The notion that you, me, London's mayor, or any other third party should make that decision on their behalf is paternalistic and denies them their [agency](https://en.wikipedia.org/wiki/Agency_%28sociology%29). Edit: hyperlink formatting.",
"title": ""
},
{
"docid": "24dc4877cb805249a4eae606cff85213",
"text": "\"Yes. You do have to pay taxes in the UK as well but it depends on how much you have already been taxed in the US. http://taxaid.org.uk/situations/migrant-workernew-to-the-uk/income-from-abroad-arising-basis-vs-remittance-basis Say, you have to pay 20% tax in the UK for your earnings here. You ARE required to pay the same percentage on your foreign income as well. Now, if your \"\"home\"\" country already taxed you at 10% (for the sake of example), then you only need to pay the \"\"remaining\"\" 10% in the UK. However, the tax law in the UK does allow you to choose between \"\"arising\"\" basis and \"\"remittance\"\" basis on your income from the country you are domiciled in. What I have explained above is based on when income \"\"arises.\"\" But the laws are complicated, and you are almost always better off by paying it on \"\"arising\"\" basis.\"",
"title": ""
},
{
"docid": "f9404a75568295aca3462b2ee59e1352",
"text": "Who runs the courts? Would you have multiple competing courts? Courts usually work on the principle that one party doesn't want to be there; how would that work in a nationless world? What happens when a private enforcement agency gets a monopoly and then wants your stuff? States work because we have representation, political recourse if there's abuse of the system (in theory). A 'private enforcement agency' sounds like a fast track to a protection racket. And also i'd argue that response by the state 100% is what is stopping 99% of people, look at the London 'riots' a few years ago - bunch of kids realized they could get away with it if they all went and looted a place at once, repeatedly happened until the ringleaders got caught or turned in to the authorities. What right would a private organization have to restrict my freedom in a stateless society? Where does it get the constitutional power? Everything would just devolve into constant warfare between groups - until a single group outperformed the others of course and boom you've got a government again.",
"title": ""
}
] |
fiqa
|
73c567678926419a9e6c6e293de3b455
|
What determines the price of fixed income ETFs?
|
[
{
"docid": "b0d570729d6309ccf9878653379d3654",
"text": "The literal answer to your question 'what determines the price of an ETF' is 'the market'; it is whatever price a buyer is willing to pay and a seller is willing to accept. But if the market price of an ETF share deviates significantly from its NAV, the per-share market value of the securities in its portfolio, then an Authorized Participant can make an arbitrage profit by a transaction (creation or redemption) that pushes the market price toward NAV. Thus as long as the markets are operating and the APs don't vanish in a puff of smoke we can expect price will track NAV. That reduces your question to: why does NAV = market value of the holdings underlying a bond ETF share decrease when the market interest rate rises? Let's consider an example. I'll use US Treasuries because they have very active markets, are treated as risk-free (although that can be debated), and excluding special cases like TIPS and strips are almost perfectly fungible. And I use round numbers for convenience. Let's assume the current market interest rate is 2% and 'Spindoctor 10-year Treasury Fund' opens for business with $100m invested (via APs) in 10-year T-notes with 2% coupon at par and 1m shares issued that are worth $100 each. Now assume the interest rate goes up to 3% (this is an example NOT A PREDICTION); no one wants to pay par for a 2% bond when they can get 3% elsewhere, so its value goes down to about 0.9 of par (not exactly due to the way the arithmetic works but close enough) and Spindoctor shares similarly slide to $90. At this price an investor gets slightly over 2% (coupon*face/basis) plus approximately 1% amortized capital gain (slightly less due to time value) per year so it's competitive with a 3% coupon at par. As you say new bonds are available that pay 3%. But our fund doesn't hold them; we hold old bonds with a face value of $100m but a market value of only $90m. If we sell those bonds now and buy 3% bonds to (try to) replace them, we only get $90m par value of 3% bonds, so now our fund is paying a competitive 3% but NAV is still only $90. At the other extreme, say we hold the 2% bonds to maturity, paying out only 2% interest but letting our NAV increase as the remaining term (duration) and thus discount of the bonds decreases -- assuming the market interest rate doesn't change again, which for 10 years is probably unrealistic (ignoring 2009-2016!). At the end of 10 years the 2% bonds are redeemed at par and our NAV is back to $100 -- but from the investor's point of view they've forgone $10 in interest they could have received from an alternative investment over those 10 years, which is effectively an additional investment, so the original share price of $90 was correct.",
"title": ""
}
] |
[
{
"docid": "141996ecd5b6a61868abb87b8a3326de",
"text": "In my experiences most hedge funds won't have a benchmark in their mandate and are evaluated based upon absolute returns. Their benchmarks are generally cash + x basis points. So, no attribution and no IR. No experience at all with CTA's though, so not sure how things are there.",
"title": ""
},
{
"docid": "9a6e37f08518df040676b360a9c70ad7",
"text": "You bring up good points, but the balance of power works both ways. Investment Banks need ratings in order to push through with fixed income issuance. If rating agencies refuse to rate a product (and it has happened, I know we are shocked!), investors will be far less likely to participate and will demand substantially higher rates of return.",
"title": ""
},
{
"docid": "be1b32a07b443f30339d679ae66b7750",
"text": "There are the EDHEC-risk indices based on similar hedge fund types but even then an IR would give you performance relative to the competition, which is not useful for most hf's as investors don't say I want to buy a global macro fund, vs a stat arb fund, investors say I want to pay a guy to give me more money! Most investors don't care how the OTHER funds did or where the market went, they want that NAV to go always up , which is why a modified sharpe is probably better.",
"title": ""
},
{
"docid": "9a2fb8987853dd7bb42da0a18d64dd5a",
"text": "The ETF price quoted on the stock exchange is in principle not referenced to NAV. The fund administrator will calculate and publish the NAV net of all fees, but the ETF price you see is determined by the market just like for any other security. Having said that, the market will not normally deviate greatly from the NAV of the fund, so you can safely assume that ETF quoted price is net of relevant fees.",
"title": ""
},
{
"docid": "446c12b0d6ce872ec6a585017050af10",
"text": "\"Does the bolded sentence apply for ETFs and ETF companies? No, the value of an ETF is determined by an exchange and thus the value of the share is whatever the trading price is. Thus, the price of an ETF may go up or down just like other securities. Money market funds can be a bit different as the mutual fund company will typically step in to avoid \"\"Breaking the Buck\"\" that could happen as a failure for that kind of fund. To wit, must ETF companies invest a dollar in the ETF for every dollar that an investor deposited in this aforesaid ETF? No, because an ETF is traded as shares on the market, unless you are using the creation/redemption mechanism for the ETF, you are buying and selling shares like most retail investors I'd suspect. If you are using the creation/redemption system then there are baskets of other securities that are being swapped either for shares in the ETF or from shares in the ETF.\"",
"title": ""
},
{
"docid": "49773cdbed7cb67df748f6a0a64f017b",
"text": "What is the question? A total return fund seeks to just maximize total returns, as opposed to benchmark tracking, low vol, high vol, sectoral, whatever, this is just a name you gotta read the long prospectus to see how they are supposed to go about doing it. Fixed income investing DOES NOT rely on on interest rates, it relies on the movements of interest rates (this is a key difference). When economies are doing poorly, there is a flight to quality (everyone is scared and lends only to governments) driving government interest rate downs and increasing the spread between government rates and corporates. My usual advice is There is never a good time to buy a mutual fund :P, better to buy an ETF or a portfolio of ETF's that correspond to your views. You need to sit down and ask yourself what type of risk tolerances you're willing to take as mutual funds by construction deliver negative alpha due to fees.",
"title": ""
},
{
"docid": "daeb68910f70be984d51f671d0e67cae",
"text": "The Creation/Redemption mechanism is how shares of an ETF are created or redeemed as needed and thus is where there can be differences in what the value of the holdings can be versus the trading price. If the ETF is thinly traded, then the difference could be big as more volume would be where the mechanism could kick in as generally there are blocks required so the mechanism usually created or redeemed in lots of 50,000 shares I believe. From the link where AP=Authorized Participant: With ETFs, APs do most of the buying and selling. When APs sense demand for additional shares of an ETF—which manifests itself when the ETF share price trades at a premium to its NAV—they go into the market and create new shares. When the APs sense demand from investors looking to redeem—which manifests itself when the ETF share price trades at a discount—they process redemptions. So, suppose the NAV of the ETF is $20/share and the trading price is $30/share. The AP can buy the underlying securities for $20/share in a bulk order that equates to 50,000 shares of the ETF and exchange the underlying shares for new shares in the ETF. Then the AP can turn around and sell those new ETF shares for $30/share and pocket the gain. If you switch the prices around, the AP would then take the ETF shares and exchange them for the underlying securities in the same way and make a profit on the difference. SEC also notes this same process.",
"title": ""
},
{
"docid": "85f152040d50f0973d1afa6b3af5da2d",
"text": "Price, whether related to a stock or ETF, has little to do with anything. The fund or company has a total value and the value is distributed among the number of units or shares. Vanguard's S&P ETF has a unit price of $196 and Schwab's S&P mutual fund has a unit price of $35, it's essentially just a matter of the fund's total assets divided by number of units outstanding. Vanguard's VOO has assets of about $250 billion and Schwab's SWPPX has assets of about $25 billion. Additionally, Apple has a share price of $100, Google has a share price of $800, that doesn't mean Google is more valuable than Apple. Apple's market capitalization is about $630 billion while Google's is about $560 billion. Or on the extreme a single share of Berkshire's Class A stock is $216,000, and Berkshire's market cap is just $360 billion. It's all just a matter of value divided by shares/units.",
"title": ""
},
{
"docid": "fdf6d44b9b633d26c622da16169598a4",
"text": "They can rebalance and often times at a random manager's discretion. ETF's are just funds, and funds all have their own conditions, read the prospectus, thats the only source of truth.",
"title": ""
},
{
"docid": "ec247f0c4dd08895e0d66bc032d9b8b1",
"text": "The key two things to consider when looking at similar/identical ETFs is the typical (or 'indicative') spread, and the trading volume and size of the ETF. Just like regular stocks, thinly traded ETF's often have quite large spreads between buy and sell: in the 1.5-2%+ range in some cases. This is a huge drain if you make a lot of transactions and can easily be a much larger concern than a relatively trivial difference in ongoing charges depending on your exact expected trading frequency. Poor spreads are also generally related to a lack of liquidity, and illiquid assets are usually the first to become heavily disconnected from the underlying in cases where the authorized participants (APs) face issues. In general with stock ETFs that trade very liquid markets this has historically not been much of an issue, as the creation/redemption mechanism on these types of assets is pretty robust: it's consequences on typical spread is much more important for the average retail investor. On point #3, no, this would create an arbitrage which an authorized participant would quickly take advantage of. Worth reading up about the creation and redemption mechanism (here is a good place to start) to understand the exact way this happens in ETFs as it's very key to how they work.",
"title": ""
},
{
"docid": "e54c4372e2aa2d8e207a2711cf44c3e6",
"text": "I stumbled on the same discrepancy, and was puzzled by a significant difference between the two prices on ETR and FRA. For example, today is Sunday, and google shows the following closing prices for DAI. FRA:DAI: ETR:DAI: So it looks like there are indeed two different exchanges trading at different prices. Now, the important value here, is the last column (Volume). According to Wikipedia, the trading on Frankfort Stock Exchange is done today exclusively via Xetra platform, thus the volume on ETR:DAI is much more important than on FRA:DAI. Obviously, they Wikipedia is not 100% accurate, i.e. not all trading is done electronically via Xetra. According to their web-page, Frankfort exchange has a Specialist Trading on Frankfurt Floor service which has slightly different trading hours. I suspect what Google and Yahoo show as Frankfort exchange is this manual trading via a Specialist (opposed to Xetra electronic trading). To answer your question, the stock you're having is exactly the same, meaning if you bought an ETR:BMW you can still sell it on FRA (by calling a FRA Trading Floor Specialist which will probably cost you a fee). On the other hand, for the portfolio valuation and performance assessments you should only use ETR:BMW prices, because it is way more liquid, and thus better reflect the current market valuation.",
"title": ""
},
{
"docid": "d70b1f6ea23c653659e2ab13df81f468",
"text": "\"Because ETFs, unlike most other pooled investments, can be easily shorted, it is possible for institutional investors to take an arbitrage position that is long the underlying securities and short the ETF. The result is that in a well functioning market (where ETF prices are what they should be) these institutional investors would earn a risk-free profit equal to the fee amount. How much is this amount, though? ETFs exist in a very competitive market. Not only do they compete with each other, but with index and mutual funds and with the possibility of constructing one's own portfolio of the underlying. ETF investors are very cost-conscious. As a result, ETF fees just barely cover their costs. Typically, ETF providers do not even do their own trading. They issue new shares only in exchange for a bundle of the underlying securities, so they have almost no costs. In order for an institutional investor to make money with the arbitrage you describe, they would need to be able to carry it out for less than the fees earned by the ETF. Unlike the ETF provider, these investors face borrowing and other shorting costs and limitations. As a result it is not profitable for them to attempt this. Note that even if they had no costs, their maximum upside would be a few basis points per year. Lots of low-risk investments do better than that. I'd also like to address your question about what would happen if there was an ETF with exorbitant fees. Two things about your suggested outcome are incorrect. If short sellers bid the price down significantly, then the shares would be cheap relative to their stream of future dividends and investors would again buy them. In a well-functioning market, you can't bid the price of something that clearly is backed by valuable underlying assets down to near zero, as you suggest in your question. Notice that there are limitations to short selling. The more shares are short-sold, the more difficult it is to locate share to borrow for this purpose. At first brokers start charging additional fees. As borrowable shares become harder to find, they require that you obtain a \"\"locate,\"\" which takes time and costs money. Finally they will not allow you to short at all. Unlimited short selling is not possible. If there was an ETF that charged exorbitant fees, it would fail, but not because of short sellers. There is an even easier arbitrage strategy: Investors would buy the shares of the ETF (which would be cheaper than the value of the underlying because of the fees) and trade them back to the ETF provider in exchange for shares of the underlying. This would drain down the underlying asset pool until it was empty. In fact, it is this mechanism (the ability to trade ETF shares for shares of the underlying and vice versa) that keeps ETF prices fair (within a small tolerance) relative to the underlying indices.\"",
"title": ""
},
{
"docid": "a2e0d7a672ee7c3c4b620d4ded62c195",
"text": "leveraged etf's are killer to hold because they seek to return some multiple of the DAILY price movement in an index. so twm seeks to return 2x the daily move in the russell 2000 Let's trace this out assuming (just to make it easy) large daily moves, and that you start with $1000 and the russell 2000 starts at 100. start of first day rusell 2000 == 100 you have $1000 end of first day (up 10% nice!) rusell 2000 == 110 you have $1200 end of second day (~9.1% down) russell 20000 == 100 you have $981.60 so the russell 2000 can move nowhere and you have lost money! This doesn't apply to all etf's just leveraged etf's. You would be better buying more of a straight inverse etf (RWM) and holding that for a longer time if you wanted to hedge.",
"title": ""
},
{
"docid": "65f91e745690772d877a58ac6472cded",
"text": "You set it based on liquidity management. Cash drag is one of the reasons actively managed funds underperform. The longer your settlement date, the less cash you have to hold because you can take three days to liquidate positions to redeem. So it's a convenience vs performance question.",
"title": ""
},
{
"docid": "0400607794f04d15bf9fdfe8a22e00b3",
"text": "\"I thought the other answers had some good aspect but also some things that might not be completely correct, so I'll take a shot. As noted by others, there are three different types of entities in your question: The ETF SPY, the index SPX, and options contracts. First, let's deal with the options contracts. You can buy options on the ETF SPY or marked to the index SPX. Either way, options are about the price of the ETF / index at some future date, so the local min and max of the \"\"underlying\"\" symbol generally will not coincide with the min and max of the options. Of course, the closer the expiration date on the option, the more closely the option price tracks its underlying directly. Beyond the difference in how they are priced, the options market has different liquidity, and so it may not be able to track quick moves in the underlying. (Although there's a reasonably robust market for option on SPY and SPX specifically.) Second, let's ask what forces really make SPY and SPX move together as much as they do. It's one thing to say \"\"SPY is tied to SPX,\"\" but how? There are several answers to this, but I'll argue that the most important factor is that there's a notion of \"\"authorized participants\"\" who are players in the market who can \"\"create\"\" shares of SPY at will. They do this by accumulating stock in the constituent companies and turning them into the market maker. There's also the corresponding notion of \"\"redemption\"\" by which an authorized participant will turn in a share of SPY to get stock in the constituent companies. (See http://www.spdrsmobile.com/content/how-etfs-are-created-and-redeemed and http://www.etf.com/etf-education-center/7540-what-is-the-etf-creationredemption-mechanism.html) Meanwhile, SPX is just computed from the prices of the constituent companies, so it's got no market forces directly on it. It just reflects what the prices of the companies in the index are doing. (Of course those companies are subject to market forces.) Key point: Creation / redemption is the real driver for keeping the price aligned. If it gets too far out of line, then it creates an arbitrage opportunity for an authorized participant. If the price of SPY gets \"\"too high\"\" compared to SPX (and therefore the constituent stocks), an authorized participant can simultaneously sell short SPY shares and buy the constituent companies' stocks. They can then use the redemption process to close their position at no risk. And vice versa if SPY gets \"\"too low.\"\" Now that we understand why they move together, why don't they move together perfectly. To some extent information about fees, slight differences in composition between SPY and SPX over time, etc. do play. The bigger reasons are probably that (a) there are not a lot of authorized participants, (b) there are a relatively large number of companies represented in SPY, so there's some actual cost and risk involved in trying to quickly buy/sell the full set to capture the theoretical arbitrage that I described, and (c) redemption / creation units only come in pretty big blocks, which complicates the issues under point b. You asked about dividends, so let me comment briefly on that too. The dividend on SPY is (more or less) passing on the dividends from the constituent companies. (I think - not completely sure - that the market maker deducts its fees from this cash, so it's not a direct pass through.) But each company pays on its own schedule and SPY does not make a payment every time, so it's holding a corresponding amount of cash between its dividend payments. This is factored into the price through the creation / redemption process. I don't know how big of a factor it is though.\"",
"title": ""
}
] |
fiqa
|
f9a7b1751420eff9036c5933689803b1
|
How to calculate how much house I can afford?
|
[
{
"docid": "76cbac1d8c3e18b9fb441b9ae4daec38",
"text": "There is no simple way to calculate how much house any given person can afford. In the answer keshlam gave, several handy rules of thumb are mentioned that are used as common screening devices to reject loans, but in every case further review is required to approve any loan. The 28% rule is the gold standard for estimating how much you can afford, but it is only an estimate; all the details (that you don't want to provide) are required to give you anything better than an estimate. In the spirit of JoeTaxpayer's answer I'm going to give you a number that you can multiply your gross income by for a good estimate, but my estimate is based on a 15 year mortgage. Assuming a 15 year mortgage with a 3% interest rate, it will cost $690.58 per $100,000 borrowed. So to take those numbers and wrap it up in a bow, you can multiply your income by 3.38 and have the amount of mortgage that most people can afford. If you have a down-payment saved add it to the number above for the total price of the home you can buy after closing costs are added in. Property taxes and insurance rates vary widely, and those are often rolled into the mortgage payment to be paid from an escrow account, banks may consider all of these factors in their calculators but they may not be transparent. If you can't afford to pay it in 15 years, you really can't afford it. Compare the same $100k loan: In 30 years at 4% you pay about $477/month with a total of about $72k in interest over the life of the loan. In 15 years at 3% you pay about $691/month but the total interest is only $24k, and you are out of the loan in half of the time. The equity earned in the first 5 years is also signficantly different with 28.5% for the 15 year loan vs. 9.5% on the 30 year loan. Without straying too far into general economics, 15 year loans would also have averted the mortgage crisis of 2008, because more people would have had enough equity that they wouldn't have walked out on their homes when there was a price correction.",
"title": ""
},
{
"docid": "e43edb28f19cc9358a2f166661299374",
"text": "$100K of mortgage debt at 4%, 30 years will result in a $477/mo mortgage. It would take about $23K in income to have 25% of the monthly income cover the mortgage. This means, that with no other large debts, a bank will lend you about 4X your income. If, instead of 25%, we decided that having 20% of income go to the mortgage, the ratio drops to just over 3X. In the end, it comes down to keshlam's advice regarding a budget. I think the question can't be answered as asked, given the fact that you offer no numbers. For the average person, credit card debt, student loans, and cars payments add up to enough to chip away at the amount the bank will lend you. Since (per one of the linked questions) the maximum debt service should be 36%, you start with that and subtract all current payments. If this doesn't suffice, let us know what, exactly you're looking for .",
"title": ""
},
{
"docid": "a5711d12602cfcbaf9d52c641416cb4d",
"text": "\"Fundamentals: Then remember that you want to put 20% or more down in cash, to avoid PMI, and recalculate with thatmajor chunk taken out of your savings. Many banks offer calculators on their websites that can help you run these numbers and figure out how much house a given mortgage can pay for. Remember that the old advice that you should buy the largest house you can afford, or the newer advice about \"\"starter homes\"\", are both questionable in the current market. =========================== Added: If you're willing to settle for a rule-of-thumb first-approximation ballpark estimate: Maximum mortgage payment: Rule of 28. Your monthly mortgage payment should not exceed 28 percent of your gross monthly income (your income before taxes are taken out). Maximum housing cost: Rule of 32. Your total housing payments (including the mortgage, homeowner’s insurance, and private mortgage insurance [PMI], association fees, and property taxes) should not exceed 32 percent of your gross monthly income. Maximum Total Debt Service: Rule of 40. Your total debt payments, including your housing payment, your auto loan or student loan payments, and minimum credit card payments should not exceed 40 percent of your gross monthly income. As I said, many banks offer web-based tools that will run these numbers for you. These are rules that the lending industy uses for a quick initial screen of an application. They do not guarantee that you in particular can afford that large a loan, just that it isn't so bad that they won't even look at it. Note that this is all in terms of mortgage paymennts, which means it's also affected by what interest rate you can get, how long a mortgage you're willing to take, and how much you can afford to pull out of your savings. Also, as noted, if you can't put 20% down from savings the bank will hit you for PMI. Standard reminder: Unless you explect to live in the same place for five years or more, buying a house is questionable financially. There is nothing wrong with renting; depending on local housing stock it may be cheaper. Houses come with ongoung costs and hassles rental -- even renting a house -- doesn't. Buy a house only when it makes sense both financially and in terms of what you actually need to make your life pleasant. Do not buy a house only because you think it's an investment; real estate can be a profitable business, but thinking of a house as simultaneously both your home and an investment is a good way to get yourself into trouble.\"",
"title": ""
}
] |
[
{
"docid": "60d54be3b63010282dc4e0772eaea452",
"text": "I would ignore the bank completely when they use gross income. Decide, based upon your current living situation, what your MAX limit on a monthly payment is. Then from that determine the size and cost of the house you can buy. My husband and I decided on a $2000 monthly payment max, but also agreed $1500 was more reasonable. When using those numbers in the calculators it is way less than when using gross income. When we used our gross pay the calculators all said we could afford double what we were looking for. Since they don't know what our take home pay is (after all the deductions including 401k, healthcare, etc), the estimates on gross income are way higher than what we can comfortably afford. Set a budget based on your current living situation and what you want your future to look like. Do you want to scrimp and coupon clip or would you rather live comfortably in a smaller home? Do the online calculators based on take home pay and on gross pay to get a sense of the range you could be looking at.",
"title": ""
},
{
"docid": "608664a3ae76a4af65782c61dae82c6a",
"text": "\"It's just a rule of thumb, and so it's done from gross to make it easy. If you make $3300 a month, and spent $1000 a month on rent, you're at the limit of what you can afford. It's not like if it's 30.0001% you're screwed but if it's 29.999% everything's fine. Some rents won't include things (wifi, cable, utilities) that others do. Some locations will require you to spend more on transportation. So the real \"\"ok\"\" range is quite wide. But if you're at 60% of gross on rent, you literally cannot make that work because after deductions, you won't have any money for food. If you're at 10% of gross on rent, you probably have a lot more money left over than most people.\"",
"title": ""
},
{
"docid": "64576ad5c580bb9cc5bb4692aa83267e",
"text": "If your goal is to have a 400K net worth, in 11 years, and you invest 2144 the entire time you will need a rate of return of at least 6.4%. This is assuming that you have zero net worth now and it does not consider your house. Obviously the house will be worth some amount, and the mortgage balance will go down. However, it cannot really be calculated with the details provided. It seems like your risk tolerance is low. You may want to head over to Bogleheads.org and look into their asset allocation model. They typically site about a 7% compounded growth rate which will more than meet your goals. They probably have information for European investors that map to the funds that we use here in the US. Keep in mind, during this time you will likely receive raises, if you start out assuming you will hit the 400-500k mark, and stick to the plan, you will likely blow that goal away. Also keep in mind the three legs to wealth building: giving some, spending some, and investing some. Your question is addressing the investing portion make sure you are also enjoying your money by spending some on yourself; and, others benefit from your prosperity. Giving to causes you deem worthy is a key component to wealth building that is often overlooked by those interested in investing.",
"title": ""
},
{
"docid": "1b7c1624d7d04d8c11b7637127205547",
"text": "\"When your dream car is not just 200 times your disposable income but in fact 200 times your whole monthly salary, then there is no way for you to afford it right now. Any attempt to finance through a loan would put you into a debt trap you won't ever dig yourself out. And if there are any car dealerships in your country which claim otherwise, run away fast. Jon Oliver from Last Week tonight made a video about business practices of car dealerships in the United States which sell cars on loans to people who can't afford them a while ago. As usual: When a deal seems too good to be true, it generally isn't true at all. After a few months, the victims customers usually end up with no car but lots of outstanding debt they pay off for years. So how do you tell if you can afford a car or not? A new car usually lives for about 10-20 years. So when you want to calculate the monthly cost of owning a new car, divide the price by 120. But that's just the price for buying the vehicle, not for actually driving it. Cars cost additional money each month for gas, repairs, insurance, taxes etc. (these costs depend a lot on your usage pattern and location, so I can not provide you with any numbers for that). If you have less disposable income per month (as in \"\"money you currently have left at the end of each month\"\") than monthly cost of purchase plus expected monthly running costs, you can not afford the car. Possible alternatives:\"",
"title": ""
},
{
"docid": "415e726f50391132ed4c01460adb72a3",
"text": "\"The formula you are looking for is pretty complicated. It's given here: http://itl.nist.gov/div898/handbook/eda/section3/eda3661.htm You might prefer to let somebody else do the grunt work for you. This page will calculate the probability for you: http://stattrek.com/online-calculator/normal.aspx. In your case, you'd enter mean=.114, standard deviation=.132, and \"\"standard score\"\"= ... oh, you didn't say what you're paying on your debt. Let's say it's 6%, i.e. .06. Note that this page will give you the probability that the actual number will be less than or equal to the \"\"standard score\"\". Enter all that and click the magic button and the probability that the investment will produce less than 6% is ... .34124, or 34%. The handy rule of thumb is that the probability is about 68% that the actual number will be within 1 standard deviation of the mean, 95% that it will be within 2 standard deviations, and 99.7% that it will be within 3. Which isn't exactly what you want because you don't want \"\"within\"\" but \"\"less than\"\". But you could get that by just adding half the difference from 100% for each of the above, i.e. instead of 68-95-99.7 it would be 84-98-99.9. Oh, I missed that in a follow-up comment you say you are paying 4% on a mortgage which you are adjusting to 3% because of tax implications. Probability based on mean and SD you gave of getting less than 3% is 26%. I didn't read the article you cite. I assume the standard deviation given is for the rate of return for one year. If you stretch that over many years, the SD goes down, as many factors tend to even out. So while the probability that money in a given, say, mutual fund will grow by less than 3% in one year is fairly high -- the 25 - 35% we're talking here sounds plausible to me -- the probability that it will grow by an average of less than 3% over a period of 10 or 15 or 20 years is much less. Further Thought There is, of course, no provably-true formula for what makes a reasonable risk. Suppose I offered you an investment that had a 99% chance of showing a $5,000 profit and a 1% chance of a $495,000 loss. Would you take it? I wouldn't. Even though the chance of a loss is small, if it happened, I'd lose everything I have. Is it worth that risk for the modest potential profit? I'd say no. Of course to someone who has a billion dollars, this might be a very reasonable risk. If it fails, oh well, that could really cut in to what he can spend on lunch tomorrow.\"",
"title": ""
},
{
"docid": "fae978c812a104583716ba6b0d6ed86d",
"text": "If you can't afford it don't buy it, the next perfect house is just around the corner. The more time you spend researching and looking at houses, the increased chance you will find the perfect house you can afford. Also, here in Australia, we (the banks as well) factor in an interest rate rise of 2% above current rates to see if repayments can still be afforded at this increased rate.",
"title": ""
},
{
"docid": "19cee018f7319046d2a12068ecb47663",
"text": "There is a fundamental flaw in this statement: For example, a home bought cash $100,000 would have to be sold $242,726.247 30 years later just to make up with inflation, and that would be a 0% return. You forgot to deduct rent from your monthly carrying costs. That changes the calculations significantly. Your calculations are valid ONLY if you were to buy a house, and let it sit empty, which is unlikely. Either you are going to live in it, and save yourself $1000 a month in rent, or, you are going to rent it out to someone, and earn an income of $1000 a month. Either way, you're up $1000 a month and this needs to be included.",
"title": ""
},
{
"docid": "f95f6b5332818507075b52f5b406e60d",
"text": "\"I'd encourage you to use rules of thumb and back-of-the-envelope. Here are some ideas that could be useful: The problem with any kind of detailed calculations is the number of unknowns: There are some really complex calculators out there, for example see ESPlanner (http://www.esplanner.com/) (caution: horrible user interface, but seemed to work), that will include all kinds of factors and run monte carlo and the whole thing. But in my opinion, it's just as good or better to say save at least 15% of income until you have 25x what you spend, or some other such rule of thumb. Here's my little blog post on savings and investing fwiw: http://blog.ometer.com/2010/11/10/take-risks-in-life-for-savings-choose-a-balanced-fund/ Another note, there's sort of an \"\"ideology of how to live\"\" embedded in any retirement recommendation, and you might want to take the time to reflect on that and consciously choose. A book on this topic is Your Money or Your Life by Robin & Dominguez, http://www.amazon.com/Your-Money-Life-Transforming-Relationship/dp/0143115766 which is a sort of radical \"\"you should save everything possible to achieve financial independence as early as possible\"\" argument. I didn't go for their plan, but I think it's thought-provoking. A newer book that may be more appealing is called The Number and it's about your question exactly. It's more designed to get you thinking, while Your Money or Your Life has a particular answer in mind. Both have some math and some rules of thumb, though they aren't focused on that. A kind of general takeaway from these books might be: first think about your expenses. What are you trying to accomplish in life, how would you like to spend your time? And then ask how much money you absolutely need to accomplish that, and focus on accomplishing your goals, spending your time (as much as you can) on what you'd like to spend it on. I'm contrasting this with a generic recommendation to save enough to spend 80% of your income in retirement, which embeds this idea that you should spend as much as possible every year, before and after you retire. Lots of people do like that idea, but it's not a law of the universe or something, it's just one popular approach.\"",
"title": ""
},
{
"docid": "d2fbc5dc05a3d6d3b2e81994ca5c3e12",
"text": "I believe the following formula provides a reasonable approximation. You need to fill in the following variables: The average annual return you need on investing the 15% = (((MP5 - MP20) * 12) + (.0326 * .95 * PP / Y)) / (PP *.15) Example assuming an interest rate of 4% on a 100K home: If you invest the $15K you'll break even if you make a 9.86% return per year on average. Here's the breakdown per year using these example numbers: Note this does not consider taxes.",
"title": ""
},
{
"docid": "a343aab16364936d534a6a452b22d73d",
"text": "\"To buy a house, you need: At least 2 years tax returns (shows a steady income history; even if you're making 50k right now, you probably weren't when you were 16, and you might not be when you're 20; as they say, easy come, easy go). A 20% down payment. These days, that easily means writing a $50k check. You make $50k a year, great, but try this math: how long will it take you to save 100% of your annual salary? If you're saving 15% of your income (which puts you above many Americans), it'll still take 7 years. So no house for you for 7 years. While your attitude of \"\"I've got the money, so why not\"\" is certainly acceptable, the reality is that you don't have a lot of financial experience yet. There could easily be lean times ahead when you aren't making much (many people since 2008 have gone 18 months or more without any income at all). Save as much money as possible. Once you get $10k in a liquid savings account, speak to a CPA or an investment advisor at your local bank to set up tax deferred accounts such as an IRA. And don't wait to start investing; starting now versus waiting until you're 25 could mean a 100% difference in your net worth at any given time (that's not just a random number, either; an additional 7 years compounding time could literally mean another doubling of your worth).\"",
"title": ""
},
{
"docid": "a8136e0b36283542987257724559274e",
"text": "\"The standard interpretation of \"\"can I afford to retire\"\" is \"\"can I live on just the income from my savings, never touching the principal.\"\" To estimate that, you need to make reasonable guesses about the return you expect, the rate of inflation, your real costs -- remember to allow for medical emergencies, major house repairs, and the like when determining you average needs, not to mention taxes if this isn't all tax-sheltered! -- and then build in a safety factor. You said liquid assets, and that's correct; you don't want to be forced into a reverse mortgage by anything short of a disaster. An old rule of thumb was that -- properly invested -- you could expect about 4% real return after subtracting inflation. That may or may not still be correct, but it makes an easy starting point. If we take your number of $50k/year (today's dollars) and assume you've included all the tax and contingency amounts, that means your nest egg needs to be 50k/.04, or $1,250,000. (I'm figuring I need at least $1.8M liquid assets to retire.) The $1.5M you gave would, under this set of assumptions, allow drawing up to $60k/year, which gives you some hope that your holdings would mot just maintain themselves but grow, giving you additional buffer against emergencies later. Having said that: some folks have suggested that, given what the market is currently doing, it might be wiser to assume smaller average returns. Or you may make different assumptions about inflation, or want a larger emergency buffer. That's all judgement calls, based on your best guesses about the economy in general and your investments in particular. A good financial advisor (not a broker) will have access to better tools for exploring this, using techniques like monte-carlo simulation to try to estimate both best and worst cases, and can thus give you a somewhat more reliable answer than this rule-of-thumb approach. But that's still probabilities, not promises. Another way to test it: Find out how much an insurance company would want as the price of an open-ended inflation-adjusted $50k-a-year annuity. Making these estimates is their business; if they can't make a good guess, nobody can. Admittedly they're also factoring the odds of your dying early into the mix, but on the other hand they're also planning on making a profit from the deal, so their number might be a reasonable one for \"\"self-insuring\"\" too. Or might not. Or you might decide that it's worth buying an annuity for part or all of this, paying them to absorb the risk. In the end, \"\"ya pays yer money and takes yer cherce.\"\"\"",
"title": ""
},
{
"docid": "b906cdacb29255d729eb9ce051426cc4",
"text": "\"Consider property taxes (school, municipal, county, etc.) summing to 10% of the property value. So each year, another .02N is removed. Assume the property value rises with inflation. Allow for a 5% after inflation return on a 70/30 stock bond mix for N. After inflation return. Let's assume a 20% rate. And let's bump the .05N after inflation to .07N before inflation. Inflation is still taxable. Result Drop in value of investment funds due to purchase. Return after inflation. After-inflation return minus property taxes. Taxes are on the return including inflation, so we'll assume .06N and a 20% rate (may be lower than that, but better safe than sorry). Amount left. If no property, you would have .036N to live on after taxes. But with the property, that drops to .008N. Given the constraints of the problem, .008N could be anywhere from $8k to $80k. So if we ignore housing, can you live on $8k a year? If so, then no problem. If not, then you need to constrain N more or make do with less house. On the bright side, you don't have to pay rent out of the .008N. You still need housing out of the .036N without the house. These formulas should be considered examples. I don't know how much your property taxes might be. Nor do I know how much you'll pay in taxes. Heck, I don't know that you'll average a 5% return after inflation. You may have to put some of the money into cash equivalents with negligible return. But this should allow you to research more what your situation really is. If we set returns to 3.5% after inflation and 2.4% after inflation and taxes, that changes the numbers slightly but importantly. The \"\"no house\"\" number becomes .024N. The \"\"with house\"\" number becomes So that's $24,000 (which needs to include rent) versus -$800 (no rent needed). There is not enough money in that plan to have any remainder to live on in the \"\"with house\"\" option. Given the constraints for N and these assumptions about returns, you would be $800 to $8000 short every year. This continues to assume that property taxes are 10% of the property value annually. Lower property taxes would of course make this better. Higher property taxes would be even less feasible. When comparing to people with homes, remember the option of selling the home. If you sell your .2N home for .2N and buy a .08N condo instead, that's not just .12N more that is invested. You'll also have less tied up with property taxes. It's a lot easier to live on $20k than $8k. Or do a reverse mortgage where the lender pays the property taxes. You'll get some more savings up front, have a place to live while you're alive, and save money annually. There are options with a house that you don't have without one.\"",
"title": ""
},
{
"docid": "fc667cc46903d9bf2c8fd48ffd853d9e",
"text": "\"I'll start by focussing on the numbers. I highly recommend you get comfortable with spreadsheets to do these calculations on your own. I assume a $200K loan, the mortgage for a $250K house. Scale this up or down as appropriate. For the rate, I used the current US average for the 30 and 15 year fixed loans. You can see 2 things. First, even with that lower rate to go 15 years, the payment required is 51% higher than with the 30. I'll get back to that. Second, to pay the 30 at 15 years, you'd need an extra $73. Because now you are paying at a 15 year pace, but with a 30 year rate. This is $876/yr to keep that flexibility. These are the numbers. There are 2 camps in viewing the longer term debt. There are those who view debt as evil, the $900/mo payment would keep them up at night until it's gone, and they would prefer to have zero debt regardless of the lifestyle choices they'd need to make or the alternative uses of that money. To them, it's not your house as long as you have a mortgage. (But they're ok with the local tax assessor having a statutory lien and his hand out every quarter.) The flip side are those who will say this is the cheapest money you'll ever see, and you should have as large a mortgage as you can, for as long as you can. Treat the interest like rent, and invest your money. My own view is more in the middle. Look at your situation. I'd prioritize In my opinion, it makes little sense to focus on the mortgage unless and until the first 5 items above are in place. The extra $459 to go to 15? If it's not stealing from those other items or making your cash flow tight, go for it. Keep one subtle point in mind, risk is like matter and energy, it's not created or destroyed but just moved around. Those who offer the cliche \"\"debt creates risk\"\" are correct, but the risk is not yours, it's the lender's. Looking at your own finances, liquidity is important. You can take the 15 year mortgage, and 10 years in, lose your job. The bank still wants its payments every month. Even if you had no mortgage, the tax collector is still there. To keep your risk low, you want a safety net that will cover you between jobs, illness, new babies being born, etc. I've gone head to head with people insisting on prioritizing the mortgage payoff ahead of the matched 401(k) deposit. Funny, they'd prefer to owe $75K less, while that $75K could have been deposited pretax (so $100K, for those in the 25% bracket) and matched, to $200K. Don't make that mistake.\"",
"title": ""
},
{
"docid": "88e9410a5b8cf7154bfd669250ea313e",
"text": "\"Whenever I'm looking at whether I can afford a new fixed monthly cost I go over my account statement for the last three months (or last three \"\"normal\"\" months in the event that there has been something unusual recently) and list the items into four columns on an Excel sheet - Fixed Essentials - costs that happen every month and that have to happen, stuff like rent, utility bills, insurance, any loans or credit cards etc Fixed Niceties - costs that happen every month but that I could cut if I needed to, stuff like Netflix, Spotify etc Variable Essentials - costs that I incur on an adhoc basis but are essential, I'm talking things like food, fuel etc Variable Niceties - costs that I incur on an adhoc basis but could be cut if required, things like buying DVDs or games etc I sum up the \"\"Essentials\"\" columns and divide by three to get a rough monthly average. This is what I have to spend so I subtract this from my monthly income which tells me what I really have available to \"\"spend\"\" in any given month. Performing the same \"\"sum and divide by three\"\" operation on the niceties and subtracting that from my \"\"available to spend\"\" figure tells me what I have left on in an average month - if this is greater than the new monthly cost I'm considering (allowing for some reasonable buffer as well - you don't want to be running to zero each month!) then I can afford the new cost and then I just have to weigh up whether I think it's worth it or whether I'd rather use that for something else. If it's not sufficient and I really want/need whatever the new cost is then I can start looking at the fixed and variable niceties to see if I can make savings there. If after trimming the niceties where I can I still can't afford it but still really want/need it then I'll start looking at the Essentials to see if there are ways to reduce them through switching utility supplier or changing my shopping/eating habits etc.\"",
"title": ""
},
{
"docid": "a82d6bb88b2c6a69e9ca89ed9c8692a7",
"text": "\"Generally speaking, so-called \"\"hard assets\"\" (namely gold or foreign currency), durable goods, or property that produces income is valuable in a situation where a nation's money supply is threatened. Gold is the universal hard asset. If you have access to a decent market, you can buy gold as bullion, coins and jewelry. Small amounts are valuable and easy to conceal. The problem with gold is that it is often marked up alot... I'm not sure how practical it is in a poor developing nation. A substitute would be a \"\"harder\"\" currency. The best choice depends on where you live. Candidates would be the US Dollar, Euro, Australian Dollar, Yen, etc. The right choice depends on you, the law in your jurisdiction, your means and other factors.\"",
"title": ""
}
] |
fiqa
|
cff0cfb1dd486eb59315343a9f5bb381
|
What is a normal amount of money to spend per week on food/entertainment/clothing?
|
[
{
"docid": "fc9a5b1af8c773dbf2e50e14fa7421dd",
"text": "\"I'll start with a question... Is the 63K before or after taxes? The short answer to your question on how much is reasonable is: \"\"It depends.\"\" It depends on a lot more than where you live, it depends on what you want... do you want to pay down debt? Do you want to save? Are you trying to buy a house? Those will influence how much you \"\"can\"\" (should let yourselves) spend. It also depends on your actual salary... just because I spend 5% of my salary on something doesn't mean bonkers to you if you're making 63,000 and I'm only making 10,000. I also have a lot of respect for you trying to take this on. It's never easy. But I would also recommend you start by trying to see what you can do to track how much you are actually spending. That can be hard, especially if you mostly use cash. Once you're tracking what you spend, I still think you're coming at this a bit backwards though... rather than ask 'how much is reasonable' to spend on those other expenses, you basically need to rule out the bigger items first. This means things like taxes, your housing, food, transportation, and kid-related expenses. (I've got 2.5 kids of my own.) I would guess that you're listing your pre-tax salaries on here... so start first with whatever it costs you to pay taxes. I'm a US citizen living in Berlin, haven't filed UK taxes, but uktaxcalculators.co.uk says that on 63,000 a year with 3 deductions your net earnings will actually be 43,500. That's 3,625/month. Then what does it cost you each month for rent/utilities/etc. to put a house over your family's head? The rule of thumb they taught in my home-economics class was 35-40%, but that's not for Europe... you'll know what it costs. Let's say its 1,450 a month (40%) for rent and utilities and maybe insurance. That leaves 2,175. The next necessity after housing is food. My current food budget is about 5-6% of my after-tax salary. But that may not compare... the cost to feed a family of 3 is a fairly fixed number, and our salaries aren't the same. As I said, I am a US expat living in Berlin, so I looked at this cost of living calculator, and it looks like groceries are about 7-10% higher there around Cardiff than here in Germany. Still, I spend about 120 € per week on food. That has a fair margin in it for splurging on ice cream and a couple brewskies. It feeds me (I'm almost 2m and about 100 kilos) and my family of four. Let's say you spend 100£ a week on groceries. For budgeting, that's 433£ a month. (52 weeks / 12 months == 4.333 weeks/month) But let's call it 500£. That leaves 1,675. From here, you'll have to figure out the details of where your own money is going--that's why I said you should really start tracking your expenses somehow... even just for a short time. But for the purposes of completing the answers to your questions, the next step is to look at saving before you try spending anything else. A nice target is to aim for 10% of your after-tax pay going into a savings account... this is apart from any other investments. Let's say you do that, you'll be putting away 363£ per month. That leaves 1,300£. As far as other expenses... you need some money for transport. You haven't mentioned car(s) but let's say you're spending another 500£ there. That would be about enough to cover one with the petrol you need to get around town. That leaves 800£ As far as a clothing budget and entertainment, I usually match my grocery budget with what I call \"\"mad money\"\". That's basically money that goes towards other stuff that I would love to categorize, but that my wife gets annoyed with my efforts to drill into on a regular basis. That's another 500£, which leaves 300£. You mentioned debts... assuming that's a credit card at around 20% interest, you probably pay 133£ a month just in interest... (20% = 0.20 / 12 = 0.01667 x 8,000 = 133) plus some nominal payment towards principal. So let's call it 175£. That leaves you with 125£ of wiggle room, assuming I have even caught all of your expenses. And depending on how they're timed, you are probably feeling a serious squeeze in between paychecks. I recognize that you're asking specific questions, but I think that just based on the questions you need a bit more careful backing into the budget. And you REALLY need to track what you're spending for the time being, until you can say... right, we usually spend about this much on X... how can we cut it out? From there the basics of getting your financial house in order are splattered across the interwebs. Make a budget... stick to it... pay down debts... save. Develop goals and mini incentives/rewards as a way to make sure your change your psyche about following a budget.\"",
"title": ""
},
{
"docid": "4b65a7bc2e4502b2f706e84c5fc12f04",
"text": "\"As THEAO suggested, tracking spending is a great start. But how about this - Figure out the payment needed to get to zero debt in a reasonable time, 24 months, perhaps. If that's more than 15% of your income, maybe stretch a tiny bit to 30 months. If it's much less, send 15% to debt until it's paid, then flip the money to savings. From what's left, first budget the \"\"needs,\"\" rent, utilities, etc. Whatever you spend on food, try to cut back 10%. There is no budget for entertainment or clothes. The whole point is one must either live beneath their means, or increase their income. You've seen what can happen when the debt snowballs. In reality, with no debt to service and the savings growing, you'll find a way to prioritize spending. Some months you'll have to choose, dinner out, or a show. I agree with Keith's food bill, $300-$400/mo for 3 of us. Months with a holiday and large guest list throws that off, of course.\"",
"title": ""
},
{
"docid": "6249769e1863bcae3d9c17157119480f",
"text": "\"Zero? Ten grand? Somewhere in the middle? It depends. Your stated salary, in U.S. dollars, would be high five-figures (~$88k). You certainly should not be starving, but with decent contributions toward savings and retirement, money can indeed be tight month-to-month at that salary level, especially since even in Cardiff you're probably paying more per square foot for your home than in most U.S. markets (EDIT: actually, 3-bedroom apartments in Cardiff, according to Numbeo, range from £750-850, which is US$1200-$1300, and for that many bedrooms you'd be hard-pressed to find that kind of deal in a good infield neighborhood of the DFW Metro, and good luck getting anywhere close to downtown New York, LA, Miami, Chicago etc for that price. What job do you do, and how are you expected to dress for it? Depending on where you shop and what you buy, a quality dress shirt and dress slacks will cost between US$50-$75 each (assuming real costs are similar for the same brands between US and UK, that's £30-£50 per shirt and pair of pants for quality brands). I maintain about a weeks' wardrobe at this level of dress (my job allows me to wear much cheaper polos and khakis most days and I have about 2 weeks' wardrobe of those) and I typically have to replace due to wear or staining, on average, 2 of these outfits a year (I'm hard on clothes and my waistline is expanding). Adding in 3 \"\"business casual\"\" outfits each year, plus casual outfits, shoes, socks, unmentionables and miscellany, call it maybe $600(£400)/year in wardrobe. That doesn't generally get metered out as a monthly allowance (the monthly amount would barely buy a single dress shirt or pair of slacks), but if you're socking away a savings account and buying new clothes to replace old as you can afford them it's a good average. I generally splurge in months when the utilities companies give me a break and when I get \"\"extra\"\" paychecks (26/year means two months have 3 checks, effectively giving me a \"\"free\"\" check that neither pays the mortgage nor the other major bills). Now, that's just to maintain my own wardrobe at a level of dress that won't get me fired. My wife currently stays home, but when she worked she outspent me, and her work clothes were basic black. To outright replace all the clothes I wear regularly with brand-new stuff off the rack would easily cost a grand, and that's for the average U.S. software dev who doesn't go out and meet other business types on a daily basis. If I needed to show up for work in a suit and tie daily, I'd need a two-week rotation of them, plus dress shirts, and even at the low end of about $350 (£225) per suit, $400 (£275) with dress shirt and tie, for something you won't be embarrassed to wear, we're talking $4000 (£2600) to replace and $800 (£520) per year to update 2 a year, not counting what I wear underneath or on the weekends. And if I wore suits I'd probably have to update the styles more often than that, so just go ahead and double it and I turn over my wardrobe once every 5 years. None of this includes laundering costs, which increase sharply when you're taking suits to the cleaners weekly versus just throwing a bunch of cotton-poly in the washing machine. What hobbies or other entertainment interests do you and your wife have? A movie ticket in the U.S. varies between $7-$15 depending on the size of the screen and 2D vs 3D screenings. My wife and I currently average less than one theater visit a month, but if you took in a flick each weekend with your wife, with a decent $50 dinner out, that's between $260-$420 (£165-270) monthly in entertainment expenses. Not counting babysitting for the little one (the going rate in the US is between $10 and $20 an hour for at-home child-sitting depending on who you hire and for how long, how often). Worst-case, without babysitting that's less than 5% of your gross income, but possibly more than 10% of your take-home depending on UK effective income tax rates (your marginal rate is 40% according to the HMRC, unless you find a way to deduct about £30k of your income). That's just the traditional American date night, which is just one possible interest. Playing organized sports is more or less expensive depending on the sport. Soccer (sorry, football) just needs a well-kept field, two goals and and a ball. Golf, while not really needing much more when you say it that way, can cost thousands of dollars or pounds a month to play with the best equipment at the best courses. Hockey requires head-to-toe padding/armor, skates, sticks, and ice time. American football typically isn't an amateur sport for adults and has virtually no audience in Europe, but in the right places in the U.S., beginning in just a couple years you'd be kitting your son out head-to-toe not dissimilar to hockey (minus sticks) and at a similar cost, and would keep that up at least halfway through high school. I've played them all at varying amateur levels, and with the possible exception of soccer they all get expensive when you really get interested in them. How much do you eat, and of what?. My family of three's monthly grocery budget is about $300-$400 (£190-£260) depending on what we buy and how we buy it. Americans have big refrigerators (often more than one; there's three in my house of varying sizes), we buy in bulk as needed every week to two weeks, we refrigerate or freeze a lot of what we buy, and we eat and drink a lot of high-fructose corn-syrup-based crap that's excise-taxed into non-existence in most other countries. I don't have real-world experience living and grocery-shopping in Europe, but I do know that most shopping is done more often, in smaller quantities, and for more real food. You might expect to spend £325 ($500) or more monthly, in fits and starts every few days, but as I said you'd probably know better than me what you're buying and what it's costing. To educate myself, I went to mysupermarket.co.uk, which has what I assume are typical UK food prices (mostly from Tesco), and it's a real eye-opener. In the U.S., alcohol is much more expensive for equal volume than almost any other drink except designer coffee and energy drinks, and we refrigerate the heck out of everything anyway, so a low-budget food approach in the U.S. generally means nixing beer and wine in favor of milk, fruit juices, sodas and Kool-Aid (or just plain ol' tap water). A quick search on MySupermarkets shows that wine prices average a little cheaper, accounting for the exchange rate, as in the States (that varies widely even in the U.S., as local and state taxes for beer, wine and spirits all differ). Beer is similarly slightly cheaper across the board, especially for brands local to the British Isles (and even the Coors Lite crap we're apparently shipping over to you is more expensive here than there), but in contrast, milk by the gallon (4L) seems to be virtually unheard of in the UK, and your half-gallon/2-liter jugs are just a few pence cheaper than our going rate for a gallon (unless you buy \"\"organic\"\" in the US, which carries about a 100% markup). Juices are also about double the price depending on what you're buying (a quart of \"\"Innocent\"\" OJ, roughly equivalent in presentation to the U.S. brand \"\"Simply Orange\"\", is £3 while Simply Orange is about the same price in USD for 2 quarts), and U.S.-brand \"\"fizzy drinks\"\" are similarly at a premium (£1.98 - over $3 - for a 2-liter bottle of Coca-Cola). With the general preference for room-temperature alcohol in Europe giving a big advantage to the longer unrefrigerated shelf lives of beer and wine, I'm going to guess you guys drink more alcohol and water with dinner than Americans. Beef is cheaper in the U.S., depending on where you are and what you're buying; prices for store-brand ground beef (you guys call it \"\"minced\"\") of the grade we'd use for hamburgers and sauces is about £6 per kilo in the UK, which works out to about $4.20/lb, when we're paying closer to $3/lb in most cities. I actually can't remember the last time I bought fresh chicken on the bone, but the average price I'm seeing in the UK is £10/kg ($7/lb) which sounds pretty steep. Anyway, it sounds like shopping for American tastes in the UK would cost, on average, between 25-30% more than here in the US, so applying that to my own family's food budget, you could easily justify spending £335 a month on food.\"",
"title": ""
}
] |
[
{
"docid": "070d2ad7fe0e1c826446a42018bbc2ae",
"text": "Well, I'm from the Netherlands, which is also kind of a 'nanny' state, usually supermarket goods are fairly cheap (bottle of 1,5L Coca Cola is $1,42, a 24-crate of beer is around $11). But gasoline ($2/L), diesel ($1.60/L) and tobacco ($6-8.50) are quite expensive. Basically we have an extra tax on certain (unhealthy and environmentally harmful) goods so you get a basic consumer tax of 19% (soon to be 21%) + 15-250%. For example a pack of cigarettes of $6.50 is $1.71 without taxes right now. But for some reason alcohol isn't taxed as heavily, where tobacco gets upwards of 250% extra tax alcohol only gets 5-15.5% extra taxes.",
"title": ""
},
{
"docid": "dd0dd85bad94d6fbb950e2764c032786",
"text": "\"I posted a comment in another answer and it seems to be approved by others, so I have converted this into an answer. If you're talking about young adults who just graduated college and worked through it. I would recommend you tell them to keep the same budget as what they were living on before they got a full-time job. This way, as far as their spending habits go, nothing changes since they only have a $500 budget (random figure) and everything else goes into savings and investments. If as a student you made $500/month and you suddenly get $2000/month, that's a lot of money you get to blow on drinks. Now, if you put $500 in savings (until 6-12 month of living expenses), $500 in investments for the long run and $500 in vacation funds or \"\"big expenses\"\" funds (Ideally with a cap and dump the extra in investments). That's $18,000/yr you are saving. At this stage in your life, you have not gotten used to spending that extra $18,000/yr. Don't touch the side money except for the vacation fund when you want to treat yourself. Your friends will call you cheap, but that's not your problem. Take that head start and build that down payment on your dream house. The way I set it up, is (in this case) I have automatics every day after my paychecks come in for the set amounts. I never see it, but I need to make sure I have the money in there. Note: Numbers are there for the sake of simplicity. Adjust accordingly. PS: This is anecdotal evidence that has worked for me. Parents taught me this philosophy and it has worked wonders for me. This is the extent of my financial wisdom.\"",
"title": ""
},
{
"docid": "1ca5e112fd2e803aee9e1db5b13fbdd6",
"text": "Set aside the amount of grocery money you want to spend in a week in cash. Then buy groceries only from this money. The first week make it a generous amount so you don't get rediculous and give up. And stick to it when you are out of money (make sure you have some canned goods or something around if you run out of money a day short). And do not shop when you are hungry.",
"title": ""
},
{
"docid": "2d0c00de68f83aef59cf18c2b6020505",
"text": "This is a big and complex topic, but it's one I think people get wrong a lot. There's a lot of ways to treat a child's pocket money: Tell a kid that they're getting $10/week allowance. Help them keep it safe, but don't give them access to it: Put it in a drawer in your office, or a piggie bank on a high shelf. Encourage them to save up for a big purchase. Help them decide what to spend it on. When they find something they want, talk it over with them to make sure it's right for them. This seems like a good approach, because it encourages thrift, long term thinking, savings, and other important elements of real life. But it's a TERRIBLE idea. All it does is make the child think of it as if it wasn't really their money. The child gets no benefits from this, and will certainly not learn anything about savings. Give the kid $10/week. Full stop. This seems like a bad idea, because the kid is just going to waste it. Which they will. :) That's the point! There's NO way to learn except by experience. Try and shift control of discretionary spending to the child as and when appropriate. Give them some money for clothes, or a present for their birthday, and let them spend it. If they're going to be spending all day at some event, give them money for lunch. And if they misspend it - tough! No kid is going to starve in one day because the spend their lunch money at a video arcade, but they will learn a valuable lesson. :) You have to be careful here of two mistakes. First, only do this for truly discretionary spending. If your kid needs clothes for school, then you better make sure they actually buy it. Second, make sure that you don't end up filling in the gaps. What you're teaching here is opportunity costs, and that won't work if your child gets to have his cake and eat it too. (Or go to the movies and STILL get that new Xbox game.) Have them get a job. And, it should go without saying, give them control of the money. It's incredibly tempting to force them to save, be responsible, etc. But all this does is force them to look responsible...for as long as their under your thumb. Nothing will impart the lessons about why being responsible is important like being irresponsible. And it's sure as hell better to learn that lesson with some paper route money when your 14 than with your rent money when your 24...",
"title": ""
},
{
"docid": "7601e04f3bc71c067101f24687e82a63",
"text": "Track your expenses. Find out where your money is going, and target areas where you can reduce expenses. Some examples: I was spending a lot on food, buying too much packaged food, and eating out too much. So I started cooking from scratch more and eating out less. Now, even though I buy expensive organic produce, imported cheese, and grass-fed beef, I'm spending half of what I used to spend on food. It could be better. I could cut back on meat and eat out even less. I'm working on it. I was buying a ton of books and random impulsive crap off of Amazon. So I no longer let myself buy things right away. I put stuff on my wish list if I want it, and every couple of months I go on there and buy myself a couple of things off my wishlist. I usually end up realizing that some of the stuff on there isn't something I want that badly after all, so I just delete it from my wishlist. I replaced my 11-year-old Jeep SUV with an 11-year-old Saturn sedan that gets twice the gas mileage. That saves me almost $200/month in gasoline costs alone. I had cable internet through Comcast, even though I don't have a TV. So I went from a $70/month cable bill to a $35/month DSL bill, which cut my internet costs in half. I have an iPhone and my bill for that is $85/month. That's insane, with how little I talk on the phone and send text messages. Once it goes out of contract, I plan to replace it with a cheap phone, possibly a pre-paid. That should cut my phone expenses in half, or even less. I'll keep my iPhone, and just use it when wifi is available (which is almost everywhere these days).",
"title": ""
},
{
"docid": "41b672feae4a9d69a896ca23a684cf0c",
"text": "Your question is rather direct, but I think there is some underlying issues that are worth addressing. One How to save and purchase ~$500 worth items This one is the easy one, since we confront it often enough. Never, ever, ever buy anything on credit. The only exception might be your first house, but that's it. Simply redirect the money you would spend in non necessities ('Pleasure and entertainment') to your big purchase fund (the PS4, in this case). When you get the target amount, simply purchase it. When you get your salary use it to pay for the monthly actual necessities (rent, groceries, etc) and go through the list. The money flow should be like this: Two How to evaluate if a purchase is appropriate It seems that you may be reluctant to spend a rather chunky amount of money on a single item. Let me try to assuage you. 'Expensive' is not defined by price alone, but by utility. To compare the price of items you should take into account their utility. Let's compare your prized PS4 to a soda can. Is a soda can expensive? It quenches your thirst and fills you with sugar. Tap water will take your thirst away, without damaging your health, and for a fraction of the price. So, yes, soda is ridiculously expensive, whenever water is available. Is a game console expensive? Sure. But it all boils down to how much do you end up using it. If you are sure you will end up playing for years to come, then it's probably good value for your money. An example of wrongly spent money on entertainment: My friends and I went to the cinema to see a movie without checking the reviews beforehand. It was so awful that it hurt, even with the discount price we got. Ultimately, we all ended up remembering that time and laughing about how wrong it went. So it was somehow, well spent, since I got a nice memory from that evening. A purchase is appropriate if you get your money's worth of utility/pleasure. Three Console and computer gaming, and commendation of the latter There are few arguments for buying a console instead of upgrading your current computer (if needed) except for playing console exclusives. It seems unlikely that a handful of exclusive games can justify purchasing a non upgradeable platform unless you can actually get many hours from said games. Previous arguments to prefer consoles instead of computers are that they work out of the box, capability to easily connect to the tv, controller support... have been superseded by now. Besides, pc games can usually be acquired for a lower price through frequent sales. More about personal finance and investment",
"title": ""
},
{
"docid": "88f95f3f33e6228d828d562ece97c1ed",
"text": "\"Just my 2 cents, I read on the book, The WSJ Financial Guidebook for New Parents, that \"\"the average family spends between $11k and $16k raising their child during his first year\"\". So it might be better for you to make a budget including that cost, then decide how much money you feel safe to invest.\"",
"title": ""
},
{
"docid": "3b0134576ad94f597841f155d16001d1",
"text": "Aside from what everyone else has said about your money (saving, investing, etc.), I'd like to comment on what else you could spend it on: Spend it all on small/stupid things that, while stupid, would make me happier. For example take taxis more often, eat often in nice restaurants, buy designer clothes, etc. I'll be young only one time. You could also put the money towards something more... productive? Like a home project. Convert a room in your living space into an office or a theater-like room. Install hardwood floors yourself. Renovate a bathroom. Plant a garden of things you would enjoy eating later. Something that you would enjoy having or doing and can look back at and be proud of putting your money towards something that you accomplished.",
"title": ""
},
{
"docid": "3d05671fdb3c36883abcde29fd83fabc",
"text": "I make it a habit at the end of every day to think about how much money I spent in total that day, being mindful of what was essential and wasn't. I know that I might have spent $20 on a haircut (essential), $40 on groceries (essential) and $30 on eating out (not essential). Then I realize that I could have just spent $60 instead of $90. This habit, combined with the general attitude that it's better to have not spent some mone than to have spent some money, has been pretty effective for me to bring down my monthly spending. I guess this requires more motivation than the other more-involved techniques given here. You have to really want to reduce your spending. I found motivation easy to come by because I was spending a lot and I'm still looking for a job, so I have no sources of income. But it's worked really well so far.",
"title": ""
},
{
"docid": "986483aca79fc08b760992585b15ae69",
"text": "Only select items. First - I agree, beware the Goldfish Factor - any of those items may very well lead to greater consumption, which will impact your waistline worse than your bottom line. And, in this category, chips, and snacks in general, you'll typically get twice the size bag for the same price as supermarket. For a large family, this might work ok. If one is interested in saving on grocery items, the very first step is to get familiar with the unit cost (often cents per ounce) of most items you buy. Warehouse store or not, this knowledge will make you a better buyer. In general, the papergoods/toiletries are cheaper than at the store but not as cheap as the big sale/coupon cost at the supermarket or pharmacy (CVS/RiteAid). So if you pay attention you may always be stocked up from other sources. All that said, there are many items that easily cover our membership cost (for Costco). The meat, beef tenderloin, $8.99, I can pay up to $18 at the supermarket or butcher. Big shrimp (12 to the lb), $9.50/lb, easily $15 at fish dept. Funny, I buy the carrots JCarter mentioned. They are less than half supermarket price per lb, so I am ahead if we throw out the last 1/4 of the bag. More often than not, it's used up 100%. Truth is, everyone will have a different experience at these stores. Costco will refund membership up to the very end, so why not try it, and see if the visit is worth it? Last year, I read and wrote a review of a book titled The Paradox of Choice. The book's premise was the diminishing return that come with too many things to choose from. In my review, I observed how a benefit of Costco is the lack of choice, there's one or two brands for most items, not dozens. If you give this a bit of thought, it's actually a benefit.",
"title": ""
},
{
"docid": "1028503291e1d7182842563f9ad292d8",
"text": "\"Keep a notebook. (or spreadsheet, etc. whatever works) Start to track what things cost as few can really commit this all to memory. You'll start to find the regular sale prices and the timing of them at your supermarkets. I can't even tell you the regular price of chicken breasts, I just know the sale is $1.79-1.99/lb, and I buy enough to freeze to never pay full price. The non-perishables are easy as you don't have to worry about spoilage. Soap you catch on sale+coupon for less than half price is worth buying to the limit, and putting in a closet. Ex Dove soap (as the husband, I'm not about to make an issue of a brand preference. This product is good for the mrs skin in winter) - reg price $1.49. CVS had a whacky deal that offered a rebate on Dove purchase of $20, and in the end, I paid $10 for 40 bars of soap. 2 yrs worth, but 1/6 the price. This type of strategy can raise your spending in the first month or two, but then you find you have the high runners \"\"in stock\"\" and as you use products from the pantry or freezer, your spending drops quite a bit. If this concept seems overwhelming, start with the top X items you buy. As stated, the one a year purchases save you far less than the things you buy weekly/monthly.\"",
"title": ""
},
{
"docid": "5c44b08854a031354dbe1f6080139836",
"text": "A Budget is different for every person. There are families making $40K/yr who will budget to spend it all. But a family making $100K of course will have a different set of spending limits for most items. My own approach is to start by tracking every cent. Keep a notebook for a time, 3 months minimum. Note, for homeowners, a full year is what it takes to capture the seasonal expenses. This approach with help you see where the money is going, and adjust accordingly. The typical goal is to spend less than you make, saving X% for retirement, etc. The most important aspect is to analyze how much money is getting spent on wasteful items. The $5 coffee, the $10 lunch, the $5-$7 magazines, etc. One can decide the $5 coffee is a social event done with a friend, and that's fine, so long as it's a mindful decision. I've watched the person in front of me at the supermarket put 4 magazines down on the counter. If she has $20 to burn, that's her choice. See Where can I find an example of a really basic family budget? for other responses.",
"title": ""
},
{
"docid": "12ee441fe497d1b302896b6155d13d07",
"text": "I have friends that have to buy very large shirts. A plain red pocketed shirt in their size costs at least $20 at a physical store if they even carry their size. You just can't beat the options and price an online retailer can offer.",
"title": ""
},
{
"docid": "8549e17945a4d8a46afa30c91f421a0e",
"text": "I don't know of any rule of thumb for travel. In general, what you spend on entertainment should be what you have left after paying for the more mundane things in life -- housing, food, electricity, and so on -- and setting aside reasonable amounts for retirement and emergencies. Entertainment varies widely as a percentage of one's income. Someone making minimum wage and trying to support a sick wife and three kids probably has pretty much zero left over for entertainment. Someone who makes a million a year and has no debts might spend 50% or more of his income on entertainment. Yes, I've heard rules of thumb for charity, housing, and retirement that are probably at least useful ballparks. But for entertainment? No, I think that's just what's left over.",
"title": ""
},
{
"docid": "40ad5d56596f5b49456e973e731c41ad",
"text": "You should see what your average weekly purchases are and set that aside in your checking/current account, then you should typically not be in danger of overdrawing. Doing this exercise will also help you get a better understaning of your spending and spending habits. For example if on average you spend $500 USD a week then put say $575 USD in your current account and you should not be in danger of over drawing and then having to go into your online account and make the transfer. I always tell people to setup a budget and to stick to it as best as they can, earmark money for dining out, entertainment, anything they can think of that they would spend money on, this way they can keep track of where it goes and how often and quick it goes.",
"title": ""
}
] |
fiqa
|
12478fcd249990234212520d35429a95
|
How do I know when I am financially stable/ready to move out on my own?
|
[
{
"docid": "8b2968b4264653859bd4443977451b41",
"text": "One big deciding factor will be what standard of living you want to maintain once you move out. Your parents have had years to get raises, accumulate savings, and establish the standard of living you are used to. Regardless of how much you save up now, you'll still have to be living at or below your means once you move out, that means that all the expenses you currently have covered by your parents have to come out of something you are currently spending elsewhere. If they can come out of whatever extra money you have now, then great. If not, you'll have to re-align your budget to align with your income. In my experience, seeing my friends and I move out, this was the biggest issue. Those who settled into a new standard of living until their wages went up did fine (even the few who moved out at 18 with no savings). Those who couldn't drop the extra expenses, and wanted to continue living at their parent's standard of living either never left home, ended up moving back, or ended up massively in debt. We're only just hitting 30 now, so it didn't take long for things to settle out.",
"title": ""
},
{
"docid": "d003b07bc1b303441f2b89575c367b78",
"text": "\"It all depends on what your financial goals are when you are ready. You sound like you could be ready today if you wanted to be. The steps that I would take are. Create a monthly draft budget. This doesn't have to be something hard and fast, just a gague of what your living expenses would be compared to your after-tax salary. Make sure there would be room for \"\"fun\"\" money. a. Consider adding a new car fund line item to this budget, and deducting that amount from your paycheck starting now so that you can save for the car. Based on the most realistic estimate that you can make, you'll get a good idea if you want to spend the money it takes to move out alone now or later. You'll also see the price for various levels of rentals in your area (renting a single family home, townhouse, condo, apartment, living in a rented room or basement, sharing a place with friends, etc) and know some of the costs of setting up for yourself. Since you're looking at the real estate market, you may want to do a cost comparison of renting versus buying. I've found the New York Times interactive graphic on this is excellent. If you are looking to buy, make sure to research the hidden costs of buying thoroughly before taking this step. To answer your last question, if you have the cash you should consider upping your 401K investment (or using Roth or regular IRA). Make sure you are investing enough to get your full employer match, if your employer offers one, and then get as close as you can to government maximum contribution limits. Compound interest is a big deal when you are 23.\"",
"title": ""
},
{
"docid": "d2ce48ba346467a08b46b829339b1cd0",
"text": "I'll just say this. You are in much better shape financially than I was when I moved out on my own and started supporting myself, and I did fine. The 6 month emergency fund is nice, but I'd gamble that most people that have been out on their own for a long time can't match that. The main thing is just to keep a budget that is commensurate with your income and adjust it if you see that emergency fund start to dwindle. Look at it this way, assuming you are wrong and you completely weren't ready for independent living, you could always go back. Nothing ventured nothing gained.",
"title": ""
},
{
"docid": "4250441bda04199fb9e440796e680535",
"text": "One major concern with moving out on your own is can you afford rent each month, be it an apartment or a house payment. You'll hear people say that anywhere from 25% to 40% of your monthly after-tax income should go to housing. 40% seems very high to me and quite risky. I'd go for closer to 30% of your monthly after-tax income and not any higher, but that's just my opinion. I had a friend that moved out of his parents house about the same time that I did. He bought himself a house, and then he immediately started looking for roommates to help pay for his house. It really was a good idea, and I wish that I'd been in a position to do the same, because I'm sure that it saved him a lot of money for the first couple of years. Apart from that, my only advise would be to get a house if you can afford it. 1) Interest rates are very low right now, and 2) if you're paying rent to someone (for an apartment or whatever) then you're just throwing your hard-earned money away. Good luck!",
"title": ""
},
{
"docid": "4577731b949a0dece0a8ed46a0bc96d8",
"text": "\"I recently moved out from my parents place, after having built up sufficient funds, and gone through these questions myself. I live near Louisville, KY which has a significant effect on my income, cost of living, and cost of housing. Factor that into your decisions. To answer your questions in order: When do I know that I'm financially stable to move out? When you have enough money set aside for all projected expenses for 3-6 months and an emergency fund of 4-10K, depending on how large a safety net you want or need. Note that part of the reason for the emergency fund is as a buffer for the things you won't realize you need until you move out, such as pots or chairs. It also covers things being more expensive than anticipated. Should I wait until both my emergency fund is at least 6 months of pay and my loans in my parents' names is paid off (to free up money)? 6 months of pay is not a good measuring stick. Use months of expenses instead. In general, student loans are a small enough cost per month that you just need to factor them into your costs. When should I factor in the newer car investment? How much should I have set aside for the car? Do the car while you are living at home. This allows you to put more than the minimum payment down each month, and you can get ahead. That looks good on your credit, and allows refinancing later for a lower minimum payment when you move out. Finally, it gives you a \"\"sense\"\" of the monthly cost while you still have leeway to adjust things. Depending on new/used status of the car, set aside around 3-5K for a down payment. That gives you a decent rate, without too much haggling trouble. Should I get an apartment for a couple years before looking for my own house? Not unless you want the flexibility of an apartment. In general, living at home is cheaper. If you intend to eventually buy property in the same area, an apartment is throwing money away. If you want to move every few years, an apartment can, depending on the lease, give you that. How much should I set aside for either investment (apartment vs house)? 10-20K for a down payment, if you live around Louisville, KY. Be very choosy about the price of your house and this gives you the best of everything. The biggest mistake you can make is trying to get into a place too \"\"early\"\". Banks pay attention to the down payment for a good reason. It indicates commitment, care, and an ability to go the distance. In general, a mortgage is 30 years. You won't pay it off for a long time, so plan for that. Is there anything else I should be doing/taking advantage of with my money during this \"\"living at home\"\" period before I finally leave the nest? If there is something you want, now's the time to get it. You can make snap purchases on furniture/motorcycles/games and not hurt yourself. Take vacations, since there is room in the budget. If you've thought about moving to a different state for work, travel there for a weekend/week and see if you even like the place. Look for deals on things you'll need when you move out. Utensils, towels, brooms, furniture, and so forth can be bought cheaply, and you can get quality, but it takes time to find these deals. Pick up activities with monthly expenses. Boxing, dancing, gym memberships, hackerspaces and so forth become much more difficult to fit into the budget later. They also give you a better credit rating for a recurring expense, and allow you to get a \"\"feel\"\" for how things like a monthly utility bill will work. Finally, get involved in various investments. A 401k is only the start, so look at penny stocks, indexed funds, ETFs or other things to diversify with. Check out local businesses, or start something on the side. Experiment, and have fun.\"",
"title": ""
},
{
"docid": "7a66da7a6d68a0dceacd379e7774fb33",
"text": "It's hard to financially justify buying a house just for one person to live in. You end up being 'over-housed' (and paying for it). Would you rent a whole house for yourself? A condo might be an option - but TO ME the maintenance fees are hard to take (and they are notorious for increasing dramatically as the building ages). You could consider buying a house that includes 1 or 2 rental units, or sharing with a friend. You do run the risk of having bad tenants though, and you have additional maintance to deal with. Having a rental unit in my modest house has worked out very well for me (living alone), and I have been VERY fortunate with tenants.",
"title": ""
},
{
"docid": "a54e3e9a80b805b108639d42f2aa27a3",
"text": "If you are living at home as an adult, then you should be paying your fair share and contributing to the household expenses. You said your parents have loans to pay for that was part of your expenses to go to college. As an adult, you should be paying your parents back for the loans they took out on your behalf. You are a responsible person, it sounds like. Therefore, you need to finish restoring your parent's financial position first before moving out or transfer the loans that are actually yours back to you. Your college education and financial duties are your responsibility. Basically, if you are an adult you should move into your own place in a responsible way or stay at home while contributing to your parent's financial household status in a mutually beneficial way of shared responsibility. Remember, healthy adults take care of their lives and share in paying for the expenses required to live.",
"title": ""
},
{
"docid": "fc7d0410c8312a85853b242a022467e7",
"text": "I’m going to suggest something your parents may be reluctant to say: “Grow up and get out.” A man living in a van down by the river, making minimum wage, with $0 in savings has achieved something you have still failed to achieve: adulthood. This, I believe, is more important than a man’s income or net worth. So please join us adults Bryan. I think you’ll enjoy it. Yes, your savings may take a hit but you will gain the respect that comes with being an adult. I think it is worth it.",
"title": ""
}
] |
[
{
"docid": "e567bd827487aeef3d7dd0e4d4c34640",
"text": "I know there are plenty of people who have to deal with the stress and know it isn't pleasant...but it's hard to see how much worse it is as far as stress goes because I have to pay $1950 in rent each month and don't get the option to default and if I do, I don't get to wait for 8 months while the banks get their paperwork in order to evict me. I want to believe that in the end I will come out ahead but either I've been incredibly smart with my life decisions or incredibly naive...",
"title": ""
},
{
"docid": "a405c923ef9d9630e97eaa6925869c1a",
"text": "My experience with owning a home is that its like putting down roots and can be like an anchor holding you to an area. Before considering whether you can financially own a home consider some of the other implications. Once you own it you are stuck for awhile and cannot quickly move away like you can with renting. So if a better job opportunity comes up or your employer moves you to another office across town that doubles your commute time, you'll be regretting the home purchase as it will be a barrier to moving to a more convenient location. I, along with my fiancée and two children, are being forced to move out of my parents home ASAP. Do not rush buying a home. Take your time and find what you want. I made the mistake once of buying a home thinking I could take on some DIY remodeling to correct some features I wasn't fond of. Life intervenes and finding extra time for DIY house updates doesn't come easy, especially with children. Speaking of children, consider the school district when buying a home too. Often times homes in good school districts cost more. If you don't consider the school district now, then you may be faced with a difficult decision when the kids start school. IF you are confident you won't want to move anytime soon and can find a house you like and want to jump into home ownership there are some programs that can help first time buyers, but they can require some effort on your part. FHA has a first time buyer program with a 3.5% down payment. You will need to search for a lender that offers FHA loans and work with them. FHA covers this program by charging mortgage insurance every month that's part of your house payment. Fannie Mae has the HomeReady program where first time home buyers can purchase a foreclosed home from their inventory for as little as 3% down and possibly get up to 3% from the seller to apply toward closing costs. Private mortgage insurance (PMI) is required with this program too. Their inventory of homes can be found on the https://www.homepath.com/ website. There is also NACA, which requires attending workshops and creating a detailed plan to prove you're ready for homeownership. This might be a good option if they have workshops in your area and you want to talk with someone in person. https://www.naca.com/about/",
"title": ""
},
{
"docid": "4fefe47e0c321ca6c236aef3646d38a1",
"text": "Is my financial status OK? If not, how can I improve it? I'm going to concentrate on this question, particularly the first half. Net income $4500 per month (I'm taking this to be after taxes; correct me if wrong). Rent is $1600 and other expenses are up to $800. So let's call that $2500. That leaves you $2000 a month, which is $24,000 a year. You can contribute up to $18,000 a year to a 401k and if you want to maintain your income in retirement, you probably should. The average social security payment now is under $1200. You have an above average income but not a maximum income. So let's set that at $1500. You need an additional income stream of $900 a month in retirement plus enough to cover taxes. Another $5500 for an IRA (probably a Roth). That's $23,500. That leaves you $500 a year of reliable savings for other purposes. Another $5500 for an IRA (probably a Roth). That's $23,500. That leaves you $500 a year of reliable savings for other purposes. You are basically even. Your income is just about what you need to cover expenses and retirement. You could cover a monthly mortgage payment of $1600 and have a $100,000 down payment. That probably gets you around a $350,000 house, although check property taxes. They have to come out of the $1600 a month. That doesn't seem like a lot for a Bay area house even if it would buy a mansion in rural Mississippi. Perhaps think condo instead. Try to keep at least $15,000 to $27,000 as emergency savings. If you lose your job or get stuck with a required expense (e.g. a major house repair), you'll need that money. You don't have enough income to support a car unless it saves you money somewhere. $500 a year is probably not going to cover insurance, parking, gas, and maintenance. It's possible that you could tighten up your expenses, but in my experience, people are more likely to underestimate their expenses than overestimate. That's why I'm saying $2500 (a little above the high end) rather than $2000 (your low end estimate). If things are stable, wait a year and evaluate. Track your actual spending. Ask yourself if you made any large purchases. Your budget should include an appliance (TV, refrigerator, washer/dryer, etc.) a year. If you're not paying for that now (included in rent?), then you need to allow for it in your ownership budget. I do not consider an ESPP to be a reliable investment vehicle. Consider the Enron possibility. You wake up one day and find out that there is no actual money. Your stock is now worthless. A diversified portfolio can survive this. If you lose your job and your investment, you'll be stuck with just your savings. Hopefully you didn't just tie them up in a house that you might have to sell to take your next job in a different location. An ESPP might work as savings for the house. If something goes wrong, don't buy the house. But it's not retirement or emergency savings. I would say that you are OK but could be better. Get your retirement savings started. That does two things. One, it gives you money for retirement. Two, it keeps you from having extra money now when it is easy to develop expensive habits. An abrupt drop from $4500 in spending to $1200 will hurt. A smooth transition from $2500 to $2500 is what you would like to see. You are behind now, but you have the opportunity to catch up for a few years. Work out how much you'll get from Social Security and how much you need to cover your typical expenses with the occasional emergency. Expect high health care costs in retirement. Medicare covers a lot but not everything, and health care is only getting more expensive. Don't forget to assume higher taxes in the future to help cover that expense and the existing debt. After a few years of catch up contributions, work out your long term plan assuming a reasonable real (after inflation) rate of return. If you can reduce the $23,500 in retirement contributions then, that's OK. But be pessimistic. Most people overestimate good things and underestimate bad things. It's much better to have extra than not enough. A 401k comes with an administrator and your choice of mutual funds. Try for diversification. Some money in bonds (25% to 30%). The remainder in stocks. Look for index funds. Try for a mix of value and growth, as they'll do better at different times. As you approach retirement, you can convert some of that into shorter term, lower yield investments. The rough rule of thumb is to have two to five years of withdrawals in short term investments like money market funds. But that's more than twenty years off. You have more choices with an IRA. In particular, you can choose your own administrator. But I'd keep the same stock/bond mix and stick to index funds if you're not interested in researching the more complex options. You may want to invest your IRA in a growth fund and your 401k in value funds and bonds. Then balance the stock/bond mix across both. When you invest each year, look at the underrepresented funds and add the most to them. So if bonds had a bad year and didn't keep pace, invest in bonds. They're probably cheap. You don't want to rebalance frequently, but once a year might be a good pace. That's about how often you should invest in an IRA, so that can be a good time. I'll let the others answer on the financial advisor part.",
"title": ""
},
{
"docid": "9f359e430e3e8e2f14b3d2d65a4f203e",
"text": "Congrats on making it this far debt free. It is rare, but nice to be in the situation that you are in. The important thing here is that you want to remain debt free. That's really what the emergency fund is all about: it keeps you from needing to go into debt should something unexpected happen. You've got 1.5 months worth of expenses saved up, and that's great. If you don't have a family or other responsibilities, that might be enough, but think about this: how are you paying for school, and what would happen if those funds stopped coming in? If you are paying for school out of your own income, what happens if you lose your job? If someone else, perhaps your parents, is paying for school, what happens if they are suddenly no longer able to do so? While you have extra cash, you want to be saving it up for situations like this. If I were you, I would build up that emergency fund until it got to the point where it could pay all your expenses and tuition until graduation. Hopefully, you won't need to touch it, but it will be there if you need it. Since you need to be able to access your money quickly, it is generally recommended to park this money in a savings account, where it is very safe. Mutual funds are a great way to invest, but they are not safe in the short term. Don't stress out about not being able to start retirement investing just yet. Making sure you can finish school debt free is the best investment you can make right now. After you graduate and land a job, you can start investing aggressively.",
"title": ""
},
{
"docid": "aef86ebe299a964f826a4562492623f3",
"text": "\"The suggestions towards retirement and emergency savings outlined by the other posters are absolute must-dos. The donations towards charitable causes are also extremely valuable considerations. If you are concerned about your savings, consider making some goals. If you plan on staying in an area long term (at least five years), consider beginning to save for a down payment to own a home. A rent-versus-buy calculator can help you figure out how long you'd need to stay in an area to make owning a home cost effective, but five years is usually a minimum to cover closing costs and such compared to rending. Other goals that might be worthwhile are a fully funded new car fund for when you need new wheels, the ability to take a longer or nicer vacation, a future wedding if you'd like to get married some day, and so on. Think of your savings not as a slush fund of money sitting around doing nothing, but as the seed of something worthwhile. Yes, you will only be young once. However being young does not mean you have to be Carrie from Sex in the City buying extremely expensive designer shoes or live like a rapper on Cribs. Dave Ramsey is attributed as saying something like, \"\"Live like no one else so that you can live like no one else.\"\" Many people in their 30s and 40s are struggling under mortgages, perhaps long-left-over student loan debt, credit card debt, auto loans, and not enough retirement savings because they had \"\"fun\"\" while they were young. Do you have any remaining debt? Pay it off early instead of saving so much. Perhaps you'll find that you prefer to hit that age with a fully paid off home and car, savings for your future goals (kids' college tuitions, early retirement, etc.). Maybe you want to be able to afford some land or a place in a very high cost of living city. In other words - now is the time to set your dreams and allocate your spare cash towards them. Life's only going to get more expensive if you choose to have a family, so save what you can as early as possible.\"",
"title": ""
},
{
"docid": "34b8238b9b341a369a39f1f688b488d3",
"text": "\"If you don't plan to stay in it, it is never good money to try to buy a house in a bad neighborhood. The question you want to be asking is probably \"\"Is it smart to buy this piece of real estate,\"\" not \"\"is it smart to buy a house in college.\"\" In this case, it's probably not smart because you won't actually have revenue from the property (you'll break even compared to renting), you may face some expensive repairs (water heater or other appliances going out, etc.), and you may find that your startup costs in things like lawn mowers, etc. is not worth the hassle (or cost of lawn service if you have someone else do it.) On top of that, can you get a loan with your proven income and assets? Don't forget to factor the cost of selling the house again into it -- and how long can you leave it on the market after you move out if it doesn't sell without going bankrupt yourself? In my opinion, it'd be a giant albatross around your neck.\"",
"title": ""
},
{
"docid": "b17769ae176dec951f352f9edcad1a0c",
"text": "\"According to your numbers, you just stated that you spend approximately $1500 in discretionary expenditures per month, yet are unable to save. I fully realize that living in a big city is usually expensive, but on your (presumably after-tax) salary, I think you can easily save a substantial portion of your income. As others have already noted, enforcing saving of a significant portion of your discretionary income is the most obvious step. It's easy to say, but I suspect that if you are like most people who have difficulty saving, the psychological impact of quitting your previous spending habits \"\"cold turkey\"\" is likely to be very harsh, all the more so if you have an active social life. You may find yourself becoming depressed or resentful at \"\"having\"\" to save. You may lose motivation to work as hard because you might think that you're putting away all this money for the distant future, whereas you are young now and want to enjoy life while you can. It is in this context, then, that I looked at your other financial obligations. Paying $1300/month to your parents is a lot. It's over 20% of your after-tax salary. You do not specify the reasons for doing this other than a vague sense of familial duty, but my recommendation is to see if this could be reduced somewhat. If you can bring it down to $1000/month, that $300 would go into your savings, and you would psychologically feel a lot better about putting, say, $600 of your own discretionary income into savings as well. Now you have, all told, about $1000/month of savings without severely curtailing your extra expenditures. But I would start with that $1500/month of luxury spending first. And yes, you do need to view it as luxury spending. The proper frame of mind is to compare your financial situation to someone who is truly unable to save because their entire income is spent on actual necessities: food and shelter; their effective tax rate is 0% because they earn too little; and they usually find themselves in debt because they cannot make ends meet. Now look back at that $1500/month. Can you honestly say that you cannot afford to cut that spending?\"",
"title": ""
},
{
"docid": "e6d65c6d831b287676fd8d5364f40eac",
"text": "There are, of course, many possible financial emergencies. They range from large medical expenses to losing your job to being sued to major home or car repairs to who-knows-what. I suppose some people are in a position where the chances that they will face any sort of financial emergency are remote. If you live in a country with national health insurance and there is near-zero chance that you will have any need to go outside this system, you are living with your parents and they are equipped to handle any home repairs, you ride the bus or subway and don't own a car so that's not an issue, etc etc, maybe there just isn't any likely scenario where you'd suddenly need cash. I can think of all sorts of scenarios that might affect me. I'm trying to put my kids through college, so if I lost my job, even if unemployment benefits were adequate to live on, they wouldn't pay for college. I have terrible health insurance so big medical bills could cost me a lot. I have an old car so it could break down any time and need expensive repairs, or even have to be replaced. I might suddenly be charged with a crime that I didn't commit and need a lawyer to defend me. Etc. So in a very real sense, everyone's situation is different. On the other hand, no matter how carefully you think it out, it's always possible that you will get bitten by something that you didn't think of. By definition, you can't make a list of unforeseen problems that might affect you! So no matter how safe you think you are, it's always good to have some emergency fund, just in case. How much is very hard to say.",
"title": ""
},
{
"docid": "dcfb94807ecbf6a57b0435b1d135e4c6",
"text": "\"Assuming the renter was properly vetted, the only question worth asking is \"\"what has changed in your life?\"\" Perhaps one of the earners has lost a job, or has moved out because a couple has broken up. If nothing has changed but they just don't feel like paying you, start the eviction process. If something has changed and you assess that it's temporary (I lent my brother money and he didn't pay me back - I'll be behind for a few months but I will catch up; my employer went out of business and didn't pay me for the last two weeks - I have a new job already and am waiting for my first paycheque) then perhaps you are willing to wait. If something has changed and it seems pretty permanent then you might reluctantly start the process. Depending on how long it takes where you live, the renter might get things under control before you finish.\"",
"title": ""
},
{
"docid": "2681455c470c3c82c7109f331a923077",
"text": "I'd be curious to compare current rent with what your overhead would be with a house. Most single people would view your current arrangement as ideal. When those about to graduate college ask for money advice, I offer that they should start by living as though they are still in college, share a house or multibedroomed apartment and sack away the difference. If you really want to buy, and I'd assume for this answer that you feel the housing market in your area has passes its bottom, I'd suggest you run the numbers and see if you can buy the house, 100% yours, but then rent out one or two rooms. You don't share your mortgage details, just charge a fair price. When the stars line up just right, these deals cost you the down payment, but the roommates pay the mortgage. I discourage the buying by two or more for the reasons MrChrister listed.",
"title": ""
},
{
"docid": "f11d7ecd4c9cdce45d294a32031f9d3c",
"text": "To be honest, if it's a home all of you share you should try and save the home for your parents. your 26, you will have plenty of time to make 30k again. Having a home headquarters will bring some security to the family. Not only that your parents are old now, it could be hard for them to get another home. They have sacrificed for you, so maybe you should sacrifice for them? Thank god i have no family.",
"title": ""
},
{
"docid": "fe641ec5ad4250f5b01cdca09248e555",
"text": "What you haven't mentioned is the purchase risk. You say that she will buy but then say you will be on the loan. If you are on the loan, essentially you will be purchasing a rental property and renting to your mother. So that is the analysis you need to consider. You need to be financially able to take on this purchase and be willing to be a landlord. The ten year timeline looks good on paper. This may not be realistic, especially with an aging parent. What if after 4 years, she can't stay in that condo? What renting buys is flexibility. If she needs money for any reason, it is not tied up in an asset and unavailable. She is able it move if necessary. If she won't need the money, she should buy in cash. That, by far, gives her the best deal.",
"title": ""
},
{
"docid": "2140584e169d629a1d505262f59597bf",
"text": "Smart parents not wanting to get stuck with a student loan or co-signing on a loan. because rent is so high Are you able to live with your parents? Is there anyway to reduce the cost of rent like renting a room? Can you move somewhere where the rent is cheaper? working 25 hours per week Working 25 hours per week and taking 6 hours is a pretty light schedule. It is not even 40 hours per week. What is stopping you from working 40 hours and paying for school from your salary? In my own life I created a pretty crappy situation for myself when I was a young man. I really wanted to go to a prestigious university, but ended up going to a community college, and then to a university that was lesser known in a less expensive area. I had to work like crazy, upwards of 50 hours per week. I also took a full load in a difficult degree program. You probably don't have to go to the extremes that I went through, but you can work more. Most adults work at their jobs well more than 40 hours per week, then come home and continue to work (on the house, raising kids, trying to start a side business, etc...). So you might as well become an adult now. There are ways to become independent from your parents for FAFSA like have a baby, get married, or join the military. I'd only recommend the last one as you will also receive the GI Bill. Another option is to try and obtain a job that offers financial aid.",
"title": ""
},
{
"docid": "6950d92f340ffdb328d15afac8299aba",
"text": "BLUF: Continue renting, and work toward financial independence, you can always buy later if your situation changes. Owning the house you live in can be a poor investment. It is totally dependent on the housing market where you live. Do the math. The rumors may have depressed the market to the point where the houses are cheaper to buy. When you do the estimate, don't forget any homeowners association fees and periodic replacement of the roof, HVAC system and fencing, and money for repairs of plumbing and electrical systems. Calculate all the replacements as cost over the average lifespan of each system. And the repairs as an average yearly cost. Additionally, consider that remodeling will be needful every 20 years or so. There are also intangibles between owning and renting that can tip the scales no matter what the numbers alone say. Ownership comes with significant opportunity and maintenance costs and is by definition not liquid, but provides stability. As long as you make your payments, and the government doesn't use imminent domain, you cannot be forced to move. Renting gives you freedom from paying for maintenance and repairs on the house and the freedom to move with only a lease to break.",
"title": ""
},
{
"docid": "bd51bd1a02a76631d26e89cfa4df81fc",
"text": "You're welcome. Pm me if you have questions. Ideally you would get to a point where you are debt free save a mortgage if that's where you are heading. Your interest rates a low enough save the credit card debt that you may want to look into an investment portfolio. Especially if you have more than $3k in cash. You don't need to keep that much cash at your age. Most investments are liquid enough you could get it out in a couple of days in case of an emergency. Though you will want to think about how taxes and market timing could affect you.",
"title": ""
}
] |
fiqa
|
1fb8eeb61bfd74a9bbfc6eed091fa748
|
Bank denying loan after “subject-to” appraisal: What to do?
|
[
{
"docid": "b11a00537c257f650ed6a54ae8d0c128",
"text": "I'm not sure about your first two options. But given your situation, a variant of option three seems possible. That way you don't have to throw away your appraisal, although it's possible that you'll need to get some kind of addendum related to the repairs. You also don't have your liquid money tied up long term. You just need to float it for a month or two while the repairs are being done. The bank should be able to preapprove you for the loan. Note that you might be better off without the loan. You'll have to pay interest on the loan and there's extra red tape. I'd just prefer not to tie up so much money in this property. I don't understand this. With a loan, you are even more tied up. Anything you do, you have to work with the bank. Sure, you have $80k more cash available with the loan, but it doesn't sound like you need it. With the loan, the bank makes the profit. If you buy in cash, you lose your interest from the cash, but you save paying the interest on the loan. In general, the interest rate on the loan will be higher than the return on the cash equivalent. A fourth option would be to pay the $15k up front as earnest money. The seller does the repairs through your chosen contractor. You pay the remaining $12.5k for the downpayment and buy the house with the loan. This is a more complicated purchase contract though, so cash might be a better option. You can easily evaluate the difficulty of the second option. Call a different bank and ask. If you explain the situation, they'll let you know if they can use the existing appraisal or not. Also consider asking the appraiser if there are specific banks that will accept the appraisal. That might be quicker than randomly choosing banks. It may be that your current bank just isn't used to investment properties. Requiring the previous owner to do repairs prior to sale is very common in residential properties. It sounds like the loan officer is trying to use the rules for residential for your investment purchase. A different bank may be more inclined to work with you for your actual purchase.",
"title": ""
},
{
"docid": "b93a5d77409254fa60210ce84930525a",
"text": "\"The first red-flag here is that an appraisal was not performed on an as-is basis - and if it could not be done, you should be told why. Getting an appraisal on an after-improvement basis only makes sense if you are proposing to perform such improvements and want that factored in as a basis of the loan. It seems very bizarre to me that a mortgage lender would do this without any explanation at all. The only way this makes sense is if the lender is only offering you a loan with specific underwriting guidelines on house quality (common with for instance VA-loans and how they require the roof be of a certain maximum age - among dozens of other requirements, and many loan products have their own standards). This should have been disclosed to you during the process, but one can certainly never assume anyone will do their job properly - or it may have only mentioned in some small print as part of pounds of paper products you may have been offered or made to sign already. The bank criteria is \"\"reasonable\"\" to the extent that generally mortgage companies are allowed to set underwriting criteria about the current condition of the house. It doesn't need to be reasonable to you personally, or any of us - it's to protect lender profits by aiding their risk models. Your plans and preferences don't even factor in to their guidelines. Not all criteria are on a a sliding scale, so it doesn't necessarily matter how well you meet their other standards. You are of course correct that paying for thousands of dollars in improvements on a house you don't own is lunacy, and the fact that this was suggested may on it's own suggest you should cut your losses now and seek out a different lender. Given the lender being uncooperative, the only reason to stick with it seems to be the sunk cost of the appraisal you've already paid for. I'd suggest you specifically ask them why they did not perform an as-is appraisal, and listen to the answer (if you can get one). You can try to contact the appraiser directly as well with this question, and ask if you can have the appraisal strictly as-is without having a new appraisal. They might be helpful, they might not. As for taking the appraisal with you to a new bank, you might be able to do this - or you might not. It is strictly up to each lender to set criteria for appraisals they accept, but I've certainly known of people re-using an appraisal done sufficiently recently in this way. It's a possibility that you will need to write off the $800 as an \"\"education expense\"\", but it's certainly worth trying to see if you can salvage it and take it with you - you'll just have to ask each potential lender, as I've heard it go both ways. It's not a crazy or super-rare request - lenders backing out based on appraisal results should be absolutely normal to anyone in the finance business. To do this, you can just state plainly the situation. You paid for an appraisal and the previous lender fell through, and so you would like to know if they would be able to accept that and provide you with a loan without having to buy a whole new appraisal. This would also be a good time to talk about condition requirements, in that you want a loan on an as-is basic for a house that is inhabitable but needs cosmetic repair, and you plan to do this in cash on your own time after the purchase closes. Some lenders will be happy to do this at below 75%-80% LTV, and some absolutely do not want to make this type of loan because the house isn't in perfect condition and that's just what their lending criteria is right now. Based on description alone, I don't think you really should need to go into alternate plans like buy cash and then get a home equity loan to get cash out, special rehab packages, etc. So I'd encourage you to try a more straight-forward option of a different lender, as well as trying to get a straight answer on their odd choice of appraisal order that you paid for, before trying anything more exotic or totally changing your purchase/finance plans.\"",
"title": ""
}
] |
[
{
"docid": "b74742b32b99f9bd32cd60cc84d3206f",
"text": "\"Often the counter-party has obligations with respect to timelines as well -- if your buying a house, the seller probably is too, and may have a time-sensitive obligation to close on the deal. I'm that scenario, carrying the second mortgage may be enough to make that deal fall through or result in some other negative impact. Note that \"\"pre-approval\"\" means very little, banks can and do pass on deals, even if the buyer has a good payment history. That's especially true when the economy is not so hot -- bankers in 2011 are worried about not losing money... In 2006, they were worried about not making enough!\"",
"title": ""
},
{
"docid": "fa3d4b96522bea88e0bdae412d40b18e",
"text": "\"There is considerable truth to what your realtor said about the Jersey City NJ housing market these days. It is a \"\"hot\"\" area with lots of expensive condos being bought up by people working on Wall Street in NYC (very easy commute by train, etc) and in many cases, the offers to purchase can exceed the asking price significantly. Be that as is may, the issue with accepting a higher offer but smaller downpayment is that when the buyer's lender appraises the property, the valuation might come in lower and the buyer may have to come up with the difference, or be required to accept a higher interest rate, or be refused the loan altogether if the lender estimates that the buyer is likely to default on the loan because his credit-worthiness is inadequate to support the monthly payments. So, the sale might fall through. Suppose that the property is offered for sale at $500K, and consider two bids, one for $480K with 30% downpayment ($144K) and another for $500K with 20% downpayment ($100K). If the property appraises for $450K, say, and the lender is not willing to lend more than 80% of that ($360K), then Buyer #1 is OK; it is only necessary to borrow $480K - $144K = $336K, while Buyer #2 needs to come up with another $40K of downpayment to be able to get the loan, or might be asked to pay a higher interest rate since the lender will be lending more than 80% of the appraised value, etc. Of course, Buyer #2's lender might be using a different appraiser whose valuation might be higher etc, but appraisals usually are within the same ballpark. Furthermore, good seller's agents can make good estimates of what the appraisal is likely to be, and if the asking price is larger than the agent's estimate of appraised value, then it might be to the advantage of the selling agent to recommend accepting the lower offer with higher downpayment over the higher offer with smaller downpayment. The sale is more likely to go through, and an almost sure 6% of $480K (3% if there is a buyer's agent involved) in hand in 30 days time is worth more than a good chance of nothing at the end of 15 days when the mortgage is declined, during which the house has been off the market on the grounds that the sale is pending. If you really like a house, you need to decide what you are willing to pay for it and tailor your offer accordingly, keeping in mind what your buyer's agent is recommending as the offer amount (the higher the price, the more the agent's commission), how much money you can afford to put down as a downpayment (don't forget closing costs, including points that might be need to be paid), and what your pre-approval letter says about how much mortgage you can afford. If you are Buyer #1, have a pre-approval letter for $360K, and have enough savings for a downpayment of up to $150K, and if you (or your spouse!) really, really, like the place and cannot imagine living in any other place, then you could offer $500K with 30% down (and blow the other offer out of the water). You could even offer more than $500K if you want. But, this is a personal decision. What your realtor said is perfectly true in the sense that for Y > Z, an offer at $X with $Y down is better than an offer at $X with $Z down. It is to a certain extent true that for W > X, a seller would find an offer at $X with $Y down to be more attractive that an offer at $W with $Z$ down, but that depends on what the appraisal is likely to be, and the seller's agent's recommendations.\"",
"title": ""
},
{
"docid": "3861087c248e59a31cf6b40248e0cf0f",
"text": "I wanted to know that what if the remaining 40% of 60% in a LTV (Loan to Value ratio ) for buying a home is not paid but the borrower only wants to get 60% of the total amount of home loan that is being provided by lending company. Generally, A lending company {say Bank] will not part with their funds unless you first pay your portion of the funds. This is essentially to safeguard their interest. Let's say they pay the 60% [either to you or to the seller]; The title is still with Seller as full payment is not made. Now if you default, the Bank has no recourse against the seller [who still owns the title] and you are not paying. Some Banks may allow a schedule where the 60/40 may be applied to every payment made. This would be case to case basis. The deal could be done with only paying 20% in the beginning to the buyer and then I have to pay EMI's of $7451. The lending company is offering you 1.1 million assuming that you are paying 700K and the title will be yours. This would safeguard the Banks interest. Now if you default, the Bank can take possession of the house and recover the funds, a distress sale may be mean the house goes for less than 1.8 M; say for 1.4 million. The Bank would take back the 1.1 million plus interest and other closing costs. So if you can close the deal by paying only 20%, Bank would ask you to close this first and then lend you any money. This way if you are not able to pay the balance as per the deal agreement, you would be in loss and not the Bank.",
"title": ""
},
{
"docid": "429d032007dcb3fc973f02149c9d81d6",
"text": "Banks in New Zealand tend to take a lien that is higher than the amount of the loan, so that your only option for a second mortgage is with them. ASB wanted 50% more than the value of the loan when I had my mortgage with them. Of course, with house price inflation the way it's been in NZ, the value of your house may have outstripped the lien anyway, and you can mortgage the rest of it with anyone you like. I suspect your lawyer will need to inform the other lienholder, but you don't need their permission.",
"title": ""
},
{
"docid": "91b0b134e6ab3649906599f949af935f",
"text": "The bank doesn't want to loan you money to build a house on property you don't own. What happens if the owner gets mad at you and wants you to leave? What happens if the owner's will gives the land to somebody else? The bank would be taking a big risk. You need to buy the land before building the house.",
"title": ""
},
{
"docid": "7927517d12481b9d1660cac99e8367d5",
"text": "Never ever use a giant monster mega bank for home loans. I am sure you probably didn't and they bought your loan from someone else. You have no legal options. What you should do Is look at getting a new loan maybe a 15 year loan. Your payment might be the same with no PMI. I would check with a relator to see what they think your home is worth. Also if you have any money you can always pay extra to the principle and get yourself to 20% based on the next appraisal. You might have a legal option regarding what they say you need in value 350k is what it should appraise to for you to get rid of pmi when you owe 280k Remember Citibank is a publicly traded company and their goal is to make more money. The CEO has a fiduciary relationship with stock holders not customers. They seriously have board meetings to figure out what charges they can invent to screw their customers and make shitloads of money. There is no incentive for them to let you get out of your PMI.",
"title": ""
},
{
"docid": "4a5d9fd18704adeef6278900266fbf8d",
"text": "\"The comments are getting too much, but to verify that you are not insane, you are being bullied. It sounds like this is a sub-prime loan, of which you are wisely trying to get out of. It also sounds like they are doing everything in their power to prevent you from doing so. For them you are a very profitable customer. This might take some legwork for you, but depending on how bad they are violating the law they might be willing to forgive the loan. What I am trying to say, it might be very worth your while! Your first step will be looking for any free resources at your disposal: Just be cautious as many \"\"credit representation\"\" type business are only offering loan consolidation. That is not what you need. Fight those bastards!\"",
"title": ""
},
{
"docid": "7e5fe8aaa425cd08ca576a07c27c3f16",
"text": "You'd have to consult a lawyer in the state that the transaction took place to get a definitive answer. And also provide the details of the contract or settlement agreement. That said, if you clearly presented the check as payment (verbally or otherwise) and they accepted and cashed the check, and it cleared, you should have good legal standing to force them to finalize the payment. While they had every right to refuse the payment, and also every right to place a hold on the credit until the transaction cleared their bank, they don't have the right to simply claim the payment as a gift just because it came in a different form than they specified in the contract. Obviously this is a lesson learned on reading the fine print though. And, to be frank, it sounds like someone wants to make life difficult for you for whatever reason. And if that is the case I would refer back to my initial comment about contacting a lawyer in that state.",
"title": ""
},
{
"docid": "40a3ed42a95a261f1ea50c917cd0b435",
"text": "Make sure that when you have the loan you still contribute enough to get the company match. For example: An inability to maximize the match might need to be figured into the opportunity cost of the loan. Some companies will suspend your contributions for a specific number of months for a hardship withdraw. Make sure you understand where the money comes from for the loan. Can you count the money that the company matched but you are not vested with, when determining the maximum amount of the loan? If the money is in what is now a closed fund can you replenish the funds back into that fund if use it to fund the loan? Know what the repayment time period is of the loan.",
"title": ""
},
{
"docid": "eaec0527d5e0ab0cafc2ab3505c52c0c",
"text": "If I understand correctly you describe putting a hold on an appartment as such: A sum of money that you give to the owner of the appartment to let them hold it for you because you are probably going to rent. In case you back out of the deal, this money can mitigate the expected loss from turning down other candidates. After asking them to hold the appartment for you, you decided not to rent. Also, you used the bank to get back the hold sum. Regardless of the legal details, it seems very clear to me that after putting down a hold and walking away, you should not get the money back. There may have been some things that distracted/confused you (call about the key), but if you actually look at the things that happened it seems both right and practical to pay them their reclaimed hold as soon as possible.",
"title": ""
},
{
"docid": "072994dbe625e6a32f9f58bd362b5233",
"text": "There is no law requiring someone to return a refused check. You need to clarify whether this payment is to establish a retainer, or to pay for services rendered. Either way you should stop payment on the check and send them a certified letter explaining that you are stopping payment on the check because they refused it. If the payment is to establish a retainer, then the issue is simple: the lawyer requires $10,000 as a retainer before you can engage them and until then you have no relationship with them. If that is the amount they want, then less than that is not accepted. If the payment is for services rendered already and you owe them money, then it is a completely different situation. Refusing partial payment means they are getting ready to sue you. In a collection suit, the larger the amount is, the better. Normally, someone owed money will only refuse a partial payment if they anticipate having to sue the debtor and they want to maximize their leverage in case of a court judgement in their favor. A creditor has the right to refuse a partial payment.",
"title": ""
},
{
"docid": "ffd1a93e5ba8df50304b578f7aee6402",
"text": "As far as I can see, this is an issue of the bank's policy rather than some legal regulation. That means that you'll need to work it out with the bank. To give you a couple of ideas to work with when you talk with them, maybe something from this list will work: Good luck!",
"title": ""
},
{
"docid": "8a5bb0e9b47404b931db4000eeea9f93",
"text": "It's sad. My mother lost her job after a brutal divorce. BOA bought up Countrywide, then when my mother pleaded for assistance BOA said they could not help her unless she was behind/in default of her mortgage. She tried to do a deed-in-lieu with a lawyer and BOA refused to accept the deed-in-lieu many times. Then BOA sold her mortgage to Green Tree (?) and they refused her deed-in-lieu as well. This went on for over 2 years and they foreclosed on the house. I told my mother to sue because they should have accepted her deed-in-lieu because it was approved by the court in her bankruptcy but she was tired of trying to save her house that she just walked away. 6 months after she left and moved in with my sister Green Tree called her offering a refinance at a lower rate and a mortgage payment that was less than a typical car payment. Now 5 years later my mom is just going to pay cash for her house and never do a mortgage again.",
"title": ""
},
{
"docid": "a5d1e46007a73134f5a59e6f5781bd63",
"text": "To supplement existing answers: the appraised value does not necessarily represent the net amount the bank could actually recover with a foreclosure. Let's look at it from the point of view of the bank. Suppose the property appraises at $200,000 and they do what you want: loan you $200,000 with the property as collateral. Now suppose a short time later, you quit paying the mortgage and they have to foreclose. Can the bank get their $200,000 back? An appraisal is only an estimate; nobody can predict perfectly how much a property will sell for. Maybe the appraiser missed something significant, and the property will only fetch $180,000. Even if the appraisal was accurate when it was made, property values may have dropped in the meantime. Maybe a sudden economic crisis is driving real estate prices down across the board. Maybe interest rates have spiked. Maybe the county has changed the zoning regulations to locate a toxic waste dump next door to the property. In any of these cases, the property may again fetch well under $200,000. Maybe the condition of the property has changed. Perhaps you trashed the place and it will take $30,000 to clean it up. (People have a tendency to do things like that when they get foreclosed.) If the bank wants to get full market value for the property, they will incur the usual costs of selling a property: paying a real estate agent's commission, painting, renting furniture to stage the property, and so on. This will eat into the net amount they actually get from the sale. It may take some time (perhaps months) for a property to sell at its full market value. During this time, the bank is out $200,000. That's money they would rather be loaning out at interest to someone else, so this represents lost income. Foreclosing a mortgage is a fairly complicated procedure. The bank has to pay its staff, including lawyers, for a significant number of hours to get the foreclosure done. There will be court filing fees and so on. If you refuse to leave, they may have to get the sheriff to evict you; that has a fee as well. If you fight the foreclosure, that racks up even more legal fees. This too eats into the net proceeds from the sale. So if the bank loans you the full $200,000, they stand a pretty significant risk of not getting all of it back, after expenses. You can understand that risk may not be worth the interest they would get from you on the extra $40,000. On the other hand, if they loan you only 80% of the property's appraised value ($160,000), they effectively shift that risk onto you. Should you default on the loan, and they foreclose, all they have to do is sell the property for $160,000 or a little bit more. That shouldn't be too hard, even if it is not freshly painted or a bit trashed. They probably don't need to hire a real estate agent: just hold a quick auction, maybe first calling up a few investors who might be interested in flipping it. If it happens to sell for more than the outstanding principal of the loan, plus the bank's costs, then they will pay you the difference; but they have no incentive to make that happen, and every incentive to just get it sold quick. So any difference between the property's true value and the actual sale price now represents a loss to you first, not to the bank. So you can see why the bank would rather not loan you the full value of the property. 80% is a somewhat arbitrary figure but it cuts their risk by a lot.",
"title": ""
},
{
"docid": "57a7e001107705c229929c34469f426f",
"text": "It's just possible that if you have your home appraised (probable cost a few hundred $), and the value is sufficiently higher than what the mortgage company is owed, that they will let this slide, since they are covered. Many banks, at least, allow secured lines of credit against the equity in your home, and allow the amount of the loan to increase if/as the value of the property goes up and your equity increases. However, I'd run this by the mortgage company before investing in the appraisal, since they may not be as flexible this way as the banks I've dealt with, and in any case it's a gamble unless you are certain of the value of your property.",
"title": ""
}
] |
fiqa
|
f3a06c25d077f0897aa68d563e1024ac
|
Why do P/E ratios for a particular industry tend to cluster around particular values?
|
[
{
"docid": "7e16bf72b7e84e7aac3a2eb57a804450",
"text": "\"This falls under value investing, and value investing has only recently picked up study by academia, say, at the turn of the millennium; therefore, there isn't much rigorous on value investing in academia, but it has started. However, we can describe valuations: In short, valuations are randomly distributed in a log-Variance Gamma fashion with some reason & nonsense mixed in. You can check for yourself on finviz. You can basically download the entire US market and then some, with many financial and technical characteristics all in one spreadsheet. Re Fisher: He was tied for the best monetary economist of the 20th century and created the best price index, but as for stocks, he said this famous quote 12 days before the 1929 crash: \"\"Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as (bears) have predicted. I expect to see the stock market a good deal higher within a few months.\"\" - Irving Fisher, Ph.D. in economics, Oct. 17, 1929 EDIT Value investing has almost always been ignored by academia. Irving Fisher and other proponents of it before it was codified by Graham in the mid 20th century certainly didn't help with comments like the above. It was almost always believed that it was a sucker's game, \"\"the bigger sucker\"\" game to be more precise because value investors get destroyed during recession/collapses. So even though a recessionless economy would allow value investors and everyone never to suffer spontaneous collapses, value investors are looked down upon by academia because of the inevitable yet nearly always transitory collapse. This expresses that sentiment perfectly. It didn't help that Benjamin Graham didn't care about money so never reached the heights of Buffett who frequently alternates with Bill Gates as the richest person on the planet. Buffett has given much credibility, and academia finally caught on around in 2000 or so after he was proven right about a pending tech collapse that nearly no one believed would happen; at least, that's where I begin seeing papers being published delving into value concepts. If one looks harder, academia's even taken the torch and discovered some very useful tools. Yes, investment firms and fellow value investors kept up the information publishing, but they are not academics. The days of professors throwing darts at the stock listings and beating active managers despite most active managers losing to the market anyways really held back this side of academia until Buffett entered the fray and embarrassed them all with his club's performance, culminating in the Superinvestors article which is still relatively ignored. Before that, it was the obsession with beta, the ratio of a security's variance to its covariance to the market, a now abandoned theory because it has been utterly discredited; the popularizers of beta have humorously embraced the P/B, not giving the satisfaction to Buffet by spurning the P/E. Tiny technology firms receive ridiculous valuations because a long-surviving tiny tech firm usually doesn't stay small for long thus will grow at huge rates. This is why any solvent and many insolvent tech firms receive large valuations: risk-adjusted, they should pay out huge on average. Still, most fall by the wayside dead, and those 100 P/S valuations quickly crumble. Valuations are influenced by growth. One can see this expressed more easily with a growing perpetuity: Where P is price, i is income, r is the rate of return, and g is the growth rate of i. Rearranging, r looks like: Here, one can see that a higher P relative to i will dull the expected rate of return while a higher g will boost it. It's fun for us value investor/traders to say that the market is totally inefficient. That's a stretch. It's not perfectly inefficient, but it's efficient. Valuations are clustered very tightly around the median, but there are mistakes that even us little guys can exploit and teach the smart money a lesson or two. If one were to look at a distribution of rs, one'd see that they're even more tightly packed. So while it looks like P/Es are all over the place industry to industry, rs are much more well clustered. Tech, finance, and discretionaries frequently have higher growth rates so higher P/Es yet average rs. Utilities and non-discretionaries have lower growth rates so lower P/Es yet average rs.\"",
"title": ""
}
] |
[
{
"docid": "0f3adf4b5a6d10cd96ff4f1b65cca73f",
"text": "P/E can use various estimates in its calculation as one could speculate about future P/E rations and thus could determine a future valuation if one is prepared to say that the P/E should be X for a company. Course it is worth noting that if a company isn't generating positive earnings this can be a less than useful tool, e.g. Amazon in the 1990s lost money every quarter and thus would have had a N/A for a P/E. PEG would use P/E and earnings growth as a way to see if a stock is overvalued based on projected growth. If a company has a high P/E but has a high earnings growth rate then that may prove to be worth it. By using the growth rate, one can get a better idea of the context to that figure. Another way to gain context on P/E would be to look at industry averages that would often be found on Yahoo! Finance and other sites.",
"title": ""
},
{
"docid": "3beff2f050d4a1efb3f16ba20425ebde",
"text": "Points are the units of measurement of the index. They're calculated based on the index formula, which in turn based on the prices of the underlying stocks. Movement in points is not really interesting, the movement as a percentage of the base price (daily opening, usually) is more interesting since it gives more context.",
"title": ""
},
{
"docid": "e5fd2fc3ea79e1c5c3779c8ed00a42f8",
"text": "\"Yes, there are non-stock analogs to the Price/Earnings ratio. Rental properties have a Price/Rent ratio, which is analogous to stocks' Price/Revenue ratio. With rental properties, the \"\"Cap Rate\"\" is analogous to the inverse of the Price/Earnings ratio of a company that has no long-term debt. Bonds have an interest rate. Depending on whether you care about current dividends or potential income, the interest rate is analogous to either a stock's dividend rate or the inverse of the Price/Earnings ratio.\"",
"title": ""
},
{
"docid": "9d9f02719dc4bd5d2fe38df5e59c278b",
"text": "In highly developed and competitive industries companies tread a continuous and very fine line between maximising shareholder profits by keeping prices up while making products as cheaply as possible, vs competitors lowering prices when they work out a way to make equivalents cheaper. In the short run you will quite often see companies hold onto large portions of efficiency savings (particularly if they make a major breakthrough in a specific manufacturing process etc) by holding old prices up, but in the long run competition pretty quickly lowers prices as the companies trying to keep high margins and prices get ruthlessly undercut by smaller competitors happy to make a bit less.",
"title": ""
},
{
"docid": "34bbcb90aefee6b1b90f85ab10a1b6d5",
"text": "While there are many very good and detailed answers to this question, there is one key term from finance that none of them used and that is Net Present Value. While this is a term generally associate with debt and assets, it also can be applied to the valuation models of a company's share price. The price of the share of a stock in a company represents the Net Present Value of all future cash flows of that company divided by the total number of shares outstanding. This is also the reason behind why the payment of dividends will cause the share price valuation to be less than its valuation if the company did not pay a dividend. That/those future outflows are factored into the NPV calculation, actually performed or implied, and results in a current valuation that is less than it would have been had that capital been retained. Unlike with a fixed income security, or even a variable rate debenture, it is difficult to predict what the future cashflows of a company will be, and how investors chose to value things as intangible as brand recognition, market penetration, and executive competence are often far more subjective that using 10 year libor rates to plug into a present value calculation for a floating rate bond of similar tenor. Opinion enters into the calculus and this is why you end up having a greater degree of price variance than you see in the fixed income markets. You have had situations where companies such as Amazon.com, Google, and Facebook had highly valued shares before they they ever posted a profit. That is because the analysis of the value of their intellectual properties or business models would, overtime provide a future value that was equivalent to their stock price at that time.",
"title": ""
},
{
"docid": "ea277e4ed379486c09e3bbc1d31fd249",
"text": "Your analysis is correct. The income statement from Google states that LinkedIn made $3.4 million in 2010 - the same number you backed into by using the P/E ratio. As you point out, the company seems overvalued compared to other mature companies. There are companies, however, that posts losses and still trade on exchanges for years. How should these companies be valued? As other posters have pointed out there are many different ways to value a company. Some investors may be speculating on substantial growth. Others may be speculating on IPO hype. Amazon did not make a profit until 2003. Its stock had been around for years before that and even split many times. If you bought the stock in 1998 and still have it you would be doing quite well.",
"title": ""
},
{
"docid": "6bf6a14a1513d13c389d1123443d40fb",
"text": "\"P/E is a useful tool for evaluating the price of a company, but only in comparison to companies in similar industries, especially for industries with well-defined cash flows. For example, if you compared Consolidated Edison (NYSE:ED) to Hawaiian Electric (NYSE:HE), you'll notice that HE has a significantly higher PE. All things being equal, that means that HE may be overpriced in comparison to ED. As an investor, you need to investigate further to determine whether that is true. HE is unique in that it is a utility that also operates a bank, so you need to take that into account. You need to think about what your goal is when you say that you are a \"\"conservative\"\" investor and look at the big picture, not a magic number. If conservative to you means capital preservation, you need to ensure that you are in investments that are diversified and appropriate. Given the interest rate situation in 2011, that means your bonds holding need to be in short-duration, high-quality securities. Equities should be weighted towards large cap, with smaller holdings of international or commodity-associated funds. Consider a target-date or blended fund like one of the Vanguard \"\"Life Strategy\"\" funds.\"",
"title": ""
},
{
"docid": "8bee78018b81af59a0e3e08da5d804a6",
"text": "The article is talking about relative cost. You could use the cash Schiller P/E ratio as a proxy. That's unit of price per unit of earning. The answer to your question is one time in history, during the 2000 dot com bubble. It's higher than 2008 before the downturn. You are paying more for the same earnings. That has nothing to do with the size of the economy and everything to do with interest rates being too low for too long",
"title": ""
},
{
"docid": "4c0181979f92ee71a72352910947e00d",
"text": "\"The \"\"random walk\"\" that you describe reflects the nature of the information flow about the value of a stock. If the flow is just little bits of relatively unimportant information (including information about the broader market and the investor pool), you will get small and seemingly random moves, which may look like a meander. If an important bit of information comes out, like a merger, you will see a large and immediate move, which may not look as random. However, the idea that small moves are a meander of search and discovery and large moves are immediate agreements is incorrect. Both small moves and large moves are instantaneous agreements about the value of a stock in the form of a demand/supply equilibrium. As a rule, neither is predictable from the point of view of a single investor, but they are not actually random. They look different from each other only because of the size of the movement, not because of an underlying difference in how the consensus price is reached.\"",
"title": ""
},
{
"docid": "b903171e5ccf5976a0e9468d1cb7e160",
"text": "\"For any isolated equity market, its beta will less resemble the betas of all other interconnected equity markets. For interconnected markets, beta is not well-dispersed, especially during a world expansion because richer nations have more wealth thus a dominant influence over smaller nations' equity markets causing a convergence. If the world is in recession, or a country is in recession, all betas or the recessing country's beta will start to diverge, respectively. If the world's economies diverge, their equity markets' betas will too. If a country is having financial difficulty, its beta too will diverge. Beta is correlation against a ratio of variance, so variance or \"\"volatiliy\"\" is only half of that equation. Correlation or \"\"direction\"\" is the other half. The ratio of variance will give the magnitude of beta, and correlation will give the sign or \"\"direction\"\". Therefore, interconnected emerging equity markets should have higher beta magnitudes because they are more variant but should generally over time have signs that more closely resemble the rest. A disconnected emerging equity market will improbably have average betas both by magnitude and direction.\"",
"title": ""
},
{
"docid": "f2ec640fa7f7a0b70da50dfc98da4ee5",
"text": "\"To add on to the other answers, in asking why funds have different price points one might be asking why stocks aren't normalized so a unit price of $196 in one stock can be directly compared to the same price in another stock. While this might not make sense with AAPL vs. GOOG (it would be like comparing apples to oranges, pun intended, not to mention how would two different companies ever come to such an agreement) it does seem like it would make more sense when tracking an index. And in fact less agreement between different funds would be required as some \"\"natural\"\" price points exist such as dividing by 100 (like some S&P funds do). However, there are a couple of reasons why two different funds might price their shares of the same underlying index differently. Demand - If there are a lot of people wanting the issue, more shares might be issued at a lower price. Or, there might be a lot of demand centered on a certain price range. Pricing - shares that are priced higher will find fewer buyers, because it makes it harder to buy round lots (100 shares at $100/share is $10,000 while at $10/share it's only $1000). While not everyone buys stock in lots, it's important if you do anything with (standardized) options on the stock because they are always acting on lots. In addition, even if you don't buy round lots a higher price makes it harder to buy in for a specific amount because each unit share has a greater chance to be further away from your target amount. Conversely, shares that are priced too low will also find fewer buyers, because some holders have minimum price requirements due to low price (e.g. penny) stocks tending to be more speculative and volatile. So, different funds tracking the same index might pick different price points to satisfy demand that is not being filled by other funds selling at a different price point.\"",
"title": ""
},
{
"docid": "0adb3fdabed361261d5cea1a20e2cffd",
"text": "One problem is that P/E ratio only looks at the last announced earnings. Let's take your manufacturing plant with a P/E of 12.5. Then they announce a major problem that will hurt future earnings and the price drops in half. Now the P/E is 6.25. It looks great, but since there aren't any new earnings that reflect the problem, it's very misleading.",
"title": ""
},
{
"docid": "392d53e0c27b44b922d2b8d50513eb4d",
"text": "\"You can think of the situation as a kind of Nash equilibrium. If \"\"the market\"\" values stock based on the value of the company, then from an individual point of view it makes sense to value stock the same way. As an illustration, imagine that stock prices were associated with the amount of precipitation at the company's location, rather than the assets of the company. In this imaginary stock market, it would not benefit you to buy and sell stock according to the company's value. Instead, you would profit most from buying and selling according to the weather, like everyone else. (Whether this system — or the current one — would be stable in the long-term is another matter entirely.)\"",
"title": ""
},
{
"docid": "9693a8aeda6d310fd31f8997e1672f4e",
"text": "When fundamentals such as P/E make a stock look overpriced, analysts often point to other metrics. The PEG ratio, for example, can be applied to cast growth companies in a better light. Fundamental analysis is highly subjective. For further discussion on the pitfalls of fundamentals, I suggest A Random Walk Down Wall Street by Burton Malkiel.",
"title": ""
},
{
"docid": "aa3078ec6e69e72a7a071cc61a91b20a",
"text": "I'm not in the business but I've always thought that Catalyst + industry context = market beating returns. Meaning that if you know what an event means faster than everyone else you can make money. Though I don't know how you'd express that in a report. An example that comes to mind is when Japan announced they were forming a consortium, the largest in the world, to make LCD panel glass. After that I got the heck of GLW though the stock price kept going up at the time. It is like no one understood the implications.",
"title": ""
}
] |
fiqa
|
11fe8772d98aa53d7512959ddda58aab
|
In general, is it financially better to buy or to rent a house?
|
[
{
"docid": "4fd215464e90bb864b3b516173aaf6ff",
"text": "\"The general answer is: \"\"it depends on how long you want to live there\"\". Here is a good calculator to figure it out: http://www.nytimes.com/interactive/business/buy-rent-calculator.html Basically, if you plan to move in a few years, then renting makes more sense. It is a lot easier to move from an apartment when your lease is up versus selling a house, which can be subject to fluctuations in the real-estate market. As an example, during the real estate bubble, a lot of \"\"young professional\"\" types bought condos and town homes instead of renting. Now these people are married with kids, need to move somewhere bigger, but they can't get rid of their old place because they can't sell it for what they still owe. If these people had rented for a few years, they would be in a better position financially. (Many people fell for the mantra \"\"If you are renting, you are throwing your money away\"\", without looking at the long-term implications.) However, your question is a little unique, because you mentioned renting for the rest of your life, and putting the savings into an investment, which is a cool idea. (Thinking outside the box, I like it.) I'm going to assume you mean \"\"rent the same place for many years\"\" versus \"\"moving around the country every few years\"\". If you are staying in one place for a long time, I am going to say that buying a house is probably a better option. Here's why: So what about investing? Let's look at some numbers: So, based on the above, I say that buying a house is the way to go (as long as you plan to live in the same place for several years). However, if you could find a better investment than the Dow, or if mortgage interest rates change drastically, things could tip in another direction. Addendum: CrimsonX brought up a good point about the costs of owning a house (upkeep and property taxes), which I didn't mention above. However, I don't think they change my answer. If you rent, you are still paying those costs. They are just hidden from you. Your landlord pays the contractor or the tax man, and then you pay the landlord as part of your rent.\"",
"title": ""
},
{
"docid": "a58fc7dbe14f82ac3d2856a08f1a856f",
"text": "\"Forget, for the moment, which will pay off most over the long term. Consider risk exposure. You've said that you (hypothetically) have \"\"little or no money\"\": that's the deal-breaker. From a risk-management perspective, your investment portfolio would be better off diversified than with 90% of your assets in a house. Consider also the nature of the risk which owning a house exposes you to: Housing prices are generally tied to the state of the economy. If the local economy crashes, not only could you lose your job, but you could lose a good part of the value of your house... and still owe a lot on your loan. (You also might not be able to move as easily if you found a new job somewhere else.) You should almost certainly rent until you're more financially stable and could afford to pay the new mortgage for a year (or more) if you suddenly lost your job. Then you can worry more about maximizing your investments' rate of return.\"",
"title": ""
},
{
"docid": "e9736dc511d3b562f2279b7227c40a95",
"text": "There's probably no simple answer, but it's fair to say there are bad times to buy, and better times. If you look at a house and see the rent is more than the mortgage payment, it may be time to consider buying. Right now, the market is depressed, if you buy and plan to stay put, not caring if it drops from here because you plan to be there for the long term, you may find a great deal to be had. Over the long term, housing matches inflation. Sounds crazy, but. Even into the bubble, if you looked at housing in terms of mortgage payment at the prevailing 30yr fixed rate and converted the payment to hours needed to work to make the payment, the 2005 bubble never was. Not at the median, anyway. At today's <5% rate, the mortgage will cost you 3.75% after taxes. And assuming a 3% long term inflation rate, less than 1%. You have expenses, to be sure, property tax, maintenance, etc, but if you fix the mortgage, inflation will eat away at it, and ultimately it's over. At retirement, I'll take a paid for house over rising rents any day.",
"title": ""
},
{
"docid": "26cbf718ff59fcc3d6dcab61bda540c0",
"text": "I just read through all of the answers to this question and there is an important point that no one has mentioned yet: Oftentimes, buying a house is actually cheaper than renting the identical house. I'm looking around my area (suburbs of Chicago, IL) in 2017 and seeing some houses that are both for sale and for rent, which makes for an easy comparison. If I buy the house with $0 down (you can't actually put $0 down but it makes the numerical comparison more accurate if you do), my monthly payment including mortgage (P+I), taxes, insurance, and HOA, is still $400 less than the monthly rent payment. (If I put 20% down it's an even bigger savings.) So, in addition to the the tax advantages of owning a home, the locked in price that helps you in an economy that experiences inflation, and the accumulated equity, you may even have extra cash flow too. If you were on the fence when you would have had to pay more per month in order to purchase, it should be a no-brainer to buy if your monthly cost is lower. From the original question: Get a loan and buy a house, or I can live for the rest of my life in rent and save the extra money (investing and stuff). Well, you may be able to buy a house and save even more money than if you rent. Of course, this is highly dependent on your location.",
"title": ""
},
{
"docid": "37dd675a555975031f5b9bf30896f679",
"text": "An important factor you failed to mention is the costs associated with owning a home. For example, every 10 / 15 years, you have to replace your AC unit ($5k) and what about replacing a roof (depends on size, but could be $10k)? Not to mention, paying a couple thousand annually for property taxes. When renting, you never have to worry about any of these three.....",
"title": ""
},
{
"docid": "7ba9327c8f024c08fa6c256cf3ec6196",
"text": "Which is generally the better option (financially)? Invest. If you can return 7-8% (less than the historical return of the S&P 500) on your money over the course of 25 years this will outperform purchasing personal property. If you WANT to own a house for other reason apart from the financial benefits then buy a house. Will you earn 7-8% on your money, there is a pretty good chance this is no because investors are prone to act emotionally.",
"title": ""
},
{
"docid": "2fe3e77ea164c71f4537732e30cb089d",
"text": "Property in general tends to go up in value. That's one advantage you won't get if you rent.",
"title": ""
}
] |
[
{
"docid": "bc3127955d17f6cc18f1b5cd2c75e6a5",
"text": "First, who is saying that it is a better option? In general it is best to pay cash for things when you can. I think the reality is that for most people owning a house would be very difficult without some sort of financing. That said, one argument for financing a house these days even if you could afford to pay cash is that the interest rates are very low. For a 30-year fixed loan you can borrow money under 4.5% APR with decent credit. If you are willing to accept even a little risk you could almost certainly invest that same money and get a return higher than 4.5%. With the US mortgage interest tax deduction the numbers are even more favorable for financing. Those rates look even more attractive when you consider you are paying for the house with today's dollars and paying back the loan with dollars from up to 30 years in the future, which will be worth much less.",
"title": ""
},
{
"docid": "289ffa029d75f9233a18c3ccc3b0671f",
"text": "\"I recommend reading What's the catch in investing in real estate for rent? and making a list of expenses. You have a known expense, the rent, and the assumption that it will rise a bit each year. If not each year, eventually the landlord will bump it, and on average, the rent should track inflation. The buy side is the complete unknown, especially to us here. The mortgage and taxes are just the beginning. My ongoing issue in the buy/rent debate is that it's easy to buy \"\"too big\"\" or at least far bigger that what you are renting. One extreme - a couple moves from their one bedroom apartment into their purchased 3BR home with far more space than they ever use. No need to paint the full picture of numbers, the house is a money pit, and they live for the house. Other end - Couple already renting a nice sized home, and they buy a similar one. They rent out the two spare bedrooms for 5 years until they have kids and want their privacy back. They bought smart, for less than market price, and from day one, the mortgage was lower than the rent they paid. By year 5, having sent the extra income to pay down the mortgage, they've paid down half the loan. As the kids come along, they refi to a new 30 yr fixed at 3.5%, and the payment is tiny compared to the rest of their budget. Simply put, the ratio of house price to rent for that same house is not a constant. When the ratio is high, it's time to rent. When it swings very low, it's worth considering a purchase. But the decision is never clear until every detail is known. The time may be perfect, and the day after you close, you lose your job, or in a good scenario, get a raise and are relocated. Just because you bought low yesterday, doesn't mean the market will pay you a good price today, it takes time for out-of-whack pricing to come back to normal. A simple question? Maybe. But we first need a lot of details to help you understand what you are considering.\"",
"title": ""
},
{
"docid": "4f115259938b6a581b6db96d3ef7bae0",
"text": "I wondered about this problem too, so I looked into the maths and made this app :- http://demonstrations.wolfram.com/BuyOrRentInvestmentReturnCalculator/ (It uses the free Wolfram computable-document format (CDF) Player.) If you try it out you can see what conditions favour renting vs buying. My own conclusion was to aim to buy a property outright upon reaching retirement age, if not sooner. Example This example compares buying a £400,000 house with renting for £1,000 a month while depositing equivalent amounts (in savings) to total the same monthly outgoings as the buyer. Mortgage rate, deposit rate, property appreciation and rent inflation can be variously specified. The example mortgage term is 20 years. As you can see the buyer and renter come out about even after the mortgage term, but the buyer comes off better after that, (having no more mortgage to pay). Of course, the rent to live in a £400,000 house would probably be more than £1,000 but this case shows an equivalence point.",
"title": ""
},
{
"docid": "2986506f97a9d44efebb9d02d2a580e9",
"text": "4) Beef up my emergency fund, make sure my 401(k) or IRA was fully funded, put the rest into investments. See many past answers. A house you are living in is not an investment. It is a purchase, just as rental is a purchase. Buying a house to rent out is starting a business. If you want to spend the ongoing time and effort and cash running a business, and if you can buy at the right time in the right place for the righr price, this can be a reasonable investment. If you aren't willing to suffer the pains of being a landlord, it's less attractive; you can hire someone to manage it for you but that cuts the income significantly. Starting a business: Remember that many, perhaps most, small businesses fail. If you really want to run a business it can be a good investment, again assuming you can buy at the right time/price/place and are willing and able to invest the time and effort and money to support the business. Nothing produces quick return with low risk.",
"title": ""
},
{
"docid": "e8a00a0ac0f4aaa1ed206d89b155f190",
"text": "Yes, it's a buyer's market. If one is looking to buy a house, comparing the cost to rent vs own is a start. Buying a property to rent to a stranger is a different issue altogether, it's a business like any other, it takes time and has risk. If today, one has a decent downpayment (20%) and plans to stay in the house for some time, buying may make economic sense. But it's never a no-brainer. One needs to understand that housing can go down as well as up, and also understand all the expenses of owning which aren't so obvious. Ever increasing property tax, repairs, etc.",
"title": ""
},
{
"docid": "879062f352451bc4ee852520a91ffa83",
"text": "\"BEFORE you invest in a house, make sure you account for all the returns, risks and costs, and compare them to returns, risks and costs of other investments. If you invest 20% of a house's value in another investment, you would also expect a return. You also probably will not have the cost interest for the balance (80% of ???). I have heard people say \"\"If I have a rental property, I'm just throwing away money - I'll have nothing at the end\"\" - if you get an interest-only loan, the same will apply, if you pay off your mortgage, you're paying a lot more - you could save/invest the extra, and then you WILL have something at the end (+interest). If you want to compare renting and owning, count the interest against the rental incoming against lost revenue (for however much actual money you've invested so far) + interest. I've done the sums here (renting vs. owning, which IS slightly different - e.g. my house will never be empty, I pay extra if I want a different house/location). Not counting for the up-front costs (real estate, mortgage establishment etc), and not accounting for house price fluctuations, I get about the same \"\"return\"\" on buying as investing at the bank. Houses do, of course, fluctuate, both up and down (risk!), usually up in the long term. On the other hand, many people do lose out big time - some friends of mine invested when the market was high (everyone was investing in houses), they paid off as much as they could, then the price dropped, and they panicked and sold for even less than they bought for. The same applies if, in your example, house prices drop too much, so you owe more than the house is worth - the bank may force you to sell (or offer your own house as collateral). Don't forget about the hidden costs - lawn mowing and snow shoveling were mentioned, insurance, maintenance, etc - and risks like fluctuating rental prices, bad tenants, tenants moving on (loss of incoming, cleaning expenses, tidying up the place etc)....\"",
"title": ""
},
{
"docid": "d9b3d137a9a7b62ce07f8c493bc452fd",
"text": "\"As Yishani points out, you always have to do due diligence in buying a house. As I mentioned in this earlier post I'd highly recommend reading this book on buying a house associated with the Wall Street Journal - it clearly describes the benefits and challenges of owning a house. One key takeaway I had was - on average houses have a \"\"rate of return\"\" on par with treasury bills. Its best to buy a house if you want to live in a house, not as thinking about it as a \"\"great investment\"\". And its certainly worth the 4-6 hours it takes to read the book cover to cover.\"",
"title": ""
},
{
"docid": "1274937bc6f58659e9d90fb5e93861c0",
"text": "\"Short answer: NO. Do NOT buy a house. Houses are a \"\"luxury\"\" good (see Why is a house not an investment?). Although the experience of the early 2000s seemed to convince most people otherwise, houses are not an investment. Historically, it has usually been cheaper to rent, because owning a house has non-pecuniary benefits such as the ability to change things around to exactly the way you like them. Consult a rent vs. buy calculator for your area to see if your area is exceptional. I also would not rely on the mortgage interest deduction for the long term, as it seems increasingly likely the Federal government will do away with it at some point. The first thing you must do is eliminate your credit card and other debts. Try to delay paying your lawyers and anyone else who is not charging you interest (or threatening to harm you in other ways) as long as possible. Save enough money to maintain your current standard of living for 6 months should you lose your job, then put the rest in your 401(k). Another word of advice: learn to live with less. Your kids do not need separate bedrooms. Hopefully one day the time will come when you can afford a larger house, but it should not be your highest priority. You and your kids will all be worse off in the end should you have unexpected financial difficulties and you have overextended yourself to buy a house. Now that your credit score is up, see if you can renegotiate your credit card loans or negotiate a new loan with lower interest.\"",
"title": ""
},
{
"docid": "7463e6b01c2f38e523cd6ba482a29b8a",
"text": "\"A couple of distinctions. First, if you were to \"\"invest in real estate\"\" were you planning to buy a home to live in, or buy a home to rent out to someone else? Buying a home as a primary residence really isn't \"\"investing in real estate\"\" per se. It's buying a place to live rather than renting one. Unless you rent a room out or get a multi-family unit, your primary residence won't be income-producing. It will be income-draining, for the most part. I speak as a homeowner. Second, if you are buying to rent out to someone else, buying a single home is quite a bit different than buying an REIT. The home is a lot less liquid, the transaction costs are higher, and all of your eggs are in one basket. Having said that, though, if you buy one right and do your homework it can set you on the road for a very comfortable retirement.\"",
"title": ""
},
{
"docid": "1c2ddf482737d372ae1c5fb5ee672551",
"text": "\"Some pros and cons to renting vs buying: Some advantages of buying: When you rent, the money you pay is gone. When you buy, assuming you don't have the cash to buy outright but get a mortgage, some of the payment goes to interest, but you are building equity. Ultimately you pay off the mortgage and you can then live rent-free. When you buy, you can alter your home to your liking. You can paint in the colors you like, put in the carpet or flooring you like, heck, tear down walls and alter the floor plan (subject to building codes and safety consideration, of course). If you rent, you are usually sharply limited in what alterations you can make. In the U.S., mortgage interest is tax deductible. Rent is not. Property taxes are deductible from your federal income tax. So if you have, say, $1000 mortgage vs $1000 rent, the mortgage is actually cheaper. Advantages of renting: There are a lot of transaction costs involved in buying a house. You have to pay a realtor's commission, various legal fees, usually \"\"loan origination fees\"\" to the bank, etc. Plus the way mortgages are designed, your total payment is the same throughout the life of the loan. But for the first payment you owe interest on the total balance of the loan, while the last payment you only owe interest on a small amount. So early payments are mostly interest. This leads to the conventional advice that you should not buy unless you plan to live in the house for some reasonably long period of time, exact amount varying with whose giving the advice, but I think 3 to 5 years is common. One mitigating factor: Bear in mind that if you buy a house, and then after 2 years sell it, and you discover that the sale price minus purchase price minus closing costs ends up a net minus, say, $20,000, it's not entirely fair to say \"\"zounds! I lost $20,000 by buying\"\". If you had not bought this house, presumably you would have been renting. So the fair comparison is, mortgage payments plus losses on the resale compared to likely rental payments for the same period.\"",
"title": ""
},
{
"docid": "61cd364e422ffa0c773733bade26c8fb",
"text": "First off, I'd highly recommend looking at this nytimes rent vs buy calculator. This calculator gives you some great flexibility (for example, estimating what will happen with a 7% return in the stock market, and comparing renting vs buying). Secondly, I have personally gotten a lot out of this wall street journal book. Check it out at the library or buy it and read it cover to cover. My personal opinion is that buying a house or condo is mostly a lifestyle choice. Some specific caveats with your situation: A sidenote: One of my friends who bought a condo in chicago is considering moving to a different city and is very much regretting buying a condo, even though he got the $8k housing credit, because renting isn't as easy as it looks (you can do it and do it profitably but you darn well better consider that BEFORE buying a condo)",
"title": ""
},
{
"docid": "83b19dd70fbd33a81587c3ac2e2adc32",
"text": "\"So either scenario has about $10K upfront costs (either realtor/selling expenses or fixing up for rental). Furthermore, I'm sure that the buyers would want you to fix all these things anyway, or reduce the price accordingly, but let's ignore this. Let's also ignore the remaining mortgage, since it looks like you can comfortably pay it off. Assuming 10% property management and 10% average vacancy (check your market), and rental price at $1000 - you end up with these numbers: I took very conservative estimates both on the rent (lower than you expect) and the maintenance expense (although on average over the years ,since you need to have some reserves, this is probably quite reasonable). You end up with 2.7% ROI, which is not a lot for a rental. The rule of thumb your wife mentioned (1% of cash equity) is indeed usually for ROI of leveraged rental purchase. However, if rental prices in your area are rising, as it sounds like they are, you may end up there quite soon anyway. The downside is that the money is locked in. If you're confident in your ability to rent and are not loosing the tax benefit of selling since it sounds like you've not appreciated, you may take out some cash through a cash-out refi. To keep cash-flow near-0, you need to cash out so that the payments would be at or less than the $3200/year (i.e.: $266/month). That would make about $50K at 30/yr fixed 5% loan. What's best is up to you to decide, of course. Check whether \"\"you can always sell\"\" holds for you. I.e.: how stable is the market, what happens if one or two large employers disappear, etc.\"",
"title": ""
},
{
"docid": "31c83387a5c166a0bf0e8c3637a9e7db",
"text": "I'll add this to what the other answers said: if you are a renter now, and the real estate you want to buy is a house to live in, then it may be worth it - in a currency devaluation, rent may increase faster than your income. If you pay cash for the home, you also have the added benefit of considerably reducing your monthly housing costs. This makes you more resilient to whatever the future may throw at you - a lower paying job, for instance, or high inflation that eats away at the value of your income. If you get a mortgage, then make sure to get a fixed interest rate. In this case, it protects you somewhat from high inflation because your mortgage payment stays the same, while what you would have had to pay in rent keeps going up an up. In both cases there is also taxes and insurance, of course. And those would go up with inflation. Finally, do make sure to purchase sensibly. A good rule of thumb on how much you can afford to pay for a home is 2.5x - 3.5x your annual income. I do realize that there are some areas where it's common for people to buy homes at a far greater multiple, but that doesn't mean it's a sensible thing to do. Also: I'll second what @sheegaon said; if you're really worried about the euro collapsing, it might give you some peace of mind to move some money into UK Gilts or US Treasuries. Just keep in mind that currencies do move against each other, so you'd see the euro value of those investments fluctuate all the time.",
"title": ""
},
{
"docid": "aac943752d99f999810f476a2afd3b00",
"text": "If you need / want the car, I would get the car. Without car payments you can save your money again to get the house. Moreover, I wouldn't want to be saddled with payments to the mortgage and car loan at the same time. Lastly, a car is a more temporary possession (10 years) vs a house (30+) years so shopping around for the house longer while you save money is a good thing. I know you want to buy while prices are low, but I personally think it is more important to get a house that you want to live in later than settle for a cheap one you get a deal on now.",
"title": ""
},
{
"docid": "e725542c1d026fca1da7d80aedc71bca",
"text": "I plotted your figures in my Buy or Rent app. It compares the equity of buying or renting by calculating what your mortgage payment would be and comparing the alternative case if you rented and invested an equivalent amount. Clearly for the amounts you specified it is better to buy, but if you change the amounts and interest or property appreciation you can see the equity effects.",
"title": ""
}
] |
fiqa
|
ef76a587d7f05581ebf20b16fd386749
|
Why do employers require you to spread your 401(k) contributions throughout the year to get the maximum match?
|
[
{
"docid": "bb94e221d756e5f6d72e01cf92db0b83",
"text": "If one makes say, $10K/mo, and the company will match the first 5% dollar for dollar, a 10%/mo deposit of $1K/mo will see a $500/mo match. If the employee manages to request 90% get put into the 401(k), after 2 months, he's done. If the company wished, they could continue the $500/mo match, I agree. They typically don't and in fact, the 'true up' you mention isn't even required, one is fortunate to get it. Many companies that match are going the other way, matching only after the year is over. Why? Why does any company do anything? To save money. I used to make an attempt to divide my deposit over the year to max out the 401(k) in December and get the match real time, not a true up.",
"title": ""
},
{
"docid": "f2c1b00df06d1bb3490603195f864b2e",
"text": "\"The only way to know the specific explanation in your situation is to ask your employer. Different companies do it differently, and they will have their reasons for that difference. I've asked \"\"But why is it that way?\"\" enough times to feel confident in telling you it's rarely an arbitrary decision. In the case of your employer's policy, I can think of a number of reasons why they would limit match earnings per paycheck: Vesting, in a sense - Much as stock options have vesting requirements where you have to work for a certain amount of time to receive the options, this policy works as a sort of vesting mechanism for your employer matching funds. Without it, you could rapidly accumulate your full annual match amount in a few pay periods at the beginning of the year, and then immediately leave for employment elsewhere. You gain 100% of the annual match for only 1-2 months of work, while the employees who remain there all year work 12 months to gain the same 100%. Dollar Cost Averaging - By purchasing the same investment vehicle at different prices over time, you can reduce the impact of volatility on your earnings. For the same reason that 401k plans usually restrict you to a limited selection of mutual funds - namely, the implicit assumption is that you probably have little to no clue about investing - they also do other strategic things to encourage employees to invest (at least somewhat) wisely. By spacing their matching fund out over time, they encourage you to space your contributions over time, and they thereby indirectly force you to practice a sensible strategy of dollar cost averaging. Dollar Cost Averaging, seen from another angle - Mutual funds are the 18-wheeler trucks of the investment super-highway. They carry a lot of cargo, but they are difficult to start, stop, or steer quickly. For the same reasons that DCA is smart for you, it's also smart for a fund. The money is easier to manage and invest according to the goals of the fund if the investments trickle in over time and there are no sudden radical changes. Imagine if every employer that does matching allowed the full maximum match to be earned on the first paycheck of the year - the mutual funds in 401ks would get big balloons of money in January followed by a drastically lower investment for the rest of the year. And that would create volatility. Plan Administration Fees - Your employer has to pay the company managing the 401k for their services. It is likely that their agreement with the management company requires them to pay on a monthly basis, so it potentially makes things convenient for the accounting people on both ends if there's a steady monthly flow of money in and out. (Whether this point is at all relevant is very much dependent on how your company's agreement is structured, and how well the folks handling payroll and accounting understand it.) The Bottom Line - Your employer (let us hope) makes profits. And they pay expenses. And companies, for a variety of financial reasons, prefer to spread their profits and expenses as evenly over the year as they can. There are a lot of ways they achieve this - for example, a seasonal business might offer an annual payment plan to spread their seasonal revenue over the year. Likewise, the matching funds they are paying to you the employees are coming out of their bottom line. And the company would rather not have the majority of those funds being disbursed in a single quarter. They want a nice, even distribution. So once again it behooves them to create a 401k system that supports that objective. To Sum Up Ultimately, those 401k matching funds are a carrot. And that carrot manipulates you the employee into behaving in a way that is good for your employer, good for your investment management company, and good for your own investment success. Unless you are one of the rare birds who can outperform a dollar-cost-averaged investment in a low-cost index fund, there's very little to chafe at about this arrangement. If you are that rare bird, then your investment earning power likely outstrips the value of your annual matching monies significantly, in which case it isn't even worth thinking about.\"",
"title": ""
},
{
"docid": "8e89046abe2d4a4719ed99595769f25a",
"text": "There's no such requirement in general. If your particular employer requires that - you should address the question to the HR/payroll department. From my experience, matches are generally not conditioned on when you contribute, only how much.",
"title": ""
}
] |
[
{
"docid": "f42b4ffa483f0afe314462226a690989",
"text": "Let me add another consideration to the company's side of the equation. Not only is a 401K a tool for the company to make them competitive when recruiting employees among other companies that offer that benefit, it is also a good retention tool. Most company's 401K plans include a vesting period of at least 3 years, sometimes more. An employee that leaves the company before they are vested in the plan will have to give up some % of the employer matched funds in the account. This gives employees incentive to stick around longer and the company reduces the risk of turnover which can be costly in terms of training and recruiting. This also factors into the reason why employers would rather give matching on the 401K than a simple pay raise. Some of those employees are going to leave during the vesting period anyway, and when that happens the employer got the benefit of motivating (extrinsically) the employee, but in the end got to keep some of the money.",
"title": ""
},
{
"docid": "36a804f76053758e3c670904a4eed573",
"text": "\"typically, your employer will automatically stop making contributions once you hit the 18k$ limit. it is worth noting that employer contributions (e.g. \"\"matching\"\") do not count towards the 18k$ employee pre-tax contribution limit. however, if you have 2 employers during the year their combined payroll deductions might exceed the limit if you do not inform your later employer of the contributions you made at your former employer (or they ignore the info). in which case, you must request a refund of \"\"excess contributions\"\" from one of the plans (your choice). you must report the refund as taxable income on your taxes. if you do not make this request by the time you file your taxes, the tax man will reject your filing and \"\"adjust\"\" your return with more taxes and penalties. sometimes requesting a refund of excess contributions might cause your employer to remove \"\"matching\"\" funds, but i am not clear on the rules behind that. there are some 401k plans that allow \"\"supplemental after-tax contributions\"\" up to the combined employee/employer limit (53k$ in 2015 and 2016). it is a rare feature, and if your company offers it, you probably already know. however, generally it is governed by a separate contribution election that only take effect once you hit the employee pre-tax contribution limit (18k$ in 2015 and 2016). you could ask your hr department to be sure. 401k plans can be changed if there is enough employee demand for a rule change. especially in a small company, simply asking for them to allow dollar based contributions instead of percent based contributions can cause them to change the plan to allow it. similarly, you could request they allow \"\"supplemental after-tax contributions\"\", but that might be a harder change to get.\"",
"title": ""
},
{
"docid": "54e754ce4fc0686eee8103b92443ece8",
"text": "You are not allowed to take a routine 401(k) withdrawal each year. There are specific reasons that you might be allowed to take a withdrawal and what you're proposing doesn't fit into those categories.",
"title": ""
},
{
"docid": "97cf05dfe3028c0d5c154cf84ef6da1e",
"text": "Adding to the excellent answers already given, we typically advise members to contribute as much as needed to get a full employer match in their 401K, but not more. We then redirect any additional savings to a traditional IRA or ROTH IRA (depending on their age, income, and future plans). Only once they've exhausted the $5000 maximum in their IRA will we look at putting more money into the 401K. The ROTH IRA is a beautiful and powerful vehicle for savings. The only reason to consider taking money out of the ROTH is in a case of serious catastrophe.",
"title": ""
},
{
"docid": "f420513b014569976ec901c2c77754fe",
"text": "There is no Roth 401(k) match. Or to be clear, when an employee deposits to a Roth 401(k), the company match goes into the traditional, pre-tax 401(k) account. That money is subject to both tax and 10% penalty on early withdrawal.",
"title": ""
},
{
"docid": "b045ab5efacdbcc1e74709409734fd03",
"text": "Its easier than that: employer matching contributions are always pre-tax. While your contribution is split between the pre-tax and the Roth post-tax parts, matching contributions are always pre-tax. Quote from the regulations I linked to: For example, matching contributions are not permitted to be allocated to a designated Roth account. So the tax you pay is only on the Roth portion of your contribution. One of the reasons for that is the complexity you're talking about, but not only. Matching is not always vested, and it would be hard to determine what portion to tax and at what rate if matching would be allowed to go to Roth.",
"title": ""
},
{
"docid": "381ac48cf2db90a9ec2b8b900edf4b5c",
"text": "Your question doesn't make much sense. The exceptions are very specific and are listed on this site (IRS.GOV). I can't see how you can use any of the exceptions regularly while still continuing being employed and contributing. In any case, you pay income tax on any distribution that has not been taxed before (which would be a Roth account or a non-deductible IRA contribution). Including the employer's match. Here's the relevant portion: The following additional exceptions apply only to distributions from a qualified retirement plan other than an IRA:",
"title": ""
},
{
"docid": "232e578503b1027f16e365fd142129f7",
"text": "The amount you contribute will reduce the taxable income for each paycheck, but it won't impact the level of your social security and medicare taxes. A 401(k) plan is a qualified deferred compensation plan in which an employee can elect to have the employer contribute a portion of his or her cash wages to the plan on a pretax basis. Generally, these deferred wages (commonly referred to as elective contributions) are not subject to income tax withholding at the time of deferral, and they are not reflected on your Form 1040 (PDF) since they were not included in the taxable wages on your Form W-2 (PDF). However, they are included as wages subject to withholding for social security and Medicare taxes. In addition, employers must report the elective contributions as wages subject to federal unemployment taxes. You might be able to keep this up for more than 7 weeks if the company offers health, dental and vision insurance. Your contributions for these policies would need to be paid for before you contribute to the 401K. Of course these items are also pre-tax so they will keep the taxable amount at zero. If there was a non-pretax deduction on your pay check that would keep the check at zero, but there would be taxes owed. This might be union dues, but it can also be some life and disability insurance polices. Most stubs specify which deductions are pre-tax, and which are post-tax. Warning. If you get the company match some companies give you the maximum match for those 7 weeks, then zero for the rest of the year. Others will still credit you with a match at the end of the year saying if you should get the benefit. It is not required that they do this. Check the company documents. You could also contribute post-tax money, which is different than Roth 401K, for the rest of the year to keep the match going. Note: If you are turning 50 this year, or are already 50, then you can contribute an additional $5,500",
"title": ""
},
{
"docid": "c78db55b0acf1739683447af345420ff",
"text": "You're going to find a lot of conflicting or vague answers on the internet because there are a lot of plan design elements that are set by the plan sponsor (employer). There are laws that mandate certain elements and dictate certain requirements of plan sponsors, many of these laws are related to record keeping and fiduciary duty. There is a lot of latitude for plan sponsors to allow or restrict employee actions even if there is no law against that activity. There are different rules mandated for employee pre-tax contributions, employee post-tax contributions, and employer contributions. You have more flexibility with regard to the employer contributions and any post tax contributions you may have made; your plan may allow an in-service distribution of those two items before you reach age 59.5. While your HR department (like most -all- HR departments) is not staffed with ERISA attorneys and CPAs it is your HR department and applicable plan documents that will lay out what an employee is permitted to do under the plan.",
"title": ""
},
{
"docid": "a70ddb5bf96ad9b69ec5802f346d0bb6",
"text": "\"The question you should be asking yourself is this: \"\"Why am I putting money into a 401(k)?\"\" For many people, the answer is to grow a (large) nest egg and save for future retirement expenses. Investors are balancing risk and potential reward, so the asset categories you're putting your 401(k) contribution towards will be a reflection on how much risk you're willing to take. Per a US News & World Report article: Ultimately, investors would do well to remember one of the key tenants of investing: diversify. The narrower you are with your investments, the greater your risk, says Vanguard's Bruno: \"\"[Diversification] doesn't ensure against a loss, but it does help lessen a significant loss.\"\" Generally, investing in your employer's stock in your 401(k) is considered very risk. In fact, one Forbes columnist recommends not putting any money into company stock. FINRA notes: Simply stated, if you put too many eggs in one basket, you can expose yourself to significant risk. In financial terms, you are under-diversified: you have too much of your holdings tied to a single investment—your company's stock. Investing heavily in company stock may seem like a good thing when your company and its stock are doing well. But many companies experience fluctuations in both operational performance and stock price. Not only do you expose yourself to the risk that the stock market as a whole could flounder, but you take on a lot of company risk, the risk that an individual firm—your company—will falter or fail. In simpler terms, if you invest a large portion of your 401(k) funds into company stock, if your company runs into trouble, you could lose both your job AND your retirement investments. For the other investment assets/vehicles, you should review a few things: Personally, I prefer to keep my portfolio simple and just pick just a few options based on my own risk tolerance. From your fund examples, without knowing specifics about your financial situation and risk tolerance, I would have created a portfolio that looks like this when I was in my 20's: I avoided the bond and income/money market funds because the growth potential is too low for my investing horizon. Like some of the other answers have noted, the Target Date funds invest in other funds and add some additional fee overhead, which I'm trying to avoid by investing primarily in index funds. Again, your risk tolerance and personal preference might result in a completely different portfolio mix.\"",
"title": ""
},
{
"docid": "577d17a91d08a46f7c4dc389251b2675",
"text": "This creates incentive for the employee to contribute more and increases the funds under management of the 401(k) plan. The size of the plan influences the fees that are charged in each of the funds offered. (The more assets under management, the better for those in the plan.) More importantly, 401(k) plans are not allowed to discriminate in favor of highly compensated employees. That discrimination is determined by calculating the average deferrals by your lower compensated employees and comparing them to the average deferrals of your highly compensated employees. If highly compensated employees are saving too much compared to the rest of the pack, they will have some of their contributions returned the next year (with all the tax implications of that). Forcing everyone to contribute 6% to get the full match helps the plan to not fail the discrimination test and protects the highly compensated employees from losing some of their tax deferrals.",
"title": ""
},
{
"docid": "1cfee81ee560fd815c85df96c86850ae",
"text": "One important thing that hasn't been mentioned here is that the vast majority of companies have eventually eliminated their Company provided Pension Plans and replaced it with a 401K with some degree of matching. There is a cost advantage to doing this as companies no longer have to maintain or work to maintain a 100% vested pension plan. This takes a great burden off them. They also don't have to manage the pension/annuity that the retirement benefit entails.",
"title": ""
},
{
"docid": "26c255888277af7da246bef7b3112c78",
"text": "\"If you aren't already contributing the maximum allowable amount, by all means do so. If you are already contributing the maximum, it doesn't matter that much when you make those contributions. Making fixed monthly contributions is done mostly for budgeting reasons. Most of us can't predict fund performance well enough to optimize our contributions (by which I mean, contributing more early if you think the market is going up, but waiting if you think it will go down, following the \"\"buy low\"\" strategy). As for employer matching, check with your company to see how they compute matches. They may match contributions for the year, even if those matching funds are only paid up to a maximum per paycheck. (For example, if you contribute 200% of the match for the first 6 months, then contribute nothing for the remaining 6 months, you may still receive the same matching funds per pay period as if you were contributing 100% throughout the year.)\"",
"title": ""
},
{
"docid": "60b55f3ee8e6c9f9196cadb600e714ef",
"text": "\"I agree with the other answers that it is a benefit, but wanted to add another explanation for this: Also, why a company would prefer matching someone's contributions (and given him or her additional free money) instead of just offering a simple raise? In addition to a match being a benefit that is part of your total compensation, 401ks have special rules for Highly Compensated Employees. If the lower paid employees do not contribute, the \"\"Highly Compensated Employees\"\" do not get to take full advantage of the 401k. By offering a match, more lower paid employees will take advantage of a 401k program allowing more Highly Compensated Employees to also take advantage of the program.\"",
"title": ""
},
{
"docid": "52ac5428aefb5e55a7576108668702e0",
"text": "Back in the late 80's I had a co-worked do exactly this. In those days you could only do things quarterly: change the percentage, change the investment mix, make a withdrawal.. There were no Roth 401K accounts, but contributions could be pre-tax or post-tax. Long term employees were matched 100% up to 8%, newer employees were only matched 50% up to 8% (resulting in 4% match). Every quarter this employee put in 8%, and then pulled out the previous quarters contribution. The company match continued to grow. Was it smart? He still ended up with 8% going into the 401K. In those pre-Enron days the law allowed companies to limit the company match to 100% company stock which meant that employees retirement was at risk. Of course by the early 2000's the stock that was purchased for $6 a share was worth $80 a share... Now what about the IRS: Since I make designated Roth contributions from after-tax income, can I make tax-free withdrawals from my designated Roth account at any time? No, the same restrictions on withdrawals that apply to pre-tax elective contributions also apply to designated Roth contributions. If your plan permits distributions from accounts because of hardship, you may choose to receive a hardship distribution from your designated Roth account. The hardship distribution will consist of a pro-rata share of earnings and basis and the earnings portion will be included in gross income unless you have had the designated Roth account for 5 years and are either disabled or over age 59 ½. Regarding getting just contributions: What happens if I take a distribution from my designated Roth account before the end of the 5-taxable-year period? If you take a distribution from your designated Roth account before the end of the 5-taxable-year period, it is a nonqualified distribution. You must include the earnings portion of the nonqualified distribution in gross income. However, the basis (or contributions) portion of the nonqualified distribution is not included in gross income. The basis portion of the distribution is determined by multiplying the amount of the nonqualified distribution by the ratio of designated Roth contributions to the total designated Roth account balance. For example, if a nonqualified distribution of $5,000 is made from your designated Roth account when the account consists of $9,400 of designated Roth contributions and $600 of earnings, the distribution consists of $4,700 of designated Roth contributions (that are not includible in your gross income) and $300 of earnings (that are includible in your gross income). See Q&As regarding Rollovers of Designated Roth Contributions, for additional rules for rolling over both qualified and nonqualified distributions from designated Roth accounts.",
"title": ""
}
] |
fiqa
|
140d3a447e3d8df48b7cef47277258af
|
Why don't market indexes use aggregate market capitalization?
|
[
{
"docid": "47518caed79587e8b2fefc7522b4577f",
"text": "\"They do but you're missing some calculations needed to gain an understanding. Intro To Stock Index Weighting Methods notes in part: Market cap is the most common weighting method used by an index. Market cap or market capitalization is the standard way to measure the size of the company. You might have heard of large, mid, or small cap stocks? Large cap stocks carry a higher weighting in this index. And most of the major indices, like the S&P 500, use the market cap weighting method. Stocks are weighted by the proportion of their market cap to the total market cap of all the stocks in the index. As a stock’s price and market cap rises, it gains a bigger weighting in the index. In turn the opposite, lower stock price and market cap, pushes its weighting down in the index. Pros Proponents argue that large companies have a bigger effect on the economy and are more widely owned. So they should have a bigger representation when measuring the performance of the market. Which is true. Cons It doesn’t make sense as an investment strategy. According to a market cap weighted index, investors would buy more of a stock as its price rises and sell the stock as the price falls. This is the exact opposite of the buy low, sell high mentality investors should use. Eventually, you would have more money in overpriced stocks and less in underpriced stocks. Yet most index funds follow this weighting method. Thus, there was likely a point in time where the S & P 500's initial sum was equated to a specific value though this is the part you may be missing here. Also, how do you handle when constituents change over time? For example, suppose in the S & P 500 that a $100,000,000 company is taken out and replaced with a $10,000,000,000 company that shouldn't suddenly make the index jump by a bunch of points because the underlying security was swapped or would you be cool with there being jumps when companies change or shares outstanding are rebalanced? Consider carefully how you answer that question. In terms of histories, Dow Jones Industrial Average and S & P 500 Index would be covered on Wikipedia where from the latter link: The \"\"Composite Index\"\",[13] as the S&P 500 was first called when it introduced its first stock index in 1923, began tracking a small number of stocks. Three years later in 1926, the Composite Index expanded to 90 stocks and then in 1957 it expanded to its current 500.[13] Standard & Poor's, a company that doles out financial information and analysis, was founded in 1860 by Henry Varnum Poor. In 1941 Poor's Publishing (Henry Varnum Poor's original company) merged with Standard Statistics (founded in 1906 as the Standard Statistics Bureau) and therein assumed the name Standard and Poor's Corporation. The S&P 500 index in its present form began on March 4, 1957. Technology has allowed the index to be calculated and disseminated in real time. The S&P 500 is widely used as a measure of the general level of stock prices, as it includes both growth stocks and value stocks. In September 1962, Ultronic Systems Corp. entered into an agreement with Standard and Poor's. Under the terms of this agreement, Ultronics computed the S&P 500 Stock Composite Index, the 425 Stock Industrial Index, the 50 Stock Utility Index, and the 25 Stock Rail Index. Throughout the market day these statistics were furnished to Standard & Poor's. In addition, Ultronics also computed and reported the 94 S&P sub-indexes.[14] There are also articles like Business Insider that have this graphic that may be interesting: S & P changes over the years The makeup of the S&P 500 is constantly changing notes in part: \"\"In most years 25 to 30 stocks in the S&P 500 are replaced,\"\" said David Blitzer, S&P's Chairman of the Index Committee. And while there are strict guidelines for what companies are added, the final decision and timing of that decision depends on what's going through the heads of a handful of people employed by Dow Jones.\"",
"title": ""
},
{
"docid": "e58ec0d9172a4cbb4b23095ab7583a37",
"text": "\"would constantly fluctuate and provide an indication of how well the market is doing. The index is there to tell if you made profit or loss by investing in the market. Using a pure total market cap will only tell you \"\"Did IPO activity exceed bankruptcy and privatization activity\"\".\"",
"title": ""
}
] |
[
{
"docid": "f2ec640fa7f7a0b70da50dfc98da4ee5",
"text": "\"To add on to the other answers, in asking why funds have different price points one might be asking why stocks aren't normalized so a unit price of $196 in one stock can be directly compared to the same price in another stock. While this might not make sense with AAPL vs. GOOG (it would be like comparing apples to oranges, pun intended, not to mention how would two different companies ever come to such an agreement) it does seem like it would make more sense when tracking an index. And in fact less agreement between different funds would be required as some \"\"natural\"\" price points exist such as dividing by 100 (like some S&P funds do). However, there are a couple of reasons why two different funds might price their shares of the same underlying index differently. Demand - If there are a lot of people wanting the issue, more shares might be issued at a lower price. Or, there might be a lot of demand centered on a certain price range. Pricing - shares that are priced higher will find fewer buyers, because it makes it harder to buy round lots (100 shares at $100/share is $10,000 while at $10/share it's only $1000). While not everyone buys stock in lots, it's important if you do anything with (standardized) options on the stock because they are always acting on lots. In addition, even if you don't buy round lots a higher price makes it harder to buy in for a specific amount because each unit share has a greater chance to be further away from your target amount. Conversely, shares that are priced too low will also find fewer buyers, because some holders have minimum price requirements due to low price (e.g. penny) stocks tending to be more speculative and volatile. So, different funds tracking the same index might pick different price points to satisfy demand that is not being filled by other funds selling at a different price point.\"",
"title": ""
},
{
"docid": "6a6596afc17a33022b76c8b593409015",
"text": "The value premium would state the opposite in fact if one looks at the work of Fama and French. The Investment Entertainment Pricing Theory (INEPT) shows a graph with the rates on small-cap/large-cap and growth/value combinations that may be of interest as well for another article noting the same research. Index fund advisors in Figure 9-1 shows various historical returns up to 2012 that may also be useful here for those wanting more detailed data. How to Beat the Benchmark is from 1998 that could be interesting to read about index funds and beating the index in a simpler way.",
"title": ""
},
{
"docid": "5b9bddfbc13053744ab668020e549954",
"text": "Yes that is the case for the public company approach, but I was referring to the transaction approach: Firm A and Firm B both have $100 in EBITDA. Firm A has $50 in cash, Firm B has $100 in cash. Firm A sells for $500, Firm B sells for $600. If we didn't subtract cash before calculating the multiple: Firm A: 5x Firm B: 6x If we DO subtract cash before calculating the multiple: Firm A: 4.5x Firm B: 5x So yea, subtracting cash does skew the multiple.",
"title": ""
},
{
"docid": "aad7fd152cc7c2878e7ebaf2e57adbf6",
"text": "It's either a broad benchmark sp500, msci world, lehman agg, and or a cash index. Most will not use a specific benchmark. While the broad benchmark may not be applicable from my experience its usually there as a proxy for the overall market.",
"title": ""
},
{
"docid": "4d3ffd2c72c84f436a8e2fad96f98f66",
"text": "The companies which define the major indexes do not derive profit directly from the indexes. They are typically brokerages, which use the indexes as a tool for discussing investment options with their clients and as a publicity tool to remind the public that they are long-standing, respected firms whom we might want to consider working with. Can't mention the Dow without being reminded of Dow Jones, for example. Likewise the Standard & Poor's 500 reminds us that S&P is still going strong. There may also be some slight market manipulation opportunities in choosing which specific stocks are included in each index, but since investors rarely follow an index exactly as originally defined I'm not convinced that's significant. And the mix included in each index changes relatively rarely and has to be justified by what the index claims to be representing.",
"title": ""
},
{
"docid": "6098bbe1b8999157bdd9941118872238",
"text": "So ... hotdogs shouldnt count either? What about cars? gasoline? Why shouldn't one off costs count? Virtually everything I buy is a one off cost. New and resold houses are being sold/bought every day. The case and shillers housing index takes attributes from common housing and amalgamates the costs. So theres your perpetual gauge if you need one. Its striking to me that perhaps the hugest cost in most people's lives, isn't considered when calculating inflation. No wonder the housing bubble got out of control.",
"title": ""
},
{
"docid": "8a9e5b48462236d2c9f48d836295b40f",
"text": "Yes, it makes sense. Like Lagerbaer says, the usefulness of technical indicators can not be answered with a simple yes or no. Some people gain something from it, others do not. Aside from this, applying technical indicators (or any other form of technical analysis - like order flow) to instruments which are composed of other instruments, such as indexes (more accurately, a derivative of it), does make sense. There are many theories why this is the case, but personally i believe it is a mixture of self fulfilling prophecy, that the instruments the index is composed of (like the stocks in the S&P500) are traded in similar ways as the index (or rather a trade-able derivative of it like ETFs and futures), and the idea that TA just represents human emotion and interaction in trading. This is a very subjective topic, so take this with a grain of salt, but in contrast to JoeTaxpayer i believe that yields are not necessary in order to use TA successfully. As long as the given instrument is liquid enough, TA can be applied and used to gain an edge. On the other hand, to answer your second question, not all stocks in an index correlate all the time, and not all of them will move in sync with the index.",
"title": ""
},
{
"docid": "0d597d62750eca680f64b993c1ceebf3",
"text": "Some economist please ELI5 what I’m missing here. In the equities market, it is considered an economic benefit when exchanges settle trades in smaller increments. When we went from eighths to decimal, for example. How is that direction into smaller divisible units different from facilitating trade with pennies for economic goods?",
"title": ""
},
{
"docid": "7c2f8a9996152c5ebb22abd1d904748f",
"text": "Yeah, I mean the real issue is that for probably 30% of users (conservatively) it's and IM system and how they get market data. Anyone that uses BDHs or backtesting does not have a reliable alternative. The analytical tools FS offers for those functions cost almost as much. Also, index level data is very expensive, separated and priced by the index managers themselves. The degree to which this 'debate' has been dumbed down is remarkable.",
"title": ""
},
{
"docid": "3277d01f335f35f5d19c74329b26e4ea",
"text": "\"Yes. S&P/ Case-Shiller real-estate indices are available, as a single national index as well as multiple regional geographic indices. These indices are updated on the last Tuesday of every month. According to the Case-Shiller Index Methodology documentation: Their purpose is to measure the average change in home prices in 20 major metropolitan areas... and three price tiers– low, middle and high. The regional indices use 3-month moving averages, published with a two-month lag. This helps offset delays due to \"\"clumping\"\" in the flow of sales price data from county deed recorders. It also assures sufficient sample sizes. Regional Case-Shiller real-estate indices * Source: Case-Shiller Real-estate Index FAQ. The S&P Case-Shiller webpage has links to historical studies and commentary by Yale University Professor Shiller. Housing Views posts news and analysis for the regional indices. Yes. The CME Group in Chicago runs a real-estate futures market. Regional S&P/ Case-Schiller index futures and options are the first [security type] for managing U.S. housing risk. They provide protection, or profit, in up or down markets. They extend to the housing industry the same tools, for risk management and investment, available for agriculture and finance. But would you want to invest? Probably not. This market has minimal activity. For the three markets, San Diego, Boston and Los Angeles on 28 November 2011, there was zero trading volume (prices unchanged), no trades settled, no open interest, see far right, partially cut off in image below. * Source: Futures and options activity[PDF] for all 20 regional indices. I don't know the reason for this situation. A few guesses: Additional reference: CME spec's for index futures and options contracts.\"",
"title": ""
},
{
"docid": "19f06ae3fb5539ce2720a61d47286e51",
"text": "\"Funds which track the same index may have different nominal prices. From an investors point of view, this is not important. What is important is that when the underlying index moves by a given percentage, the price of the tracking funds also move by an equal percentage. In other words, if the S&P500 rises by 5%, then the price of those funds tracking the S&P500 will also rise by 5%. Therefore, investing a given amount in any of the tracking funds will produce the same profit or loss, regardless of the nominal prices at which the individual funds are trading. To see this, use the \"\"compare\"\" function available on the popular online charting services. For example, in Google finance call up a chart of the S&P500 index, then use the compare textbox to enter the codes for the various ETFs tracking the S&P500. You will see that they all track the S&P500 equally so that your relative returns will be equal from each of the tracking funds. Any small difference in total returns will be attributable to management fees and expenses, which is why low fees are so important in passive investing.\"",
"title": ""
},
{
"docid": "e9149538d610725a2eac924e1aea37af",
"text": "As I write this, the NASDAQ Composite is at 2790.00, down 6.14 points from yesterday. To calculate the percentage, you take 6.14 and divide by yesterday's close of 2796.14 to yield 0.22%. In your example, if SPY drops from 133.68 to 133.32, you use the difference of -0.36 and divide by the original, i.e. -0.36/133.68 = -0.27%. SPY is an ETF which you can invest in that tracks the S&P 500 index. Ideally, the index would have dropped the same percentage as SPY, but the points would be different (~10x higher). To answer your question about how one qualifies a point, it completely depends on the index being discussed. For example, the S&P 500 is a market-capitalization weighted index of the common stock of 500 large-cap US public companies. It is as if you owned every share of each of the 500 companies, then divide by some large constant to create a number that's easily understood mentally (i.e. 1330). The NASDAQ Composite used the same methodology but includes practically all stocks listed on the NASDAQ. Meanwhile, the Dow Jones Industrial Average is a price-weighted index of 30 large-cap companies. It's final value is modified using a divisor known as the Dow Divisor, which accounts for stock splits and similar events that have occurred since a stock has joined the index. Thus, points when referring to an index do not typically represent dollars. Rather, they serve as a quantitative measure of how the market is doing based on the performance of the index constituents. ETFs like SPY add a layer of abstraction by creating an investible vehicle that ideally tracks the value of the underlying index directly. Finally, neither price nor index value is related to volume. Volume is a raw measurement of the total number of shares traded for a given stock or the aggregate for a given exchange. Hope this helps!",
"title": ""
},
{
"docid": "0e0a17f4cb11fdeada4c57156bbd9bc1",
"text": "No, there is no real advantage. The discrepancies in how they track the index will (generally) be so small that this provides very, very limited diversification, while increasing the complexity of your investments.",
"title": ""
},
{
"docid": "d0c0764029404e59244d50be1b159dad",
"text": "\"Here is my simplified take: In any given market portfolio the market index will return the average return on investment for the given market. An actively managed product may outperform the market (great!), achieve average market performance (ok - but then it is more expensive than the index product) or be worse than the market (bad). Now if we divide all market returns into two buckets: returns from active investment and returns from passive investments then these two buckets must be the same as index return are by definition the average returns. Which means that all active investments must return the average market return. This means for individual active investments there are worse than market returns and better then market returns - depending on your product. And since we can't anticipate the future and nobody would willingly take the \"\"worse than market\"\" investment product, the index fund comes always up on top - IF - you would like to avoid the \"\"gamble\"\" of underperforming the market. With all these basics out of the way: if you can replicate the index by simply buying your own stocks at low/no costs I don't see any reason for going with the index product beyond the convenience.\"",
"title": ""
},
{
"docid": "be3f373f8d70b137501de20014c0ab9d",
"text": "> So what’s the problem? When investors put their money in an index like the S&P 500, they believe that they are just investing in “the market”, broadly. But now, these for-profit indices have made an active decision to exclude certain stocks on the basis of their voting structures. The author doesn't seem to understand the difference between the companies creating the passive funds that track the indices and the companies creating the indices that are being tracked. Indices have always been subject to somewhat arbitrary rules for what is being included and how its value is calculated. So this article is completely missing the point.",
"title": ""
}
] |
fiqa
|
2e80e236e1538e0c874599110a6e5d2d
|
How Warren Buffett made his money
|
[
{
"docid": "6bfdc5b647b5f94ef5ffe18b4b174c9a",
"text": "\"Despite Buffett's nearly perfect consistent advice over the past few decades, they don't reflect his earliest days. His modern philosophy seemed to solidify in the 1970s. You can see that Buffett's earliest days grew faster, at 29.5 % for those partners willing to take on leverage with Buffett, than the last half century, at 19.7%. Not only is Buffett limited by size, as its quite difficult to squeeze one half trillion USD into sub-billion USD investments, but the economy thus market is far different than it was before the 1980s. He would have to acquire at least 500 billion USD companies outright, and there simply aren't that many available that satisfy all of his modern conditions. The market is much different now than it was when he first started at Graham-Newman because before the 1960s, the economy thus market would collapse and rebound about every few years. This sort of variance can actually help a value investor because a true value investor will abandon investments when valuations are high and go all in when valuations are low. The most extreme example was when he tried to as quietly as possible buy up an insurance company selling for something like a P/E of 1 during one of the collapses. These kinds of opportunities are seldom available anymore, not even during the 2009 collapse. As he became larger, those investments became off limits because it simply wasn't worth his time to find such a high returner if it's only a bare fraction of his wealth. Also, he started to deviate from Benjamin Graham's methods and started to incorporate Philip Fisher's. By the 1970s, his investment philosophy was more or less cemented. He tried to balance Graham's avarice for price with Fisher's for value. All of the commentary that special tax dodges or cheap financing are central to his returns are false. They contributed, but they are ancillary. As one can see by comparing the limited vs general partners, leverage helps enormously, but this is still a tangent. Buffett has undoubtedly built his wealth from the nature of his investments. The exact blueprint can be constructed by reading every word he has published and any quotes he has not disavowed. Simply, he buys the highest quality companies in terms of risk-adjusted growth at the best available prices. Quantitatively, it is a simple strategy to replicate. NFLX was selling very cheaply during the mid-2000s, WDC sells frequently at low valuations, up and coming retailers frequently sell at low valuations, etc. The key to Buffett's method is emotional control and removing the mental block that price equals value; price is cost, value is revenue, and that concept is the hardest for most to imbibe. Quoting from the first link: One sidelight here: it is extraordinary to me that the idea of buying dollar bills for 40 cents takes immediately to people or it doesn't take at all. It's like an inoculation. If it doesn't grab a person right away, I find that you can talk to him for years and show him records, and it doesn't make any difference. They just don't seem able to grasp the concept, simple as it is. A fellow like Rick Guerin, who had no formal education in business, understands immediately the value approach to investing and he's applying it five minutes later. I've never seen anyone who became a gradual convert over a ten-year period to this approach. It doesn't seem to be a matter of IQ or academic training. It's instant recognition, or it is nothing. and I'm convinced that there is much inefficiency in the market. These Graham-and-Doddsville investors have successfully exploited gaps between price and value. When the price of a stock can be influenced by a \"\"herd\"\" on Wall Street with prices set at the margin by the most emotional person, or the greediest person, or the most depressed person, it is hard to argue that the market always prices rationally. In fact, market prices are frequently nonsensical. and finally Success in investing doesn’t correlate with I.Q. once you’re above the level of 25. Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing. There is almost no information on any who has helped Buffett internally or even managed Berkshire's investments aside from Louis Simpson. It is unlikely that Buffett has allowed anyone to manage much of Berkshire's investments considering the consistent stream of commentary from him claiming that he nearly does nothing except read annual reports all day to the extent that he may have neglected his family to some degree and that listening to others will more likely hurt performance than help with the most striking example being his father's recommendation that he not open a hedge fund after retiring from Graham-Newman because he believed the market was topping, and he absolutely idolized his father.\"",
"title": ""
},
{
"docid": "8fdbf339263b1065a53a294559a4d6dd",
"text": "\"There is actually a recent paper that attempted to decompose Buffett's outperformance. I've quoted the abstract below: \"\"Berkshire Hathaway has realized a Sharpe ratio of 0.76, higher than any other stock or mutual fund with a history of more than 30 years, and Berkshire has a significant alpha to traditional risk factors. However, we find that the alpha becomes insignificant when controlling for exposures to Betting-Against-Beta and Quality-Minus-Junk factors. Further, we estimate that Buffett’s leverage is about 1.6-to-1 on average. Buffett’s returns appear to be neither luck nor magic, but, rather, reward for the use of leverage combined with a focus on cheap, safe, quality stocks. Decomposing Berkshires’ portfolio into ownership in publicly traded stocks versus wholly-owned private companies, we find that the former performs the best, suggesting that Buffett’s returns are more due to stock selection than to his effect on management. These results have broad implications for market efficiency and the implementability of academic factors.\"\"\"",
"title": ""
}
] |
[
{
"docid": "974603438efffb44dbeb13d6df665925",
"text": "I don’t know specifics of the situation but one possibility would be that Buffett may have billions in various assets etc companies he owns, stocks bonds, but if he doesn’t sell any of those stocks or cash in any of those bonds, then on paper he didn’t make any money that year because he’s letting the assets appreciate. I would say net income is the amount of income you claimed that year, so if you had sold some stock, the amount of money you sold them for would be your income. As opposed to net worth being “if they wanted to” if Buffett sold all of his stocks and assets, he would be able to get billions for it. So while he technically is worth billions, on his tax returns he doesn’t claim much income.",
"title": ""
},
{
"docid": "e468f3dd2a7862c490cba7671c69bba3",
"text": "/u/Dexter0_0 - Additionally, nominal dollars should be adjusted for inflation using the [core PCE price deflator](https://fred.stlouisfed.org/series/DPCCRG3A086NBEA). For instance, $5,000 in 1944 (when Mr. Buffett was 14), would feel like $48,000. /u/jaasx - the trailing off in the later years is more likely do to the difficulty of earning high rates of returns on large piles of money (i.e. diminishing marginal returns). [Here are Mr. Buffett's own words](https://valuebin.wordpress.com/2011/01/27/warren-buffett-on-investing-small-sums-of-money/), and can be seen in the stock price of Berkshire Hathaway (appreciating more slowly in recent decades than in the '70s & '80s).",
"title": ""
},
{
"docid": "e91b1f08ae696306311d1ca153bab4f0",
"text": "\"US federal tax law distinguishes many types of income. For most people, most of their income is \"\"earned income\"\", money you were paid to do a job. Another category of income is \"\"capital gains\"\", money you made from the sale of an asset. For a variety of reasons, capital gains tax rates are lower than earned income tax rates. (For example, it is common that much of the gain is not real profit but inflation. If you buy an asset for $10,000 and sell it for $15,000, you pay capital gains tax on the $5,000 profit. But what if prices in general since you bought the asset have gone up 50%? Then your entire profit is really inflation, you didn't actually make any money -- but you still have to pay a tax on the paper gain.) So if you make your money by investing in assets -- buying and selling at a profit -- you will pay lower taxes than if you made the same amount of money by receiving a salary from a job, or by running a business where you sell your time and expertise rather than an asset. But money made from assets -- capital gains -- is not tax free. It's just a lower tax. It MIGHT be that when combined with other deductions and tax credits this would result in you paying no taxes in a particular year. Maybe you could avoid paying taxes forever if you can take advantage of tax loopholes. But for most people, making money from capital gains could result in lower taxes per dollar of income than someone doing more ordinary work. Or it could result in higher taxes, if you factor in inflation, net present value of money, and so on. BTW Warren Buffet's \"\"secretary\"\" is not a typist. She apparently makes at least $200,000 a year. http://www.forbes.com/sites/paulroderickgregory/2012/01/25/warren-buffetts-secretary-likely-makes-between-200000-and-500000year/#ab91f3718b8a. And side note: if Warren Buffet thinks he isn't paying enough in taxes, why doesn't he voluntarily pay more? The government has a web site where citizens can voluntarily pay additional taxes. In 2015 they received $3.9 million in such contributions. http://www.treasurydirect.gov/govt/reports/pd/gift/gift.htm\"",
"title": ""
},
{
"docid": "c3dbe23baa3731a9c553bf645a1ddd1d",
"text": "\"That's just his base salary for last year. Keep reading in the article: He also received $1.6 million worth of securit[ies]. Plus, he's probably earned plenty in salary, bonuses, and other compensation in previous years to more than keep up his lifestyle. He can also sell (relatively) small amounts of the stock he already owns to get millions in cash without raising an eyebrow. how are people able to spend more than what they make, without going into debt? Well, people can't spend more than they have without going into debt. Certainly money can be saved, won, inherited, whatever without being \"\"earned\"\". Other than that, debt is the only option. That said, MANY \"\"wealthy\"\" people will spend WAY more than they have by going into debt. This can be done through huge mortgages, personal loans using stock, real estate, or other assets as collateral, etc. I don't know about Bezos specifically, but it's not uncommon for \"\"wealthy\"\" people to live beyond their means - they just have more assets behind them to secure personal loans, or bankers are more willing to lend them unsecured money because of the large interest rates they can charge. Their assumption is presumably that the interest they'll pay on these loans is less than the earnings they'll get from the asset (e.g. stock, real estate). While it may be true in some cases, it can also go bad and cause you to lose everything.\"",
"title": ""
},
{
"docid": "e51cf7afa6aabe63143fd7875be00205",
"text": "The main thing you're missing is that while you bear all the costs of manipulating the market, you have no special ability to capture the profits yourself. You make money by buying low and selling high. But if you want to push the price up, you have to keep buying even though the price is getting high. So you are buying high. This gives everyone, including you, the opportunity to sell high and make money. But you will have no special ability to capture that -- others will see the price going up and will start selling within a tiny fraction of a second. You will have to keep buying all the shares they keep selling at the artificially inflated price. So as you keep trying to buy more and more to push the price up enough to make money, everyone else is selling their shares to you. You have to buy more and more shares at an inflated price as everyone else is selling while you are still buying. When you switch to selling, the price will drop instantly, since there's nobody to buy from you at the inflated price. The opportunity you created has already been taken -- by the very people you were trading with. Billions have been lost by people who thought this strategy would work.",
"title": ""
},
{
"docid": "6e9ebc57e4df203c6ab584cc9e5ec0ed",
"text": "\"First of all, the annual returns are an average, there are probably some years where their return was several thousand percent, this can make a decade of 2% a year become an average of 20% . Second of all, accredited investors are allowed to do many things that the majority of the population cannot do. Although this is mostly tied to net worth, less than 3% of the US population is registered as accredited investors. Accredited Investors are allowed to participate in private offerings of securities that do not have to be registered with the SEC, although theoretically riskier, these can have greater returns. Indeed a lot of companies that go public these days only do so after the majority of the growth potential is done. For example, a company like Facebook in the 90s would have gone public when it was a million dollar company, instead Facebook went public when it was already a 100 billion dollar company. The people that were privileged enough to be ALLOWED to invest in Facebook while it was private, experienced 10000% returns, public stock market investors from Facebook's IPO have experienced a nearly 100% return, in comparison. Third, there are even more rules that are simply different between the \"\"underclass\"\" and the \"\"upperclass\"\". Especially when it comes to leverage, the rules on margin in the stock market and options markets are simply different between classes of investors. The more capital you have, the less you actually have to use to open a trade. Imagine a situation where a retail investor can invest in a stock by only putting down 25% of the value of the stock's shares. Someone with the net worth of an accredited investor could put down 5% of the value of the shares. So if the stock goes up, the person that already has money would earn a greater percentage than the peon thats actually investing to earn money at all. Fourth, Warren Buffett's fund and George Soros' funds aren't just in stocks. George Soros' claim to fame was taking big bets in the foreign exchange market. The leverage in that market is much greater than one can experience in the stock market. Fifth, Options. Anyone can open an options contract, but getting someone else to be on the other side of it is harder. Someone with clout can negotiate a 10 year options contract for pretty cheap and gain greatly if their stock or other asset appreciates in value much greater. There are cultural limitations that prompt some people to make a distinction between investing and gambling, but others are not bound by those limitations and can take any kind of bet they like.\"",
"title": ""
},
{
"docid": "f5a2ac814e0f47b51a7f35f47f3c850d",
"text": "\"Warren Buffett pointed out that if you set 1 million monkeys to flipping coins, after ten flips, one monkey in about 1,000 (1,024) actually, would have a \"\"perfect\"\" track record of 10 heads. If you can double your money every three to five years (basically, the outer limit of what is humanly possible), you can turn $1,000 into $1 million in 30-50 years. But your chances of doing this are maybe those of that one in 1,000 monkeys. There are people that believe that if Warren Buffett were starting out today, \"\"today's version\"\" could not beat the historical version. One of the \"\"believers\"\" is Warren Buffett himself (if you read between the lines of his writings). What the promoters do is to use the benefit of hindsight to show that if someone had done such-and-such trades on such-and-such days, they would have turned a few thousand into a million in a few short years. That's \"\"easy\"\" in hindsight, but then challenge them to do it in real time!\"",
"title": ""
},
{
"docid": "1ace2779c15685158929931d658536e7",
"text": "Shit article that displays the author has no farming idea of how Warren Buffet operates. The man has metrics that tell him when shares are too expensive. When this happens, he doesn't buy, and dividends can tend to accumulate when you have almost $500 billion in assets (which could just be 2 years of 5% dividend yields). If they are expensive, he won't buy, and money will accumulate. When there is a crash, he buys on the cheap. That how you get 23% of Year-on-year gains for 40 years. The fact that he is not buying does indicate that the market is overvalued, which is consistent with the fact that there is still a substantial amount of QE. The question is: what will happen as the Fed winds it down. They are aiming for a small decrease or leveling out of the stock market. If that happens, and the market stagnates for a couple of years, maybe the metrics will catch up and he will buy again without a crash happening.",
"title": ""
},
{
"docid": "2c33a6811b667dc4c41322a763088ef4",
"text": "I could be wrong, but I doubt that Bernie started out with any intention of defrauding anyone, really. I suspect it began the first time he hit a quarter when his returns were lower than everyone else's, or at least not as high as he'd promised his investors they'd be, so he fudged the numbers and lied to get past the moment, thinking he'd just make up for it the next quarter. Only that never happened, and so the lie carried forward and maybe grew as things didn't improve as he expected. It only turned into a ponzi because he wasn't as successful at investing as he was telling his investors he was, and telling the truth would have meant the probability that he would have lost most of his clients as they went elsewhere. Bernie couldn't admit the truth, so he had to keep up the fiction by actually paying out returns that didn't exist, which required constantly finding new money to cover what he was paying out. The source of that money turned out to be new investors who were lured in by people already investing with Bernie who told them how great he was as a financial wizard, and they had the checks to prove it. I think this got so far out of hand, and it gradually dragged more and more people in because such things turn into black holes, swallowing up everything that gets close. Had the 2008 financial crisis not hit then Bernie might still be at it. The rapid downturns in the markets hit many of Bernie's investors with margin calls in other investments they held, so they requested redemptions from him to cover their calls, expecting that all of the money he'd convinced to leave with him really existed. When he realized he couldn't meet the flood of redemptions, that was when he 'fessed up and the bubble burst. Could he have succeeded by simple investing in Berkshire? Probably. But then how many people say that in hindsight about them or Amazon or Google, or any number of other stocks that turned out similarly? (grin) Taking people's money and parking it all in one stock doesn't make you a genius, and that's how Bernie wanted to be viewed. To accomplish that, he needed to find the opportunities nobody else saw and be the one to get there first. Unfortunately his personal crystal ball was wrong, and rather than taking his lumps by admitting it to his investors, his pride and ego led him down a path of deception that I'm sure he had every intention of making right if he could. The problem was, that moment never came. Keep in mind one thing: The $64 billion figure everyone cites isn't money that really existed in the first place. That number is what Bernie claimed his fund was worth, and it is not the amount he actually defrauded people out of. His actual cash intake was probably somewhere in the $20 billion range over that time. Everything else beyond that was nothing more than the fictionalized returns he was claiming to get for his clients. It's what they thought they had in the bank with him, rather than what was really there.",
"title": ""
},
{
"docid": "f72096078666904daa338a9408f0f8e9",
"text": "Do you think Buffet's track record is a result of luck? Also it is tough to compare Singer and Buffet because their strategies are so different. Paul Singer's investing focuses on activism & distress, whereas Buffet is a value investor.",
"title": ""
},
{
"docid": "23c0aec2630f46aec1894d85809f1124",
"text": "Yes, because we don't want to be China. It also helps stimulate an economy to have your largest portion get most of the wealth. Warren Buffett can only eat one meal at a time, live in one house at a time, and only has so much time in his day. If you give his yearly salary to 150 people that are right now unable to do any of those things, they will put that money to better use.",
"title": ""
},
{
"docid": "db1ccbc57a778e7a93f06a6a95ab0dde",
"text": "\"Consultant, I commend you for thinking about your financial future at such an early age. Warren Buffet, arguably the most successful investor ever lived, and the best known student of Ben Graham has a very simple advice for non-professional investors: \"\"Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard’s.)\"\" This quote is from his 2013 letter to shareholders. Source: http://www.berkshirehathaway.com/letters/2013ltr.pdf Buffet's annual letters to shareholders are the wealth of useful and practical wisdom for building one's financial future. The logic behind his advice is that most investors cannot consistently pick stock \"\"winners\"\", additionally, they are not able to predict timing of the market; hence, one has to simply stay in the market, and win over in the long run.\"",
"title": ""
},
{
"docid": "6e6390bc4bd318df463271b969ab2ba9",
"text": "This has never really adequately explained it for me, and I've tried reading up on it all over the place. For a long time I thought that in a trade, the market maker pockets the spread *for that trade*, but that's not the case. The only sensible explanation I've found (which I'm not going to give in full...) is that the market maker will provide liquidity by buying and selling trades they have no actual view on (short or long), and if the spread is higher, that contributes directly to the amount they make over time when they open and close positions they've made. It would be great to see a single definitive example somewhere that shows how a market maker makes money.",
"title": ""
},
{
"docid": "c7d15ce341a607d020f7c95b96e51e11",
"text": "\"my problem with your argument is its base falseness: \"\"During the 2007 subprime mortgage crisis, Goldman was able to profit from the collapse in subprime mortgage bonds in the summer of 2007 by short-selling subprime mortgage-backed securities. Two Goldman traders, Michael Swenson and Josh Birnbaum, are credited with bearing responsibility for the firm's large profits during America's sub-prime mortgage crisis. The pair, members of Goldman's structured products group in New York, made a profit of $4 billion by \"\"betting\"\" on a collapse in the sub-prime market, and shorting mortgage-related securities.\"\" that is wikipedia, but they seem to know what is going on better than you do so...\"",
"title": ""
},
{
"docid": "7c0e031045feb0f059b8f4d20233b164",
"text": "\"We just got in an argument in another thread, and I don't necessarily want to continue it, but was browsing your comments and saw this. I can say from personal experience (I have several high net worth clients) that this isn't true. The rich do the opposite of leave their money laying around. They invest it to make more money. They buy office buildings, fund new companies, buy up stocks, and drive investment in general. Someone has to do these things. Office buildings can't just be owned by \"\"the people\"\". Someone with a ton of money has to come along and fund them. For example, one of my friends knows Elon Musk (founder of Pay-Pal, Tesla Motors, Solar City, and Space X). He is *worth* $2 billion, but was living on other people's couches (including my friend's) after he sold Pay-Pal because he had just poured all of his cash into starting Tesla Motors. He was a billionaire without a penny to his name (well I'm sure he had a little cash lying around, but was essentially asset rich, cash broke). THAT is what most ultra rich people are like. They invest their money, they don't just horde it away in a savings account. The things people like Musk do create jobs and sometimes entire industries (or three entire industries in his case). I'm by no means arguing that this is right or wrong, but to say rich people just have money lying around is absurd. You don't get rich by saving money in the bank, you get rich by spending it. I'm in my early 20's, but already own multiple apartment buildings. I'm not rich yet and am in the same boat as Musk was. I have tons of assets, but almost no cash I can spend. However, you bet my efforts are creating jobs. I'm employing people to renovate and people to repair and maintain these buildings. I'm helping stop the bleeding in the real estate market, but, according to the narrative, I'm evil because my \"\"income\"\" is six figures.\"",
"title": ""
}
] |
fiqa
|
3b1fcd2861c9343dfbc4e5950098eab2
|
I was given a 1099-misc instead of a w-2 what are my next steps?
|
[
{
"docid": "563440e7c3bd9c4100cc7605236340c8",
"text": "\"I agree that you should have received both a 1099 and a W2 from your employer. They may be reluctant to do that because some people believe that could trigger an IRS audit. The reason is that independent contractor vs employee is supposed to be defined by your job function, not by your choice. If you were a contractor and then switched to be an employee without changing your job description, then the IRS could claim that you should have always been an employee the entire time, and so should every one of the other contractors that work for that company with a similar job function. It's a hornet's nest that the employer may not want to poke. But that's not your problem; what should you do about it? When you say \"\"he added my Federal and FICA W/H together\"\", do you mean that total appears in box 4 of your 1099? If so, it sounds like the employer is expecting you to re-pay the employer portion of FICA. Can you ask them if they actually paid it? If they did, then I don't see them having a choice but to issue a W2, since the IRS would be expecting one. If they didn't pay your FICA, then the amount this will cost you is 7.65% of what would have been your W2 wages. IMHO it would be reasonable for you to request that they send you a check for that extra amount. Note: even though that amount will be less than $600 and you won't receive a 1099 in 2017 for it, legally you'll still have to pay tax on that amount so I think a good estimate would be to call it 10% instead. Depending on your personality and your relationship with the employer, if they choose not to \"\"make you whole\"\", you could threaten to fill out form SS-8. Additional Info: (Thank you Bobson for bringing this up.) The situation you find yourself in is similar to the concept of \"\"Contract-to-Hire\"\". You start off as a contractor, and later convert to an employee. In order to avoid issuing a 1099 and W2 to the same person in a single tax year, companies typically utilize one of the following strategies: Your particular situation is closest to situation 2, but the reverse. Instead of retroactively calling you a W2 employee the entire time, your employer is cheating and attempting to classify you as a 1099 contractor the entire time. This is frowned upon by the IRS, as well as the employee since as you discovered it costs you more money in the form of employer FICA. From your description it sounds like your employer was trying to do you a favor and didn't quite follow through with it. What they should have done was never switch you to W2 in the first place (if you really should have been a contractor), or they should have done the conversion properly without stringing you along.\"",
"title": ""
}
] |
[
{
"docid": "9ca487f414c2c6031f240a6f39f57761",
"text": "\"Well, as you say, the instructions for form W-2 (for your employer to fill out) say You must report all employer contributions (including an employee's contributions through a cafeteria plan) to an HSA in box 12 of Form W-2 with code W. Employer contributions to an HSA that are not excludable from the income of the employee also must be reported in boxes 1, 3, and 5. However, while it's your employer's job to fill out W-2 correctly, it's only your job to file your taxes correctly. Especially as you say your box 1/3/5 income is correct, this isn't too hard to do. You should file Form 8889 with your return and report the contributions on Line 9 as Employer Contributions. (And as you say, both what the employer contributed outright and what you had deducted from your pay are both Employer Contributions.) Be sure to keep your final pay stub for the year (or other documentation) showing that your employer did contribute that amount, just in case the IRS does end up questioning it for some reason. If you really want to, you could try calling the IRS and letting them know that you have contributions that weren't reported on your W-2 to see if they want to follow up with your employer about correcting their documentation, if your efforts have been fruitless. There's even a FAQ page on the IRS site about how to contact them when your employer isn't giving you a correct W-2 and how to fill out a Form 4852 instead of using the W-2, which I'd recommend if the amount of income listed was wrong or if there were some other more \"\"major\"\" problem with the form. Most likely, though, since it's not going to affect the amount of tax anybody will pay, it's not going to be at the top of their list. I would worry more filling out the forms you need to fill out correctly rather than worrying about the forms your employer isn't filling out correctly.\"",
"title": ""
},
{
"docid": "e60c76c4257a2b9514250cba964fb1e6",
"text": "I believe it's not only legal, but correct and required. A 1099 is how a business reports payments to others, and they're required by the IRS to send them for payments of $600 or more (for miscalleneous payments like this). The payment is an expense to the landlord and income to you, and the 1099 is how that's documented (although note that if they don't send you a 1099, it's still income to you and you still need to report it as such). It's similar to getting a 1099-INT for interest payments or a 1099-DIV for dividend payments. You'll get a 1099-MISC for a miscellaneous payment. If you were an employee they'd send you a W-2, not a 1099.",
"title": ""
},
{
"docid": "f32d820d97c3f202be1a3c1a88a1820b",
"text": "\"Does he need to file a tax return in this situation? Will the IRS be concerned that he did not file even if he received a 1099? No. However, if you don't file the IRS may come back asking why, or \"\"make up\"\" a return for you assuming that the whole amount on the 1099-MISC is your net earnings. So in the end, I suspect you'll end up filing even though you don't have to, just to prove that you don't have to. Bottom line - if you have 1099 income (or any other income reported to the IRS that brings you over the filing threshold), file a return.\"",
"title": ""
},
{
"docid": "d261b95aa4f917f2b19443b949a5c35e",
"text": "\"Whenever you do paid work for a company, you will need to fill out some sort of paperwork so that the company knows how to pay you, and also how to report how much they paid you to the appropriate government agencies. You should not think of this as a \"\"hurdle\"\" and you shouldn't worry that you haven't been employed for a long time. The two most common ways a company pays an individual are via employee wages, or \"\"independent contractor\"\" payments. When you start a relationship with a company, if you are going to become an employee, then you will out a W4 form, and at the end of the year you will receive a W2 form. If you are an independent contractor, (which you would be considered in this case), you will fill out form W9 and at the end of the year you will receive a 1099. This is completely normal and you have nothing to worry about. All it means is that if you make more than a certain amount (typically $600) in a year, you will receive a 1099 in the mail or electronically. The 1099 form basically means that they are reporting that amount to the IRS, and it also helps you file your tax return by showing you all the numbers you need on one form. Please remember that when you are paid as an independent contractor, no taxes are withheld on your behalf, so you may owe some tax on the money you make. It's best to set aside some of your income so you are prepared to pay it come tax time next year.\"",
"title": ""
},
{
"docid": "51e02e18fe8ff18b3bbd421ca9eeee5c",
"text": "As a follow-up, I was able to find a bank that gave me a loan. I just called several banks listed on Yelp, and one ended up working with me. It is also possible that the previous banks misunderstood me and assumed I was 1099 and not W2. I made it very clear to this guy that I was W2, and there was absolutely no problem. Also, it turned out the recruiter I work for has special paperwork their employees can give to lenders to verify W2 employment. So, I have been in my condo since January. And, the condo was a little under $250K. Anyway, I still think it's ABSOLUTELY RIDICULOUS that banks would not give a loan to a web developer who is in super high demand and making well over 100K/year -- even if I am 1099. I have never, ever in my life been late on a single payment for anything, and I have an 800 credit score. To even question that I could not make payments is ludicrous. Whenever I put my resume on monster.com (just one web site), I receive about 20 phone calls daily -- and I am not exaggerating even slightly.",
"title": ""
},
{
"docid": "29af954b3b5d2f33d38175d849fcf8ac",
"text": "You should get a 1099-MISC for the $5000 you got. And your broker should send you a 1099-B for the $5500 sale of Google stock. These are two totally separate things as far as the US IRS is concerned. 1) You made $5000 in wages. You will pay income tax on this as well as FICA and other state and local taxes. 2) You will report that you paid $5000 for stock, and sold it for $5500 without holding it for one year. Since this was short term, you will pay tax on the $500 in income you made. These numbers will go on different parts of your tax form. Essentially in your case, you'll have to pay regular income tax rates on the whole $5500, but that's only because short term capital gains are treated as income. There's always the possibility that could change (unlikely). It also helps to think of them separately because if you held the stock for a year, you would pay different tax on that $500. Regardless, you report them in different ways on your taxes.",
"title": ""
},
{
"docid": "a403d7de68675f08817c02e9104ea567",
"text": "If you're correct that it's not taxable because it's non-taxable reimbursement (which is supported by your W-2), then it should not go on your 1040 at all. If it is taxable, then it really should have appeared on your W-2 and would probably end up on Line 7 of your Form 1040.",
"title": ""
},
{
"docid": "16581677e644eac47253d3d85e446f77",
"text": "I suggest you have a professional assist you with this audit, if the issue comes into questioning. It might be that it wouldn't. There are several different options to deal with such situation, and each can be attacked by the IRS. You'll need to figure out the following: Have you paid taxes on the reimbursement? Most likely you haven't, but if you had - it simplifies the issue for you. Is the program qualified under the employers' plan, and the only reason you're not qualified for reimbursement is that you decided to quit your job? If so, you might not be able to deduct it at all, because you can't take tax benefits on something you can be reimbursed for, but chose not to. IRS might claim that you quitting your job is choosing not to get reimbursement you would otherwise get. I couldn't find from my brief search any examples of what happened after such a decision. You can claim it was a loan, but I doubt the IRS will agree. The employer most likely reported it as an expense. If the IRS don't contest based on what I described in #2, and you haven't paid taxes on the reimbursement (#1), I'd say what you did was reasonable and should be accepted (assuming of course you otherwise qualify for all the benefits you're asking for). I would suggest getting a professional advice. Talk to a EA or a a CPA in your area. This answer was not intended or written to be used, and it cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer",
"title": ""
},
{
"docid": "97cbde3c965690a53a5b344eaf7ebe19",
"text": "Forms 1099 and W2 are mutually exclusive. Employers file both, not the employees. 1099 is filed for contractors, W2 is filed for employees. These terms are defined in the tax code, and you may very well be employee, even though your employer pays you as a contractor and issues 1099. You may complain to the IRS if this is the case, and have them explain the difference to the employer (at the employer's expense, through fines and penalties). Employers usually do this to avoid providing benefits (and by the way also avoid paying payroll taxes). If you're working as a contractor, lets check your follow-up questions: where do i pay my taxes on my hourly that means does the IRS have a payment center for the tax i pay. If you're an independent contractor (1099), you're supposed to pay your own taxes on a quarterly basis using the form 1040-ES. Check this page for more information on your quarterly payments and follow the links. If you're a salaried employee elsewhere (i.e.: receive W2, from a different employer), then instead of doing the quarterly estimates you can adjust your salary withholding at that other place of work to cover for your additional income. To do that you submit an updated form W4 there, check with the payroll department on details. Is this a hobby tax No such thing, hobby income is taxed as ordinary income. The difference is that hobby cannot be at loss, while regular business activity can. If you're a contractor, it is likely that you're not working at loss, so it is irrelevant. what tax do i pay the city? does this require a sole proprietor license? This really depends on your local laws and the type of work you're doing and where you're doing it. Most likely, if you're working from your employer's office, you don't need any business license from the city (unless you have to be licensed to do the job). If you're working from home, you might need a license, check with the local government. These are very general answers to very general questions. You should seek a proper advice from a licensed tax adviser (EA/CPA licensed in your state) for your specific case.",
"title": ""
},
{
"docid": "0e0ae1e5e3f2fc011f870fc4b608327e",
"text": "\"You can list it as other income reported on line 21 of form 1040. In TurboTax, enter at: - Federal Taxes tab (Personal in Home & Business) - Wages & Income -“I’ll choose what I work on” Button Scroll down to: -Less Common Income -Misc Income, 1099-A, 1099-C. -The next screen will give you several choices. Choose \"\"Other reportable Income\"\". You will reach a screen where you can type a description of the income and the amount. Type in the amount of income and categorize as Tutoring.\"",
"title": ""
},
{
"docid": "f5bb48681b5df3512b1d651714b729d6",
"text": "When you itemize your deductions, you get to deduct all the state income tax that was taken out of your paycheck last year (not how much was owed, but how much was withheld). If you deducted this last year, then you need to add in any amount that you received in state income tax refunds last year to your taxes this year, to make up for the fact that you ended up deducting more state income tax than was really due to the state. If you took the standard deduction last year instead of itemizing, then you didn't deduct your state income tax withholding last year and you don't need to claim your refund as income this year. Also, if you itemized, but chose to take the state sales tax deduction instead of the state income tax deduction, you also don't need to add in the refund as income. For whatever reason, Illinois decided that you don't get a 1099-G. It might be that the amount of the refund was too small to warrant the paperwork. It might be that they screwed up. But if you deducted your state income tax withholding on last year's tax return, then you need to add the state tax refund you got last year on line 10 of this year's 1040, whether or not the state issued you a form or not. Take a look at the Line 10 instructions starting on page 22 of the 1040 instructions to see if you have any unusual situations covered there that you didn't mention here. (For example, if you received a refund check for multiple years last year.) Then check your tax return from last year to verify that you deducted your state income tax withholding on Schedule A. If you did, then this year add the refund you got from the state to line 10 of this year's 1040.",
"title": ""
},
{
"docid": "d1b3d85e0259ff79c5fcce5e2a24ff6c",
"text": "I assume the OP is the US and that he is, like most people, a cash-basis tax payer and not an accrual basis tax payer. Suppose the value of the rental of the unit the OP is occupying was reported as income on the OP's 2010 and 2011 W-2 forms but the corresponding income tax was not withheld. If the OP correctly transcribed these income numbers onto his tax returns, correctly computed the tax on the income reported on his 2010 and 2011 1040 forms, and paid the amount due in timely fashion, then there is no tax or penalty due for 2010 and 2011. Nor is the company entitled to withhold tax on this income for 2010 and 2011 at this time; the tax on that income has already been paid by the OP directly to the IRS and the company has nothing to do with the matter anymore. Suppose the value of the rental of the unit the OP is occupying was NOT reported as income on the OP's 2010 and 2011 W-2 forms. If the OP correctly transcribed these income numbers onto his tax returns, correctly computed the tax on the income reported on his 2010 and 2011 1040 forms, and paid the amount due in timely fashion, then there is no tax or penalty due for 2010 and 2011. Should the OP have declared the value of the rental of the unit as additional income from his employer that was not reported on the W-2 form, and paid taxes on that money? Possibly, but it would be reasonable to argue that the OP did nothing wrong other than not checking his W-2 form carefully: he simply assumed the income numbers included the value of the rental and copied whatever the company-issued W-2 form said onto his 1040 form. At least as of now, there is no reason for the IRS to question his 2010 and 2011 returns because the numbers reported to the IRS on Copy A of the W-2 forms match the numbers reported by the OP on his tax returns. My guess is that the company discovered that it had not actually declared the value of the rental payments on the OP's W-2 forms for 2010 and 2011 and now wants to include this amount as income on subsequent W-2 forms. Now, reporting a lump-sum benefit of $38K (but no actual cash) would have caused a huge amount of income tax to need to be withheld, and the OP's next couple of paychecks might well have had zero take-home pay as all the money was going towards this tax withholding. Instead, the company is saying that it will report the $38K as income in 78 equal installments (weekly paychecks over 18 months?) and withhold $150 as the tax due on each installment. If it does not already do so, it will likely also include the value of the current rent as a benefit and withhold tax on that too. So the OP's take-home pay will reduce by $150 (at least) and maybe more if the current rental payments also start appearing on the paychecks and tax is withheld from them too. I will not express an opinion on the legality of the company withholding an additional $150 as tax from the OP's paycheck, but will suggest that the solution proposed by the company (have the money appear as taxable benefits over a 78-week period, have tax withheld, and declare the income on your 2012, 2013 and 2014 returns) is far more beneficial to the OP than the company declaring to the IRS that it made a mistake on the 2010 and 2011 W-2's issued to the OP, and that the actual income paid was higher. Not only will the OP have to file amended returns for 2010 and 2011 but the company will need to amend its tax returns too. In summary, the OP needs to know that He will have to pay taxes on the value of the waived rental payments for 2010 and 2011. The company's mistake in not declaring this as income to the OP for 2010 and 2011 does not absolve him of the responsibility for paying the taxes What the company is proposing is a very reasonable solution to the problem of recovering from the mistake. The alternative, as @mhoran_psprep points out, is to amend your 2010 and 2011 federal and state tax returns to declare the value of the rental during those years as additional income, and pay taxes (and possibly penalties) on the additional amount due. This takes the company completely out of the picture, but does require a lot more work and a lot more cash now rather than in the future.",
"title": ""
},
{
"docid": "64ff7d85368c789defd8b35ea3d24c03",
"text": "\"The contract he wants me to sign states I'll receive my monthly stipend (if that is the right word) as a 1099 contractor. The right word is guaranteed payment, which is what \"\"salary\"\" is called when a partner is working for a partnership she's a partner in. Which is exactly the case in your situation. 1099 is not the right form to report this, the partnership (LLC in your case) should be using the Schedule K-1 for that. I suggest you talk to a lawyer and a tax adviser (EA/CPA) who are licensed in your State, before you sign anything.\"",
"title": ""
},
{
"docid": "f60760cdf7ae4938f7de3f0c56f80baf",
"text": "Based on the statement in your question you think it should have been on the 2014 W-2 but it was included on the 2015 W-2. If you are correct, then you are asking them to correct two w-2 forms: the 2014 form and the 2015 form. You will also have to file form 1040-x for 2014 to correct last years tax forms. You will have to pay additional tax with that filing, and there could be penalties and interest. But if you directed them on the last day of the year, it is likely that the transaction actually took place the next year. You will have to look at the paperwork for the account to see what is the expected delay. You should also be able to see from the account history when it actually took place, and when the funds were credited to your account. or you could just pay the tax this year. This might be the best if there is no real difference in the result. Now if you added the sale to your taxes lat year without a corresponding tax statement from your account, that is a much more complex situation. The IRS could eventually flag the discrepancy, so you may have to adjust last year filing anyway.",
"title": ""
},
{
"docid": "177452e08f5bcd1a5ccb6fada4720bcd",
"text": "\"(Insert the usual disclaimer that I'm not any sort of tax professional; I'm just a random guy on the Internet who occasionally looks through IRS instructions for fun. Then again, what you're doing here is asking random people on the Internet for help, so here goes.) The gigantic book of \"\"How to File Your Income Taxes\"\" from the IRS is called Publication 17. That's generally where I start to figure out where to report what. The section on Royalties has this to say: Royalties from copyrights, patents, and oil, gas, and mineral properties are taxable as ordinary income. In most cases, you report royalties in Part I of Schedule E (Form 1040). However, if you hold an operating oil, gas, or mineral interest or are in business as a self-employed writer, inventor, artist, etc., report your income and expenses on Schedule C or Schedule C-EZ (Form 1040). It sounds like you are receiving royalties from a copyright, and not as a self-employed writer. That means that you would report the income on Schedule E, Part I. I've not used Schedule E before, but looking at the instructions for it, you enter this as \"\"Royalty Property\"\". For royalty property, enter code “6” on line 1b and leave lines 1a and 2 blank for that property. So, in Line 1b, part A, enter code 6. (It looks like you'll only use section A here as you only have one royalty property.) Then in column A, Line 4, enter the royalties you have received. The instructions confirm that this should be the amount that you received listed on the 1099-MISC. Report on line 4 royalties from oil, gas, or mineral properties (not including operating interests); copyrights; and patents. Use a separate column (A, B, or C) for each royalty property. If you received $10 or more in royalties during 2016, the payer should send you a Form 1099-MISC or similar statement by January 31, 2017, showing the amount you received. Report this amount on line 4. I don't think that there's any relevant Expenses deductions you could take on the subsequent lines (though like I said, I've not used this form before), but if you had some specific expenses involved in producing this income it might be worth looking into further. On Line 21 you'd subtract the 0 expenses (or subtract any expenses you do manage to list) and put the total. It looks like there are more totals to accumulate on lines 23 and 24, which presumably would be equally easy as you only have the one property. Put the total again on line 26, which says to enter it on the main Form 1040 on line 17 and it thus gets included in your income.\"",
"title": ""
}
] |
fiqa
|
cf7277571f293626cf2cc99c5481862d
|
For very high-net worth individuals, does it make sense to not have insurance?
|
[
{
"docid": "93ac5c7e87fbf813b47b44d966bcd307",
"text": "\"Yes, and the math that tells you when is called the Kelly Criterion. The Kelly Criterion is on its face about how much you should bet on a positive-sum game. Imagine you have a game where you flip a coin, and if heads you are given 3 times your bet, and if tails you lose your bet. Naively you'd think \"\"great, I should play, and bet every dollar I have!\"\" -- after all, it has a 50% average return on investment. You get back on average 1.5$ for every dollar you bet, so every dollar you don't bet is a 0.5$ loss. But if you do this and you play every day for 10 years, you'll almost always end up bankrupt. Funny that. On the other hand, if you bet nothing, you are losing out on a great investment. So under certain assumptions, you neither want to bet everything, nor do you want to bet nothing (assuming you can repeat the bet almost indefinitely). The question then becomes, what percentage of your bankroll should you bet? Kelly Criterion answers this question. The typical Kelly Criterion case is where we are making a bet with positive returns, not an insurance against loss; but with a bit of mathematical trickery, we can use it to determine how much you should spend on insuring against loss. An \"\"easy\"\" way to undertand the Kelly Criterion is that you want to maximize the logarithm of your worth in a given period. Such a maximization results in the largest long-term value in some sense. Let us give it a try in an insurance case. Suppose you have a 1 million dollar asset. It has a 1% chance per year of being destroyed by some random event (flood, fire, taxes, pitchforks). You can buy insurance against this for 2% of its value per year. It even covers pitchforks. On its face this looks like a bad deal. Your expected loss is only 1%, but the cost to hide the loss is 2%? If this is your only asset, then the loss makes your net worth 0. The log of zero is negative infinity. Under Kelly, any insurance (no matter how inefficient) is worth it. This is a bit of an extreme case, and we'll cover why it doesn't apply even when it seems like it does elsewhere. Now suppose you have 1 million dollars in other assets. In the insured case, we always end the year with 1.98 million dollars, regardless of if the disaster happens. In the non-insured case, 99% of the time we have 2 million dollars, and 1% of the time we have 1 million dollars. We want to maximize the expected log value of our worth. We have log(2 million - 20,000) (the insured case) vs 1% * log(1 million) + 99% * log(2 million). Or 13.7953 vs 14.49. The Kelly Criterion says insurance is worth it; note that you could \"\"afford\"\" to replace your home, but because it makes up so much of your net worth, Kelly says the \"\"hit it too painful\"\" and you should just pay for insurance. Now suppose you are worth 1 billion. We have log(1 billion - 20k) on the insured side, and 1%*log(999 million) + 99% * log(1 billion) on the uninsured side. The logs of each side are 21.42 vs 20.72. (Note that the base of the logarithm doesn't matter; so long as you use the same base on each side). According to Kelly, we have found a case where insurance isn't worth it. The Kelly Criterion roughly tells you \"\"if I took this bet every (period of time), would I be on average richer after (many repeats of this bet) than if I didn't take this bet?\"\" When the answer is \"\"no\"\", it implies self-insurance is more efficient than using external insurance. The answer is going to be sensitive to the profit margin of the insurance product you are buying, and the size of the asset relative to your total wealth. Now, the Kelly Criterion can easily be misapplied. Being worth financially zero in current assets can easily ignore non-financial assets (like your ability to work, or friends, or whatever). And it presumes repeat to infinity, and people tend not to live that long. But it is a good starting spot. Note that the option of bankruptcy can easily make insurance not \"\"worth it\"\" for people far poorer; this is one of the reasons why banks insist you have insurance on your proprety. You can use Kelly to calculate how much insurance you should purchase at a given profit margin for the insurance company given your net worth and the risk involved. This can be used in Finance to work out how much you should hedge your bets in an investment as well; in effect, it quantifies how having money makes it easier to make money.\"",
"title": ""
},
{
"docid": "33b6f2e8779b315f359445ac5be75ab5",
"text": "\"I think the key to this question is your last sentence, because it's applicable to everyone, high net-worth or not: How would one determine whether they are better off without insurance? In general, insurance is a net good when the coverage would prevent a 'catastrophic' event. If a catastrophic event doesn't happen, oh well, you wasted money on insurance. If it does happen, you just saved yourself from bankruptcy. These are two separate outcomes, so taking the 'average' cost of a catastrophic event (and weighing that against the more expensive insurance premiums) is not practical. This is a way of reducing risk, not of maximizing returns. Let the insurance company take the risk - they benefit from having a pool of people paying premiums, and you benefit because your own life has less financial risk. Now for something like cheap home electronics, insurance is a bad idea. This is because you now have a 'pool' of potential risks, and your own life experience could be close to the 'average' expected result. Meaning you'll pay more for insurance than you would just replacing broken things. This answer is another good resource on the topic. So to your question, at what point in terms of net-worth does someone's house become equivalent to you and your toaster? Remember that if you have home fire insurance, you are protecting the value of your house, because that loss would be catastrophic to you. But a high net-worth individual would also likely find the loss of their house catastrophic. Unless they are billionaires with multiple 10M+ mansions, then it is quite likely that regardless of wealth, a significant portion of their worth is tied up in their home. Even 10% of your net worth would be a substantial amount. As an example, would someone worth $1M have only a 100k home? Would someone worth $10M have only a $1M Home? Depends on where they live, and how extravagantly. Similarly, if you were worth $10M, you might not need extra insurance on your Toyota Camry, but you might want it if you drive a $1M Ferrari! Not to mention that things like auto insurance may cover you for liability, which could extend beyond the value of your car, into medical and disability costs for anyone in an accident. In fact, being high net-worth may make you more vulnerable to lawsuits, making this insurance even more important. In addition, high net-worth individuals have insurance that you or I have no need of. Things like kidnapping insurance; business operation insurance, life insurance used to secure bank loans. So yes, even high net-worth individuals may fear catastrophic events, and if they have so much money - why wouldn't they pay to reduce that risk? Insurance provides a service to them the same as to everyone else, it's just that the items they consider too 'cheap' too insure are more expensive than a toaster. Edit to counter concerns in some other answers, which say that insurance is \"\"always a bad idea\"\": Imagine you are in a kafka-esque episode of \"\"Let's Make a Deal\"\". Monty Hall shows you two parallel universes, each with 100 doors. You must choose your universe, then choose a door. The first universe is where you bought insurance, and behind every door is a penalty of $200. The second universe is where you didn't buy insurance, and behind 99 doors is nothing, with one random door containing a penalty of $10,000. On average, playing the game 99,999 times, you will come out ahead 2:1 by not buying insurance. But you play the game only maybe 3 times in your life. So which universe do you choose? Now, you might say \"\"pfft - I can cover the cost of a 10k penalty if it happens\"\". But this is exactly the point - insurance (unless already required by law) is a net good when it covers catastrophic losses. If you are wealthy enough to cover a particular loss, you typically shouldn't buy that insurance. That's why no one should insure their toaster. This is not a question of \"\"average returns\"\", it is a question of \"\"risk reduction\"\".\"",
"title": ""
},
{
"docid": "b5bf96d7c983c8dce32b8a34bba14280",
"text": "\"There are 2 maxims that help make sense of insurance: Following those 2 rules, \"\"normal\"\" insurance makes sense. Can't afford to replace your car? insure it. Can afford to lose your TV? Don't insure it. People with a net worth in the low millions have very similar insurance needs to the middle class. For example, they might be able to afford a new car when they total it, but they probably can't afford to pay for the long term care of the person they accidentally ran over. Similarly, they probably need to insure their million dollar house, just like average people insure more affordable housing. \"\"Very wealthy\"\" people still have the same basic choices, but for different assets. If you are a billionaire, then you might not bother to insure your $30k childhood home or your fleet vehicles, but you probably would insure your $250m mansion, your $100m yacht and your more pricey collectible cars. It's also worth noting that \"\"very wealthy\"\" people are at much higher risk of being sued for negligence or personal injury. As such, they are more likely to purchase personal liability or umbrella insurance coverage to protect against such risks. Multi-million-dollar personal injury suits would never be filed against a poorer person simply because they couldn't afford to pay even the plaintiff's lawyer fees when they lost the court case. Insurance also makes sense when the insurance company is likely to (grossly) underestimate the risk they are taking. For example, if I am a really bad driver, but i have a clean record thanks to my army of lawyers, then insurance might actually be a good deal for me even on average. To take the \"\"very wealthy\"\" stereotypes to the extreme, perhaps my eccentric billionaire neighbor and I are in an escalating feud which I think will result in my butler \"\"accidentally\"\" running his car into my neighbor's precious 1961 Ferrari.\"",
"title": ""
},
{
"docid": "bfe6baf0c8053dd25f2f4ba19e01794f",
"text": "The point of insurance is to trade high variable costs for much lower fixed costs. The question isn't whether you can afford what would be a catastrophic event for anyone else, but whether it would be better to pay a small amount regularly vs. a possibly larger amount occasionally. One of the reasons to buy insurance is to avoid costly litigation (rich people are more frequently targeted for litigation). By purchasing liability insurance, the insurance company pays for the litigation and/or settlement. If you are wealthy enough to keep an experienced litigation firm on retainer, you may not need that benefit, but it might be worth giving that stress to a third party. Life insurance is also an important part of estate planning because of the tax treatment of insurance payouts compared to the tax treatment of a large estate. There are certainly classes of insurance that make less sense for those with great cash flow, but money doesn't obviate all the benefits of insurance.",
"title": ""
},
{
"docid": "f32af580ce64f87e6568c568aa2f018b",
"text": "\"It depends. \"\"High net worth individuals\"\" is very subjective. Lets say a person is worth 1.5 million. High, but not super high. For one, they should have an umbrella policy. Until your net worth is above 300K, you really don't need an umbrella policy. They should insure their home and cars, but should probably have high deductibles. Health insurance is a must as a bad illness can wipe them out. They should have long term care insurance when they reach age 60. Now lets say a person is worth about 10 million. They might be able to self insure basic transportation and probably don't need long term care insurance. However, they may choose to carry the full coverage car insurance, or other lines, because it is a value. In conclusion insurance needs change based on a person's net worth and income. It is very hard to make a blanket statement without details of the makeup of one's net worth and how they earn their income. Having said all of that, a high net worth (HNW) individual may never be able to drop certain coverage. Lets say that a HNW owns a 50K condo, 1K square foot condo. Given that the outside structure is covered by the HOA the insurance on such a unit only covers the contents and liability. The contents could easily be floated by the HNW individual, but not the liability. It is probably a requirement, on their umbrella policy, that they carry the maximum liability protection on their vehicles and properties. In the case above they would carry a policy for the purposes of liability protection. This could also be true of their dependents. Say for example, their adult child receives some financial assistance from their parents (like college being paid for). The HNW individuals should have their child cover the maximum liability on the auto policy. According to this site: A person with a net worth of 1.5 million would be in the 90-95 percentile, a person with 10 million in the 99th. This article does a decent job of describing what constitutes a HNW person or household. Namely 1 million in investable assets, which is of course a bit different then net worth.\"",
"title": ""
},
{
"docid": "89c4cabe70d8a89a1ae6827421920ea0",
"text": "\"The general answer to this is \"\"yes\"\". When you're dealing with single-digit millionaires, the answer is that their insurance habits and needs are basically the same as everyone else. When you get into the double digit and triple digit millionaires, or people worth billions, they have additional options, but those basically boil down to using \"\"self-insurance\"\" rather than paying a company for an insurance policy. The following is based on both what I've read and a fair deal of personal experience working for or with various stripes of millionaire, and even one billionaire. Addressing the types of insurance you mention: This is generally used to provide survivors with a replacement for income you can no longer provide when dead, in addition to paying for costs associated with dying (funeral, hospital/hospice bills, etc). Even millionaires and billionaires have this, yes, but the higher your net worth, the less value it has. If you're worth 9 or 10 figures, you probably already have trust funds set up for your family members, so an extra payout from an insurance policy is probably going to represent a small fraction of the wealth you're leaving your survivors, and as has been noted, insurance makes a profit, so the expectation by the insurance company is that they'll make more money on the policy than they'll have to pay out on death. That being said, the members of the 9+ figure club I've worked for all had multi-million dollar life insurance policies on them, which were paid for or heavily subsidized by the companies they owned or worked for. I doubt they would have held those policies if they had to pay the full cost, but when it's free or cheap, why not? Absolutely. As health insurance in America is an untaxed employment benefit, owing to regulations from World War II, all the wealthy folks I've had contact with got outrageously good plans as part of the companies they work for or owned. Having said that, even their trust fund beneficiaries held health insurance, because this type of insurance (in America, at least) is actually not really insurance, it's more of a pre-payment plan for medical expenses, and as such, it provides broader access to health care than you'd get from simply having enough money to pay for whatever treatments you need. If you walk into a hospital as a millionaire and state that you'll definitely be able to pay for your open-heart surgery with cash, you'll get a very different response than if you walk in with your insurance card and your \"\"diamond-level\"\" coverage. So, in this case, it's not as much as about the monetary benefits (although this is a type of \"\"insurance\"\" that's generally free or heavily discounted to the individual, so that's a factor) as it is about easier access to health care. Although this is required by law, it's one of the common forms of insurance that the very wealthy can, and often do handle differently than the rest of us. Most (if not all) US states have a provision to allow motorists to self-insure themselves, which amount to putting up a bond to cover claims against them. Basically, you deposit the minimum amount the state determines is required for auto insurance with the responsible state organization, get a certificate of self-insurance and you're good to go. All the high wealth individuals I know when this route, for two reasons - first of all, they didn't have to deal with insurance companies (or pay sky-high rates on account of all the speeding tickets they picked up) and secondly, they made their deposit with government bonds they had in their portfolios anyway, and they could still collect the interest on their self-insurance deposits. Of course, this meant that if they wrecked or dinged up their Maserati or Bentley or whatever, they'd be out of pocket to repair or replace it... but I guess if you can afford one $200,000 car, you can afford to buy a second one if you wreck it, or get by riding one of your other luxury automobiles instead. Since someone else mentioned kidnapping insurance, I'll point out here that what Robert DeNiro did in Casino when he put a couple million dollars into a safety deposit box for his wife to use if he was kidnapped or needed to pay off a government official is essentially the same thing as \"\"self-insurance\"\". Putting money away somewhere for unexpected events in lieu of buying an insurance policy against them. In real life, the very wealthy will often do this with US treasuries, government bonds and other interest-bearing, safe investments. They make a little money, diversify their portfolios and at the same time, self-insure against a potential big loss. This is another insurance area where even the very wealthy are remarkably similar to the rest of us, in that they all generally have it, yes, although the reason is a little different. For normal folks, the home they own is generally the largest part of their net worth, or at least a very substantial fraction, for those older folks with retirement savings that exceed the value of their homes. So for us, we have home owners insurance to prevent a catastrophic event from wiping out the lion's share of our net worth. If you're an ultra-wealthy individual who can afford an 8 figure home, that's not really the case (at least with the ones I've dealt with, who made their fortunes in business and are good managing their wealth and diversifying their assets - could be different for sports stars or the entertainment industry), and these people generally own multiple homes anyway, so it's not as big a deal if they lose one. However, no one actually buys a multi-million dollar home by writing a multi-million dollar check. They get a mortgage, just like the rest of us. And to get a mortgage, insurance on the property is a requirement. So yes, even the ultra wealthy generally have insurance on their home(s). There is an element of not wanting to shell out another 20 million if the place burns down, or someone breaks in and steals your valuables, but the bigger part of the reason is that it's required to get a mortgage in the first place, which is generally done for financial reasons - interest on your mortgage is a tax deduction, and you don't want to sink millions of dollars all at once into buying a property that's not going to appreciate in value, when you can get a mortgage and invest those millions of dollars to make more money instead.\"",
"title": ""
},
{
"docid": "96c320793de662b8549c60cee3880fe7",
"text": "Simply put, it makes sense from the moment you can afford the loss without negative consequences. For example, if your car costs $20000 and you happen to have another $20000 laying around, you can choose not to insure your car against damage. In the worst case, you can simply buy a new one. However, not insuring your car has a hidden cost: you can't long-term invest that money anymore. If your insurance costs $500 a year, and you can invest those $20000 with a return on investment of more than 2.5%, it still makes sense to invest that money while having your car insured.",
"title": ""
},
{
"docid": "90e5c075808444b3079a84d19def23ea",
"text": "\"There is an economic, a social and a psychological side to the decision whether to buy insurance or not, and if yes, which one. Economically, as you say already in your question, an insurance is on average a net loss for the insured. The key word here is \"\"average\"\". If you know that there are many cancer cases in your family buy health insurance by all means; it's a sound investment. If you are a reckless driver make sure you have extensive coverage on your liability insurance. But absent such extra risks: Independently of somebody's wealth insurance should be limited to covering catastrophic events. What is often overlooked is that the insurance by all means should really cover those catastrophic events. For example the car liability minimums in many states are not sufficient. The typical upper middle class person could probably pay the 15k/30k/10k required in Arizona with a loan on their house; but a really catastrophic accident is simply not covered and would totally ruin that person and their family. Insuring petty damage is a common mistake: economically speaking, all insurances should have deductibles which are as high as one could afford to pay without feeling too much pain. That \"\"pain\"\" qualification has an economical and a social aspect. Of course any risk which materialized is an economical damage of some kind; perhaps now I can't buy the PS4, or the diamond ring, or the car, or the house, or the island which had caught my eye. I could probably do all these things, just perhaps without some extras, even if I had paid for insurance; so if I don't want to live with the risk to lose that possibility I better buy insurance. Another economical aspect is that the money may not be available without selling assets, possibly on short notice and hence not for the best price. Then an insurance fee takes the role of paying for a permanent backup credit line (and should not be more expensive than that). The social aspect is that even events which wouldn't strictly ruin a person might still force them to, say, sell their Manhattan penthouse (no more parties!) or cancel their country club membership. That is a social pain which is probably to be avoided. Another socioeconomic aspect is that you may have a relationship to the person selling you the insurance. Perhaps he buys his car at your dealership? Perhaps he is your golf buddy? Then the insurance may be a good investment. It is only borderline bad to begin with; any benefits move the line into the profit zone. The psychological aspect is that an insurance buys peace of mind, and that often seems to be the most important benefit. A dart hits the flat screen? Hey, it was insured. Junior totals the Ferrari? Hey, it was insured. Even if the house burns down having fire insurance will be a consolation.\"",
"title": ""
},
{
"docid": "ef4b0cff3e13cb4f5bf4142ca6be722e",
"text": "\"I'm going to take a very crude view of this: Suppose that you have an event that would cost $100,000 if it occurred. If there's a 10% chance that it'll happen to you and the insurance costs less than $10,000, you'll make a profit \"\"on average.\"\" This is, of course, assuming that you could afford a $100,000 loss. If you can't, the actual loss could be much higher (or different). For example, if you couldn't afford surgery because you didn't have health insurance, it could be a lot more \"\"costly\"\" in a way that could be difficult to compare to the $100,000. Obviously, this is a very simplistic view of things. For example, making more than you paid on the premium typically isn't the only reason you'd buy insurance (even if you're high net worth). Just wanted to throw this out there for what it's worth though.\"",
"title": ""
},
{
"docid": "8a247b8eb4005d4a1e4020639dfc5bfa",
"text": "\"While a lot of the answers focus on cost to replace and how much money you should have for tangible goods. There are a few more issues to consider. However before we get started, these issues are not related to ones net worth. They are related to other factors. Having money certainly helps, but someone worth only $10 may not need to insure their stuff under some circumstances. Insurance is a risk avoidance strategy. As such, it should be used to avoid risks that would otherwise cause issues for you. The normal example is a house. If you lost your house due to fire, would you be able to \"\"make it\"\" while you paid the mortgage off, and got a new mortgage to pay for a new house? This is a relatively simple view, but a good one. These days people tend to look at insurance as a savings account. I payed in X so I am entitled to Y. Heath insurance (a bit more on this later) is exacerbating the issue by selling it's self that way, but it simply isn't true. What your paying the premium for to avoid the risk of loss. Not so you can have a pool of money to draw from in time of need, but so that a time of need should never arise. Which brings us back to, should you get insurance? Tangible Assets Let's assume you have no legal or contractual obligation to have insurance. If you put the money you were spending aside would you have enough money to secure a new asset should your current one just vanish? This is the normal argument. But it has a second side. Do you need the asset at all, or can you just accept the loss. Lets pick on a red neck for a second. While certainly not millionaires, or \"\"well off\"\" by conventional means, the guy with 6 cars on bricks in his lawn does not need to insure 6 cars. If one were to vanish, it may make a hardship but hey, he's got 5 more. So with tangible goods it's more of a question of can you afford to replace the item, do you need to replace the item, and how big a risk is it to you to loose the item? What would you rather loose, the item, or the cost of the insurance? Non-tangible Assets I am going to try to keep this as un-rant like as I can manage, but be aware that I am biased. There are two big examples of non-tangible assets that are commonly insured. Life Insurance, and Health insurance. There are others, but it's very hard to get people to pay money to insure something that they don't actually have. Ideas can be insured, for example, but in order to insure an idea you have to spell it out, at that point why not just file for the patent etc. etc. Keep in mind that a lot of people and companies will insure against losses due to IP theft or other such intangible things. Largely these follow the same rules as tangible assets. This section is meant to focus on those insurances that do not. Life Insurance Life insurance is a bit odd. Were all going to die, so it seems like a \"\"good bet\"\" but what your insuring against with life insurance is an early death. For term life insurance it's a gamble. Will you die before your term runs out. For full life insurance (with no term) it's a different gamble. Will you die before you have paid in what they agreed to pay out. In many cases it's also a gamble that you will miss a payment or two and cancel the policy before you die. If the risk of your death worth the insurance. Usually while young the answer is yes. Do you leave your Family short one earner? Will they make it without the insurance? But as you get older, as life insurance becomes more of a sure thing it also becomes less needed. Your kids move out, there not dependent on you any more. You have retirement accounts setup so your partner need not worry should something happen. What risk exactly are your trying to avoid at this point. You will die. You have planned for that eventuality, it's not a risk anymore, it's a fact. Heath Insurance Is another beast all together. Historically you insured against some catastrophic event, that you couldn't really plan for. Say a heart attack. Surgery and treatment would run in the tens of thousands, so it would ruin you if you didn't have insurance to cover that. That was the risk that you were avoiding. A big, expensive event, causing financial ruin. However, over time it has shifted into something else. The general concept is still there, insure to avoid a risk. But the \"\"risk\"\" has been widened to include all manor of things that are not actually risks. For example a flu. You would go to your doctor, pay your co-pay, and your insurance would pay the rest of the visit. Then you would go to the drug store and get the drugs, pay your co-pay and the insurance pays the rest. But what risk, in this instance are you insuring against? That you can't cover the cost of a doctors visit? That you can't cover the cost of the medication? In this example, a common one, historically the \"\"mother of the house\"\" would go you have a flu, have some chicken noodle soup and go to bed. That would be the end of it. Cost of care is a day's lost wages (or maybe a weeks) and a few cans of soup. However today, because we choose to, the cost of care is much higher. We go to the doctor, pay our co-pays, the insurance has to pay it's part. The doctors office has to carry the cost of the staff it takes to see you, and the staff it takes to handle the claims with the insurance company. And now your flu, cost $1,500. But again that's not exactly true either. With heath insurance and \"\"normal\"\" medical care (like sprained ankles, and colds, etc.) the insurance only really covers the cost of having insurance. In that same flu example, if you went to the doctor as a \"\"self pay\"\" (no insurance) you would often time get a much lower, and reasonable rate. Frequently, under the cost of your standard co-pay. This seems like the doctors being \"\"bad\"\" but it's not. They don't have to file a claim, they don't have to keep track of it. They get immediate payment, not payment 6 months down the line that they need to share with other businesses. With \"\"critical\"\" or \"\"catastrophic\"\" care, heath insurance is still a good thing. If you have a big, unforeseen event, then heath insurance is great at helping you avoid that risk. With chronic (long term) care, your back in the same boat as the flu. Often times you can get better, and cheaper, care as a self pay patent, then as a insured patent. That is not always the case however. So you have to measure your own circumstance, and decide if insurance is right for you. But remember insurance is about risk avoidance, and not about paying less. You will ALWAYS pay more for insurance. It's designed that way. Even if the cost is hidden in many ways. (Taxes, spread out over visits, or prescriptions, etc.)\"",
"title": ""
},
{
"docid": "ef5b6dc7311f4f9c36b361b227df3922",
"text": "The point about insurance is solidarity. Think about this: In London a few hundred years ago people first started insuring their houses against fire. There were several insurance companies, and if you used one you got a marker on your house. So if your house caught fire they would come and check, and they would put the fire out only if it had their marker on it. Now, in most places these days the fire brigade will always come and always put your fire out. We expect this, and we are happy to pay for this service by taxation, and we do not fret about wasted money if we pay it for decades without ever having a fire. We also do not complain if the neighbour's house burns, and they get the full fire service which we have been paying for. Now all the fire brigade do is rescue you and put your fire out. Here in Germany every house owner is also obliged to have fire insurance, so if your house burns it can be repaired or rebuilt. Everyone pays insurance premiums, and I never heard anyone complain if they paid for 50 years and never claimed anything. If you need a new house the payout is huge. But the premiums are low. This only works if everyone is insured. This can only work if we all accept the concept of solidarity. It is easy to say, I don't smoke so I don't need to insure against fire, or, I live a healthy life so I don't need to insure against cancer. But lightning does not check your CV before it strikes. It hits you or your fellow man, and how can you justify not helping your neighbour? Insurance can only work if we all take part.",
"title": ""
},
{
"docid": "3754ae6055372185516ce33d6e052646",
"text": "I think that insurance is one of the best things ever created for this reasons:",
"title": ""
},
{
"docid": "084088085c5d314c7889b4ff5d7668ba",
"text": "\"Let's face it: most people pay more in insurance premiums than they \"\"get back\"\" in claims. I put \"\"get back\"\" in quotes because, with very few exceptions, the money paid out in claims does not go to the insured, but to others, such as doctors and hospitals. But even if you ignore the question who does the money actually go to, it's a losing proposition for most people. The exceptions are those who have a major loss, greater than what they put in over the years. But never forget: these are exceptions. The return on your money, on the average, is only a little better than playing the lottery. The usual counter-argument to the above is, but what if you are one of the exceptions? I for one refuse to let my life be dictated by worries of unlikely events that might happen. If you're the sort who obsesses on what could (but probably won't) happen, then maybe you should have insurance. Just don't tell me I need to do the same. When I lived in California, they had a program where you could deposit $25,000 with the State, and then you could drive, legally, without insurance. I did this for a while, didn't have any accidents, and exited the system (when I moved out of state) a few years later with more money (interest) than I put in. You don't accomplish that with insurance. But let's get back to rich people. Unless you get into an accident with you at fault and the other guy needing a head transplant as a result (joke), you could probably absorb the cost of an accident without blinking an eye. Those in the upper-middle-class might do well with high-deductible insurance that only pays out if there's an extreme accident. Then again if you have to borrow to buy something expensive (making monthly payments), they will usually demand you buy insurance with it. This is a way for the lender to protect himself at your expense, and if you refuse, good luck getting a loan somewhere else. I hate the idea of insurance so much I would make an act of insurance punishable by law.\"",
"title": ""
},
{
"docid": "006af641dc7eed3cffc112269cd30595",
"text": "Indeed, there is conservation of money. If the insurance companies have those big buildings and television commercials and CEOs, then that money comes from only one place: the insurance premiums of customers. To say insurance is a good deal is either The benefit and cost of insurance for most: Indeed, of all the answers here, James Turner's is best. If you can't afford to lose something, it is vital to insure it. Ideally insurance would be a non-profit operation to best cover this. Such that people would as a whole lose nothing. Theoretically it could even be slightly for profit by making wise investment decisions, and benefiting from the future value of money by beating inflation. But they don't (see this writeup for slightly dated information on health, and this Wikipedia article for more direction). But even if you are taking an average loss (by using a profit-making insurance company), by taking insurance you avoid the situation where you're crippled by a catastrophe. You are paying a fee to hedge your losses. Like James said, insure what you cannot afford to lose. But realize you're going into a situation where the overall net is an average loss of between 10-50% of your money, on average. Basically you're playing the lottery, except your net losses mostly go to fund the company and the CEOs rather than nominally support education. But you sounded like you understood those ideas well, so... Can you self insure? As others noted, yes, there is the option of self insurance in most places. Even even often when insurance is considered as required. For example, in the US, basically car insurance coverage is required. But generally you are legally able to self insure to cover this requirement: The cost of self insuring: There is one cost to self-insure: time. It takes time to research the laws, time to to satisfy those requirements, and then time to find/setup all the care providers (doctors, mechanics, lawyers, etc). When is it worth it? First, again, you must satisfy the prerequisite: you are able to financially handle the loss of the topic under consideration. At a commenter's request, here is an attempt to better spell out this requirement (though it doesn't appear pertinent to the question asked, it is indeed very important not to mistakenly assume you satisfy this requirement). Can you comfortably cover the level of insurance you would otherwise be taking out. $50,000/$100,000/$50,000 is a common reasonable insurance level, so that would be $200,000. Basically, have enough money to cover the loss of your car, your possible injury expenses, and most importantly the damage and medical of anyone else you hit. You would need to have that value available, optimally in your accounts. Alternatively, you could weigh it against your assets, such that if you had low accounts but a paid off $200,000 house, you could conceivably sell your property and still be able to survive financially afterwards. However, it is indeed dangerous to make this assumption, as there may be additional costs and troubles in selling assets, and you may fail to recognize how precious the property is to you. Having at least double or triple in property you'd be willing to part with might be a more comfortable number. Again, the main idea is: can you afford to lose the insured value tomorrow? Though you hope it wouldn't happen, if someone came and took $200,000+ of yours tomorrow, would you be able to adjust to it relatively easily? If the answer is yes, you've satisfied this requirement. In many states it's easier to understand whether you can meet this requirement: it instead becomes can you take out the liability bond required. If you've met that requirement, then it comes down to the time you'd lose versus the savings you'd gain. To get a fair idea, you'll need: The premium you would pay to purchase the insurance: Since you are likely losing 10-50% of your premiums, it should be fair to make a rough estimate of value lost by using 25% for most purposes (especially given that this still ignores the future value/opportunity cost of your money, which could often be 5-10% if invested well) The value of your time: You must properly identify either: A rough estimate of how much time it will take you to research the legal requirements and meet them, and then to research/handle the subsequent needs that come up which the insurance would take care of in an average year. So try to balance those typical years where you wouldn't have a lot of work to do with a year where you'd need to call repair mechanics or find health practitioners. Perhaps aim high, research/calling usually takes more time than we think. Is this calculation positive? Your estimated net annual benefit (or cost) from self insuring is: 0.25 * (Insurance Premium Per Year) - (Estimated Value of Your Time)*(Estimated Hours Of Work\\Research to Self-Insure Per Year) This is a rough estimate. But if the result is quite positive (and you can afford to cover the hit the insurance would otherwise cover), you're likely better off self-insuring. If the result is quite negative (or you can't cover the possible costs insurance would cover), you're probably better off buying insurance. Finally, indeed there are still a few other factors on each side to consider... Most often those additional pluses and minuses probably are smaller than the primary cost/benefits spelt out earlier. But if you're rich enough to have the money, you're in a situation where you can likely sacrifice a little income to have your peace of mind. So there's certainly a lot to consider in it. But if you're a self starter, I believe you're right that you'll find it's more worthwhile to self-insure if you indeed have the resources.",
"title": ""
},
{
"docid": "48932ccce5c4f1658693ec8ad67231a0",
"text": "Everyone is usually better off without insurance. A very few people are much better off with insurance. Insurance is a gamble and when you lose, you win. Very few people lose badly enough to win. Most people just pay money into insurance and never get as much back as they pay in. For most people, in most lives, insurance is a bad deal. The reason people crave insurance is because they cannot calculate the probability of something bad happening as well as an actuary can do so. The gap in knowledge between you and and actuary is what make insurance providers rich and you poor. They are smart, you are not. You think some terrible thing is going to happen to you, they know it probably won't. So they sell you a product you probably will never need. Anyhow, most people can't understand probability, and how to analyze risk, so they won't get what I'm saying here. Understanding the real cost of risk is the first lesson in understanding money and wealth. Rich people usually understand the value and cost of risk. Hence, they only buy insurance when they expect to lose, that is, to win. We rich people do everything only when we know already we are going to win. We don't gamble, unless we are the house. When a self-made rich man buys something, its because he knows already he is going to come out ahead on it, most probably.",
"title": ""
}
] |
[
{
"docid": "5ab3e118c60058987f14696f65d3471e",
"text": "\"You don't mention what kind of insurance you're talking about, but I'll just address one angle on the question. For some kinds of insurance, such as health insurance (in the US), auto insurance, and homeowner's insurance, you may be insuring against an event that you would not be able to pay for without the insurance. For instance, if you are at fault in a car accident and injure someone, they could sue you for $100,000. A lot of people don't have $100,000. So it's not even a matter of \"\"I'll take the risk of having to pay it when the time comes\"\"; if the time comes, you could lose virtually everything you own and still have to pay more from future earnings. You're not just paying $X to offset a potential loss of $Y; you're paying $X to offset a potential derailment of your entire life. It is plausible that you could assign a reasonable monetary value to that potential \"\"cost\"\" that would mean you actually come out ahead in the insurance equation. It is with smaller expenses (such as insuring a new cellphone against breakage) that insurance becomes harder to justify. When the potential nonfinancial \"\"collateral damage\"\" of a bad event are less, you must justify the insurance expenses on the financial consequences only, which, as you say, is often difficult.\"",
"title": ""
},
{
"docid": "be2cae6c13606d7d4653c326d5ad553d",
"text": "If you can not support yourself should your father die, an insurance policy may make sense as a safety net. As an investment, it is a bad bet unless he knows something about his health that would somehow not cause his premiums to be increased tremendously yet not cause them to claim he was attempting to defraud them and refuse payment. In other words, it is a bad bet, period. Insurance is a tool. If the tool doesn't do something you specifically need, it's the wrong tool.",
"title": ""
},
{
"docid": "e48a26da3c0a0c63bdae93575ef5466c",
"text": "You only need umbrella policy for large amounts of liability protection (I think they usually start with $1M). So if you don't have and don't expect to have assets at such a high value - why would you need the insurance? Your homeowners/renters/car/travel insurance should be enough, and you still need to have those for umbrella since its on top of the existing coverage, not instead. Many people just don't have enough assets to justify such a high coverage.",
"title": ""
},
{
"docid": "52492852287011fbe018664819ecfe84",
"text": "This isn't new. In the mid 80s rules were established by the IRS to differentiate life insurance from Modified Endowment Contracts, placing upper limits on how much money could be placed in life insurance accounts relative to the coverage provided and how quickly (fastest a policy can become paid-in-full is 7 years). None of this closes the fundamental loophole, but it exists for a reason, taxation of life insurance is probably unwise and would result in less people using life insurance as a risk mitigation technique, despite the fact that it's very appropriate for that in some situations. The problem here is that once you get out of everyday-people numbers and into very large sums the vehicle can be clearly abused to avoid taxes on investment gains while living, and possibly avoid them altogether depending on how the estate is structured, and this is bad for the average person who'd like the megarich to pay their percent towards the public needs the same way the average guy does.",
"title": ""
},
{
"docid": "c4dcb9c144a41a17c85ab1b22a75429d",
"text": "One reason is that insurance gives you tranquility. Without insurance, you live with the uncertainty of not knowing if/when disaster is going to strike. Insurance allows you to trade this uncertainty for regular monthly/yearly payments.",
"title": ""
},
{
"docid": "f104797b982afbc2afa37a5185a082d7",
"text": "I think that mbhunter hit the nail on the head regarding your question. I just want to add that having a policy that isn't sponsored by your employer is a good idea... employer policies are regulated by the federal government via ERISA. Independent policies are state regulated, and usually have better protections. Also, look for a policy that allows you to increase your coverage later without medical qualification so you don't need to overbuy insurance initially.",
"title": ""
},
{
"docid": "dcdb74b676a5c610589b8ecc1f25d49e",
"text": "Thats a good question. You don't have any argument from me on that. However, I have friends who have done that and after a few years living like that, its extremely hard on them if they get sick, because the system THAT I AM TELLING YOU ABOUT, will ruin them *in a flash*. Its increasingly designed to take ALL of people's money when they are at their most vulnerable, when they are sick. And IT doesn't care. Single payer systems will just fix you up, you dont get a bill. They have to be free, which you can tell [by reading this](http://www.iatp.org/files/GATS_and_Public_Service_Systems.htm) - which explains why.",
"title": ""
},
{
"docid": "b31565f39a22a3c38bad6baeab2848a1",
"text": "You can say it's a bad proxy but practically all the richest people have their money tied up in equities, and it would be foolish for them not to. You have to include that somehow. Net worth is not just liquid assets",
"title": ""
},
{
"docid": "b3d1e961c626c0fa9fd975e9eb47b271",
"text": "\"As others have pointed out, it's all about a fixed, small cost versus the potential of a large cost. If you have insurance, you know you will pay a fixed amount per month. There is a 100% probability that you will have to pay this premium. If you don't have insurance, there is a large chance that you will have no cost in any given month, and a small chance that you will have a large cost. Like my home-owners insurance costs me about $50 per month. If I didn't have insurance and my house burned down, I would be out something like $100,000. What's the chance that my house will burn down this month? Very small. But I'd rather pay $50 and not have to worry about it. On the other hand, I just bought a filing cabinet for $160 and the store offered me an \"\"extended warranty\"\" for something like $20 a year. What's the probability that some accident will happen that damages my filing cabinet? Pretty small. Even if it did, I think I could handle shelling out $160. I can imagine my stomach in knots and lying awake at nights worrying about the possibility of losing $100,000 or finding myself homeless. I can't imagine lying awake at nights worrying about losing $160 or being force to stuff my files under the bed. I'll take my chances. When I was young and had even less money than I have now, I bought cars that cost me a thousand dollars or. Even poor as I was, I knew that if the car was totaled I could dig up the cash to buy another. It wasn't worth paying the insurance premium. These days I'm driving a car that cost me $6,000. I have collision and comprehensive insurance, but I think it's debatable. I bought the car with cash to begin with, and if I had to I could scrape up the cash to replace it. Especially considering that my last payment for my daughter's college tuition is due next month and then that expense is gone. :-)\"",
"title": ""
},
{
"docid": "6432f676e46cf1fe6c01f6ed725fb872",
"text": "\"There are healthy people and there are sick people. Each are that way because of their genetics, behavior, and (somewhat) luck. To some extent health insurance is insurance, and covers that luck... But mostly the Affordable Care Act and healthCare.gov are about health care... It's a scheme to allocate burdens, not to insure against risk. Healthy people dont think this is fair. \"\"When I invest time at the gym, invest money and time on healthy food, invest in learning healthy habits... And someone else doesn't... Why should I have to pay for their heart replacement? The freerider chooses to risk heart disease while I foot their bill, I pay twice prevention for myself and a cure for him, while he increases the cost for us all. \"\" Genetics is a touchy subject, but... if someone has a hugely expensive heridatible disease... Should that person and their spouse bear the burdens of having and raising their kids? If they can't afford to do so, should the rest of society have to take money away from their own families to finance that family's reproduction?\"",
"title": ""
},
{
"docid": "0ca1a00a58d46726efd352f668f67a73",
"text": "\"You're making the assumption that a person would be aware, in advance, that they'd have enough resources to pay the costs of anything that might happen. Second, you're assuming the cost of insurance would outweigh what the person would have to pay out of pocket if they didn't have insurance. In other words as an example, if the insurance premiums on my car are so high that it would be cheaper for me to replace it myself in cash then it might make sense, but how likely is that to be the case? There's a gambling adage that I think applies here - \"\"Always bet with the house's money\"\". Why would I put my own money on the line in the event of some event rather than pay for an insurance policy that takes care of it for me? That way, my costs are predictable and manageable - I pay the premiums and perhaps a deductible, and that's it.\"",
"title": ""
},
{
"docid": "b5bdf9d528d9d22037096d1248682550",
"text": "There is some magic involved in that calculation, because what health insurance is worth to you is not necessarily the same it is worth for the employer. Two examples that illustrate the extreme ends of the spectrum: let's say you or a family member have a chronic or a serious illness, especially if it is a preexisting condition - for instance, cancer. In that case, health insurance can be worth literally millions of dollars to you. Even if you are a diabetic, the value of health insurance can be substantial. Sometimes, it could even make financial sense in that case to accept a very low-paying job. On the other extreme of the scale, if you are very young and healthy, many people decide to forego insurance. In that case, the value of health insurance can be as little as the penalty (usually, 2% of your taxable income, I believe).",
"title": ""
},
{
"docid": "67d00ea8fa1ac62fe04e2a744eb61aba",
"text": "\"Not to be rude, but I think you have an extremely naive view of how the United States operates. Insurance and Health Care are the exact same thing in this country for 99.9% of the people in it. The reason for this is that there is no way that anyone can afford \"\"healthcare\"\" without an insurance company unless they are in the top .1%. That is the way the system was set up, and it results in millions being uninsured and millions more being uninsurable. I am not an ignorant person, but clearly it makes you feel superior to say it, so carry on. You have no idea what you are talking about, or whom you are talking to.\"",
"title": ""
},
{
"docid": "d446846369a78284f7692921324ee4c6",
"text": "\"Careful with saying \"\"no need\"\". Look careful at the cost of life insurance. That cost depends obviously on the amount, but also on the age when you start paying into the insurance. If you take out a $100,000 insurance at 20, and someone else takes it out at 30, and a third person at 50, they will pay hugely different amounts when you reach the same age. You will pay less when you are 50 then the person taking out insurance at 30 when they reach the age of 50, and less again than the person who just started with their life insurance. And as mhoran said, once you have insurance you can keep it even if you get an illness that would make you uninsurable.\"",
"title": ""
},
{
"docid": "22f3b8f8f550fc4633da9b77326adde3",
"text": "For the second part, no most NYSE trades are done electronically.",
"title": ""
}
] |
fiqa
|
15fa33fb3f43a705b1de60973e3593bd
|
Which % of the global economy is considered “emerging”?
|
[
{
"docid": "6fe7136d0ad975b808acb88e334ef023",
"text": "The company that runs the fund (Vanguard) on their website has the information on the general breakdown of their investments of that fund. They tell you that as of July 31st 2016 it is 8.7% emerging markets. They even specifically list the 7000+ companies they have purchased stocks in. Of course the actual investment and percentages could [change every day]. Vanguard may publish on this Site, in the fund's holdings on the webpages, a detailed list of the securities (aggregated by issuer for money market funds) held in a Vanguard fund (portfolio holdings) as of the most recent calendar-quarter-end, 30 days after the end of the calendar quarter, except for Vanguard Market Neutral Fund (60 calendar days after the end of the calendar quarter), Vanguard index funds (15 calendar days after the end of the month), and Vanguard Money Market Funds (within five [5] business days after the last business day of the preceding month). Except with respect to Vanguard Money Market Funds, Vanguard may exclude any portion of these portfolio holdings from publication on this Site when deemed in the best interest of the fund.",
"title": ""
}
] |
[
{
"docid": "23c2964324abb7d0c9853444e043d7a3",
"text": "\"This is the best tl;dr I could make, [original](https://www.reuters.com/article/us-usa-policy-development/u-s-is-a-danger-to-the-world-warns-top-economist-idUSKCN1C41XD) reduced by 81%. (I'm a bot) ***** > BARCELONA - A global push to end poverty and hunger, and combat climate change by 2030 is at risk from American &quot;Militarism&quot;, powerful business interests and the actions of President Donald Trump, said leading U.S. economist and U.N. special adviser Jeffrey Sachs. > &quot;More and more I see that while the kind of technical solutions I work on are very important ... the real obstacles that we are fighting every day are the political obstacles, the headwinds of powerful interests, bad ways of doing things,&quot; he added. > Sachs, who has helped some 100 countries shape their policies, said he had expected to focus on international development issues &quot;Because the U.S. would more or less take care of itself&quot; - but that no longer applies to his home nation. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/73l97c/us_is_a_danger_to_the_world_warns_top_economist/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~219995 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*: **U.S.**^#1 **Sachs**^#2 **More**^#3 **United**^#4 **going**^#5\"",
"title": ""
},
{
"docid": "3f37f44c33a386f41e8aa32c706e65f5",
"text": "Think of GDP growth as a weighted average of all agents in the country that produce goods and services, some grow, some retract, we get an average of ~1.5%. While the S&P 500 is just the weighted average of the 500 largest **public** companies, and while some shrink, most are growing. They are responsible for a portion of GDP growth, but not all. Even the Wilshire 5000, which has every public company listed will show growth larger than GDP because of the nature of the companies listed. Lastly, as time goes to infinity, all companies will grow at the rate of GDP growth, otherwise they'll consume every other company until it is the only one left. Essentially, exchanges only look at a handful of companies and their performance. GDP looks at all companies in the U$.",
"title": ""
},
{
"docid": "75c48506b317dc3518cb079bdcf946b9",
"text": "\"GDP being a measurement for an economy's growth and with the stock market being driven (mostly) by company profits you would expect a tight correlation between GDP growth and stock market performance. After all, a growing economy should lead to a corresponding increase in profit right? But the stock market is heavily influenced by investor mentality; irrational exuberant buying and panic selling make the stock market far more volatile than GDP ever can be. Just look at the 2001 bubble and 2008 panic sell-off for famous examples. I feel emerging markets are particularly prone to overly optimistic buying to \"\"get in\"\" on the GDP growth followed by overly pessimistic selling when politics get unfavorable. Also keep in mind that GDP measurements are all done after the fact, the growth that is reported has already happened. The stock market might have already expected the reported growth and priced it in. A final point: governments and companies in emerging markets have a reputation (sometimes deserved) of poor governance, think corruption, nepotism etc. So even if the economy grows substantially investors might not believe they can profit from the growth. P.S. What do you base the \"\"no great increase\"\" on? Emerging markets have had a rough decade but that index would have still returned 9% annually if you held it since 2001.\"",
"title": ""
},
{
"docid": "0389ef13c4efdfebeb2cfe9c55344eb3",
"text": "\"This might not map well, because personal finance is not the global economy; but let's start by talking about this in terms of the cost of a loan vs the gain of an investment. If you can buy a house with a mortgage at 3%, but make 7% on average in the stock market... You should take as *looong* as possible to pay that off, and invest every penny you can spare in the markets. Heck, if you can take on even *more* debt at 3%, you should still do the same. Now imagine you have the power to literally print money, *but*, doing so is effectively a form of \"\"loan\"\" to yourself. We call the \"\"interest\"\" on that loan \"\"inflation\"\", and it comes out to roughly 2%, basically the same rate that US treasuries pay (they aren't strictly locked, but they rarely drift far apart). So, if you can print money at 1%, you should rationally print as much money as you possibly can to buy US treasuries at 2+%. But someone has to *take* that money off your hands - Pallets of money siting in a warehouse aren't worth any more than the paper they're made of. There we get into trade imbalances... Whether printing money costs you 0.1% or 10% or 1000% per year depends on whether your country is, on average, making or losing money on international trade (I'm glossing over a hell of a lot there, as full disclosure), and by how much. If you're printing money as fast as you can just to buy food to stay alive with zero exports, you're screwed; if your country exports $10 to the US (or equivalents) for every $1 you import, the rest of that is essentially \"\"invested\"\" in USD, in that you didn't need to print it yourself just to feed your people.\"",
"title": ""
},
{
"docid": "86624c3d1509fa6dba40561c99974129",
"text": "\"What a great explanation! I was familiar with many of the concepts, but I've learnt quite a lot. Do you happen to know any sources for further reading that are just as understandable to a non-economist? And/Or would you mind continuing / expanding this into whichever direction you find worth exploring? I would love to see this explanation \"\"connected\"\" to the debt crisis and how/why the US and europe seem to be in different situations there. Maybe that would be too complex to explain in more detail using your model, but maybe it is possible..?\"",
"title": ""
},
{
"docid": "636c82034cad8c30b43c9f13cad4e238",
"text": "\"The U.S. economy has grown at just under 3% a year after inflation over the past 50 years. (Some of this occurred to \"\"private\"\" companies that are not listed on the stock market, or before they were listed.) The stock market returns averaged 7.14% a year, \"\"gross,\"\" but when you subtract the 4.67% inflation, the \"\"net\"\" number is 2.47% a year. That gain corresponds closely to the \"\"just under 3% a year\"\" GDP growth during that time.\"",
"title": ""
},
{
"docid": "5bf3487c2e9cffeaedd48bd6196fafaa",
"text": "\"China's regulators, it seems, are on the attack. Guo Shuqing, chairman of the China Banking Regulatory Commission, announced recently that he'd resign if he wasn't able to discipline the banking system. Under his leadership, the CBRC is stepping up scrutiny of the role of trust companies and other financial institutions in helping China's banks circumvent lending restrictions. The People's Bank of China has also been on the offensive. It has recently raised the cost of liquidity, attacked riskier funding structures among smaller banks, and discontinued a program that effectively monetized one-fifth of last year's increase in lending. Are the regulators finally getting serious about reining in credit creation? The answer is an easy one: Yes if they're willing to allow economic growth to slow substantially, probably to 3 percent or less, and no if they aren't. inRead invented by Teads This is because there's a big difference between China's sustainable growth rate, based on rising demand driven by household consumption and productive investment, and its actual GDP growth rate, which is boosted by massive lending to fund investment projects that are driven by the need to generate economic activity and employment. Economists find it very difficult to formally acknowledge the difference between the two rates, and many don't even seem to recognize that it exists. Yet this only shows how confused economists are about gross domestic product more generally. The confusion arises because a country's GDP is not a measure of the value of goods and services it creates but rather a measure of economic activity. In a market economy, investment must create enough additional productive capacity to justify the expenditure. If it doesn't, it must be written down to its true economic value. This is why GDP is a reasonable proxy in a market economy for the value of goods and services produced. But in a command economy, investment can be driven by factors other than the need to increase productivity, such as boosting employment or local tax revenue. What's more, loss-making investments can be carried for decades before they're amortized, and insolvency can be ignored. This means that GDP growth can overstate value creation for decades. That's what has happened in China. In the first quarter of 2017, China added debt equal to more than 40 percentage points of GDP -- an amount that has been growing year after year. In 2011, the World Economic Forum predicted that China's debt would increase by a worrying $20 trillion by 2020. By 2016, it had already increased by $22 trillion, according to the most conservative estimates, and at current rates it will increase by as much as $50 trillion by 2020. These numbers probably understate the reality. If all this debt hasn't boosted China's GDP growth to substantially more than its potential growth rate, then what was the point? And why has it proven so difficult for the government to rein it in? It has promised to do so since 2012, yet credit growth has only accelerated, reaching some of the highest levels ever seen for a developing country. The answer is that credit creation had to accelerate to boost GDP growth above the growth rate of productive capacity. Much, if not most, of China's 6.5 percent GDP growth is simply an artificial boost in economic activity with no commensurate increase in the capacity to create goods and services. It must be fully reversed once credit stops growing. To make matters worse, if high debt levels generate financial distress costs for the economy -- as already seems to be happening -- the amount that must be reversed will substantially exceed the original boost. Once credit is under control, China will have lower but healthier GDP growth rates. If the economy rebalances, most Chinese might not even notice: It would require that household income -- which has grown much more slowly than GDP for nearly three decades -- now grow faster, so that the sharp slowdown in economic growth won't be matched by an equivalent slowdown in wage growth. Clear thinking from leading voices in business, economics, politics, foreign affairs, culture, and more. Share the View Enter your email Sign Up But to manage this rebalancing requires substantial transfers of wealth from local governments to ordinary households to boost consumption. This is why China hasn't been able to control credit growth in the past. The central government has had to fight off provincial \"\"vested interests,\"\" who oppose any substantial transfer of wealth. Without these transfers, slower GDP growth would mean higher unemployment. Whether regulators can succeed in reining in credit creation this time is ultimately a political question, and depends on the central government's ability to force through necessary reforms. Until then, as long as China has the debt capacity, GDP growth rates will remain high. But to see that as healthy is to miss the point completely.\"",
"title": ""
},
{
"docid": "bf5cff032b3c606fd579c65de622fc8c",
"text": "\"This is the best tl;dr I could make, [original](https://www.iea.org/newsroom/news/2017/july/global-energy-investment-fell-for-a-second-year-in-2016-as-oil-and-gas-spending-c.html) reduced by 86%. (I'm a bot) ***** > Global energy investment fell by 12% in 2016, the second consecutive year of decline, as increased spending on energy efficiency and electricity networks was more than offset by a continued drop in upstream oil and gas spending, according to the International Energy Agency&#039;s annual World Energy Investment report. > Global energy investment amounted to USD 1.7 trillion in 2016, or 2.2% of global GDP. For the first time, spending on the electricity sector around the world exceeded the combined spending on oil, gas and coal supply. > The United States saw a sharp decline in oil and gas investment, and accounted for 16% of global spending. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6nqnvn/july_global_energy_investment_fell_for_a/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~168423 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*: **energy**^#1 **investment**^#2 **spender**^#3 **year**^#4 **Global**^#5\"",
"title": ""
},
{
"docid": "b408999d23ce9855cfcbed05165d429b",
"text": "\"This is the best tl;dr I could make, [original](http://www.cnbc.com/2017/06/28/chinas-debt-surpasses-300-percent-of-gdp-iif-says-raising-doubts-over-yellens-crisis-remarks.html) reduced by 69%. (I'm a bot) ***** > Casrten Brzeski, senior economist at ING said that &quot;High debt levels mean that the debt crisis has not been solved, yet. Neither in the US, nor in the Eurozone. Increasing debt levels in Asia and other emerging market economies also show that a structural change has not yet taken place.\"\" > According to the IIF, despite the fact that debt levels have slowed down in mature economies, emerging market debt rose 5 percentage points from a year ago. > &quot;The household debt-to-GDP ratio hit an all-time high of over 45 percent in the first quarter of 2017 -well above the Emerging Market average of around 35 percent. In addition, our estimates based on monthly data on total social financing suggest that China&#039;s total debt surpassed 304 percent of GDP as of May 2017,&quot; the IIF noted. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6p6vug/chinas_debt_surpasses_300_percent_of_gdp_iif_says/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~174153 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*: **debt**^#1 **Bank**^#2 **market**^#3 **trillion**^#4 **levels**^#5\"",
"title": ""
},
{
"docid": "f281ca5432ea04eed56f4a9c836e0d55",
"text": "The article speaks about how pieces of the pie have shrunk. I'm also curious to know if the pie's growth has maintained or shrunk as well. All the women starting full time jobs from the 60's would have to have some impact on the overall salaries. That's inevitable. And how have the demographics changed in the top 5%? Could a divergence there justify a portion of the diverging rates?",
"title": ""
},
{
"docid": "5994a1b5367cc7a98b0000bd13590441",
"text": "This is an interesting read. I'd be interested in hearing what percentage of people making the high cutoff before, and then going above that after was. That is, how many low wage workers were converted to higher wage workers, and what affect that had on the resulting statistics.",
"title": ""
},
{
"docid": "c96f11b2c154045edf20bad8d9f979a4",
"text": "\"This is the best tl;dr I could make, [original](https://about.bnef.com/blog/electric-vehicles-accelerate-54-new-car-sales-2040/) reduced by 92%. (I'm a bot) ***** > London and New York, 6 July 2017 - Electric vehicles will make up the majority of new car sales worldwide by 2040, and account for 33% of all the light-duty vehicles on the road, according to new research published today. > The team now estimates that EVs will account for 54% of all new light-duty vehicle sales globally by 2040, not the 35% share it forecast previously. > BNEF sees them accounting for nearly 67% of new car sales in Europe by 2040, and for 58% in of sales in the U.S. and 51% in China by the same date. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6p1zel/electric_vehicles_to_accelerate_to_54_of_new_car/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~173744 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*: **New**^#1 **vehicle**^#2 **BNEF**^#3 **Energy**^#4 **Bloomberg**^#5\"",
"title": ""
},
{
"docid": "7f8b1bd0693424694a36d5d0193b1a1f",
"text": "This thread has been linked to from elsewhere on reddit. - [/r/ConcentrationOfWealth] [Peak Inequality: The .01% And The Impoverishment Of Society • /r/economy](http://np.reddit.com/r/ConcentrationOfWealth/comments/2ehfse/peak_inequality_the_01_and_the_impoverishment_of/) *^If ^you ^follow ^any ^of ^the ^above ^links, ^respect ^the ^rules ^of ^reddit ^and ^don't ^vote ^or ^comment. ^Questions? ^Abuse? [^Message ^me ^here.](http://www.reddit.com/message/compose?to=%2Fr%2Fmeta_bot_mailbag)*",
"title": ""
},
{
"docid": "3dd3cd0bb253c7094de0c6f953b1e969",
"text": "I find it somewhat doubtful that the US economy will grow by less than 16 billion in the next 33 years. 33 years ago the US had a GDP of just 4 Trillion. Yes i know that growth has slowed down considerably but I just don't see how the US economy will fail to double in such a long period of time. Hell from 2015 to 2016 the US economy grew 530 billion dollars to 18.57 Trillion dollars. Assuming Growth stopped and we simply increased our GDP by that much every year we'd increase by that much in 33 years. But that's unlikely to happen over the long period and since growth is compounding I see us easily staying ahead of India. China only gets past us on PPP seeing as their nominal economy was practically flat last year due to a slump in the renimbi.",
"title": ""
},
{
"docid": "efedb6a2ada64387f86ac32342288419",
"text": "\"This is the best tl;dr I could make, [original](https://www.bloomberg.com/news/articles/2017-05-31/u-s-slips-in-global-competitiveness-ranking-as-china-shoots-up) reduced by 77%. (I'm a bot) ***** > The U.S. fell out of the top three in a global competitiveness ranking, as executives&#039; perception of the world&#039;s biggest economy deteriorated after Donald Trump&#039;s election. > The U.S. slipped one spot to fourth in an annual ranking published by the IMD World Competitiveness Center, a research group at IMD business school in Switzerland. > The U.S. drop largely reflects survey results, as global executives questioned by IMD ranked the country lower in categories including government and business efficiency. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6epyee/us_slips_in_global_competitiveness_ranking_as/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~134240 tl;drs so far.\"\") | [Theory](http://np.reddit.com/r/autotldr/comments/31bfht/theory_autotldr_concept/) | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr \"\"PM's and comments are monitored, constructive feedback is welcome.\"\") | *Top* *keywords*: **ranks**^#1 **country**^#2 **U.S.**^#3 **economy**^#4 **World**^#5\"",
"title": ""
}
] |
fiqa
|
cf02087a4d9472bd076f4d62c5c62f6d
|
Recommended finance & economy book/blog for a Software Engineer?
|
[
{
"docid": "18fdf9e3dfc67a60abdd1702ae7f00b6",
"text": "Start at Investopedia. Get basic clarification on all financial terms and in some cases in detail. But get a book. One recommendation would be Hull. It is a basic book, but quite informative. Likewise you can get loads of material targeted at programmers. Wilmott's Forum is a fine place to find coders as well as finance guys.",
"title": ""
},
{
"docid": "fa5137efacc233a210ef420c50b9f283",
"text": "Another good economic comment blog is Naked Capitalism.",
"title": ""
},
{
"docid": "691d30be5ea3ac2d0d01dfe13974d43d",
"text": "For economics I recommend mises or these videos to get you started. For daily critical analysis of financial markets, keynesian government policies, and other interesting reading I recommend zerohedge. I've learned more about financial markets and government regulations by reading the comments section on zerohedge articles than anywhere else on the internet. The comment section is very raw (i.e. lots of fucking cursing) but there are some jewels of information in there. For daily critical thinking I suggest lewrockwell.",
"title": ""
}
] |
[
{
"docid": "397220883f559435621d173d3f45c35c",
"text": "You're asking for a LOT. I mean, entire lives and volumes upon volumes of information is out there. I'd recommend Benjamin Graham for finance concepts (might be a little bit dry...), *A Random Walk Down Wall Street,* by Burton Malkiel and *A Concise Guide to Macro Economics* by David Moss.",
"title": ""
},
{
"docid": "b3cc4d75dede621bfa13fae275f4db50",
"text": "We are mostly .NET C#. I'm not trying to sound like a big shot but generally, to work in finance as a software engineer, you have to be good at what you do. More specifically, I work on developing the inside tools for our traders and mutual/hedge fund managers to manage the business. I work on benchmark, asset, and valuation analysis tools. Technologies I use on a daily basis are C#, SQL, JavaScript, JQuery, MVVM (and other design patterns), HTML5, and more specialized unit testing tools. If you have any more questions, feel free to ask or pm.",
"title": ""
},
{
"docid": "7f4270d67a6601b909ed315a269981d3",
"text": "Hey thank you so much for the reply! So the interview is a late stage one - I've gotten past the concepts and honestly the role *shouldn't* be that heavy on the finance side ...what I'm looking at now is actually having to mock up a financial forecast in a real estate development scenario. I'm getting the case in advance and have to prepare a presentation. So right now, I really need the ABCs of forecasting specifically. But I'm definitely checking out your recommendations!",
"title": ""
},
{
"docid": "80a96267a5a8e0c55503489088c27d01",
"text": "What is the best way to get into knowledge about the financial world? I have been reading some guides on investopedia, discussing the financial world with others, and looking at some tutorial videos. Are there any good books/websites that are for a newcomer to the financial world? Any help would be greatly appreciated",
"title": ""
},
{
"docid": "75c3db5159a5d2647df8a07d7a2538cc",
"text": "Hi guys, could I get advice on possibly entering finance myself? I have a BSE in computer engineering, and a Ph.D. in nanoscience and microsystems, and I do computational aeroscience and biology now. Needless to say, I'm an applied physics and computer nerd. I love currency and commodities trading and instruments, though, I'm totally fascinated by it and I'm a *mean* coder and scientist. Can I get into finance?",
"title": ""
},
{
"docid": "ad544a91ad384dd2c20760e218163f88",
"text": "I was wondering if someone could recommend a textbook I'm taking a course right now in foundations of finance and we're dealing with subjects such as utility functions, risk aversion, prudence, temperance, Arrow-Debreau securities, portfolio theory, and more I'm finding the textbook we're using (Intermediate Finance, Danthine & Donaldson) a bit hard to understand",
"title": ""
},
{
"docid": "cf879d817b1a282b62a24a5bf1dc6ed0",
"text": "\"I'm another programmer, I guess we all just like complicated things, or got here via stackoverflow. Obligatory tedious but accurate point: Investing is not personal finance, in fact it's maybe one of the less important parts of it. See this answer: Where to start with personal finance? Obligatory warning for software developer type minds: getting into investing because it's complicated and therefore fun is a really awful idea from a financial perspective. Or see behavioral finance research on how analytical/professional/creative type people are often terrible at investing, while even-tempered practical people are better. The thing with investing is that inaction is better than action, tried and true is better than creative, and simple is better than complicated. So if you're like me and many programmers and like creative, complicated action - not good for the wallet. You've been warned. That said. :-) Stuff I read In general I hate reading too much financial information because I think it makes me take ill-advised actions. The actions I most need to take have to do with my career and my spending patterns. So I try to focus on reading about software development, for example. Or I answer questions on this site, which at least might help someone out, and I enjoy writing. For basic financial news and research, I prefer Morningstar.com, especially if you get the premium version. The writing has more depth, it's often from qualified financial analysts, and with the paid version you get data and analysis on thousands of funds and stocks, instead of a small number as with Motley Fool newsletters. I don't follow Morningstar regularly anymore, instead I use it for research when I need to pick funds in a 401k or whatever. Another caveat on Morningstar is that the \"\"star ratings\"\" on funds are dumb. Look at the Analyst Picks and the analyst writeups instead. I just flipped through my RSS reader and I have 20-30 finance-related blogs in there collecting unread posts. It looks like the only one I regularly read is http://alephblog.com/ which is sort of random. But I find David Merkel very thoughtful and interesting. He's also a conservative without being a partisan hack, and posts frequently. I read the weekly market comment at http://hussmanfunds.com/ as well. Most weeks it says the market is overvalued, so that's predictable, but the interesting part is the rationale and the other ideas he talks about. I read a lot of software-related blogs and there's some bleed into finance, especially from the VC world; blogs like http://www.avc.com/ or http://bhorowitz.com/ or whatever. Anyway I spend most of my reading time on career-related stuff and I think this is also the correct decision from a financial perspective. If you were a doctor, you'd be better off reading about doctoring, too. I read finance-related books fairly often, I guess there are other threads listing ideas on that front. I prefer books about principles rather than a barrage of daily financial news and questionable ideas. Other than that, I keep up with headlines, just reading the paper every day including business-related topics is good enough. If there's some big event in the financial markets, it'll show up in the regular paper. Take a class I initially learned about finance by reading a pile of books and alongside that taking the CFP course and the first CFA course. Both are probably equivalent to about a college semester worth of work, but you can plow through them in a couple months each if you focus. You can just do the class (and take the exam if you like), without having to go on and actually get the work experience and the certifications. I didn't go on to do that. This sounds like a crazy thing to do, and it kind of is, but I think it's also sort of crazy to expect to be competent on a topic without taking some courses or otherwise getting pretty deep into the material. If you're a normal person and don't have time to take finance courses, you're likely better off either keeping it super-simple, or else outsourcing if you can find the right advisor: What exactly can a financial advisor do for me, and is it worth the money? When it's inevitably complex (e.g. as you approach retirement) then an advisor is best. My mom is retiring soon and I found her a professional, for example. I like having a lot of knowledge myself, because it's just the only way I could feel comfortable. So for sure I understand other people wanting to have it too. But what I'd share from the other side is that once you have it, the conclusion is that you don't have enough knowledge (or time) to do anything fancy anyway, and that the simple answers are fine. Check out http://www.amazon.com/Smart-Simple-Financial-Strategies-People/dp/0743269942 Investing for fun isn't investing for profit Many people recommend Motley Fool (I see two on this question already!). The site isn't evil, but the problem (in my opinion) is that it promotes an attitude toward and a style of investing that isn't objectively justifiable for practical reasons. Essentially I don't think optimizing for making money and optimizing for having fun coexist very well. If investing is your chosen hobby rather than fishing or knitting, then Motley Fool can be fun with their tone and discussion forums, but other people in forums are just going to make you go wrong money-wise; see behavioral finance research again. Talking to others isn't compatible with ice in your decision-making veins. Also, Motley Fool tends to pervasively make it sound like active investing is easier than it is. There's a reason the Chartered Financial Analyst curriculum is a few reams of paper plus 4 years of work experience, rather than reading blogs. Practical investing (\"\"just buy the target date fund\"\") can be super easy, but once you go beyond that, it's not. I don't really agree with the \"\"anyone can do it and it's not work!\"\" premise, any more than I think that about lawyering or doctoring or computer programming. After 15 years I'm a programming expert; after some courses and a lot of reading, I'm not someone who could professionally run an actively-managed portfolio. I think most of us need to have the fun part separate from the serious cash part. Maybe literally distinct accounts that you keep at separate brokerages. Or just do something else for fun, besides investing. Morningstar has this problem too, and finance.yahoo.com, and Bloomberg, I mean, they are all interested in making you think about investing a lot more than you ought to. They all have an incentive to convince you that the latest headlines make a difference, when they don't. Bottom line, I don't think personal finance changes very quickly; the details of specific mutual funds change, and there's always some new twist in the tax code, but the big picture is pretty stable. I think going in-depth (say, read the Chartered Financial Analyst curriculum materials) would teach you a lot more than reading blogs frequently. The most important things to work on are income (career) and spending (to maximize income minus spending). That's where time investment will pay off. I know it's annoying to argue the premise of the question rather than answering, but I did try to mention a couple things to read somewhere in there ;-)\"",
"title": ""
},
{
"docid": "7664a51de25f2cd352a3584104a914df",
"text": "Those are the three books that were considered fundamental at my university: Investments - Zvi Bodie (Author), Alex Kane (Author), Alan Marcus (Author), Stylianos Perrakis (Author), Peter Ryan (Author) This book covers the basics of financial markets. It explains how markets work, general investing principles, basic risk notions, various types of financial instruments and their characteristics and portfolio management principles. Futures and Options markets - John C. Hull This book goes more in depth into derivatives valuation and the less common / more complex instruments. The Handbook of Fixed Income Securities This books covers fixed income securities. In all cases, they are not specifically math-oriented but they do not shy away from it when it is called for. I have read the first and the other two were recommended by professors / friends now working in financial markets.",
"title": ""
},
{
"docid": "ed94c996ea2eda52c332ab82b4541cd4",
"text": "I really like Value Investing by Bruce Greenwald. It's not a textbook so you can probably pick it up for about $20. While it is dense, I think with some patience you might be able to understand it at the undergrad level. The process outlined in the VI book is very different from the conventional corp finance way of valuing a company. A typical corp finance model would probably have you model cash flows 5 or 10 years out and then assume some sort of terminal growth. The VI book argues that it's nearly impossible to predict things that far out accurately so build your valuation on what we know. Start with the balance sheet. Then look at this year's earnings. Is that sustainable? This is a simplification of course but I describe it only so you can get the idea. I think it's definitely a worthwhile read.",
"title": ""
},
{
"docid": "fa26101b0073b60c433c10ea2fbe9cbd",
"text": "can someone recommend a book for everything finance for real estate? what are some key distinctive features that crunching numbers for real estate have? im looking for stuff like cash flow, risk that comes with leverage.. stuff i have no idea about.",
"title": ""
},
{
"docid": "732b1d87850d18987f69ce516b933752",
"text": "\"This Stack Exchange site is a nice place to find answers and ask questions. Good start! Moving away from the recursive answer... Simply distilling personal finance down to \"\"I have money, I'll need money in the future, what do I do\"\", an easily digestible book with how-to, multi-step guidelines is \"\"I Will Teach You To Be Rich\"\". The author talks about setting up the accounts you should have, making sure all your bills are paid automatically, saving on the big things and tips to increase your take home pay. That link goes to a compilation page on the blog with many of the most fundamental articles. However, \"\"The World’s Easiest Guide To Understanding Retirement Accounts\"\" is a particularly key article. While all the information is on the free blog, the book is well organized and concise. The Simple Dollar is a nice blog with frugal living tips, lifestyle assessments, financial thoughts and reader questions. The author also reviews about a book a week. Investing - hoping to get better returns than savings can provide while minimizing risk. This thread is an excellent list of books to learn about investing. I highly recommend \"\"The Bogleheads' Guide to Investing\"\" and \"\"The Only Investment Guide You'll Ever Need\"\". The world of investment vehicles is huge but it doesn't have to be complicated once you ignore all the fads and risky stuff. Index mutual funds are the place to start (and maybe end). Asset allocation and diversification are themes to guide you. The books on that list will teach you.\"",
"title": ""
},
{
"docid": "b1e87e20ea7c2e4339234e735b7a73ef",
"text": "How much finance and software engineering you're looking to do? I had a pleasure to work with a guy who did support (high level) for internal equity trading platform at IB (much less pleasure to work with). He moved to algo trading at another IB some time ago. He told me he started with 0 finance knowledge but by the time he was leaving by my account he was magician in proficiency in both fields. Took only a year or so.",
"title": ""
},
{
"docid": "f2a932050402a9e3dd0164694d8c976d",
"text": "Hi, I am 20, pursuing majors in Petroleum Eng. I have almost zero knowledge of finance or trading. I want to shift my career to finance (preferably algo-trading ). So I've started with learning python. What else do you suggest I can start with?",
"title": ""
},
{
"docid": "574b017cfd1cf5f806022929d53b7fdc",
"text": "No need for Fabozzi yet. His stuff gets cover in plenty of college textbooks, old and new. Keep browsing /r/finance, /r/personalfinance, and /r/investing and you'll find the usual recommendations. Here's goldman sach's recommended reading list: http://www.stat.unc.edu/faculty/cji/890-11/Goldman-Sachs-Suggested-Reading-List.pdf No need to read it all. Follow your interests.",
"title": ""
},
{
"docid": "72ad718ec6550fe07b59f6f835d43aea",
"text": "I am a Systems Engineering major. I currently work at a prop trading firm trading fixed income. I would emphasize your math skills, analytical thinking learned in engineering school, and express how much you are interested/experience in finance. It seems like you are on top of all that and if the job market wasn't so rough, I would say you sound like an ideal candidate and I feel like most finance jobs like people with engineering/math backgrounds as long as they are knowledgeable in finance.",
"title": ""
}
] |
fiqa
|
27833e46ba494ac61da6cc9d8c61e83f
|
What are the benefits of opening an IRA in an unstable/uncertain economy?
|
[
{
"docid": "347d5c851c80fcd03aeb5473b2a53959",
"text": "\"IRAs have huge tax-advantages. You'll pay taxes when you liquidate gold and silver. While volatile, \"\"the stock market has never produced a loss during any rolling 15-year period (1926-2009)\"\" [PDF]. This is perhaps the most convincing article for retirement accounts over at I Will Teach You To Be Rich. An IRA is just a container for your money and you may invest the money however you like (cash, stocks, funds, etc). A typical investment is the purchase of stocks, bonds, and/or funds containing either or both. Stocks may pay dividends and bonds pay yields. Transactions of these things trigger capital gains (or losses). This happens if you sell or if the fund manager sells pieces of the fund to buy something in its place (i.e. transactions happen without your decision and high turnover can result in huge capital gains). In a taxable account you will pay taxes on dividends and capital gains. In an IRA you don't ever pay taxes on dividends and capital gains. Over the life of the IRA (30+ years) this can be a huge ton of savings. A traditional IRA is funded with pre-tax money and you only pay tax on the withdrawal. Therefore you get more money upfront to invest and more money compounds into greater amounts faster. A Roth IRA you fund with after-tax dollars, but your withdrawals are tax free. Traditional versus Roth comparison calculator. Here are a bunch more IRA and 401k calculators. Take a look at the IRA tax savings for various amounts compared to the same money in a taxable account. Compounding over time will make you rich and there's your reason for starting young. Increases in the value of gold and silver will never touch compounded gains. So tax savings are a huge reason to stash your money in an IRA. You trade liquidity (having to wait until age 59.5) for a heck of a lot more money. Though isn't it nice to be assured that you will have money when you retire? If you aren't going to earn it then, you'll have to earn it now. If you are going to earn it now, you may as well put it in a place that earns you even more. A traditional IRA has penalties for withdrawing before retirement age. With a Roth you can withdraw the principal at anytime without penalty as long as the account has been open 5 years. A traditional IRA requires you take out a certain amount once you reach retirement. A Roth doesn't, which means you can leave money in the account to grow even more. A Roth can be passed on to a spouse after death, and after the spouse's death onto another beneficiary. more on IRA Required Minimum Distributions.\"",
"title": ""
},
{
"docid": "9b826c0a84f0b110f908bd3de20ce1ad",
"text": "Regarding investing in gold vs. stocks, I don't think I could say it better than Warren Buffett: You could take all the gold that's ever been mined, and it would fill a cube 67 feet in each direction. For what that's worth at current gold prices, you could buy all -- not some -- all of the farmland in the United States. Plus, you could buy 10 Exxon Mobils, plus have $1 trillion of walking-around money. Or you could have a big cube of metal. Which would you take? Which is going to produce more value?",
"title": ""
},
{
"docid": "efd794cf375c797b38808e607dfeda10",
"text": "Even Gold lost 1/2 of it's value between 1980 and 2000. You would not have fared well if you retired during that period heavily invested in Gold. http://www.usagold.com/reference/prices/history.html You said yourself that one can not foresee what the future will bring. At least IRA's force you to into dollar cost averaging, whereas if your money was outside of a retirement account, you might be tempted to speculate. -Ralph Winters",
"title": ""
},
{
"docid": "18d1512abda4de57076a40fc825450fd",
"text": "You bring up a valid concern. IRAs are good retirement instruments as long as the rules don't change. History has shown that governments can change the rules regarding retirement accounts. As long as you have some of your retirement assets outside of an IRA I think IRAs are good ways to save for retirement. It's not possible to withdraw the money before retirement without penalty. Also, you will be penalized if you do not withdraw enough when you do retire.",
"title": ""
},
{
"docid": "bbbc82fbd231bbe26174b6697a68203d",
"text": "Yes, it's possible to withdraw money without penalty but you have to do it in a special way. For example you have to withdraw the same amount every year until you retire: Tapping Your IRA Penalty-Free as for unstable economy - you can trade many instruments in your IRA. you can do bonds, mutual funds, stocks, ETFs or just keep it in cash. Some do well in bad economy.",
"title": ""
},
{
"docid": "61c462dc6bf0528ecc69846b78cf4479",
"text": "As I stated in my comment on @JCotton's answer, the only way you benefit by putting your money in an IRA or other tax-deferred vehicle is if you expect to have a lower tax rate when you withdraw than when you put the money in. If you look at @JCotton's numbers and remember to pay taxes when you withdraw the money in 30 years, you will see that both situations - paying taxes now or 30 years from now - give you the exact same dollar amount if the tax rates are the same at both points in time. So if you put money in an IRA, you're betting on the fact that the government will not substantially raise interest rates by then, and/or that you will be in a lower tax bracket. To me, the only valid reasons to invest in an IRA or 401K are the following: However, you should also consider the major downside that the money is locked away and, at best, inconvenient to access when you need it. At worst, you have to pay taxes and penalties if you ever withdraw that money. If you are a financially responsible person, I think you're generally better off keeping your money outside of an IRA or 401K, with the exception of making sure to get all of your employer's matching contributions.",
"title": ""
},
{
"docid": "a73a32e9c0c175cc10a1014387ee433f",
"text": "\"Your are mixing multiple questions with assertions which may or may not be true. So I'll take a stab at this, comment if it doesn't make sense to you. To answer the question in the title, you invest in an IRA because you want to save money to allow you to retire. The government provides you with tax incentives that make an IRA an excellent vehicle to do this. The rules regarding IRA tax treatment provide disincentives, through tax penalties, for withdrawing money before retirement. This topic is covered dozens of times, so search around for more detail. Regarding your desire to invest in items with high \"\"intrinsic\"\" value, I would argue that gold and silver are not good vehicles for doing this. Intrinsic value doesn't mean what you want it to mean in this context -- gold and silver are commodities, whose prices fluctuate dramatically. If you want to grow money for retirement over a long period, of time, you should be invested in diversified collection of investments, and precious metals should be a relatively small part of your portfolio.\"",
"title": ""
}
] |
[
{
"docid": "c5dd8cdb1892363bbaa7e0b9547ae431",
"text": "Without making specific recommendations, it is worthwhile to point out the differing tax treatments for a Roth IRA: investments in a Roth IRA will not be taxed when you withdraw them during retirement (unless they change the law on that or something crazy). So if you are thinking about investing in some areas with high risk and high potential reward (e.g. emerging market stocks) then the Roth IRA might be the place to do it. That way, if the investment works out, you have more money in the account that won't ever be taxed. We can talk about the possible risks of certain kinds of investments, but this is not an appropriate forum to recommend for or against them specifically. Healthcare stocks are subject to political risk in the current regulatory climate. BRICs are subject to political risks regarding the political and business climate in the relevant nations, and the growth of their economies need not correspond with growth in the companies you hold in your portfolio. Energy stocks are subject to the world economic climate and demand for oil, unless you're talking alternative-energy stocks, which are subject to political risk regarding their subsidies and technological risk regarding whether or not their technologies pan out. It is worth pointing out that any ETF you invest in will have a prospectus, and that prospectus will contain a section discussing the risks which could affect your investment. Read it before investing! :)",
"title": ""
},
{
"docid": "6717866315a55e750928ea6245ad3f8b",
"text": "I don't quite understand your thought process here. First, in a tax-advantaged retirement account you are NOT allowed to engage in a transaction with yourself. If you just want to run a business and be able to write off expenses, how is using the self-directed IRA relevant? You can either buy the condo using your tax-advantaged account and rent it out to regular tenants. Or you buy the condo yourself using your own money and then operate your business so you can deduct business expenses from doing so. 401k's allow you to take a loan out of it, so you can look into that as well.",
"title": ""
},
{
"docid": "8dcbe5ddda15574ace112c0a790e58a5",
"text": "A lot of people on here will likely disagree with me and this opinion. In my opinion the answer lies in your own motives and intentions. If you'd like to be more cognizant of the market, I'd just dive in and buy a few companies you like. Many people will say you shouldn't pick your own stocks, you should buy an index fund, or this ETF or this much bonds, etc. You already have retirement savings, capital allocation is important there. You're talking about an account total around 10% of your annual salary, and assuming you have sufficient liquid emergency funds; there's a lot of non-monetary benefit to being more aware of the economy and the stock market. But if you find the house you're going to buy, you may have to liquidate this account at a time that's not ideal, possibly at a loss. If all you're after is a greater return on your savings than the paltry 0.05% (or whatever) the big deposit banks are paying, then a high yield savings account is the way I'd go, or a CD ladder. Yes, the market generally goes up but it doesn't ALWAYS go up. Get your money somewhere that it's inured and you can be certain how much you'll have tomorrow. Assuming a gain, the gain you'll see will PALE in comparison to the deposits you'll make. Deposits grow accounts. Consider these scenarios if you allocate $1,000 per month to this account. 1) Assuming an investment return of 5% you're talking about $330 return in the first year (not counting commissions or possible losses). 2) Assuming a high yield savings account at 1.25% you're talking about $80 in the first year. Also remember, both of these amounts would be taxable. I'll admit in the event of 5% return you'll have about four times the gain but you're talking about a difference of ~$250 on $12,000. Over three to five years the most significant contributor to the account, by far, will be your deposits. Anyway, as I'm sure you know this is not investment advice and you may lose money etc.",
"title": ""
},
{
"docid": "0d4da236acbcbe8db2d292c774cbf990",
"text": "\"I would add to the other excellent answers that another factor besides just high unemployment numbers is the fear people have regarding the \"\"financial\"\" aspects of the country, that is the value of stocks and the value of the dollar. When the economy is sluggish it means people aren't buying enough, therefore companies aren't making enough, therefore their profits are too low and people start to divest from them, and stock prices drop. Or even the fear of this happening can induce people to sell off shares. The point is, people are worried \"\"in this economy\"\" because if--due to unemployment, low spending/consumer confidence--the stock market crashes again as it did in 2008/09, that represents a lot of savings lost, e.g. 40-50% of what one was counting on to retire with, particularly if you panic sell at the bottom. Now suddenly it's as if you had a huge robbery, and you will have to work longer into your retirement years than you'd planned. Similarly, if, due to monetary policy, the U.S. inflates the dollar, what one saved for retirement may not be sufficient. (These arguments are true for shorter periods than just one's retirement, but just taking that as an example). So it's not just unemployment that is worrisome \"\"in this economy\"\". This said, I agree with George Marian that one ought to be careful and plan well regardless of the winds of the economy. I guess for most people (and companies), though, \"\"in this economy\"\" means they can't get away with the kind of carelessness they might have during a boom.\"",
"title": ""
},
{
"docid": "b35101b9909b455d70fefabb955441cf",
"text": "This analysis misses the opportunities the Roth IRA presents to those with special access. It assumes that all money grows at the same rate, with investments at regular intervals. These assumptions hold for normal workers, but not for the privileged. Suppose, for example, that in a single year you have limited access to a security that is an acorn you know will grow into a mighty oak; for this example, this security will grow 1000x over some short period of time. For simplicity, assume both the value of acorns you can buy and the the maximum IRA contribution in this year is $5K. After the short acorn growth period, the after tax values are: There is a minor difference in the amount of money you need to buy the acorns (pre v. post tax), but this is negligible relative to the amount of cash you can assume you have on hand to have special access. The Atlantic provides an acorn example from private equity (not used with a Roth) and this Washington Post article describes someone with non-publicly traded startup stocks and a Roth.",
"title": ""
},
{
"docid": "9446134c4389c8289474a7910980a74b",
"text": "Then at the end, if you decide to cash in your house, you can roll the proceeds into a fancier house to avoid paying taxes on your profit. The problem is that the book was written in 1989. That comment is no longer true; that part of the tax law changed in the 1990's. Also in 1989 the maximum amount that person could put in an IRA was $2,000 and hadn't been raised for almost a decade and wouldn't be raised for another decade. Roth accounts didn't exist; nor did HSA's or 529's. Most people didn't have a 401K. You are asking to compare what options we have today compared to what was available in the late 1980's. For me except, for the years 2001-2005 and 2010-2015, the period from 1988 until now has had flat real estate values. Still the current values haven't returned to the peak in 2005. The score is 11 great years, 17 flat or negative. I know many people who during the 1990's had a zero return on their real estate.",
"title": ""
},
{
"docid": "b4f272cbcf780e50d86fda8794acb691",
"text": "You might be confusing two different things. An advantage of investing over a long term is the compounding of returns. Those returns can be interest, dividends, or capital gains. The mix between them depends on what you invest it and how you invest in it. This advantage applies whether your investment is in a taxable brokerage account or in a tax-advantaged 401K or IRA. So, start investing early so that you have longer for this compounding of returns to happen. The second thing is the tax deferral you get from 401(k) or IRAs. If you invest in a ordinary taxable account, then you have to pay taxes on your interest and dividends for the year in which they occur. You also have to pay taxes on any capital gains which you realize during the year. These yearly tax payments are then money that you don't get the benefit of compounding on. With 401(k) and IRAs, you don't have to pay taxes during these intermediate years.",
"title": ""
},
{
"docid": "e687d3a0caba7580b4613cd562a56be5",
"text": "I think you may be drawing the wrong conclusion about why you put what type of investment in a taxable vs. tax-advantaged account. It is not so much about risk, but type of return. If you're investing both tax-advantaged and taxable accounts, you can benefit by putting more tax-inefficient investments inside your tax-advantaged accounts. Some aggressive asset types, like real estate, can throw off a lot of taxable income. If your asset allocation calls for investing in real estate, holding it in a 401k or IRA can allow more of your money to remain invested, rather than having to use it to pay for taxes. And if you're holding in a Roth IRA, you get that tax free. But bonds, a decidedly non-aggressive asset, also throw off a lot of taxable income. You're able to hold them in a tax-advantaged account and not pay taxes on the income until you withdraw it from the account (or tax free in the case of a Roth account.) An aggressive stock fund that is primarily expected to provide returns via price appreciation would do well in a taxable account because there's likely little tax consequence to you until it is sold.",
"title": ""
},
{
"docid": "b2c9d55800920d12987fec8518dbba0a",
"text": "\"That depends, really. Generally speaking, though - Roth IRAs are THE PLACE for Stock-Market/Mutual-Fund investing. All the off the wall (or, not so off the wall) things like Real Estate investments, or buying up gold, or whatever other ideas you hear from people - they may be good or bad or whatnot. But your Roth IRA is maybe not the best place for that sort of thing. The whole philosophy behind IRAs is to deliberately set aside money for the future. Anything reasonable will work for this. Explore interesting investment ideas with today's money, not tomorrow's money. That being said - at your age I would go for the riskier options within what's available. If I were in your situation (and I have been, recently), I would lean toward low-fee mutual funds classified as \"\"Growth\"\" funds. My own personal opinion (THIS IS NOT ADVICE) is that Small Cap International funds are the place to be for young folks. That's a generalized opinion based on my feel for the world, but I don't think I'm personally competent to start making specific stock picks. So, mutual funds makes sense to me in that I can select the fund that generally aligns with my sense of things, and assume that their managers will make reasonably sound decisions within that framework. Of course that assumption has to be backed up with reputation of the specific MF company and the comparative performance of the fund relative to other funds in the same sector. As to the generalized question (how else can you work toward financial stability and independence), outside of your Roth IRA: find ways to boost your earning potential over time, and buy a house before the next bubble (within the next 18 months, I'm GUESSING).\"",
"title": ""
},
{
"docid": "cab8a85705f3c03341cab69c7efa553e",
"text": "If you look at history, it shows that the more people predict corrections the less was the chance they came. That doesn't prove it stays so, though. 2017 is not any different than other years in the future: Independent of this, with less than ten years remaining until you need to draw from your money, it is a good idea to move away from high risk (and high gain); you will not have enough time to recover if it goes awry. There are different approaches, but you should slowly and continuously migrate your capital to less risky investments. Pick some good days and move 10% or 20% each time to low-risk, so that towards the end of the remaining time 90 or 100% are low or zero risk investments. Many investment banks and retirement funds offer dedicated funds for that, they are called 'Retirement 2020' or 'Retirement 2030'; they do exactly this 'slow and continuous moving over' for you; just pick the right one.",
"title": ""
},
{
"docid": "0c6447c101e56bd225ca1f42fd858639",
"text": "Why would somebody want an IRA if they have a 401K and a Roth 401K?",
"title": ""
},
{
"docid": "5c31fd2ca20d45cccad3bed1bf0859cf",
"text": "\"Well.... If you have alllll your money invested, and then there's a financial crisis, and there's a personal crisis at the same time (e.g. you lose your job) then you're in big trouble. You might not have enough money to cover your bills while you find a new job. You could lose your house, ruin your credit, or something icky like that. Think 2008. Even if there's not a financial crisis, if the money is in a tax-sheltered retirement account then withdrawing it will incur ugly penalities. Now, after you've got an emergency fund established, things are different. If you could probably ride out six to twelve months with your general-purpose savings, then with the money you are investing for the long term (retirement) there's no reason you shouldn't invest 100% of the money in stocks. The difference is that you're not going to come back for that money in 6 months, you're going to come back for it in 40 years. As for retirement savings over the long term, though, I don't think it's a good idea to think of your money in those terms. If you ever lose 100% of your money on the stock market while you've invested in diversified instruments like S&P500 index funds, you're probably screwed one way or another because that represents the core industrial base of the US economy, and you'll have better things to worry about, like looking for a used shotgun. Myself, I prefer to give the suggestion \"\"don't invest any money in stocks if you're going to need to take it out in the next 5 years or so\"\" because you generally shouldn't be worried about a 100% loss of all the money in stocks your retirement accounts nearly so much as you should be worried about weathering large, medium-term setbacks, like the dot-com bubble crash and the 2008 financial crisis. I save the \"\"don't invest money unless you can afford to lose it all\"\" advice for highly speculative instruments like gold futures or social-media IPOs. Remember also that while you might lose a lot of your money on the stock market, your savings accounts and bonds will earn you pathetic amounts by comparison, which you will slowly lose to inflation. If you've had your money invested for decades then even during a crash you may still be coming out ahead relative to bonds.\"",
"title": ""
},
{
"docid": "2f863f9b00fc3ab68fa29c09bed2ffde",
"text": "\"To keep it simple, I will keep the focus between a Trad IRA and a normal Taxable account (Roth's and 401(k) add more complications that make another problem). I will also assume, based on the question, that you aren't able to deduct the IRA contributions. Also, a Roth is better in every way than a non-deductible Trad IRA so the \"\"backdoor Roth\"\" mentioned in other answers is probably the way to go and this is more of an academic exercise. Ok, so why bother with the IRA if you're taxed anyway? Because you aren't taxed as you go! With a normal non-tax-advantaged account you have to pay taxes every year on any realized capital gains and dividends (including fund distributions). Because of the compounding nature of savings, delaying paying taxes is in your best interest. Simple example: Taxable Account: IRA Account: Now, this is a very simplified example. If you're more tax-conscious (i.e. more buy-and-holding), you can delay paying some of the long-term cap gains in the taxable account, but any short-term cap gains (including distributions from the underlying funds) will be at your marginal income tax rate. A few other observations: EDIT: I set up a spreadsheet where each year I deposited $1000 for 35 years. Each year, the balance in the IRA account grows by 5%, but the taxable only by 5%*(1-0.15) = 4.25% due to the effect of taxes. At the end of 35 years, my simulation assumes you pay 15% on all the gains in the IRA, which would likely not be the case, but easier than forecasting through retirement and demonstrates what I'm trying to show. Here's plot showing the balance in the various accounts, the blue is the IRA account, orange the taxable account, and grey is the effective balance of the IRA, after paying taxes on the gains: And here's a plot of the advantage of the IRA (after paying taxes on the gains), vs the taxable account: Whether that's worth it to you or anyone depends on some the assumptions in the simulation, especially effective tax rates, and growth rates, as well as any personal issues. Some people may be less likely to raid an IRA account, for example, than a normal account. Conversely, if you have a project coming up, you may need something a bit more liquid than an IRA.\"",
"title": ""
},
{
"docid": "2268cd97ad96813139a7a735fb5a81c3",
"text": "Unfortunately, that's a call only you can make and whichever route you choose comes with advantages and disadvantages. If you manage your money directly, you may significantly reduce costs (assuming that you don't frequently trade index funds or you use a brokerage like RobinHood) and take advantage of market returns if the indexes perform well. On the other hand, if the market experiences some bad years, a professional might (and this is a huge might) have more self-discipline and prevent a panic sell, or know how to allocate accordingly both before and after a rise or fall (keep in mind, investors often get too greedy for their own good, like they tend to panic at the wrong time). As an example of why this might is important: one family member of mine trusted a professional to do this and they failed; they bought in a rising market and sold in a falling market. To avoid the above example, if you do go with the professional service, the best course of action is to look at their track record; if they're new, you might be better on your own. Since I assume this one or more professionals at the company, testing to see what they've recommended over the years might help you evaluate if they're offering you a good choice. Finally, depending on how much money you have, you could always do what Scott Adams did: he took a portion of his own money and managed it himself and tested how well he did vs. how well his professional team did (if I recall, I believe he came out ahead of his professional team). With two decades left, that may help guide you the rest of the way, even through retirement.",
"title": ""
},
{
"docid": "2889ad9fd541beb4dccf1c5c25b0dfaa",
"text": "You have many options, and there is no one-size-fits-all recommendation. You can contribute to your IRA in addition to your 401(k), but because you have that 401(k), it is not tax-deductable. So there is little advantage in putting money in the IRA compared to saving it in a personal investment account, where you keep full control over it. It does, however, open the option to do a backdoor-rollover from that IRA to a Roth IRA, which is a good idea to have; you will not pay any taxes if you do that conversion, if the money in the IRA was not tax deducted (which it isn't as you have the 401(k)). You can also contribute to a Roth IRA directly, if you are under the income limits for that (193k$ for married, I think, not sure for single). If this is the case, you don't need to take the detour through the IRA with the backdoor-rollover. Main advantage for Roth is that gains are tax free. There are many other answers here that give details on where to save if you have more money to save. In a nutshell, In between is 'pay off all high-interest debt', I think right after 1. - if you have any. 'High-Interest' means anything that costs more interest than you can expect when investing.",
"title": ""
}
] |
fiqa
|
895261280b58a941e1137698efc55ebc
|
Investment / Savings advice in uncertain economy
|
[
{
"docid": "25576cb705e4edc9ccb7e8c1921ad71b",
"text": "$23,000 Student Loans at 4% This represents guaranteed loss. Paying this off quickly is a conservative move, while your other investments may easily surpass 4% return, they are not guaranteed. Should I just keep my money in my savings account since I want to keep my money available? Or are there other options I have that are not necessarily long term may provide better returns? This all depends on your plans, if you're just trying to keep cash in anticipation of the next big dip, you might strike gold, but you could just as easily miss out on significant market gains while waiting. People have a poor track record of predicting market down-turns. If you are concerned about how exposed to market risk you are in your current positions, then you may be more comfortable with a larger cash position. Savings/CDs are low-interest, but much lower risk. If you currently have no savings (you titled the section savings, but they all look like retirement/investment accounts), then I would recommend focusing on that first, getting a healthy emergency fund saved up, and budgeting for your car/house purchases. There's no way to know if you'd be better off investing everything or piling up cash in the short-term. You have to decide how much risk you are comfortable with and act accordingly.",
"title": ""
},
{
"docid": "cc13c4bd1503bbb1b62c7955bea94d58",
"text": "\"An alternative to a savings account is a money market account. Not a bank \"\"Money Market\"\" account which pays effectively the same silly rate as a savings account, but an actual Money Market investment account. You can even write checks against some Money Market investment accounts. I have several accounts worth about 13,000 each. Originally, my \"\"emergency fund\"\" was in a CD ladder. I started experimenting with two different Money market investment accounts recently. Here's my latest results: August returns on various accounts worth about $13k: - Discover Bank CD: $13.22 - Discover Bank CD: $13.27 - Discover Bank CD: $13.20 - Discover Savings: $13.18 - Credit Union \"\"Money Market\"\" Savings account: $1.80 - Fidelity Money Market Account (SPAXX): $7.35 - Vanguard Money market Account (VMFXX): $10.86 The actual account values are approximate. The Fidelity Money Market Account holds the least value, and the Credit Union account by far the most. The result of the experiment is that as the CDs mature, I'll be moving out of Discover Bank into the Vanguard Money Market account. You can put your money into more traditional equities mutual fund. The danger with them is the stock market may drop big the day before you want to make your withdrawl... and then you don't have the down payment for your house anymore. But a well chosen mutual fund will yield better. There are 3 ways a mutual fund increase in value: Here's how three of my mutual funds did in the past month... adjusted as if the accounts had started off to be worth about $13,000: Those must vary wildly month-to-month. By the way, if you look up the ticker symbols, VASGX is a Vanguard \"\"Fund of Funds\"\" -- it invests not 100% in the stock market, but 80% in the stock market and 20% in bonds. VSMGX is a 60/40 split. Interesting that VASGX grew less than VSMGX...but that assumes my spreadsheet is correct. Most of my mutual funds pay dividends and capital gains once or twice a year. I don't think any pay in August.\"",
"title": ""
}
] |
[
{
"docid": "03bd51af0037dd95496e5d212684437d",
"text": "\"You are your own worst enemy when it comes to investing. You might think that you can handle a lot of risk but when the market plummets you don't know exactly how you'll react. Many people panic and sell at the worst possible time, and that kills their returns. Will that be you? It's impossible to tell until it happens. Don't just invest in stocks. Put some of your money in bonds. For example TIPS, which are inflation adjusted treasury bonds (very safe, and the return is tied to the rate of inflation). That way, when the stock market falls, you'll have a back-stop and you'll be less likely to sell at the wrong time. A 50/50 stock/bond mix is probably reasonable. Some recommend your age in bonds, which for you means 20% or so. Personally I think 50/50 is better even at your young age. Invest in broad market indexes, such as the S&P 500. Steer clear of individual stocks except for maybe 5-10% of your total. Individual stocks carry the risk of going out of business, such as Enron. Follow Warren Buffet's two rules of investing: a) Don't lose money b) See rule a). Ignore the \"\"investment porn\"\" that is all around you in the form of TV shows and ads. Don't chase hot companies, sectors or countries. Try to estimate what you'll need for retirement (if that's what your investing for) and don't take more risk than you need to. Try to maintain a very simple portfolio that you'll be able to sleep well with. For example, check into the coffeehouse investor Pay a visit to the Bogleheads Forum - you can ask for advice there and the advice will be excellent. Avoid investments with high fees. Get advice from a good fee-only investment advisor if needed. Don't forget to enjoy some of your money now as well. You might not make it to retirement. Read, read, read about investing and retirement. There are many excellent books out there, many of which you can pick up used (cheap) through amazon.com.\"",
"title": ""
},
{
"docid": "79a7be86c8b7c56dca5a5d1caa005029",
"text": "\"Since this is your emergency fund, you generally want to avoid volatility while keeping pace with inflation. You really shouldn't be looking for aggressive growth (which means taking on some risk). That comes from money outside of the emergency fund. The simplest thing to do would be to shop around for a different savings account. There are some deals out there that are better than ING. Here is a good list. The \"\"traditional\"\" places to keep an emergency fund are Money Market Mutual Funds (not to be confused with Money Market Accounts). They are considered extremely safe investments. However, the returns on such a fund is pretty low these days, often lower than a high-yield online savings account. The next step up would be a bond fund (more volatility, slightly better return). Pick something that relies on Government bonds, not \"\"high-yield\"\" (junk) bonds or anything crazy like that. Fidelity Four in One comes pretty close to your \"\"index of indexes\"\" request, but it isn't the most stable thing. You'd probably do better with a safer investment.\"",
"title": ""
},
{
"docid": "89284f3984c1f9da4e87b7bcd0d6f026",
"text": "\"Many of my friends said I should invest my money on stocks or something else, instead of put them in the bank forever. I do not know anything about finance, so my questions are: First let me say that your friends may have the best intentions, but don't trust them. It has been my experience that friends tell you what they would do if they had your money, and not what they would actually do with their money. Now, I don't mean that they would be malicious, or that they are out to get you. What I do mean, is why would you take advise from someone about what they would do with 100k when they don't have 100k. I am in your financial situation (more or less), and I have friends that make more then I do, and have no savings. Or that will tell you to get an IRA -so-and-so but don't have the means (discipline) to do so. Do not listen to your friends on matters of money. That's just good all around advise. Is my financial status OK? If not, how can I improve it? Any financial situation with no or really low debt is OK. I would say 5% of annual income in unsecured debt, or 2-3 years in annual income in secured debt is a good place to be. That is a really hard mark to hit (it seems). You have hit it. So your good, right now. You may want to \"\"plan for the future\"\". Immediate goals that I always tell people, are 6 months of income stuck in a liquid savings account, then start building a solid investment situation, and a decent retirement plan. This protects you from short term situations like loss of job, while doing something for the future. Is now a right time for me to see a financial advisor? Is it worthy? How would she/he help me? Rather it's worth it or not to use a financial adviser is going to be totally opinion based. Personally I think they are worth it. Others do not. I see it like this. Unless you want to spend all your time looking up money stuff, the adviser is going to have a better grasp of \"\"money stuff\"\" then you, because they do spend all their time doing it. That being said there is one really important thing to consider. That is going to be how you pay the adviser. The following are my observations. You will need to make up your own mind. Free Avoid like the plague. These advisers are usually provided by the bank and make their money off commission or kickbacks. That means they will advise you of the product that makes them the most money. Not you. Flat Rate These are not a bad option, but they don't have any real incentive to make you money. Usually, they do a decent job of making you money, but again, it's usually better for them to advise you on products that make them money. Per Hour These are my favorite. They charge per hour. Usually they are a small shop, and will walk you through all the advise. They advise what's best for you, because they have to sit there and explain their choices. They can be hard to find, but are generally the best option in my opinion. % of Money These are like the flat rate advisers to me. They get a percentage of the money you give them to \"\"manage\"\". Because they already have your money they are more likely to recommend products that are in their interest. That said, there not all bad. % or Profit These are the best (see notes later). They get a percentage of the money they make for you. They have the most interest in making you money. They only get part of what you get, so there going to make sure you get the biggest pie, so they can get a bigger slice. Notes In the real world, all advisers are likely to get kickbacks on products they recommend. Make sure to keep an eye for that. Also most advisers will use 2-3 of the methods listed above for billing. Something like z% of profit +$x per hour is what I like to see. You will have to look around and see what is available. Just remember that you are paying someone to make you money (or to advise you on how to make money) so long as what they take leaves you with some profit your in a better situation then your are now. And that's the real goal.\"",
"title": ""
},
{
"docid": "c69d09b34eabd583b8c1df493606605c",
"text": "Assuming that the financial system broke down, not enough supply of essential commodities or food but there is political and administrative stability and no such chaos that threatens your life by physical attacks. The best investment would then be some paddy fields, land, some cows, chickens and enough clothing , a safe house to stay and a healthy life style that enables you to work for food and some virtue at heart and management skills to get people work for you on your resources so that they can survive with you (may be you earn some profit -that is up to your moral standards to decide, how much). It all begins to start again; a new Financial System has to be in place….!",
"title": ""
},
{
"docid": "301bfdde2a9a2b9e9e1161c2eb7aba16",
"text": "You can't both enforce saving and have access to the money -- from what you say, it's clear that if you can access the money you will spend it. Can you find an account that allows one withdrawal every six months but no more, which should help to cut down on the impulse buys but still let you get at your money in an emergency?",
"title": ""
},
{
"docid": "a6ddae69b35c5bff3de3c0e11feef1d6",
"text": "The best investment is always in yourself and increasing your usable skills. If you invest the money in expanding your skills, it won't matter what the economy does, you will always be useful.",
"title": ""
},
{
"docid": "5f8153afd212e6e5cd6cf20c42f96389",
"text": "There is no rule of thumb (although some may suggest there is). Everybody will have different goals, investment preferences and risk tolerances. You need to figure this out by yourself by either education yourself in the type of investments you are interested in or by engaging (and paying for) a financial advisor. You should not be taking advice from others unless it is specifically geared for your goals, investment DNA and risk tolerance. The only advice I would give you is to have a plan (whether you develop it yourself or pay a financial advisor to develop one). Also, don't have all your savings sitting in cash, as long-term you will fall behind the eight ball in real returns (allowing for inflation).",
"title": ""
},
{
"docid": "27956ee0d314fb8c8e1a361b3b04ae07",
"text": "I would say your decision making is reasonable. You are in the middle of Brexit and nobody knows what that means. Civil society in the United States is very strained at the moment. The one seeming source of stability in Europe, Germany, may end up with a very weakened government. The only country that is probably stable is China and it has weak protections for foreign investors. Law precedes economics, even though economics often ends up dictating the law in the long run. The only thing that may come to mind is doing two things differently. The first is mentally dropping the long-term versus short-term dichotomy and instead think in terms of the types of risks an investment is exposed to, such as currency risk, political risk, liquidity risk and so forth. Maturity risk is just one type of risk. The second is to consider taking some types of risks that are hedged either by put contracts to limit the downside loss, or consider buying longer-dated call contracts using a small percentage of your money. If the underlying price falls, then the call contracts will be a total loss, but if the price increases then you will receive most of the increase (minus the premium). If you are uncomfortable purchasing individual assets directly, then I would say you are probably doing everything that you reasonably can do.",
"title": ""
},
{
"docid": "371c1e838f63884778df632c1758dce0",
"text": "Considering the historical political instability of your nation, real property may have higher risk than normal. In times of political strife, real estate plummets, precisely when the money's needed. At worst, the property may be seized by the next government. Also, keeping the money within the country is even more risky because bank accounts are normally looted by either the entering gov't or exiting one. The safest long run strategy with the most potential for your family is to get the money out into various stable nations with good history of protecting foreign investors such as Switzerland, the United States, and Hong Kong. Once out, the highest expected return can be expected from internationally diversified equities; however, it should be known that the value will be very variant year to year.",
"title": ""
},
{
"docid": "948ee5b44eff4a2789c3ac703ce5d2e9",
"text": "Firstly, sorry about the accident. I am afraid you will need to do your own legwork, because you cannot trust other people with your money. It's a good thing you do not need to rush. Take your time to learn things. One thing is certain, you cannot let your money sit in a bank - inflation will digest them. You need to learn about investing yourself, or you run a risk of someone taking advantage of you. And there are people who specialise in exploiting people who have money and no idea what to do with them. There is no other way, if you have money, you need to know how to deal with it, or you are likely to lose it all. Since you need to have monthly income and also income that makes more money to make further investments, you need to look at two most common investments that are safe enough and also give good returns on investment: Property and index funds. You might also have a look at National bonds as this is considered safest investment possible (country has to go bust for you to lose money), but you are too young for that. Young = you can take more risk so Property and shares (indexes). You want to have your property investments in a country that is stable and has a good ROI (like Netherlands or Lithuania). Listen to some audio lectures: https://www.audible.co.uk/pd/Health-Personal-Development/Investing-in-Real-Estate-6th-Edition-Audiobook/B008SEH1R0 https://www.audible.co.uk/pd/Business/The-Secrets-of-Buy-to-Let-Success-Audiobook/B00UVVM222 https://www.audible.co.uk/pd/Non-fiction/Economics-3rd-Edition-Audiobook/B00D8J7VUC https://www.audible.co.uk/pd/Advanced-Investments-Part-1-Audiobook/B00HU81B80 After you sorted your investment strategy, you might want to move to a country that is Expat friendly and has lower living costs than US and you should be able to live like a king... best of luck.",
"title": ""
},
{
"docid": "3ab2573cad4bde03574e290f5e8ed6ac",
"text": "\"I think this is a good question with no single right answer. For a conservative investor, possible responses to low rates would be: Probably the best response is somewhere in the middle: consider riskier investments for a part of your portfolio, but still hold on to some cash, and in any case do not expect great results in a bad economy. For a more detailed analysis, let's consider the three main asset classes of cash, bonds, and stocks, and how they might preform in a low-interest-rate environment. (By \"\"stocks\"\" I really mean mutual funds that invest in a diversified mixture of stocks, rather than individual stocks, which would be even riskier. You can use mutual funds for bonds too, although diversification is not important for government bonds.) Cash. Advantages: Safe in the short term. Available on short notice for emergencies. Disadvantages: Low returns, and possibly inflation (although you retain the flexibility to move to other investments if inflation increases.) Bonds. Advantages: Somewhat higher returns than cash. Disadvantages: Returns are still rather low, and more vulnerable to inflation. Also the market price will drop temporarily if rates rise. Stocks. Advantages: Better at preserving your purchasing power against inflation in the long term (20 years or more, say.) Returns are likely to be higher than stocks or bonds on average. Disadvantages: Price can fluctuate a lot in the short-to-medium term. Also, expected returns are still less than they would be in better economic times. Although the low rates may change the question a little, the most important thing for an investor is still to be familiar with these basic asset classes. Note that the best risk-adjusted reward might be attained by some mixture of the three.\"",
"title": ""
},
{
"docid": "7a239311eb2a819b7aadbbc3c95fa014",
"text": "The very term 'market conditions' is subjective and needs context. There are 'market conditions' that favor buying (such as post crash) or market conditions that favor selling (such as the peak of a bubble). Problem with mutual funds is you can't really pick these points yourself; because you're effectively outsourcing that to a firm. If you're tight on time and are looking for weekly update on the economy a good solution is to identify a reputable economist (with a solid track record) and simply follow their commentary via blog or newsletter.",
"title": ""
},
{
"docid": "018a0681a063de4325c24a085eb6e29a",
"text": "\"This is a \"\"stress\"\" period, much like the 1930s and 1970s. At a time like this, it is smart to be debt free, and to have money saved for the likely emergencies. There are growth periods like those of the 1980s and 1990s, probably returning in the 2020s and 2030s. At such times, it makes sense to play it a little \"\"looser\"\" and borrow money for investments. But the first order of business in answering this question is to look around you and figure out what is going on in the world (stress or growth).\"",
"title": ""
},
{
"docid": "8b97d4bf72e0dd05ddcdc5bb3403b6ae",
"text": "There is no country tag, so I will answer the question generally. Is it possible...? Yes, it's possible and common. Is it wise? Ask Barings Bank whether it's a good idea to allow speculative investing.",
"title": ""
},
{
"docid": "4f7891abbef9c75a7d5c213f3d855c84",
"text": "So my Question is this, in reality is investment in equities like the stock market even remotely resemble the type of growth one would expect if investing the same money in an account with compounding interest? Generally no as there is a great deal of volatility when it comes to investing in stocks that isn't well represented by simply taking the compounded annual growth rate and assuming things always went up and never went down. This is adding in the swings that the market will take that at times may be a bit of a rude surprise to some people. Are all these prognosticators vastly underestimating how much savers need to be socking away by overstating what is realistic in terms of growth in investment markets? Possibly but not probably. Until we know definitively what the returns are from various asset classes, I'm not sure I'd want to claim that people need to save a ton more. I'll agree that the model misses how wide the swings are, not necessarily that the averages are too low or overstated.",
"title": ""
}
] |
fiqa
|
5d48dfa42c69837464ba17996277c9b0
|
How is gold shared in worldwide economies?
|
[
{
"docid": "65ee28372de3872e9a359166613cfa9a",
"text": "Money is no longer backed by gold. It's backed by the faith and credit of the issuing government. A new country,say, will first trade goods for dollars or other currency, so its ownership of gold is irrelevant. Its currency will trade at a value based on supply/demand for that currency. If it's an unstable currency, inflating too quickly, the exchange rate will reflect that as well. More than that your question kind of mixes a number of issues, loosely related. First is the gold question, second, the question of currency exchange rates and they are derived, with an example of a new country. Both interesting, but distinct processes.",
"title": ""
},
{
"docid": "2010171848c9f2ed7905095c9d3428af",
"text": "\"You might want to read about about the Coase Theorem. \"\"In law and economics, the Coase theorem, attributed to Ronald Coase, describes the economic efficiency of an economic allocation or outcome in the presence of externalities. The theorem states that if trade in an externality is possible and there are no transaction costs, bargaining will lead to an efficient outcome regardless of the initial allocation of property rights. In practice, obstacles to bargaining or poorly defined property rights can prevent Coasian bargaining.\"\" This is similar to what you are asking. Each country has an endowment of gold, and they must create a set amount of money to represent their endowment of gold. This will establish an exchange rate. If I have 5 tons of gold and you have 5 tons, and I print 10 dollars and you print 20, then one of my dollars is worth two of your dollars. Thus, the amount of money is not relevant- it's the exchange rate between the countries. If all the nations know each other's gold endowment, then we will have a perfect exchange rate. If we don't, then currency printing will vary but arbitrage should drive it to an accurate price. Gold and diamonds are both valuable in part due to scarcity, but gold has been used as a measure of value because it's been historically used as a medium of exchange. People just realized that swapping paper was safer and cheaper than physically transporting gold, but the idea of gold as a measure of value is present because \"\"that's how it's always been.\"\" Nobody \"\"creates/supervises\"\" these procedures, but organizations like the IMF, ECB, Fed Reserve, etc implement monetary policy to regulate the money supply and arbitrage drives exchange rates to fair values.\"",
"title": ""
},
{
"docid": "2d226080c7b877bcf69c1d5c424cde17",
"text": "I think you are asking a few questions here. Why is gold chosen as money? In a free market there are five characteristics of a good money: Gold and silver meet all five characteristics. Diamonds are not easily divisible which is why they are not normally used as money. Copper, Iron, and lead are not scarce enough - you would need a lot of these metals to make weekly or daily purchases. Paper is also way too plentiful to be used as money. By the way, historically silver has been used for money more than gold. How does international trade work with gold as money (is this what you are asking with your hypothetical example of 10 countries each with y amount of gold?) Typically a government will issue a currency that is backed by gold. This means you can redeem your currency for actual gold. Then when an American spends 5 US dollars (USD) to purchase a Chinese good the Chinese man now owns 5 USDs. The Chinese man can either redeem the 5 USD for gold or spend the 5 USD in the US. If a government issues more currency then they have gold for then the gold will start to flow from that country to other countries as the citizens of the other countries redeem the over-issued currency for gold. This outflow of gold restricts governments from over-issuing paper currency. Who creates the procedures and who supervises them in modern worldwide economy? The Federal Reserve, IMF, and Bank of International Settlements all are involved in the current system where the US dollar (see Bretton Woods agreement) is the reserve currency used by central banks throughout the world. Some think this system is coming to an end. I tend to agree.",
"title": ""
}
] |
[
{
"docid": "1ebcd8981322222e077da7e11fa4c19e",
"text": "This was answered wonderfully in a recent Planet Money podcast: Why Gold?. Here are some higlights of gold: If listening to podcasts isn't your thing, read this summary.",
"title": ""
},
{
"docid": "02de874aa4484ea8fc2860b128165f7c",
"text": "\"Because people are willing to trade for it. People are willing to trade for Gold because: The value of gold goes up because the demand for it goes up, while the supply has been basically static (or growing at a low static rate) for a long time. The demand is going up because people see it as a safe place to put their money. Another reason Gold's value in dollars goes up, is because the value of the item it's traded against (dollars, euros, yen, etc) goes down, while its own value stays roughly the same. You point out Gold is not as liquid as cash, but gold (both traded on an exchange, and held physically) is easily sold. There is always someone willing to trade you cash for gold. Compare this to some of the bank stocks during the first part of our current recession. People were not willing to give much of anything for your shares. As the (annoying, misleading) advertisements say, \"\"Gold has never been worth zero\"\".\"",
"title": ""
},
{
"docid": "69e213e1a561b292ef85f0c079ea6cb6",
"text": "Russia main reserve is Euro, Gold and Yuan. They have dumped good sums of dollar since way back. The rest of oil buyers would gladly pay russians in whatever currency they want, specially if it is non dollar. Cheap oil on cheaper currency? Who doesn't want that? The chinese pay their oil in Yuan. Russian gladly takes Yuan, since its the most liquid currency in pacific, not to mention china is their no.1 trading partner.",
"title": ""
},
{
"docid": "19c3b55e715be226f97cbb89d0b1d051",
"text": "\"Thanks for bringing up gift economies. The \"\"barter-to-credit story\"\", as you call it, is a good just-so story for explaining our current monetary system, but it's not how it actually happened. It's important to emphasize that. The gift economy is the original economy. It's used in small groups,bands or tribes of up to ~100 people, where you keep how much each person owes you in your head. These peoples don't have writing, remember. The problem with the gift economy is that it doesn't scale. Once you've got more than a couple hundred people or so (basically, Dunbar's number), or too many tradable goods and services, it starts to break down. People can't keep track of their debts anymore, and it becomes harder to agree on prices. Random aside: It's interesting to look at communism with this in mind, because essentially it's a return to something very much like a gift economy, but on a grand scale. But despite modern records-keeping and communication, it failed because we still can't coordinate such a large economy without some sort of market to set prices.\"",
"title": ""
},
{
"docid": "404f4c43c7313536978290ab8efe43b7",
"text": "Yes, the US dollar is the standard for all global trade - IMF driven And China has been going for that title for the past decade and this is a very smart and tactical way to do it If this goes through, gold & oil might become really good place to be. The US has been in a supply run and kept the price of oil low. Things are changing quick...",
"title": ""
},
{
"docid": "4f3bfe9e1ff531df19c0d935b14360d8",
"text": "It's not really about nation states, the problem is larger than that. The West who consumes too much, faced off against the East who makes too much. Seems like everyone's just waiting for the dollar to fail, so some new order can resolve.",
"title": ""
},
{
"docid": "99ae11da9e2344a919be8ae6153f2302",
"text": "\"The reason I don't want to get into here it is because internet debates over these things turn into an absolute shit-show, instantly. In a nutshell, the (sane parts of) argument comes down to very difficult-to-prove assumptions about how perfectly fiat currency can/will be implemented. - The (sane) case for gold is that it is very difficult to get into the kind of money-printing mischief that places like Zimbabwe and Argentina have got into when your currency is based on something with a finite and slow-growing supply. It's hard to print more gold. - The (sane) case for fiat currency is that it is ridiculous to hamstring the entire economy by tying it to one arbitrary commodity with a fluctuating value and supply that does not correlate well with overall economic output. A perfectly-implemented fiat currency, printed and ordained by a perfectly omniscient, perfectly competent, and perfectly benevolent central bank (let's call it \"\"God money\"\"), is the ideal. That's pretty much axiomatic, and even sane gold-bugs would tend to allow the above, so far as it goes, including all stipulations. In fact, someone inclined to believe in divine intervention might make a case that gold is precisely that: a hard-to-forge, easy-to-detect, easy-to-handle metal placed on earth by God in quantities just right to serve as currency. The problem is that a really *bad* fiat currency is absolutely terrible: leads to nightmare-scenarios; people starving on one side of a fence while tons of crops are being burned on the other side because of runaway price-discrepancies, stuff like that. Again, even (sane) Keynesians will allow as much. The problem is that the crazies, ideologues, and single-issue zealots come out of the woodwork when you start getting into this stuff, and tend to dominate the conversation (if \"\"conversation\"\" is a fair word to use). In a sense, the \"\"sane\"\" spectrum of debate boils down to an almost ideological divide: - Whether you believe that a sort of permanent, technocratic, central-bank/currency-issuer is possible/plausible. Because if it *is* achievable, it is almost certainly better than just tying the whole economy to the price of a single commodity. If it is *not* achievable, then it is almost certainly better to let the markets adjust and correct, however imperfectly, than to tie the whole economy to the whims and wishes of incompetent and politically-motivated money-printers. (I hope that makes sense, and that it is a fair representation of the conundrum). The problem with making an argument is that you've got a hodge-podge of technical (and sometimes fairly complicated) nitty-gritty, plus a certain amount of starting-assumption/worldview/ideological stuff, all smooshed together, and almost all of it is very hard/impossible to \"\"prove\"\" via evidential scientific testing. Both the technical and historical stuff have strong conflicting indicators, and it's obviously not possible to, say, set up two identical societies and let them run for a thousand years, controlling for everything but monetary policy, and see what happens. Macro-economics is a very imperfect science. It has certainly given the world some very useful and valuable insights and axioms, but the testing methods are extremely indirect and heavily subject to interpretation: you really have only the historical record to draw on, and it is almost impossible to find examples that control for whatever variable is in question. Macro, ideally, *tries* really hard to be science, but you're always kind of picking from bad examples when testing a hypothesis, trying to line up vaguely similar historical periods to isolate for some common factor. It's kind of like geology or theoretical physics, except with much smaller and messier data-sets. Ten thousand years from now, it will be much easier to look at the historical data and isolate for particular variables over multiple hundred-year spans across a variety of cultural, political, and socio-economic backgrounds. For now, the peanut-gallery is chock full of questions that the experts cannot answer, and the record is full of exceptions to every rule, and a lot of it frankly boils down to worldview and ideology (with a healthy dollop of \"\"I'm smarter than you\"\" to finish the sauce). Since I personally prefer technical questions to politics, I will leave it to others to formulate and debate those things.\"",
"title": ""
},
{
"docid": "0ff176eb7c422c1fc2cc9399e488d3c1",
"text": "I think what the person meant to say is that Gold is not a one stop solution. There's nothing wrong with having Gold in an otherwise diversified portfolio but you need to be aware about the potential downsides: The problem with gold is that its value nowadays depends mainly on investor confidence, or the lack of it (actual demand for gold cannot explain the rise in value gold had after the crisis). If people are afraid the world and currencies with it will go to hell, the gold price will go up. Why? Because if currencies seize to exist, Gold will still be accepted. It can replace currencies. What many people tend to forget: let's consider the extreme example and currencies really cease to exist and all hell breaks lose. What good are gold bars at the bank, or even at home, for that matter? You'll be better off with gold coins to use in barter and to pay off marauders. But that's not about investing anymore, that's survivalism.",
"title": ""
},
{
"docid": "fd7d02335ff582044ff4b31a60e1cadd",
"text": "Dear Sir/madam We are Local Village Gold Miners from Rep. of Guinea, In West African. I am a Member of the Said Community and in charge of Marketing, Advertising, communication and sourcing potential diamond and gold dust buyers, agents/brokers or partners for our mined gold dust AU./DIAMONDS. Prior To The Latest Privilege Accorded Local Gold and Diamond Miners in Guinea Conakry Since April 2007 to Market and Sell Diamond and Gold Dust AU themselves, Thus my offer to AU Gold Dust and Diamond UNCUT Dust prospective buyers, Brokers, representatives, agents, intermediaries and partners willing To Establish Meaningful Business transaction that is Viable and Durable with us. Hence, I'm offering you a Fresh Gold Dust. AU for sale with the following specifications and details. COMMODITY.......................................AURUM UTALIUM (AU) Form................................Gold Dust/nugget Powder. Quantity..........................123kg - 500kgs and more. Quality/Purity.................. 22 carat or better. Finesse..........................92% OR Better. Location.......................... Conakry Origin............................. Guinea . Price per kg......................$35,000 USD/KG AS FOR THE DIAMOND THAT IS UNCUT, WE ARE IN POSITIONS OF OVER 4850 Carats OF GAMS STONE OF FDGH AND LM GRADES. We are looking forward to your response if our product does interest you. Accept our warm hearted Regards: NB : this is my alternative CONTACT US CAN SPEAK ENGLISH ,FRENCH AND CHINESE Tel:+22467118646 webs www.africalocalgoldminers.webs.com E-mail: [email protected] Rue DI 519 Conakry Republique de Guinee Best Regard Mr john dabo",
"title": ""
},
{
"docid": "747d0919801affbdccb59eba840be91f",
"text": "I am not really qualified to be engaged in this argument so I won't tell you why I suspect you are wrong. That said, there are many many many factors that drive productivity (which I believe is up?) and the income distribution (which I concede is a big problem). Observing that the problem started approximately concurrently with the end of the gold standard (which is arguable), is really not evidence that we should return to the gold standard. Correlation != causation.",
"title": ""
},
{
"docid": "8bb6f2fa37a7dadb2eecc6d87c3f65f2",
"text": "\"In theory, the idea is that diversified assets will perform differently in different circumstances, spreading your risk around. Whether that still functions in practice is a decent question, as the \"\"truth\"\" of most probability based arguments for diversification rely on the different assets being at least somewhat uncorrelated. This article suggests that might not be true. Specifically: The correlations we note among industry sectors are profoundly and dysfunctionally high. and Gold and silver traders have gotten too used to the negative correlation trade with stocks. This is, in fact, an unusual relationship for precious metals tostocks. The correlation should actually be zero.\"",
"title": ""
},
{
"docid": "ac3f9a457db7f58af6e800ebb6250a00",
"text": "It is a shame that really insightful article is wrapped up in a paranoid wrapper. It is all accurate, IMO and is basically the worldview I use when I trade markets. Except I don't get all fixated on gold. I see gold as just one tool out of many for exploiting the exploiters.",
"title": ""
},
{
"docid": "53797b151ae0daf43edf5e83c4fc64bd",
"text": "The problem I have with gold is that it's only worth what someone will pay you for it. To a degree that's true with any equity, but with a company there are other capital resources etc that provide a base value for the company, and generally a business model that generates income. Gold just sits there. it doesn't make products, it doesn't perform services, you can't eat it, and the main people making money off of it are the folks charging a not insubstantial commission to sell it to you, or buy it back. Sure it's used in small quantities for things like plating electrical contacts, dental work, shielding etc. But Industrial uses account for only 10% of consumption. Mostly it's just hoarded, either in the form of Jewelry (50%) or 'investment' (bullion/coins) 40%. Its value derives largely from rarity and other than the last few years, there's no track record of steady growth over time like the stock market or real-estate. Just look at what gold prices did between 10 to 30 years ago, I'm not sure it came anywhere near close to keeping pace with inflation during that time. If you look at the chart, you see a steady price until the US went off the gold standard in 1971, and rules regarding ownership and trading of gold were relaxed. There was a brief run up for a few years after that as the market 'found its level' as it were, and you really need to look from about 74 forward (which it experienced its first 'test' and demonstration of a 'supporting' price around 400/oz inflation adjusted. Then the price fluctuated largely between 800 to 400 per ounce (adjusted for inflation) for the next 30 years. (Other than a brief sympathetic 'Silver Tuesday' spike due to the Hunt Brothers manipulation of silver prices in 1980.) Not sure if there is any causality, but it is interesting to note that the recent 'runup' in price starts in 2000 at almost the same time the last country (the Swiss) went off the 'gold standard' and gold was no longer tied to any currency (or vise versa) If you bought in '75 as a hedge against inflation, you were DOWN, as much as 50% during much of the next 33 years. If you managed to buy at a 'low' the couple of times that gold was going down and found support around 400/oz (adjusted) then you were on average up slightly as much as a little over 50% (throwing out silver Tuesday) but then from about '98 through '05 had barely broken even. I personally view 'investments' in gold at this time as a speculation. Look at the history below, and ask yourself if buying today would more likely end up as buying in 1972 or 1975? (or gods forbid, 1980) Would you be taking advantage of a buying opportunity, or piling onto a bubble and end up buying at the high? Note from Joe - The article Demand and Supply adds to the discussion, and supports Chuck's answer.",
"title": ""
},
{
"docid": "496bc8c184def81836ac19d3315ff668",
"text": "\"Comission is a must when doing sales. That is the best (and only good) incentive to sell more. How much you want to give all depends on margins, the salary level that is accepted in your state/country and what sellers you have (young or old). Salary costs at 30 - 35% of total order value is normal including salary tax and all tax oriented costs around that employee. There are 2 ways of doing it. Only high commission and fixed salary + lower commission. Even if you use fixed salary + commission you can have \"\"restrictions\"\" so they have to sell above a certain level to get that commission. That means that you don't take any risks. An example of a salary model that I found was popular. (The numbers are just made up according to what is normal to have in Sweden). It's a step-model. If you sell for: Step 1: 0 - $3000 you get high commission 20% of everything you sell Step 2: $3000 - $4000 you get fixed salary of $1000 + 10% commission Step 3: $4000 - $6000 you get fixed salary of $1700 + 15% commission And so on. Your weakest points are when going to a higher step. You have to change the steps so it works with your salary statistics so you have most people under a step to motivate them to go to the next instead of having them exactly above one step. As you can see, with a step model, you just put a disquise on the commission model but make it more attractive. What the seller think is that they have a fixed salary. If a seller is happy, he/she is selling a lot. I have also had a criteria saying that if you can keep youself at 1 step for more than 3 months you will start there each month. Then it's up to the team leader to warn if that seller IS good or just LUCKY.\"",
"title": ""
},
{
"docid": "b1e31c0a10ca632844786eb12a4497e3",
"text": "The company will have to pay 20% tax on its profits. Doesn't matter how these profits are earned. Profits = Income minus all money you spend to get the income. However, you can't just take the profits out of the company. The company can pay you a salary, on which income tax, national insurance, and employer's national insurance have to be paid at the usual rate. The company can pay you a dividend, on which tax has to be paid. And the company can pay money into the director's pension fund, which is tax free. Since the amount of company revenue can be of interest, I'd be curious myself what the revenue of such a company would be. And if the company makes losses, I'm sure HMRC won't allow you to get any tax advantages from such losses.",
"title": ""
}
] |
fiqa
|
3ac00b6844710ccdb5ec38e2b92cb007
|
How can a 'saver' maintain or increase wealth in low interest rate economy?
|
[
{
"docid": "3c4db89839bf06a8c684257ea8615b86",
"text": "\"Since the other answers have covered mutual funds/ETFs/stocks/combination, some other alternatives I like - though like everything else, they involve risk: Example of how these other \"\"saving methods\"\" can be quite effective: about ten years ago, I bought a 25lb bag of quinoa at $19 a bag. At the same company, quinoa is now over $132 for a 25lb bag (590%+ increase vs. the S&P 500s 73%+ increase over the same time period). Who knows what it will cost in ten years. Either way, working directly with the farmers, or planting it myself, may become even cheaper in the future, plus learning how to keep and store the seeds for the next season.\"",
"title": ""
},
{
"docid": "9b203f5e786001b6923c2aee538fae4e",
"text": "Personally, I invest in mutual funds. Quite a bit in index funds, some in capital growth & international.",
"title": ""
},
{
"docid": "3ab2573cad4bde03574e290f5e8ed6ac",
"text": "\"I think this is a good question with no single right answer. For a conservative investor, possible responses to low rates would be: Probably the best response is somewhere in the middle: consider riskier investments for a part of your portfolio, but still hold on to some cash, and in any case do not expect great results in a bad economy. For a more detailed analysis, let's consider the three main asset classes of cash, bonds, and stocks, and how they might preform in a low-interest-rate environment. (By \"\"stocks\"\" I really mean mutual funds that invest in a diversified mixture of stocks, rather than individual stocks, which would be even riskier. You can use mutual funds for bonds too, although diversification is not important for government bonds.) Cash. Advantages: Safe in the short term. Available on short notice for emergencies. Disadvantages: Low returns, and possibly inflation (although you retain the flexibility to move to other investments if inflation increases.) Bonds. Advantages: Somewhat higher returns than cash. Disadvantages: Returns are still rather low, and more vulnerable to inflation. Also the market price will drop temporarily if rates rise. Stocks. Advantages: Better at preserving your purchasing power against inflation in the long term (20 years or more, say.) Returns are likely to be higher than stocks or bonds on average. Disadvantages: Price can fluctuate a lot in the short-to-medium term. Also, expected returns are still less than they would be in better economic times. Although the low rates may change the question a little, the most important thing for an investor is still to be familiar with these basic asset classes. Note that the best risk-adjusted reward might be attained by some mixture of the three.\"",
"title": ""
}
] |
[
{
"docid": "d86cb91597b6cbdd5135c07d89d5e0db",
"text": "More money doesn't make people richer in the sense that if the govt gave every citizen a $1 they would all still have the same amount of wealth and purchasing power, but their nominal value in dollar terms would be $1 higher. Money is just the denominator in exchange, so lets say a bicycle is $100 and a scooter is $200, you know that 2 bikes equals 1 scooter. So printing $100 for people to each buy a bicycle will just make the price of bikes go up, and they'll end up costing much more than $100, so no real wealth has been created. The main problem that I think you're trying to identify i that we've had an over-expansion of credit by central banks around the world. The scarcity of credit is a good thing because it forces only the best, most productive ideas to be allowed to be undertaken. If a bank only has $10 to loan, and business man A can use that to have a return of 50%, business man B can have 25%, and business man C can have 5%, then the obvious choice is to give the loan to business man A because he is using the resources most productively, and depending on the details of his business model, is the least risky person to loan to (ie the bank is most assured he will be able to pay his money back). But with central banks controlling interest rates, and reserve requirements for banks, the banks can lever themselves up and lend out much more money than they've taken in. After all if a bank can finance its reserves with low interest rates, but make additional money from increased lending, then they are incentivised to seek higher profits. Especially with the FDIC insuring everyone's bank deposits. So now businessmen A, B and C all get their loans and are able to start their businesses, but they're all in the same line of work and need to utilize the same resources. So now instead of just businessman A buying materials he has two other buyers looking to utilize a scarce amount of resources. The price of those resources is now higher since supply is limited but demand has tripled. So now businessman A can only make 40% through his business, B can make 5% and businessman C loses money in his venture. A and B pay their loan back but C is unable to. Ignoring interest, for the sake of simplicity, the bank has essentially broken even. Before leveraging up they loaned out $10 and got back $10. After leveraging they loaned out $30 and got back 20. So the problem you're seeing is excessive credit permitting ventures to be undertaken that should not have been allowed to be. The problem is interest rates that are not set by the market, but by a centralized bureau who couldn't possibly have enough information to determine what the cost of financing should be.",
"title": ""
},
{
"docid": "af9e3804fe0ba09f7a01b49f444fe670",
"text": "\"The classic definition of inflation is \"\"too much money chasing too few goods.\"\" Low rates and QE were intended to help revive a stalled economy, but unfortunately, demand has not risen, but rather, the velocity of money has dropped like a rock. At some point, we will see the economy recover and the excess money in the system will need to be removed to avoid the inflation you suggest may occur. Of course, as rates rise to a more normal level, the price of all debt will adjust. This question may not be on topic for this board, but if we avoid politics, and keep it close to PF, it might remain.\"",
"title": ""
},
{
"docid": "7f36c05d8eff0f82f58f3cdf2cc742d0",
"text": "The safest investment in the United States is Treasures. The Federal Reserve just increased the short term rate for the first time in about seven years. But the banks are under no obligation to increase the rate they pay. So you (or rather they) can loan money directly to the United States Government by buying Bills, Notes, or Bonds. To do this you set up an account with Treasury Direct. You print off a form (available at the website) and take the filled out form to the bank. At the bank their identity and citizenship will be verified and the bank will complete the form. The form is then mailed into Treasury Direct. There are at least two investments you can make at Treasury Direct that guarantee a rate of return better than the inflation rate. They are I-series bonds and Treasury Inflation Protected Securities (TIPS). Personally, I prefer the I-series bonds to TIPS. Here is a link to the Treasury Direct website for information on I-series bonds. this link takes you to information on TIPS. Edit: To the best of my understanding, the Federal Reserve has no ability to set the rate for notes and bonds. It is my understanding that they can only directly control the overnight rate. Which is the rate the banks get for parking their money with the Fed overnight. I believe that the rates for longer term instruments are set by the market and are not mandated by the Fed (or anyone else in government). It is only by indirect influence that the Fed tries to change long term rates.",
"title": ""
},
{
"docid": "0a0eec08c6dc5f325bd54e3dfe206026",
"text": "\"Other people have already demonstrated the effect of compound interest to the question. I'd like to add a totally different perspective. Note that the article says if you can follow this simple recipe throughout your working career, you will almost certainly beat out most professional investors [...] you'll likely accumulate enough savings to retire comfortably. (the latter point may be the more practical mark than the somewhat arbitrary million (rupees? dollars?) My point here is that the group of people who do put away a substantial fraction of their (lower) early wages and keep them invested for decades show (at least) two traits that will make a very substantial difference to the average (western) person. They may be correlated, though: people who are not tempted or able to resist the temptation to spend (almost) their whole income may be more likely to not touch their savings or investments. (In my country, people like to see themselves as \"\"world champions in savings\"\", but if you talk to people you find that many people talk about saving for the next holidays [as opposed to saving for retirement].) Also, if you get going this way long before you are able to retire you reach a relative level of independence that can give you a much better position in wage negotiations as you do not need to take the first badly paid job that comes along in order to survive but can afford to wait and look and negotiate for a better job. Psychologically, it also seems to be easier to consistently keep the increase in your spending below the increase of your income than to reduce spending once you overspent. There are studies around that find homeowners on average substantially more wealthy than people who keep living in rental appartments (I'm mostly talking Germany, were renting is normal and does not imply poverty - but similar findings have also been described for the US) even though someone who'd take the additional money the homeowner put into their home over the rent and invested in other ways would have yielded more value than the home. The difference is largely attributed to the fact that buying and downpaying a home enforces low spending and saving, and it is found that after some decades of downpayment homeowners often go on to spend less than their socio-economic peers who rent. The group that is described in this question is one that does not even need the mental help of enforcing the savings. In addition, if this is not about the fixed million but about reaching a level of wealth that allows you to retire: people who have practised moderate spending habits as adults for decades are typically also much better able to get along with less in retirement than others who did went with a high consumption lifestyle instead (e.g. the homeowners again). My estimate is that these effects compound in a way that is much more important than the \"\"usual\"\" compounding effect of interest - and even more if you look at interest vs. inflation, i.e. the buying power of your investment for everyday life. Note that they also cause the group in question to be more resilient in case of a market crash than the average person with about no savings (note that market crashes lead to increased risk of job loss). Slightly off topic: I do not know enough how difficult saving 50 USD out of 50 USD in Pakistan is - and thus cannot comment whether the savings effort called for in the paper is equivalent/higher/lower than what you achieve. I find that trying to keep to student life (i.e. spending that is within the means of a student) for the first professional years can help kick-starting a nest egg (European experience - again, not sure whether applicable in Pakistan).\"",
"title": ""
},
{
"docid": "bc2a6b19f5982a16f98ead1fe326ba63",
"text": "This question is likely to be voted closed as opinion-based. That said - In general people have become accustomed to instant gratification. They also have the media showing them luxury and are enticed every day to buy things they don't need. In the US, the savings rate is awfully low, but it's not just the lower 50%, it's 75% of people who aren't saving what they should. see http://web.stanford.edu/group/scspi/_media/working_papers/pfeffer-danziger-schoeni_wealth-levels.pdf for an interesting article on the topic of accumulated wealth.",
"title": ""
},
{
"docid": "aefe743b20c09ba211183e7b92a884ed",
"text": "Increasing rates from .75% to 1% is an attempt to control debt. The new 1% rate drives down demand for bonds based on the old .75% rate and drives down demand for stocks who have decrease profit because they pay more interest on debt. This is the federal reserves primary tool controling inflation. 1% is what the banks pay to borrow money, they base their lending rates on this 1% figure. If a person can guarantee a .75% return on money borrowed at 1%, they will opt to save and instead lend their money out at 1%.",
"title": ""
},
{
"docid": "e07c617f1278b936ca41ad293ffd4b98",
"text": "Based on your question, I am going to assume your criterion are: Based on these, I believe you'd be interested in a different savings account, a CD, or money market account. Savings account can get you up to 1.3% and money market accounts can get up to 1.5%. CDs can get you a little more, but they're a little trickier. For example, a 5 year CD could get up to 2%. However, now you're money is locked away for the next few years, so this is not a good option if this money is your emergency fund or you want to use it soon. Also, if interest rates increase then your money market and savings accounts' interest rates will increase but your CD's interest rate misses out. Conversely, if interest rates drop, you're still locked into a higher rate.",
"title": ""
},
{
"docid": "fb68856b924b978df94ce08bea6c1a69",
"text": "\"Their high savings isn't why they have to export capital, the issue is that domestic depositors don't have access to the sky-high interest rates over the last 2 decades in China. There is definitely correlation between asset levels and debt. I miss-typed in my previous post. I meant to say that the amount of debt is overstated, precicesly because wealth is high relative to income due to the high savings rate. Ultimately, there isn't a good answer yet to your question. The seminal work (which has received many updates in the last 6 years) that first attempted to understand the disconnect between the ultra-high interest rate in China and the high levels of capital exports is called \"\"Growing Like China,\"\" by Song, Storesletten, and Zilibotti published in the American Economic Review in 2011. Global debt according to the IIF is 327% of GDP. So China is actually a little below average in terms of total debt to GDP. And when you're growing at 5%+ a year, it is okay to lever up a little bit. On top of all of this, the Chinese government is well aware of these issues and will almost certainly make some comments October 18th and over the next week about constraining debt growth. This is all complicating the issue though, when you have a huge supply of money to lend, interest rates fall and companies take on more debt. So in general you would expect savings and debt levels to move together.\"",
"title": ""
},
{
"docid": "481467d7deea46bb5ea3a473c02ce5ef",
"text": "\"Pay off the credit cards. From now on, pay off the credit cards monthly. Under no circumstances should you borrow money. You have net worth but no external income. Borrowing is useless to you. $200,000 in two bank accounts, because if one bank collapses, you want to have a spare while you wait for the government to pay off the guarantee. Keep $50,000 in checking and another $50k in savings. The remainder put into CDs. Don't expect interest income beyond inflation. Real interest rates (after inflation) are often slightly negative. People ask why you might keep money in the bank rather than stocks/bonds. The problem is that stocks/bonds don't always maintain their value, much less go up. The bank money won't gain, but it won't suddenly lose half its value either. It can easily take five years after a stock market crash for the market to recover. You don't want to be withdrawing from losses. Some people have suggested more bonds and fewer stocks. But putting some of the money in the bank is better than bonds. Bonds sometimes lose money, like stocks. Instead, park some of the money in the bank and pick a more aggressive stock/bond mixture. That way you're never desperate for money, and you can survive market dips. And the stock/bond part of the investment will return more at 70/30 than 60/40. $700,000 in stock mutual funds. $300,000 in bond mutual funds. Look for broad indexes rather than high returns. You need this to grow by the inflation rate just to keep even. That's $20,000 to $30,000 a year. Keep the balance between 70/30 and 75/25. You can move half the excess beyond inflation to your bank accounts. That's the money you have to spend each year. Don't withdraw money if you aren't keeping up with inflation. Don't try to time the market. Much better informed people with better resources will be trying to do that and failing. Play the odds instead. Keep to a consistent strategy and let the market come back to you. If you chase it, you are likely to lose money. If you don't spend money this year, you can save it for next year. Anything beyond $200,000 in the bank accounts is available for spending. In an emergency you may have to draw down the $200,000. Be careful. It's not as big a cushion as it seems, because you don't have an external income to replace it. I live in southern California but would like to move overseas after establishing stable investments. I am not the type of person that would invest in McDonald's, but would consider other less evil franchises (maybe?). These are contradictory goals, as stated. A franchise (meaning a local business of a national brand) is not a \"\"stable investment\"\". A franchise is something that you actively manage. At minimum, you have to hire someone to run the franchise. And as a general rule, they aren't as turnkey as they promise. How do you pick a good manager? How will you tell if they know how the business works? Particularly if you don't know. How will you tell that they are honest and won't just embezzle your money? Or more honestly, give you too much of the business revenues such that the business is not sustainable? Or spend so much on the business that you can't recover it as revenue? Some have suggested that you meant brand or stock rather than franchise. If so, you can ignore the last few paragraphs. I would be careful about making moral judgments about companies. McDonald's pays its workers too little. Google invades privacy. Exxon is bad for the environment. Chase collects fees from people desperate for money. Tesla relies on government subsidies. Every successful company has some way in which it can be considered \"\"evil\"\". And unsuccessful companies are evil in that they go out of business, leaving workers, customers, and investors (i.e. you!) in the lurch. Regardless, you should invest in broad index funds rather than individual stocks. If college is out of the question, then so should be stock investing. It's at least as much work and needs to be maintained. In terms of living overseas, dip your toe in first. Rent a small place for a few months. Find out how much it costs to live there. Remember to leave money for bigger expenses. You should be able to live on $20,000 or $25,000 a year now. Then you can plan on spending $35,000 a year to do it for real (including odd expenses that don't happen every month). Make sure that you have health insurance arranged. Eventually you may buy a place. If you can find one that you can afford for something like $100,000. Note that $100,000 would be low in California but sufficient even in many places in the US. Think rural, like the South or Midwest. And of course that would be more money in many countries in South America, Africa, or southern Asia. Even southern and eastern Europe might be possible. You might even pay a bit more and rent part of the property. In the US, this would be a duplex or a bed and breakfast. They may use different terms elsewhere. Given your health, do you need a maid/cook? That would lean towards something like a bed and breakfast, where the same person can clean for both you and the guests. Same with cooking, although that might be a second person (or more). Hire a bookkeeper/accountant first, as you'll want help evaluating potential purchases. Keep the business small enough that you can actively monitor it. Part of the problem here is that a million dollars sounds like a lot of money but isn't. You aren't rich. This is about bare minimum for surviving with a middle class lifestyle in the United States and other first world countries. You can't live like a tourist. It's true that many places overseas are cheaper. But many aren't (including much of Europe, Japan, Australia, New Zealand, etc.). And the ones that aren't may surprise you. And you also may find that some of the things that you personally want or need to buy are expensive elsewhere. Dabble first and commit slowly; be sure first. Include rarer things like travel in your expenses. Long term, there will be currency rate worries overseas. If you move permanently, you should certainly move your bank accounts there relatively soon (perhaps keep part of one in the US for emergencies that may bring you back). And move your investments as well. Your return may actually improve, although some of that is likely to be eaten up by inflation. A 10% return in a country with 12% inflation is a negative real return. Try to balance your investments by where your money gets spent. If you are eating imported food, put some of the investment in the place from which you are importing. That way, if exchange rates push your food costs up, they will likely increase your investments at the same time. If you are buying stuff online from US vendors and having it shipped to you, keep some of your investments in the US for the same reason. Make currency fluctuations work with you rather than against you. I don't know what your circumstances are in terms of health. If you can work, you probably should. Given twenty years, your million could grow to enough to live off securely. As is, you would be in trouble with another stock market crash. You'd have to live off the bank account money while you waited for your stocks and bonds to recover.\"",
"title": ""
},
{
"docid": "54021fa6f8918e0f14a01e2c971c153b",
"text": "\"Note: I am making a USA-assumption here; keep in mind this answer doesn't necessarily apply to all countries (or even states in the USA). You asked two questions: I'm looking to buy a property. I do not want to take a risk on this property. Its sole purpose is to provide me with a place to live. How would I go about hedging against increasing interest rates, to counter the increasing mortgage costs? To counter increasing interest rates, obtaining a fixed interest rate on a mortgage is the answer, if that's available. As far as costs for a mortgage, that depends, as mortgages are tied to the value of the property/home. If you want a place to live, a piece of property, and want to hedge against possible rising interest rates, a fixed mortgage would work for these goals. Ideally I'd like to not lose money on my property, seeing as I will be borrowing 95% of the property's value. So, I'd like to hedge against interest rates and falling property prices in order to have a risk neutral position on my property. Now we have a different issue. For instance, if someone had opened a fixed mortgage on a home for $500,000, and the housing value plummeted 50% (or more), the person may still have a fixed interest rate protecting the person from higher rates, but that doesn't protect the property value. In addition to that, if the person needed to move for a job, that person would face a difficult choice: move and sell at a loss, or move and rent and face some complications. Renting is generally a good idea for people who (1) have not determined if they'll be in an area for more than 5-10 years, (2) want the flexibility to move if their living costs rises (which may be an issue if they lose wages), (3) don't want to pay property taxes (varies by state), homeowner's insurance, or maintenance costs, (4) enjoy regular negotiation (something which renters can do before re-signing a lease or looking for a new place to live). Again, other conditions can apply to people who favor renting, such as someone might enjoy living in one room out of a house rather than a full apartment or a person who likes a \"\"change of scenes\"\" and moves from one apartment to another for a fresh perspective, but these are smaller exceptions. But with renting, you have nothing to re-sell and no financial asset so far as a property is concerned (thus why some real estate agents refer to it as \"\"throwing away money\"\" which isn't necessarily true, but one should be aware that the money they invest in renting doesn't go into an asset that can be re-sold).\"",
"title": ""
},
{
"docid": "6435f24f13a0fde33b0d612aa3ee4b3d",
"text": "Firstly, make sure annual income exceeds annual expenses. The difference is what you have available for saving. Secondly, you should have tiers of savings. From most to least liquid (and least to most rewarding): The core of personal finance is managing the flow of money between these tiers to balance maximizing return on savings with budget constraints. For example, insurance effectively allows society to move money from savings to stocks and bonds. And a savings account lets the bank loan out a bit of your money to people buying assets like homes. Note that the above set of accounts is just a template from which you should customize. You might want to add in an FSA or HSA, extra loan payments, or taxable brokerage accounts, depending on your cash flow, debt, and tax situation.",
"title": ""
},
{
"docid": "9cbcabecdc2bc42d0b03e63e79ed8048",
"text": "I think three things are happening right now: 1) The stock market is one of the only sensible places to get a return on your money. Bond rates are very low and real estate is a little trickier. 2) There are fewer publicly traded companies now than there have been in the past. It's easier to invest in public companies than private companies, so more money is going into fewer companies, inflating the prices. 3) Wealth inequality is higher now than it has been in decades. If you give poor people more money, they just spend it to lead more comfortable lives. They won't invest in the stock market. If you give a rich person more money, they just invest more of it, since they are already spending as much as they reasonably can. In this economy, for the past few decades, we've been giving the rich more and more money. So, with these 3 factors, more money is pouring into the fewer companies of the stock market, inflating their prices. (At least, this is the idea put forward by a Fidelity analyst I heard a talk from recently, and it makes sense to me).",
"title": ""
},
{
"docid": "f8eea88952afaba90154a7630916d930",
"text": "\"When you say that the problem is \"\"high supply but no demand\"\" you are actually correct. Here's why: The phrase \"\"borrow/spend less, save more\"\" isn't an absolute law. It's more of a cautionary tale. Obviously, spending is an integral part of an economy: it accounts for at least 50% of every transaction! But the aphorism is getting at something other than admonishing people to not spend. The point of the saying is that interest rates should reflect savings rates. What it comes down to is the how the law of supply and demand applies to the relationship between savings and interest rates. Consider this thought experiment: in a world where everybody saves 50% of their income, what would happen to interest rates? Banks would have a glut of savings, relative to the population. Assuming demand remains constant, interest rates would go down: the price of borrowing goes down as the supply of money to be borrowed increases. Thus a corollary of the law of supply and demand is that as savings increase, interest rates tend to go down. So, as savings increase, the economic environment encourages capital improvements. Businesses can borrow at lower rates and increase long-term productive capacity. This is what the federal reserve has attempted to do by lowering the Fed Funds rate to near zero and by Operation Twist: increase economic activity through low borrowing costs. So, what's the problem? When interest rates are artificially low there are no savings to support the production later in time. A company that borrows at a 1% rate created by the feds can build a factory to make widgets, but it will have a hard time selling that widget to a population with a negative net worth. However, if the 1% rate is \"\"natural\"\", then the company should be fine: the savings of the population should support the production from his widget factory. For about 30 years we have experienced a credit boom in this country that was not created by excess savings. This trend couldn't continue forever. Look around you. At the end of the day, an economy is simply a group of people getting together to buy and sell stuff and services. Right now there is a lot of debt, and little cash. Who will be doing the buying?\"",
"title": ""
},
{
"docid": "7ce16bd0717300b2d01250b34a10b473",
"text": "Wait, if everyone isn't buying things and saving money instead, who is left to get loans to buy things at higher rates? Banks don't wag the consumer's tail. Banks will make loads more money on their variable rate loans which will hurt a lot of people. Until wages rise to incentivize buying things, loan interest rates need to be low. Only way to spur the economy is to get more money in the hands of the spenders. We keep giving it to the hoarders.",
"title": ""
},
{
"docid": "ddd515b9ee7e1314156eac28ec463373",
"text": "Remind me again who held and was willing to loan out that debt? The investor classes partly created the risk environment that they now want protection from. convenient. If they're going to sit on their savings, they're going to comparatively lose more to inflation, so what you think will happen probably wouldn't happen. And even if they do, savings don't receive preferential tax treatment anyways.",
"title": ""
}
] |
fiqa
|
d6cabbd9cca5953b2b891df6c2eb28bf
|
What is the main purpose of FED increase and decrease interest rate?
|
[
{
"docid": "298aceb6b086f2bd4e05a455c82ccb76",
"text": "When inflation is high or is rising generally interest rates will be raised to reduce people spending their money and slow down the rate of inflation. As interest rates rise people will be less willing to borrow money and more willing to keep their money earning a good interest rate in the bank. People will reduce their spending and invest less into alternative assets but instead put more into their bank savings. When inflation is too low and the economy is starting to slow down generally interest rates will be raised to encourage more spending to restart the economy again. As interest rates drop more will take their saving out of their bank accounts as is starts to earn very little in interest rate and more will be willing to borrow as it becomes cheaper to borrow. People will start spending more and investing their money outside of bank savings.",
"title": ""
}
] |
[
{
"docid": "afcfaa3930781982e106f63f9e89ae04",
"text": "Why can't the Fed simply bid more than the bond's maturity value to lower interest rates below zero? The FED could do this but then it would have to buy all the bonds in the market since all other market participants would not be willing to lend money to the government only to receive less money back in the future. Not everyone has the ability to print unlimited amounts of dollars :)",
"title": ""
},
{
"docid": "7a66ffd467cfa8743dc1cf6724f238af",
"text": "You understand that the Fed is *supposed* to make overnight loans to banks, that one of its primary jobs is to be a lender of last resort? And yes, some were foreign banks; foreign subsidies of US banks or counter-parties to large US banks. Near-zero, yes for course we're talking about *overnight* loans. The current commercial rate for overnight euro LIBOR is 0.26179%, in other words, 0.0026, near zero OMG conspiracy!",
"title": ""
},
{
"docid": "f60d0a00d26b6902b0811938684a0671",
"text": "\"Quantitative Easing Explained: http://www.npr.org/blogs/money/2010/10/07/130408926/quantitative-easing-explained The short of it is that you're right; the Fed (or another country's Central Bank) is basically creating a large amount of new money, which it then injects into the economy by buying government and institutional debt. This is, in fact, one of the main jobs of the central bank for a currency; to manage the money supply, which in most fiat systems involves slowly increasing the amount of money to keep the economy growing (if there isn't enough money moving around in the economy it's reflected in a slowdown in GDP growth), while controlling inflation (the devaluation of a unit of currency with respect to most or all things that unit will buy including other currencies). Inflation's primary cause is defined quite simply as \"\"too many dollars chasing too few goods\"\". When demand is low for cash (because you have a lot of it) while demand for goods is high, the suppliers of those goods will increase their price for the goods (because people are willing to pay that higher price) and will also produce more. With quantitative easing, the central bank is increasing the money supply by several percentage points of GDP, much higher than is normally needed. This normally would cause the two things you mentioned: Inflation - inflation's primary cause is \"\"too many dollars chasing too few goods\"\"; when money is easy to get and various types of goods and services are not, people \"\"bid up\"\" the price on these things to get them (this usually happens when sellers see high demand for a product and increase the price to take advantage and to prevent a shortage). This often happens across the board in a situation like this, but there are certain key drivers that can cause other prices to increase (things like the price of oil, which affects transportation costs and thus the price to have anything shipped anywhere, whether it be the raw materials you need or the finished product you're selling). With the injection of so much money into the economy, rampant inflation would normally be the result. However, there are other variables at play in this particular situation. Chief among them is that no matter how much cash is in the economy, most of it is being sat on, in the form of cash or other \"\"safe havens\"\" like durable commodities (gold) and T-debt. So, most of the money the Fed is injecting into the economy is not chasing goods; it's repaying debt, replenishing savings and generally being hoarded by consumers and institutions as a hedge against the poor economy. In addition, despite how many dollars are in the economy right now, those dollars are in high demand all around the world to buy Treasury debt (one of the biggest safe havens in the global market right now, so much so that buying T-debt is considered \"\"saving\"\"). This is why the yields on Treasury bonds and notes are at historic lows; it's bad everywhere, and U.S. Government debt is one of the surest things in the world market, especially now that Euro-bonds have become suspect. Currency Devaluation - This is basically specialized inflation; when there are more dollars in the market than people want to have in order to use to buy our goods and services, demand for our currency (the medium of trade for our goods and services) drops, and it takes fewer Euros, Yen or Yuan to buy a dollar. This can happen even if demand for our dollars inside our own borders is high, and is generally a function of our trade situation; if we're buying more from other countries than they are from us, then our dollars are flooding the currency exchange markets and thus become cheaper because they're easy to get. Again, there are other variables at play here that keep our currency strong. First off, again, it's bad everywhere; nobody's buying anything from anyone (relatively speaking) and so the relative trade deficits aren't moving much. In addition, devaluation without inflation is self-stablizing; if currency devalues but inflation is low, the cheaper currency makes the things that currency can buy cheaper, which encourages people to buy them. At the same time, the more expensive foreign currency increases the cost in dollars of foreign-made goods. All of this can be beneficial from a money policy standpoint; devaluation makes American goods cheaper to Americans and to foreign consumers alike than foreign goods, and so a policy that puts downward pressure on the dollar but doesn't make inflation a risk can help American manufacturing and other producer businesses. China knows this just as well as we do, and for decades has been artificially fixing the exchange rate of the Renmin B (Yuan) lower than its true value against the dollar, meaning that no matter how cheap American goods get on the world market, Chinese goods are still cheaper, because by definition the Yuan has greater purchasing power for the same cost in dollars. In addition, dollars aren't only used to buy American-made goods and services. The U.S. has positioned its currency over the years to be an international medium of trade for several key commodities (like oil), and the primary currency for global lenders like the IMF and the World Bank. That means that dollars become necessary to buy these things, and are received from and must be repaid to these institutions, and thus the dollar has a built-in demand pretty much regardless of our trade deficits. On top of all that, a lot of countries base their own currencies on our dollar, by basically buying dollars (using other valuable media like gold or oil) and then holding that cash in their own central banks as the store of value backing their own paper money. This is called a \"\"dollar board\"\". Their money becomes worth a particular fraction of a dollar by definition, and that relationship is very precisely controllable; with 10 billion dollars in the vault, and 20 billion Kabukis issued from Kabukistan's central bank, a Kabuki is worth $.50. Print an additional 20 billion Kabuki and the value of one Kabuki decreases to $.25; buy an additional 10 billion dollars and the Kabuki's value increases again to $.50. Quite a few countries do this, mostly in South America, again creating a built-in demand for U.S. dollars and also tying the U.S. dollar to the value of the exports of that country. If Kabukistan's goods become highly demanded by Europe, and its currency increases relative to the dollar, then the U.S. dollar gets a boost because by definition it is worth an exact, fixed number of Kabukis (and also because a country with a dollar board typically has no problem accepting dollars as payment and then printing Kabukis to maintain the exchange rate)\"",
"title": ""
},
{
"docid": "7573e4ed4182d7fe0dec027f67145669",
"text": "\"Wiki's not entirely accurate. My conspiracy theorist answer is because the Fed is not a government entity, it gives them increased flexibility with decreased transparency and the ability to do what is necessary to keep the currency/economy afloat under the fiat money system. A good book I found on this is Ron Paul's \"\"End the Fed\"\".\"",
"title": ""
},
{
"docid": "94f4b3bad0673cfc2d66983ab898f89d",
"text": "What you said is technically correct. But the implication OP might get from that statement is wrong. If the Fed buys bonds and nominal yields go down (Sometimes they might even go up if it meant the market expected the Fed's actions to cause more inflation), inflation expectations don't go down unless real yields as measured by TIPs stay still.",
"title": ""
},
{
"docid": "1e383f03888247ea2380a334c0f3734c",
"text": "\"Haha now there's two of you. I have two twits parrot squawking in my ears in stereo. Okay, so maybe you aren't from the US, in which case I can forgive your confusion and completely circular logic. You must have gone back to Wikipedia or something, because the IS and LM curves are not, in your words, operating without \"\"control by powerful offices in government.\"\" The IS and LM curve indeed cross at a level that is consistent with an equilibrium between income and expenditure's equilibirium with the money market. But that's just the label slapped on it, it's not determinative as some sort of naturally occurring law of economics in our society. No, these things don't just happen on their own. If what you're inartfully implying were true, then there would be no such thing as an expansionary or contractionary monetary policy. Manipulating and controlling the money supply is the entire reason for the existence of the Federal Reserve! What is wrong with you? Go read a book or something on it, fuck me. The Federal Reserve, by setting interest rates mainly, and by open market operations, and by less frequently changing the reserve requirements which directly controls the MONEY MULTIPLIER (you know, that thing that creates money out of thin air you seem to not be able to understand exists?) is constantly changing AGGREGATE DEMAND in the economy. Aggregate demand is what the ISLM curve is about. It's about the equilibrium between price levels and the level of economic OUTPUT DEMANDED. But not supplied. That's aggregate supply, and the Federal Reserve effects that less. But yes, you've simply expanded the scope of things I could talk about that are fucked up about banks and the Fed in particular, because the Federal Reserve, in manipulating aggregate demand for money, actually is destroying money and the efficient use of money at the same time, because the LM curve in particular really represents the relationship between REAL income and the REAL money supply. Real means not nominal, but in actual purchasing terms. The Fed is manipulating an LM curve that at its base is a piece of logic built on the assumption that what's going into it are real numbers, and yet by definition, the Fed acting to manipulate it makes those numbers not determined by purely market forces, but also by the Fed. That makes them less than real. Basically the Federal Reserve pumps up artificial levels of demand in the economy, which lasts for a bit to generate growth numbers, but in the long term it simply results in inflation and a continually delayed (at least for now) reckoning where the artificial demand (i.e. the government's ability to borrow) cannot be further expanded, and something has to give. This down the road would be a monetary crisis involving the US dollar being knocked off its perch as the world's primary reserve currency, and the yields on Treasuries skyrocketing to the point that the government is either forced to behave or else print so much money to actually cover interest payments on the debt that the flood of money into the economy causes catastrophic inflation. But anyway, my point is that you're making a circular argument, because you're saying that the Fed doesn't interfere in or exert tremendous control over the economy, because there's something that we know shows the given price level of money in an economy called the ISLM curve, falsely implying that everything's fine with money because it's determined by mechanical, natural laws, almost like gravity, when in fact the Federal Reserve's whole purpose is to manipulate the inputs that go into that curve. It reduces interest rates which artificially increases income. It also increases the velocity of money, an input for the LM curve, by increasing nominal economic output, etc. etc. The IS and LM curves are not these things that just sort of happen on their own. This may come as a shock, but the US has a central bank which has as its sole purpose the manipulation of these curves. Its central mandate is control of price levels. Its unspoken mandate is to preserve the status of the big banks on the top of society, which is why the big banks created it in the first place, and why they own all the branches (this is the root fact behind why some people say that the Federal Reserve is in fact not federal and is instead privately owned, which isn't completely literally true, but true enough in the sense that it has a clear conflict of interest between the public good it's supposed to be upholding and the private interests of the banks that own its branches and exert control over the financial system, mainly through the New York branch). But that's not the whole story about the total money supply. There's also the pyramiding effect of the money multiplier. It's as if you're just pretending these things don't exist. It's real, I assure you. Banks create money out of thin air when they extend credit to you. To pay the obligation to them, you use the real money you in fact earned through your own labor, or from some real asset you might have. They get the better end of the deal, and almost all the money in the economy is spawned by this process, this insanely exorbitant privilege they have. And yes, I have a problem with it.\"",
"title": ""
},
{
"docid": "28187df0941807dfabb9cb1a848d3531",
"text": "\"Keep in mind that the Federal Reserve Chairman needs to be very careful with his use of words. Here's what he said: It is arguable that interest rates are too high, that they are being constrained by the fact that interest rates can't go below zero. We have an economy where demand falls far short of the capacity of the economy to produce. We have an economy where the amount of investment in durable goods spending is far less than the capacity of the economy to produce. That suggests that interest rates in some sense should be lower rather than higher. We can't make interest rates lower, of course. (They) only can go down to zero. And again I would argue that a healthy economy with good returns is the best way to get returns to savers. So what does that mean? When he says that \"\"we can't make interest rates lower\"\", that doesn't mean that it isn't possible. He's saying that our demand for goods is lower than our ability to produce them. Negative interest would actually make that problem worse -- if I know that things will cost less in a month, I'm not going to buy anything. The Fed is incentivizing spending by lowering the cost of capital to zero. By continuing this policy, they are eventually going to bring on inflation, which will reduce the value of the currency -- which gives people and companies that are sitting on money an dis-incentive to continue hoarding it.\"",
"title": ""
},
{
"docid": "76188a98f807d3db4916876259ef74a0",
"text": "Typically developing economics are marked by moderate to high inflation [as they are growing at a faster pace], higher in savings rate and higher lending rates. If you reduce the lending rate, more business / start-up will borrow at cheaper rate, this in turn means lowers savings rate and leads to higher inflation. To combat this Central Banks make borrowing expensive, which lowers inflation and increases the saving rate. Essentially all these 3 are tied up. As to why these countries offer higher interest on USD is because most of the developing countries have trade [current account] deficit. They need to bring in more USD in the country. One of the ways is to encourage Non Resident Citizens to park their foreign earning back home, ensuring more funds USD inflow. The rate differential also acts as a guide as to how the currency would be valued against USD. For example if you get 8% on USD, less than 12% had you converted same to Rouble, at the end of say 3 years, the exchange rate between USD and Rouble would factor that 4%, ie rouble will go down. Developed countries on the other hand are marked by low inflation [they have already achieved everything] as there is no spurt in growth, it more BAU. They are also characterized by low savings and lending rates.",
"title": ""
},
{
"docid": "ec7d7e5c5674d90ed20fb432879d9ef9",
"text": "That's just factually incorrect. Outright lying aside, the previously mentioned contraction is after after a 2.1% Q4 and clocked in just .2% below last year's national average (a five year low). Regardless of that tiny bit of logic, the Fed has forecast a 2.9% Q2. Full employment and highest consumer confidence in years are driving it. Even worse case in that article, the forecasts are above 2.5% for the next quarter.",
"title": ""
},
{
"docid": "d1a9ceb43bcd442954e28400976f767e",
"text": "\"This is the best tl;dr I could make, [original](https://www.ceps.eu/publications/why-are-central-bankers-shifting-goalposts) reduced by 87%. (I'm a bot) ***** > Given its comfortable position today, it is difficult to explain why the ECB is continuing unconventional monetary policy measures, such as negative interest rates or QE. The theme of this year&#039;s meeting of the world&#039;s central bankers in Jackson Hole, Wyoming, had little to do with monetary policy. > Central banks are made independent precisely because it is understood that they are accountable for achieving their own objective of maintaining price stability, regardless of the economy&#039;s underlying growth rate. > In 1999, a core inflation rate of around 2%, combined with unemployment below 5%, justified a federal funds rate of 5%. Today, the Federal Reserve has kept its benchmark rate below 1.5% - 350 basis points lower than in 1999 - and has postponed any reduction in its bloated balance sheet. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6z2pql/ceps_why_are_central_bankers_shifting_the/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~207107 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*: **rate**^#1 **policy**^#2 **today**^#3 **inflation**^#4 **monetary**^#5\"",
"title": ""
},
{
"docid": "fe4cac5d97ea232f71072bed556b83c2",
"text": "Great reply. This is one of reasons why I like this subreddit. I thought that fed interest are far more important that you state. Rate is low + economy is booming (lender thinks there is good chance of repayment), banks loan money much more willingly (reserves are covered by cheap fed loans -> greater profit). That should significantly affect money supply.",
"title": ""
},
{
"docid": "b8d65f6a17d78cbd91372e411f776a69",
"text": "\"You are forgetting one crucial point regarding the money supply. The US Federal Reserve increases the money supply, meaning some of the money is not really loaned, it just appears out of nowhere. At first glance this seems even worse: over the short term, the Fed changes the money supply to help the economy in whatever way it sees fit. But over the long term, the money supply increases to reflect economic growth. As new technology is introduced, more can be accomplished with the same labor and resources, and thus the money supply needs to be increased. Money is really just a convenient replacement for the barter system, so if there are more things to barter \"\"for\"\" (goods and services) then there should also be more things to barter \"\"with\"\" (money). Also keep in mind inflation. The cost of goods and services goes up over time due to the inflation of currency, and so the money supply must also be increased so that those goods and services do not artificially increase in value, which would be very bad.\"",
"title": ""
},
{
"docid": "cf8c5a3d72f99e79d0eee15526e05b00",
"text": "This is similar to the overnight lending rate set by the US Federal Reserve Board. If money is more expensive to borrow (higher interest rate) then less will be borrowed. Commercial and consumer loan rates follow up or down via market pressures (though possibly to a lesser extent in China) to adjust to the new central bank rate. Money creation is driven in part by fractional reserve banking: banks are required to have but a small percentage of deposits on hand in cash, and the rest can be lent out, deposited in another bank that has the same fractional reserve requirement, and that money can be lent out, etc. Higher interest rates dampen this lending activity, so inflation is toned down.",
"title": ""
},
{
"docid": "e4ee281926e6a79e88acbe72e41096f9",
"text": "\"First of all, just for the sake of clarity, the Federal Reserve doesn't actually \"\"print\"\" money - that's the job of the BEP. What they do is they buy US Treasury bonds - i.e., loan money to the US government. The money they do it with are created \"\"from thin air\"\" - just by adding some numbers in certain accounts, thus it is described as \"\"printing money\"\". The US government then spends the money however it wishes to. The idea is that this money is injected into the economy - since the only way the US government can use the money from these loans is to spend them on buying something or give it to some people that would spend them. As it is a loan, sometime in the future the US government would pay these loans back, and in this moment the Fed would decide - if they want to \"\"contract\"\" the supply of money back, they just \"\"destroy\"\" the money they've got, by erasing the numbers they created before. They could also do it by selling the bonds they hold on the open market and then again \"\"destroy\"\" the money they got as proceeds, thus lowering the amount of money existing in the economy. This way the Fed can control how much money is out there and thus supposedly influence inflation and economic activity. The Fed could also inject money in the economy by buying any assets after creating the money - for example, right now they own about a trillion dollars worth of various mortgage-based securities. But since buying specific security would probably give unfair advantage to the issuers and owners of this security, usually US treasury bonds if what they buy. The side effect of increased supply of money denominated in dollars would be, as you noted, devaluation of dollars compared to other currencies.\"",
"title": ""
},
{
"docid": "02796cad037fa47f7f1dc2560189d293",
"text": "\"What is your biggest wealth building tool? Income. If you \"\"nerf\"\" your income with payments to banks, cable, credit card debt, car payments, and lattes then you are naturally handicapping your wealth building. It is sort of like trying to drive home a nail holding a hammer right underneath the head. Normal is broke, don't be normal. Normal obtains student loans while getting an education. You don't have to. You can work part time, or even full time and get a degree. As an example, here is one way to do it in Florida. Get a job working fast food and get your associates degree using a community college that are cheap. Then apply for the state troopers. Go away for about 5 months, earning an income the whole time. You automatically graduate with a job that pays for state schools. Take the next three years (or more if you want an advanced degree) to get your bachelors. Then start your desirable career. What is better to have \"\"wasted\"\" approx 1.5 years being a state trooper, or to have a student loan payment for 20 years? There is not even pressure to obtain employment right after graduation. BTW, I know someone who is doing exactly what I outlined. Every commercial you watch is geared toward getting you to sign on the line that is dotted, often going into debt to do so. Car commercials will tell you that you are a bad mom or not a real man if you don't drive the 2015 whatever. Think differently, throw out your numbers and shoot for zero debt. EDIT: OP, I have a MS in Comp Sci, and started one in finance. My wife also has a masters. We had debt. We paid that crap off. Work like a fiend and do the same. My wife's was significant. She planned on having her employer pay it off for each year she worked there. (Like 20% each year or something.) Guess what, that did not work out! She went to work somewhere else! Live like you are still in college and use all that extra money to get rid of your debt. Student loans are consumer debt.\"",
"title": ""
}
] |
fiqa
|
a12eb6335a87ef4662b56e91f1bf0a0e
|
What happens if someone destroy money?
|
[
{
"docid": "d6c65aeccd0683c60a76071f66ac8b74",
"text": "Depending on the country, nothing. For example, the US has about $1.3 trillion dollars of cash in circulation. Which means that if you were to burn a million dollars of it, that would be 0.000077% of the circulating cash. But cash is a small portion of the actual money in the US. Only about 8% of all money is in cash, the rest is in other forms of value, which means that you'd only be destroying 0.0000062% of the US's money if you burned a full $1,000,000.",
"title": ""
}
] |
[
{
"docid": "b93c7ef76fa2cce48a890654cca162ba",
"text": "That's like saying the Dollar is untrustworthy because Madoff used it in his scam, or that the Dollar is a criminal enterprise because US cash is the number one currency of the black market. If you believe those arguments as well, then I grant your criticism, but otherwise you'd be inconsistent. Personally I don't think it makes sense to blame the money in any of these situations. Money's just a fundamental tool for all economic activity, good or bad, and in all of these cases, I'd argue the money did exactly what it's supposed to do. Seems a lot more reasonable to blame the individuals involved.",
"title": ""
},
{
"docid": "1b8b1ccf5da9d12db5f771d27f4f5d92",
"text": "Echoing JohnF, and assuming you mean the physical, rather than abstract meaning of money? The abstract concept obviously isn't replaced (unless the currency is discredited, or like the creation of the Euro which saw local currencies abandoned). The actual bits of paper are regularly collected, shredded (into itty-bitty-bits) and destroyed. Coinage tends to last a lot longer, but it also collected and melted down eventually. Depends on the country, though. No doubt, many people who took a gap year to go travelling in points diverse came across countries where the money is a sort of brown-grey smudge you hold with care in thick wadges. The more modern economies replace paper money on a dedicated cycle (around three years according to Wikipedia, anyway).",
"title": ""
},
{
"docid": "dfdae4d4e49db42f4ac8872b91cedfe5",
"text": "Assume that he reformed his ways. He stopped the destructive behavior (gambling) and had enough money from a job going forward to pay for all his future expenses. Then it is true the old debts will fade away both as being collectable, and as a source of a negative mark on the credit report. Also assume that the people or companies never figure out that the the relative has a steady source of income, also assume that all the debts can be forgiven and have no long lasting impact. If any of those assumptions aren't true the plan won't work. The trail of debts will continue to grow, and may have additional complications. As debts fall off the radar, they may be replaced even faster by new threats. Many a person has used a debt consolidation loan, or a home equity loan to pay off all the credit cards; but found themselves back in trouble because they never fixed the underlying problem: they spend more than they make. In the case of a home equity loan they put their house at rick, as a replacement of unsecured loans. If the gambling continues, the lack of payment of old debts becomes a crutch for the ability to generate new debts.",
"title": ""
},
{
"docid": "3a75aef42b2ea095ab21acbd518c1c4f",
"text": "Under US law, if you clearly have more than half of a torn bill it is worth its full value; the smaller piece is worth nothing... except that having both halves makes the banking system much happier, since it prevents some particularly stupid counterfeiting attempts. So this proposal wouldn't be cheat-proof unless the cut is close enough to the middle to make determining 51% difficult. And I'd like to see you try to explain to a bank how so many bills were cut in half... (This is more normally an issue when money has been damaged unintentionally, of course.)",
"title": ""
},
{
"docid": "3d950755a8b61ed3e9d7451cdd84b0b3",
"text": "\"Im not sure, but let me try. \"\"That person\"\" won't affect the value of currency, after two (or three) years (maybe months), agencies will report anomalies in country. Will be start the end of market. God bless FBI and NSA for prevent this. Actually, good \"\"hypothetical\"\" question.\"",
"title": ""
},
{
"docid": "8e1f3402f6be1995f6370f699e651c10",
"text": "glass steall is one. getting rid of glass stegall meant commercial banks could create iou money irresponsibly through loaning and sell the loan to wall street speculators. This drives up assets to bubble prices. Inflation for all.",
"title": ""
},
{
"docid": "a6e67df494d70bb86bbc203462decd2a",
"text": "Coins have the minimum value of the metal they are made from. Bank notes (paper money) would only be valuable when it becomes rare. And there isn't a good way to predict how quickly something like Zimbabwe dollars will become rare (that I know of at least).",
"title": ""
},
{
"docid": "c3dde80b95a519f0137d6062a6639fb0",
"text": "\"In the United States if the person insures an article and then claims a loss of that article, the insurance replaces the missing/destroyed article. If later on the item is found the original is owned by the insurance company. The person who purchased the policy doesn't get to keep both. Of course if the item was so valuable to be priceless the insurance company would be open to an exchange of items or money. But if they suspect fraud...then it becomes a legal matter. Even when a life isn't involved it can be a source of dispute: http://www.artnet.com/magazineus/news/spencer/spencers-art-law-journal5-7-10.asp INSURED V. INSURER: WHEN STOLEN ART IS RECOVERED, WHO OWNS IT? Kenneth S. Levine This essay is about the word \"\"subrogation,\"\" which frequently appears in insurance policies. An insured painting is stolen and the insurance company pays the owner’s claim for the value of the painting. Many years later, when the painting is recovered, its value is many times what it was when the insurance claim was paid. The insurance company takes the position that it owns the painting, while the owner says I own the painting, less the value of the insurance proceeds received. The resolution of this dispute depends on the meaning of the word \"\"subrogation\"\" in the insurance policy. When life insurance is involved, the item being replace is the lost stream of income. The question of returning money and how much would be a legal issue. They would also want to know if there was fraud, and who was involved.\"",
"title": ""
},
{
"docid": "ad73bd8539ac724a2790c7febeabc767",
"text": "\"The SFGate had an article on this a few years ago: http://www.sfgate.com/business/networth/article/When-government-fines-companies-who-gets-cash-3189724.php \"\"Civil penalties, often referred to as fines, usually go to the U.S. Treasury or victims.\"\" Short answer in the case you references it would be the US Treasury. In cases where there is a harmed party then they would get something to account for their loss. But it can get complicated depending on the crime.\"",
"title": ""
},
{
"docid": "985398eb036b785f2e9219933b6b2b4d",
"text": "\"But I think another interesting postscript to this which is relevant at this time is that the orchard wildfire isn't the only thing that can make money \"\"disappear\"\". The use of a currency rather than a transferable note means that it can be an independent store of value, so there are perverse outcomes that can happen that can't happen with IOUs. So say some particularly wealthy person in the village starts to hoard his money and corners a large fraction of the money supply (say he's anticipating some horrible plague). The number of Loddars decreases, and the orchard owner starts paying his workers fewer Loddars as a result. But their debts are denominated in \"\"old\"\" Loddars which were easier to come by, and quickly the workers are unable to pay their debts, or have to spend all their money on their debts and have none for anything else. They default on those debts and the money \"\"disappears\"\"--but it doesn't disappear for any physical reason (the workers are doing the same amount of work), it disappears because of a shock to the monetary supply. This is a \"\"demand shock\"\" versus the \"\"supply shock\"\" of an orchard catching on fire.\"",
"title": ""
},
{
"docid": "4f836cd217d6541bbfe6c08fcca1719a",
"text": "The question is about the US but to add the European perspective: The rule over here (I only know German law, but assume it's the same for all of the Euro area) is that you need more than half of the bill or you have to be able to prove that more than half of the bill was destroyed (good luck) in order to get it replaced. Deformed coins can also be replaced. But all only as long as you didn't break it on purpose. So giving half of the bill to the cab driver would be on purpose and (if the central bank knows about it) make the bill (or coin) invalid. German information: https://www.bundesbank.de/Navigation/DE/Aufgaben/Bargeld/Beschaedigtes_Geld/beschaedigtes_geld.html",
"title": ""
},
{
"docid": "d8b546e3ca3edf9892dc011ac3e6ca69",
"text": "It's quite the contrary. If there are mass failures of banks, then the money supply will collapse and there will be vicious deflation, increasing the value of money held as cash. It's only if governments print money to bail the banks out that there's a (small) risk of hyperinflation and the effective collapse of the currency.",
"title": ""
},
{
"docid": "ddfb27d7da0a0df21a16911f574c45b0",
"text": "I can see three possibilities: * The money was illegally transferred and used for operating costs when they started having trouble. * The company was playing Enron-like accounting games, and were reporting imaginary profits and gains. In that case, the money never really existed. * The money was outright stolen, and is in somebody's offshore bank accounts. Or some combination of these.",
"title": ""
},
{
"docid": "1d38822bf632fe87eea07da72fa4d23f",
"text": "Similar action is being undertaken in Europe following the example of Cyprus. As WND recently pointed out, finance ministers of the 27-member European Union in June had approved forcing bondholders, shareholders and large depositors with more than 100,000 euros in their accounts to make the financial sacrifice before turning to the government for help with taxpayer funds. Do they get compensation later if the bank recovers?",
"title": ""
},
{
"docid": "ef97994caf681e812349342b498a2398",
"text": "In general, Roth IRAs, are associated with the individual. Unlike 401(k)s for which the business holds the retirement account in the name of the individual. So, although the company may have helped you set up the Roth it is in your name and you can continue to contribute to it. Wikipedia has some helpful information here. It should be noted, however, that sometimes businesses set up special deals with retirement service companies or brokers that hold Roth IRAs so you should check with the particular company/broker that holds your Roth.",
"title": ""
}
] |
fiqa
|
5a13a591db5ab07fc803c8d18a6e8fb7
|
how derivatives transfer risk from one entity to another
|
[
{
"docid": "18fffb30cf851552aecb3366f6b51409",
"text": "By buying the call option, you are getting the benefit of purchasing the underlying shares (that is, if the shares go up in value, you make money), but transferring the risk of the shares reducing in value. This is more apparent when you are using the option to offset an explicit risk that you hold. For example, if you have a short position, you are at unlimited risk of the position going up in value. You could decide you only want to take the risk that it might rise to $X. In that case, you could buy a call option with $X strike price. Then you have transferred the risk that the position goes over $X to the counterpart, since, even if the shares are trading at $X+$Y you can close out the short position by purchasing the shares at $X, while the option counterpart will lose $Y.",
"title": ""
},
{
"docid": "726bcd53a303cde3ab05e01634862981",
"text": "When you buy a call option, you transfer the risk to the owner of the asset. They are risking losing out on gains that may accumulate in addition to the strike price and paid premium. For example, if you buy a $25 call option on stock XYZ for $1 per contract, then any additional gain above $26 per share of XYZ is missed out on by the owner of the stock and solely benefits the option holder.",
"title": ""
},
{
"docid": "52981c665fee7c5690b99f2b7cb7e0d2",
"text": "The important thing to realize is, what would you do, if you didn't have the call? If you didn't have call options, but you wanted to have a position in that particular stock, you would have to actually purchase it. But, having purchased the shares, you are at risk to lose up to the entire value of them-- if the company folded or something like that. A call option reduces the potential loss, since you are at worst only out the cost of the call, and you also lose a little on the upside, since you had to pay for the call, which will certainly have some premium over buying the underlying share directly. Risk can be defined as reducing the variability of outcomes, so since calls/shorts etc. reduce potential losses and also slightly reduce potential gains, they pretty much by definition reduce risk. It's also worth noting, that when you buy a call, the seller could also be seen as hedging the risk of price decreases while also guaranteeing that they have a buyer at a certain price. So, they may be more concerned about having cash flow at the right time, while at the same time reducing the cost of the share losing in value than they are losing the potential upside if you do exercise the option. Shorts work in the same way but opposite direction to calls, and forwards and futures contracts are more about cash flow management: making sure you have the right amount of money in the right currency at the right time regardless of changes in the costs of raw materials or currencies. While either party may lose on the transaction due to price fluctuations, both parties stand to gain by being able to know exactly what they will get, and exactly what they will have to pay for it, so that certainty is worth something, and certainly better for some firms than leaving positions exposed. Of course you can use them for speculative purposes, and a good number of firms/people do but that's not really why they were invented.",
"title": ""
}
] |
[
{
"docid": "ed548c3e0a3f02a0fdfa8740bd84ee73",
"text": "\"I struggled with this one at first. It's easiest if you temporarily ignore the mathematical machinery of martingales and go back to the derivation that Black and Scholes provide in their 1973 paper. They basically show that when you construct a portfolio consisting of a long position in the option (the one being priced) and a short position on the replicating portfolio (consisting of shares of stock and cash in the risk-free bank account), then that portfolio will be entirely risk-less, and hence will earn the risk-free rate of interest. This makes intuitive sense if you think about it - every change in the value of the option is going to be countered by an opposite change in the replicating portfolio; by no arbitrage, that composite portfolio (the option + the replicating portfolio) must therefore earn the risk-free rate. The fact that the composite portfolio earns the risk-free rate provides the connection to martingale pricing. Recall that a martingale is basically* a stochastic process that has no drift, only volatility. Here, it's useful to think of the drift as being the \"\"risk premium\"\" or \"\"return\"\" of a particular asset (like the stock). What martingale pricing theory says is that to find the price of the option we (1) discount the value of the replicating portfolio by the cash bond (the numeraire asset), and (2) turn the stochastic process of the risky asset in the replicating portfolio into a martingale. This move intuitively makes sense because the Black-Scholes derivation shows that the replicating portfolio + the option must earn the risk-free rate, but if you divide the value of the Black-Scholes replicating portfolio by the numeraire asset, you're going to cancel out that risk-free rate -- e.g. have a Martingale. (I'm not a mathematician, so please correct me if I've mucked something up in my explanation). *I say basically because there are some technical conditions that need to be fulfilled, but that's generally true.\"",
"title": ""
},
{
"docid": "eb0299e0e2742cda3ef07689492964a8",
"text": "I used to trade power for a closed end hedge fund. Yes, weather derivatives are very important. They help power traders / utilities hedge for unaccountable variables, IE weather. For example, lets say it costs a utility $50 an hour to produce power for the load when it is 80 degrees outside. Lets say I trade the contract with them to guarantee the weather will be under 80 degrees. If the weather is higher than 80 degrees, more people turn in their AC, the load on the grid goes up, and the utility has to start generating power at $70 an hour. Under this contract, I would be liable to pay the utility the net difference in their cost (the additional $20 per hour they generate per mw). In that case I am a loser. If the power comes in under 80 degrees, I make money as I priced (sold) the contract at a premium according to the risk I calulated for offereing the contract. This has many many applications, but yes, its not a weird thing to trade. Hope this helps.",
"title": ""
},
{
"docid": "6c36699bd826eaa8ece137871f7998d2",
"text": "It's not! With gambling, you're placing a bet on some team's performance but you don't own the team, or the field they play on, or the other team, or the ball! Derivatives are just like that! Except with derivatives, the team can bet against themselves, and not tell you that they have!",
"title": ""
},
{
"docid": "02427d12af8759afcbefe184e22a93fa",
"text": "As far as I can see, it misses the most important point (from the perspective of a private person), for most derivatives: It's marketing. There are a bunch of derivatives out there which are ONLY traded by (and actively marketed to) retail investors, no instutional investors or companies. They are complex and, in terms of the combination of risk and reward, inferior to plain-vanilla classic derivatives, which gives the bank a better margin...",
"title": ""
},
{
"docid": "6342604cd47313dbdefb96dca9f311fd",
"text": "\"As Dheer pointed out, Wikipedia has a good definition of what a negotiable instrument is. A security is an instrument or certificate that signifies an ownership interest in something tangible. 1 share of IBM represents some small fraction of a company. You always have the ability to choose a price you are willing to pay -- which may or may not be the price that you get. A derivative is a level of abstraction linked by a contract to a security... if you purchase a \"\"Put\"\" contract on IBM stock, you have a contractural right to sell IBM shares at a specific price on a specific date. When you \"\"own\"\" a derivative, you own a contract -- not the actual security.\"",
"title": ""
},
{
"docid": "8daec80263369110516fd14857c70b71",
"text": "\"MD-Tech answered: The answer is in your question: derivatives are contracts so are enforced in the same way as any other contract. If the counterparty refuses to pay immediately they will, in the first instance be billed by any intermediary (Prime Broker etc.) that facilitated the contract. If they still refuse to pay the contract may stipulate that a broker can \"\"net off\"\" any outstanding payments against it or pay out using deposited cash or posted margins. The contract will usually include the broker as an interested party and so they can, but don't need to, report a default (such that this is) to credit agencies (in some jurisdictions they are required to by law). Any parties to the trade and the courts may use a debt collection agency to collect payments or seize assets to cover payment. If there is no broker or the counterparty still has not paid the bill then the parties involved (the party to the trade and any intermediaries) can sue for breach of contract. If they win (which would be expected) the counterparty will be made to pay by the legal system including, but not limited to, seizure of assets, enforced bankruptcy, and prison terms for any contempts of court rulings. All of this holds for governments who refuse to pay derivatives losses (as Argentina did in the early 20th century) but in that case it may escalate as far as war. It has never done so for derivatives contracts as far as I know but other breaches of contract between countries have resulted in armed conflict. As well as the \"\"hard\"\" results of failing to pay there are soft implications including a guaranteed fall in credit ratings that will result in parties refusing to do business with the counterparty and a separate loss of reputation that will reduce business even further. Potential employees and funders will be unwilling to become involved with such a party and suppliers will be unwilling to supply on credit. The end result in almost every way would be bankruptcy and prison sentences for the party or their senior employees. Most jurisdictions allow for board members at companies in material breach of contract to be banned from running any company for a set period as well. edit: netting off cash flows netting off is a process whereby all of a party's cash flows, positive and negative, are used to pay each other off so that only the net change is reflected in account balances, for example: company 1 cash flows netting off the total outgoings are 3M + 500k = 3.5M and total incomings are 1.2M + 1.1M + 1.2M = 3.5M so the incoming cash flows can be used to pay the outgoing cash flows leaving a net payment into company1's account of 0.\"",
"title": ""
},
{
"docid": "0e76f8ec294f1dda50d223b9e70c6059",
"text": "It makes sense for a lot of people - it's basically weather insurance. It's useful for farmers (bad weather ruining a harvest), airlines (abnormally high amount of snowstorms increasing cost of delayed flights), hotels (rain making people visit less), ski resorts (not enough snow) and other businesses that can be negatively impacted by extreme weather variations. If they systematically slightly overpay for this protection the speculator can make money on net helping these businesses reduce the volatility of their cashflows which is important because they need to pay their overhead costs every year. Edit: The derivatives themselves also allows the people selling weather insurance to hedge their exposure on the market.",
"title": ""
},
{
"docid": "caa19ab27be2bb9a82c10b0dc848e95d",
"text": "Generally, anyone can. Selling them is an interesting point, as the buyer has a counterparty risk that you won't be able to pay at the term of the contract. So, if I was a vendor buying a derivative in my example, I would definitely get that derivative from a bank as opposed to my friend Jim Bob. Especially in cases of bespoke derivatives, it doesn't make sense for anyone except people who have material interest to by it, as the expectation value of the hedge is negative. Essentially, you're more likely to lose money than gain money from a hedge. The exception is when you have information above that of the market, which could allow for a positive return. That is the reason that people advocate for derivatives as mechanisms of price discovery, because large imbalances aren't likely to form when someone could arbitrage or even just take positions when the market goes out of whack. That only really works in publically traded markets, however, bespoke derivatives don't really contribute to better pricing afaik. Of course, that's the simple explanation to a huge, complex, and varied field. Certainly, speculators exist, particularly in the more commoditized derivatives. Especially in the leadup to the financial crisis, large amounts were spent on exotic derivatives that blew up in people's faces. The easiest thing to say about them is that they are double edged swords. In theory, they're fantastic, as it allows risk to be spread around to people that want it. It should lead to a safer system, as hedged comapnies are less exposed to shocks and are more resilient. But in practice, we've alao seen them used as risk concentrators (AIG). We've seen cases where correlations arise that weren't assumed before, and what used to be manageable positions become lead weights. We've seen the dangers that large systemically important financial institutions have when they are a counterparty to tens of trillions in notional derivatives, as when they fail the risk of failure is over every derivative they are counterparty to, not just the hedged exposure. Sorry, this is more than you asked for. I tend to get carried away.",
"title": ""
},
{
"docid": "a20065d917fb18d76572c8a226091329",
"text": "\"Seems like you are concerned with something called assignment risk. It's an inherent risk of selling options: you are giving somebody the right, but not the obligation, to sell to you 100 shares of GOOGL. Option buyers pay a premium to have that right - the extrinsic value. When they exercise the option, the option immediately disappears. Together with it, all the extrinsic value disappears. So, the lower the extrinsic value, the higher the assignment risk. Usually, option contracts that are very close to expiration (let's say, around 2 to 3 weeks to expiration or less) have significantly lower extrinsic value than longer option contracts. Also, generally speaking, the deeper ITM an option contract is, the lower extrinsic value it will have. So, to reduce assignment risk, I usually close out my option positions 1-2 weeks before expiration, especially the contracts that are deep in the money. edit: to make sure this is clear, based on a comment I've just seen on your question. To \"\"close out an options position\"\", you just have to create the \"\"opposite\"\" trade. So, if you sell a Put, you close that by buying back that exact same put. Just like stock: if you buy stock, you have a position; you close that position by selling the exact same stock, in the exact same amount. That's a very common thing to do with options. A post in Tradeking's forums, very old post, but with an interesting piece of data from the OCC, states that 35% of the options expire worthless, and 48% are bought or sold before expiration to close the position - only 17% of the contracts are actually exercised! (http://community.tradeking.com/members/optionsguy/blogs/11260-what-percentage-of-options-get-exercised) A few other things to keep in mind: certain stocks have \"\"mini options contracts\"\", that would correspond to a lot of 10 shares of stock. These contracts are usually not very liquid, though, so you might not get great prices when opening/closing positions you said in a comment, \"\"I cannot use this strategy to buy stocks like GOOGL\"\"; if the reason is because 100*GOOGL is too much to fit in your buying power, that's a pretty big risk - the assignment could result in a margin call! if margin call is not really your concern, but your concern is more like the risk of holding 100 shares of GOOGL, you can help manage that by buying some lower strike Puts (that have smaller absolute delta than your Put), or selling some calls against your short put. Both strategies, while very different, will effectively reduce your delta exposure. You'd get 100 deltas from the 100 shares of GOOGL, but you'd get some negative deltas by holding the lower strike Put, or by writing the higher strike Call. So as the stock moves around, your account value would move less than the exposure equivalent to 100 shares of stock.\"",
"title": ""
},
{
"docid": "3365eaf1af20cd0487b113340fb84876",
"text": "First, realize that Wikipedia is written by individuals, just like this board has thousands of members. The two definition were written and edited by different people, most likely. Think Venn diagram. The definition for financial instruments claims that it's the larger set, and securities is contained in a subset. Comparing the two, it seems pretty consistent. Yes, Securities include derivatives. Transferable is close to tradable, although to me tradable implies a market as compared to private transfers. I don't believe there's an opposite, per se, but there's 'other stuff.' My house has value, but is not a security. My coffee cup has no value. Back to the concept of Venn. There aren't really opposites, just items falling outside the set we're discussing. I'd caution, this is a semantic exercise. If you know what you're buying, a stock, a bond, a gold bar, etc, whether it's a financial instrument or security doesn't matter to you.",
"title": ""
},
{
"docid": "1b807557ba137c1143736dc37981715b",
"text": "I think your premise is slightly flawed. Every investment can add or reduce risk, depending on how it's used. If your ordering above is intended to represent the probability you will lose your principal, then it's roughly right, with caveats. If you buy a long-term government bond and interest rates increase while you're holding it, its value will decrease on the secondary markets. If you need/want to sell it before maturity, you may not recover your principal, and if you hold it, you will probably be subject to erosion of value due to inflation (inflation and interest rates are correlated). Over the short-term, the stock market can be very volatile, and you can suffer large paper losses. But over the long-term (decades), the stock market has beaten inflation. But this is true in aggregate, so, if you want to decrease equity risk, you need to invest in a very diversified portfolio (index mutual funds) and hold the portfolio for a long time. With a strategy like this, the stock market is not that risky over time. Derivatives, if used for their original purpose, can actually reduce volatility (and therefore risk) by reducing both the upside and downside of your other investments. For example, if you sell covered calls on your equity investments, you get an income stream as long as the underlying equities have a value that stays below the strike price. The cost to you is that you are forced to sell the equity at the strike price if its value increases above that. The person on the other side of that transaction loses the price of the call if the equity price doesn't go up, but gets a benefit if it does. In the commodity markets, Southwest Airlines used derivatives (options to buy at a fixed price in the future) on fuel to hedge against increases in fuel prices for years. This way, they added predictability to their cost structure and were able to beat the competition when fuel prices rose. Even had fuel prices dropped to zero, their exposure was limited to the pre-negotiated price of the fuel, which they'd already planned for. On the other hand, if you start doing things like selling uncovered calls, you expose yourself to potentially infinite losses, since there are no caps on how high the price of a stock can go. So it's not possible to say that derivatives as a class of investment are risky per se, because they can be used to reduce risk. I would take hedge funds, as a class, out of your list. You can't generally invest in those unless you have quite a lot of money, and they use strategies that vary widely, many of which are quite risky.",
"title": ""
},
{
"docid": "2af07b740b87613ecc580fd8f8e59ced",
"text": "\"I am assuming you mean derivatives such as speeders, sprinters, turbo's or factors when you say \"\"derivatives\"\". These derivatives are rather popular in European markets. In such derivatives, a bank borrows the leverage to you, and depending on the leverage factor you may own between 50% to +-3% of the underlying value. The main catch with such derivatives from stocks as opposed to owning the stock itself are: Counterpart risk: The bank could go bankrupt in which case the derivatives will lose all their value even if the underlying stock is sound. Or the bank could decide to phase out the certificate forcing you to sell in an undesirable situation. Spread costs: The bank will sell and buy the certificate at a spread price to ensure it always makes a profit. The spread can be 1, 5, or even 10 pips, which can translate to a the bank taking up to 10% of your profits on the spread. Price complexity: The bank buys and sells the (long) certificate at a price that is proportional to the price of the underlying value, but it usually does so in a rather complex way. If the share rises by €1, the (long) certificate will also rise, but not by €1, often not even by leverage * €1. The factors that go into determining the price are are normally documented in the prospectus of the certificate but that may be hard to find on the internet. Furthermore the bank often makes the calculation complex on purpose to dissimulate commissions or other kickbacks to itself in it's certificate prices. Double Commissions: You will have to pay your broker the commission costs for buying the certificate. However, the bank that issues the derivative certificate normally makes you pay the commission costs they incur by hiding them in the price of the certificate by reducing your effective leverage. In effect you pay commissions twice, once directly for buying the derivative, and once to the bank to allow it to buy the stock. So as Havoc P says, there is no free lunch. The bank makes you pay for the convenience of providing you the leverage in several ways. As an alternative, futures can also give you leverage, but they have different downsides such as margin requirements. However, even with all the all the drawbacks of such derivative certificates, I think that they have enough benefits to be useful for short term investments or speculation.\"",
"title": ""
},
{
"docid": "7216604d3f8715b51196cd358b2b6426",
"text": "\"JoeTaxpayer's answer adequately explained leverage and some of your risks. Your risks also include: The firm's risk is that you will figure out a way to leave them with a negative account that contributes to another customer's profit and yet you disappear in a way that makes the negative account impossible to collect. Another risk is that you are not who you say you are, or that the money you invest is not yours. These are called \"\"know your customer\"\" risks.\"",
"title": ""
},
{
"docid": "59430118e07e163ffeb46f261970388b",
"text": "No. Such companies don't exist. Derivative instruments have evolved over a period and there is a market place, stock exchange with members / broker with obligations etc clearly laid out and enforceable. If I understand correctly say the house is at 300 K. You would like a option to sell it to someone for 300 K after 6 months. Lets say you are ready to pay a premium of 10K for this option. After 6 months, if the market price is 400 K you would not exercise the option and if the market price of your house is 200 K you would exercise the option and ask the option writer to buy your house for 300 K. There are quite a few challenges, i.e. who will moderate this transaction. How do we arrive that house is valued at 300K. There could be actions taken by you to damage the property and hence its reduction in value, etc. i.e. A stock exchange like market place for house is not there and it may or may not develop in future.",
"title": ""
},
{
"docid": "11ac7193d83c134cf94524ff5242facc",
"text": "When we 'delta-hedge', we make the value of a portfolio 0. No - you make the risk relative to some underlying 0. The portfolio does have a value, but if whatever underlying you're hedging against changes slightly the value of your portfolio should not change. But, what is the derivative of a portfolio? It's the instantaneous rate of change of the portfolio) relative to some underlying phenomenon. With a portfolio of many stocks, there's not one single factor that drives the value of your portfolio. You have sensitivity to each underlying stock (price and volatility), interest rates, the market as a whole, etc. For simplicity, we might imagine a portfolio that has holdings in .... a call .... a stock .... and a bank account (to borrow and lend money). You will have a delta relative to the stock and a delta relative to the underlying instrument on the option, etc. Those can only be aggregated for each factor (e.g. if the call is an option on the same stock) Theta is the only one you can calculate for the portfolio as a whole - it will be the aggregate theta of all of your positions (since change in time is constant across all investments). All of the others are not aggregatable since they are measuring sensitivities to different phenomena.",
"title": ""
}
] |
fiqa
|
edde7cbee7b5b2e88e62f965400d320d
|
How fast does the available amount of gold in the world increase due to mining?
|
[
{
"docid": "0688fcd073e0219ce2b6319825056b50",
"text": "For the last few years around 2,500 metric tonnes of gold have been produced each year. This is on top of existing supply of 160,000 metric tonnes. Existing yearly production is around 1.5% of the existing supply. Charts from here.",
"title": ""
},
{
"docid": "9178447e3c6b7a4528522f3c1acb7cdc",
"text": "If that fraction is really small, then the amount of gold can be thought of as relatively constant. That fraction is very small. After all, people have been mining gold for thousands of years. So the cumulative results of gold mining have been building up the supply for quite some time. Meanwhile, owners of gold rarely destroy it. A little bit of gold is used in some industries as a consumable. This limited consumption of gold offsets some of the production that comes from mining. But truthfully this effect is minuscule. For the most part people either hoard it like its made of gold, or sell it (after all it is worth its weight in gold). If you're interested Wikipedia lists a few more factors that affect gold prices. (If you're not interested Wikipedia lists them anyway.)",
"title": ""
},
{
"docid": "3e15fa69c9638052da5104cf68de929d",
"text": "Approximately 5.3 billion ounces have been mined. This puts the total value of all gold in the world at about $9.5 trillion, based on $1800/oz. Total world net worth was $125T in 2006. There's an odd thing that happens when one asset's value is suddenly such a large percent of all assets. (This reminds me of how and why the tech bubble burst. Cisco and EMC would have been worth more than all other stocks combined if they grew in the 00's like they did in the 90's.) Production (in 2005/6) ran about 80 million oz/yr. Just over 1.5% impact to total supply, so you are right in that observation. On the other hand, the limited amount out here, means that if everyone decided to put their wealth in gold, it would be done by driving the price to bubblicious levels. One can study this all day, and parse out how much is in investment form (as compared to jewelry, etc) and realize that a few trillion dollars in value pales in comparison to the wealth of the US alone, let alone the world. Half the world can't buy two oz if they tried. Of course there's pressure to reopen mines that had costs pushing $800/oz. Understand that the supply of $300 gold is long gone. As the easy gold has been mined, and cost goes up, there's a point where mines close. But as the price of gold trades at these levels, the mines that couldn't produce at $600 are now opening.",
"title": ""
}
] |
[
{
"docid": "eab99cf37df4a53a13425e546e9c18cc",
"text": "Your quote: There's about 10 trillion in gold and about 2.8 trillion of US cash in the world. Neither of these is anywhere large enough to be used for all the transactions in the world. So how was it commercial banks could lend like crazy for home mortgages?? M1 remaind constant throughout the decade and years , if frac multiplier effect was the cause for m2, why wasn't it until the 2000s that m2 became exponential? Commercial Banks able to create credit and lend out of thin air to customers thanks to deregulation that caused m2 to explode. They didn't need no FED. They didin't need no reserves. They were able to act regardless of the FED. The FED responded to them, instead of the other way around. Before deregulation banks didn't bother creating too much credit loans coz it was too dangerous, they were mostly utilty banks. After deregulation, creation of exotic derivatives, low interest rates, and high speed internet globalized digital trading, they went crazy creating credit out of thin air coz it wasn't dangerous because they could sell the home loans.",
"title": ""
},
{
"docid": "861a9d04974ce6c228e125c840a8f454",
"text": "Mining/discovery of gold can be inflationary -- the Spanish looting of Central America for a few hundred years or the gold rush in the 19th century US are examples of that phenomenon. The difference between printing currency and mining is that you have to ability to print money on demand, while mining is limited to whatever is available to extract at a given time. The rising price of gold may be contributing to increased production, as low-grade ore that wasn't economically viable to work with in the 1980's are now affordable.",
"title": ""
},
{
"docid": "7ade3fd091361ec8f9583fdbc5e25aee",
"text": "@Michael Kjörling answered why platinum is in demand like it is. But it missed some of the significant risks so I will address some of them. Platinum is much more rare than gold. But not because there is less platinum than gold just that the known existing platinum veins are smaller and more disbursed. So if a large vein were found it could have a significant impact on the availability and thus reducing price of platinum. New mining technologies are being developed every day. One of these could make exacting platinum from existing not platinum mines easier and more cost effective again increasing the availability and reducing the price of platinum. The vast majority of platinum use today is for emissions controls. There is a lot of money being thrown into research on green energy and technologies. One of these technologies or a side effect of other research could result in much more cost effective ways to combat emissions. Should that happen I would expect the price of platinum to fall through the floor and potentially never recover. I do not think any of these scenarios are imminent. But the risks that they present are so great it is important to consider them before investing.",
"title": ""
},
{
"docid": "f416e822c8eb187414af66b992c6054d",
"text": "No, it doesn't matter how powerful the machines are that do the mining. The system balances it out (increases the difficulty) so that one block is mined every 10 minutes, regardless of whether there's 500 miners in the world or 50 million, it will always be around 10 minutes (sometimes 9 and sometimes 11 though). And one block used to be 50BTC, but every 4 years this halves and so in 100 years the supply increase will be almost 0, miners will still get the transaction fees though. This means bitcoin is limited to a supply of less than 21 million. Which creates the scarcity. There's possibly a problem though. Quantum computing might not increase the supply but it could potentially decrypt the encryption, but if that happens the whole internet and digital world will be in trouble and not just bitcoin.",
"title": ""
},
{
"docid": "0050f863ef36b0db197df6b4660bee87",
"text": "blockchain.info has all the most recent stats. 264,360 bitcoins traded in the last 24 hours. About [16.5 Million](http://moderninvestor.io/how-many-bitcoins-have-been-mined/) exist right now. Here is how they make more bitcoins >12.5 [bitcoins per block](https://en.wikipedia.org/wiki/Bitcoin) (approximately every ten minutes) until mid 2020,[7] and then afterwards 6.25 bitcoins per block for 4 years until next halving. This halving continues until 2110–40, when 21 million bitcoins will have been issued. None of that is really making the price going up. There is not a shortage of bitcoins. There are just more people wanting to buy bitcoin right now then there are people who want to sale. So on the exchanges people keep offering to buy at a higher and higher price. Competing with each other causing the price to go up. It'll probably hit a peak and drop back down to 4k or so. That seems to be the trend with bitcoin. Climb real high, dip down to about halfway up that climb, level off, time goes by, peak again. Repeat.",
"title": ""
},
{
"docid": "8ac2209c513ee6c964e7277b426315ba",
"text": "Gold is a commodity. It has a tracked price and can be bought and sold as such. In its physical form it represents something real of signifigant value that can be traded for currency or barted. A single pound of gold is worth about 27000 dollars. It is very valuable and it is easily transported as opposed to a car which loses value while you transport it. There are other metals that also hold value (Platinum, Silver, Copper, etc) as well as other commodities. Platinum has a higher Value to weight ratio than gold but there is less of a global quantity and the demand is not as high. A gold mine is an investement where you hope to take out more in gold than it cost to get it out. Just like any other business. High gold prices simply lower your break even point. TIPS protects you from inflation but does not protect you from devaluation. It also only pays the inflation rate recoginized by the Treasury. There are experts who believe that the fed has understated inflation. If these are correct then TIPS is not protecting its investors from inflation as promised. You can also think of treasury bonds as an investment in your government. Your return will be effectively determined by how they run their business of governing. If you believe that the government is doing the right things to help promote the economy then investing in their bonds will help them to be able to continue to do so. And if consumers buy the bonds then the treasury does not have to buy any more of its own.",
"title": ""
},
{
"docid": "94f18051e3c46aff0d139f67e81dc269",
"text": "\"Gold has very useful physical properties for some engineering applications. Even tiny amounts of gold can substantially improve products, so it can be worthwhile to pay high prices per ounce for gold. For example: Gold can be \"\"beaten\"\" or electroplated to produce very thin shiny coatings. Entire roofs (of famous buildings) have been covered with \"\"gold leaf\"\", at a cost that was small compared to the supporting structure. A very thin layer of electroplated gold provides better protection against corrosion than a much thicker layer of electroplated nickel. Even if gold costs thousands of times more per ounce than nickel, it is cheaper to use gold as an anti-corrosion layer than nickel (for use in military-grade naval electronics). A thin layer of electroplated gold greatly increases the electrical current-carrying capacity of a thin copper wire.\"",
"title": ""
},
{
"docid": "1b3b75b7f7d2399f069f84668f5936e4",
"text": "The continent of Africa has lots of natural resources, but did not fare as well as the USA, so that alone doesn't explain everything. However, there was mass migration from the old world to the new world for the entire US history. 88 people control more wealth than the poorest half of the world (3.6B people or whatever). That is a relatively meaningless statistic, alone. Thanks to automation and globalization, intellectual property, and access to capital, I see the trend continuing until 9 people control 99.9999999% of the world's wealth. I may look up Ricardian theory.",
"title": ""
},
{
"docid": "4f9847f7b6ee037d2b5ce638f730adb0",
"text": "First is storage which is a big and a detrimental headache. Security is another big headache. Investing in precious metal has always been an investment opportunity in the countries in the east i.e. India and China because of cultural reason and due to absence of investment opportunities for the less fortunate ones. It isn't the case so in the West. Secondly what is the right an opportune moment is open to question. When the worlwide economy is up and running, that is probably the time to buy i.e. people would like to put money in use rather than store. The saying goes the other way when the economy is stagnating. Then there is also the case of waiting out the bad periods to sell your gold and silver. If you do want to buy precious metals then use a service like BullionVault, rather than doing those yourself. It takes care of the 2 big headaches, I mentioned earlier.",
"title": ""
},
{
"docid": "3ea59ac7efc1564bd9772aec0fc73a5c",
"text": "\"It's not clear that anything needs to go up if gold goes down. In a bubble, asset prices can just collapse, without some other asset increasing to compensate. Economies are not a zero-sum game. On the other hand, gold may fall when people decide they don't need to hoard some store of value that, to their minds, never changes. It could very well indicate that there is more confidence in the broader economy. I am not a gold bug, so I don't much see the point in \"\"investing\"\" in something that is non-productive and also inedible, but to each his own.\"",
"title": ""
},
{
"docid": "07da716d1d8347d82b6dc1b3a03cfbd2",
"text": "Some countries are considering stocking up on gold to shore up their notes. (Or so I heard) If this happens, gold will obviously become more rare. The price will then be valued not only by the buying and selling of it but also by the forced rarity of it.",
"title": ""
},
{
"docid": "af6fc06890c6a15e9c4c5206ac646982",
"text": "Since 2007 the world has seen a period of striking economic and financial volatility featuring the deepest recession since the 1930s despite this gold has performed strongly with its price roughly doubling since the global financial crisis began in mid-2007. 1. Gold and real interest rates: One of the factor that influences gold prices is real interest rate which is to some extent related to inflation. Since gold lacks a yield of its own, the opportunity cost of holding gold increases with a real interest rate increase and decreases with a fall in real interest rates. 2. Gold and the US dollar: The external value of the US dollar has been a significant influence on short-term gold price movements. The IMF estimated6 in 2008 that 40-50% of the moves in the gold price since 2002 were dollar-related, with a 1% change in the effective external value of the dollar leading to a more than 1% change in the gold price (Source). 3. Gold and financial stress: It is a significant and commonly observed influence on the short-term price of gold. In periods of financial stress gold demand may rise for a number of reasons: 4. Gold and political instability: It is another factor that can boost gold prices. Investor concerns about wars, civil conflicts and international tensions can boost demand for gold for similar reasons to those noted above for periods of financial stress. Gold‟s potential function as a „currency of last resort‟ in case of serious system collapse provides a particular incentive to hold it in case the political situation is especially severe. (Source) 5. Gold and official sector activity: The behaviour of central banks and other parts of the official sector can have an important impact on gold prices. One reason for this is that central banks are big holders of gold, possessing some 30,500 metric tons in 2010, which is approximately 15% of all above-ground gold stocks. As a result, central bank policies on gold sales and purchases can have significant effects, and these policies have been subject to considerable shifts over the decades. (Source) (Source of above graphs)",
"title": ""
},
{
"docid": "3c0be7f8345f898877a01ab341b099da",
"text": "\"Platinum use is pretty heavily overweight in industrial areas; according to the linked Wikipedia article, 239 tonnes of platinum was sold in 2006, of which 130 tonnes went to vehicles emissions control devices and another 13.3 tonnes to electronics. Gold sees substantial use as an investment as well as to hedge against economical decline and inflation, with comparatively little industrial (\"\"real world\"\", as some put it) use. That is their principal difference from an investment point of view. According to Wikipedia's article on platinum, ... during periods of economic uncertainty, the price of platinum tends to decrease due to reduced industrial demand, falling below the price of gold. Gold prices are more stable in slow economic times, as gold is considered a safe haven and gold demand is not driven by industrial uses. If your investment scenario is a tanking world economy, for reason of its large industrial usage, I for one would not count on platinum to not fall in price. Of course gold may fall in price as well, but since it is not primarily an industrial use commodity, I would personally expect gold to do better in such a scenario.\"",
"title": ""
},
{
"docid": "50b52264b9409f57b1b597876e96528a",
"text": "Technically, you could improve your odds in this hypothetical pre-apocolyptic economy by diversifying your digital and tangible precious-metal-commodity portfolio by going in with gold, silver, platinum, palladium, and others. That being said I'm not sure if one can access tangible stores of all these metals...",
"title": ""
},
{
"docid": "cdffb915d0dd1bd742154da933a60b2b",
"text": "The points given by DumbCoder are very valid. Diversifying portfolio is always a good idea. Including Metals is also a good idea. Investing in single metal though may not be a good idea. •Silver is pretty cheap now, hopefully it will be for a while. •Silver is undervalued compared to gold. World reserve ratio is around 1 to 11, while price is around 1 to 60. Both the above are iffy statements. Cheap is relative term ... there are quite a few metals more cheaper than Silver [Copper for example]. Undervalued doesn't make sense. Its a quesiton of demand and supply. Today Industrial use of Silver is more widespread, and its predecting future what would happen. If you are saying Silver will appreciate more than other metals, it again depends on country and time period. There are times when even metals like Copper have given more returns than Silver and Gold. There is also Platinum to consider. In my opinion quite a bit of stuff is put in undervalued ... i.e. comparing reserve ratio to price in absolute isn't right comparing it over relative years is right. What the ratio says is for every 11 gms of silver, there is 1 gm of Gold and the price of this 1 gm is 60 times more than silver. True. And nobody tell is the demand of Silver 60 times more than Gold or 11 times more than Gold. i.e. the consumption. What is also not told is the cost to extract the 11 gms of silver is less than cost of 1 gm of Gold. So the cheapness you are thinking is not 100% true.",
"title": ""
}
] |
fiqa
|
e60a46a6bd279cd62dd8362044bd0cd6
|
Should I switch/rollover my IRA to a Gold IRA at Regal Assets?
|
[
{
"docid": "403ee36ddc52aed7be3f9ff2502f494f",
"text": "\"The link you originally included had an affiliate code included (now removed). It is likely that your \"\"friend\"\" suggested the site to you because there is something in it for your \"\"friend\"\" if you sign up with their link. Seek independent financial advice, not from somebody trying to earn a commission off you. Don't trust everything you read online – again, the advice may be biased. Many of the online \"\"reviews\"\" for Regal Assets look like excuses to post affiliate links. A handful of the highly-ranked (by Google Search) \"\"reviews\"\" about this company even obscure their links to this company using HTTP redirects. Whenever I see this practice in a \"\"review\"\" for a web site, I have to ask if it is to try and appear more independent by hiding the affiliation? Gold and other precious metal commodities can be part of a diversified portfolio, a small part with some value as a hedge, but IMHO it isn't prudent to put all your eggs in that basket. Look up the benefits of diversification. It isn't hard to find compelling evidence in favor of the practice. You should also look up the benefits of low-fee passively-managed index funds. A self-directed IRA with a reputable broker can give you access to a wide selection of low-fee funds, not just a single risky asset class.\"",
"title": ""
},
{
"docid": "9a55bf800e3b8318039ed73b974c6f75",
"text": "Advantages of Gold IRA (regardless of where you're holding it): Disadvantages of Gold IRA: Instead, you can invest in trust funds like SLV (The ETF for silver) or GLD in your regular brokerage IRA. These funds negotiate their prices of storage, are relatively liquid, and shield you from the dangers of owning physical metal while providing opportunity to invest in it at market prices.",
"title": ""
}
] |
[
{
"docid": "db335a248bc9fc882e92419a5ed646ff",
"text": "I am assuming that you are talking about rolling a 401k over to an IRA since if you were rolling over to another 401k you probably would not have a choice as to where it would be. Ameriprise will generally have lower fees than JPMorgan. (Probably why your husband's mutual fund is with Ameriprise.) Additionally having both accounts with Ameriprise will better allow them to assist you with your long term financial planning. For these two reasons I would recommend rolling your account over to Ameriprise. No, I do not work for Ameriprise",
"title": ""
},
{
"docid": "a5aa979140c977b298717a423bd1af39",
"text": "\"I don't think there's a rule -- (I can't comment) but Brick cited IRS rules...but IMO Brick missed one thing -- @ashur668 is not looking for a distribution, but is looking for a rollover. My best guess: that this part of the ruleset is not well defined, and your (and my) employer have chosen to interpret any withdrawl as a \"\"distribution\"\", even if better characterized a rollover. A few months ago, I went so far as to explore if I could use a loophole -- my company had just gone through a merger; I was hoping I could rollover some or maybe all of my 401k to my IRA (I remember now, it would have been everything before starting roth 401k contributions). My company asserted this was not permitted, and further asserted that the rumors I had heard were mistaken that when we went through a company spin-off a few years before, that nobody under 59 1/2 was permitted to roll over. I did a quick search and found IRS topic 413 As far as I can tell, this topic is silent on the matter at hand. Topic 413 referred me to IRS Publication 575, where I started looking at the section on rollovers. I read some of it then got bored. Note that we're one step removed -- we are reading IRS publications and interpretations of IRS rules. I don't know that anybody here has read the actual tax law. There may be something in there that prevents companies from rolling over before 59 1/2 that is not well codified in IRS publications.\"",
"title": ""
},
{
"docid": "f16c76a2696d6a1c2ed33abc20bb70c5",
"text": "\"You ask about \"\"traditional IRA VS taxable (non-retirement) investment account.\"\" You already know about tax deductible IRAs, which are similar, mostly, to your 401(k). A Traditional IRA can have a non-deducted component. In a sense, it then functions similar to the fully pre-tax IRA as it grows tax free, but then withdrawals are made and taxes paid on the pro-rated not-yet-taxed money. It also offers the simple conversion to a Roth IRA. For those who have no current IRA with pre-tax money, a conversion will be tax free, for those with an existing pretax IRA, conversions are prorated for tax due, if the account had say $10,000, and $5,000 was post-tax, any conversion will have half taxed at your marginal rate.\"",
"title": ""
},
{
"docid": "56c02b180ce5bd2911593743154dff9d",
"text": "Unless I'm misunderstanding something, you don't need to move your assets into a new type of account to accomplish your goal of letting your money grow in a low cost vanguard index fund. Simply reallocate your assets within the Inherited IRA. If the brokerage you're in doesn't meet your needs (high transaction fees, no access to the Vanguard funds you're interested in) you can always move to a low cost brokerage. The new brokerage can help you transfer your assets so that the Inherited IRA remains intact. You will not have a tax burden if you do this reallocation and you'll be able to feel good about your diversification with a low cost index fund. You will, however, have to pay taxes on your RMD. Since you're young I can't imagine that your RMD will be greater than the $5k you can invest in a Roth IRA. If it is, you can open a personal account and keep letting the the money grow.",
"title": ""
},
{
"docid": "917d06f07b6ae6cb031bcbaebc4fe133",
"text": "\"Taxes are triggered when you sell the individual stock. The IRS doesn't care which of your accounts the money is in. They view all your bank and brokerage accounts as if they are one big account mashed together. That kind of lumping is standard accounting practice for businesses. P/L, balance sheets, cash flow statements etc. will clump cash accounts as \"\"cash\"\". Taxes are also triggered when they pay you a dividend. That's why ETFs are preferable to mutual funds; ETFs automatically fold the dividends back into the ETF's value, so it doesn't cause a taxable event. Less paperwork. None of the above applies to retirement accounts. They are special. You don't report activity inside retirement accounts, because it would be very hard for regular folk to do that reporting, so that would discourage them from taking IRAs. Taxes are paid at withdrawal time (or in Roth's, never.)\"",
"title": ""
},
{
"docid": "22028b9b164f152a7d630d133b5eaffe",
"text": "3 Yes, a big yes, it cannot go into the account it came from. Then both accounts >can't be touched for a year. 3) Actually it looks like you can reinvest it in the same IRA account. Based on IRS publication 590 http://www.irs.gov/publications/p590/ch01.html You can withdraw, tax free, all or part of the assets from one traditional IRA if you reinvest them within 60 days in the same or another traditional IRA. Because this is a rollover, you cannot deduct the amount that you reinvest in an IRA.",
"title": ""
},
{
"docid": "a73a32e9c0c175cc10a1014387ee433f",
"text": "\"Your are mixing multiple questions with assertions which may or may not be true. So I'll take a stab at this, comment if it doesn't make sense to you. To answer the question in the title, you invest in an IRA because you want to save money to allow you to retire. The government provides you with tax incentives that make an IRA an excellent vehicle to do this. The rules regarding IRA tax treatment provide disincentives, through tax penalties, for withdrawing money before retirement. This topic is covered dozens of times, so search around for more detail. Regarding your desire to invest in items with high \"\"intrinsic\"\" value, I would argue that gold and silver are not good vehicles for doing this. Intrinsic value doesn't mean what you want it to mean in this context -- gold and silver are commodities, whose prices fluctuate dramatically. If you want to grow money for retirement over a long period, of time, you should be invested in diversified collection of investments, and precious metals should be a relatively small part of your portfolio.\"",
"title": ""
},
{
"docid": "65d0e65fc15b89d957ea8f4aacf84849",
"text": "Brokerages are supposed to keep your money separate from theirs. So, even if they fail as a company, your money and investments are still there, and can be transferred to another brokerage. It doesn't matter if it's an IRA or taxable account. Of course, as is the case with MF Global, if illegally take their client's money (i.e., steal), it may be a different story. In such cases, SIPC covers up to $500K, of which $250K can be cash, as JoeTaxpayer said. You may be interested in the following news item from the SEC. It's about some proposed changes, but to frame the proposal they lay out the way it is now: http://www.sec.gov/news/press/2011/2011-128.htm The most relevant quote: The Customer Protection Rule (Rule 15c3-3). This SEC rule requires a broker-dealer to segregate customer securities and cash from the firm’s proprietary business activities. If the broker-dealer fails, these customer assets should be readily available to be returned to customers.",
"title": ""
},
{
"docid": "56c0eb30c722c9f3e6541bf13bab17b2",
"text": "\"You can have as many IRA accounts as you want (whether Roth or Traditional), so you can have a Roth IRA with American Funds and another Roth IRA with Vanguard if you like. One disadvantage of having too many IRA accounts with small balances in each is that most custodians (including Vanguard) charge an annual fee for maintaining IRA accounts with small balances but waive the fee if the balance is large. So it is best to keep your Roth IRA in just one or two funds with just one or two custodians until such time as investment returns plus additional contributions made over the years makes the balances large enough to diversify further. Remember also that you cannot contribute the maximum to each IRA; the sum total of all your IRA contributions (doesn't matter whether to Roth or to Traditional IRAs) for any year must satisfy the limit for that year. You can move money from one IRA of yours to another IRA (of the same type) of yours without any tax issues to worry about. Such movements (called rollovers or transfers) are not contributions and do not count towards the annual contribution limit. The easiest way to do move money from one IRA account to another IRA account is by a trustee-to-trustee transfer where the money goes directly from one custodian (American Funds in this case) to the other custodian (Vanguard in this case). The easiest way of accomplishing this is to call Vanguard or go online on their website, tell them that you are wanting to establish a Roth IRA with them, and that you want to fund it by transferring money held in a Roth IRA with American Funds. Give Vanguard the account number of your existing American Funds IRA, tell them how much you want to transfer over -- $1000 or $20,000 or the entire balance as the case may be -- and tell Vanguard to go get the money. In a few days' time, the money will appear in your new Vanguard Roth IRA and the American Funds Roth IRA will have a smaller balance, possibly a zero balance, or might even be closed if you told Vanguard to collect the entire balance. DO NOT approach American Funds and tell them that you want to transfer money to a new Roth IRA with Vanguard: they will bitch and moan and drag their heels about doing so because they are unhappy to lose your business, and will probably screw up the transfer. Talk to Vanguard only. They are eager to get their hands on your IRA money and will gladly take care of the whole thing for you at no charge to you. DO NOT cash in any stock shares, or mutual fund shares, or whatever is in your Roth IRA in preparation for \"\"cashing out of the old account\"\". There is a method where you take a \"\"rollover distribution\"\" from your American Funds Roth IRA and then deposit the money into your new Vanguard Roth IRA within 60 days, but I recommend most strongly against using this because too many people manage to screw it up. It is 60 days, not two months; the clock starts from the day American Funds cuts your check, not when you get the check, and it is stopped when the money gets deposited into your new account, not the day you mailed the check to Vanguard or the day that Vanguard received it, and so on. In short, DO NOT try this at home: stick to a trustee-to-trustee transfer and avoid the hassles.\"",
"title": ""
},
{
"docid": "b96a32d7ef61a8997c029cfe86745804",
"text": "It is not absolutely clear that transitioning all your retirement money from mutual funds, stocks, bonds, CDs etc to an annuity (either now, or just before retirement) is the best decision, especially once you are old enough to have to take Required Minimum Distributions (RMDs). The IRS says in Publication 590 Distributions from individual retirement annuities. If your traditional IRA is an individual retirement annuity, special rules apply to figuring the required minimum distribution. For more information on rules for annuities, see Regulations section 1.401(a)(9)-6. These regulations can be read in many libraries, IRS offices, and online at IRS.gov. I would recommend talking to a tax accountant before going your proposed route.",
"title": ""
},
{
"docid": "c7efc2dd021ddf9a2a03b9622a11cf2a",
"text": "I have managed two IRA accounts; one I inherited from my wife's 401K and my own's 457B. I managed actively my wife's 401 at Tradestation which doesn't restrict on Options except level 5 as naked puts and calls. I moved half of my 457B funds to TDAmeritrade, the only broker authorized by my employer, to open a Self Directed account. However, my 457 plan disallows me from using a Cash-secured Puts, only Covered Calls. For those who does not know investing, I resent the contention that participants to these IRAs should not be messing around with their IRA funds. For years, I left my 401k/457B funds with my current fund custodian, Great West Financial. I checked it's current values once or twice a year. These last years, the market dived in the last 2 quarters of 2015 and another dive early January and February of 2016. I lost a total of $40K leaving my portfolio with my current custodian choosing all 30 products they offer, 90% of them are ETFs and the rest are bonds. If you don't know investing, better leave it with the pros - right? But no one can predict the future of the market. Even the pros are at the mercy of the market. So, I you know how to invest and choose your stocks, I don't think your plan administrator has to limit you on how you manage your funds. For example, if you are not allowed to place a Cash-Secured Puts and you just Buy the stocks or EFT at market or even limit order, you buy the securities at their market value. If you sell a Cash-secured puts against the stocks/ETF you are interested in buying, you will receive a credit in fraction of a dollar in a specific time frame. In average, your cost to owning a stock/ETF is lesser if you buy it at market or even a limit order. Most of the participants of the IRA funds rely too much on their portfolio manager because they don't know how to manage. If you try to educate yourself at a minimum, you will have a good understanding of how your IRA funds are tied up to the market. If you know how to trade in bear market compared to bull market, then you are good at managing your investments. When I started contributing to my employer's deferred comp account (457B) as a public employee, I have no idea of how my portfolio works. Year after year as I looked at my investment, I was happy because it continued to grow. Without scrutinizing how much it grew yearly, and my regular payroll contribution, I am happy even it only grew 2% per year. And at this age that I am ready to retire at 60, I started taking investment classes and attended pre-retirement seminars. Then I knew that it was not totally a good decision to leave your retirement funds in the hands of the portfolio manager since they don't really care if it tanked out on some years as long at overall it grew to a meager 1%-4% because they managers are pretty conservative on picking the equities they invest. You can generalize that maybe 90% of IRA investors don't know about investing and have poor decision making actions which securities/ETF to buy and hold. For those who would like to remain as one, that is fine. But for those who spent time and money to study and know how to invest, I don't think the plan manager can limit the participants ability to manage their own portfolio especially if the funds have no matching from the employer like mine. All I can say to all who have IRA or any retirement accounts, educate yourself early because if you leave it all to your portfolio managers, you lost a lot. Don't believe much in what those commercial fund managers also show in their presentation just to move your funds for them to manage. Be proactive. If you start learning how to invest now when you are young, JUST DO IT!",
"title": ""
},
{
"docid": "fff73a674758f0ff127dcfb637b8dc0a",
"text": "Right you **don't** ever want to use that account for your traditional 401k rollovers. Realistically, you could *probably* still have it reclassified as a traditional IRA and roll your traditional 401ks into it, which was basically your original idea except none of the funds would be Roth; but if you see yourself ever potentially contributing to a Roth IRA going forward (which makes all the more sense if you have only traditional 401k funds in your retirement portfolio so far), there's nothing *wrong* with having both types of IRA at the same time. But no, don't cross the streams! :)",
"title": ""
},
{
"docid": "98a5868f2c408ae8be508c3de121f711",
"text": "Rolling a 401(k) to an IRA should be your default best option. Rolling a 401(k) to another 401(k) is rarely the best option, but that does happen. I've done it once when I started a job at a company that had a great 401(k) with a good selection of low-cost mutual funds. I rolled the 401(k) from one previous job in to this 401(k) to take advantage of it. In all other cases, I rolled 401(k)s from previous jobs to my Rollover IRA, which gave me the most freedom of investment options. Finally, with 401(k)-to-Roth IRA rollovers, it's important to decouple two concepts so you can analyze it as a sum of two transactions:",
"title": ""
},
{
"docid": "2284266afb6b9f175e37d333d58bd9eb",
"text": "\"Assuming my math is correct and that I'm not missing something about Roth investments, it appears to me that either option will work out exactly the same if you will be in the same tax bracket in retirement. This is true only if your average tax rate in retirement is the same as your current marginal rate. I'm surprised none of the answers mention this since it is the crux of your question! If you can deduct an IRA against your income taxes, it is almost always better option than the Roth equivalent. Marginal rates should not be compared to average rates or you will form all sorts of inaccurate conclusions. \"\"If you are in a lower tax rate in retirement traditional is better\"\" really means, \"\"if your average tax rate in retirement is lower than your current marginal rate, traditional is better\"\" - which for the overwhelming majority of Americans is the case. Consider the following. Let's say your intend to contribute $1000 in one year (making $2k) and withdraw it the next that is your only income in that year. Your tax brackets look like: This is quite simplified but for this purpose will illustrate precisely why comparisons like you are making are very misleading. In this case you can put $1000 in and pay no income tax at all (because you deduct it). You then withdraw $1000 the next year. The first $500 you withdraw you pay no taxes on and the next $500 has a tax rate of 15%, for a total tax of of $75. However - this is a tax against your entire withdrawal of $1000, so your average tax rate (this is important! average is different than marginal) is only 7.5% and you are left with $925. In this case you can only contribute $850 to the IRA because you are taxed against the money at your marginal rate (15%). When you withdraw it, you don't pay any taxes and are left with the entire $850 $850. This is less than the above, because you are taxed the whole amount at your previous marginal rate. If however your tax rate in retirement was 30% for everything above $500, only then are the two scenarios equal. Your marginal tax rate in retirement has to be very high relative to your current tax rate for the Roth to ever catch up and be better. If you are able to deduct an IRA contribution, it will almost always be the best option. The average federal income tax rate on middle class families has not changed dramatically enough over the past 50 years to be above normal marginal tax rates - even at the 15% federal tax bracket, your marginal rate is still higher than the highest average tax rate for the past 50 years by at least 3% and normally significantly so. The reason I make this point about middle class marginal rates is that the majority of \"\"taxes might be higher in retirement!\"\" is very unlikely to be the case in a meaningful way given the past 50 years. However if you are in the top tax rate you are paying historic low tax rates (by a factor of nearly 3), but also observe you can't do either IRA since you must make $400k/year. The difference for middle class is no where near as noticeable. Keep in mind if you can't deduct, there is no reason to not contribute to the Roth. There are other factors contributing to the traditional/Roth decision. This answer only addresses the specifics in your question.\"",
"title": ""
},
{
"docid": "8ed05ba03b5f9286a96d556596e82a02",
"text": "\"What you're describing is a non-deductible traditional IRA. That is what happens when your employer 401K or your high income disqualifies gou from using a traditional IRA the normal way. Yes, non-deductible traditional IRAs are stupid.** Now let's be clear on the mechanism behind the difference. There's an axiom of tax law that the same money can't be taxed twice. This is baked so deep into tax law that it often isn't even specified particularly. The IRS is not allowed to impose tax on money already taxed, i.e. The original contribution on an ND Trad IRA. So this is not a new kind of IRA, it is simply a Trad IRA with an asterisk. **But then, some say so are deductible traditional IRAs when compared to the Roth. The real power of an ND Trad IRA is that it can be converted to Roth at all income levels. This is called the \"\"Roth Backdoor\"\". It combines three factors. Contribute to an ND Trad IRA, stick it in a money market/sweep fund, and a week later convert to Roth, pay taxes on the 17 cents of growth in the sweep fund since the rest was already taxed. The net effect is to work the same as a Roth contribution - not tax deductible, becomes a Roth, and is not taxed on distribution. If you already have traditional IRA money that you contributed that wasn't taxed, this really screws things up. Because you can't segment or LIFO your IRA money, the IRS considers it one huge bucket, and requires you draw in proportion. EEK! Suppose you contribute $5000 to an IRA in a non-deductible mode. But you also have a different IRA funded with pretax money that now has $45,000. As far as IRS is concerned, you have one $50,000 IRA and only $5000 (10%) is post-tax. You convert $5000 to Roth and IRS says 90% of that money is taxable, since it's the same pool of money. You owe taxes on all of it less the $500 fraction that was pre-taxed, and $4500 of already-taxed IRA remains in the account. The math gets totally out-of-hand after just a couple of conversions. Your best bet is to convert the whole shebang at one time -- and to avoid a monstrous tax hit, do this in a gap year.\"",
"title": ""
}
] |
fiqa
|
971affea2ce998ad872a916d12a91672
|
How do you find reasonably priced, quality, long lasting clothing?
|
[
{
"docid": "c48155123bdf182f41b463d4c74562ae",
"text": "On the quality angle a big part of it is experience, but the biggest thing is careful observation. You have to take a close, critical look at any article of clothing. (This holds true for just about any purchase.) As far as finding them for reasonable prices it's the usual thing: sales and buying them second-hand. Finally, regarding maintenance:",
"title": ""
},
{
"docid": "664ce5eb58362d39930520f5e54f6310",
"text": "The idea that you should buy quality, long lasting clothes shouldn't go unchallenged. It's just not true for everybody. If you have a job or a lifestyle that makes it so your clothes are going to get worn out fast regardless of quality, buying expensive clothes doesn't make sense. With that said: look for heavier-feeling fabrics, avoid colors that will fade (or worse: bleed into your other clothes in the wash). Check the laundry instructions so you can see whether they're on the delicate end of the spectrum. Re: how to extend the life: avoid bleach. Even color safe bleach contains peroxide which can break down fabrics faster.",
"title": ""
},
{
"docid": "54a445ed4a0af699f5b0ac64fa97255c",
"text": "Use resources like Consumer Reports and recommendations from like-minded friends to figure out brands which have a reputation for making quality clothes. Then trust, but verify. Ideally have a friend who sews a lot go with you on a clothing expedition if you don't know how to determine quality in clothing. People who sew knew their fabrics, and this could be very helpful to you. Start at places that are known for quality clothing, but make sure the reputation hasn't outlived reality. I'd look for: Once you've identified places that you can trust, wait for sales at those stores. I've found that shopping sales at department stores (or better, places like L. L. Bean) is cheaper than a discount retailer and much easier. Even cheaper, go to a thrift store and look for those brands in timeless styles. Your mileage will vary in terms of the what people throw out in your area. Thrift stores work extremely well in high cost of living areas where people give away nearly new items.",
"title": ""
},
{
"docid": "85310efc673c825bf8a414999cdf0ff2",
"text": "Are specific brand recommendations allowed? I'm a big fan of Lands' End. They have good quality clothing at reasonable prices in all the basic styles. They have great customer service and you con order online and avoid clothes shopping at the mall (which I hate).",
"title": ""
},
{
"docid": "9a53754b86746bae0943ef36cb00374b",
"text": "According to this http://shine.yahoo.com/event/financiallyfit/cheapest-days-to-shop-online-2301854/ Tuesday is the best day of the week to buy men's apparel.",
"title": ""
},
{
"docid": "737ae21dbe4d97bbfa38d61400848399",
"text": "The best way to find good quality is to check the garment tag: What kind of material is it made of? Jersey 100% cotton or any 100% cotton is one of the best quality material for most casual clothing. Then, you should touch it (designer step/touching). You will get better along the way. If you think you will like it, it may be a good quality. You should try it. and look for similar material when shopping. It does not matter the store where you shop, you should check the garment quality because even at the expensive stores you can find bad quality. Quality in Stitch: you should check the the garment stitch, look at the top and underneath stitches, watch for good and consist stitching pattern. especially the sides and armholes underneath of the garment. Style is something personal. Everybody has different style, but stores are classified by age targeting. If you can find a store that usually made your style, good quality material at reasonable price. you should consider shop there. Most of the time, it will cost a little bit more or much more. BUT CHEAP IS EXPENSIVE!! you end up spending more money at the end of the year. Reasonable means a fair price for both parties, You and the seller. Neither cheap or expensive.",
"title": ""
}
] |
[
{
"docid": "645f3af95a25383d388d8d95adaca232",
"text": "For the CPI, there is actually federal employees whose job it is to visit various stores to collect the prices of specific items (boy's size-14 collared shirt made of 97 percent cotton). Planet Money did a great podcast on this, actually following one of these people for a day.",
"title": ""
},
{
"docid": "6249769e1863bcae3d9c17157119480f",
"text": "\"Zero? Ten grand? Somewhere in the middle? It depends. Your stated salary, in U.S. dollars, would be high five-figures (~$88k). You certainly should not be starving, but with decent contributions toward savings and retirement, money can indeed be tight month-to-month at that salary level, especially since even in Cardiff you're probably paying more per square foot for your home than in most U.S. markets (EDIT: actually, 3-bedroom apartments in Cardiff, according to Numbeo, range from £750-850, which is US$1200-$1300, and for that many bedrooms you'd be hard-pressed to find that kind of deal in a good infield neighborhood of the DFW Metro, and good luck getting anywhere close to downtown New York, LA, Miami, Chicago etc for that price. What job do you do, and how are you expected to dress for it? Depending on where you shop and what you buy, a quality dress shirt and dress slacks will cost between US$50-$75 each (assuming real costs are similar for the same brands between US and UK, that's £30-£50 per shirt and pair of pants for quality brands). I maintain about a weeks' wardrobe at this level of dress (my job allows me to wear much cheaper polos and khakis most days and I have about 2 weeks' wardrobe of those) and I typically have to replace due to wear or staining, on average, 2 of these outfits a year (I'm hard on clothes and my waistline is expanding). Adding in 3 \"\"business casual\"\" outfits each year, plus casual outfits, shoes, socks, unmentionables and miscellany, call it maybe $600(£400)/year in wardrobe. That doesn't generally get metered out as a monthly allowance (the monthly amount would barely buy a single dress shirt or pair of slacks), but if you're socking away a savings account and buying new clothes to replace old as you can afford them it's a good average. I generally splurge in months when the utilities companies give me a break and when I get \"\"extra\"\" paychecks (26/year means two months have 3 checks, effectively giving me a \"\"free\"\" check that neither pays the mortgage nor the other major bills). Now, that's just to maintain my own wardrobe at a level of dress that won't get me fired. My wife currently stays home, but when she worked she outspent me, and her work clothes were basic black. To outright replace all the clothes I wear regularly with brand-new stuff off the rack would easily cost a grand, and that's for the average U.S. software dev who doesn't go out and meet other business types on a daily basis. If I needed to show up for work in a suit and tie daily, I'd need a two-week rotation of them, plus dress shirts, and even at the low end of about $350 (£225) per suit, $400 (£275) with dress shirt and tie, for something you won't be embarrassed to wear, we're talking $4000 (£2600) to replace and $800 (£520) per year to update 2 a year, not counting what I wear underneath or on the weekends. And if I wore suits I'd probably have to update the styles more often than that, so just go ahead and double it and I turn over my wardrobe once every 5 years. None of this includes laundering costs, which increase sharply when you're taking suits to the cleaners weekly versus just throwing a bunch of cotton-poly in the washing machine. What hobbies or other entertainment interests do you and your wife have? A movie ticket in the U.S. varies between $7-$15 depending on the size of the screen and 2D vs 3D screenings. My wife and I currently average less than one theater visit a month, but if you took in a flick each weekend with your wife, with a decent $50 dinner out, that's between $260-$420 (£165-270) monthly in entertainment expenses. Not counting babysitting for the little one (the going rate in the US is between $10 and $20 an hour for at-home child-sitting depending on who you hire and for how long, how often). Worst-case, without babysitting that's less than 5% of your gross income, but possibly more than 10% of your take-home depending on UK effective income tax rates (your marginal rate is 40% according to the HMRC, unless you find a way to deduct about £30k of your income). That's just the traditional American date night, which is just one possible interest. Playing organized sports is more or less expensive depending on the sport. Soccer (sorry, football) just needs a well-kept field, two goals and and a ball. Golf, while not really needing much more when you say it that way, can cost thousands of dollars or pounds a month to play with the best equipment at the best courses. Hockey requires head-to-toe padding/armor, skates, sticks, and ice time. American football typically isn't an amateur sport for adults and has virtually no audience in Europe, but in the right places in the U.S., beginning in just a couple years you'd be kitting your son out head-to-toe not dissimilar to hockey (minus sticks) and at a similar cost, and would keep that up at least halfway through high school. I've played them all at varying amateur levels, and with the possible exception of soccer they all get expensive when you really get interested in them. How much do you eat, and of what?. My family of three's monthly grocery budget is about $300-$400 (£190-£260) depending on what we buy and how we buy it. Americans have big refrigerators (often more than one; there's three in my house of varying sizes), we buy in bulk as needed every week to two weeks, we refrigerate or freeze a lot of what we buy, and we eat and drink a lot of high-fructose corn-syrup-based crap that's excise-taxed into non-existence in most other countries. I don't have real-world experience living and grocery-shopping in Europe, but I do know that most shopping is done more often, in smaller quantities, and for more real food. You might expect to spend £325 ($500) or more monthly, in fits and starts every few days, but as I said you'd probably know better than me what you're buying and what it's costing. To educate myself, I went to mysupermarket.co.uk, which has what I assume are typical UK food prices (mostly from Tesco), and it's a real eye-opener. In the U.S., alcohol is much more expensive for equal volume than almost any other drink except designer coffee and energy drinks, and we refrigerate the heck out of everything anyway, so a low-budget food approach in the U.S. generally means nixing beer and wine in favor of milk, fruit juices, sodas and Kool-Aid (or just plain ol' tap water). A quick search on MySupermarkets shows that wine prices average a little cheaper, accounting for the exchange rate, as in the States (that varies widely even in the U.S., as local and state taxes for beer, wine and spirits all differ). Beer is similarly slightly cheaper across the board, especially for brands local to the British Isles (and even the Coors Lite crap we're apparently shipping over to you is more expensive here than there), but in contrast, milk by the gallon (4L) seems to be virtually unheard of in the UK, and your half-gallon/2-liter jugs are just a few pence cheaper than our going rate for a gallon (unless you buy \"\"organic\"\" in the US, which carries about a 100% markup). Juices are also about double the price depending on what you're buying (a quart of \"\"Innocent\"\" OJ, roughly equivalent in presentation to the U.S. brand \"\"Simply Orange\"\", is £3 while Simply Orange is about the same price in USD for 2 quarts), and U.S.-brand \"\"fizzy drinks\"\" are similarly at a premium (£1.98 - over $3 - for a 2-liter bottle of Coca-Cola). With the general preference for room-temperature alcohol in Europe giving a big advantage to the longer unrefrigerated shelf lives of beer and wine, I'm going to guess you guys drink more alcohol and water with dinner than Americans. Beef is cheaper in the U.S., depending on where you are and what you're buying; prices for store-brand ground beef (you guys call it \"\"minced\"\") of the grade we'd use for hamburgers and sauces is about £6 per kilo in the UK, which works out to about $4.20/lb, when we're paying closer to $3/lb in most cities. I actually can't remember the last time I bought fresh chicken on the bone, but the average price I'm seeing in the UK is £10/kg ($7/lb) which sounds pretty steep. Anyway, it sounds like shopping for American tastes in the UK would cost, on average, between 25-30% more than here in the US, so applying that to my own family's food budget, you could easily justify spending £335 a month on food.\"",
"title": ""
},
{
"docid": "9e5f422023e165364beb530f63b9b19c",
"text": "Given the universal crisis and how difficult it’s to gross money these days, people are reconsidering allowances and wise money management. Louis vuitton online sale are virtually each where, however sadly, only a certain folks are able to purchase them with the costly rate tags that come along with them. But, designer bargains really are the stuffs to scout for when it’s the matter of new designer fashion at a much more reasonable.",
"title": ""
},
{
"docid": "6931d197725d642af6e205046315f1b0",
"text": "Get ready to impress people around you. Just opt for Men’s linen vests that never go out of fashion& make you look smart every time you wear them. Go for smart, casual tailored look this summer. There are a number of choices available, reflect your best style with Men’s linen vest.",
"title": ""
},
{
"docid": "d3943b7471b6efa9074161cf5168f967",
"text": "Smart. Add in daily necessities like toothpaste, disposable razors and toilet paper and you've got Walmart and Costco by the balls. Most people are spending their money on consumables and are much more conservative these days. If I were them I'd stick to food and the daily needs and not even bother with clothing and furniture and such. Keep it simple I think. In and out.",
"title": ""
},
{
"docid": "c0d07234351928020532712416bfd150",
"text": "Years ago, Costco had amazing quality made in italy wool pants. The quality to price ratio was unbelievable. They stopped getting them from the italian manufacturer and they suck now. I imagine that Costco did what you were talking about. In the end, it was bad for the customer.",
"title": ""
},
{
"docid": "00c7990716b67fbb8f3fc247169a0789",
"text": "You're missing out by not buying shirts online. I guess it depends on the type of shirt, but I'll never buy a men's dress shirt in a store again outside of an emergency. In store shirts are always crazy expensive, poor quality, and a terrible fit. Online I can get the precise size, fabric, and construction I want, for about a third cheaper than in store.",
"title": ""
},
{
"docid": "f45108e61b6b73dc098892517e82086a",
"text": "\"Best strategy that has worked for me is to remember first of all that you hardly ever need anything \"\"right now\"\". Try this: if you see something you want to buy, leave it for at least two weeks, better yet a month. If after that time you have hardly thought about it, then you almost certainly don't need it. But if you've thought quite a lot about owning it and how it will be beneficial, then perhaps it's worth picking up. You will probably find that a small percentage of things you'd like to buy make it through that screening period.\"",
"title": ""
},
{
"docid": "84a39ac68628341d9ed01aaf95797520",
"text": "I speak as a person without kids, but I'll give this a shot anyway, using my memory of the perspective I had when I was a kid. My advice is, if the kids are young enough to not care much, don't be afraid of the thrift store. My parents got a bunch of clothes from the thrift store as I was growing up (around elementary school age) and I didn't care at all. When I got to be older, (middle school age) shopping at Target and K-mart didn't seem bad either. By the time the kids are old enough to really care beyond, they are probably old enough to get their own part-time jobs and get their own clothing. I however, am probably naive, as I still care little for such things, and judging from popular culture, most care about them a great deal.",
"title": ""
},
{
"docid": "2c8d3cc94e14c1df6018f1436806179e",
"text": "Fining fitting plus size clothes for men can be quite a frustrating process. Most stores will only stock regular sizes for clothes. However, there are options that a plus size wearer can pursue. For years XXLLENT have pride in producing well made large men's plus size clothing for big and curvy men.",
"title": ""
},
{
"docid": "40d286a9dc6a851f6aaffc86d1ef4c92",
"text": "With our “Budget Closeouts” you can save a lot of money as we are agents and Buy closeout Apparel have a more affordable Towels and Bath items than other closeout sources. All products are below general costs. Purchase a few plenty and get even larger discounts.",
"title": ""
},
{
"docid": "7f744b5ad272acd5f438d51544aaee43",
"text": "Fashioncornerstone.com is an amazing online store in the USA from where you can purchase the most stylish stuffs for men and women at very reasonable prices. Free Delivery Available in the USA! Get up to 80% off all summer!",
"title": ""
},
{
"docid": "c09e215e6a32255c048d38b6554d40d4",
"text": "Long term taxation cannot by itself surpress GDP if those same taxes are being used on goods and services. It can surpress growth, and cause a fall off if people are leaving the area or closing businesses but at some point it'll hit an equilibrium point. GDP does include government spending after all.",
"title": ""
},
{
"docid": "35d91a387845c71bad1e0be0ab7a2293",
"text": "\"Only you can decide whether it's wise or not given your own personal circumstances. Brexit is certainly a big risk, and noone can really know what will happen yet. The specific worries you mention are certainly valid. Additionally you might find it hard to keep your job or get a new one if the economy turns bad, and in an extreme \"\"no deal\"\" scenario you might find yourself forced to leave - though I think that's very unlikely. House prices could also collapse leaving you in \"\"negative equity\"\". If you're planning on staying in the same location in the UK for a long time, a house tends to be a worthwhile investment, particularly as you always need somewhere to live, so owning it is a \"\"hedge\"\" against prices rising. Even if prices do fall, you do still have somewhere to live. If you're planning on going back to your home country at some point, that reduces the value of owning a house. If you want to reduce your risk, consider getting a mortgage with a long-term fixed rate. There are some available for 10 years, which I'd hope would be enough to get us over most of the Brexit volatility.\"",
"title": ""
}
] |
fiqa
|
476df9e397b3f16ed537bcfd9d9c7a0e
|
Are Shiller real-estate futures and options catching on with investors?
|
[
{
"docid": "562f6e8c6ac0f96ba86bcf9bd451bcfc",
"text": "\"The Case-Schiller macro derivatives market has seen very minimal activity. For example, in the three regional markets of San Diego (SDG), Boston (BOS) and Los Angeles (LAX) on 28 November 2011, there was zero trading volume, no trades settled, no open interest. * Source: CME Futures and options activity[PDF] for all 20 regional indices. Why haven't these real-estate futures caught on with investors? Keep in mind that the CME introduced these indices, with support from Professor Shiller and partner Standard & Poor's several years ago. The CME seems committed to wait this out, as they have shown no indication of dropping the Case-Shiller indices. There are alternative real-estate investment securities to the Case-Shiller indices. I don't think the market of investors is so small that Case-Shiller has been, in effect, \"\"crowded out\"\" by them. I think it is more likely a matter of known quantities. Also, I don't know how well these alternatives are doing! Additional reference: CME spec's for Case-Shiller index futures and options contracts.\"",
"title": ""
},
{
"docid": "d2c41bc831f6e1d471f900536d617499",
"text": "\"In my experience, Shiller is always way before his time with his predictions and often it comes at too early a point for anyone actually making some money to care about. His view is very long term - and I trust his predictions, because he so accurately predicted so many of the homepocalypse, and the measures that would follow. He even predicted that there would be bailouts in his book \"\"Irrational Exuberance\"\". His opinons were poo-poo'd as doom and gloom and manipulative until every piece started falling apart in the specific order of events (give or take) that they did. I personally think people like Dr. Shiller make bold predictions that are hard to swallow. The derivatives market is a bit skittish about rolling into bull territory with any kind of housing index, but Warren Buffet's old adage to \"\"buy when everyone is selling and sell when everyone is buying.\"\" (paraphrase). I see this as a good long-term investment because I trust Shiller's judgement, he stuck to his guns when the doubts were lobbed at him incessantly (and Krugman, et. al. to some extent), and he turned out to be more than vindicated. To me, these kinds of sources are usually pretty sound. The man knows what he's talking about, and I wouldn't mind picking up a piece of that action, especially if the market just doesn't trust any real estate investments. It's pretty easy to realize that right now housing will be undervalued and now that mortgage applications are (supposedly) stricter, I think there's a good argument to be made that this economist should continue to exceed expectations.\"",
"title": ""
}
] |
[
{
"docid": "739db29878aca072f67ad3a13df5af3d",
"text": "Are things getting better yet or are things still a mess? I have heard people say that right now is a 'good' time to take out a loan, and that it is a buyer's market in real estate. Something to consider here is what intentions do you have for the real estate you'd buy. If you intend to sell quickly, then selling into a buyer's market doesn't sound like a great idea. While real estate may be cheap, there can be the question of how long do you think this will last? How much of a burden on time and energy are you expecting to take if you do switch residences or buy an investment property? But more specifically, are there any hidden details that come with taking a loan out when interest rates are low that I should be aware of? I'd be careful to note if the rate is fixed for the entire length of the loan or does it adjust over time. If it can adjust then there is the possibility of those adjustments going up.",
"title": ""
},
{
"docid": "aaa449c638a72dc718f27f45a6c40907",
"text": "\"Probably but not necessarily. Your question could also be posed regarding cash & carry for commodities in contango: If I can take delivery on the gold now, short the gold next year and make delivery then, paying the storage fees, is this an arbitrage opportunity? It is in the sense that you know your delivery and the money you will make, but it's not in the sense that until delivery (or execution in the options case) you are still on the hook for the margins due from price fluctuations. Additionally you need to consider what ROI you will make from the trade. Even though it's \"\"guaranteed\"\" it may be less than what you can earn from other \"\"zero risk\"\" opportunities.\"",
"title": ""
},
{
"docid": "278f315a77e4a4a26c0a02e978f6be6f",
"text": "This fortune article is referenced in his either 2003 or 2004 annual report in which he does say that the market will not likely return much in the future and generally talks numbers. I am also a value investor, such that I can be in this environment and believe there is a bit of value in knowing where you think the market is headed but the real value is in underwriting each deal. In long, I agree with you",
"title": ""
},
{
"docid": "04bc38af33a77e553afb790380e0d30b",
"text": "You seem to underestimate the risk of this deal for the inverstors. A person purchasing a residence is happy to pay $70K instead of $150K now, and the only risk they take is that the construction company fails to build the condo. Whatever happens on the estate market in two years, they still saved the price difference between the price of complete apartments and to-be-build apartments (which by the way may be less than $150K-$70K, since that $150K is the price on a hot market in two years). However, an investor aiming to earn money counts on that the property will actually cost $150K in two years, so he's additionally taking the risk that the estate market may drop. Should that happen, their return on investment will be considerably lower, and it's entirely possible they will make a loss instead of a profit. At this point, this becomes yet another high risk investment option, like financing a startup.",
"title": ""
},
{
"docid": "b8ae6f768d8dcfb58a1b2409faa1224d",
"text": "\"There's a market for single stock futures. The market (however small) is OneChicago, \"\"an Equity Finance Exchange offering security futures products.\"\" I don't know how easy access is for retail investors.\"",
"title": ""
},
{
"docid": "50532dba417e7878dd4042a85918e8ac",
"text": "Look into commodities futures & options. Unfortunately, they are not trivial instruments.",
"title": ""
},
{
"docid": "e87756a237f5292d6dd49a12b7a03ee6",
"text": "Just short GS. http://www.google.com/finance?q=gs Much more fun. That list looks like a global macro short list. Shorting XOM, JNJ are systemic risk plays. The guys that stand out for specific risk: INTC AMZN ABT LMT BMY AMGN CMG AVB, I stopped reading after that. fundamentally I would long INTC as them and AMD are the market for CPU's. Maybe people are betting against pc's... AMZN has a retardedly high facebook like P/E. I don't know enough about most of the risk.",
"title": ""
},
{
"docid": "efce77f31deaafbffcf362e30aea9e0d",
"text": "\"VNQ only holds ~16% residential REITs. The rest are industrial, office, retail (e.g. shopping malls), specialized (hotels perhaps?) etc. Thus, VNQ isn't as correlated towards housing as you might have assumed just based on it being about \"\"real estate.\"\" Second of all, if by \"\"housing\"\" you mean that actual houses have gone up appreciably, then you ought to realize that residential REITs seldom hold actual houses. The residential units held tend primarily to be rental apartments. There is a relationship in prices, but not direct.\"",
"title": ""
},
{
"docid": "ef598db00822ea62dc1ec99fb6904b32",
"text": "Thanks. Just to clarify I am looking for a more value-neutral answer in terms of things like Sharpe ratios. I think it's an oversimplification to say that on average you lose money because of put options - even if they expire uselessly 90% of the time, they still have some expected payoff that kicks in 10% of the time, and if the price is less than the expected payoff you will earn money in the long term by investing in put options (I am sure you know this as a PhD student I just wanted to get it out there.)I guess more formally my question would be are there studies on whether options prices correspond well to the diversification benefits they offer from an MPT point of view.",
"title": ""
},
{
"docid": "cbc8773cb5a67bbf55cba1b513b1816b",
"text": "\"Due to the zero percent interest rate on the Euro right now you won't find any investment giving you 5% which isn't equivalent to gambling. One of the few investment forms which still promises gains without unreasonable risks right now seems to be real estate, because real estate prices in German urban areas (not so in rural areas!) are growing a lot recently. One reason for that is in fact the low interest rate, because it makes it very cheap right now to take a loan and buy a home. This increased demand is driving up the prices. Note that you don't need to buy a property yourself to invest in real estate (20k in one of the larger cities of Germany will get you... maybe a cardboard box below a bridge?). You can invest your money in a real estate fund (\"\"Immobilienfond\"\"). You then don't own a specific property, you own a tiny fraction of a whole bunch of different properties. This spreads out the risk and allows you to invest exactly as much money as you want. However, most real estate funds do not allow you to sell in the first two years and require that you announce your sale one year in advance, so it's not a very liquid asset. Also, it is still a risky investment. Raising real estate prices might hint to a bubble which might burst eventually. Financial analysts have different opinions about this. But fact is, when the European Central Bank starts to take interest again, then the demand for real estate property will drop and so will the prices. When you are not sure what to do, ask your bank for investment advise. German banks are usually trustworthy in this regard.\"",
"title": ""
},
{
"docid": "0a6368f4bfb24cd03b1a1c0d42ad2813",
"text": "My 2 cents:As I understand it, stochastic math doesn't seem to cut it for pricing derivatives. Ito's Lemma and Feynman-Kac SDE solutions both impose constraints on higher order moments of the PDF. So you can't just drop in your forecasted return distribution and get a price. All the fixes seem somewhat ad hoc. Shit gets real when you move from options to their first cousin: term structure of interest rates. The Heath-Jarrow-Morton framework was intractable in the original paper, but there are some promising simplifying assumptions. I think there's real money there for someone who works that out and comes up with new arbitrage possibilities. On the other hand, you get some phenomenally bad math like the Gaussian copula that was used to value the subprime tranches and bring them a mind-boggling AAA rating. A lot of folks here do fancy nonlinear time series analysis to forecast the 1st, 2nd & higher moments of asset returns. Not a lot of theoretical basis (well neuroscience), but if you can do it better you win.",
"title": ""
},
{
"docid": "5a121c4f397ec5791d0fcf6b3cbdeb2e",
"text": "\"One way to \"\"get into the real estate market\"\" is to invest your money in a fund which has its value tied to real estate. For example, a Real Estate Investment Trust. This fund would fluctuate largely inline with the property values in the area(s) where the fund puts its money. This would have a few (significant) changes from 'traditional' real estate investing, including:\"",
"title": ""
},
{
"docid": "f7c7d5c317bd7ca3d56dfc906b82d5a8",
"text": "If your planning on shorting the stocks be careful, while the value of the retail sector may be declining there will be a lot of back and forth over the next ten years, and as REITs discounts to nav increases, there is huge opportunities for buyouts from developers who have other use ideas for the real estate. The real estate will always have value, even if it's not as a shopping center.",
"title": ""
},
{
"docid": "c6006d5d44a26b2d1418cbde824c60d6",
"text": "Ok, see that was my thinking too. Historically, stocks and land values have always gone up, even after the depression. So, it seems to me, that if you have a buy and hold strategy with a horizon of 10-20 years, then you should be fine. Is my thinking realistic along those lines?",
"title": ""
},
{
"docid": "6194e70294709a000a67a8082c3515f1",
"text": "\"I think anyone who is seriously contemplating a real estate purchase needs to sit down and read some history -- in particular the accounts of the 1930's and what happened to people who jumped into real estate in the midst of the depression. If you're not aware: by and large, what happened is they lost their asses: the property continues to fall in value, and then they're on the hooked for increasing taxes as local and state governments raise taxes in a desperate attempt to plug budget holes. And, of course, interest rates are headed nowhere but up. That will inversely impact your home's value, given that most people buy homes exactly like you're thinking about them: not how much the home is worth, but rather how much payment can you afford (as rates go up, you can afford less). A contemporary piece which has lots of accounts of this over multiple years is [The Great Depression - A Diary](http://www.amazon.com/The-Great-Depression-A-Diary/dp/1586489011). IMHO real estate is to be avoided until well after a bottom has been reached, and that's IMHO still some years away. Someone coming out of college now should ferret away as much money as possible, live as cheaply as possible, and stay far, far away from thoughts of \"\"gee, it sure would be a good idea to go drop half a million dollars on a house when I'm making $70K.\"\" While you're predicting raises and employment, neither is safe to take for granted. Indeed, many folks thought that in the late 00's and got absolutely destroyed financially as a result.\"",
"title": ""
}
] |
fiqa
|
fccca8cc84cb308a87dab7f5bd069532
|
What does “Net Depreciation in Fair Value” mean on a financial report?
|
[
{
"docid": "3ef191bd6b7281c763458553dff54681",
"text": "First, the annual report is just that, a snapshot that shows value at the beginning and end of the period. Beginning = Aug 08 = $105B End = Aug 09 = $89B Newsletter date May 10 = $96B Odd they chose end of August as it's not even a calendar quarter end. The $16B was market loss during that period. Nearly half of that seemed to be recovered by the time this newsletter came out. The balance sheet also has to show deposits and payments made to existing retirees. I haven't looked at the S&P numbers for those dates, but my gut says this is right. The market tanked and the plan was down, but not too bad. Protect? The PBGC guarantees pensions up to a certain limit. I believe that in general, teachers are below the limit and are not at risk of a reduced benefit. You do need to check that your plan is covered. If not, I believe the state would take over directly. I hope this helps.",
"title": ""
}
] |
[
{
"docid": "8f20d184f04a39ab58bee86c211d7adc",
"text": "\"To answer your question briefly: net income is affected by many things inside and outside of management control, and must be supplemented by other elements to gain a clear picture of a company's health. To answer your question in-depth, we must look at the history of financial reporting: Initially, accounting was primarily cash-based. That is, a business records a sale when a customer pays them cash, and records expenses when cash goes out the door. This was not a perfectly accurate system, as cashflow might be quite erratic even if sales are stable (collection times may differ, etc.). To combat problems with cash-based accounting, financial reporting moved to an accrual-based system. An accrual is the recording of an item before it has fully completed in a cash transaction. For example, when you ship goods to a customer and they owe you money, you record the revenue - then you record the future collection of cash as a balance sheet item, rather than an income statement item. Another example: if your landlord charges you rent on December 31st for the past year, then in each month leading up to December, you accrue the expense on the income statement, even though you haven't paid the landlord yet. Accrual-based accounting leaves room for accounting manipulation. Enron is a prime example; among other things, they were accruing revenue for sales that had not occurred. This 'accelerated' their income, by having it recorded years before cash was ever collectible. There are specific guidelines that restrict doing things like this, but management will still attempt to accelerate net income as much as possible under accounting guidelines. Public companies have their financial statements audited by unrelated accounting firms - theoretically, they exist to catch material misstatements in the financial statements. Finally, some items impacting profit do not show up in net income - they show up in \"\"Other Comprehensive Income\"\" (OCI). OCI is meant to show items that occurred in the year, but were outside of management control. For example, changes in the value of foreign subsidiaries, due to fluctuations in currency exchange rates. Or changes in the value of company pension plan, which are impacted by the stock market. However, while OCI is meant to pick up all non-management-caused items, it is a grey area and may not be 100% representative of this idea. So in theory, net income is meant to represent items within management control. However, given the grey area in accounting interpretation, net income may be 'accelerated', and it also may include some items that occurred by some 'random business fluke' outside of company control. Finally, consider that financial statements are prepared months after the last year-end. So a company may show great profit for 2015 when statements come out in March, but perhaps Jan-March results are terrible. In conclusion, net income is an attempt at giving what you want: an accurate representation of the health of a company in terms of what is under management control. However it may be inaccurate due to various factors, from malfeasance to incompetence. That's why other financial measures exist - as another way to answer the same question about a company's health, to see if those answers agree. ex: Say net income is $10M this year, but was only $6M last year - great, it went up by $4M! But now assume that Accounts Receivable shows $7M owed to the company at Dec 31, when last year there was only $1M owed to the company. That might imply that there are problems collecting on that additional revenue (perhaps revenue was recorded prematurely, or perhaps they sold to customers who went bankrupt). Unfortunately there is no single number that you can use to see the whole company - different metrics must be used in conjunction to get a clear picture.\"",
"title": ""
},
{
"docid": "145d8cf762769c52f00716bde4c9129a",
"text": "There is a positive not being mentioned above: the depreciation vs your regular earned income. Disclaimer: I am not a tax attorney or an accountant, nor do I play one on the internet. I am however a landlord. With that important caveat out of the way: Rental properties (and improvements to them) depreciate in value on a well-defined schedule. You can claim that depreciation as a phantom loss to lower the amount of your taxable regular income. If you make a substantial amount of the latter, it can be a huge boon in the first few years you own the property. You can claim the depreciation as if the property were new. So take the advice of a random stranger on the internet to your accountant/attorney and see how much it helps you.",
"title": ""
},
{
"docid": "4c23a61f572194b420b110c7a2af7c62",
"text": "\"This is called \"\"change\"\" or \"\"movement\"\" - the change (in points or percentage) from the last closing value. You can read more about the ticker tape on Investopedia, the format you're referring to comes from there.\"",
"title": ""
},
{
"docid": "b573ff1763f664a030871b1be7801af5",
"text": "Could be misunderstanding your context. But ev = equity + debt - cash. So don't think it makes sense for an equity holder to have an individual ev/ebitda different from the company's. Are you asking in context of valuing equity and debt from an ev/ebitda multiple?",
"title": ""
},
{
"docid": "a4380d3bed0e99990fb75de7a61c45f9",
"text": "You can think of a free cash flow as dividends from operations. FCF = cash from operations - investment in operations. The present value of these cash flows into the future is the value of the firm (DCF is very much like the dividend discount model). Now why does a DCF produce enterprise value and not equity value? Because a DCF values the firm's operating assets. To find the equity value, you use the accounting relation: assets = liabilities + equity (or in financial terms net operating assets = net financial obligations + common stockholders equity). This means you take away net debt from the value produced by the DCF to find equity. Now all your excess cash is netted off against your financial obligations (debt) to find the net debt. Cash used for day to day operations is an operating asset and should be treated as such, operating cash should not deducted from value of assets when finding the value of equity. At least that's what they're teaching at university now (i'm a uni student who's just finished my business valuation subject).",
"title": ""
},
{
"docid": "e1ce8250eb72a7472e0fcb696d1dc384",
"text": "\"In general, when dealing with quantities like net income that are not restricted to being positive, \"\"percentage change\"\" is a problematic measure. Even with small positive values it can be difficult to interpret. For example, compare these two companies: Company A: Company B: At a glance, I think most people would come away with the impression that both companies did badly in Y2, but A made a much stronger recovery. The difference between 99.7 and 99.9 looks unimportant compared to the difference between 100,000 and 40,000. But if we translate those to dollars: Company A: Y1 $100m, Y2 $0.1m, Y3 $100.1m Company B: Y1 $100m, Y2 $0.3m, Y3 $120.3m Company B has grown by a net of 20% over two years; Company A by only 1%. If you're lucky enough to know that income will always be positive after Y1 and won't drop too close to zero, then this doesn't matter very much and you can just look at year-on-year growth, leaving Y1 as undefined. If you don't have that guarantee, then you may do better to look for a different and more stable metric, the other answers are correct: Y1 growth should be left blank. If you don't have that guarantee, then it might be time to look for a more robust measure, e.g. change in net income as a percentage of turnover or of company value.\"",
"title": ""
},
{
"docid": "8f5439eccba9927dbad2c3edb01e31dd",
"text": "Such activity is normally referred to as bartering income. From the IRS site - You must include in gross income in the year of receipt the fair market value of goods or services received from bartering. Generally, you report this income on Form 1040, Schedule C (PDF), Profit or Loss from Business (Sole Proprietorship), or Form 1040, Schedule C-EZ (PDF), Net Profit from Business (Sole Proprietorship). If you failed to report this income, correct your return by filing a Form 1040X (PDF), Amended U.S. Individual Income Tax Return. Refer to Topic 308 and Amended Returns for information on filing an amended return.",
"title": ""
},
{
"docid": "9b1878d675da2b5a540ade3487ed40d6",
"text": "In the second example you are giving up future free cash flows in exchange for a capital gain on the original investment. With that respect the money you will not gain will be the difference of the future cash flows ( net of related costs) minus the net gain on the panel you have sold. The financial result can be considered as the opposite of a sunk cost, that is a cost you have already incurred ( and cannot be recovered) vs net future gains you are giving up. In more sophisticated financial terms we are talking about the benefit-cost ratio: ( from Investopedia)",
"title": ""
},
{
"docid": "75ffcd067af42e2df03285f2b01a8697",
"text": "\"From Wikipedia: Usage Because EV is a capital structure-neutral metric, it is useful when comparing companies with diverse capital structures. Price/earnings ratios, for example, will be significantly more volatile in companies that are highly leveraged. Stock market investors use EV/EBITDA to compare returns between equivalent companies on a risk-adjusted basis. They can then superimpose their own choice of debt levels. In practice, equity investors may have difficulty accurately assessing EV if they do not have access to the market quotations of the company debt. It is not sufficient to substitute the book value of the debt because a) the market interest rates may have changed, and b) the market's perception of the risk of the loan may have changed since the debt was issued. Remember, the point of EV is to neutralize the different risks, and costs of different capital structures. Buyers of controlling interests in a business use EV to compare returns between businesses, as above. They also use the EV valuation (or a debt free cash free valuation) to determine how much to pay for the whole entity (not just the equity). They may want to change the capital structure once in control. Technical considerations Data availability Unlike market capitalization, where both the market price and the outstanding number of shares in issue are readily available and easy to find, it is virtually impossible to calculate an EV without making a number of adjustments to published data, including often subjective estimations of value: In practice, EV calculations rely on reasonable estimates of the market value of these components. For example, in many professional valuations: Avoiding temporal mismatches When using valuation multiples such as EV/EBITDA and EV/EBIT, the numerator should correspond to the denominator. The EV should, therefore, correspond to the market value of the assets that were used to generate the profits in question, excluding assets acquired (and including assets disposed) during a different financial reporting period. This requires restating EV for any mergers and acquisitions (whether paid in cash or equity), significant capital investments or significant changes in working capital occurring after or during the reporting period being examined. Ideally, multiples should be calculated using the market value of the weighted average capital employed of the company during the comparable financial period. When calculating multiples over different time periods (e.g. historic multiples vs forward multiples), EV should be adjusted to reflect the weighted average invested capital of the company in each period. In your question, you stated: The Market Cap is driven by the share price and the share price is determined by buyers and sellers who have access to data on cash and debts and factor that into their decision to buy or sell. Note the first point under \"\"Technical Considerations\"\" there and you will see that the \"\"access to data on cash and debts\"\" isn't quite accurate here so that is worth noting. As for alternatives, there are many other price ratios one could use such as price/earnings, price/book value, price/sales and others depending on how one wants to model the company. The better question is what kind of investing strategy is one wanting to use where there are probably hundreds of strategies at least. Let's take Apple as an example. Back on April 23, 2014 they announced earnings through March 29, 2014 which is nearly a month old when it was announced. Now a month later, one would have to estimate what changes would be made to things there. Thus, getting accurate real-time values isn't realistic. Discounted Cash Flow is another approach one can take of valuing a company in terms of its future earnings computed back to a present day lump sum.\"",
"title": ""
},
{
"docid": "1169f9db654b7e89de8d8bc0a26b24e1",
"text": "The preparation for starting up of the company has lasted already more than 2 years. Let's say the company starts officially in January next year. So, in January 2014... 8 million USD is invested to purchase the equipments and the company will start selling their prdocuts right away. Imagine the company will be selling the same amount of products each year at the same price for 5 years. After 5 years it will sell the equipments for 6 million USD and cease to exist. The depreciation of equipments is divided into those 5 years. So, each year the depreciation of equipments is 400.000 USD. In despite of this, the company will make 500.000 USD per year as a profit before tax. So, the equipments are bought in Januardy 2014 (first month of the existence of the company) and sold in December 2018 (last month of the existence of the company). This is the NPV that I calculated. Is it correct?",
"title": ""
},
{
"docid": "b107f0cef24f9d51830447421b8b2582",
"text": "This answer fills in some of the details you are unsure about, since I'm further along than you. I bought the ESPP shares in 2012. I didn't sell immediately, but in 2015, so I qualify for the long-term capital gains rate. Here's how it was reported: The 15% discount was reported on a W2 as it was also mentioned twice in the info box (not all of my W2's come with one of these) but also This showed the sale trade, with my cost basis as the discounted price of $5000. And for interests sake, I also got the following in 2012: WARNING! This means that just going ahead and entering the numbers means you will be taxed twice! once as income and once as capital gains. I only noticed this was happening because I no longer worked for the company, so this W2 only had this one item on it. This is another example of the US tax system baffling me with its blend of obsessive compulsive need for documentation coupled with inexplicably missing information that's critical to sensible accounting. The 1099 documents must (says the IRS since 2015) show the basis value as the award price (your discounted price). So reading the form 8949: Note: If you checked Box D above but the basis reported to the IRS was incorrect, enter in column (e) the basis as reported to the IRS, and enter an adjustment in column (g) to correct the basis. We discover the number is incorrect and must adjust. The actual value you need to adjust it by may be reported on your 1099, but also may not (I have examples of both). I calculated the required adjustment by looking at the W2, as detailed above. I gleaned this information from the following documents provided by my stock management company (you should the tax resources section of your provider):",
"title": ""
},
{
"docid": "f766087d13ac15a104961a481536a7af",
"text": "Does the friend fix your electrical wiring and the engine of your car? If you need a professional advice - ask a professional. In this case - an accountant (not necessarily a CPA, but at least an experienced bookkeeper). Financial Statements (official documents, that is) must be signed by a public accountant (CPA in the US) or the principle (you). I wouldn't take chances and would definitely have an accountant do that. You need to consider the asset useful life, and the depreciation. The fact that you use it for non-business purposes may be recorded in various ways. One that comes to mind is accounting as a supplement for depreciation: You depreciate the percentage that is used for business, and record as a distribution to owner the rest (which is accounting for the personal use). This way it would also match the tax reporting (in the US, at least). Bottom line: if you're preparing an official financial statement (that you're going to submit to anyone other than yourself) - get a professional advice.",
"title": ""
},
{
"docid": "45fed3fdfefc389c5e6a939ea75b0d38",
"text": "83(b) election requires you to pay the current taxes on the discount value. If the discount value is 0 - the taxes are also 0. Question arises - why would someone pay FMV for restricted stocks? That doesn't make sense. I would argue, as a devil's advocate, that the FMV is not really fair market value, since the restriction must have reduced the price you were willing to pay for the stocks. Otherwise why would you buy the stocks at full price - with strings attached that could easily cost you the whole amount you paid?",
"title": ""
},
{
"docid": "babde865bb9d96b55faa268417c37cb3",
"text": "It's a way to help normalize the meaning of the earnings report. Some companies like Google have a small number of publicly traded shares (322 Million). Others like Microsoft have much larger numbers of shares (8.3 Billion). The meaning depends on the stock. If it's a utility company that doesn't really grow, you don't want to see lots of changes -- the earnings per share should be stable. If it's a growth company, earnings should be growing quickly, and flat growth means that the stock is probably going down, especially if slow growth wasn't expected.",
"title": ""
},
{
"docid": "1adf6bf3b115f70cb8d77a0be6e30f97",
"text": "\"Yes - this is exactly what it means. No losses (negative earnings). With today's accounting methods, you might want to determine whether you view earnings including or excluding extraordinary items. For example, a company might take a once-off charge to its earnings when revising the value of a major asset. This would show in the \"\"including\"\" but not in the \"\"excluding\"\" figure. The book actually has a nice discussion in Chapter 12 \"\"Things to Consider About Per-Share Earnings\"\" which considers several additional variables to consider here too. Note that this earnings metric is different from \"\"Stock Selection for the Defensive Investor\"\" which requires 10 years. PS - My edition (4th edition hardback) doesn't have 386 pages so your reference isn't correct for that edition. I found it on page 209 in Chapter 15 \"\"Stock Selection for the Enterprising Investor\"\".\"",
"title": ""
}
] |
fiqa
|
29381a74ffaac16fcd44dca6bab03319
|
US citizen married to non-resident alien; how do I file taxes?
|
[
{
"docid": "3a286a1b3fdb61d9cef094b42c37f63a",
"text": "\"Congrats on the upcoming wedding! Here is the official answer to this question, from the IRS. They note that you can choose to treat your spouse as a US resident for tax purposes and file jointly if you want to, by attaching a certain declaration to your tax return. Though I'm not a tax expert, if your partner has significant income it seems like this might increase your taxes due. You can also apply for an SSN (used for tax filings, joint or separate return) at a social security office or US consulate, by form SS-5, or file form W-7 with the IRS to get a Taxpayer Identification Number which is just as useful for this purpose. Without that, you can write \"\"Non Resident Alien\"\" (or \"\"NRA\"\") in the box for your partner's SSN, and mail in a paper return like that. See IRS Publication 17 page 22 (discussions on TurboTax here, here, etc.).\"",
"title": ""
},
{
"docid": "18e04e697d83f44d2dcbe03dd7928152",
"text": "\"From what you've described, your spouse is a non-resident alien for US tax purposes. You have two choices: Use the Nonresident Spouse Treated As Resident election and file as Married Filing Jointly. Since your spouse doesn't have, and doesn't currently qualify for, an SSN, he/she will need to apply for an ITIN together with the tax filing. Note that by becoming a resident alien, your spouse's worldwide income the whole year would be subject to US taxes, and would need to be reported on your joint tax filing, though he/she will be able to use the Foreign Earned Income Exclusion to exclude $100k of her foreign earned income, since he/she will have been out of the US for 330 days in a 12-month period. Or, file as Married Filing Separately. You write \"\"NRA\"\" for your spouse's SSN on your tax return. As a nonresident alien, if your spouse doesn't have any US income, he/she doesn't have to file a US tax return, and doesn't need to apply for an ITIN. Which one is better is up to you to figure out.\"",
"title": ""
}
] |
[
{
"docid": "86b81fd3a6587950b805c5d5def75ddb",
"text": "Of course you're reportable to the IRS. Your income is someone's expense, they'll report it if required. What you're probably asking is whether you need to pay any taxes in the US. If you're neither US citizen nor a green card holder, and you don't step foot to the US - you will probably not need to pay taxes there.",
"title": ""
},
{
"docid": "eb3edb9346792440f6dfe9396e27c24c",
"text": "If you have non Residency status in Canada you don't need to file Canadian tax return. To confirm your status you need to contact Canada Revenue (send them letter, probably to complete some form).",
"title": ""
},
{
"docid": "134248d08749c7999287d4f12f2c9db6",
"text": "My wife and I are both Canadian citizens living in the US with green card status. I still have a Canadian RRSP and bank account in Canada that are dormant for the most part. We use the Canadian debit card only when traveling (which is quite helpful). Neither of us file any paperwork in Canada anymore. But as others have mentioned, we do file the FBAR form... this takes about 10 minutes and gets mailed somewhere in Michigan if I recall correctly. (Keep the balance less than $10k total among all foreign accounts and you relieve yourself of this too.) As far as taxes go, we make less interest in our Canadian account than in our US accounts, so the tax burden is less.",
"title": ""
},
{
"docid": "1525ae32cf52879d47052ec31a67d930",
"text": "A non-resident alien is only allowed for deductions connected to producing a US-sourced income (See IRC Sec. 873). Thus you can only deduct things that qualify as business expenses, and State taxes on your wages. In addition you can deduct a bunch of stuff explicitly allowed (like tax preparation, charitable contributions, casualty losses, etc) but sales tax is not in that list.",
"title": ""
},
{
"docid": "1d4ba8a949e4138c61188e7132d74980",
"text": "You need to file IRS Form 1040-NR. The IRS's website provides instructions.",
"title": ""
},
{
"docid": "9438f2630d7f0c5e6cdb291a7a68cca1",
"text": "\"I would suggest reading through page 1 of the Arizona Nonresident form instructions at the web address below: https://www.azdor.gov/Portals/0/ADOR-forms/TY2015/10100/10177_inst.pdf To quote: \"\"You are subject to Arizona income tax on all income derived from Arizona sources. If you are in this state for a temporary or transitory purpose or did not live in Arizona but received income from sources within Arizona during 2015, you are subject to Arizona tax. Income from Arizona sources includes the following: ...the sale of Arizona real estate...\"\"\"",
"title": ""
},
{
"docid": "7b0c964ba22d93e8451148742228fe18",
"text": "Resident Alien is liable for the same taxes as a citizen. Citizenship has nothing to do with taxes.",
"title": ""
},
{
"docid": "a3b95031eb506b30bf9d5cc055cbaba9",
"text": "You should consult a US CPA to ensure your situation is handled correctly. It appears, the money is Israel source income and not US source income regardless if you receive it while living in the U.S. If you file the correct form, I suspect the form is 1040NR and your state form to disclose your income, if any, in 2015 and 2016, it should not be a problem. Having said that, if you do earn any type of income while in the U.S. , you are required to disclose it to both the IRS and state.",
"title": ""
},
{
"docid": "d67803ddbaed689189eccfe8f6a604e9",
"text": "It's not just the US based mailing address for registration or US based credit-card or bank account: even if you had all these, like I do, you will find that these online filing companies do not have the infrastructure to handle non-resident taxes. The reason why the popular online filing companies do not handle non-resident taxes is because: Non-residents require a different set of forms to fill out - usually postfixed NR - like the 1040-NR. These forms have different rules and templates that do not follow the usual resident forms. This would require non-trivial programming done by these vendors All the NR forms have detailed instructions and separate set of non-resident guides that has enough information for a smart person to figure out what needs to be done. For example, check out Publication 519 (2011), U.S. Tax Guide for Aliens. As a result, by reading these most non-residents (or their accountants) seem to figure out how the taxes need to be filed. For the remaining others, the numbers perhaps are not significant enough to justify the non-trivial programming that need to be done by these vendors to incorporate the non-resident forms. This was my understanding when I did research into tax filing software. However, if you or anyone else do end up finding tax filing software that does allow non-resident forms, I wil be extremely happy to learn about them. To answer your question: you need to do it yourself or get it done by someone who knows non-resident taxes. Some people on this forum, including me for gratis, would be glad to check your work once you are done with it as long as you relieve us of any liability.",
"title": ""
},
{
"docid": "e09a2ad6a58da909bc41f83bf55ba52e",
"text": "Though non-resident Indians (NRIs) earn their living abroad, their obligation to file tax returns in India doesn't end. With the July 31 deadline for filing returns barely a month away, NRIs need to gear up to file their return if they have income in India that exceeds the basic exemption limit. How to Determine tax residency status: An NRI first needs to determine his tax residency status, that is, whether he falls in the category of resident or non-resident Indian (NRI) for tax purposes. While there may be no ambiguity regarding the status of an NRI who has lived abroad for a long time, those who have moved abroad recently or have returned to India after a long stay abroad need to ascertain their residency status properly.",
"title": ""
},
{
"docid": "d3aa0e53873e068ee63eb8e1179eae2b",
"text": "\"I would suggest to get an authoritative response from a CPA. In any case it would be for your own benefit to have at least the first couple of years of tax returns prepared by a professional. However, from my own personal experience, in your situation the income should not be regarded as \"\"US income\"\" but rather income in your home country. Thus it should not appear on the US tax forms because you were not resident when you had it, it was given to you by your employer (which is X(Europe), not X(USA)), and you should have paid local taxes in your home country on it.\"",
"title": ""
},
{
"docid": "c319314829325f38c1d037dea17cd4fe",
"text": "My understanding is that the only tax implication is that any interest income earned on foreign accounts is still taxable in the US if held by a US citizen. If the total across foreign accounts totals more than $10,000 you'll have to report those accounts to the Treasury via FinCEN Form 114, this doesn't create any additional tax obligations, it's just a regulatory measure to stop people from hiding money overseas and not paying tax on those earnings. If the US account is only in your husband's name, and the Australian account is only in your name, there may not be any reporting requirement to the Treasury. Money transferred between spouses is not subjected to gift-tax.",
"title": ""
},
{
"docid": "6e31671c8dc747f0d43b06df8775700a",
"text": "\"You don't have to hire a tax consultant, there is a number of companies who sell software (installable or web-based) that helps you do it by asking for all relevant data interview-style. These typically cost between 15 and 25 EUR. I'm not sure whether any of them are available in English, but if you can read German well, you should be OK. taxback.com is in English, but to be honest it looks a bit dodgy to me. Now for your questions: are there some tricky fields (lines) that after filling in my taxes will be counted higher? This is rare, at least for employees you nearly always get something back. are there some tricky fields (lines) that after filling in my taxes could be counted lower? Not in general. Marriage is mentioned below, and otherwise it's all about individual deductibles. Ah, one important factor: if you have investment income and have not filed a Freistellungsauftrag with your bank, you can get some of the taxes by filling out the \"\"Anlage KAP\"\" form with data you got in the Jahressteuerbescheinigung from your bank. are there some flat-rates (Pauschals) that I could get advantage from? Absolutely. As an employee, the biggest factor is the Werbungskostenpauschale of (I think currently) 1000 EUR for general work-related expenses, which will be accepted without proof. If your expenses are higher than that and you file individual expenses, there are flat rates for work-related moving and for commuting distance. is it better to give a tax return together with my wife (who was only a girlfriend in 2013 living with me in one household) or to give it separately? It's not possible to do a joint tax filing for the time before your marriage. What you should consider is to apply for a different tax class from now on, if one of you earns significantly more than the other. when separately, do I have to fill her information in my tax return or can I just pretend there is nobody else in my apartment? As far as taxes are concerned, unmarried roommates are treated completely separately with one exception: only one of you can deduct service charges included in your rent. You have to get a Nebenkostenabrechnung from your landlord, and service charges, i.e. janitor, gardener, etc. should be marked separately. But this may not be worth bothering with, usually it results in a tax return of maybe 15 EUR. is there any guide in English that could be of help with filling in the tax return form? I couldn't find anything that looked really useful in a short search.\"",
"title": ""
},
{
"docid": "6f1757e12b8309837d76e792e3845e77",
"text": "\"I don't believe it makes a difference at the federal level -- if you file taxes jointly, gains, losses, and dividends appear on the joint tax account. If you file separately, I assume the tax implications only appear on the owner's tax return. Then the benefits might outweigh the costs, but only if you correctly predict market behavior and the behavior of your positions. For example, lets say you lose 30k in the market in one year, and your spouse makes 30k. If you're filing jointly, the loss washes out the gain, and you have no net taxes on the investment. If you're filing separately, you can claim 3k in loss (the remaining 27k in loss is banked to future tax years), but your spouse pays taxes on 30k in gain. Where things get more interesting is at the state level. I live in a \"\"community property state,\"\" where it doesn't matter whether you have separate accounts or not. If I use \"\"community money\"\" to purchase a stock and make a million bucks, that million bucks is shared by the two of us, whether the account is in my name our in our name. income during the marriage is considered community property. However property you bring into the marriage is not. And inheritances are not community property -- until co-mingled. Not sure how it works in other states. I grew up in what's called an \"\"equitable property state.\"\"\"",
"title": ""
},
{
"docid": "3fac14afc592b93b8ce9f478f10e9464",
"text": "I really appreciate the long response! You clearly have more knowledge than me in regards to the finance end of the business. That said, is there so much money/debt tied up in taxi licenses and medallions that it would create even a mini financial market crash? If so, how would we (investors) profit from the situation?",
"title": ""
}
] |
fiqa
|
cee3cf7838a0dd839073a115cee4c0ff
|
looking for research tool to plug in and evaluate theoretical historical returns
|
[
{
"docid": "c1492fef953735b5f6997e04a1d5492e",
"text": "\"The professional financial advisors do have tools which will take a general description of a portfolio and run monte-carlo simulations based on the stock market's historical behavior. After about 100 simulation passes they can give a statistical statement about the probable returns, the risk involved in that strategy, and their confidence in these numbers. Note that they do not just use the historical data or individual stocks. There's no way to guarantee that the same historical accidents would have occurred that made one company more successful than another, or that they will again. \"\"Past performance is no guarantee of future results\"\"... but general trends and patterns can be roughly modelled. Which makes that a good fit for those of us buying index funds, less good for those who want to play at a greater level of detail in the hope of doing better. But that's sorta the point; to beat market rate of return with the same kind of statistical confidence takes a lot more work.\"",
"title": ""
}
] |
[
{
"docid": "835aea544af9ee19eb114bf793e8f425",
"text": "\"I keep spreadsheets that verify each $ distribution versus the rate times number of shares owned. For mutual funds, I would use Yahoo's historical data, but sometimes shows up late (a few days, a week?) and it isn't always quite accurate enough. A while back I discovered that MSN had excellent data when using their market price chart with dividends \"\"turned on,\"\" HOWEVER very recently they have revamped their site and the trusty URLs I have previously used no longer work AND after considerable browsing, I can no longer find this level of detail anywhere on their site !=( Happily, the note above led me to the Google business site, and it looks like I am \"\"back in business\"\"... THANKS!\"",
"title": ""
},
{
"docid": "8874c2e14077c87317b65163a01e3d35",
"text": "\"The graphing tools within Yahoo offer a decent level of adjustment. You can easily choose start and end years, and 2 or more symbols to compare. I caution you. From Jan 1980 through Dec 2011, the S&P would have grown $1 to $29.02, (See Moneychimp) but, the index went up from 107.94 to 1257.60, growing a dollar to only $11.65. The index, and therefore the charts, do not include dividends. So long term analysis will yield false results if this isn't accounted for. EDIT - From the type of question this is, I'd suggest you might be interested in a book titled \"\"Stock Market Logic.\"\" If memory serves me, it offered up patterns like you suggest, seasonal, relations to Presidential cycle, etc. I don't judge these approaches, I just recall this book exists from seeing it about 20 years back.\"",
"title": ""
},
{
"docid": "852794d0d9b1643cd8e965fea5278006",
"text": "\"Usually you gotta build those tools for yourself :P, you can usually build em in excel as its fairly easy and sort to see what is the most profitable, you can code most of the heavy lifting in excel, monte carlo/\"\"complex\"\" methods you probably won't even need... I'm a strong proponent of R however what you're doing is not that complex.... edit: I accidently a word.\"",
"title": ""
},
{
"docid": "081512f0aaafbef6ec324b5e271c4821",
"text": "\"Check out Professor Damodaran's website: http://pages.stern.nyu.edu/~adamodar/ . Tons of good stuff there to get you started. If you want more depth, he's written what is widely considered the bible on the subject of valuation: \"\"Investment Valuation\"\". DCF is very well suited to stock analysis. One doesn't need to know, or forecast the future stock price to use it. In fact, it's the opposite. Business fundamentals are forecasted to estimate the sum total of future cash flows from the company, discounted back to the present. Divide that by shares outstanding, and you have the value of the stock. The key is to remember that DCF calculations are very sensitive to inputs. Be conservative in your estimates of future revenue growth, earnings margins, and capital investment. I usually develop three forecasts: pessimistic, neutral, optimistic. This delivers a range of value instead of a false-precision single number. This may seem odd: I find the DCF invaluable, but for the process, not so much the result. The input sensitivity requires careful work, and while a range of value is useful, the real benefit comes from being required to answer the questions to build the forecast. It provides a framework to analyze a business. You're just trying to properly fill in the boxes, estimate the unguessable. To do so, you pore through the financials. Skimming, reading with a purpose. In the end you come away with a fairly deep understanding of the business, how they make money, why they'll continue to make money, etc.\"",
"title": ""
},
{
"docid": "5685b1ded2c93079cd5e6b11fdc85535",
"text": "I found that an application already exists which does virtually everything I want to do with a reasonable interface. Its called My Personal Index. It has allowed me to look at my asset allocation all in one place. I'll have to enter: The features which solve my problems above include: Note - This is related to an earlier post I made regarding dollar cost averaging and determining rate of returns. (I finally got off my duff and did something about it)",
"title": ""
},
{
"docid": "0905df12631772350b672e32f143dc23",
"text": "Here are a few things I've already done, and others reading this for their own use may want to try. It is very easy to find a pattern in any set of data. It is difficult to find a pattern that holds true in different data pulled from the same population. Using similar logic, don't look for a pattern in the data from the entire population. If you do, you won't have anything to test it against. If you don't have anything to test it against, it is difficult to tell the difference between a pattern that has a cause (and will likely continue) and a pattern that comes from random noise (which has no reason to continue). If you lose money in bad years, that's okay. Just make sure that the gains in good years are collectively greater than the losses in bad years. If you put $10 in and lose 50%, you then need a 100% gain just to get back up to $10. A Black Swan event (popularized by Nassim Taleb, if memory serves) is something that is unpredictable but will almost certainly happen at some point. For example, a significant natural disaster will almost certainly impact the United States (or any other large country) in the next year or two. However, at the moment we have very little idea what that disaster will be or where it will hit. By the same token, there will be Black Swan events in the financial market. I do not know what they will be or when they will happen, but I do know that they will happen. When building a system, make sure that it can survive those Black Swan events (stay above the death line, for any fellow Jim Collins fans). Recreate your work from scratch. Going through your work again will make you reevaluate your initial assumptions in the context of the final system. If you can recreate it with a different medium (i.e. paper and pen instead of a computer), this will also help you catch mistakes.",
"title": ""
},
{
"docid": "e50fbda863f078d02e1be7577f198d04",
"text": "http://www.euroinvestor.com/exchanges/nasdaq/macromedia-inc/41408/history will work as DumbCoder states, but didn't contain LEHMQ (Lehman Brother's holding company). You can use Yahoo for companies that have declared bankruptcy, such as Lehman Brothers: http://finance.yahoo.com/q/hp?s=LEHMQ&a=08&b=01&c=2008&d=08&e=30&f=2008&g=d but you have to know the symbol of the holding company.",
"title": ""
},
{
"docid": "baeda48ad38b88a95a6cbfd626419096",
"text": "I've looked into Thinkorswim; my father uses it. Although better than eTrade, it wasn't quite what I was looking for. Interactive Brokers is a name I had heard a long time ago but forgotten. Thank you for that, it seems to be just what I need.",
"title": ""
},
{
"docid": "19626720f85dcf1e74d4b90ea17a917e",
"text": "Another possibly more flexible option is Yahoo finance here is an example for the dow.. http://finance.yahoo.com/q/hp?s=%5EDJI&a=9&b=1&c=1928&d=3&e=10&f=2012&g=d&z=66&y=0 Some of the individual stocks you can dl directly to a spreadsheet (not sure why this isn't offer for indexs but copy and paste should work). http://finance.yahoo.com/q/hp?s=ACTC.OB+Historical+Prices",
"title": ""
},
{
"docid": "29659306b04dc3e5b307209bc5b7310d",
"text": "Personally, I think this one is best. RAROC (risk-adjusted return on capital) puts things in perspective for excess returns when considering risk-contribution. It does have its flaws, e.g. the quality of the VaR can be manipulated or simply incorrectly measured. But as in any model, it's GIGO (garbage-in garbage-out).",
"title": ""
},
{
"docid": "7e16bf72b7e84e7aac3a2eb57a804450",
"text": "\"This falls under value investing, and value investing has only recently picked up study by academia, say, at the turn of the millennium; therefore, there isn't much rigorous on value investing in academia, but it has started. However, we can describe valuations: In short, valuations are randomly distributed in a log-Variance Gamma fashion with some reason & nonsense mixed in. You can check for yourself on finviz. You can basically download the entire US market and then some, with many financial and technical characteristics all in one spreadsheet. Re Fisher: He was tied for the best monetary economist of the 20th century and created the best price index, but as for stocks, he said this famous quote 12 days before the 1929 crash: \"\"Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as (bears) have predicted. I expect to see the stock market a good deal higher within a few months.\"\" - Irving Fisher, Ph.D. in economics, Oct. 17, 1929 EDIT Value investing has almost always been ignored by academia. Irving Fisher and other proponents of it before it was codified by Graham in the mid 20th century certainly didn't help with comments like the above. It was almost always believed that it was a sucker's game, \"\"the bigger sucker\"\" game to be more precise because value investors get destroyed during recession/collapses. So even though a recessionless economy would allow value investors and everyone never to suffer spontaneous collapses, value investors are looked down upon by academia because of the inevitable yet nearly always transitory collapse. This expresses that sentiment perfectly. It didn't help that Benjamin Graham didn't care about money so never reached the heights of Buffett who frequently alternates with Bill Gates as the richest person on the planet. Buffett has given much credibility, and academia finally caught on around in 2000 or so after he was proven right about a pending tech collapse that nearly no one believed would happen; at least, that's where I begin seeing papers being published delving into value concepts. If one looks harder, academia's even taken the torch and discovered some very useful tools. Yes, investment firms and fellow value investors kept up the information publishing, but they are not academics. The days of professors throwing darts at the stock listings and beating active managers despite most active managers losing to the market anyways really held back this side of academia until Buffett entered the fray and embarrassed them all with his club's performance, culminating in the Superinvestors article which is still relatively ignored. Before that, it was the obsession with beta, the ratio of a security's variance to its covariance to the market, a now abandoned theory because it has been utterly discredited; the popularizers of beta have humorously embraced the P/B, not giving the satisfaction to Buffet by spurning the P/E. Tiny technology firms receive ridiculous valuations because a long-surviving tiny tech firm usually doesn't stay small for long thus will grow at huge rates. This is why any solvent and many insolvent tech firms receive large valuations: risk-adjusted, they should pay out huge on average. Still, most fall by the wayside dead, and those 100 P/S valuations quickly crumble. Valuations are influenced by growth. One can see this expressed more easily with a growing perpetuity: Where P is price, i is income, r is the rate of return, and g is the growth rate of i. Rearranging, r looks like: Here, one can see that a higher P relative to i will dull the expected rate of return while a higher g will boost it. It's fun for us value investor/traders to say that the market is totally inefficient. That's a stretch. It's not perfectly inefficient, but it's efficient. Valuations are clustered very tightly around the median, but there are mistakes that even us little guys can exploit and teach the smart money a lesson or two. If one were to look at a distribution of rs, one'd see that they're even more tightly packed. So while it looks like P/Es are all over the place industry to industry, rs are much more well clustered. Tech, finance, and discretionaries frequently have higher growth rates so higher P/Es yet average rs. Utilities and non-discretionaries have lower growth rates so lower P/Es yet average rs.\"",
"title": ""
},
{
"docid": "0e4dd0800c43b069a301a33451519f63",
"text": "\"I'd start with a Google search for \"\"best backtesting tools.\"\" Does your online brokerage offer anything? You already understand that the data is the important part. The good stuff isn't free. But yeah, if you have some money to spend you can get more than enough data to completely overwhelm you. :)\"",
"title": ""
},
{
"docid": "77910cb1a35f144cf084c07e12dd9ba9",
"text": "I am mostly interested in day to day records, and would like the data to contain information such as dividend payouts, and other parameters commonly available, such as on : http://finviz.com/screener.ashx ... but the kind of queries you can do is limited. For instance you can only go back two years.",
"title": ""
},
{
"docid": "39e680ba097f0ffc975fb39a29e5dcd0",
"text": "Check the answers to this Stackoverflow question https://stackoverflow.com/questions/754593/source-of-historical-stock-data a number of potential sources are listed",
"title": ""
},
{
"docid": "10233a68f38891dfe9dd64590cb455f3",
"text": "\"Long-term capital gains, which is often the main element of investment income for investors who are not high-frequency day traders, are taxed at a single rate that is often substantially below the marginal rate they would otherwise be taxed at, particularly for wealthy individuals. There are a few rationales behind this treatment; the two most common are that the government wants to encourage long-term investments (as opposed to short-term speculation), and that capital gains are a kind of double taxation (from one point of view) as they are coming from income that has already been taxed once before (as wage or ordinary income). The latter in particular is highly controversial, but this is one of the more divisive political issues in the taxation front - one party would eliminate the tax entirely, the other would eliminate the difference. For most individuals, the majority of their long-term capital gains are taxed at 15% up to almost half of a million dollars total AGI, which is a fairly low rate - it's equivalent to the rate a taxpayer would pay on up to $37,000 in wage income (after deductions/exemptions/etc.). You can see from this table in Wikipedia that it is much preferred to pay long-term capital gains rates when possible - at every point it's at least 10% lower than the tax rate for ordinary income. Ordinary income includes wages and many other sources of income - basically, anything that is not long term capital gains. Wage income is taxed at this rate, and also subject to some non-income-tax taxes (FICA and Medicare in particular); other sources of ordinary income are not subject to those taxes (including IRA income). Short term capital gains are generally included in this bucket. Qualified Dividends are treated similarly to long-term capital gains (as they are of a similar nature), and taxed accordingly. The \"\"Net Investment Tax\"\" is basically applying the Medicare tax to investment income for higher-income taxpayers ($125k single, $250k joint). It's on top of capital gains rates for them. It came about through the Affordable Care Act, and is one of the first provisions likely to be repealed by the new Congress (as it can be repealed through the budgeting provision). It seems likely that 2017 taxes will not contain this provision.\"",
"title": ""
}
] |
fiqa
|
8de932ffe4020879ee6f6b0e4cec2585
|
What assets would be valuable in a post-apocalyptic scenario?
|
[
{
"docid": "eb6cf381a81bcc5bf1f0ada803b42b6f",
"text": "Gold and silver are for after the crisis, not during. Gold and silver are far more likely to be able to be exchanged for things you need, since they are rare, easily divided, etc. Getting land away from where the crap is happening is also good, but it's more than that. Say you have land somewhere. How will the locals view you if you move there to hunker down only when things go bad? They won't really trust you, and you'll inherit a new set of problems. Building relationships in an off-the-beaten-path area requires a time investment. Investing in lifestyle in general is good. Lifestyle isn't just toys, but it's privacy, peace of mind, relationships with people with whom you can barter skills, as well as the skills you might think you'd need to do more than just get by in whatever scenario you envision. For the immediate crisis, you'd better have the things you'll need for a few months. Stores probably won't be supplied on any regular basis, and the shelves will be bare. Trying to use gold or silver during the crisis just makes you a target for theft. With regard to food, it's best to get acclimated to a diet of what you'd have on hand. If you get freeze-dried food, eat it now, so that it's not a shock to your system when you have to eat it. (Can you tell I've been thinking about this? :) )",
"title": ""
},
{
"docid": "575030f448925974f3fa677897b9fe52",
"text": "This is going to be a list of some things that will likely be of value immediately after some apocalyptic event. However, note that I am not answering your question of what you should invest in now to take advantage of such an event. That is a pretty ridiculous notion. Preparing oneself for such a possibility is certainly a good idea. That said, there are some realistic limitations to how you could take advantage of such a situation. Namely, the very real requirement of physical security. Unless you have a huge posse -- armed to the teeth -- to defend your cache, someone will come along with a bigger and better armed group to take it. (Not to mention that I am the type of person that would -- at least -- consider organizing such a group to take you down; if only as a matter of principle.) Guns & ammo (Also, knives; ideally ones that can be used as weapons and for food preparation/hunting.) Alcohol. Especially liquor. It's concentrated and easier to store than beer or wine. Beside for getting inebriated, it is useful as a sedative and antiseptic. Non-perishable foods. Canned goods are obvious. Though, grains and cereals can be stored with relative ease under some circumstances. (Obviously, not so easily done in an urban area.) Methods of starting a fire. Preferably rugged ones, such as flint and steel. (Lighters would only be of limited use. Matches are bulky and require water-tight storage.) Salt and/or salt-licks. (Possibly, other forms of non-perishable bait.) As bstpierre puts it, hunting will be about survival not sport. Hand-tools. Textiles, fabrics, thread and needles. Medicines of all sorts, though especially antibiotics, antiseptics and painkillers. Books of a practical nature. Topics such as: wilderness survival, cooking, carpentry, etc. The list is mostly ordered in terms of value & practicality. Ultimately, I doubt there is much that will provide a practical investment idea for such a scenario. The physical security issue is a big limiting factor. In a post-apocalyptic scenario it goes back to who is bigger, stronger and better armed. One thing does come to mind: knowledge. Prepare yourself with the skills and knowledge you need to survive in such a scenario and you will be invaluable. Also, as bstpierre notes in the comments, connections will likely also be important. (Probably local or nearby connections.) No one person can do it all alone. It will come down to cooperation.",
"title": ""
},
{
"docid": "7c77b5f83deb90b892d8f58e51b08249",
"text": "Bullets, canned goods, and farm supplies that don't need gas (e.g. seed, feed, plows).",
"title": ""
},
{
"docid": "07fc07ef99b20b8babc5659d64b930b9",
"text": "This is a long term investment but can be very useful during tough times. Be prepared not only to take but to give as well. Moreover:",
"title": ""
},
{
"docid": "894b7a0f3c3a8af10d0e9f07ae32fc46",
"text": "I find these type of questions silly, but I'll bite:",
"title": ""
},
{
"docid": "049304ac4dbd80b55fd4c9ef6e7bcf26",
"text": "Guns. Without them, any other conceivable asset would be taken from you. By someone with guns.",
"title": ""
},
{
"docid": "dd635c4552c760a3c33deb1f1b4ff579",
"text": "A book on the power of persuasion. The people will need you to lead them to the glory land like the Deacon* from Waterworld *Dennis Hopper. Study up.",
"title": ""
},
{
"docid": "ec6afc1397f4c85fbf66584762ce4b9e",
"text": "Apocalyptic like MAD MAX, huh? Well, no one so far has mentioned Gasoline, not paper gasoline futures but the real thing in barrels or tankers. Guns, ammo, sure... but if everyone on the ground is shooting each other I'd prefer an ultralight helicopter. You all have watched MAD MAX, right? On a more serious note, there is a country in the South Pacific that never saw fighting in world war 2 due to its remoteness, but is large and developed enough to be agriculturally pretty much self sufficient, and with a low population has plenty of space. Might be good to squirrel away something down there...",
"title": ""
},
{
"docid": "9c81a552c36f71fd5895519436975081",
"text": "Barton Biggs's book Wealth, War and Wisdom aims to answer the question of what investments are best-suited to preserving value despite large-scale catastrophes by looking at how various investments and assets performed in countries affected by WWII. In Japan, stocks and urban land turned out to be good investments; in France, farm land and gold did better. Stocks outperformed bonds in nearly every country. Phil Greenspun recently wrote a review of the book.",
"title": ""
},
{
"docid": "c69d09b34eabd583b8c1df493606605c",
"text": "Assuming that the financial system broke down, not enough supply of essential commodities or food but there is political and administrative stability and no such chaos that threatens your life by physical attacks. The best investment would then be some paddy fields, land, some cows, chickens and enough clothing , a safe house to stay and a healthy life style that enables you to work for food and some virtue at heart and management skills to get people work for you on your resources so that they can survive with you (may be you earn some profit -that is up to your moral standards to decide, how much). It all begins to start again; a new Financial System has to be in place….!",
"title": ""
}
] |
[
{
"docid": "100c16089b98c6da4bdec9e3d52ba91b",
"text": "\"The raw question is as follows: \"\"You will be recommending a purposed portfolio to an investment committee (my class). The committee runs a foundation that has an asset base of $4,000,000. The foundations' dual mandates are to (a) preserve capital and (b) to fund $200,000 worth of scholarships. The foundation has a third objective, which is to grow its asset base over time.\"\" The rest of the assignment lays out the format and headings for the sections of the presentation. Thanks, by the way - it's an 8 week accelerated course and I've been out sick for two weeks. I've been trying to teach myself this stuff, including the excel calculations for the past few weeks.\"",
"title": ""
},
{
"docid": "332c7311f705acec1dd28a25e372bdce",
"text": "I'd have anything you would need for maybe 3-6 months stored up: food, fuel, toiletries, other incidentals. What might replace the currency after the Euro collapses will be the least of your concerns when it does collapse.",
"title": ""
},
{
"docid": "e8d5cf282efac11e79e96e042aacb9f1",
"text": "\"... until they collapse too!!! This is \"\"Luft Gesheft\"\": German/Yiddish for \"\"making money out of thin air\"\". Money should be made by making things and building things - adding value to something. Apple Computers is one example - they make real money.\"",
"title": ""
},
{
"docid": "ca0fd39e8414dd94c6d787fd00e425f7",
"text": "Taking into account your POV I would recommend mostly goods that will be harder to obtain, precious metals (not only gold) and forex (although the forex aproach depends on some other country not having troubles with it's own economy which in a world as interconnected as ours by internet and all the new technologies doesn't seem likely) i highly recommend silver which is cheaper than gold and is stable enough in the long term",
"title": ""
},
{
"docid": "5b61cd51d2cc4371f170a880274c6812",
"text": "Investing for your future through stocks isn’t for the faint of heart. While there are stocks that can withstand our volatile market, there are few that can guarantee their business will still be a business 20 or 30 years from now. [Compound Stock Earnings](http://www.compoundstockearnings.com) Report Benigans would always be with us, but they no longer exist.",
"title": ""
},
{
"docid": "5847f3eccb16327595bb29b661629dc5",
"text": "Cash can be a lifesaver after a natural disaster. I was in central Mississippi in 2005 after Katrina. There were a few things selling for cash only (generators for one). The banks opened pretty quick (1 day) where I was; south of me it took much longer (days or weeks).",
"title": ""
},
{
"docid": "ab8e2c4f62e90b429e52348b090e65d3",
"text": "\"First of all, metals are commodities. So if you're phrasing that as metals and/or commodities, then that's poorly worded. If you're phrasing that as \"\"metal commodity reports\"\" then say as such. Second, and more importantly: what commodities? Power is very different than coffee. Different places specialize in different things, all banks are good in some and weak in others. There's no generic \"\"commodity\"\" market but rather a huge range of specifically different products traded in the future.You learn more than a small fraction of this universe so pick one or two specific products from the macro buckets (i.e. energy, grains, metals) and focus on those.\"",
"title": ""
},
{
"docid": "8a577accc4d151f7a1e3550a1b212d49",
"text": "Vehicles (plural, because I'd be filling multiple roles, and also because I'd really prefer to have spare parts). Self-sufficient farm with machine shop, heavy-duty fabric production/sewing capacity. Hunting/camping gear. That kind of thing. I have about $600 in student loan debt remaining, which should be gone in the next year. No car loan (own my truck outright), don't own a house, carry 0 balance on my credit card. I suspect I'm a bit older than you (28) and I'm finding increasingly that I'm feeling financially strained by both current needs and projected needs. Moreso future than current, as a matter of fact, though I am unemployed right now. No matter how I look at it, barring some exceptional luck, there's no good way to obtain what I feel is needed to ensure that I can retire in safety. The current system basically forces you to take on nigh-crippling debt and hope like hell you can remain employed almost constantly through the most productive years of your life so that you may retire with some degree of security. 75K would make me feel a lot closer, but it only really deals with the immediate concerns and gives me room to hope to rectify the future ones in the next decade. If it were a completely foolproof 75K with no chance of vanishing, it'd go a lot further -- but still wouldn't alleviate my worries entirely.",
"title": ""
},
{
"docid": "0ff176eb7c422c1fc2cc9399e488d3c1",
"text": "I think what the person meant to say is that Gold is not a one stop solution. There's nothing wrong with having Gold in an otherwise diversified portfolio but you need to be aware about the potential downsides: The problem with gold is that its value nowadays depends mainly on investor confidence, or the lack of it (actual demand for gold cannot explain the rise in value gold had after the crisis). If people are afraid the world and currencies with it will go to hell, the gold price will go up. Why? Because if currencies seize to exist, Gold will still be accepted. It can replace currencies. What many people tend to forget: let's consider the extreme example and currencies really cease to exist and all hell breaks lose. What good are gold bars at the bank, or even at home, for that matter? You'll be better off with gold coins to use in barter and to pay off marauders. But that's not about investing anymore, that's survivalism.",
"title": ""
},
{
"docid": "b72db17639d8369ec3dcb5b7f060b69f",
"text": "\"Buying gold, silver, palladium, copper and platinum. The first two I am thinking about new currencies. The last three for the perpetual need for the metals in industry. I also have invested in Numismatic coins. They are small portable and easy to hide around the house. I only collect silver coins, so even if the world really blows up and numismatics goes out the window, I can depend on them forming a barter system through the content value of the silver. The problem with collectable items is that they are easy to see. For example, a nice painting just shouts out \"\"steal me!\"\". I don't buy large gold coins. As long as the coin is below 1/4 Oz gold I collect it. If the dollar does finaly collapse, to be honest it will be so bad that I think weapons will be order of the day. Do I think it will collapse...nah never.\"",
"title": ""
},
{
"docid": "3920dc7fad00ba1d6cb961f24716c96a",
"text": "Yes, because you cannot have an exponential growth rate that is faster than the rate at which the economy grows on the long term. 100% growth is much more than the few percent at which the economy grows, so your share in the World economy would approximately double every year. Today the value of all the assets in the World economy is about $200 trillion. If you start with an investment of just $1000 and this doubles every year, then you'll own all the World's assets in 37.5 years, assuming this doesn't grow. You can, of course, take into account that it does grow, this will yield a slightly larger time before you own the entire World.",
"title": ""
},
{
"docid": "bfb22c159524565b6c9b3c92161645a8",
"text": "\"In addition to the \"\"The Time Machine\"\"-type society you're talking about where the working class basically end up devolving into hunting game for elites, i'd worry that the enhancement for the skilled-labor jobs you describe would include some dog collars. If I'm an enhanced engineer I'll start my own company, not make money for someone else. If I'm a super soldier I'd hit up academi (blackwater), not get treated like shit in the army. If these technologies can enhance intelligence, it can probably also steer traits like loyalty, ambition, etc to ensure that the person acts more like an appliance rather than a genius.\"",
"title": ""
},
{
"docid": "648dc0f65d1f823e09181327ef4871ea",
"text": "I'm not sure I'd say the assets they had were worthless. One of the big controversies was whether it was a solvency crisis (bad assets) or a liquidity crisis (fine assets, but if everyone sells illiquid assets there's a fire sale problem). The US and Buffett bet it was a liquidity crisis, and they were proven right.",
"title": ""
},
{
"docid": "726fbdba1e79487a1d8064202473751e",
"text": "But how valuable is it in the Star Trek world? How much gold is available and how much do they need?Are there alternatives? Will they ever find another element that replaces it? These all affect the actual value... Nothing has value without demand, so how can anything be intrinsically valuable?",
"title": ""
},
{
"docid": "6d9723d9c0973eba47a049d0c9b17649",
"text": "Different risks require different hedges. You won't find a single hedge that will protect you against any risk. The best way to think about this is who would benefit if those events occurred? Those are the people you want to invest in. So if a war broke out, who would benefit? Defense contractors. Security companies. You get the idea. You also need to think about if you really need to hedge against those things now or not. For example, I wouldn't bother to hedge against global warming or peak oil. It's not like one morning you're going to wake up, turn on CNNfn and see that the stock market is down 500 points because global warming or peak oil just hit. These are things that happen gradually and you can react to them gradually as they happen.",
"title": ""
}
] |
fiqa
|
0abb014e869e54ff339fddde62a667d9
|
Economics Books
|
[
{
"docid": "089776e0e9e8b721f51d3936c4844a99",
"text": "\"i'm absolutely a newcomer in economics and i wish to understand how things work around finance. This is a pretty loaded question. To understand finance, you need the basics of economics. In almost every economics school in the country, you first study microeconomics and then economics. So, we'll start with micro. One of, if not the, most popular books is \"\"Principles of Microeconomics\"\" by Mankiw. This book covers the fundamentals of micro econ (opportunity, supply, demand, consumer choice, production, costs, basic game theory, and allocation of resources) in a clear and effective manner. It's designed for the novice and very easy to read. Like Mankiw's other book, \"\"Principles of Macroeconomics\"\" is also top notch. There is some overlap in key areas (i.e. opportunity cost, supply, demand, indifference curves, elasticity, taxation) because they are fundamental to economics and the overlap will always be there, but from there the book goes into key macro concepts like GDP, CPI, Employment, Monetary and Fiscal policy, and Inflation. An excellent intro primer indeed. Now that you have the fundamentals down, it's time to learn about finance. The best resource, in my opinion, is \"\"Financial Markets\"\" by Robert Shiller on Open Yale Courses. I've personally taken Prof. Shiller's class last semester, and the man is brilliant. The lectures cover every single aspect of finance and can turn the complete novice into a fairly experienced finance student. The first lecture also covers all the math required so you don't get lost at any point. Be warned, however, that the course is very deep. We used Fabozzi's textbook \"\"Foundations of Financial Markets and Institutions,\"\" which is over 600 pages deep and we were required to know essentially all of it. Watch the videos and follow the readings and you'll be a finance whiz soon! Financial Markets on Open Yale And that's your roadmap to what you want. There are other economics books and it's true that the first few chapters of both Mankiw books are largely the same, but that's because any economics course always covers the basics first. If you want to look at other books, Krugman has written some good books as well. Be sure to read reviews because some books are meant for 2nd/3rd year econ students, so you don't want to get a too advanced book. At the novice level, we're interested in understanding the basic concepts so we can master Fabozzi. As for finance books - Fabozzi teaches you all the fundamentals of financial markets so you've got a powerful foundation. From there you can expand to more niche books such as books on investing or on monetary policy or whatever you want. Best of luck!\"",
"title": ""
},
{
"docid": "8a4816563e0e034461e3eb1c563ded99",
"text": "Economics without math is a tall order, since it seems that one of the things economists love to do is try and reduce everything down to mathematical formulas. OTOH you are asking about a lot of topics besides economics. A few books I might suggest would be those three should do a good job of introductory info and helping you understand the basics and vocabulary. If you want more, one of the better 'recommended reading lists' for things financial that I've ever found is here",
"title": ""
},
{
"docid": "8988d7685d8ed4155b5700d0afd18403",
"text": "I followed Economics by Michael Parkin for my college level course. It does not involve very complicated mathematics (beyond simple arithmetic and interpreting plots/charts). I found it very enjoyable. Stocks, bonds, and other money market instruments are not covered under this subject usually. They are covered under finance. I normally recommend Hull to people but because you are not interested in mathematics I would recommend Stuart R Veale.",
"title": ""
},
{
"docid": "076f5a3cca12c675ad2748addcff763e",
"text": "The free Yale Course taught by Bob Shiller called Financial Markets is really good. Find it on youtube, iTunes U, academic earth, or yale's site.",
"title": ""
}
] |
[
{
"docid": "87b4eb1746ceda20df057a3aa24829b2",
"text": "It seems to me that 99% of the problems that keep economics from being considered a real science is that it obstinately sticks to using polyanna, unrealistic models to illustrate real-world behavior. Don't be surprised if that doesn't work and completely fails to predict major market events.",
"title": ""
},
{
"docid": "279a77b60a0c534fefc4c932c95c7c9b",
"text": "Well, yeah, but did they affect *everything* equally? You don't get two houses, one for your extra worker, so it decreases demand for the *number* of houses relative to the number of workers. A textbook author or journalist authors the same book or newspaper article; it's just printed more times. It does cause a shift in what types of labor are in demand relative to supply.",
"title": ""
},
{
"docid": "7e39b94e58872fe0eeae94b3879bbb6b",
"text": "\"Economics is built on the assumption that people make rational decisions based on the desire to increase their economic well-being. While economists have long known that isn't strictly true, Thaler was a pioneer in studying why people sometimes make irrational decisions, and how they can be encouraged to make smarter ones. He's made economics more human,\"\" said Peter Gärdenfors, a member of the commitee that awarded the prize.\"\" So how come the business world still ignores him? And treat humans like machines?\"",
"title": ""
},
{
"docid": "36549cb1d8714c02d6e8403a9d7ee3d6",
"text": "So what you’re saying is that the undergrad level text (fundamentals of blablabla) is good enough to get a decent understanding of the concepts? I’m a bit confused of the two bcs for e.g. take Hull, the grad level book is more widely recommended. I’ll graduate very soon, enter the workforce, and plan to go to a grad school several years down the line. Now, being in a sort of break point, I’m not sure which one I should go for. I do have an exposure to read some finance texts, but not a lot—introductory chapters here & there—and would prefer texts that are not super dry. What do you think?",
"title": ""
},
{
"docid": "05b6f24cd0a5afdb1a74a598488c663f",
"text": "#####&#009; ######&#009; ####&#009; [**Progress and Poverty**](https://en.wikipedia.org/wiki/Progress%20and%20Poverty): [](#sfw) --- > >___Progress and Poverty: An Inquiry into the Cause of Industrial Depressions and of Increase of Want with Increase of Wealth: The Remedy___ was written by [Henry George](https://en.wikipedia.org/wiki/Henry_George) in 1879. The book is a [treatise](https://en.wikipedia.org/wiki/Treatise) on the [cyclical](https://en.wikipedia.org/wiki/Business_cycle) nature of an industrial [economy](https://en.wikipedia.org/wiki/Economy) and its remedies. >==== >[**Image**](https://i.imgur.com/b8JhYJK.jpg) [^(i)](https://commons.wikimedia.org/wiki/File:Henry_George2.jpg) - *Henry George, author of Progress and Poverty.* --- ^Interesting: [^Henry ^George](https://en.wikipedia.org/wiki/Henry_George) ^| [^Georgism](https://en.wikipedia.org/wiki/Georgism) ^| [^Climate ^change ^and ^poverty](https://en.wikipedia.org/wiki/Climate_change_and_poverty) ^| [^Business ^cycle](https://en.wikipedia.org/wiki/Business_cycle) ^Parent ^commenter ^can [^toggle ^NSFW](http://www.np.reddit.com/message/compose?to=autowikibot&subject=AutoWikibot NSFW toggle&message=%2Btoggle-nsfw+cjg6y18) ^or[](#or) [^delete](http://www.np.reddit.com/message/compose?to=autowikibot&subject=AutoWikibot Deletion&message=%2Bdelete+cjg6y18)^. ^Will ^also ^delete ^on ^comment ^score ^of ^-1 ^or ^less. ^| [^(FAQs)](http://www.np.reddit.com/r/autowikibot/wiki/index) ^| [^Mods](http://www.np.reddit.com/r/autowikibot/comments/1x013o/for_moderators_switches_commands_and_css/) ^| [^Magic ^Words](http://www.np.reddit.com/r/autowikibot/comments/1ux484/ask_wikibot/)",
"title": ""
},
{
"docid": "589c916aea3a5fdabf66704468b2d677",
"text": "Here is a list of threads in other subreddits about the same content: * [Wealth Management Products in China [pdf]](https://www.reddit.com/r/Economics/comments/78kwt4/wealth_management_products_in_china_pdf/) on /r/Economics with 3 karma (created at 2017-10-25 10:50:52 by /u/LtCmdrData) ---- ^^I ^^am ^^a ^^bot ^^[FAQ](https://www.reddit.com/r/DuplicatesBot/wiki/index)-[Code](https://github.com/PokestarFan/DuplicateBot)-[Bugs](https://www.reddit.com/r/DuplicatesBot/comments/6ypgmx/bugs_and_problems/)-[Suggestions](https://www.reddit.com/r/DuplicatesBot/comments/6ypg85/suggestion_for_duplicatesbot/)-[Block](https://www.reddit.com/r/DuplicatesBot/wiki/index#wiki_block_bot_from_tagging_on_your_posts) ^^Now ^^you ^^can ^^remove ^^the ^^comment ^^by ^^replying ^^delete!",
"title": ""
},
{
"docid": "d1ccc64f25d64a7a008f03af546ed1c3",
"text": "I don’t think you know what is right or wrong. This is the third time you’ve called me out, and the third time you were mistaken. The starving man is starvinf because he lacks food. Give him a million dollars in the middle of Antarctica, and he will still starve. These false equivalences you have presented above are where so many of our problems come from. People forget the value of reality over currency. The Mother’s affection does have monetary value. It just isn’t so easily quantifiable. See: Psychiatrists and Psychologists. They make money off these issues. The financial value can be seen in the correction of the consequences from lack of affection. To PAY for affection, trust, loyalty, so many of the “social” properties we rely on, though, negates some or all of their value. You assume so many rules that just aren’t supported by reality. Your economic theories seem to fail when faced with the nuances of reality, especially those economics has ignored. That’s my opinion, anyway.",
"title": ""
},
{
"docid": "7d9410b7aae95bb7a36206e0ecfa5102",
"text": "> By volume? % of GDP > this is a relative term relative to other countries. ie soviet union, european nations, ... > I'm pretty sure everything you know of economics comes from Econ 101, Ayn Rand or both. i was an econ minor at northwestern (pretty much all Keynesian teaching). i also read a lot of stuff by various austrian economists. > I'm not going to spend 10 minutes diagramming this sentence. there's nothing wrong or untrue about that sentence",
"title": ""
},
{
"docid": "3c9ed0056ff789546cac2040d1a25920",
"text": "Internet sites Books Academic",
"title": ""
},
{
"docid": "7664a51de25f2cd352a3584104a914df",
"text": "Those are the three books that were considered fundamental at my university: Investments - Zvi Bodie (Author), Alex Kane (Author), Alan Marcus (Author), Stylianos Perrakis (Author), Peter Ryan (Author) This book covers the basics of financial markets. It explains how markets work, general investing principles, basic risk notions, various types of financial instruments and their characteristics and portfolio management principles. Futures and Options markets - John C. Hull This book goes more in depth into derivatives valuation and the less common / more complex instruments. The Handbook of Fixed Income Securities This books covers fixed income securities. In all cases, they are not specifically math-oriented but they do not shy away from it when it is called for. I have read the first and the other two were recommended by professors / friends now working in financial markets.",
"title": ""
},
{
"docid": "d51a63597564a2f29ef677a8ed261044",
"text": "I'll add Robert Shiller's [Irrational Exuberance](https://en.wikipedia.org/wiki/Irrational_Exuberance_(book) too, to summarize the recent era of Wall Street booms and busts. The best books I've ever read on finance are [Nassim Taleb](https://en.wikipedia.org/wiki/Nassim_Nicholas_Taleb)'s. But they're mostly about his own analysis of financial phenomena, and they approach financial history mostly from that highly unique viewpoint.",
"title": ""
},
{
"docid": "c676034e77126d6307f5bcf92dad9b6e",
"text": "\"there's a planet money podcast interview with him from a few years back that gives a good glimpse into the framework of his economic thoughts worth checking out. he also wrote a book caller \"\"fault lines\"\" that is definitely worth the read.\"",
"title": ""
},
{
"docid": "c1447a9322867e543ff294236633f619",
"text": "You can go to Goodwill or a used book store in town and find a college level textbook Economics courses are usually broken down into General Econ, Micro Econ and Macro Econ... after those you can into more focus aspects of economics like Economies of Scale and history.. You can look up more about opportunity costs, supply and demand, guns and butter.. that's what I remember from my General Econ courses. --- Also, this sub doesn't really have anything to do with Economics as far as academics goes. It's more about the current events of economic policy.",
"title": ""
},
{
"docid": "f59ce08702cf602578f2462074f39c79",
"text": "\"Chicken or Egg? ----- Demand alone is not enough. Else famines would never happen, food would just magically appear in response to people's (overwhelming) desire to consume same. Likewise, Supply alone is insufficient as well: there are plenty of products and services that are produced, but which are unwanted and go unused. An ECONOMY is just a conceptual aggregate of countless thousands, millions and billions of individual (and often distinct) acts of matching up Supply WITH Demand. The fundamental error of aggregate-level \"\"economics\"\" is imagining that all of those interactions can be controlled as if they were somehow homogenous when they are everything but.\"",
"title": ""
},
{
"docid": "5870e9397fad6826ba3e8b63374fae07",
"text": "Not exactly nonfiction, but [Reminiscences of a Stock Operator](https://en.wikipedia.org/wiki/Reminiscences_of_a_Stock_Operator) is a can't-skip portrait of the very early days of Wall Street (early 20th century). It's a narrative memoir, not a work of analysis, which makes it an easy read. If you're looking for something more analytical and recent (but not too recent), the can't-skip recommendation I would make is Burton Malkiel's [A Random Walk Down Wall Street](https://en.wikipedia.org/wiki/A_Random_Walk_Down_Wall_Street). If you're looking for something more in the biographical range, I'd look for a biography of the man who's had the most influence on the theory of portfolio construction, [Harry Markowitz](https://en.wikipedia.org/wiki/Harry_Markowitz). I don't have any titles to recommend here, although [this brief biography](http://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/1990/markowitz-bio.html) might help you decide how to proceed.",
"title": ""
}
] |
fiqa
|
b022cb9f5cefca22a4ec19030d0cb1d7
|
Closing a credit card with an annual fee without hurting credit score?
|
[
{
"docid": "68783a5b04d0137e5486a0089d3501a1",
"text": "The two factors that will hurt you the most is the age of the credit account, and your available credit to debt ratio. Removing an older account takes that account out of the equation of calculating your overall credit score, which can hurt significantly, especially if that is the only, or one of just a couple, of open credit lines you have available. Reducing your available credit will make your current debt look bigger than what it was before you closed your account. Going over a certain percentage for your debt to available credit can make you look less favorable to lenders. [As stated above, closing a credit card does remove it from the credit utilization calculation which can raise your debt/credit ratio. It does not, however; affect the average age of credit cards. Even closed accounts stay on your credit report for ten years and are credited toward average age of cards. When the closed credit card falls off your report, only then, will the average age of credit cards be recalculated.] And may I suggest getting your free credit report from https://www.annualcreditreport.com . It's the only place considered 'official' to receive your free annual credit report as told by the FTC. Going to other 3rd party sites to pull your credit report can risk your information being traded or sold. EDIT: To answer your second point, there are numerous factors that banks and creditors will consider depending on the type of card you're applying for. The heavier the personal rewards (cash back, flyer miles, discounts, etc.) the bigger the stipulation. Some factors to consider are your income to debt ratio, income to available credit ratio, number of revolving lines of credit, debt to available credit ratio, available credit to debt ratio, and whether or not you have sufficient equity and/or assets to cover both your debt and available credit. They want to make sure that if you go crazy and max out all of your lines of credit, that you are capable of paying it all back in a sufficient amount of time. In other words, your volatility as a debt-consumer.",
"title": ""
}
] |
[
{
"docid": "de2025b241f8fe7e14defc87ce78a3fd",
"text": "\"One key point that other answers haven't covered is that many credit cards have a provision where if you pay it off every month, you get a grace period on the interest. Interest doesn't accrue at all unless you rollover a non-zero balance. But if you do, you pay interest on the average balance, not the rolled-over balance, for the entire month. You have to ask yourself what you are trying to accomplish with your credit history? Are you trying to maximize your \"\"buying power\"\" (really, leverage)? Or are you trying to make sure that you get the best terms on a moderately sized loan (house mortgage, car note)? As JohnFx and losthorse already noted, it's in the banker's best interest to maximize the profit they make off of you. Of course, that is not in your best interest. Keeping a credit card balance from month to month definitely feeds the greedy nature of the financing beast. And makes them willing to take more risks, because the returns are also higher. But those returns cost you. If you are planning to get sensible loans in the future, that you can comfortably afford, you won't need a maxed credit score. You won't get the largest loan amounts, but because you are doing the sensible thing and making a large down payment, the risk is also very low and you'll find lenders willing to give you a low interest rate. Because even though the reward is lower than the compulsive purchaser who pays an order of magnitude more in financing fees, the return/risk ratio is still very favorable to the bank. Don't play the game that maximizes their return. That happens when you have a loan of maximum size, high interest rate, and struggle to make payments, end up missing a couple and paying late fees, or request forbearance which compounds the interest. Play to minimize risk.\"",
"title": ""
},
{
"docid": "9db5f2bb069cd14d9733940060d165ac",
"text": "\"The biggest (but still temporary) ding you'll see on your credit score from opening a new account is from the low average (and low minimum) account age. This will have a stronger effect than the hard pull of the credit report, which is still a factor (but not much of one if you only have 1-2 pulls in the past couple years). Having a lower average account age increases your risk to lenders. Your average will go up by one month per month, and each time you open an account it will suffer a drop proportional to the number of accounts you already had open before. So if you want to have a more \"\"solid\"\" credit score that stays strong in the face of new accounts in the future, it's better to open a few more accounts now (assuming you can ride out the temporary drop in score and aren't planning to go e.g. mortgage-shopping in the very near future). Having an additional line of credit will also likely cause your credit card utilization (total balance / total credit limit, expressed as a percentage) to decrease, which would tend to increase your credit score, counteracting the age factor, unless your utilization is already extremely low (which it probably is given your monthly account payoffs). There are various credit score simulators out there, from places that show you your credit score, and you can put in a hypothetical new card account to see the immediate likely impact for your particular situation. You identified other costs, such as risk of fraud and fees. You should check your statements once in a while even if you're not using the card, just to make sure no one else is. The bit of additional time required for this is a nonzero cost of having an open credit card account. So is the additional hassle of dealing with having the card stolen etc. if you carry it in your wallet and your wallet's stolen. If you have an account with zero activity for some number of years, the bank may close it automatically and that can reflect negatively on a credit report (as a bank closure of the account, the reason is often obscured). Check your terms and conditions and/or have some activity every so often to prevent this from happening. Some of the otherwise most attractive credit cards have monthly or annual fees, which will cost you, and you won't want to close those because it would then reduce your credit score (e.g. by reducing the total available credit and increasing your utilization percentage) - so the solution is don't apply for credit cards that have monthly/annual fees. There are plenty of good cards without those fees. With a credit score that high, you can get cards that have some very good benefits and rewards programs, as well as some with great introductory offers. Though I'm not familiar with details of Amazon's offer, $80 cash up-front with nothing else seems unlikely to be among your best options. I would think that for at least some of the fee-free cards available to you, the benefits exceed the costs, and you could \"\"cash in\"\" some of the benefits of your good credit record to get those benefits (i.e. this is one of those things you work hard to build good credit for), while also building your long-term reputation for repayment reliability. Also be aware as you shop around for cards that credit card companies pay fairly high referral fees to websites that send customers their way, so if you want you can think about who you're supporting when you click the link that takes you to an application you complete, and choose to support a site you think is providing a useful consumer-focused service. As factors affecting your credit score in addition to payment history (i.e. making regular payments as agreed on the new account will help you), Equifax lists:\"",
"title": ""
},
{
"docid": "8d993d1e702f9e83f0ef2b0d52494616",
"text": "Your best option is just to pick a card that gives you the best (highest) rewards without charging you an annual or other fees (or the lowest annual or other fees). As you are looking to pay off the full balance by the due date you won't have to worry about the interest rate but just make sure you get an interest free period.",
"title": ""
},
{
"docid": "5fa2fdb9afac53bf36b34740cd97dec0",
"text": "\"The question asked in your last paragraph (what's the downside) is answered simply; if you take out a loan and close the cards, that's a ding on your score because your leverage ratio on this portion of your credit jumps to 100% or more, and because you'll be reducing the average age of your lines of credit (one line of credit a few days old versus five lines of credit several years old each). If you take out the loan and don't close the accounts, it's one more line of credit, increasing your total credit, lowering your leverage, but making institutions more reluctant to give you any more credit until they see what you'll do with what you have. In either case, assuming you can get the loan at less than the average rate of the cards (that's actually not a guarantee; a lot of lenders will want APRs in the 20s or 30s even for a title loan or other collateralized loan), then your cost of capital will also go down. That gives you more of a gap of discretionary income that you can better use to \"\"snowball\"\" all this debt as you are planning. Another thing to keep in mind is that the minimum payment changes as the balance does. The minimum payment covers monthly interest at least, and therefore varies based on your interest rate (usually variable) and your balance (which will hopefully be decreasing). A constant payment over the current minimum, much like a more traditional amortization, would be preferable.\"",
"title": ""
},
{
"docid": "312d32a49042514a7405bb87a35c97c5",
"text": "I disagree with the reply. Your both impressions are correct. - Do not close old credit cards because they keep your credit rating high (fico score) - Also low utilization that credit cards report to credit rating companies, improves your rating.",
"title": ""
},
{
"docid": "469cdfdf93fe42ed1e5dee41831d0e41",
"text": "\"paying it off over time, which I know is the point of the card That may very well be the card issuer's goal, but it need not be yours. The benefits, as your question title seems to ask for - That said, use the card, but don't spend more than you have in your checking account to pay it when the bill comes. What you may want to hear - \"\"Charge the furniture. Pay it off over the next year, even at 20%/yr, the total interest on $2000 of furniture will only be $200, if you account for the declining balance. That's $4/week for a year of enjoying the furniture.\"\" You see, you can talk yourself into a bad decision. Instead, shop, but don't buy. Lay out the plan to buy each piece as you save up for it. Consider what would happen if you buy it all on the card and then have any unexpected expenses. It just gets piled on top of that and you're down a slippery slope.\"",
"title": ""
},
{
"docid": "2c9c75c629be6d5071b24dbc148034f2",
"text": "Please realize that your issuer can close the account for any number of reasons. Inactivity is one, as having a credit line open costs them money and if you never charge anything, the company doesn't get any transaction fees from vendors nor does the company get to charge you any interest. An occasional charge is likely to keep your card from being closed automatically, but it is not a guarantee. Another reason they may close the account is that you have other bad marks show up on your credit score, or their criteria for offering you the card change so you no longer match their target demographic. I have a credit card issued by my credit union that I have not used for a couple of years. They will not close the card account because my other accounts are still very profitable for them. If I were not an otherwise profitable customer, I wouldn't be surprised if they closed my credit card account. If you are serious about keeping the account open, you should probably have more than a trivial amount of usage.",
"title": ""
},
{
"docid": "6d47872c305ac82a7baf1b8d3fd8b0b2",
"text": "The difference in interest is not a huge factor in your decision. It's about $2 per month. Personally I would go ahead and knock one out since it's one less to worry about. Then I would cancel the account and cut that card up so you are not tempted to use it again. To address the comments... Cutting up the card is NOT the ultimate solution. The solution is to stop borrowing money... Get on a strict budget, live on less than what you bring home, and throw everything you can at this high-interest debt. The destroying of the card is partly symbolic - it's a gesture to indicate that you're not going to use credit cards at all, or at least until they can be used responsibly, not paying a DIME of interest. It's analogous to a recovering alcoholic pouring out bottles of booze. Sure you can easily get more, but it's a commitment to changing your attitude and behavior. Yes leaving the card open will reduce utilization and improve (or not hurt) credit score - but if the goal is to stop borrowing money and pay off the other card, then once that is achieved, your credit score will be significantly improved, and the cancelling of the first card will not matter. The card (really both cards) should never, ever be used again.",
"title": ""
},
{
"docid": "3bee47d0f50380f7d37d3db993228a35",
"text": "There's no harm in keeping them open. Like you said, closing the lines will potentially hurt your utilization. The extent of that impact will depend on your particular situation. There are situations where closing a line will have no actual impact on your utilization. If you have 100k of open credit and a debt load of $2k, if you close a $10k line you won't really have an issue because your utilization is 2% and closing the line will take you to 2.2%.",
"title": ""
},
{
"docid": "cb85de0b7686d07f00729fa1f49c9002",
"text": "The U.S. bankruptcy laws no longer make it simple to discharge credit card debt, so you can't simply run up a massive tab on credit cards and then just walk away from them anymore. That used to be the case, but that particular loophole no longer exists the way it once did. Further, you could face fraud charges if it can be proven you acted deliberately with the intent to commit fraud. Finally, you won't be able to rack up a ton of new cards as quickly as you might think, so your ability to amass enough to make your plan worth the risk is not as great as you seem to believe. As a closing note, don't do it. All you do is make it more expensive for the rest of us to carry credit cards. After all, the banks aren't going to eat the losses. They'll just pass them along in the form of higher fees and rates to the rest of us.",
"title": ""
},
{
"docid": "e05a4fe9b8fc3d695a78129c4107f782",
"text": "\"FICO 08, a newer fico formula that many lenders are simultaneously switching to now, ignores artificially lengthened credit history/score by piggybacking. So don't feel left out in that regard. Average age of accounts is affected when closed accounts fall off your credit report, which can take 7 years, not just by closing them. But I'm not familiar with the latest \"\"weightings\"\" of these things, so its tough to say how significant it will be when that happens. There are also newer FICO formulas, that may become relevant 7 years from now, so it is definitely something to be conscious of but they aren't immediately consequential, since you can do other things to improve your credit worthiness in the near term.\"",
"title": ""
},
{
"docid": "ba5b7274a04a768d3faedd8fe82590a8",
"text": "I've got a card that I've had for about 25 years now. The only time they charged me interest I showed it was their goof (the automatic payment failed because of their mistake) and they haven't cancelled it. No annual fee, a bit of cash back. The only cards I've ever had an issuer close are ones I didn't use.",
"title": ""
},
{
"docid": "886e255b1882e28b54fd09c9515931c6",
"text": "You can always cancel the card and close this account. Consider switching to a bank that has better customer service. Closing accounts typically gets a lot of attention and it's fairly likely they will contact you to reconsider and so you'll have a chance to air your grievances. Whether they have anything to offer that would cause you to stay is for you to decide.",
"title": ""
},
{
"docid": "4e305ff507936645db116a265d935c3f",
"text": "See if the bank has other credit cards they offer. Many banks have multiple ones: some cards have great benefits, others do not; some cards have high rates, some do not; some cards are secured, some do not. If they have a card that you like ask them to switch you to the card you want. They should be able to do so very easily. Your card number will change, but they will treat it is a replacement so that your credit score will not take a hit during the switch. It may be possible to get them to waive the annual fee, but most won't because each card type they offer are separate products so they only allow you to pick one of their options. If they don't have a card to your liking apply for a card from anther bank that has the benefits and annual fees (zero) that you are looking for. It may be that the new card will start with a lower limit, but it will increase over time, especially as you shift more of your business to the new card. When you cancel the old card before the next year rolls around you will take a small short hit to your credit score, but that is ok.",
"title": ""
},
{
"docid": "d8a0ea3b3dde6eb528f6510f15113ddb",
"text": "\"There are two factors in your credit score that may be affected. The first is payment history. Lenders like to see that you pay your bills, which is the most straightforward part of credit scores IMO. If you've actually been paying your bills on time, though, then this should still be fine. The second factor is the average age of your open accounts. Longer is considered better here because it means you have a history of paying your bills, and you aren't applying for a bunch of credit recently (in which case you may be taking on too much and will have difficulties paying them). If this card is closed, then it will no longer count for this calculation. If you don't have any other open credit accounts, then that means as soon as you open another one, your average age will be one day, and it will take a long time to get it to \"\"good\"\" levels; if you have other matured accounts, then those will balance out any new accounts so you don't get hit as much. Incidentally, this is one of the reasons why it's good to get cards without yearly fees, because you can keep them open for a long time even if you switch to using a different card primarily.\"",
"title": ""
}
] |
fiqa
|
4802f394f71a534b25deaa6ffce57888
|
Is there any chance for a layperson to gain from stock exchange? [duplicate]
|
[
{
"docid": "f36cd41b21b29b8de79e613e25b725aa",
"text": "Currencies are a zero-sum game. If you make money, someone else will lose it. Because bank notes sitting in a pile don't create anything useful. But shares in companies are different, because companies actually do useful things and make money, so it's possible for all investors to make money. The best way to benefit is generally to put your money into a low-cost index fund and then forget about it for at least five years.",
"title": ""
},
{
"docid": "f1bb13083fe7110e1148166ae2d565b1",
"text": "It depends what you mean by 'gain'. Over long period of times the market increases so using a blind monkey with a dart or index fund should be sufficient to get an average returns. The key difference is that changes in currency are close to zero sum game while money in equity or bonds is actually used for something (building a company etc.). If you mean 'get above average returns' then you will likely get answers depending on person. If you think that markets are efficient then you won't beat the market consistently - over long periods the returns are likely to be no better then average - because of large number of 'smart people' trying to beat each other (and even them are likely to have below-average returns). If you don't think so then it is possible to get above average consistently - as long as you know how to beat those 'smart people'.",
"title": ""
},
{
"docid": "15eea65830ec471dbb2b7d7acf7f652a",
"text": "No. As long as you are sensible, an average person can make money on the stock market. A number of my investments (in Investment trusts) over the last 10 yeas have achieved over 200%. You're not going to turn $1000 into a million but you can beat cash. I suggest reading the intelligent investor by Graham - he was Warren Buffet's mentor",
"title": ""
}
] |
[
{
"docid": "9dddc1a47be34d8ba56d8071a8d8f94b",
"text": "\"If they could really do this, do you really think they would be wasting their time offering this course? You are being lied to. (Or more accurately: It's certainly possible to gamble and get lucky, but those gambles are more likely to result in your rapidly losing your money than in your rapidly gaining value.) It is possible to make money in the market. But \"\"market rate of return\"\" has historically averaged around 8%. That won't make you rich by itself, but it's better return than you can get from banks... at higher risk, please note. There are places in the market where, by accepting more risk of losing your money, you can improve on that 8%. For me the risk and effort are too much for the potential additional gains, but de gustibus.\"",
"title": ""
},
{
"docid": "52df732c4df329442fc20ebc702e5e89",
"text": "This is one of the simplest demonstrable examples of a non-intuitive result. (And has a ton of utility for corporate strategy, not just trade ... but many business managers do not understand it). Statistics and exponential growth contain others simple-to-prove non-intuitive results. People need to study this type of stuff more ... brains are no good at understanding reality. David Ricardo was *the* man.",
"title": ""
},
{
"docid": "69e4603c713071cd9e01609a98732949",
"text": "Stock trading (as opposed to IPO) doesn't directly benefit the company. But it affects their ability to raise additional funds; if they're valued higher, they don't need to sell as many shares to raise a given amount of money. And the stockholders are part owners of the company; their votes in annual corporate meetings and the like can add up to a substantial influence on the company's policies, so the company has an interest in keeping them (reasonably) happy. Dividends (distributing part of the company's profits to the stockholders) are one way of doing so. You're still investing in the company. The fact that you're buying someone else's share just means you're doing so indirectly, and they're dis-investing at the same time.",
"title": ""
},
{
"docid": "a0650fb0155b8c0c25bca8f943ce5715",
"text": "\"I tried to read a couple of articles, most are behind a paywall. Hopefully you'll forgive me for thinking the whole page looked like a bunch of corporate propaganda- an entire page of \"\"here's why everyone is wrong about us\"\" with formatting from the early 2010s. Maybe you can walk me through this. You've got thousands of mathematicians and engineers who could be designing something useful instead spending time accomplishing nothing except for fractionally beating each other at trading \"\"paper\"\" assets. Similarly you have construction crews that could be expanding internet capability, instead laying cable some guys can signal trades sooner than other guys. The positions HFTs hold are so short, they can't possibly be benefiting from the actual overall change in value of the underlying assets, which happens over the course of months, not microseconds. So the only possible returns come from \"\"taking\"\" someone else's value. I'm not making a moral judgement, here I'm pointing out that there's no net benefits to society.\"",
"title": ""
},
{
"docid": "225fecb9a626a65fd7274665d27907a7",
"text": "> Honestly, I think this open access to the stock market whereby anyone can be a 'trader' is a terrible thing. Really? Could you please elaborate? Do you think it's a flaw in the stock market system itself or in peoples' financial education?",
"title": ""
},
{
"docid": "d98a1a97eb6179caef1f1e5c9c6958c7",
"text": "\"Not at all impossible. What you need is Fundamental Analysis and Relationship with your investment. If you are just buying shares - not sure you can have those. I will provide examples from my personal experience: My mother has barely high school education. When she saw house and land prices in Bulgaria, she thought it's impossibly cheap. We lived on rent in Israel, our horrible apartment was worth $1M and it was horrible. We could never imagine buying it because we were middle class at best. My mother insisted that we all sell whatever we have and buy land and houses in Bulgaria. One house, for example, went from $20k to EUR150k between 2001 and 2007. But we knew Bulgaria, we knew how to buy, we knew lawyers, we knew builders. The company I currently work for. When I joined, share prices were around 240 (2006). They are now (2015) at 1500. I didn't buy because I was repaying mortgage (at 5%). I am very sorry I didn't. Everybody knew 240 is not a real share price for our company - an established (+30 years) software company with piles of cash. We were not a hot startup, outsiders didn't invest. Many developers and finance people WHO WORK IN THE COMPANY made a fortune. Again: relationship, knowledge! I bought a house in the UK in 2012 - everyone knew house prices were about to go up. I was lucky I had a friend who was a surveyor, he told me: \"\"buy now or lose money\"\". I bought a little house for 200k, it is now worth 260k. Not double, but pretty good money! My point is: take your investment personally. Don't just dump money into something. Once you are an insider, your risk will be almost mitigated and you could buy where you see an opportunity and sell when you feel you are near the maximal real worth of your investment. It's not hard to analyse, it's hard to make a commitment.\"",
"title": ""
},
{
"docid": "bf9700a40846d89acd57e1341d961289",
"text": "Before you decide on moving into trading, whether you have experience or not, you need to sort out a couple of questions. How much do you really understand about the markets ? How much money you have and what would be the maximum loss you may be able to take ? What supporting Eco-system you have to help you in terms of trading i.e. hardware, software, research, connections who can provide you with solid information and sorts of it ? Are you really prepared to take on institutions who have billions to spend and take losses i.e. amounts which might break you will be peanuts for them ? I am assuming you are in US, so this website may help you a bit, trading websites where you can open an account. Even if you reply in affirmative to the above questions, you should still be wary about making money by trading. It is a field where even the best people have been smacked in the face without any mercy. And above all don't expect any person will take mercy on your hard earned cash. They will take you to the cleaners if they have to. There are some websites which allow you to participate in trading, not involving real money. Try that out and see where you get to ? That should give you some pointers on where you are headed. And realize that it is human nature to assume, when you hear news that such and such trader make loads of money in such and such trades, trading is easy, unless you do it for yourself. The truth is such traders would be on their desk for 18-20 hours at a stretch, 6-7 days a week, without a life to make such money. And they have loads of support staff i.e. analysts, IT guys who makes it easier for them. Do you have such help ? If no, then look the other side. But giving up without trying at all will be cowardly, but do it in limits which you can bear and not to get carried away when things are good.",
"title": ""
},
{
"docid": "096893f66144d372513ee827938fe573",
"text": "It's not primarily more people investing. In the 1980s stock exchanges went from open outcry trading floors where all trades involved actually exchanging pieces of paper to electronic trading. Once that happened, it wasn't long before most trades were executed by computer programs rather than human beings, turning stocks over rapidly for very short-term profits rather than long-term investment, greatly increasing the number of trades (and also increasing liquidity for the actual investors; it's by no means all bad).",
"title": ""
},
{
"docid": "bb28cf4e4e06bf5115246d92fa92e80b",
"text": "\"There's a huge difference between \"\"can an anverage person make a profit on the stock market\"\" and \"\"can an average person get rich off the stock market\"\". It is certainly possible for an average person to profit, but of course you are unlikely to profit as much as the big Wall Street guys. An S&P 500 index fund, for instance, would be a pretty good way to profit. People with high-powered tools may make a lot of money picking individual stocks, and may even make some choices that help them when the market is down, but it's difficult to see how they could consistently make money over the long term without the S&P 500 also going up. The same applies, to varying extents, to various other index funds, ETFs, and mutual funds. I agree with littleadv that there is no single \"\"right\"\" thing for everyone to do. My personal take is that index funds are a good bet, and I've seen a lot of people take that view on personal finance blogs, etc. (for whatever that's worth). One advantage of index funds that track major indexes (like the S&P 500) is that because they are and are perceived as macro-indicators of the overall economic situation, at least you're in the same boat as many other people. On one level, that means that if you lose money a lot of other investors are also losing money, and when large numbers of people start losing money, that makes governments take action, etc., to turn things around. On another level, the S&P 500 is a lot of big companies; if it goes down, some of those big companies are losing value, and they will use their big-company resources to gain value, and if they succeed, the index goes up again and you benefit. In other words, index funds (and large mutual funds, ETFs, etc.) make investing less about what day-trading wonks focus on, which is trying to make a \"\"hot choice\"\" for a large gain. They make it more about hitching your wagon to an extremely large star that is powered by all the resources of extremely large companies, so that when those companies increase their value, you gain. The bigger the pool of people whose fortunes rise and fall with your own, the more you become part of an investment portfolio that is (I can't resist saying it) \"\"too big to fail\"\". That isn't to say that the S&P 500 can't lose value from time to time, but rather that if it does go down big and hard and stay there, you probably have bigger problems than losing money in the stock market (e.g., the US economy is collapsing and you should begin stockpiling bullets and canned food).\"",
"title": ""
},
{
"docid": "7383dd763f68e1302c984a493b88e7fe",
"text": "I don't believe the decision is decided by age or wealth. You only stock pick when a) you enjoy the process because it takes time and if you consider it 'work' then the cost will probably not be offset by higher returns. b) you must have the time to spend trading, monitoring, choosing, etc. c) you must have the skills/experience to 'bring something to the table' that you think gives you an edge over everyone else. If you don't then you will be the patsy that others make a profit off.",
"title": ""
},
{
"docid": "d136f7a305f0ebe8718fdc3b590115ec",
"text": "As Chris pointed out in his comment, smaller stock exchanges may use open outcry. There are several exchanges that use open outcry/floor trading in the US, however, although they aren't necessarily stock exchanges. Having visited the three Chicago exchanges I mentioned, I can personally vouch for their continued use of a trading floor, although its use is declining in all three.",
"title": ""
},
{
"docid": "34ca4c64635f2c69fa7b98f5e381c71c",
"text": "In the real world, there are only two times you'll see that 5% become worth anything - ie, something you can exchange for cash - 1) if another company buys them; (2) if they go public. If neither of these things happen, you cannot do anything with the stock or stock options that you own.",
"title": ""
},
{
"docid": "c06c8d85dd054196a8f18a0c3aee6c83",
"text": "\"Shares are for investors. Most of the rich are investors. Unfortunately, the reverse is not true. But if you want to get rich, the first step is to become an investor. (The second is to become a SUCCESSFUL investor. 50 pounds might be too little. Try to start with at least 500 at a time. You can ADD amounts of 50 pounds. There are definitely fees involved. You will \"\"pay for lessons.\"\" But it will be worth it, if you become even a moderately successful investor. As for rules, they'll teach you the rules. Everyone wants your business. People have gotten (modestly) rich, buying shares here and there. One man told me of investing $600 in a company called Limited, and ending up with $12,000 some years later. BRIC is not a \"\"share.\"\" It is an acronym for four countries \"\"of the future.\"\" High risk, high reward here.\"",
"title": ""
},
{
"docid": "ff92842b6e54ec1ee1c815c3f6b8caa2",
"text": "The short answer is yes, it is possible to do what these classes claim, however, it is highly unlikely. For every person they can show you that got rich using whatever so called method they are teaching, there are hundreds of people that didn't that they aren't telling you about. What I would recommend is invest in a well diversified portfolio. If you have a higher tolerance for risk then you can make some of that portfolio out of higher risk/reward investments. Maybe you pick the next Apple or Google or Netflix or whatever but that portion of your portfolio should be money that you can afford to lose in case you pick duds.",
"title": ""
},
{
"docid": "b162c03324b8020cb7acdc8e7c8b3d0f",
"text": "\"Stock returns cannot be evaluated on its own. You need to take into account inflation and the return of other investment vehicles. Over the long run, you want to earn more than your peers (ie inflation), or lose less than them. Stock lets you buy into the profits of a company managed by others. So the fundamental question is \"\"do those company managers make better decision than average person?\"\" Of course there are times when they make awful decisions (eg just before dotcom bubble), and sometimes the best decision is to close the business. But overall those people are much better educated, have higher IQ, more resourceful, etc, and so over long time and across all the companies, this is correct and hence the stock market premium.\"",
"title": ""
}
] |
fiqa
|
fdc5f0df17853767b49b7dd76dc42ee2
|
My bank wants to lower my credit limit on my credit card. Will this impact me negatively?
|
[
{
"docid": "7a973884516a9b20614aa458246f2d06",
"text": "No, it will have no negative impact on getting a mortgage. You are building up a history with regular payments and are not carrying a balance on the card each month. Your ability to get a mortgage will ultimately be based on other things. Money Saving Expert has a good guide on what will affect your credit score. A further discussion on the topic that backs up that what a mortgage company is interested in is affordability and a stable history. They really don't care about utilisation ratios. (Though might be spooked by almost maxed out cards - sign of poor spending control, or large unused limits - too easy to go into bad debt.)",
"title": ""
},
{
"docid": "d30d9944ffb350a939e480f136721847",
"text": "Will having a lower credit limit, which I will still never reach, negatively impact my ability to get a mortgage in future? This would increase your utilization, the percentage of your total available credit that you use at any one time. Because it decreases the divisor, your total available credit, while not changing the dividend, the amount of your credit that you use. In the United States, you generally want utilization to be between 8% and 30%. So if this increases your utilization, it could hurt your credit score (or if your utilization is low enough, possibly help it). I do not know if the rule is the same in the United Kingdom or not, but this site claims that it is at least similar. 22% is an OK utilization, assuming you have no other debt. But a utilization of 17% is closer to 8% and may be better. It may be worth calling them to keep your credit limit where it is if they don't ask too much from you.",
"title": ""
}
] |
[
{
"docid": "f52db782d7f454a32f753ee772bfb8bb",
"text": "Paying weekly to be able to have maneuver room under your credit limit is a way to handle low credit limits. Doing it to boost your credit score when you have no immediate need for a loan is wasting energy. A few months in advance of buying a car or house, you can start to worry about your utilization rate. When you apply for the loan they will pull your credit file, and that will lock in your utilization rates. Then make sure that you pay the balance quickly, and if you need to make a big purchase pay the bill before the account closes for the month. Keep in mind that if you pay the balance every month the highest utilization rate will occur the day the payment is due. This is because it not only has all the purchases from the previous bill, but all the purchases you have made since that bill closed. For example if you have a credit limit of 10K and you spend 2K a month on the credit card, on the day the payment is due it is not unusual to see the total owed to be above 3K. If they pulled your file on that day, your utilization rate would appear to be above 30%.",
"title": ""
},
{
"docid": "074ce24b4b91ea5b5e687d5911d8da83",
"text": "5% cashback? Wow. No, this would not generally affect your credit rating. You aren't altering anything that is generally tracked by the credit rating agencies. You put a purchase on your credit card which temporarily increases your utilisation, but then immediately pay it off, leaving your utilisation practically unchanged.",
"title": ""
},
{
"docid": "6c4abd762163886d13171978d7a9541e",
"text": "If you want to close the card, close it. The impact on your credit score will be minimal, if any, and the impact on your life will likely be even less. First, as you noted, the history from your card does not disappear when you close the card; it will stay on your credit report for as long as 10 years. By that time, you'll have many years of on-time payments from your other cards, and the loss of this one card won't be significant. Because the card has a low credit limit, it won't have much effect on your credit utilization numbers, either. Finally, your credit score might just be high enough that a small drop will have no impact on your financial life whatsoever. In my opinion, hanging onto a credit card you don't want just to try to attain some type of high score is pointless. Close the card.",
"title": ""
},
{
"docid": "f780ede624cc558237341e4335e2dd31",
"text": "The answer to your question is no. Your credit rating is the way creditors let each other know whether you are in a good position and have a strong tendency to repay your debts, not whether you are an easy target for making money on interest and penalties associated with failing to repay debts in full. The fact that you make your payments on time will definitely not lower your credit rating. While the banks are not making as much money on you as they would if you carried a balance, they are also not spending a lot of money on you, nor losing a lot of money on people like you failing to repay debts. The transactions charged to the retailers cover the costs of operating your card and then a little bit. That is enough to make you worth keeping as a customer. They are happy with your arrangement. The formula for credit rating computation is proprietary, but we know what the factors are overall. Making payments on time consistently is a positive, not a negative factor. However, they do look at the number of cards and overall mix of cards and other types of debt. For example, if you have a very large amount of credit capacity in your cards and no mortgage, that could possibly be a negative. If you have opened some of those accounts recently, it could be a negative. If you have a larger number credit cards than they think is good, that could be a negative. There are other things as well that could be bringing your score down. Probably worth it to take a look. If you want to get an idea of what factors are adding positively and negatively to your credit score, I'd encourage you to visit CreditKarma.com, Quizzle.com, or another source intended to help you understand and improve your credit rating.",
"title": ""
},
{
"docid": "0a370c3a336e48f29bfcbc69fc83b868",
"text": "\"Sometimes you need to do more than ask to have your rating reduced. You need to make it in their best interest (no pun intended) to do it. Find the lowest rate card and then tell the others you want to transfer your balance to that card and close the account (don't do it, it is an empty threat). I guarantee they will transfer you to a retention agent who will give you a better deal. From their perspective your current offer is getting 19% interest instead of 22%, why would they do that without some motivation? With the approach described above their options are get 19% interest instead of 0% interest. It is all about negotiation and the \"\"Retention agents\"\" have the most leverage to do so.\"",
"title": ""
},
{
"docid": "bc39ebc96f26ede3ea62f4829612c593",
"text": "\"Generally it is not recommended that you do anything potentially short-term deleterious to your credit during the process of seeking a mortgage loan - such as opening a new account, closing old accounts, running up balances, or otherwise applying for any kind of loan (people often get carried away and apply for loans to cover furniture and appliances for the new home they haven't bought yet). You are usually OK to do things that have at least a short-term positive effect, like paying down debt. But refinancing - which would require applying for a non-home loan - is exactly the sort of hard-pull that can drop your credit rating. It is not generally advised. The exception to this is would be if you have an especially unusual situation with an existing loan (like your car), that is causing a deal-breaking situation with your home loan. This would for example be having a car payment so high that it violates maximum Debt-to-Income ratios (DTI). If your monthly debt payments are more than 43% of your monthly income, for instance, you will generally be unable to obtain a \"\"qualified mortgage\"\", and over 28-36% will disqualify you from some lenders and low-cost mortgage options. The reason this is unusual is that you would have to have a bizarrely terrible existing loan, which could somehow be refinanced without increasing your debt while simultaneously providing a monthly savings so dramatic that it would shift your DTI from \"\"unacceptable\"\" to \"\"acceptable\"\". It's possible, but most simple consumer loan refis just don't give that kind of savings. In most cases you should just \"\"sit tight\"\" and avoid any new loans or refinances while you seek a home purchase. If you want to be sure, you'll need to figure out your DTI ratio (which I recommend anyway) and see where you would be before and after a car refinance. If this would produce a big swing, maybe talk with some mortgage loan professionals who are familiar with lending criteria and ask for their opinion as to whether the change would be worth it. 9 times out of 10, you should wait until after your loan is closed and the home is yours before you try to refinance your car. However I would only warn you that if you think your house + car payment is too much for you to comfortably afford, I'd strongly recommend you seriously reconsider your budget, current car ownership, and house purchasing plans. You might find that after the house purchase the car refi isn't available either, or fine print means it wouldn't provide the savings you thought it would. Don't buy now hoping an uncertain cost-saving measure will work out later.\"",
"title": ""
},
{
"docid": "5fa2fdb9afac53bf36b34740cd97dec0",
"text": "\"The question asked in your last paragraph (what's the downside) is answered simply; if you take out a loan and close the cards, that's a ding on your score because your leverage ratio on this portion of your credit jumps to 100% or more, and because you'll be reducing the average age of your lines of credit (one line of credit a few days old versus five lines of credit several years old each). If you take out the loan and don't close the accounts, it's one more line of credit, increasing your total credit, lowering your leverage, but making institutions more reluctant to give you any more credit until they see what you'll do with what you have. In either case, assuming you can get the loan at less than the average rate of the cards (that's actually not a guarantee; a lot of lenders will want APRs in the 20s or 30s even for a title loan or other collateralized loan), then your cost of capital will also go down. That gives you more of a gap of discretionary income that you can better use to \"\"snowball\"\" all this debt as you are planning. Another thing to keep in mind is that the minimum payment changes as the balance does. The minimum payment covers monthly interest at least, and therefore varies based on your interest rate (usually variable) and your balance (which will hopefully be decreasing). A constant payment over the current minimum, much like a more traditional amortization, would be preferable.\"",
"title": ""
},
{
"docid": "1e4de5ee34553d4e9d81d02d02bd3b5c",
"text": "My card keeps a separate 'cash advance' limit, that's lower than the regular rate. I believe balance transfers also trigger that limit and (much higher) interest rate.",
"title": ""
},
{
"docid": "02438e9bb394de18945773d7b7842e30",
"text": "The only drawback is if you spend more than you can with the new limit and end up having to pay interest if you can't pay the balance in full. Other than that, there are no drawbacks to getting a credit increase. On the flip side, it's actually good for you. It shows that the banks trust you with more credit, and it also decreases your credit utilization ratio (assuming you spend the same).",
"title": ""
},
{
"docid": "75fe4e68887941daac5a00d26e9a3c06",
"text": "Assumptions 1 & 2 are correct. Plus you will improve on credit score. The only disadvantage is if you get lax about it and overspend beyond your limit ... Plus a small risk of fraud of card transactions ...",
"title": ""
},
{
"docid": "c80ca8f9dc887b28b5771edef88368c4",
"text": "\"Here's my crude reasoning: Let's say you have just one recently acquired credit card with a $5000 limit. The company that issued the credit card set the $5000 limit based on however they assessed your risk. Now if you're using a significant portion of of the $5000 limit, it means (at least for them) that you are stretching your wallet. Even if you've been paying monthly consistently and since you are heavily using your limit, it also means that if you lose your primary source of money for even one month, (income etc.), then your risk to the lender increases sharply. Had you been making more money (compared to this $5000 limit) then either you'd have used less % of your available credit or you would've gotten your limits raised by asking your bank to re-evaluate your risk and increase the limit. Also your statement \"\"Why is a US credit score based on credit utilization?\"\" is slightly incorrect. As per FICO, Credit utilization has 35% weight while your payment history has a weight of 35% http://www.creditcards.com/credit-card-news/help/5-parts-components-fico-credit-score-6000.php To sum it up, we can debate if the weight for credit utilization should be higher or lower but unfortunately as others have pointed out, these scores are meant to help lenders not consumers. So whether we like it or not, the secret algorithms to calculate the scores and the actual weights (variables and rules) they use are completely out of our hands.\"",
"title": ""
},
{
"docid": "c04766bd3dd7726caf75ff1eeab53a63",
"text": "\"Your use of the term \"\"loan\"\" is confusing, what you're proposing is to open a new card and take advantage of the 0% APR by carrying a balance. The effects to your credit history / score will be the following:\"",
"title": ""
},
{
"docid": "ff517eaa4f37a33a96c6fd72ce6f821a",
"text": "Overpaying a credit card to create a large positive balance may cause a bank to red flag your account. This is a technique used in fraud for check kiting (write or deposit a fraudulent check to overpay your credit card, then demand a refund on the balance overpaid before the check bounces.) Every bank is different: Talk to your bank first before you try this. For a small balance ($5-20) overpayment isn't a big deal, it happens regularly... just spend down the balance. Past that, you might be harming your credit record or risk closing the account if the bank disagrees with how you are using an overpaid balance for a larger purchase, or you risk unwanted law enforcement attention aimed at your finances. If you are trying to do this to build your creditworthiness, a secured card is better for this purpose. Disagree with your credit limit? Deposit more in the holding account.",
"title": ""
},
{
"docid": "d14711729b97add28c20e2e8b1141186",
"text": "\"I'm the contrarian on this forum. Since you asked a \"\"should I ...\"\" question, I'm free to answer \"\"No, you shouldn't increase your limit. Instead, you should close it out\"\". A credit card is a money pump - it pumps money from your account to the bank's profit margins. When I look at my furniture and the bank's furniture, I know exactly who needs my money more (hint: it's not the bank). Credit cards change people's spending patterns. In my first day of training as a Sears salesman, the use of the card was drummed into our heads. People purchase on average 25% more when they use a card than when they pay cash. That's good if you're a retailer or the lender (at that time Sears was both), but no good if you're a consumer. Build up a $1,000 emergency fund (for emergencies only, not \"\"I need a quick latte because I stayed up too late last night\"\"), then savings for 6 to 12 months living expenses. Close and cut up the credit card. Save up and pay cash for everything except possibly your house mortgage. If you have that much cash in the bank, the bankers will be as willing to talk to you as if you had an 800+ score. I have lived both with and without debt. Life without debt is well worth the short term sacrifice early on.\"",
"title": ""
},
{
"docid": "7bd8572aed467d1f9e285837d5171f92",
"text": "You could use a stock-only ISA and invest in Exchange Traded Funds (ETFs). ETFs are managed mutual funds that trade on open exchanges in the same manner as stocks. This changes the specific fund options you have open to you, but there are so many ETFs at this point that any sector you want to invest in is almost certainly represented.",
"title": ""
}
] |
fiqa
|
bf6cdc79fe7990b0ed048db3b75bf7e9
|
Does anyone offer no interest loans?
|
[
{
"docid": "adc056cda7db92a5b012d40e900b26a8",
"text": "Such loans are of course possible. They exist because the lender gains something other than interest from them: What would happen to the economy if these were common? These are common, common as anything. In fact where it's not banks lending the money, these are the default. So, nothing would happen to the economy, this is one of the ways the economy works all over the world. If you're more interested in a loan from a bank or other financial institution, made to you for whatever purpose you want - here's $10,000, have fun, give it back ten years from now - ask yourself what the bank would get from that? Perhaps they could do it as a perk when you do something else with them like get a mortgage or keep $1000 in your chequing account all the time. But in the absence of any other relationship, what would be their reason for taking on the overhead and paperwork of approving you for a loan and keeping track of whether you're paying it back or not, for no return, whether financial or intangible? No return? It doesn't happen.",
"title": ""
},
{
"docid": "7b000a97892cc975d572e05f9af9505f",
"text": "This is very much possible and happens quite a lot. In the US, for example, promotional offers by credit card companies where you pay no interest on the balance for a certain period are a very common thing. The lender gains a new customer on such a loan, and usually earns money from the spending via the merchant fees (specifically for credit cards, at least). The pro is obviously free money. The con is that this is usually for a short period of time (longest I've seen was 15 months) after which if you're not careful, high interest rates will be charged. In some cases, interest will be charged retroactively for the whole period if you don't pay off the balance or miss the minimum payment due.",
"title": ""
}
] |
[
{
"docid": "832a5559bcaa52f284e96bd250ec057f",
"text": "\"Your thinking is unfortunately incorrect; an amortising loan (as opposed to interest only loans) pay down, or amortise, the principal with each payment. This means that the amount that is owed at prepayment will always be less than the total borrowed, and is also why some providers make a charge for prepayment. The \"\"fairness\"\" arguments that you make predicated on that misunderstanding are, therefore, incorrect.\"",
"title": ""
},
{
"docid": "0289022308ebf38fe78e9fa60167689b",
"text": "Lending isn't profitable when interest rates are this low. Consider what's involved to offer a savings or checking account. The bank must maintain branches with tellers. The bank has to pay rent (or buy and pay property taxes and utilities). The bank has to pay salaries. The bank has to maintain cash so as to make change. And pay for insurance against robbery. All of that costs money. At 6% interest, a bank can sort of make money. Not great money, but it takes in more than it has to pay out. At 4% interest, which is about where ten year mortgage rates are in Canada, the bank doesn't make enough margin. They are better off selling the loan and closing their branches than offering free checking accounts. An additional problem is that banks tend to make money from overdraft fees. But there's been a move to limit overdraft fees, as they target the most economically vulnerable. So Canadian banks tend to charge monthly fees instead. UK banks may also start charging monthly fees if interest rates stay low and other fees get curtailed.",
"title": ""
},
{
"docid": "22e6a67b3772124c6afed7830c1bfb4f",
"text": "\"A \"\"true\"\" 0% loan is a losing proposition for the bank, that's true. However when you look at actual \"\"0%\"\" loans they usually have some catches: There might also be late payment fees, prepayment penalties, and other clauses that make it a good deal on average to the bank. Individual borrowers might be able to get away with \"\"free money\"\", but the bank does not look to make money on each loan, they look to make money on thousands of loans overall. For a retailer (including new car sellers). the actual financing costs will be baked into the sales price. They will add, say, 10% to the sales price in exchange for an interest-free loan. They can also sell these loans to an investment bank or other entity, but they would be sold at a deep discount, so the difference will be made up in the sales price or other \"\"fees\"\". It's possible that they would just chalk it up to promotional discounts or customer acquisition costs, but it would not be a good practice on a large scale.\"",
"title": ""
},
{
"docid": "2030d051b9a4283cf0200420312b9693",
"text": "The bank depends on the laws of large numbers. They don't need to make money on every customer -- just on average. There are several ways that zero interest makes sense to them: You asked about banks, and I don't think you see this last scheme in use very much by a bank. Here's why. First, customers absolutely hate it - and when you drop the interest bomb, they will warn their friends away, blow you up on social media, call the TV news consumer protectors, and never, ever, ever do business with you again. Which defeats your efforts in customer acquisition. Second, it only works on that narrow range of people who default just a little bit, i.e. who have an auto-pay malfunction. If someone really defaults, not only will they not pay the punishment interest, they won't pay the principal either! This only makes sense for secured loans like furniture or cars, where you can repo that stuff - with unsecured loans, you don't really have any power to force them to pay, short of burning their credit. You can sue them, but you can't get blood from a stone.",
"title": ""
},
{
"docid": "4587dc621c938b566c4374e77c0e9888",
"text": "Zero percent interest may sound great, but those deals often have extra margin built into the price to make up for it. If you see 0%, find it cheaper somewhere else and avoid the cloud over your head.",
"title": ""
},
{
"docid": "9e480d3236692273886be154a8499ced",
"text": "\"I read up on it and saw that the IRS can \"\"charge\"\" the loan provider on interest even if the loan provider doesn't charge interest, but this is normally mitigated by the 0% interest being considered a gift and as long as it's below X amount your fine. Yes, this sums it up. X is the amount of the gift exemption, the $14K. However, you must differ between loan with no interest and loan with no paying back. With loan with no interest you're still giving a statutory gift of the IRS mandated minimum interest. However, the principal is expected to be repaid to you and you must show that this expectation is reasonably fulfilled. If you cannot (i.e.: you gave a \"\"loan\"\" with no intention of it being paid back), then the IRS will recharacterize the whole amount as the gift, and you'll be on the hook for gift tax for the amounts above the exemption. What defines a loan vs a gift in terms of the IRS, is it simply that the loan will be paid back, or is it only considered a loan if a promisary note is made? As I said - you must be able to show that the loan is indeed a loan, even if it is with no interest. I.e.: it is being repaid, it is treated as a loan by all parties, and is not an attempt to evade gift tax. Promissory note is not a must, but will definitely be helpful in showing that. But without the de-facto repayment of the loan, it will be hard to argue that it is not a gift, even if you have a promissory note. That means, you should make a loan in such a way that the borrower will (begin) repaying it reasonably soon, so that you can show payment schedule being followed and money moving back to you. Reasonably soon is not of course defined in a statute, so do consult with a EA/CPA licensed in your state on how to structure the loan so that it will not appear as an attempt to evade the gift tax. Are there any limits on how big a loan can be? No, but keep in mind that even with statutory interest charges (published by the IRS monthly, see the link), with large enough loan you can exceed the gift tax exemption. Also, keep in mind that interest is taxable income to you. Even if you gift it back (i.e.: the statutory interest).\"",
"title": ""
},
{
"docid": "aa4a29677cbaabb9dbf2395e17812b4a",
"text": "I mean, at a personal level, I do this all the time. I will absolutely take advantage of low interest financing offers if I know I can make more money with the outstanding balance than will be drawn in interest. It can also make sense from a risk management perspective: I need liquidity even if I can cover the cost, I anticipate needing a large sum of cash over a short interval during the finance period. If I were to pay all upfront the cumulative expenditures would Darwin me too close to my safety threshold for my comfort level, but by financing I can distribute the risk and keep a higher margin for error over the course of the loan.",
"title": ""
},
{
"docid": "43e4ed84fdb1f925cabfef36d8b03482",
"text": "\"Whether or not the specific card in question is truly 0% interest rate for the first 12 months, such cards do exist. However, the bank does make money out of it on the average: Still, 12 months of not having to think about paying the bill. Nice. This is exactly what they want you to do. Then in 12 months, when you start thinking about it, you may find out that you don't have the cash immediately available and end up paying the (usually very large) interest. It is possible to game this system to keep the \"\"free\"\" money in investments for the 12 months, as long as you are very careful to always follow the terms and dates. Because even one mishap can take away the small profits you could get for a 12 month investment of a few thousand dollars, it is rarely worth the effort.\"",
"title": ""
},
{
"docid": "4399251698e20b9d4823ceead594e568",
"text": "\"Tell them you will not loan them any more money until their existing debts are paid off. This is closer to how the real world works and it won't come across as vengeful or like your changing your initial \"\"contract\"\". If they protest, lovingly tell them that your money is not their money, and that an interest free loan from their father is a privilege, not a right. As far as charging interest on your loans, go for it! Charge them 5% or something small. Just don't do it on the existing loans or that will come across as changing your initial \"\"contract\"\" again, and perhaps once they've proven themselves to be reliable borrowers they can once again earn the privilege to have an interest free loan. The book \"\"The Millionaire Next Door\"\" has really good thoughts on this in its section on Economic Outpatient Care.\"",
"title": ""
},
{
"docid": "6a29ceaf87d00765a91c3425175ea0ed",
"text": "Of course, the situation for each student will vary widely so you'll have to dig deep on your own to know what is the best choice for your situation. Now that the disclaimer is out of the way, the best choice would be to use the Unsubsidized Stafford loan to finance graduate school if you need to resort to loans. The major benefits to the Unsubsidized Stafford are the following: You'll be forced to consider other loan types due to the Unsubsidized Stafford loan's established limits on how much you can borrow per year and in aggregate. The borrowing limits are also adjustable down by your institution. The PLUS loan is a fallback loan program designed to be your last resort. The program was created as a way for parents to borrow money for their college attending children when all other forms of financing have been exhausted. As a result you have the following major disadvantages to using the PLUS loan: You do have the bonus of being able to borrow up to 100% of your educational costs without any limits per year or in aggregate. The major benefit of keeping your loans in the Direct Loan program is predictability. Many private student loans are variable interest rate loans which can result in higher payments during the course of the loan. Private loans are also not eligible for government loan forgiveness programs, such as for working in a non-profit for 10 years.",
"title": ""
},
{
"docid": "d8793d06c2f638210aad99902e013eb1",
"text": "Banks worry that the large gift might be a loan that is ultimately expected to be repaid. If so, that affects the cash flow of the recipient, and makes it more difficult to make the mortgage payments to the bank. In some cases, of course, it is an informal loan: Dad advances a large $X to son to use as a downpayent, but does not charge interest and the expectation is that the money will be returned in smaller chunks as and when the son can afford to repay Dad. In some cases, Dad truly means it as a gift, but son feels an obligation to repay the money, if not explicitly, then by paying for the first few months of Dad's nursing home stay, etc. So, banks like to have an explicit document such as a copy of a letter from Dad saying that this money is a gift, and some assurance that this is on the up and up. If the amount is larger than the maximum gift that can be given each year without having to file a gift tax return, then some assurance that a gift tax return will be filed is helpful. Mentioning this in the letter is good: it indicates that there are no secret handshakes or secret agreements to the effect that this is in fact a loan, with or without regular repayments.",
"title": ""
},
{
"docid": "7c8e7d04180bab1c82626651b353546a",
"text": "I funded about a half dozen loans. All were AA or A rated. All but one paid me. The one who stiffed me wiped out all my profit on the others. I ended up with a tiny negative return.",
"title": ""
},
{
"docid": "20dea3b2e4cbbd789235606ea60ee020",
"text": "At your age, the only place you are going to get a loan is from relatives. If you can't... Go to next year's conference. Missing it this year might feel like a disaster, but it really, really isn't.",
"title": ""
},
{
"docid": "998308ee3ff8f396abe59c9e60451502",
"text": "In addition to a fee-only advisor, brought up by dg99, you could consider asking your questions on message boards such as Bogleheads.org. I have found the advice amazing, obviously conflict-free, and free.",
"title": ""
},
{
"docid": "5d443125db4c2e83b1348b20603f284f",
"text": "I have abused 0% interest programs time and time again, but only because my wife and I are assiduous about paying our bills on time. We've mostly taken advantage of it with bigger purchases that we've done through Lowe's or Home Depot (eg - washing machines, carpeting, stove, fridge), but its been well worth it. There are two rules that we set for ourselves whenever we do a 0% interest program -- 1) We have the money already in savings so that we can easily pay it off at any time 2) We agree to pay our monthly bill on time There's nothing quite like using another person's money to buy your things, while keeping your money to gain interest in a savings account.",
"title": ""
}
] |
fiqa
|
6da2af21a50921742f75d4af7f683c87
|
Is there a measure that uses both cost of living plus income?
|
[
{
"docid": "819ebf9d4c042f3f6513c710753e0994",
"text": "\"The key term you're looking for is \"\"purchasing power parity\"\", which considers the local prices of goods and services when making comparisons between countries. For example, you can look up the GDP by PPP per capita to get a sense of much people on average incomes can buy in each country. Of course, average incomes may not be too relevant to your own specific circumstances, but nonetheless you can look at the PPP data itself to figure out how to translate specific numbers between two currencies. However, note that the \"\"basket\"\" of goods used to calculate this measure itself has a significant impact on the results. Comparing prices of food and electronic equipment respectively will often give very different answers.\"",
"title": ""
},
{
"docid": "a5e68cfd5310448c6914a2932f772bb8",
"text": "\"But what if I am getting paid salary from a source in India? In other words, it may be that in India a research assistant at a college on average earns a third of what a research assistant like me earns here in US. In that case, even if my cost of living there is much less, so is my salary. There are sites that provide a good guidance for what the average salary for an profession with x years of experience would be. Of course some would get paid more than average. So you can try and make a logic, if in US say you are being paid more than average, you would be paid more than average elsewhere. Plus If moving from Developed to Developing country, one has the Advantage of positive pedigree bias. There are also websites that would give the Purchasing Power Parity for quite a few currency pairs. The Real difficulty to find is whether the Lifestyle you have in a specific country would be similar in other country. If you compare like for like it becomes slightly skewed. If you compare equivalence, then can you adjust. A relevant example my friend in US had a Independent Bungalow in US. It was with Basement and attic, 2 levels of living space with 4 bedroom. He shifted to India and got a great salary compared to normal Indian salary. However this kind of house in India in Bangalore would be affordable only to CEO's of top companies. So is living in a 3 room apartment fine? There are multiple such aspects. Drinking a Starbucks coffee couple of times a day is routine for quite a few in US. In India this would be considered luxury. A like for equivalent comparison is \"\"One drinks 3-4 mugs of Coffee\"\" in US, and average Indian drinks \"\"Tea/Coffee 3-4 mugs\"\". In India the local Tea / Coffee would be Rs 10 - Rs 20. A Starbucks would come with starting price of Rs 150. The same applies to food. A McBurger in India would be around Rs 100. The Indian equivalent Wada Pav is for Rs 10. A Sub Way would be Rs 150. A Equivalent Mumbai Sandwich around Rs 25. I personally am picky about food, so it doesn't matter where I go, I can only eat specific things, which means I spend a huge amount of money if I am outside of India. When I was in US, I couldn't afford a maid, driver or any help. In India I have 2 maids, a cooking maid and a driver. Plus I get plumber, electrician, window cleaner, and all the help without costing me much. Things that I absolutely can't dream in US. My colleague in UK preferred to stay in a specific locality as it has a very good Church. So if its important, one may find few good ones in India if one is Roman Catholic, if one follows Lutheran, Greek Orthodox, tough luck. Citizenship: Does it matter ... A foreign national may never get an Indian citizenship. Children don't qualify either unless both parents are Indian. Health Care: Again is quite different. One may feel Health care in US is not good or very expensive ... but there are multiple aspects of this. So in essence its very broad there is traffic, cleanliness, climate, culture, etc ... PS: A research assistant in India is poorly paid, because colleges don't have funds. Research in fundamental science is quite low. Industry to university linkages are primitive and now where close to what we have in US.\"",
"title": ""
}
] |
[
{
"docid": "aa83c422dfc7b4bab93c96c31558ad31",
"text": "\"I am admittedly not giving a scientific or mathematical analysis here, just giving my anecdotal take on what I've lived through. I don't know if my assessment of 'tripled' is even accurate, just that there's a palpable sense of things being a lot more expensive & it just seems to me that the cost of living has gone up quite a bit for average people from what it once was, especially considering most of us now have cable bills, internet costs and in my case several different cell phone bills for different members of the family. I realize these are not necessities but they are important things that most people are now expected to have. I didn't mean to imply that we've had \"\"insane\"\" inflation & I understand that these things are mathematically measured as both Core inflation and CPI and by these measures things have held pretty steady. It just seems to me that these sorts of indexes have not yet taken a lot of things into account regarding the realities of modern day living and their resultant expenses.\"",
"title": ""
},
{
"docid": "2f426109acac2cb990efbc3b3026274f",
"text": "You work backwards. A top-down budget. i.e. 'bottom-up' is to list what you want, and perhaps find that there's nothing left for retirement savings, top-down divides from your gross income down to each expense. Say you make $60000/yr, $5000/mo. $1250 is about what you can spend on housing. You can go with the smallest apartment you can tolerate, a tiny 2 BR with roommate, or get the biggest apartment or house you can afford for this money. In the end, this question may be closed as 'opinion-based.' It's not simple to answer and it's more about your own preferences. Quality of life is more than your house/apt size. I've known people who lived in tiny spaces, and used public transportation, but took 3 week-long trips each year. Others who lived in big houses, drove fancy cars, and somehow when their first kid entered high school, realized they had saved nothing for college. Decide on your own priorities and tilt the budget to reflect that.",
"title": ""
},
{
"docid": "074ac03b0e291f45a9afc4600833e3a7",
"text": "True economy consists in always making the income exceed the out-go. Wear the old clothes a little longer if necessary; dispense with the new pair of gloves; mend the old dress; live on plainer food if need be; so that, under all circumstances, unless some unforeseen accident occurs, there will be a margin in favor of the income. A penny here, and a dollar there, placed at interest, goes on accumulating, and in this way the desired result is attained. It requires some training, perhaps, to accomplish this economy, but when once used to it, you will find there is more satisfaction in rational saving, than in irrational spending. Here is a recipe which I recommend; I have found it to work an excellent cure for extravagance, and especially for mistaken economy: When you find that you have no surplus at the end of the year, and yet have a good income, I advise you to take a few sheets of paper and form them into a book and mark down every item of expenditure. Post it every day or week in two columns, one headed “necessaries” or even “comforts,” and the other headed “luxuries,” and you will find that the latter column will be double, treble, and frequently ten times greater than the former. The real comforts of life cost but a small portion of what most of us can earn. Dr. Franklin says “it is the eyes of others and not our own eyes which ruin us. If all the world were blind except myself I should not care for fine clothes or furniture.” It is the fear of what Mrs. Grundy may say that keeps the noses of many worthy families to the grindstone. In America many persons like to repeat “we are all free and equal,” but it is a great mistake in more senses than one.",
"title": ""
},
{
"docid": "b01c6e1d2a78ef5f00f3ba1ab810f5f4",
"text": "\"To begin, I'm not sure you understand what COL refers to. It's what you spend, not what you bring in. Let's say Bob makes 60k in some midwest town, but spends 30k for living. If his salary and his cost of living both increase at the same rate, let's say they both double, this means Bob now makes 120k but spends 60k. He now saves double what he would have before. That 30k extra saved is 30k extra saved. His purchasing power has now gone greatly up, especially in respect to housing outside of an expensive area like the valley. For one, let me clear this up - SF, the city itself, is expensive. I'm talking more generally about the bay area, and silicon valley as a whole. Most tech jobs from the big tech companies that we think of as \"\"the bay\"\" are not in SF. they are in mountain view, Sunnyvale, and that area. So this might explain some of our disagreements. Most people who work for large tech companies understand they have a decision to make - live in the city proper, pay a lot more than the greater valley, use transit into work (all of the giants have regular shuttles in), but get to love a more \"\"hip\"\" life, or be more conservative in the valley, where rental prices are on par with NYC. In talking to a lot of people who work for the big companies, they know this. Younger folks who want to live the city life pay the premium, but by far and wide they live outside of it, where it is closer to work, and they take the rail up for weekends out with buddies. I'm still not sure where you are getting a doubling of the COL in the valley versus outside. Yes, housing as a single item is going to be a person's largest expense. But all the rest of their expenses are not going to see a similar increase. It's also important to remember that saving 10% of 60 v 10% of 120 is significantly different. Lots of people take jobs in the valley, are able to save vastly larger amounts of cash, and then leave. In my calculations I evaluated the COL markup to be ~30% for the valley for a 200k job. That is, I spend maybe 50k of my earning on all living expenses in the Midwest (in a downtown, nice area), and would expect I'd pay about 70k for the same standard in the valley. But I'd be saving a shitton more. I've done the math, I'm not here to argue with someone who just googled SF cost of living searching for the answers I want. I've talked to actual people out there. I appreciate your passion for this, but your 100% increase in COL estimate is simply wrong. But then again, it depends on how you live and where you live in your current situation. I live in a large midwest city, actually in the city itself.\"",
"title": ""
},
{
"docid": "7b9c926e47c626abd0e033e310e063e1",
"text": "Let an app do it for you, group items and see where you spend your money. One example: https://www.tinkapp.com/en/ Should provide a starting point for showing income vs expenses.",
"title": ""
},
{
"docid": "b7089553b51cc256baf371ae747cacfe",
"text": "The long-run goal is to eliminate poverty through wealth creation. If that makes for some weird new social interactions, I'd say that's a reasonable cost. I mention comparing to earlier periods simply as a measure of progress to determine whether or not there is a problem that needs correction, such as a specific group in society experiencing real wage stagnation, or truly anemic growth rates relative to earlier periods. It's the slope of the trend line for each group that I'd be worried about, where linear or exponential is good, and logarithmic should indicate a potential crisis. Ultimately, I believe that it's not a persons absolute circumstances that matter, but the rate at which those circumstances are improving throughout their lives that most strongly affects their subjective well-being (but that's just my theory). As for real estate costs, you're absolutely correct that this is a problem, but it's as easily explainable problem. Supply is artificially constrained in most of the US due to the need for explicit government permission (in the form of building permits and zoning laws) in order to build new units. Basic economics says that when supply is artificially restricted, prices will rise. In areas where government is restrictive, such as San Francisco, prices rise sharply. In places where government is more permissive, like Houston, prices remain much more reasonable.",
"title": ""
},
{
"docid": "ed757364d1d17b0da0f0cf424818d2b0",
"text": "Yea, so they mention household and income....Am I supposed to count both my spouse income and my own? Because if that's true...then I'm part of the 1% at 27, yet it sure as shit doesn't feel like it.",
"title": ""
},
{
"docid": "9f910dd25fe2c3ef06ed799d1f813b10",
"text": "\"It's very hard to measure the worth of an abstract concept like money, particularly over long periods of time. In the modern era we have things like the Consumer Price Index (CPI) in the United States, where the Bureau of Labor Statistics literally sends \"\"shoppers\"\" out to find prices of things and surveys people to find out what they buy. This results in a variety of \"\"indexes\"\" which variously get reported by media outlets as \"\"inflation\"\" (or \"\"deflation\"\" if the change in value goes the other way). There are also other measurements available like the MIT Billion Prices Project which attempt to make their own reading of the \"\"worth\"\" of currencies. Those kinds of things are about the only ways to measure a currency's change in \"\"value to itself\"\" because a currency is basically only worth what one can buy with it. While it isn't \"\"all the world's currencies combined\"\", there is a concept of the International Monetary Fund's \"\"Special Drawing Rights (SDR)\"\", which is a basket of five currencies used by world central banks to help \"\"back\"\" each other's currencies, and is (very) occasionally used as a unit of currency for international contracts. One might be able to compare the price of one currency to that of the SDR, or even to any other weighted average of world currencies that one wanted, but I don't think it's done nearly as often as comparing currencies to the basket of goods one can buy to find \"\"inflation\"\". Even though one might think what would be important to measure would be overall Money Supply Inflation, much more often people care more about measuring Price Inflation. (Occasionally people worry about Wage Inflation, but generally that's considered a result of high Price Inflation.) In order to try to keep this on topic as a \"\"personal finance\"\" thing rather than an \"\"economics\"\" thing, I guess the question is: Why do you want to know? If you have some assets in a particular currency, you probably care most about what you'll be able to buy with them in the future when you want or need to spend them. In that sense, it's inflation that you're likely caring about the most. If you're trying to figure out which currency to keep your assets in, it largely depends on what currency your future expenses are likely to be in, though I can imagine that one might want to move out of a particular currency if there's a lot of political instability that you're expecting to lead to high inflation in a currency for a time.\"",
"title": ""
},
{
"docid": "26ce60fef4f08824a11abf3f8009ba3b",
"text": "The IRS defines income quite specifically. On the topic What is Taxable and Nontaxable Income, they note: You can receive income in the form of money, property, or services. This section discusses many kinds of income that are taxable or nontaxable. It includes discussions on employee wages and fringe benefits, and income from bartering, partnerships, S corporations, and royalties. Bartering, or giving someone wages (or similar) in something other than currency (or some other specifically defined things, like fringe benefits), is taxed at fair market value: Bartering Bartering is an exchange of property or services. You must include in your income, at the time received, the fair market value of property or services you receive in bartering. For additional information, Refer to Tax Topic 420 - Bartering Income and Barter Exchanges. Bartering is more specifically covered in Topic 420 - Bartering Income: You must include in gross income in the year of receipt the fair market value of goods or services received from bartering. Generally, you report this income on Form 1040, Schedule C (PDF), Profit or Loss from Business (Sole Proprietorship), or Form 1040, Schedule C-EZ (PDF), Net Profit from Business (Sole Proprietorship). If you failed to report this income, correct your return by filing a Form 1040X (PDF), Amended U.S. Individual Income Tax Return. Refer to Topic 308 for information on filing an amended return. More details about income in general beyond the above articles is available in Publication 525, Taxable and Nontaxable Income. It goes into great detail about different kinds of income. In your example, you'd have to calculate the fair market value of an avocado, and then determine how much cash-equivalent you were paid in. The IRS wouldn't necessarily tell you what that value was; you'd calculate it based on something you feel you could justify to them afterwards. The way I'd do it would be to write down the price of avocados at each pay period, and apply a dollar-cost-averaging type method to determine the total pay's fair value. While the avocado example is of course largely absurd, the advent of bitcoins has made this much more relevant. Publication 525 has this to say about virtual currency: Virtual Currency. If your employer gives you virtual currency (such as Bitcoin) as payment for your services, you must include the fair market value of the currency in your income. The fair market value of virtual currency (such as Bitcoin) paid as wages is subject to federal income tax withholding, Federal Insurance Contribution Act (FICA) tax, and Federal Unemployment Tax Act (FUTA) tax and must be reported on Form W-2, Wage and Tax Statement. Gold would be fundamentally similar - although I am not sure it's legal to pay someone in gold; assuming it were, though, its fair market value would be again the definition of income. Similarly, if you're paid in another country's currency, the US dollar equivalent of that is what you'll pay taxes on, at the fair market value of that currency in US dollars.",
"title": ""
},
{
"docid": "6cb015bc77c1ea1f1c8ff282b7c89e35",
"text": "This doesn't explain the methodology used, but it appears to only include national taxes on wage income for the middle class. Do these European countries have the equivalent of state and local taxes? Do they have sales tax or VAT? Property taxes? The American tax system is uniquely cumbersome and complicated to the point where even tax experts don't understand all of it. I highly doubt whichever method was used in this study accurately represents the tax burden on Americans, but I can't say for sure since that article doesn't share its methodology.",
"title": ""
},
{
"docid": "adacca83dbfb4de58aba2e034d7e2a54",
"text": "It sounds like you're mixing a simple checkbook register with double-entry bookkeeping. Do you need a double-entry level of rigor? Otherwise, why not have two columns, one for income (like a paycheck) and one for expenses (like paying a cable bill)? Then add up both columns and then take the difference of the sums to get your increase or decrease for the time period. If you want to break up income and expenses further, then you can do that too.",
"title": ""
},
{
"docid": "9bd1a5f5aeb95f5ac87bf992d454e1c0",
"text": "\"While this does fall under the \"\"All-inclusive income\"\" segment of GI (gross income), there are two questions that come up. I invested in a decentralized bitcoin business and earned about $230 this year in interest from it Your wording is confusing here only due to how bitcoin works.\"",
"title": ""
},
{
"docid": "68213ebec764c524f77fdb1c34b1d3a4",
"text": "I guess you could figure it out based on your total income, and the total number of hours it takes to generate that income if you want to do it simply. Count you job, side work, soda can deposits, and saving earned directly by effort (coupons and deal shopping) But the real answer to the question is understanding Opportunity Cost and what you could be doing instead. The problem with opportunity cost is the value system that judges the worth of the other opportunities is a deeply intrinsic factor that cannot be judged by anybody else.",
"title": ""
},
{
"docid": "904291c8790bd890b5644dd82a6e17d8",
"text": "Your problem is one that has challenged many people. As you said there are two aspects to balancing a budget, reducing expenses or increasing income. And you state that you have done all the cost-cutting that you can find. Looking at ways to increase your income is a good way to balance your budget. How big is your problem? Do you need to find another $100/month, or do you need $1000/month? There are many part-time jobs you could obtain (fast food, retail, grocery), you could obtain a sales-job (cars, real estate, even working for a recruiting firm) where you could connect buyers and sellers. If your need is $100/month, a part-time job on weekends would fill the gap. When I was trying to solve my budget problems a few years ago, I thought that I needed to increase my income. And I did increase my income. But then I realized that my expenses were too high. And I re-evaluated my priorities. I challenge you to revisit your expenses. Often we assume that we need things that we really cannot afford. Consider a few of your (possible) expenses, My problems included mortgage debt, auto loans, high utilities, high car insurance, too much spending on kids activities, and a few other problems.",
"title": ""
},
{
"docid": "7176e7804657cee356c2c689025bb444",
"text": "In comparing housing to investing in a stock market, the author claims housing is a poor investment because houses depreciate. He's forgetting about the land component. The improvement on the land is only a portion of the value, and it's the only part that depreciates. In markets where the prices have risen significantly the value is largely in the land. Land has a finite supply, which is even more evident when we are looking at land located where people actually want to live. While strong banking controls kept Canada from suffering the same crash in the second half of the 2000's; availability of land where people actually want to live is likely responsible for a lot of the divergence between the US and Canada. Most Canadians live within 100 kilometres of the border between the two countries; as the weather makes living more northern undesirable. The US has lots of available land in places with a better climate than a lot of Canada. Sure, there's some highly desirable places to live in the US where prices have skyrocketed; but the scarcity of desirable land affects all of Canada and is not going to go away.",
"title": ""
}
] |
fiqa
|
8ce32650569636dcdca8e383d661a03c
|
How to evaluate investment risk in practical terms
|
[
{
"docid": "80ccc6f1c6b0f9d238426febd4303db4",
"text": "\"Generally investing in index-tracking funds in the long term poses relatively low risk (compared to \"\"short term investment\"\", aka speculation). No-one says differently. However, it is a higher risk than money-market/savings/bonds. The reason for that is that the return is not guaranteed and loss is not limited. Here volatility plays part, as well as general market conditions (although the volatility risk also affects bonds at some level as well). While long term trend may be upwards, short term trend may be significantly different. Take as an example year 2008 for S&P500. If, by any chance, you needed to liquidate your investment in November 2008 after investing in November 1998 - you might have ended up with 0 gain (or even loss). Had you waited just another year (or liquidated a year earlier) - the result would be significantly different. That's the volatility risk. You don't invest indefinitely, even when you invest long term. At some point you'll have to liquidate your investment. Higher volatility means that there's a higher chance of downward spike just at that point of time killing your gains, even if the general trend over the period around that point of time was upward (as it was for S&P500, for example, for the period 1998-2014, with the significant downward spikes in 2003 and 2008). If you invest in major indexes, these kinds of risks are hard to avoid (as they're all tied together). So you need to diversify between different kinds of investments (bonds vs stocks, as the books \"\"parrot\"\"), and/or different markets (not only US, but also foreign).\"",
"title": ""
}
] |
[
{
"docid": "47949a3d96c655c0cb45eba95c6e912e",
"text": "\"This turned out be a lot longer than I expected. So, here's the overview. Despite the presence of asset allocation calculators and what not, this is a subjective matter. Only you know how much risk you are willing to take. You seem to be aware of one rule of thumb, namely that with a longer investing horizon you can stand to take on more risk. However, how much risk you should take is subject to your own risk aversion. Honestly, the best way to answer your questions is to educate yourself about the individual topics. There are just too many variables to provide neat, concise answers to such a broad question. There are no easy ways around this. You should not blindly rely on the opinions of others, but rather use your own judgment to asses their advice. Some of the links I provide in the main text: S&P 500: Total and Inflation-Adjusted Historical Returns 10-year index fund returns The Motley Fool Risk aversion Disclaimer: These are the opinions of an enthusiastic amateur. Why should I invest 20% in domestic large cap and 10% in developing markets instead of 10% in domestic large cap and 20% in developing markets? Should I invest in REITs? Why or why not? Simply put, developing markets are very risky. Even if you have a long investment horizon, you should pace yourself and not take on too much risk. How much is \"\"too much\"\" is ultimately subjective. Specific to why 10% in developing vs 20% in large cap, it is probably because 10% seems like a reasonable amount of your total portfolio to gamble. Another way to look at this is to consider that 10% as gone, because it is invested in very risky markets. So, if you're willing to take a 20% haircut, then by all means do that. However, realize that you may be throwing 1/5 of your money out the window. Meanwhile, REITs can be quite risky as investing in the real estate market itself can be quite risky. One reason is that the assets are very much fixed in place and thus can not be liquidated in the same way as other assets. Thus, you are subject to the vicissitudes of a relatively small market. Another issue is the large capital outlays required for most commercial building projects, thus typically requiring quite a bit of credit and risk. Another way to put it: Donald Trump made his name in real estate, but it was (and still is) a very bumpy ride. Yet another way to put it: you have to build it before they will come and there is no guarantee that they will like what you built. What mutual funds or index funds should I investigate to implement these strategies? I would generally avoid actively managed mutual funds, due to the expenses. They can seriously eat into the returns. There is a reason that the most mutual funds compare themselves to the Lipper average instead of something like the S&P 500. All of those costs involved in managing a mutual fund (teams of people and trading costs) tend to weigh down on them quite heavily. As the Motley Fool expounded on years ago, if you can not do better than the S&P 500, you should save yourself the headaches and simply invest in an S&P 500 index fund. That said, depending on your skill (and luck) picking stocks (or even funds), you may very well have been able to beat the S&P 500 over the past 10 years. Of course, you may have also done a whole lot worse. This article discusses the performance of the S&P 500 over the past 60 years. As you can see, the past 10 years have been a very bumpy ride yielding in a negative return. Again, keep in mind that you could have done much worse with other investments. That site, Simple Stock Investing may be a good place to start educating yourself. I am not familiar with the site, so do not take this as an endorsement. A quick once-over of the material on the site leads me to believe that it may provide a good bit of information in readily digestible forms. The Motley Fool was a favorite site of mine in the past for the individual investor. However, they seem to have turned to the dark side, charging for much of their advice. That said, it may still be a good place to get started. You may also decide that it is worth paying for their advice. This blog post, though dated, compares some Vanguard index funds and is a light introduction into the contrarian view of investing. Simply put, this view holds that one should not be a lemming following the crowd, rather one should do the opposite of what everyone else is doing. One strong argument in favor of this view is the fact that as more people pile onto an investing strategy or into a particular market, the yields thin out and the risk of a correction (i.e. a downturn) increases. In the worst case, this leads to a bubble, which corrects itself suddenly (or \"\"pops\"\" thus the term \"\"bubble\"\") leading to quite a bit of pain for the unprepared participants. An unprepared participant is one who is not hedged properly. Basically, this means they were not invested in other markets/strategies that would increase in yield as a result of the event that caused the bubble to pop. Note that the recent housing bubble and resulting credit crunch beat quite heavily on the both the stock and bond markets. So, the easy hedge for stocks being bonds did not necessarily work out so well. This makes sense, as the housing bubble burst due to concerns over easy credit. Unfortunately, I don't have any good resources on hand that may provide starting points or discuss the various investing strategies. I must admit that I am turning my interests back to investing after a hiatus. As I stated, I used to really like the Motley Fool, but now I am somewhat suspicious of them. The main reason is the fact that as they were exploring alternatives to advertising driven revenue for their site, they promised to always have free resources available for those unwilling to pay for their advice. A cursory review of their site does show a decent amount of general investing information, so take these words with a grain of salt. (Another reason I am suspicious of them is the fact that they \"\"spammed\"\" me with lots of enticements to pay for their advice which seemed just like the type of advice they spoke against.) Anyway, time to put the soapbox away. As I do that though, I should explain the reason for this soapboxing. Simply put, investing is a risky endeavor, any way you slice it. You can never eliminate risk, you can only hope to reduce it to an acceptable level. What is acceptable is subject to your situation and to the magnitude of your risk aversion. Ultimately, it is rather subjective and you should not blindly follow someone else's opinion (professional or otherwise). Point being, use your judgment to evaluate anything you read about investing. If it sounds too good to be true, it probably is. If someone purports to have some strategy for guaranteed (steady) returns, be very suspicious of it. (Read up on the Bernard Madoff scandal.) If someone is putting on a heavy sales pitch, be weary. Be especially suspicious of anyone asking you to pay for their advice before giving you any solid understanding of their strategy. Sure, many people want to get paid for their advice in some way (in fact, I am getting \"\"paid\"\" with reputation on this site). However, if they take the sketchy approach of a slimy salesmen, they are likely making more money from selling their strategy, than they are from the advice itself. Most likely, if they were getting outsized returns from their strategy they would keep quiet about it and continue using it themselves. As stated before, the more people pile onto a strategy, the smaller the returns. The typical model for selling is to make money from the sale. When the item being sold is an intangible good, your risk as a buyer increases. You may wonder why I have written at length without much discussion of asset allocation. One reason is that I am still a relative neophyte and have a mostly high level understanding of the various strategies. While I feel confident enough in my understanding for my own purposes, I do not necessarily feel confident creating an asset allocation strategy for someone else. The more important reason is that this is a subjective matter with a lot of variables to consider. If you want a quick and simple answer, I am afraid you will be disappointed. The best approach is to educate yourself and make these decisions for yourself. Hence, my attempt to educate you as best as I can at this point in time. Personally, I suggest you do what I did. Start reading the Wall Street Journal every day. (An acceptable substitute may be the business section of the New York Times.) At first you will be overwhelmed with information, but in the long run it will pay off. Another good piece of advice is to be patient and not rush into investing. If you are in a hurry to determine how you should invest in a 401(k) or other such investment vehicle due to a desire to take advantage of an employer's matching funds, then I would place my money in an S&P 500 index fund. I would also explore placing some of that money into broad index funds from other regions of the globe. The reason for broad index funds is to provide some protection from the normal fluctuations and to reduce the risk of a sudden downturn causing you a lot pain while you determine the best approach for yourself. In this scenario, think more about capital preservation and hedging against inflation then about \"\"beating\"\" the market.\"",
"title": ""
},
{
"docid": "d98a1a97eb6179caef1f1e5c9c6958c7",
"text": "\"Not at all impossible. What you need is Fundamental Analysis and Relationship with your investment. If you are just buying shares - not sure you can have those. I will provide examples from my personal experience: My mother has barely high school education. When she saw house and land prices in Bulgaria, she thought it's impossibly cheap. We lived on rent in Israel, our horrible apartment was worth $1M and it was horrible. We could never imagine buying it because we were middle class at best. My mother insisted that we all sell whatever we have and buy land and houses in Bulgaria. One house, for example, went from $20k to EUR150k between 2001 and 2007. But we knew Bulgaria, we knew how to buy, we knew lawyers, we knew builders. The company I currently work for. When I joined, share prices were around 240 (2006). They are now (2015) at 1500. I didn't buy because I was repaying mortgage (at 5%). I am very sorry I didn't. Everybody knew 240 is not a real share price for our company - an established (+30 years) software company with piles of cash. We were not a hot startup, outsiders didn't invest. Many developers and finance people WHO WORK IN THE COMPANY made a fortune. Again: relationship, knowledge! I bought a house in the UK in 2012 - everyone knew house prices were about to go up. I was lucky I had a friend who was a surveyor, he told me: \"\"buy now or lose money\"\". I bought a little house for 200k, it is now worth 260k. Not double, but pretty good money! My point is: take your investment personally. Don't just dump money into something. Once you are an insider, your risk will be almost mitigated and you could buy where you see an opportunity and sell when you feel you are near the maximal real worth of your investment. It's not hard to analyse, it's hard to make a commitment.\"",
"title": ""
},
{
"docid": "e67feb54e0801a51758bca20bb4bbec4",
"text": "I implemented this in MatLab about 10 years back. You just calculate your conditional variance of the required assets (x_i), use matrix multiplication on the correlation matrix (rho_i_j) from the same asset (this could be a point of research but unless you are using extreme conditions on the VaR it makes little difference) then apply a standard Markiowitz optimisation approach. You can then just use simple Sharpe ratio (marginal return over conditional risk) at every point on the efficient frontier. Then choose the maximum Sharpe ratio point.",
"title": ""
},
{
"docid": "1034f141e13d0ab627501a394187997c",
"text": "You can look the Vanguard funds up on their website and view a risk factor provided by Vanguard on a scale of 1 to 5. Short term bond funds tend to get their lowest risk factor, long term bond funds and blended investments go up to about 3, some stock mutual funds are 4 and some are 5. Note that in 2008 Swenson himself had slightly different target percentages out here that break out the international stocks into emerging versus developed markets. So the average risk of this portfolio is 3.65 out of 5. My guess would be that a typical twenty-something who expects to retire no earlier than 60 could take more risk, but I don't know your personal goals or circumstances. If you are looking to maximize return for a level of risk, look into Modern Portfolio Theory and the work of economist Harry Markowitz, who did extensive work on the topic of maximizing the return given a set risk tolerance. More info on my question here. This question provides some great book resources for learning as well. You can also check out a great comparison and contrast of different portfolio allocations here.",
"title": ""
},
{
"docid": "59ee99fc3853372dbb802b2e295679f8",
"text": "Dummy example to explain this. Suppose your portfolio contained just two securities; a thirty year US government bond and a Tesla stock. Both of those position are currently valued at $1mm. The Tesla position however is very volatile with its daily volatility being about 5% (based on the standard deviation of its daily return) whole there bond's daily volatility is 1%. Then the Tesla position is 5/6 of your risk while being only 1/2 of the portfolio. Now if in month the Tesla stock tanks to half is values then. Then it's risk is half as much as before and so it's total contribution to risk has gone down.",
"title": ""
},
{
"docid": "cdc4f6ec4f3490acec2d5a30e5500739",
"text": "Factors to consider: For the taxable investments:",
"title": ""
},
{
"docid": "b84f71445299a2f60b17857348dd8a7d",
"text": "\"FRM, but IIRC \"\"Risk\"\" is more of a reporting role in most banks nowadays. Meaning you automate some tools that generate reports, and your job is to make sure the results are numerically consistent with industry standard (read: wrong) methodology, and capital rules. Learn how to calculate VaR 20 different ways, some less useless than others, however mostly fundamentally useless. Expected shortfall, so basically if there is a VaR break what is the expected loss (also useless!) as you will either by simulating based on some distribution that hopefully fits the data, or historical data which is supposed to repeat itself. So to do this fun stuff: You're gonna need to know stochastic calculus (not necessarily but you should understand intuitively the formulas you're using), statistics (hypothesis testing), some econometrics/time series analysis, but key thing is programming.\"",
"title": ""
},
{
"docid": "26ceaf89f25dc15d761e3c7c15c56718",
"text": "\"The risk of any investment is measured by its incremental effect on the volatility of your overall personal wealth, including your other investments. The usual example is that adding a volatile stock to your portfolio may actually reduce the risk of your portfolio if it is negatively correlated with the other stuff in your portfolio. Common measures of risk, such as beta, assume that you have whole-market diversified portfolio. In the case of an investment that may or may not be hedged against currency movements, we can't say whether the hedge adds or removes risk for you without knowing what else is in your portfolio. If you are an EU citizen with nominally delimited savings or otherwise stand to lose buying power if the Euro depreciates relative to the dollar, than the \"\"hedged\"\" ETF is less risky than the \"\"unhedged\"\" version. On the other hand, if your background risk is such that you benefit from that depreciation, then the reverse is true. \"\"Hedging\"\" means reducing the risk already present in your portfolio. In this case it does not refer to reducing the individual volatility of the ETF. It may or may not do that but individual asset volatility and risk are two very different things.\"",
"title": ""
},
{
"docid": "97ba7c78d9da95d26c6773d89ff25ec3",
"text": "\"It's interesting that you use so many different risk measures. Here's what I'd like to know more in detail: 1) About the use of VaR. I've heard (from a friend, may be unreliable) that some investment managers like Neuberger Berman doesn't use VaR for assessing risk and maintaining capital adequacy requirements. Rather, some firms only rely on tracking error, beta, standard deviation, etc. Why do you think is this so? Isn't VaR supposed to be a widely accepted risk measure. 2) The whole \"\"Expected Shortfall vs. VaR\"\" debate. I've read some papers comparing Expected Shortfall and VaR. Mainly, they criticize VaR for not being able to consider the 1% probability left where losses can (probably) skyrocket to infinity. If I need to choose between the two, which do you think is better and why?\"",
"title": ""
},
{
"docid": "7586147cc335126f7bc08f20bff2f746",
"text": "In your own example of VW, it dropped from its peak price of $253 to $92. If you had invested $10,000 in VW in April 2015, by September of that year it would have gone down to $3,600. If you held on to your investment, you would now be getting back to $6,700 on that original $10,000 investment. Your own example demonstrates that it is possible to lose. I have a friend who put his fortune into a company called WorldCom (one of the examples D Stanley shared). He actually lost all of his retirement. Luckily he made some money back when the startup we both worked for was sold to a much larger company. Unsophisticated investors lose money all the time by investing in individual companies. Your best bet is to start searching this site for answers on how to invest your money so that you can see actual strategies that reduce your investment risk. Here's a starting point: Best way to start investing, for a young person just starting their career? If you want to better illustrate this principle to yourself, try this stock market simulation game.",
"title": ""
},
{
"docid": "100c16089b98c6da4bdec9e3d52ba91b",
"text": "\"The raw question is as follows: \"\"You will be recommending a purposed portfolio to an investment committee (my class). The committee runs a foundation that has an asset base of $4,000,000. The foundations' dual mandates are to (a) preserve capital and (b) to fund $200,000 worth of scholarships. The foundation has a third objective, which is to grow its asset base over time.\"\" The rest of the assignment lays out the format and headings for the sections of the presentation. Thanks, by the way - it's an 8 week accelerated course and I've been out sick for two weeks. I've been trying to teach myself this stuff, including the excel calculations for the past few weeks.\"",
"title": ""
},
{
"docid": "5e7a7044a927ec8ab40b5f4398ddd8cb",
"text": "Generally speaking. 1. Take the position size / average daily volume. 2. Multiply that number by 10 or whatever 1/whatever % of volume you think you can execute, ( you can at best acct for 10 percent of traded volume on a day). 3. You now have days until liquidation (x) 4. Take the days until liquidation sample the return over time x. I.e. if days until liquidation is 10, you would sample 10 day returns. 5. Calculate the distribution characteristics of this window (mean, var, skew, kurt) and calculate VaR based on some confidence. You can now have a liquidity risk expected loss and a VaR. If position is on margin don't forget to add the interest cost. Note: Instead of taking 10 day return, you can take the 10 day VWAP and calculate return between Open and 10 day vwap.",
"title": ""
},
{
"docid": "05df34a65fa32fa9dd56f84f73990c16",
"text": "\"If you're asking this question, you probably aren't ready to be buying individual stock shares, and may not be ready to be investing in the market at all. Short-term in the stock market is GAMBLING, pure and simple, and gambling against professionals at that. You can reduce your risk if you spend the amount of time and effort the pros do on it, but if you aren't ready to accept losses you shouldn't be playing and if you aren't willing to bet it all on a single throw of the dice you should diversify and accept lower potential gain in exchange for lower risk. (Standard advice: Index funds.) The way an investor, as opposed to a gambler, deals with a stock price dropping -- or surging upward, or not doing anything! -- is to say \"\"That's interesting. Given where it is NOW, do I expect it to go up or down from here, and do I think I have someplace to put the money that will do better?\"\" If you believe the stock will gain value from here, holding it may make more sense than taking your losses. Specific example: the mortgage-crisis market crash of a few years ago. People who sold because stock prices were dropping and they were scared -- or whose finances forced them to sell during the down period -- were hurt badly. Those of us who were invested for the long term and could afford to leave the money in the market -- or who were brave/contrarian enough to see it as an opportunity to buy at a better price -- came out relatively unscathed; all I have \"\"lost\"\" was two years of growth. So: You made your bet. Now you have to decide: Do you really want to \"\"buy high, sell low\"\" and take the loss as a learning experience, or do you want to wait and see whether you can sell not-so-low. If you don't know enough about the company to make a fairly rational decision on that front, you probably shouldn't have bought its stock.\"",
"title": ""
},
{
"docid": "8c755610386012c509020b65c42c3891",
"text": "\"Yes, there is a very good Return vs Risk graph put out at riskgrades.com. Look at it soon, because it will be unavailable after 6-30-11. The RA (return analysis) graph is what I think you are looking for. The first graph shown is an \"\"Average Return\"\", which I was told was for a 3 year period. Three period returns of 3, 6 and 12 months, are also available. You can specify the ticker symbols of funds or stocks you want a display of. For funds, the return includes price and distributions (total return), but only price movement for stocks - per site webmaster. I've used the graphs for a few years, since Forbes identified it as a \"\"Best of the Web\"\" site. Initially, I found numerous problems with some of the data and was able to work with the webmaster to correct them. Lately though, they have NOT been correcting problems that I bring to their attention. For example, try the symbols MUTHX, EDITX, AWSHX and you'll see that the Risk Grades on the graphs are seriously in error, and compress the graph results and cause overwriting and poor readability. If anyone knows of a similar product, I'd like to know about it. Thanks, George\"",
"title": ""
},
{
"docid": "00135dcac4fb6133749e18b232752e96",
"text": "you can check google scholar for some research reports on it. depends how complex you want to get... it is obviously a function of the size of the portfolio of each type of asset. do you have a full breakdown of securities held? you can get historical average volumes during different economic periods, categorized by interest rates for example, and then calculate the days required to liquidate the position, applying a discount on each subsequent day.",
"title": ""
}
] |
fiqa
|
e440da11061392ca9c579ffae56aef2f
|
Using stable short-term, tax-free municipal bond funds to beat the bank?
|
[
{
"docid": "7cd202188772096642d33487735482d2",
"text": "Banks' savings interest is ridiculous, has always been, compared to other investment options. But there's a reason for that: its safe. You will get your money back, and the interest on it, as long as you're within the FDIC insurance limits. If you want to get more returns - you've got to take more risks. For example, that a locality you're borrowing money to will default. Has happened before, a whole county defaulted. But if you understand the risks - your calculations are correct.",
"title": ""
},
{
"docid": "229023ba18d64536fc9058a4ca7c36c0",
"text": "If your main goal is to avoid taxes, municipal bonds are a good strategy, it's not the best way to make more than 1-2% in gains. And kudos for putting money back into the community.",
"title": ""
}
] |
[
{
"docid": "03c08a7d9d8b1ea7c12a1b8bb4cb0f73",
"text": "http://www.citymayors.com/finance/bonds.html > There were approximately $3.7 trillion outstanding in municipal bonds by 2011 according to a quarterly U.S. Federal Reserve Flow of Funds release in December 2011. This amount included a $840 billion dollar amount missed from prior calculations of outstanding debt issued since 2004.(Kaske, Michelle. “Fed Agrees With Citi on $3.7 Trillion Estimate”. Bloomberg. December 8, 2011.) Still waiting on your magic numbers. What he did was cite a number that represents the entire muni bond market. A number that can be sourced from valid places. The muni bond market IS worth that much in total. At least from the sources we have thus far. You've yet to actually do much of anything but bitch that his numbers (and apparently the MSRB and Fed's numbers) are wrong while good ol crotchpoozie knows the real score.",
"title": ""
},
{
"docid": "cba82135c4def9b57bde82806051cac8",
"text": "Next year, the Fed plans on unwinding the Bonds and MBS. They'll ramp up to $50 billion a month. At the same time we'll be selling Bonds on the market to finance the debt at a rate of $70 billion a month. I wonder who's going to have the cash to buy the Toxic MBS and the low yield Bonds they'll be unloading on top of the usual Bonds for future debt. Those Bonds will have to pay double digit rates before anyone will buy them. Future generations will just get even more screwed the way the Fed has it planned.",
"title": ""
},
{
"docid": "d366d4fe216e2fbe1d20e138f28688e1",
"text": "When the laws allow for bonds to be issued for anything other than infrastructure projects, you end up in financial ruin. Politicians can't help themselves, and spend future money, today on day to day expenses. Then future residents, are paying off bonds for items they see no current benefit on. It makes taxes appear high. Look at cities like Chicago as an example.",
"title": ""
},
{
"docid": "bffcf4ef1809546937edf2f201fc6711",
"text": "Distributions of interest from bonds are taxable as income by the Federal, state and municipal (if applicable) government. End of year fund distributions are subject to capital gains taxes as well. You can minimize taxation by: Note that the only bonds that are guaranteed safe are US Government obligations, as the US government has unlimited taxation powers and the ability to print money. Municipal obligations are generally safe, but there is a risk that municipal governments will default. You can also avoid taxation by not realizing gains. If you buy individual stocks or tax-efficient mutual funds, you will have minimal tax liability until you sell. Also, just wanted to point out that bonds do not equal safety and money markets do not pay sufficient interest to offset inflation, you need a diversified portfolio. Five year treasury notes are only paying 1.3% now, and bond prices drop when interest rates go up. Given the level of Federal spending and the wind-down of the war, its likely that rates will rise.",
"title": ""
},
{
"docid": "8eb29fc32076f8d336f8e79cecafdc86",
"text": "There are two industrial sectors with a recent history of raising revenue and profit faster than inflation: education and health care. While there is indeed some political risk, my assumption is these sectors would continue to beat inflation even under a theoretical socialist President Bernie Sanders. There are several such sector funds available from popular low ER mutual fund companies; I don't believe this forum likes specific commercial investment touting so I decline to name specific ones.",
"title": ""
},
{
"docid": "559bcb23af398eac7d3065409eed3ab5",
"text": "If your mortgage interest is tax-deductible, it's generally a bad idea to pay down the principal on the mortgage because you'd be losing the tax deduction. You could instead invest it in a tax-free municipal bond fund, especially if you're in a high tax bracket (including state and local marginal tax rates). For example, if you have a 5% rate mortgage on your home, you could invest in a 3.5% municipal bond and still come out ahead when you apply the tax deduction to your income at a 44% (33% federal + 7% state + 4% city in NYC) marginal tax rate.",
"title": ""
},
{
"docid": "8bc279563293599f6a7ccf87b98342bd",
"text": "I came up with a real way. I saw once the market be so dumb as to allow this to work. Inflation rate = 2.5%. Home interest rate = 3%. Tax deduction = 1%. Money spent on inflation-adjusted I bonds (at the time these paid 0% net, that is 2.5% gross). Result, .5% profit after accounting for inflation. The kicker: Uncle Sam's I bonds are tax free. Sure it's not possible today, but the rates occasionally drop low enough.",
"title": ""
},
{
"docid": "d264bc6a1cf7182321a568f1eedcf29a",
"text": "\"The muni bond business . Are you really too dumb to understand that's how he's referencing it in the article? He's not talking about a specific company or companies numbnuts he's talking about \"\"The business of muni bonds...i.e the total outstanding municipal bond market.\"\". Try some reading comprehension on for size. To walk you through it there are multiple uses of the word 'business'. Among them are the two you're having a real problem with in your reading comprehension. 1. Business = Company: I run a dry cleaning business. 2. Business = Industry: I am in the dry cleaning business. What he is (clearly) referring to when he says \"\"a business worth $3.7 trillion\"\" is \"\"business = industry\"\" in the second manner listed above. You're interpreting it as if he's claiming the first manner. That's incorrect. Factually and grammatically incorrect. Yours is the type of ignorance that morons on Reddit rely on to make their arguments work. I'm done here with you since you don't seem to be able to parse out rudimentary information from an article.\"",
"title": ""
},
{
"docid": "56430c0f9c7afce78e726fbb7b8e8cfc",
"text": "\"For real. AAA treasury bonds are used a safe investment vehicle for the reason of \"\"its the US government, its safe\"\", which is pretty similar to the \"\"dude, who doesnt pay their mortgage?!\"\" line of thinking. You got people dumping money into these derivatives and suddenly someone goes \"\"oh yeah you just bought a bunch of bad debt that should be rated 'junk'. Oops.\"\"\"",
"title": ""
},
{
"docid": "5b683b5c56dadebd966fea31964fadf1",
"text": "\"One alternative to bogleheadism is the permanent portfolio concept (do NOT buy the mutual fund behind this idea as you can easily obtain access to a low cost money market fund, stock index fund, and bond fund and significantly reduce the overall cost). It doesn't have the huge booms that stock plans do, but it also doesn't have the crushing blows either. One thing some advisers mention is success is more about what you can stick to than what \"\"traditionally\"\" makes sense, as you may not be able to stick to what traditionally makes sense (all people differ). This is an excellent pro and con critique of the permanent portfolio (read the whole thing) that does highlight some of the concerns with it, especially the big one: how well will it do in a world of high interest rates? Assuming we ever see a world of high interest rates, it may not provide a great return. The authors make the assumption that interest rates will be rising in the future, thus the permanent portfolio is riskier than a traditional 60/40. As we're seeing in Europe, I think we're headed for a world of negative interest rates - something in the past most advisers have thought was very unlikely. I don't know if we'll see interest rates above 6% in my lifetime and if I live as long as my father, that's a good 60+ years ahead. (I realize people will think this is crazy to write, but consider that people are willing to pay governments money to hold their cash - that's how crazy our world is and I don't see this changing.)\"",
"title": ""
},
{
"docid": "0e7a7d141918f575069aaded7d9d5d53",
"text": "The government pays interest on its debts just like anyone else, but since it's already the government and already taking advantage of credit (your money loaned to it through the bonds), it doesn't need the extra benefit of taxing the interest it pays. **It's better off just issuing bonds at a lower interest rate and letting you keep all the interest, instead of a higher interest rate which will have some amount taxed and returned to it anyway.** The government wants a cut of private loan interest just like any other income, which is why interest on private bonds/loans is taxable. Edit: What about municipal bonds? Wouldn't the federal government benefit from taxing interest on municipal bonds? Municipal bonds are issued to support public infrastructure & services such as construction of water supply infrastructure. Since the goal is to improve facilities for the public benefit, and government programs ostensibly aim to provide public benefits as well, it allows the full proceeds of the bonds to go to the designated projects at the lowest possible interest rate (and the public pays the interest through city rates). Taxing municipal bonds would result in a higher cost to the public for the same end result (because of higher interest rates), with the net interest going to the federal & state governments via income tax on the interest.",
"title": ""
},
{
"docid": "0f61c2688a2b82bdbad6909bab943faf",
"text": "\"Yes, definitely. Many municipalities and local governments issue bonds to fund various projects (schools, hospitals, infrastructure, etc). You can buy these bonds and in that way invest in these things. In the US these kinds of bonds are tax-free, i.e.: the income they provide is not taxed (by the US government, may be taxed by your State, check local tax laws). There are also dedicated mutual funds that that is all they invest in, if you don't want to deal with picking individual bonds. As to mom-and-pop stores - that would not be as easy, as mom-and-pop stores are by definition family owned and you can invest in them only if you are personally acquainted with them. Instead, you can invest in small regional/local chains, that while not being mom-and-pop, still small enough to be considered \"\"local\"\", but are publicly traded so that you can easily invest in them. You'll have to look for these. You can also use social lending platforms, like Lending Club, which I reviewed on my blog, or others, where you can participate in a lending pool to other people. You can invest in a credit union by opening an account there. Credit unions are owned by their account holders.\"",
"title": ""
},
{
"docid": "8cc00e61174d102fff008e8fa1aad7fa",
"text": "\"For a two year time frame, a good insured savings account or a low-cost short-term government bond fund is most likely the way I would go. Depending on the specific amount, it may also be reasonable to look into directly buying government bonds. The reason for this is simply that in such a short time period, the stock market can be extremely volatile. Imagine if you had gone all in with the money on the stock market in, say, 2007, intending to withdraw the money after two years. Take a broad stock market index of your choice and see how much you'd have got back, and consider if you'd have felt comfortable sticking to your plan for the duration. Since you would likely be focused more on preservation of capital than returns during such a relatively short period, the risk of the stock market making a major (or even relatively minor) downturn in the interim would (should) be a bigger consideration than the possibility of a higher return. The \"\"return of capital, not return on capital\"\" rule. If the stock market falls by 10%, it must go up by 11% to break even. If it falls by 25%, it must go up by 33% to break even. If you are looking at a slightly longer time period, such as the example five years, then you might want to add some stocks to the mix for the possibility of a higher return. Still, however, since you have a specific goal in mind that is still reasonably close in time, I would likely keep a large fraction of the money in interest-bearing holdings (bank account, bonds, bond funds) rather than in the stock market. A good compromise may be medium-to-high-yield corporate bonds. It shouldn't be too difficult to find such bond funds that can return a few percentage points above risk-free interest, if you can live with the price volatility. Over time and as you get closer to actually needing the money, shift the holdings to lower-risk holdings to secure the capital amount. Yes, short-term government bonds tend to have dismal returns, particularly currently. (It's pretty much either that, or the country is just about bankrupt already, which means that the risk of default is quite high which is reflected in the interest premiums demanded by investors.) But the risk in most countries' short-term government bonds is also very much limited. And generally, when you are looking at using the money for a specific purpose within a defined (and relatively short) time frame, you want to reduce risk, even if that comes with the price tag of a slightly lower return. And, as always, never put all your eggs in one basket. A combination of government bonds from various countries may be appropriate, just as you should diversify between different stocks in a well-balanced portfolio. Make sure to check the limits on how much money is insured in a single account, for a single individual, in a single institution and for a household - you don't want to chase high interest bank accounts only to be burned by something like that if the institution goes bankrupt. Generally, the sooner you expect to need the money, the less risk you should take, even if that means a lower return on capital. And the risk progression (ignoring currency effects, which affects all of these equally) is roughly short-term government bonds, long-term government bonds or regular corporate bonds, high-yield corporate bonds, stock market large cap, stock market mid and low cap. Yes, there are exceptions, but that's a resonable rule of thumb.\"",
"title": ""
},
{
"docid": "d9541b7dd3a0d48fd5d36e184aad95bf",
"text": "If you are in an economy which has a decent liquid debt market (corporate bonds, etc.), then you may look into investing in AA or AA+ rated bonds. They can provide higher returns than bank deposits and are virtually risk-free. (Though in severe economic downturns, you can see defaults in even very high-rated bonds, leading to partial or complete loss of value however, this is statistically quite rare). You can make this investment through a debt mutual fund but please make sure that you read through the offer document carefully to understand the investment style of the mutual fund and their expense ratio (which directly affect your returns). In any case, it is always recommended to reach out to an investment adviser who is good with local tax laws to minimize taxes and maximize returns.",
"title": ""
},
{
"docid": "6767c66274c2315423cadd3711bfb23c",
"text": "I would say generally, the answer is No. There might be some short term relief to people in certain situations, but generally speaking you sign a contract to borrow money and you are responsible to pay. This is why home loans offer better terms then auto loans, and auto loans better than credit cards or things like furniture. The better terms offer less risk to the lender because there are assets that can be repossessed. Homes retain values better than autos, autos better than furniture, and credit cards are not secured at all. People are not as helpless as your question suggests. Sure a person might lose their high paying job, but could they still make a mortgage payment if they worked really hard at it? This might mean taking several part time jobs. Now if a person buys a home that has a very large mortgage payment this might not be possible. However, wise people don't buy every bit of house they can afford. People should also be wise about the kinds of mortgages they use to buy a home. Many people lost their homes due to missing a payment on their interest only loan. Penalty rates and fees jacked up their payment, that was way beyond their means. If they had a fixed rate loan the chance to catch up would have not been impossible. Perhaps an injury might prevent a person from working. This is why long term disability insurance is a must for most people. You can buy quite a bit of coverage for not very much money. Typical US households have quite a bit of debt. Car payments, phone payments, and either a mortgage or rent, and of course credit cards. If income is drastically reduced making all of those payments becomes next to impossible. Which one gets paid first. Just this last week, I attempted to help a client in just this situation. They foolishly chose to pay the credit card first, and were going to pay the house payment last (if there was anything left over). There wasn't, and they are risking eviction (renters). People finding themselves in crisis, generally do a poor job of paying the most important things first. Basic food first, housing and utilities second, etc... Let the credit card slip if need be no matter how often one is threatened by creditors. They do this to maintain their credit score, how foolish. I feel like you have a sense of bondage associated with debt. It is there and real despite many people noticing it. There is also the fact that compounding interest is working against you and with your labor you are enriching the bank. This is a great reason to have the goal of living a debt free life. I can tell you it is quite liberating.",
"title": ""
}
] |
fiqa
|
b62880c0f4db34d02c91a572d7a02629
|
Is UK house price spiral connected to debt based monetary system?
|
[
{
"docid": "0e67c38e578f0f510810343ba2120b19",
"text": "\"There are a few factors at work here, supply and demand being the main one. The Office for National Statistics has some good information: http://visual.ons.gov.uk/uk-perspectives-housing-and-home-ownership-in-the-uk/ Supply has historically struggled to compete with demand in the UK and this situation has been exacerpated since the 1980s when Margaret Thatcher was Prime Minister. She set up a variety of schemes to encourage people to own their own home, such as tax relief (MIRAS) and since then home ownership in the UK has increased dramatically. The then conservative government also set up the \"\"right to buy\"\" scheme (in 1980) that allowed council tenants to purchase their council houses at a discounted rate. The effect of this was to increase the number of home owners whilst reducing the amount of housing available for councils to rent to new tenants. Anecdotal evidence (I can't find a documented source to back this up) suggests that councils did not build sufficient new homes to replace those purchased by their ex-tenants. The population of the UK has also increased, by around 10 million since 1980 (around 20%) and this has pushed up demand for housing. House building in the UK has not kept pace with these factors that has led to a shortage of supply that has pushed up prices. http://www.ons.gov.uk/ons/rel/pop-estimate/population-estimates-for-uk--england-and-wales--scotland-and-northern-ireland/2013/sty-population-changes.html There's another factor at play here as well. If you go back to the 1970s around 53% of women would go out to work but in 2013 this figure increased to 67% as it became more common for households to have double incomes. This extra supply of cash also pushed up house prices. http://www.ons.gov.uk/ons/dcp171776_328352.pdf Your question regards a debt based monetary system is not entirely clear, but there are limitations put onto how much money people can borrow that are potentially limiting how much house prices can rise by. Today most lenders are more conservative in how much they will lend but this wasn't the case in the mid 2000s when house prices rose very quickly. Lenders are more cautious today after the crash of the late 2000s, but things are begining to relax again and they are starting to lend more which could in turn lead to further house price rises in line with what was seen in the 2000s. Recessions have coincided with house prices falling back or at least being stable. In the 1980s house prices trebled from 1980 to 1988 but then fell back a little as the recession hit, before starting to rise again in 1997. This rise was sustained until 2008 during which time prices trebled again. Based on this you could assume prices will treble again as we come out of the recession, as long as this is sustained for 8 years or so. However, as the potential for more households to become double income is reduced (high female employment already) and wages are unlikely to raise that quickly, this may not be realistic, unless the mortgage lenders become extremely lax, to the point of reckless! To answer your other question, about the affordability of housing, this will be based on the level of wages in the UK and how strict or lax the lenders are, also taking into effect the availability of housing for purchase. If wages rise, house prices will rise, if lenders are willing to lend more money, house prices will rise and if demand continues to outrstip supply, prices will rise. None of the major UK political parties are likely to solve the problems of population growth and not enough houses being built so it is likely prices will rise but you could argue that they are not far off a peak based on current wages and lenders attitudes. If the UK economy continues to recover from the recession, it is possible they will fuel another housing boom by lending ever increasing salary multiples as happened in the 2000s, unless there is government intervention, ie regulation of the lenders.\"",
"title": ""
},
{
"docid": "81df6a5235dad320c3fa1c7971100e9e",
"text": "\"No. Rural Scotland has exactly the same monetary system, and not the same bubble. Monaco (the other example given) doesn't even have its own monetary system but uses the Euro. Look instead to the common factor: a lot of demand for limited real estate. Turning towards the personal finance part of it, we know from experience that housing bubbles may \"\"burst\"\" and housing prices may drop suddenly by ~30%, sometimes more. This is a financial risk if you must sell. Yet on the other hand, the fundamental force that keeps prices in London higher than average isn't going away. The long-term risk often is manageable. A 30% drop isn't so bad if you own a house for 30 years.\"",
"title": ""
}
] |
[
{
"docid": "17b51bc610cbce0f58d07b01916d0533",
"text": "Not anytime soon, I suspect, but not necessarily for financial reasons. I found this interesting, including the link to the five tests, but I think that this topic is only partially judged through financial eyes, there's a lot of political issues around this with national identity/immigration issues already in the spot light as well as political aspirations. If there will be a call in the near future to join the Euro, how would that reflect on the financial industry in the UK from a PR perspective? and on the political leadership and how it managed the financial crisis? I believe that it is in the interest of all the people in the high positions to show the country getting back on track rather than making ground shaking moves. But what do I know....:-)",
"title": ""
},
{
"docid": "c07159e245303172793305c3a1d8a2be",
"text": "While debt increases the likelihood and magnitude of a crash, speculation, excess supply and other market factors can result in crashes without requiring excessive debt. A popular counter example of crashes due to speculation is 16th century Dutch Tulip Mania. The dot com bubble is a more recent example of a speculative crash. There were debt related issues for some companies and the run ups in stock prices were increased by leveraged traders, but the actual crash was the result of failures of start up companies to produce profits. While all tech stocks fell together, sound companies with products and profits survive today. As for recessions, they are simply periods of time with decreased economic activity. Recessions can be caused by financial crashes, decreased demand following a war, or supply shocks like the oil crisis in the 1970's. In summary, debt is simply a magnifier. It can increase profits just as easily as can increase losses. The real problems with crashes and recessions are often related to unfounded faith in increasing value and unexpected changes in demand.",
"title": ""
},
{
"docid": "8ab90eea050860a8a0fd05acc26713a6",
"text": "\"To understand the Twist, you need to understand what the Yield Curve is. You must also understand that the price of debt is inverse to the interest rate. So when the price of bonds (or notes or bills) rises, that means the current price goes up, and the yield to maturity has gone down. Currently (Early 2012) the short term rate is low, close to zero. The tools the fed uses, setting short term rates for one, is exhausted, as their current target is basically zero for this debt. But, my mortgage is based on 10yr rates, not 1 yr, or 30 day money. The next step in the fed's effort is to try to pull longer term rates down. By buying back 10 year notes in this quantity, the fed impacts the yield at that point on the curve. Buying (remember supply/demand) pushes the price up, and for debt, a higher price equates to lower yield. To raise the money to do this, they will sell short term debt. These two transactions effectively try to \"\"twist\"\" the curve to pull long term rates lower and push the economy.\"",
"title": ""
},
{
"docid": "c64cffb9f5b04dd8da7726e4221e02f7",
"text": "Yes there is an inverse relationship but that's how it's meant to work. Debt creates money. Banks do lend out customers savings for return interest as the bank can make a profit rather than the cash just sitting there. The process of Lending pumps money into the economy that wouldn't be there otherwise so it creates money. The banks will either have a cash deficit or surplus at end of each day and either need to borrow from other banks to balance their books or if in surplus lend to other banks to make interest because that's more profitable than holding the cash surplus. The overnight cash rate then determines interest rates we pay. High private debt occurs when lots of people are investing & buying things so there is stimulation and growth in the economy. A lot more tax is being paid in these periods so government debt is lower because they are getting lots of tax money. Also To stimulate the economy into this growth period the government usually sells off large cash bonds (lowering their debt) to release cash into the economy, the more cash available the less banks have to borrow to cover deficits on overnight cash market and the lower interest rates will be. Lower interest rates = more borrowing and higher Private debt. The government can't let growth get out of control as they don't want high inflation so they do the opposite to slow down growth, I.e buy up cash bonds and take money out of economy causing higher interest rates and less borrowing = More debt for government less for private.",
"title": ""
},
{
"docid": "d705f9393e7eb4d9507c24e6edaa7e59",
"text": "\"I'm not intimately familiar with the situation in Australia, but in the US the powers that be have adopted an interventionist philosophy. The Federal Reserve (Central Bank) is \"\"buying back\"\" US Gov't debt to keep rates low, and the government is keeping mortgage rates low buy buying mortgages with the proceeds of the cheap bond sales. While this isn't directly related to Australia, it is relevant because the largest capital markets are in the US and influence the markets in Australia. In the US, the CPI is a survey of all urban consumers. If you're a younger, middle class consumer with income growth ahead of you, your costs are going to shift more rapidly than an elderly or poor person who already owns or is in subsidized housing, and doesn't spend as much on transportation. For example, my parents are in their early 60's and are living in the house that I grew up in, which they own free and clear. There are alot of people like them, and they aren't affected by the swing in housing prices that we've seen in the last decade.\"",
"title": ""
},
{
"docid": "432f55ef513524ca36a935720a54e195",
"text": "\"This is the best tl;dr I could make, [original](https://www.ecb.europa.eu/pub/pdf/scpwps/ecb.wp2073.en.pdf) reduced by 99%. (I'm a bot) ***** > Inflation Housing Demand + 0 + + 0 0 Mon Pol + + 0 0 Loans Supply Lend Rates 0 + 0 + A. Supply A. Demand + + + The first column lists the endogenous variables of the VAR, which react to the shocks reported in the first row: housing demand shocks, monetary policy innovations, shocks to the credit supply, aggregate supply and demand shocks. > The patterns used to distinguish aggregate demand and supply shocks are commonly used in the literature, we are able to discriminate house prices shocks from loans supply and lending rates shocks on the ground of economic theory. > In Spain, in the absence of other shocks, if the growth rates of real consumption had been driven exclusively by housing demand shocks, they would have been largest around 1995 and 2004, and lowest in 2012.18 The cumulative effect of housing demand shocks is rather muted in the remaining countries. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6gxbr4/ecb_house_prices_and_monetary_policy_in_the_euro/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~142717 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*: **shock**^#1 **price**^#2 **House**^#3 **housing**^#4 **policy**^#5\"",
"title": ""
},
{
"docid": "4c05196cadb750e8859fb1537cd59459",
"text": "I don't know much about the convertible debt space, but it seems like this regulation may be a positive sign that the government is being proactive in preventing financial institutions from developing overly complex debt structures (at least on an on-going basis) that get the global economy back into trouble. Does anyone with a more informed opinion than my own have something to share?",
"title": ""
},
{
"docid": "72219980609d159014b02d59a87983e8",
"text": "\"I don't know what angle you're trying to push or why, but are you also saying that Kenichi Ueda of the IMF and Beatrice Weder Di Mauro of the University of Mainz are similarly lacking the understanding of financial concepts when they published a [paper](http://www.imf.org/external/pubs/ft/wp/2012/wp12128.pdf) \"\"Quantifying Structural Subsidy Values for Systemically Important Financial Institutions\"\"? Are you suggesting a similar \"\"entire shaker of salt\"\" when they \"\"estimate[d] the structural subsidy values by exploiting expectations of state support embedded in credit ratings and by using long-run average value of rating bonus\"\"? Should we really be so skeptical when they conclude: >Section III has provided estimates of the value of the subsidy to SIFIs in terms of the overall ratings. Using the range of our estimates, we can summarize that a one-unit increase in government support for banks in advanced economies has an impact equivalent to 0.55 to 0.9 notches on the overall long-term credit rating at the end-2007. And, this effect increased to 0.8 to 1.23 notches by the end-2009 (Summary Table 8). At the end-2009, the effect of the government support is almost identical between the group of advanced countries and developing countries. Before the crisis, governments in advanced economies played a smaller role in boosting banks’ long-term ratings. These results are robust to a number of sample selection tests, such as testing for differential effects across developing and advanced countries, for both listed and non-listed banks, and also correcting for bank parental support and alternative estimations of an individual bank’s strength. I ask because this article is founded on that study - linked to by Bloomberg which is then linked to in OP's Huffpo article. While you can certainly claim that Mark Gongloff \"\"shows a basic lack of understanding\"\" of whatever, why don't you put some skin in the game and demonstrate how he somehow misses the entire point of that study, or better yet really wow us by de-bunking that study.\"",
"title": ""
},
{
"docid": "6d9319ff56e68d79176f284a1700fccb",
"text": "Yes, but only because the US had a huge crash. Other economies have, in the absence of any credible *real* growth strategy, continued pumping housing. I still think student debt will erode incomes further as it's simply pulling forward demand that will drag on incomes later. When nearly everyone has a degree then nearly everyone doesn't get paid much more for having one. By the same principle of supply and demand all the boomer downsizing vs impoverished 30-something lack of upsizing will mean prices will fall.",
"title": ""
},
{
"docid": "799a9ee5e202bf0686256b32b8c4a361",
"text": "\"As Michael McGowan says, just because gold has gone up lots recently does not mean it will continue to go up by the same amount. This plot: shows that if your father had bought $20,000 in gold 30 years ago, then 10 years ago he would have slightly less than $20,000 to show for it. Compare that with the bubble in real estate in the US: Update: I was curious about JoeTaxpayer's question: how do US house prices track against US taxpayer's ability to borrow? To try to answer this, I used the house price data from here, the 30 year fixed mortgages here and the US salary information from here. To calculate the \"\"ability to borrow\"\" I took the US hourly salary information, multiplied by 2000/12 to get a monthly salary. I (completely arbitrarily) assumed that 25 per cent of the monthly salary would be used on mortgage payments. I then used Excel's \"\"PV\"\" (Present Value) function to calculate the present value of the thirty year fixed rate mortgage. The resulting graph is below. The correlation coefficient between the two plots is 0.93. There are so many caveats on what I've done in ~15 minutes, I don't want to list them... but it certainly \"\"gives one furiously to think\"\" !! Update 2: OK, so even just salary information correlates very well with the house price increases. And looking at the differences, we can see that perhaps there was a spike or bubble in house prices over and above what might be expected from salary-only or ability-to-borrow.\"",
"title": ""
},
{
"docid": "50c7e3ea42c36ece76e0b2aa28f33a4d",
"text": "\"This is the best tl;dr I could make, [original](https://www.cityfalcon.com/blog/investments/student-loan-debt-new-mortgage-crisis/?utm_campaign=ao_reddit) reduced by 94%. (I'm a bot) ***** > Costs of living, especially for those attending universities in cities like New York or London, also account for a nontrivial portion of the debt. > Is the student debt bubble in the United States the next mortgage crisis? > One major difference between the student debt problem and the mortgage crisis is the lack of CDOs and CDSs. The thread that connected banks, governments, individuals and economies were the CDO and CDS. With a complex system of mortgage securitization and insurance against those securities, the system effectively collapsed itself. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/79mt1s/student_loan_debt_the_new_mortgage_crisis_in_2018/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~237528 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*: **debt**^#1 **student**^#2 **education**^#3 **economy**^#4 **borrowed**^#5\"",
"title": ""
},
{
"docid": "b68c9e7304d736d1aa6ba5855c8f9e52",
"text": "NB - I live in Surrey and bought my house in January 2014. If you don't have a very social life, it does pay to stay outside London. Places outside London are cheap and you will get a better deal in relation to houses or flats as compared to London. I feel very priced out of the market regarding London mortgages I will strongly question you logic behind this ? Why only London ? Why not live in the commuter belt outside London. Good places to reside, good schools, nice neighbourhood and away from the hustle and bustle of London. Many of my colleagues commute from Cambridge and Oxford daily into Central London and they laugh at people who want to buy a house in London, just for the sake of buying a house. It seems that the housing market is generally in a bubble due to being distorted by the finance market London house market is different from the rest of UK. People from overseas tend to invest in London property market, so it is always inflated. Even the property tax hasn't deterred many. I could look into buying somewhere and renting it out You are trying to join the same people, because of whom you have been put out of the housing market. I strictly question this logic unless your mortgage is less than the rent you pay and what rent you get. Buy a roof over your head first, then think of profiting from property.",
"title": ""
},
{
"docid": "e44e5d398d5efd28d6c1262b52e48099",
"text": "\"So I'm in Australia and we have our very own housing price/credit bubble right now (which is finally deflating) and I'll try explain it as I understand. I welcome anyone to chime in and correct me. The problem we faced (still face to a large degree) is the idea of rising asset prices and how this fuels a feedback loop into increasing personal debt, all based on the false assumption that house prices always go up. Now before I continue, house prices *do* always go up in the long run, but so does the cost of everything and we call that inflation, adjusting for this effect usually reveals that house prices are cyclical in the long term and never really 'grow'. So that aside we in Australia recently saw a long period of increasing house prices (as did the USA and Europe, and more recently China), the thing about house price is it is your 'equity', I'll try and explain: (all figures are made up to provide a simple example) if you borrow $200,000 to buy a house that costs $250,000 you owe the bank 80% of the equity (what your home is 'worth', and notionally this is value that you own) in your home and the bank will be happy, remembering that they make money on your interest payments, not your principal repayments. If your house then increases in value to $300,000 but you still owe $200,000 then you now owe only 66% of your equity. The bank sees you as a lower risk and encourages you to borrow more to get back up to that sweet spot they had before of 80% - this is a nice tradeoff between risk and reward for the bank. You, the consumer, have just been mailed a new credit card with a 50k limit (hypothetical) and theres a new iMac being released next week, and you really did want to trade in your 5yr old car (see where this is going yet?). Not only is this type of spending given a mighty boost but consumers feel like this house thing has done them very well and suddenly they have the ability to borrow lots more money, why not get a second house and do it all over again? The added demand for investment housing drives prices, throw in some generous government incentives (here and in the USA) and demand is pushed hard, prices grow more and the whole thing feeds back into itself. People feel richer, spend more from their credit cards, buy another house, etc. But what happens if your house 'value' then drops to $240k? The bank now sees you as a high risk, so do the bank's investors, you have negative equity, the bank demands the difference paid back to it or it might take your home. Somehow, nobody believed this would happen. Hopefully you start to see the picture? In Australia we are now facing a slow melt in housing prices which has not yet hurt en masse but it has dried up the credit cards, retails spending has collapsed and everyone is worried about the future. Now to realise where the USA got to you have to also understand that banks were not merely asking for a maximum of 80% owed on the asset, many of them let this figure go to 100%, since hey prices always go up, right? They then in some cases went further and neglected to look into your income and confirm you could even *repay* your loan. Sounds dodgey? This is just the setup. Remember I mentioned the bank's investors? Well banks/smart people basically figured out a clever way of 'dealing with' the risk of a few outliers with bad financial situations by collecting large numbers of home loans into a single entity and selling it on. Loans were graded according to risk and I believe they were even cut up into smaller pieces (10% of your high risk loan assigned to 10 different 'debt objects' with different risk profiles). These 'collateralised debt obligations' were traded from one bank/investment firm to another with everyone happily accepting the risk profiles until eventually nobody knew what risk was where. Think about it like \"\"I'll throw 10 high risk loans, 50 medium risk loans and 40 low risk loans into a pot, stir it up and sell the soup as 'pretty safe' \"\". This all seemed like a very good idea until it gradually became clear just how much of these loans were in the 'extremely stupid high risk' category. This is probably extremely confusing by now, but thats the point, investors could no longer judge how risky an investment in a bank or financial institute was, the market did not correct for any of this until it was all too late. The moral of the story is when people tell you an investment is guaranteed to make you money, you stay away from that investment. And to specifically answer your question you can't solely blame government incentives as you might be able to see, but they play a part in a giant orchestra, there are many factors that drive this sort of stupidity, stupidity being the primary one.\"",
"title": ""
},
{
"docid": "d6e5ae4073483fc8fe8353bc8a8c31ad",
"text": "The Shiller data is inflation adjusted. In effect, a flat line means that long term, housing rises with inflation, no more no less. There's no argument, just the underlying data to support his charts. This, among them. As much as I respect Nobel Prize winning Robert Shiller, his approach and analysis of the boom ignored interest rates. Say we look at a $50K earning couple. This is just below median income. At 9%, they qualify to borrow $145K. As rates fell to 4%, they qualify for $244K. Same fixed 30 term. Ignoring all other factors, the swing in rates will generate an oscillation around the long term trend. And my own data crunching suggests the equilibrium median home price will tend toward the price supported by the median income. A similar, but not identical question - Why can't house prices be out of tune with salaries? In response to Chan-Ho's comment - I'd imagine Shiller understood the interest impact. To clarify, the chart, as presented, ignores it.",
"title": ""
},
{
"docid": "e8244db9b6d7cb8ae986c5b82432cdec",
"text": "Most people today (and maybe regardless of era) are irrational and don't properly valuate many of their purchases, nor are they emotionally equipped to do the math properly, including projection into the future and applying probabilities. This compounds. Imagine that each individual is bound to others by a rubber band and can stretch in a certain direction. The more your neighbors stretch, the more you are both motivated to stretch and able to stretch. These are crudely analogous to consumer wants as well as allowed consumer debt. The banks are also within this network of rubber bands and much of their balance sheet is based on how far they've stretched on the aggregate of all connected bands (counting others debts as their credit because it will presumably be repaid), and every so often enough people's feet slip that a lot of rubber bands snap back. This is a bubble bursting.",
"title": ""
}
] |
fiqa
|
9bc6a7b9c51915269bbf42b399651755
|
Is it unreasonable to double your investment year over year?
|
[
{
"docid": "68ca8ce246d0e966543105f3cfd308d4",
"text": "Yes, it is unreasonable and unsustainable. We all want returns in excess of 15% but even the best and richest investors do not sustain those kinds of returns. You should not invest more than a fraction of your net worth in individual stocks in any case. You should diversify using index funds or ETFs.",
"title": ""
},
{
"docid": "3920dc7fad00ba1d6cb961f24716c96a",
"text": "Yes, because you cannot have an exponential growth rate that is faster than the rate at which the economy grows on the long term. 100% growth is much more than the few percent at which the economy grows, so your share in the World economy would approximately double every year. Today the value of all the assets in the World economy is about $200 trillion. If you start with an investment of just $1000 and this doubles every year, then you'll own all the World's assets in 37.5 years, assuming this doesn't grow. You can, of course, take into account that it does grow, this will yield a slightly larger time before you own the entire World.",
"title": ""
},
{
"docid": "27aa45737bb833845898f3a5a750f43f",
"text": "\"Wealth gained hastily will dwindle but whoever gathers little by little will increase it. Proverbs 13:11 (ESV) Put another way... \"\"Easy come, easy go\"\" You cannot sustain 100% annual ROI. Sooner than you think you will hit a losing streak. Casinos depend on this truth. You may win a few rolls of the dice. But betting your winnings will eventually cause you to lose all.\"",
"title": ""
},
{
"docid": "6f1551afd1abb120bab92dc358d48309",
"text": "One thing I like to do every once in a while is look at the day's market movers. It's a list of symbols that had huge movement. There tend to be a couple of 50+% movers every time I look. In fact today I see ATV moved up 414.48%: So there it is—doubling your investment in one day and then some is technically possible. The problem is that the market movers chart also has an equal number of symbols that had major movements in the other direction. Today's winner is: SPCB lost 40% in one day, and thats the problem. If you invest in anything that can double your investment in one year, it can also halve your investment in one year. Or do better. Or do worse. You really don't know because the volatility is so high.",
"title": ""
},
{
"docid": "f9d0671f97e043bc4c5aab149a7f419b",
"text": "It is not unheard of. Celebrity investors such as Warren Buffet and Carl Icahn gained notoriety by more than doubling investments some years, with a few very stellar trades and bets. Doubling, as in a 100% gain, is actually conservative if you want to play that game, as 500%, 1200% and greater gains are possible and were achieved by the two otherwise unrelated people I mentioned. This reality is opposite of the comparably pitiful returns that Warren Buffet teaches baby boomers about, but compounding on 2-5% gains annually is a more likely way to build wealth. It is unreasonable to say and expect that you will get the outcome of doubling an investment year over year.",
"title": ""
},
{
"docid": "8ce800bdc507c542f7639aa0286f04b8",
"text": "\"Nobody has consistently doubled their investment year after year, not even the \"\"greats\"\" like George Soros and Warren Buffett. Mr. Buffett's average annual returns have been over 20% for over 50 years. That's about twice the American average of 10%-11% a year. So Mr. Buffett has been \"\"twice as good as average\"\" for his adult life. That's like having a 200 IQ. And in a poll taken in 2000, he was rated the greatest portfolio manager of all time. No lesser person could hope to do better. What has happened is that people may double their investment in ONE year, then \"\"give some back\"\" the following year. Or else go through several years of \"\"average\"\" 10%-15% returns. The reason is that they will have an investment style that works for one particular market, but not for all markets, so they will have to wait for their \"\"best\"\" market, to have their \"\"best\"\" year.\"",
"title": ""
},
{
"docid": "8d2417fd1e8eb8a7ede06951fc8de9c8",
"text": "\"Yes. The definition of unreasonable shows as \"\"not guided by or based on good sense.\"\" 100% years require a high risk. Can your one stock double, or even go up three fold? Sure, but that would likely be a small part of your portfolio. Overall, long term, you are not likely to beat the market by such high numbers. That said, I had 2 years of returns well over 100%. 1998, and 1999. The S&P was up 26.7% and 19.5%, and I was very leverage in high tech stock options. As others mentioned, leverage was key. (Mark used the term 'gearing' which I think is leverage). When 2000 started crashing, I had taken enough off the table to end the year down 12% vs the S&P -10%, but this was down from a near 50% gain in Q1 of that year. As the crash continued, I was no longer leveraged and haven't been since. The last 12 years or so, I've happily lagged the S&P by a few basis points (.04-.02%). Also note, Buffet has returned an amazing 15.9%/yr on average for the last 30 years (vs the S&P 11.4%). 16% is far from 100%. The last 10 year, however, his return was a modest 8.6%, just .1% above the S&P.\"",
"title": ""
},
{
"docid": "d98a1a97eb6179caef1f1e5c9c6958c7",
"text": "\"Not at all impossible. What you need is Fundamental Analysis and Relationship with your investment. If you are just buying shares - not sure you can have those. I will provide examples from my personal experience: My mother has barely high school education. When she saw house and land prices in Bulgaria, she thought it's impossibly cheap. We lived on rent in Israel, our horrible apartment was worth $1M and it was horrible. We could never imagine buying it because we were middle class at best. My mother insisted that we all sell whatever we have and buy land and houses in Bulgaria. One house, for example, went from $20k to EUR150k between 2001 and 2007. But we knew Bulgaria, we knew how to buy, we knew lawyers, we knew builders. The company I currently work for. When I joined, share prices were around 240 (2006). They are now (2015) at 1500. I didn't buy because I was repaying mortgage (at 5%). I am very sorry I didn't. Everybody knew 240 is not a real share price for our company - an established (+30 years) software company with piles of cash. We were not a hot startup, outsiders didn't invest. Many developers and finance people WHO WORK IN THE COMPANY made a fortune. Again: relationship, knowledge! I bought a house in the UK in 2012 - everyone knew house prices were about to go up. I was lucky I had a friend who was a surveyor, he told me: \"\"buy now or lose money\"\". I bought a little house for 200k, it is now worth 260k. Not double, but pretty good money! My point is: take your investment personally. Don't just dump money into something. Once you are an insider, your risk will be almost mitigated and you could buy where you see an opportunity and sell when you feel you are near the maximal real worth of your investment. It's not hard to analyse, it's hard to make a commitment.\"",
"title": ""
},
{
"docid": "cb7a295dd66a62cf18a6b8763ed80268",
"text": "I know it may not last longer but i was able to 2.5x my wealth over last 2 years.(2016, 2017 cont) I was successfully able to convert 70k into 452k in 21months. Now at this amount, I am really worried and want to take all the profit. I agree that I have been lucky with these returns but it was not all outright luck. Now my plan is to take 100k of it and try high risk investments while investing 350k in index funds.",
"title": ""
}
] |
[
{
"docid": "bbeb069f1de0e2d785f8e9e064473933",
"text": "Your initial investment in this case is $9 on the first morning. Every other morning you are using part of your profits to buy the new piece of jewelry, so you are actually not investing any new funds. So each day you are effectively keeping $1 of your profits and re_re-investing $9. But your initial investment of your own funds is only the first $9. In other words if you only had $9 in the bank at the start of the year you could make $365 profits during the year and finish up with $374 in the the bank at the end of the year.",
"title": ""
},
{
"docid": "13d54dbd5a6b33f419ebeafe4f977782",
"text": "\"I read the book, and I'm willing to believe you'd have a good chance of beating the market with this strategy - it is a reasonable, rational, and mechanical investment discipline. I doubt it's overplayed and overused to the point that it won't ever work again. But only IF you stick to it, and doing so would be very hard (behaviorally). Which is probably why it isn't overplayed and overused already. This strategy makes you place trades in companies you often won't have heard of, with volatile prices. The best way to use the strategy would be to try to get it automated somehow and avoid looking at the individual stocks, I bet, to take your behavior out of it. There may well be some risk factors in this strategy that you don't have in an S&P 500 fund, and those could explain some of the higher returns; for example, a basket of sketchier companies could be more vulnerable to economic events. The strategy won't beat the market every year, either, so that can test your behavior. Strategies tend to work and then stop working (as the book even mentions). This is related to whether other investors are piling in to the strategy and pushing up prices, in part. But also, outside events can just happen to line up poorly for a given strategy; for example a bunch of the \"\"fundamental index\"\" ETFs that looked at dividend yield launched right before all the high-dividend financials cratered. Investing in high-dividend stocks probably is and was a reasonable strategy in general, but it wasn't a great strategy for a couple years there. Anytime you don't buy the whole market, you risk both positive and negative deviations from it. Here's maybe a bigger-picture point, though. I happen to think \"\"beating the market\"\" is a big old distraction for individual investors; what you really want is predictable, adequate returns, who cares if the market returns 20% as long as your returns are adequate, and who cares if you beat the market by 5% if the market cratered 40%. So I'm not a huge fan of investment books that are structured around the topic of beating the market. Whether it's index fund advocates saying \"\"you can't beat the market so buy the index\"\" or Greenblatt saying \"\"here's how to beat the market with this strategy,\"\" it's still all about beating the market. And to me, beating the market is just irrelevant. Nobody ever bought their food in retirement because they did or did not beat the market. To me, beating the market is a game for the kind of actively-managed mutual fund that has a 90%-plus R-squared correlation with the index; often called an \"\"index hugger,\"\" these funds are just trying to eke out a little bit better result than the market, and often get a little bit worse result, and overall are a lot of effort with no purpose. Just get the index fund rather than these. If you're getting active management involved, I'd rather see a big deviation from the index, and I'd like that deviation to be related to risk control: hedging, or pulling back to cash when valuations get rich, or avoiding companies without a \"\"moat\"\" and margin of safety, or whatever kind of risk control, but something. In a fund like this, you aren't trying to beat the market, you're trying to increase the chances of adequate returns - you're optimizing for predictability. I'm not sure the magic formula is the best way to do that, focused as it is on beating the market rather than on risk control. Sorry for the extra digression but I hope I answered the question a bit, too. ;-)\"",
"title": ""
},
{
"docid": "fa9651ecd8b5e06c2bca0c7386e774cc",
"text": "To answer your precise question, your plans are not at all misguided, and are in fact very reasonable. You are clearly financially very comfortable, and from the tone of your post it sounds like you value security and simplicity over maximizing your investment return over the coming years. If money was the most important thing to you then you would stay shackled to your high paying jobs. @JoeTaxpayer's answer has some great information for a person who is interested in maximizing their investment return. If you followed that advice, you might increase your return on investments by up to 1%/year (I'm just throwing a ball park number out there). So your choice is simple. Peace of mind on one hand and perhaps 1% additional return on investments on the other hand.",
"title": ""
},
{
"docid": "a5e1360f3a804475b28a1f26149f104b",
"text": "Anybody that offers a bigger return than a deposit claiming 100% safe is a fraud. There is always a risk: Yes, you can gain 30% in a year, but nobody can guarantee that you'll repeat that gain the next. My own experience (and I do take risks), one year I go up, the next year I go down...",
"title": ""
},
{
"docid": "b4fd3346b362b43bc4afa5ecfc367ae3",
"text": "\"I'd agree that this can seem a little unfair, but it's an unavoidable consequence of the necessary practicality of paying out dividends periodically (rather than continuously), and differential taxation of income and capital gains. To see more clearly what's going on here, consider buying stock in a company with extremely simple economics: it generates a certain, constant earnings stream equivalent to $10 per share per annum, and redistributes all of that profit as periodic dividends (let's say once annually). Assume there's no intrinsic growth, and that the firm's instrinsic value (which we'll say is $90 per share) is completely neutral to any other market factors. Under these economics, this stock price will show a \"\"sawtooth\"\" evolution, accruing from $90 to $100 over the course of a year, and resetting back down to $90 after each dividend payment. Now, if I am invested in this stock for some period of time, the fair outcome would be that I receive an appropriately time-weighted share of the $10 annual earnings per share, less my tax. If I am invested for an exact calendar year, this works as I'd expect: the stock price on any given day in the year will be the same as it was exactly one year earlier, so I'll realise zero capital gain, but I'll have collected a $10 taxed dividend along the way. On the other hand, what if I am invested for exactly half a year, spanning a dividend payment? I receive a dividend payment of $10 less tax, but I make a capital loss of -$5. Overall, pre-tax, I'm up $5 per share as expected. However, the respective tax treatment of the dividend payment (which is classed as income) and the capital gains is likely to be different. In particular, to benefit from the \"\"negative\"\" taxation of the capital loss I need to have some positive capital gain elsewhere to offset it - if I can't do that, I'm much worse off compared to half the full-year return. Further, even if I can offset against a gain elsewhere the effective taxation rates are likely to be different - but note that this could work for or against me (if my capital gains rate is greater than my income tax rate I'd actually benefit). And if I'm invested for half a year, but not spanning a dividend, I make $5 of pure capital gains, and realise a different effective taxation rate again. In an ideal world I'd agree that the effective taxation rate wouldn't depend on the exact timing of my transactions like this, but in reality it's unavoidable in the interests of practicality. And so long as the rules are clear, I wouldn't say it's unfair per se, it just adds a bit of complexity.\"",
"title": ""
},
{
"docid": "53dd714fdcde93886c79bef5635ec6a9",
"text": "\"First, please allow me to recommend that you do not try gimmickry when financials do give expected results. It's a sure path to disaster and illegality. The best route is to first check if accounts are being properly booked. If they are then there is most likely a problem with the business. Anything out of bounds yet properly booked is indeed the problem. Now, the reason why your results seem strange is because investments are being improperly booked as inventory; therefore, the current account is deviating badly from the industry mean. The dividing line for distinguishing between current and long term assets is one year; although, modern financial accounting theorists & regulators have tried to smudge that line, so standards do not always adhere to that line. Therefore, any seedlings for resale should be booked as inventory while those for potting as investment. It's been some time since I've looked at the standards closely, but this used to fall under \"\"property, plant, & equipment\"\". Generally, it is a \"\"capital expenditure\"\" by the oldest definition. It is not necessary to obsess over initial bookings because inventory turnover will quickly resolve itself, so a simple running or historical rate can be applied to the seedling purchases. The books will now appear more normal, and better subsequent strategic decisions can now be made.\"",
"title": ""
},
{
"docid": "2698016794b852de38938d5a5e422209",
"text": "No, you can't. The limits are contribution limits, not limits on the value of the investment. If you contributed $5,500 for 2015, you are done contributing for that tax year. You are free to contribute another $5,500 for 2016.",
"title": ""
},
{
"docid": "8f4b4c9c8645edfa232b9beab747db47",
"text": "\"This post may be old anyhow here's my 2 cents. Real world...no. Compounding is overstated. I have 3 mutual funds, basically index funds, you can go look them up. vwinx, spmix, spfix in 11 years i've made a little over 12,000 on 50,000 invested. That averages 5%. That's $1,200 a year about. Not exactly getting rich on the compounding \"\"myth?\"\". You do the math. I would guess because overly optimistic compounding gains are based on a straight line gains. Real world...that aint gonna happen.\"",
"title": ""
},
{
"docid": "bbe9180f1cff5262fcf27862358c007a",
"text": "\"I have heard that investing more money into an investment which has gone down is generally a bad idea*. \"\"Throwing good money after bad\"\" so to speak. Is investing more money into a stock, you already have a stake in, which has gone up in price; a good idea? Other things being equal, deciding whether to buy more stocks or shares in a company you're already invested in should be made in the same way you would evaluate any investment decision and -- broadly speaking -- should not be influenced by whether an existing holding has gone up or down in value. For instance, given the current price of the stock, prevailing market conditions, and knowledge about the company, if you think there is a reasonable chance that the price will rise in the time-period you are interested in, then you may want to buy (more) stock. If you think there is a reasonable chance the price will fall, then you probably won't want to buy (more) stock. Note: it may be that the past performance of a company is factored into your decision to buy (e.g was a recent downturn merely a \"\"blip\"\", and long-term prospects remain good; or have recent steady rises exhausted the potential for growth for the time being). And while this past performance will have played a part in whether any existing holding went up or down in value, it should only be the past performance -- not whether or not you've gained or lost money -- that affects the new decision. For instance: let us suppose (for reasons that seemed valid at the time) you bought your original holding at £10/share, the price has dropped to £2/share, but you (now) believe both prices were/are \"\"wrong\"\" and that the \"\"true price\"\" should be around £5/share. If you feel there is a good chance of this being achieved then buying shares at £2, anticipating they'll rally to £5, may be sound. But you should be doing this because you think the price will rise to £5, and not because it will offset the loses in your original holding. (You may also want to take stock and evaluate why you thought it a good idea to buy at £10... if you were overly optimistic then, you should probably be asking yourself whether your current decisions (in this or any share) are \"\"sound\"\"). There is one area where an existing holding does come into play: as both jamesqf and Victor rightly point out, keeping a \"\"balanced\"\" portfolio -- without putting \"\"all your eggs in one basket\"\" -- is generally sound advice. So when considering the purchase of additional stock in a company you are already invested in, remember to look at the combined total (old and new) when evaluating how the (potential) purchase will affect your overall portfolio.\"",
"title": ""
},
{
"docid": "bae2ad702ebc1440fa3a7f006e568fe8",
"text": "\"The problem with the proposed plan is the word \"\"inevitable\"\". There is no such thing as a recovery that is guaranteed (though we may wish it to be so), and even if there was there is no telling how long it will take for a recovery to occur to a sufficient degree. There are also no foolproof ways to determine when you have hit the bottom. For historical examples, consider the Nikkei. In 2000 the value fell from 20000 to 15000 in a single year. Had you bought then, you would have found the market still fell and didn't get back to 15k until 2005...where it went up and down for years, when in 2008 it fell again and would not get back to that level again until 2014. Lest you think this was an isolated international incident, the same issues happened to the S&P in 2002, where things went up until they fell even lower in 2009 before finally climbing again. Will there be another recession at some point? Surely. Will there be a single, double, or triple dip, and at what point is the true bottom - and will it take 5, 10, or 20+ years for things to get back above when you bought? No one really knows, and we can only guess. So if you want to double down after a recession, you can, but it's important you not fool yourself into thinking you aren't greatly increasing your risk exposure, because you are.\"",
"title": ""
},
{
"docid": "0964d9db32ade538d1fd0fdb8d764ecf",
"text": "Something really does seem seedy that if I invest $2500, that I'll make above 50k if the stock doubles. Is it really that easy? You only buy or sell on margin. Think of when the stock moves in the opposite direction. You will loose 50k. You probably didn't look into that. Investment will vanish and then you will have debt to repay. Holding for long term in CFD accounts are charged per day. Charges depends on different service providers. CFD isn't and should not be used for long term. It is primarily for trading in the short term, maybe a week at the maximum. Have a look at the wikipedia entry and educate yourself.",
"title": ""
},
{
"docid": "1c007d2f764ed54de2b635b1ceb950c4",
"text": "\"(Leaving aside the question of why should you try and convince him...) I don't know about a very convincing \"\"tl;dr\"\" online resource, but two books in particular convinced me that active management is generally foolish, but staying out of the markets is also foolish. They are: The Intelligent Asset Allocator: How to Build Your Portfolio to Maximize Returns and Minimize Risk by William Bernstein, and A Random Walk Down Wall Street: The Time Tested-Strategy for Successful Investing by Burton G. Malkiel Berstein's book really drives home the fact that adding some amount of a risky asset class to a portfolio can actually reduce overall portfolio risk. Some folks won a Nobel Prize for coming up with this modern portfolio theory stuff. If your friend is truly risk-averse, he can't afford not to diversify. The single asset class he's focusing on certainly has risks, most likely inflation / purchasing power risk ... and that risk that could be reduced by including some percentage of other assets to compensate, even small amounts. Perhaps the issue is one of psychology? Many people can't stomach the ups-and-downs of the stock market. Bernstein's also-excellent follow-up book, The Four Pillars of Investing: Lessons for Building a Winning Portfolio, specifically addresses psychology as one of the pillars.\"",
"title": ""
},
{
"docid": "6550eb8b1f267dd995068f20e63ae48f",
"text": "My super fund and I would say many other funds give you one free switch of strategies per year. Some suggest you should change from high growth option to a more balance option once you are say about 10 to 15 years from retirement, and then change to a more capital guaranteed option a few years from retirement. This is a more passive approach and has benefits as well as disadvantages. The benefit is that there is not much work involved, you just change your investment option based on your life stage, 2 to 3 times during your lifetime. This allows you to take more risk when you are young to aim for higher returns, take a balanced approach with moderate risk and returns during the middle part of your working life, and take less risk with lower returns (above inflation) during the latter part of your working life. A possible disadvantage of this strategy is you may be in the higher risk/ higher growth option during a market correction and then change to a more balanced option just when the market starts to pick up again. So your funds will be hit with large losses whilst the market is in retreat and just when things look to be getting better you change to a more balanced portfolio and miss out on the big gains. A second more active approach would be to track the market and change investment option as the market changes. One approach which shouldn't take much time is to track the index such as the ASX200 (if you investment option is mainly invested in the Australian stock market) with a 200 day Simple Moving Average (SMA). The concept is that if the index crosses above the 200 day SMA the market is bullish and if it crosses below it is bearish. See the chart below: This strategy will work well when the market is trending up or down but not very well when the market is going sideways, as you will be changing from aggressive to balanced and back too often. Possibly a more appropriate option would be a combination of the two. Use the first passive approach to change investment option from aggressive to balanced to capital guaranteed with your life stages, however use the second active approach to time the change. For example, if you were say in your late 40s now and were looking to change from aggressive to balanced in the near future, you could wait until the ASX200 crosses below the 200 day SMA before making the change. This way you could capture the majority of the uptrend (which could go on for years) before changing from the high growth/aggressive option to the balanced option. If you where after more control over your superannuation assets another option open to you is to start a SMSF, however I would recommend having at least $300K to $400K in assets before starting a SMSF, or else the annual costs would be too high as a percentage of your total super assets.",
"title": ""
},
{
"docid": "50d441273b7652a20071b085a53fb989",
"text": "they are, but they aren't regulated so they're great for the people underwriting, brokering, clearing, and facilitating the trading. doesn't matter that the 50+ yo guys selling it don't understand blockchain, or even the fundamental reason why these coins supposedly have value, the customers don't either.",
"title": ""
},
{
"docid": "6ad772daa2134a1fcd7ebaee7cdc0945",
"text": "The one whose order gets to the exchange first. The exchange receives the orders and arranges them in First-In-First-Out order, by which they're then executed. At some point it is synchronized and put into a list. Whoever gets to that point first - gets the deal.",
"title": ""
}
] |
fiqa
|
81c86c77f0ea70ddd9075ba953e20837
|
What are “headwinds” and “tailwinds” in financial investments?
|
[
{
"docid": "8c347bd23308d51e38217338e2ca3de9",
"text": "\"The term \"\"tailwinds\"\" describes some condition or situation that will help move growth higher. For example, falling gas prices will help a delivery company be more profitable. Lower gas prices is said to be a tailwind for the freight services industry. \"\"Headwinds\"\" are just the opposite. Its a situation what will make growth more difficult. For example, if the price of beef goes much higher, McDonald's is facing headwinds. It's a nautical term. If the wind is at your back (tailwind), that will help you move forward more quickly. If you are moving into a headwind, that will only make progress more difficult.\"",
"title": ""
},
{
"docid": "360199722b7757b67c64d9a4b3e15b61",
"text": "Headwinds in an economic situation represent events or conditions e.g. a credit crisis, rising costs, natural disasters, etc, that slow down the growth of an economy. So headwinds are negative. Tailwinds are the opposite and help to increase growth of an economy.",
"title": ""
}
] |
[
{
"docid": "eb0299e0e2742cda3ef07689492964a8",
"text": "I used to trade power for a closed end hedge fund. Yes, weather derivatives are very important. They help power traders / utilities hedge for unaccountable variables, IE weather. For example, lets say it costs a utility $50 an hour to produce power for the load when it is 80 degrees outside. Lets say I trade the contract with them to guarantee the weather will be under 80 degrees. If the weather is higher than 80 degrees, more people turn in their AC, the load on the grid goes up, and the utility has to start generating power at $70 an hour. Under this contract, I would be liable to pay the utility the net difference in their cost (the additional $20 per hour they generate per mw). In that case I am a loser. If the power comes in under 80 degrees, I make money as I priced (sold) the contract at a premium according to the risk I calulated for offereing the contract. This has many many applications, but yes, its not a weird thing to trade. Hope this helps.",
"title": ""
},
{
"docid": "b354cfcaa22f3ae30140295627b99872",
"text": "The point of derivatives is to get rid of the risk you don't want so you can acquire exposure only to the risk you want. Who wants weather/temperature risk -- speculators. Who doesn't want that risk? Anyone who's core business is adversely affected by bad weather. It's the same reason multinational firms will hedge FX and interest rates. All a speculator is typically doing is taking the other side of the trade based on what they feel is the true price of the risk they are assuming",
"title": ""
},
{
"docid": "a94b5eecca6ba3b05164821c00dcc103",
"text": "\"https://www.fool.com/investing/general/2013/07/30/2-types-of-risk-2-types-of-bubbles.aspx (mirror): The Wall Street Journal reviews: What Mr. Bernstein calls \"\"shallow risk\"\" is a temporary drop in an asset's market price; decades ago, the great investment analyst Benjamin Graham referred to such an interim decline as \"\"quotational loss.\"\" \"\"Deep risk,\"\" on the other hand, is an irretrievable real loss of capital, meaning that after inflation you won't recover for decades -- if ever. So quotational loss = loss not explained by change of actual value of a firm.\"",
"title": ""
},
{
"docid": "cedf0f6d3eda7cab6a6d873a80e54033",
"text": "Mostly some custom work i've done myself, bayesian and time series models, but there is some pattern matching. Most TA functions such as MA's, MACD's, BollingerBands, are simple ways of doing time series analysis. MA's are basic filters. MACD is essentially a way of viewing acceleration, as its the informational difference between filters. BB's are mean reverters based on standard deviation/ RSI is a ratio of filtered up to down moves basically generating an indicator based on how strong the market has moved.",
"title": ""
},
{
"docid": "ff8f7a486adf61b296339b15fb9d2700",
"text": "Thanks for that, it did help. I think my issue is I don't work in finance itself, I'm a lawyer, and 'capital' generally has a very specific meaning in English company law, where it refers exclusively to shareholder capital. I realise capital in finance terms includes both debt and equity investment.",
"title": ""
},
{
"docid": "b3a1c1a22b4ef798a3315cc961bded21",
"text": "In your other question about these funds you quoted two very different yields for them. That pretty clearly says they are NOT tracking the same index.",
"title": ""
},
{
"docid": "0fec26dbfb1b86a689440b4b9b859ead",
"text": "\"Well there are a few comments that need to be made here I suppose. Though at work now so this will be short. First there is the difference between banking, which indeed mostly looks at capital adequacy ratios and uses VaR as one of the methods to get to the risk-weighted assets. Then there is the buy side which is more interested in \"\"how much would I stand to lose in portfolio X if markets head south, and how does that relate to what a have promised my client?\"\" In the first situation it is the bank itself taking on the risk, in the second the risk lies entirely with the client. An asset manager could lose 100% on your regular old equity mandate and it wouldn't hit him except for loss in fees, whereas a significant trading loss for a bank can put it out of business.. My personal view is that all of these metrics are merely useful instruments and for a large part they all tell me the same thing. A higher duration on a fixed income mandate will give a higher VaR, a higher shortfall, more negative results on rates stress scenarios etcetera. They only really become useful when imposing limits on them, or using them to steer based on whatever the prevailing risk appetite is at a certain point in time. Or when looking at trends, or relative risk of portfolio A vs B Don't get me wrong, I too can debate for hours about VaR parameters. Confidence intervals, look back periods, return frequency, decay factors, parametric or historical / monte carlo simulation, etcetera. But I think in practise that is really of limited use. If you take any ex ante risk measure and you thoroughly understand it, make an informed choice about risk appetite and steer on it, you basically have done your job as a risk manager. Sorry I know I am not answering your questions in a structured way but am on my phone so it's hard to keep overview. PM me if you want to discuss things in detail.\"",
"title": ""
},
{
"docid": "1aa8e87a1881bf344bdfee7c4c4e4eb5",
"text": "For a time period as short as a matter of months, commercial paper or bonds about to mature are the highest returning investments, as defined by Benjamin Graham: An investment operation is one which, upon thorough analysis, promises safety of principal and a satisfactory return. Operations not meeting these requirements are speculative. There are no well-known methods that can be applied to cryptocurrencies or forex for such short time periods to promise safety of principal. The problem is that with $1,500, it will be impossible to buy any worthy credit directly and hold to maturity; besides, the need for liquidity eats up the return, risk-adjusted. The only alternative is a bond ETF which has a high probability of getting crushed as interest rates continue to rise, so that fails the above criteria. The only alternative for investment now is a short term deposit with a bank. For speculation, anything goes... The best strategy is to take the money and continue to build up a financial structure: saving for risk-adjusted and time-discounted future annual cash flows. After the average unemployment cycle is funded, approximately six or so years, then long-term investments should be accumulated, internationally diversified equities.",
"title": ""
},
{
"docid": "c849f182aee1eb0b098b8e7111a4a1b7",
"text": "I think you may be confused on terminology here. Financial leverage is debt that you have taken on, in order to invest. It increases your returns, because it allows you to invest with more money than what you actually own. Example: If a $1,000 mutual fund investment returns $60 [6%], then you could also take on $1,000 of debt at 3% interest, and earn $120 from both mutual fund investments, paying $30 in interest, leaving you with a net $90 [9% of your initial $1,000]. However, if the mutual fund 'takes a nose dive', and loses money, you still need to pay the $30 interest. In this way, using financial leverage actually increases your risk. It may provide higher returns, but you have the risk of losing more than just your initial principle amount. In the example above, imagine if the mutual fund you owned collapsed, and was worth nothing. Now, you would have lost $1,000 from the money you invested in the first place, and you would also still owe $1,000 to the bank. The key take away is that 'no risk' and 'high returns' do not go together. Safe returns right now are hovering around 0% interest rates. If you ever feel you have concocted a mix of options that leaves you with no risk and high returns, check your math again. As an addendum, if instead what you plan on doing is investing, say, 90% of your money in safe(r) money-market type funds, and 10% in the stock market, then this is a good way to reduce your risk. However, it also reduces your returns, as only a small portion of your portfolio will realize the (typically higher) gains of the stock market. Once again, being safer with your investments leads to less return. That is not necessarily a bad thing; in fact investing some part of your portfolio in interest-earning low risk investments is often advised. 99% is basically the same as 100%, however, so you almost don't benefit at all by investing that 1% in the stock market.",
"title": ""
},
{
"docid": "4fe71dad8b6df9ac042bb484b3097c02",
"text": "I use two measures to define investment risk: What's the longest period of time over which this investment has had negative returns? What's the worst-case fall in the value of this investment (peak to trough)? I find that the former works best for long-term investments, like retirement. As a concrete example, I have most of my retirement money in equity, since the Sensex has had zero returns over as long as a decade. Since my investment time-frame is longer, equity is risk-free, by this measure. For short-term investments, like money put aside to buy a car next year, the second measure works better. For this purpose, I might choose a debt fund that isn't the safest, and has had a worst-case 8% loss over the past decade. I can afford that loss, putting in more money from my pocket to buy the car, if needed. So, I might choose this fund for this purpose, taking a slight risk to earn higher return. In any case, how much money I need for a car can only be a rough guess, so having 8% less than originally planned may turn out to be enough. Or it may turn out that the entire amount originally planned for is insufficient, in which case a further 8% shortfall may not be a big deal. These two measures I've defined are simple to explain and understand, unlike academic stuff like beta, standard deviation, information ratio or other mumbo-jumbo. And they are simple to apply to a practical problem, as I've illustrated with the two examples above. On the other hand, if someone tells me that the standard deviation of a mutual fund is 15%, I'll have no idea what that means, or how to apply that to my financial situation. All this suffers from the problem of being limited to historical data, and the future may not be like the past. But that affects any risk statistic, and you can't do better unless you have a time machine.",
"title": ""
},
{
"docid": "0f7068685da6d41e4de33c1724134345",
"text": "From Wikipedia: Investment has different meanings in finance and economics. In Finance investment is putting money into something with the expectation of gain, that upon thorough analysis, has a high degree of security for the principal amount, as well as security of return, within an expected period of time. In contrast putting money into something with an expectation of gain without thorough analysis, without security of principal, and without security of return is speculation or gambling. The second part of the question can be addressed by analyzing the change in gold price vs inflation year by year over the long term. As Chuck mentioned, there are periods in which it didn't exceed inflation. More important, over any sufficiently long length of time the US stock market will outperform. Those who bought at the '87 peak aren't doing too bad, yet those who bought in the last gold bubble haven't kept up with inflation. $850 put into gold at the '80 top would inflate today to $2220 per the inflation calculator. You can find with a bit of charting some periods where gold outpaced inflation, and some where it missed. Back to the definition of investment. I think gold fits speculation far better than it does investment. I've heard the word used in ways I'd disagree with, spend what you will on the shoes, but no, they aren't an investment, I tell my wife. The treadmill purchase may improve my health, and people may use the word colloquially, but it's not an investment.",
"title": ""
},
{
"docid": "6d6f870f48d0f4bf8e0c576af96e9095",
"text": "\"I'd argue the two words ought to (in that I see this as a helpful distinction) describe different activities: \"\"Investing\"\": spending one's money in order to own something of value. This could be equipment (widgets, as you wrote), shares in a company, antiques, land, etc. It is fundamentally an act of buying. \"\"Speculating\"\": a mental process in which one attempts to ascertain the future value of some good. Speculation is fundamentally an act of attempted predicting. Under this set of definitions, one can invest without speculating (CDs...no need for prediction) and speculate without investing (virtual investing). In reality, though, the two often go together. The sorts of investments you describe are speculative, that is, they are done with some prediction in mind of future value. The degree of \"\"speculativeness\"\", then, has to be related to the nature of the attempted predictions. I've often seen that people say that the \"\"most speculative\"\" investments (in my use above, those in which the attempted prediction is most chaotic) have these sorts of properties: And there are probably other ideas that can be included. Corrections/clarifications welcome! P.S. It occurs to me that, actually, maybe High Frequency Trading isn't speculative at all, in that those with the fastest computers and closest to Wall Street can actually guarantee many small returns per hour due to the nature of how it works. I don't know enough about the mechanics of it to be sure, though.\"",
"title": ""
},
{
"docid": "9031cd641767c4fa0b9f66906157836f",
"text": "I think by definition there aren't, generally speaking, any indicators (as in chart indicators, I assume you mean) for fundamental analysis. Off the top of my head I can't think of one chart indicator that I wouldn't call 'technical', even though a couple could possibly go either way and I'm sure someone will help prove me wrong. But the point I want to make is that to do fundamental analysis, it is most certainly more time consuming. Depending on what instrument you're investing in, you need to have a micro perspective (company specific details) and a macro perspective (about the industry it's in). If you're investing in sector ETFs or the like, you'd be more reliant on the macro analysis. If you're investing in commodities, you'll need to consider macro analysis in multiple countries who are big producers/consumers of the item. There's no cut and dried way to do it, however I personally opt for a macro analysis of sector ETFs and then use technical analysis to determine my entry and/or exit.",
"title": ""
},
{
"docid": "d6bf11b0627d73cbea9659cfedae9210",
"text": "\"The calculation and theory are explained in the other answers, but it should be pointed out that the video is the equivalent of watching a magic trick. The secret is: \"\"Stock A and B are perfectly negatively correlated.\"\" The video glasses over that fact that without that fact the risk doesn't drop to zero. The rule is that true diversification does decrease risk. That is why you are advised to spread year investments across small-cap, large-cap, bonds, international, commodities, real estate. Getting two S&P 500 indexes isn't diversification. Your mix of investments will still have risk, because return and risk are backward calculations, not a guarantee of future performance. Changes that were not anticipated will change future performance. What kind of changes: technology, outsourcing, currency, political, scandal.\"",
"title": ""
},
{
"docid": "9c34675e34f7f86936d7cbd88072c7cc",
"text": "In practice momentum and trend following are two different ideas, albeit similar and often ocurr simultaneously. I don’t know if the book makes a clear disctinction between the two but keep this in mind: 1) Momentum trading is a trade where prices are increasing/decreasing and an increasing rate usually confirmed by heavy volume. Like you said, this can often be at the top of a bubble or nearing a bottom of a crash but not necessarily. It may also occur when trend trading is violated (switching directions or a new trend emerging) 2) Trend following is a trade where one could draw a disctinct linear line in a chart (up or down at some angle). Being able to draw a line into the future would be your projected ‘trend’ target. You could buy now and say “the trend is up, in 365 days the S&P 500 will trade at 2,based on the trend we’ve seen in the past year",
"title": ""
}
] |
fiqa
|
8b8346b27993c3955f9aae4b7969a811
|
Why certain currencies are considered safe havens in times of turmoil
|
[
{
"docid": "04380472d698ba617ee0248bf26c8164",
"text": "It's a combination of neutrality, economic power, economic freedom, a history of stability, and tradition. In the case of the Japanese yen, it's obviously economic power that is the determining factor, as Japan is the world's third largest economy. Switzerland, on the other hand, is only the 19th largest economy, but ranks very high in all the other criteria.",
"title": ""
},
{
"docid": "1757d95cb174dec0d19ffc5db8c39e7f",
"text": "\"Switzerland is presumably where one moves the money in case of an apocalypse; although, they have lost some of that appeal now with the tax reporting to the EU and USA. Switzerland has a very old, stable banking industry, but this isn't the only appeal. Their reputation for safeguarding money, be it despot or Nazi, is most of the attraction. Low to no taxes is the second. Also, there isn't much financially illegal despite recent changes. Put that all together, and if a country is about to go to hell in handbasket because it borrowed too much or goes to war while Switzerland stays stable and very strict about paying depositors, those residents are going to try to move as much money to Switzerland as possible before its confiscated for one reason or another, sending the CHF up. Japan is a different duck. They have persistently ~0% inflation thus low nominal and real interest rates. With them, the so-called \"\"cash & carry trade\"\" or more ubiquitous \"\"carry trade\"\" dominates. Many investors choose to borrow in JPY to buy investments denominated in other currencies. If the countries of those other currencies are about to take their residents' money or go to war, putting money at jeopardy, the residents doing the carry trading will try to unwind their levered investments to reduce risk, sending the JPY up.\"",
"title": ""
}
] |
[
{
"docid": "68679dfcbf90d701f3a3ee8be64ab27f",
"text": "There's no way the greek government has the cash to defend a peg. Defending a peg takes a lot of cash. If your currency goes above the peg, you need to print more. If it goes below the peg, you need to buy it back, with euros for example. Greece has no euros, and so cannot defend a peg.",
"title": ""
},
{
"docid": "38a479e3fac8a4d4deb5d8caa993d72a",
"text": "\"Having savings only in your home currency is relatively 'low risk' compared with other types of 'low diversification'. This is because, in a simple case, your future cash outflows will be in your home currency, so if the GBP fluctuates in value, it will (theoretically) still buy you the same goods at home. In this way, keeping your savings in the same currency as your future expenditures creates a natural hedge against currency fluctuation. This gets complicated for goods imported from other countries, where base price fluctuates based on a foreign currency, or for situations where you expect to incur significant foreign currency expenditures (retirement elsewhere, etc.). In such cases, you no longer have certainty that your future expenditures will be based on the GBP, and saving money in other currencies may make more sense. In many circumstances, 'diversification' of the currency of your savings may actually increase your risk, not decrease it. Be sure you are doing this for a specific reason, with a specific strategy, and not just to generally 'spread your money around'. Even in case of a Brexit, consider: what would you do with a bank account full of USD? If the answer is \"\"Convert it back to GBP when needed (in 6 months, 5 years, 30, etc.), to buy British goods\"\", then I wouldn't call this a way to reduce your risk. Instead, I would call it a type of investment, with its own set of risks associated.\"",
"title": ""
},
{
"docid": "3e9dab648c073d7d951d574e279b4de7",
"text": "Dollar is the lingua franca of the financial industry and unluckily it is the US currency. It is till today considered the most safest investment bet, that is why you have China possesing $3 trillion of US debt, as an investment albiet a very safe one. Financial investors get in queue to by US bonds the moment they are put up for sale. Because of the AAA rating the investors consider it to be safe at a specific rate. Now when you lower the credit rating you are indirectly asking the US government that you want a higher return(yield) on your investments. When you ask for higher yields, it translates into higher interest rates (money US would get for bonds issued decreases and so more bonds are issued). So you basically start looking at a slowdown in consumer spendings households and businesses. With already defaults, repossesions and lesser spending, the slowdown would increase manifold.",
"title": ""
},
{
"docid": "379efa836cc7a4c7502ea05e87ecfafc",
"text": "Currencies don't have intrinsic value. Just because you have to pay taxes in USD does not mean it has intrinsic value. The government could theoretically switch currency every second, not that that will ever happen. But yes the USD is supported by the US government and that's like a safety net for the value of the USD. Bitcoin doesn't have a government accepting bitcoin in taxes (except maybe liberland or something) so BTC doesn't have that safenet. But with such a liquid market and millions of buyorders bitcoin doesn't really need a safenet. There will always be demand. I prefer a scarce currency with growing demand than an inflationary currency backed by a corrupt government that loses value over time.",
"title": ""
},
{
"docid": "233fefaa0be88b6404682ad147c28974",
"text": "If you want to use that money and maybe don't have the time to wait a few years if things should go bad, than you will definitely want to hold a good bunch of your money in the currency you buy most stuff with (so in most cases the currency of the country you live in) even if it is more volatile.",
"title": ""
},
{
"docid": "1e27e77f9b48e65c7e51b05e7102406c",
"text": "Here's a point in favor of central banks: With a central bank in the middle making sure payments clear, transactions can happen with near perfect trust. When a bank has a daylight overdraft, the Fed covers it. When a bank needs overnight funding, the Fed provides it. If a bank needs vault cash, a truck shows up from the Fed. Without this, no one could ever be entirely confident the other party was money-good. With a volume of transactions that can amount to annual GDP in as little as six days, this level of trust is critical to a smoothly functioning system of payments.",
"title": ""
},
{
"docid": "7c3ea2d85b77310aaa66303551243d31",
"text": "Precious metals also tend to do well during times of panic. You could invest in gold miners, a gold or silver ETF or in physical bullion itself.",
"title": ""
},
{
"docid": "86516c0d3489f7e5c5913e2155b60eb1",
"text": "But then why wouldn't that be their primary mode to control their currency now/are they starting/hinting at doing so to move away from US treasuries? There must be benefits to Treasury purchasing that seems better to them, maybe that QE can't do alone? And I have to imagine with the tenuous nature of their financial system, the shock alone from losing access to the Dollar (and before they could use QE to devalue the currency back down) would be a major issue.",
"title": ""
},
{
"docid": "6fbe5c263a53570193750b611429aaa0",
"text": "Because people trade currency in exchange for goods and services. They can easily prevent competition by violent means or by having control of the market through market share. Price can be controlled by the threat of super low prices in order to drive out competing businesses.",
"title": ""
},
{
"docid": "aaf385e8e4cec04116c0701d991180b7",
"text": "I think your approach of looking exclusively at USD deposits is a prudent one. Here are my responses to your questions. 1) It is highly unlikely that a USD deposit abroad be converted to local currency upon withdrawal. The reason for offering a deposit in a particular currency in the first place is that the bank wants to attract funds in this currency. 2) Interest rate is a function of various risks mostly supply and demand, central bank policy, perceived risk etc. In recent years low-interest rate policy as led by U.S., European and Japanese central banks has led particularly low yields in certain countries disregarding their level of risk, which can vary substantially (thus e.g. Eastern Europe has very low yields at the moment in spite of its perceived higher risk). Some countries offer depository insurance. 3) I would focus on banks which are among the largest in the country and boast good corporate governance i.e. their ownership is clean and transparent and they are true to their business purpose. Thus, ownership is key, then come financials. Country depository insurance, low external threat (low war risk) is also important. Most banks require a personal visit in order to open the account, thus I wouldn't split much further than 2-3 banks, assuming these are good quality.",
"title": ""
},
{
"docid": "50e236ec0f96a0593fda16098b715f5e",
"text": "Public debt and risk of currency devaluation are two very, very different things. Until the BRICS are able to buy commodities on a significant scale using a market basket of their own currencies, the USD will remain one of the (if not the) safest currencies in the world.",
"title": ""
},
{
"docid": "209158c83940631e2c9f741f0da36157",
"text": "As mentioned in several other answers, the main reason for high rates is to maximize profit. However, here is another, smaller effect: The typical flow of getting money from an ATM: Suppose you have a minute to consider the offer, then in that time the currency may drop or rise (which you can see from an external source of information). Therefore this opens a window for abuse. For real major currencies these huge switches are rare, but they do happen. And when 1 or 2 minor currencies are involved these switches are more common. Just looking at a random pair for today (Botswana Pula to Haitian Gourde) I immediately spotted a moment where the exchange rate jumped by more than 2 %. This may not be the best example, but it shows why a large margin is desirable. Note that this argument only holds for when the customer knows in advance what the exchange rate would be, for cases where it is calculated afterwards I have not found any valid excuse for such large margins (except that it allows them to offer other services at a lower price because these transaction).",
"title": ""
},
{
"docid": "aa9b5d6f4a38386e5f16a6afcfabc9ce",
"text": "I meant bitcoin. The issuer is the designer of the currency, which I have stated multiple times, has structural issues. The exchanges are the banks, which have been shown to be susceptible to hacking. Bitcoin is also a fiat currency, just like every other currency, just one with no faith or guarantees behind it and no one to hold accountable when things go sideways. No thanks.",
"title": ""
},
{
"docid": "3f618ab19f17487dccfcaef9c71b6f43",
"text": "\"Money is money because people believe it is money. By \"\"believe it is money\"\", I mean that they expect they will be able to turn it into useful goods or services (food, rent, houses, truckloads full of iron ore, mining equipment, massages at the spa, helicopter rides, iPads, greenhouses, income streams to support your future retirement, etc). Foreign exchange rates change because people's ideas about how much useful goods or services they can get with various currencies change. For example: if the Zimbabwe government suddenly printed 10 times as much money as used to exist, you probably couldn't use that money to buy as much food at the Zimbabwe-Mart, so you wouldn't be willing to give people as many US-dollars (which can buy food at the US-Mart) for a Zimbabwe-dollar as you used to be able to. (It's not exactly that easy, because - for instance - food in the US is more useful to me than food in Zimbabwe. But people still move around all sorts of things, like oil, or agricultural products, or minerals, or electronics components.) The two main things that affect the value of a currency are the size of the economy that it's tied to (how much stuff there is to get), and how much of the currency there is / how fast it's moving around the economy (which tells you how much money there is to get it with). So most exchange rate shifts reflect a change in people's expectations for a regional economy, or the size of a money supply. (Also, Zimbabwe is doing much better now that it's ditched their own currency - they kept printing trillions of dollars' worth - and just trade in US dollars. Their economy still needs some work, but... better.)\"",
"title": ""
},
{
"docid": "7b9e1b14c98aa0813d39fed38251fb95",
"text": "\"My advice would be to invest that 50k in 25% batches across 4 different money markets. Batch 1: Lend using a peer-to-peer account - 12.5k The interest rates offered by banks aren't that appealing to investors anymore, at least in the UK. Peer to peer lending brokers such as ZOPA provide 5% to 6% annual returns if you're willing to hold on to your investment for a couple of years. Despite your pre-conceptions, these investments are relatively safe (although not guaranteed - I must stress this). Zopa state on their website that they haven't lost any money provided from their investors since the company's inception 10 years ago, and have a Safeguard trust that will be used to pay out investors if a large number of borrowers defaulted. I'm not sure if this service is available in Australia but aim for an interest rate of 5-6% with a trusted peer-to-peer lender that has a strong track record. Batch 2: The stock market - 12.5k An obvious choice. This is by far the most exciting way to grow your money. The next question arising from this will likely be \"\"how do I pick stocks?\"\". This 12.5k needs to be further divided into 5 or so different stocks. My strategy for picking stock at the current time will be to have 20% of your holdings in blue-chip companies with a strong track record of performance, and ideally, a dividend that is paid bi-anually/quarterly. Another type of stock that you should invest in should be companies that are relatively newly listed on the stock market, but have monopolistic qualities - that is - that they are the biggest, best, and only provider of their new and unique service. Examples of this would be Tesla, Worldpay, and Just-eat. Moreover, I'd advise another type of stock you should purchase be a 'sin stock' to hedge against bad economic times (if they arise). A sin stock is one associated with sin, i.e. cigarette manufacturers, alcohol suppliers, providers of gambling products. These often perform good while the economy is doing well, but even better when the economy experiences a 2007-2008, and 2001-dotcom type of meltdown. Finally, another category I'd advise would be large-cap energy provider companies such as Exxon Mobil, BP, Duke Energy - primarily because these are currently cheaper than they were a few months ago - and the demand for energy is likely to grow with the population (which is definitely growing rapidly). Batch 3: Funds - 12.5k Having some of your money in Funds is really a no-brainer. A managed fund is traditionally a collection of stocks that have been selected within a particular market. At this time, I'd advise at least 20% of the 12.5k in Emerging market funds (as the prices are ridiculously low having fallen about 60% - unless China/Brazil/India just self destruct or get nuked they will slowly grow again within the next 5 years - I imagine quite high returns can be had in this type of funds). The rest of your funds should be high dividend payers - but I'll let you do your own research. Batch 4: Property - 12.5k The property market is too good to not get into, but let's be honest you're not going to be able to buy a flat/house/apartment for 12.5k. The idea therefore would be to find a crowd-funding platform that allows you to own a part of a property (alongside other owners). The UK has platforms such as Property Partner that are great for this and I'm sure Australia also has some such platforms. Invest in the capital city in areas as close to the city's center as possible, as that's unlikely to change - barring some kind of economic collapse or an asteroid strike. I think the above methods of investing provide the following: 1) Diversified portfolio of investments 2) Hedging against difficult economic times should they occur And the only way you'll lose out with diversification such as this is if the whole economic system collapses or all-out nuclear war (although I think your investments will be the least of your worries in a nuclear war). Anyway, this is the method of investing I've chosen for myself and you can see my reasoning above. Feel free to ask me if you have any questions.\"",
"title": ""
}
] |
fiqa
|
c9c70c7d21ebcee8b2b72b53b86320c6
|
Is there a financial product that allows speculation on GDP?
|
[
{
"docid": "3048fcd106371966f419a784a95ddf8e",
"text": "The closest thing that you are looking for would be FOREX exchanges. Currency value is affected by the relative growth of economies among other things, and the arbritrage of currencies would enable you to speculate on the relative growth of an individual economy.",
"title": ""
}
] |
[
{
"docid": "efd0097229164057ef16b3e11f442cf7",
"text": "The closest I can think of from the back of my head is http://finviz.com/map.ashx, which display a nice map and allows for different intervals. It has different scopes (S&P500, ETFs, World), but does not allow for specific date ranges, though.",
"title": ""
},
{
"docid": "e34cc3a908ca41889fbf8177fb23690b",
"text": "> “The economy, as measured by gross domestic product, can be expected to grow at an annual rate of about 3 percent over the long term, and inflation of 2 percent would push nominal GDP growth to 5 percent, Buffett said. Stocks will probably rise at about that rate and dividend payments will boost total returns to 6 percent to 7 percent, he said.” [Warren Buffett](https://www.csmonitor.com/Business/The-Simple-Dollar/2013/0506/What-Warren-Buffett-s-stock-market-math-means-for-your-retirement) This isn't the whole picture, but it's a start.",
"title": ""
},
{
"docid": "8b18a18b6528b4276d4c996910e6f497",
"text": "Dithering in the dark Quantifying the effect of political uncertainty on the global economy EUROPE teeters at the edge of an economic abyss, its fate in the hands of political leaders at odds over how to solve the continent’s twin debt and bank crises. America may be pushed over a “fiscal cliff” at the end of the year by political dysfunction. And even China, although unlikely to take a deep dive, is hostage to the will and ability of its government to stimulate growth. More than at any point in recent history, the global economy’s fate is tied to the capriciousness of policymakers. How much does such uncertainty cost? Anecdotal evidence suggests that it costs a lot. Customers of Cisco Systems, the world’s biggest maker of internet gear, are taking longer to make decisions, according to John Chambers, the company’s boss. Their orders tend to be smaller than before, and to require more in-house approvals. They say they are planning to buy more stuff later this year, reported Mr Chambers recently, but “then in the very next breath they say it depends on what happens on a global and macro scale.”In Europe firms must reckon not only with recession but also with the risk that their investments may be redenominated in a different currency or locked in by capital controls. Robert Bergqvist of SEB, a Swedish bank, says that several Swedish corporate customers have put investment projects on hold because they don’t know how the euro crisis will unfold. If America falls over the “fiscal cliff”, it would suffer a fiscal squeeze of 5% of GDP, easily enough to push the economy into recession. Last summer, as America’s government came perilously close to exhausting its legal authority to borrow, Barack Obama and Republicans in Congress could not resolve their fiscal differences. Instead, they kicked the can down the road, agreeing on huge automatic spending cuts that would start on January 2nd, just as all of George Bush’s tax cuts are due to expire, along with a separate temporary payroll tax cut. No deal to avoid this double whammy is likely before the November 6th election. So any firm that sells to the federal government is left in limbo. Mike Lawrie, head of Computer Sciences Corporation, a big technology-services firm, recently told investors: “I just don’t know what’s going to happen...None of us [knows].” The debt-ceiling showdown makes last summer’s weak economy weaker, said James Tisch, the boss of Loews Corporation, a conglomerate, last month. And “this fiscal cliff is the summer of ’11 but on steroids.” Economists have long suspected that uncertainty could hurt growth. John Maynard Keynes said investment was based on expectations that are “subject to sudden and violent changes”. In a 1980 paper Ben Bernanke, now chairman of the Federal Reserve, formalised this effect: since most investment is irreversible, uncertainty “increases the value of waiting for new information [and thus] retards the current rate of investment.” In the 1990s Avinash Dixit and Robert Pindyck went further, making an analogy between an investment opportunity and a stock option, the value of which rises with the volatility of the stock price but disappears once the option is exercised. If an investment is irreversible, uncertainty raises the value of hoarding cash and waiting to see what happens. Gauging the fog Quantifying uncertainty is a more recent sport. To measure it, Nick Bloom and Scott Baker of Stanford University and Steve Davis of the University of Chicago constructed an index. It counts how often uncertainty related to policy is mentioned in newspapers, the number of temporary provisions in the tax code and the degree to which forecasts of inflation and federal spending differ from each other. That index hit its highest in 25 years during last summer’s debt-ceiling battle and remains high (by contrast, the Vix index of stock market volatility, a conventional gauge of uncertainty, remains below its peak of 2009; see chart). A simpler index for Europe that tracks news reports of uncertainty has similarly spiked. Mr Bloom and his co-authors fed their index into a model of growth that seeks to filter out purely economic factors by controlling for interest rates and stock prices. They conclude that the rise in uncertainty between 2006 and 2011 reduced real GDP by 3.2% and cost 2.3m jobs. Such estimates should be taken with a grain of salt. They demonstrate that policy uncertainty and weaker economic growth are related, not that the first causes the second. Many radical policy actions, from the TARP bail-out programme to the Federal Reserve’s quantitative easing and the Dodd-Frank law on financial reform, were responses to unprecedented economic trauma: collapsing house prices, failing financial institutions and the deepest recession since the second world war. That trauma did most of the damage to growth, not any uncertainty about the policy response. Had policymakers stood still, the result would have been less policy uncertainty but a far more damaging crisis. Clearly some policies, such as Mr Obama’s health-care reform, generate uncertainty independent of economic developments. But at least Obamacare comes with benefits as well as risks; that cannot be said for the current political brinkmanship. As the fiscal cliff draws nearer, argues Ethan Harris, Bank of America’s economist for North America, the incentive to defer hiring and investment will grow, putting pressure on the economy. “The process is as important as the outcome,” he says, “and the process is a disaster.” http://www.economist.com/node/21556930 Thomas Oye",
"title": ""
},
{
"docid": "883cafa8f5663e43e4c96d54317ed88f",
"text": "Banks in certain countries are offering such facility. However I am not aware of any Bank in Hungary offering this. So apart from maintaining a higher amount in HUF, there by reducing the costs [and taking the volatility risks]; there aren't many options.",
"title": ""
},
{
"docid": "c8b8a8cd6dd609be92d7c068483a4d53",
"text": "Factset also provides a host of tools for analysis. Not many people know as they aren't as prevalent as Bloomberg. CapitalQ and Thomson Reuters also provide analysis tools. Most of the market data providers also provide analysis tools to analyze the data they and others provide.",
"title": ""
},
{
"docid": "adaba88e23cded5660899924bfd1f056",
"text": "If anyone is interested in looking into it, the company Pinnacle has actually been using theory from quantitative finance for a long time. I went to one of their talks during useR!2017 in Brussels, really interesting betting company.",
"title": ""
},
{
"docid": "59f54cbaa67b1798e28fbcb031da4510",
"text": "\"The term \"\"stock\"\" here refers to a static number as contrasted to flows, e.g. population vs. population growth. Stock, in this context, is not at all related to an equity instrument. Yes, annual refinance costs, interest rate payments etc. are what we should be looking at when assessing debt burden. Those are flows. That was my point when cautioning against naive debt GDP comparisons. Also, keep in mind that by borrowing in it's sovereign currency, the US has an enormous amount of monetary tools to handle the debt if it ever became a problem. Greece, by comparison, is at the mercy of the ECB, so they only have fiscal levers to pull. The interest expense does not strike me as especially concerning, but I'd be happy to verify BIS or IMF reports if you would like.\"",
"title": ""
},
{
"docid": "c714df641d3c69e2e6d54221e81635ba",
"text": "Firstly, comparing debt to GDP is comparing a stock to a flow, you're committing a transgression that is warned about in Econ 101. Secondly, I appreciate your concern about the height of debt but it's really just a measure of the flow of capital. Debt is an investment too, and the headline debt number mixes government, corporate, and consumer debt which have very different attributes. In fact the holders of most government debt are normal citizens and pensioners. More concerning might be the levels of *consumer* debt, but (I would argue) that only becomes an issue if debt starts being issued fraudulently to people who shouldn't be receiving it, e.g. ahead of the mortgage crisis. There may be nothing I can say to convince you otherwise, and I'm not saying that overleveraging *isn't* something to be concerned about, but I'm trying to remind you that the story is more complicated than you're letting on. Finally, respectfully, please don't scaremonger about derivatives. The notional value is very high, but derivatives are a zero-sum market (unlike the stock market, e.g.), and in fact the majority of derivatives are for hedging and reducing risk. While it's certainly possible to use derivatives to leverage oneself, this really only happens with hedge fund-type operations, and even if the derivative market blew up I highly doubt it would affect average people very much. TL;DR, If there's another crash in the next 5 years, I doubt it will be due to debt (outside of *perhaps* China, but I think that'd lead to more of a recession than a full blown 2008-esque crisis). It definitely will not be because of derivatives.",
"title": ""
},
{
"docid": "b1c6d980076a737e1d0939f6b32732f6",
"text": "I mean, sure. But that has nothing to do with gdp-ppp, mostly because I'm pretty sure you can't pay for spying with yuan. GDP-PPP is the metric people point when they *really* want the US to no longer geopolitically matter. In reality, China has got a long way to go before they get to the point of truly challenging the US.",
"title": ""
},
{
"docid": "01a307c4236d58d3e0da1df77541e4a9",
"text": "I didn't take too many finance or economics courses so i can't comment. In my post I recommended the YouTube video or audiobook 'why an economy grows and why it doesn't' I guess it's more economy related than finance related, but is still relevant as it touches on loans and net worth and stuff.",
"title": ""
},
{
"docid": "bee5a63f15bde0552214d71f7f7654fb",
"text": "If you are looking to analyze stocks and don't need the other features provided by Bloomberg and Reuters (e.g. derivatives and FX), you could also look at WorldCap, which is a mobile solution to analyze global stocks, at FactSet and S&P CapitalIQ. Please note that I am affiliated with WorldCap.",
"title": ""
},
{
"docid": "f988fc7610be7ccd2e8685e75ebb6fe5",
"text": "Assuming S&P value as % of GDP doesn't change, to get S&P return you add (Nominal GDP % growth + Dividend Yield) -> S&P return. Historically the S&P has grown faster as corporations of won market share and therefore grown to a larger portion of GDP. While this can continue (or possibly reverse), and can happen globally as well, you are correct in pointing out that it cannot continue ad infinitum.",
"title": ""
},
{
"docid": "62c2505b9c73061efe7702f188ad3fbd",
"text": "It's important to realize that any portfolio, if sufficiently diversified should track overall GDP growth, and anything growing via a percentage per annum is going to double eventually. (A good corner-of-napkin estimate is 70/the percentage = years to double). Just looking at your numbers, if you initially put in the full $7000, an increase to $17000 after 10 years represents a return of ~9.3% per annum (to check my math $7000*1.09279^10 ≈ $17000). Since you've been putting in the $7000 over 10 years the return is going to be a bit more than that, but it's not possible to calculate based on the information given. A return of 9.3% is not bad (some rules of thumb: inflation is about 2-4% so if you are making less than that you're losing money, and 6-10% per annum is generally what you should expect if your portfolio is tracking the market)... I wouldn't consider that rate of return to be particularly amazing, but it's not bad either, as you've done better than you would have if you had invested in an ETF tracking the market. The stock market being what it is, you can't rule out the possibility that you got lucky with your stock picks. If your portfolio was low-risk, a return of 9%ish could be considered amazing, but given that it's about 5-6 different stocks what I'd consider amazing would be a return of 15%+ (to give you something to shoot for!) Either way, for your amount of savings you're probably better off going with a mutual fund or an ETF. The return might be slightly lower, but the risk profile is also lower than you picking your stocks, since the fund/ETF will be more diversified. (and it's less work!)",
"title": ""
},
{
"docid": "9e6f5a82008f9330d2061b78d7cbadd5",
"text": "I spent a while looking for something similar a few weeks back and ended up getting frustrated and asking to borrow a friend's Bloombterg. I wish you the best of luck finding something, but I wasn't able to. S&P and Morningstar have some stuff on their site, but I wasn't able to make use of it. Edit: Also, Bloomberg allows shared terminals. Depending on how much you think as a firm, these questions might come up, it might be worth the 20k / year",
"title": ""
},
{
"docid": "dd16f3323c1ff492af0518c89d5e8601",
"text": "Using GDP as a proxy for economic well-being was ok, though not great, when GDP growth seemed to be linked with other measures like average salary, purchasing power, national debt and employment. I had really hoped that the split in these different measures during and since the recession would mean that people started to look for more nuanced reporting of the stats but sadly it seems that now GDP is on the up and employment is back below 7% everything is fine in the world of newspaper publishing.",
"title": ""
}
] |
fiqa
|
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